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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-1
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
and
Statement on
SCHEDULE 13D
Under the Securities Exchange Act of 1934
AUTOMOBILE PROTECTION CORPORATION -- APCO
(Name of Subject Company)
AM1 ACQUISITION COMPANY
FORD MOTOR COMPANY
(Bidders)
COMMON STOCK, $.001 PAR VALUE PER SHARE
(Title of Class of Securities)
052905106
(CUSIP Number of Class of Securities)
JOHN K. DICKERSON, ESQ.
FORD MOTOR COMPANY
THE AMERICAN ROAD, SUITE 325, WHQ
DEARBORN, MICHIGAN 48121
TELEPHONE: (313) 322-3000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidders)
COPY TO:
DAVID J. SORKIN, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 455-2000
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$177,510,671 $35,503
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* Based on the offer to purchase all of the outstanding shares of common stock
of the Subject Company at $13.00 cash per share, 11,936,716 Shares
outstanding and 1,717,951 options outstanding as of June 10, 1999.
** 1/50 of 1% of Transaction Valuation.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid:
Form or Registration No.:
Filing Party:
Date Filed:
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CUSIP NO. 052905106 PAGE __ OF __ PAGES
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1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ford Motor Company
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or
2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER*
4,347,242
SHARES ---------------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY 0
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OWNED BY 9 SOLE DISPOSITIVE POWER
0
EACH ---------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
REPORTING 0
PERSON
WITH
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON*
4,347,242
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36.3% (based on 11,976,716 shares outstanding)
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14 TYPE OF REPORTING PERSON
CO
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* Beneficial ownership is based solely on the provisions of (i) the Company
Option Agreement, pursuant to which, among other things, the Company has
granted to the reporting person an option to purchase 2,375,406 Shares and
(ii) the Stock Option and Tender Agreements, pursuant to which, among other
things, certain stockholders of the Company have granted to the reporting
person options to purchase an aggregate of 1,971,836 Shares and such
stockholders have agreed to vote such Shares, and have granted to the
reporting person a proxy to vote such shares, in the manner set forth in the
Stock Option and Tender Agreements. Capitalized terms have the meanings
assigned to them herein.
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CUSIP NO. 052905106 PAGE __ OF __ PAGES
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1 NAME OF REPORTING PERSON
SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
AM1 Acquisition Company
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or
2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Georgia
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7 SOLE VOTING POWER*
NUMBER OF 1,971,836
SHARES ---------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH ---------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ---------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON*
1,971,836
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.5% (based on 11,976,716 shares outstanding)
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14 TYPE OF REPORTING PERSON
CO
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* Beneficial ownership is based solely on the provisions of the Stock Option and
Tender Agreements, pursuant to which, among other things, stockholders of the
Company have agreed to vote certain Shares beneficially owned by them, and
have granted to the reporting person a proxy to vote such Shares, in the
manner set forth in the Stock Option and Tender Agreement. Capitalized terms
have the meanings assigned to them herein.
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This Tender Offer Statement on Schedule 14D-1 relates to the offer by AM1
Acquisition Company, a Georgia corporation (the "Purchaser") and a wholly owned
subsidiary of Ford Motor Company, a Delaware corporation (the "Parent"), to
purchase all of the outstanding shares of Common Stock, par value $.001 per
share (the "Shares"), of Automobile Protection Corporation -- APCO, a Georgia
corporation (the "Company"), at a purchase price of $13.00 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated June 16, 1999 (the "Offer to
Purchase"), a copy of which is attached hereto as Exhibit (a)(1), and in the
related Letter of Transmittal (which, together with the Offer to Purchase, as
amended from time to time, constitute the "Offer"), a copy of which is attached
hereto as Exhibit (a)(2).
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Automobile Protection
Corporation -- APCO. The information set forth in Section 7 ("Certain
Information Concerning the Company") of the Offer to Purchase is incorporated
herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is Common Stock, par value $.001 per share, of the Company. The
information set forth in the Introduction (the "Introduction") of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by the Purchaser and the Parent.
The information set forth in Section 8 ("Certain Information Concerning the
Purchaser and the Parent,") of the Offer to Purchase and in Schedule I thereto
is incorporated herein by reference.
(e) and (f) During the last five years, neither the Purchaser nor the
Parent nor, to the best knowledge of the Purchaser or the Parent, any of the
persons listed in Schedule I to the Offer to Purchase (i) has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 10 ("Background of the
Offer; Contacts with the Company"), Section 11 ("The Merger Agreement; The Stock
Option and Tender Agreements; The Company Option Agreement") and Section 12
("Purpose of the Offer; The Merger; Plans for the Company") of the Offer to
Purchase and in Exhibits (c)(1) and (c)(4) of this Schedule 14D-1 is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company"), Section 11 ("The Merger
Agreement; The Stock Option and Tender Agreements; The Company Option
Agreement"), Section 12 ("Purpose of the Offer; The Merger; Plans for the
Company") and Section 13 ("Dividends and Distributions") of the Offer to
Purchase is incorporated herein by reference.
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(f)-(g) The information set forth in Section 14 ("Effect of the Offer on
the Market for the Shares, Nasdaq Listing and Exchange Act Registration") of the
Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 11 ("The
Merger Agreement; The Stock Option and Tender Agreements; The Company Option
Agreement"), Section 8 ("Certain Information Concerning the Purchaser and the
Parent") and Schedule I to the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Purchaser and the Parent"), Section 10 ("Background
of the Offer; Contacts with the Company"), Section 11 ("The Merger Agreement;
The Stock Option and Tender Agreements; The Company Option Agreement") and
Section 12 ("Purpose of the Offer; The Merger; Plans for the Company") of the
Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning the
Purchaser and the Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b) and (c) The information set forth in Section 16 ("Certain Legal Matters
and Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 14 ("Effect of the Offer on the
Market for the Shares, Nasdaq Listing and Exchange Act Registration") and
Section 16 ("Certain Legal Matters and Regulatory Approvals") of the Offer to
Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Offer to Purchase dated June 16, 1999.
(a) (2) Letter of Transmittal.
(a) (3) Notice of Guaranteed Delivery.
(a) (4) Letter from Information Agent to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a) (5) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a) (6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a) (7) Summary Advertisement as published on June 16, 1999.
(a) (8) Press Release issued by the Parent and the Company on June 10,
1999.
ii
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(c) (1) Agreement and Plan of Merger, dated as of June 10, 1999, among the
Parent, the Purchaser and the Company.
(c) (2) Stock Option and Tender Agreement, dated as of June 10, 1999
between the Parent and Martin J. Blank.
(c) (3) Stock Option and Tender Agreement, dated as of June 10, 1999
between the Parent and Larry I. Dorfman.
(c) (4) Stock Option Agreement, dated as of June 10, 1999 between the
Parent and the Company.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
AM1 Acquisition Company
By: /s/ L. JOHANNA KAIPAINEN
-----------------------------------
Name: L. Johanna Kaipainen
Title: Vice President and Secretary
Ford Motor Company
By: /s/ PETER SHERRY, JR.
-----------------------------------
Name: Peter Sherry, Jr.
Title: Assistant Secretary
Date: June 16, 1999
iv
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EXHIBIT INDEX
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EXHIBIT
NO. DESCRIPTION
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(a)(1) Offer to Purchase dated June 16, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter from Information Agent to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
(a)(5) Letter to clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
(a)(7) Summary Advertisement as published on June 16, 1999
(a)(8) Press Release issued by the Parent and the Company on June
10, 1999
(c)(1) Agreement and Plan of Merger, dated as of June 10, 1999,
among the Parent, the Purchaser and the Company
(c)(2) Stock Option and Tender Agreement, dated as of June 10, 1999
between the Parent and Martin J. Blank
(c)(3) Stock Option and Tender Agreement, dated as of June 10, 1999
between the Parent and Larry I. Dorfman
(c)(4) Stock Option Agreement, dated as of June 10, 1999 between
the Parent and the Company
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EXHIBIT (a)(1)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
AUTOMOBILE PROTECTION CORPORATION -- APCO
at
$13.00 NET PER SHARE
by
AM1 ACQUISITION COMPANY
a wholly owned subsidiary of
FORD MOTOR COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JULY 14, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES OF THE COMMON STOCK OF AUTOMOBILE PROTECTION CORPORATION -- APCO WHICH
CONSTITUTES A MAJORITY OF ALL THE OUTSTANDING SHARES OF SUCH COMMON STOCK
(DETERMINED ON A FULLY DILUTED BASIS). THE OFFER IS ALSO SUBJECT TO OTHER TERMS
AND CONDITIONS. SEE THE INTRODUCTION AND SECTIONS 1 AND 15.
THE BOARD OF DIRECTORS OF AUTOMOBILE PROTECTION CORPORATION -- APCO HAS
UNANIMOUSLY DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING EACH OF THE OFFER AND THE MERGER, ARE FAIR TO
AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF AUTOMOBILE PROTECTION
CORPORATION -- APCO AND RECOMMENDS THAT HOLDERS OF SHARES ACCEPT THE OFFER AND
TENDER THEIR SHARES TO AM1 ACQUISITION COMPANY.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, mail or deliver the Letter of Transmittal (or such
facsimile) and any other required documents to the Depositary (as defined
herein), and either deliver the certificates representing the tendered Shares
and any other required documents to the Depositary or tender such Shares
pursuant to the procedure for book-entry transfer set forth in Section 3 or (2)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. Stockholders
having Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee if they desire to tender Shares so registered.
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedure for book-entry transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in Section
3.
Questions and requests for assistance may be directed to D.F. King & Co.,
Inc. (the "Information Agent") at its address and telephone number set forth on
the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
also be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
June 16, 1999
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TABLE OF CONTENTS
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PAGE
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INTRODUCTION..................................................... 1
THE TENDER OFFER................................................. 3
1. Terms of the Offer, Expiration Date......................... 3
2. Acceptance for Payment and Payment for Shares............... 4
3. Procedure for Tendering Shares.............................. 5
4. Withdrawal Rights........................................... 8
5. Certain Federal Income Tax Consequences..................... 8
6. Price Range of Shares; Dividends............................ 9
7. Certain Information Concerning the Company.................. 10
8. Certain Information Concerning the Purchaser and the
Parent...................................................... 11
9. Source and Amount of Funds.................................. 12
10. Background of the Offer; Contacts with the Company.......... 12
11. The Merger Agreement; The Stock Option and Tender
Agreements; The Company Option Agreement.................... 14
12. Purpose of the Offer; The Merger; Plans for the Company..... 25
13. Dividends and Distributions................................. 27
14. Effect of the Offer on the Market for the Shares, Nasdaq
Listing and Exchange Act Registration....................... 27
15. Certain Conditions of the Offer............................. 28
16. Certain Legal Matters and Regulatory Approvals.............. 30
17. Fees and Expenses........................................... 33
18. Miscellaneous............................................... 33
SCHEDULE I Certain Information Regarding the Directors and
Executive Officers of Purchaser
and the Parent................................. 34
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To the Stockholders of Automobile Protection Corporation -- APCO:
INTRODUCTION
AM1 Acquisition Company, a Georgia corporation (the "Purchaser") and a
wholly owned subsidiary of Ford Motor Company, a Delaware corporation (the
"Parent"), hereby offers to purchase all of the outstanding shares of Common
Stock, par value $.001 per share (the "Shares"), of Automobile Protection
Corporation -- APCO, a Georgia corporation (the "Company"), at a purchase price
of $13.00 per Share, net to the seller in cash without interest thereon, upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which, as amended or supplemented from
time to time, together constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the transfer and sale of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of First Chicago Trust Company of New
York, which is acting as the Depositary for the Offer (in such capacity, the
"Depositary") and D.F. King & Co., Inc., which is acting as the Information
Agent for the Offer (in such capacity, the "Information Agent"), incurred in
connection with the Offer. See Section 17.
The Board of Directors of the Company (the "Company Board") has unanimously
determined that the Merger Agreement (as defined below) and the transactions
contemplated thereby, including each of the Offer and the Merger (as defined
below), are fair to and in the best interests of the stockholders of the Company
and recommends that the holders of the Shares accept the Offer and tender their
Shares to the Purchaser.
The Company Board has received the written opinion of The Robinson-Humphrey
Company, LLC, ("Robinson-Humphrey") financial advisor to the Company, that the
consideration to be received by the stockholders of the Company pursuant to the
Merger Agreement is fair to such stockholders from a financial point of view. A
copy of the opinion of Robinson-Humphrey is attached to the Company's
Solicitation/ Recommendation Statement on Schedule 14D-9 (as amended or
supplemented from time to time, the "Schedule 14D-9") which is being distributed
to the stockholders of the Company. The Robinson-Humphrey opinion should be read
in its entirety for the assumptions made, the procedures followed, the matters
considered and the limits of the review made by Robinson-Humphrey in connection
with such opinion. The Robinson-Humphrey opinion was prepared for the Company
Board and does not constitute a recommendation to any stockholder as to whether
to tender their Shares in the Offer. Robinson-Humphrey was not retained as an
advisor or agent to the Company's stockholders.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) A NUMBER OF SHARES WHICH CONSTITUTES A MAJORITY OF ALL THE OUTSTANDING SHARES
(DETERMINED ON A FULLY-DILUTED BASIS) (THE "MINIMUM TENDER CONDITION"), (II) THE
WAITING PERIOD (AND ANY EXTENSION THEREOF) APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF
1976, AS AMENDED (THE "HSR ACT") HAVING BEEN TERMINATED OR EXPIRED, AND (III)
ALL CONSENTS, APPROVALS AND FILINGS UNDER ANY STATE STATUTE, LAW (INCLUDING
COMMON LAW), ORDINANCE, RULE OR REGULATION APPLICABLE TO AUTOMOBILE WARRANTY OR
SERVICE CONTRACT PROVIDERS, AUTOMOBILE INSURANCE PROVIDERS OR PERSONS IN OTHER
SIMILAR BUSINESSES OR OTHER BUSINESSES OPERATED BY THE COMPANY OR ANY SUBSIDIARY
OF THE COMPANY ("AUTO WARRANTY LAWS") THAT ARE REQUIRED TO BE MADE OR OBTAINED
PRIOR TO THE ACCEPTANCE OF THE SHARES PURSUANT TO THE OFFER HAVING BEEN MADE OR
OBTAINED. SEE SECTIONS 1 AND 15. IF THE PURCHASER PURCHASES NOT LESS THAN THAT
NUMBER OF SHARES NEEDED TO SATISFY THE MINIMUM TENDER CONDITION, IT WILL BE ABLE
TO EFFECT THE MERGER WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER OF
THE COMPANY. SEE SECTION 12.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 10, 1999 (the "Merger Agreement"), among the Parent, the Purchaser
and the Company. The Merger Agreement provides, among other things, for the
making of the Offer by the Purchaser, and further provides that, following the
completion of the Offer, upon the terms and subject to the conditions of the
Merger Agreement and the Georgia Business Corporation Code (the "GBCC"), the
Purchaser will be merged with and into the Company
1
<PAGE> 4
(the "Merger"). Following the Merger, the Purchaser and the Parent anticipate
that the Company will continue as the surviving corporation (the "Surviving
Corporation") and become a wholly owned subsidiary of the Parent, and that the
separate corporate existence of the Purchaser will cease. The Merger Agreement
is more fully described in Section 11.
Two of the Company's stockholders, Martin J. Blank and Larry I. Dorfman
(the "Principal Company Stockholders"), have entered into stock option and
tender agreements with the Parent, dated as of June 10, 1999 (each, a "Stock
Option and Tender Agreement" and together, the "Stock Option and Tender
Agreements") with respect in total to approximately 16.5% of the issued and
outstanding Shares (taking into account vested options held by the Principal
Company Stockholders) based on the Company's Schedule 14D-9. Pursuant to these
agreements, each of the Principal Company Stockholders have agreed, among other
things, to tender (and not withdraw) their Shares to the Purchaser pursuant to
the Offer, to provide each of the Parent and the Purchaser with an irrevocable
proxy to vote in favor of the Merger and otherwise to support the transaction
with the Purchaser. The Principal Company Stockholders have also granted to the
Parent an option to purchase, which is exercisable upon the occurrence of
certain events, all of the Shares beneficially owned by them. See Section 11 for
a description of the Stock Option and Tender Agreements.
In connection with the Merger Agreement, the Parent and the Company have
entered into a stock option agreement, dated as of June 10, 1999 (the "Company
Option Agreement"), pursuant to which, among other things, the Company has
granted to the Parent an irrevocable option to purchase 2,375,406 newly issued
Shares, representing 19.9% of the issued and outstanding Shares, upon the terms
and subject to the conditions of the Company Option Agreement, at a price of
$13.00 per share. The option is exercisable upon the occurrence of certain
events. See Section 11 for a description of the Company Option Agreement.
The Company has represented to the Parent that as of June 10, 1999, (i)
there were 11,936,716 Shares issued and outstanding, (ii) 1,233,129 Shares were
subject to outstanding Company Employee Stock Options (as defined in the Merger
Agreement), (iii) 464,822 Shares were subject to Third Party Stock Options (as
defined in the Merger Agreement) and (iv) up to 20,000 Shares may be issuable in
respect of Potential Stock Options (as defined in the Merger Agreement). Based
upon the foregoing, the Purchaser believes that 6,827,334 Shares constitute a
majority of the outstanding Shares on a fully diluted basis.
If the Purchaser acquires a majority of the outstanding Shares in the
Offer, then the Purchaser will have the power, which it intends to exercise, to
cause the Merger to be completed without the affirmative vote or action of any
other stockholder of the Company. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares owned by the Company or any of its
subsidiaries, the Parent or the Purchaser, which shares, by virtue of the
Merger, shall be canceled and shall cease to exist with no payment being made
with respect thereto, and other than Dissenters' Shares (as defined herein))
shall be converted into the right to receive in cash the price per share paid
pursuant to the Offer (the "Merger Consideration"), payable to the holder
thereof without interest, upon surrender of the certificate formerly
representing such Share.
Pursuant to the Merger Agreement, the Company has also agreed, if and to
the extent permitted by law, at the request of the Parent and subject to the
terms of the Merger Agreement, to take all necessary and appropriate actions to
cause the Merger to become effective as soon as practicable after the expiration
of the Offer, without a meeting of the Company's stockholders. See Section 12.
Certain federal income tax consequences of the sale of the Shares pursuant
to the Offer and the exchange of Shares for the Merger Consideration pursuant to
the Merger are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
2
<PAGE> 5
THE TENDER OFFER
1. TERMS OF THE OFFER, EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer and the Merger Agreement, the Purchaser will pay for all
Shares validly tendered on or prior to the Expiration Date and not withdrawn as
permitted by Section 4. The term "Expiration Date" means 12:00 Midnight, New
York City time, on Wednesday, July 14, 1999, unless and until the Purchaser, in
its discretion (but subject to the terms and conditions of the Merger
Agreement), shall have extended the period during which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by the Purchaser, shall expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM TENDER CONDITION, THE WAITING PERIOD (AND ANY EXTENSION THEREOF)
APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER UNDER THE HSR ACT
HAVING BEEN TERMINATED OR EXPIRED, AND ALL CONSENTS, APPROVALS AND FILINGS UNDER
THE AUTO WARRANTY LAWS OF ANY STATE THAT ARE REQUIRED TO BE MADE OR OBTAINED
PRIOR TO THE ACCEPTANCE OF THE SHARES PURSUANT TO THE OFFER HAVING BEEN MADE OR
OBTAINED. SEE SECTION 15, WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER.
SUBJECT TO THE PROVISIONS OF THE MERGER AGREEMENT, INCLUDING THE PROVISIONS OF
THE MERGER AGREEMENT SET FORTH IN THE NEXT PARAGRAPH, AND THE APPLICABLE RULES
AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"),
THE PURCHASER EXPRESSLY RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO WAIVE ANY
OR ALL CONDITIONS TO THE OFFER AND TO MAKE ANY OTHER CHANGES IN THE TERMS AND
CONDITIONS OF THE OFFER. SUBJECT TO THE PROVISIONS OF THE MERGER AGREEMENT AND
THE APPLICABLE RULES AND REGULATIONS OF THE COMMISSION, IF BY THE EXPIRATION
DATE ANY OR ALL OF SUCH CONDITIONS TO THE OFFER HAVE NOT BEEN SATISFIED, THE
PURCHASER RESERVES THE RIGHT (BUT SHALL NOT BE OBLIGATED) TO (I) TERMINATE THE
OFFER AND RETURN ALL TENDERED SHARES TO TENDERING STOCKHOLDERS, (II) WAIVE SUCH
UNSATISFIED CONDITIONS AND PURCHASE ALL SHARES VALIDLY TENDERED OR (III) EXTEND
THE OFFER, AND, SUBJECT TO THE TERMS OF THE OFFER (INCLUDING THE RIGHTS OF
STOCKHOLDERS TO WITHDRAW THEIR SHARES), RETAIN THE SHARES WHICH HAVE BEEN
TENDERED, UNTIL THE OFFER, AS SO EXTENDED BY THE PURCHASER, SHALL EXPIRE.
Subject to the applicable rules and regulations of the Commission and the
terms of the Merger Agreement, the Purchaser expressly reserves the right (but
shall not be obligated), in its sole discretion, at any time and from time to
time, and regardless of whether or not any of the events set forth in Section 15
shall have occurred or shall have been determined by the Purchaser to have
occurred, to (i) extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary and (ii) amend
the Offer in any respect by giving oral or written notice of such amendment to
the Depositary. Under the terms of the Merger Agreement, however, without the
consent of the Company (unless the Company takes certain actions as described in
Section 11 under "No Solicitation"), the Purchaser will not reduce the number of
Shares subject to the Offer, reduce the price per Share to be paid pursuant to
the Offer, modify or add to the conditions of the Offer in any manner adverse to
the holders of the Shares, change the form of consideration payable in the Offer
or, except as otherwise provided in the Merger Agreement, extend the Offer. The
rights reserved by the Purchaser in this paragraph are in addition to the
Purchaser's rights to terminate the Offer pursuant to Section 15. The Merger
Agreement provides that, subject to the terms and conditions of the Offer and
the Merger Agreement and the satisfaction or waiver (to the extent permitted) of
all the conditions to the Offer as of the Expiration Date, the Purchaser will
pay for all Shares validly tendered and not withdrawn pursuant to the Offer as
soon as practicable after the Expiration Date, provided the Purchaser may (i)
extend the Offer, if at the scheduled expiration date of the Offer any of the
conditions to the Purchaser's obligation to purchase the Shares are not
satisfied, until such time as such conditions are satisfied or waived, (ii)
extend the Offer for a period of not more than ten business days beyond the
initial expiration date of the Offer, if on the date of such extension less than
90% of the outstanding Shares have been validly tendered and not properly
withdrawn pursuant to the Offer, (iii) extend the Offer for any period required
by any rule, regulation, interpretation or position of the Commission or the
staff thereof applicable to the Offer, (iv) extend the Offer in order to provide
sufficient time for the Parent to respond to any supplement or amendment to the
disclosure delivered by the Company to the Parent in accordance with the terms
of the Merger Agreement or (v) extend the Offer for any reason for a period of
not more than ten business days beyond the latest expiration date that would
3
<PAGE> 6
otherwise be permitted. The Purchaser shall have no obligation to pay interest
on the purchase price of tendered Shares,
3.1
<PAGE> 7
including in the event the Purchaser exercises its right to extend the period of
time during which the Offer is open.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, and such announcement in
the case of an extension will be made in accordance with Rule 14e-1(d) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), no later than
9:00 A.M., New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which the Purchaser
may choose to make any public announcement, except as provided by applicable law
(including Rules 14d-4(c) and 14(d)-6(d) under the Exchange Act, which require
that material changes be promptly disseminated to holders of Shares), the
Purchaser shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to the
Dow Jones News Service.
If the Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, the Purchaser will disseminate
additional tender offer material and extend the Offer to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality, of the changes. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought, a minimum
ten business day period from the day of such change is generally required to
allow for adequate dissemination to stockholders. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday, or a federal holiday
and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York
City time.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares and furnished to brokers, dealers, commercial banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing, for subsequent transmittal to beneficial
owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer and the Merger Agreement, the Purchaser
will accept for payment and pay for all Shares validly tendered and not properly
withdrawn on or prior to the Expiration Date that the Purchaser becomes
obligated to purchase as soon as practicable after the expiration of the Offer,
provided that the Purchaser may extend the Offer as described above. In
addition, subject to applicable rules of the Commission, the Purchaser expressly
reserves the right to delay acceptance for payment of or payment for Shares
pending receipt of any other regulatory approvals specified in Section 16. Any
such delays will be effected in compliance with Rule 14e-1(c) under the Exchange
Act.
For information with respect to approvals and filings required to be
obtained or made prior to the consummation of the Offer, including under the HSR
Act and the Auto Warranty Laws, see Section 16.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates representing such Shares ("Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's Message
(as defined below) in connection with a book-entry transfer, and (iii) any other
documents required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
4
<PAGE> 8
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from the Purchaser
and transmitting such payments to stockholders whose Shares have been accepted
for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR
SHARES BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING
SUCH PAYMENT. If for any reason whatsoever acceptance for payment of or payment
for any Shares tendered pursuant to the Offer is delayed or the Purchaser is
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
then without prejudice to the Purchaser's rights set forth herein, the
Depositary may nevertheless, on behalf of the Purchaser and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Shares and such Shares may not
be withdrawn except to the extent that the tendering stockholder is entitled to
and duly exercises withdrawal rights as described in Section 4.
If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted for more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned
without expense to the tendering stockholder (or, in the case of Shares tendered
by book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 3, such Shares will be
credited to an account maintained at the Book Entry Transfer Facility), as
promptly as practicable following the expiration, termination or withdrawal of
the Offer.
The Purchaser may, at any time, transfer or assign to one or more
corporations directly or indirectly majority owned by the Parent the right to
purchase all or any portion of the Shares tendered pursuant to the Offer, but
any such transfer or assignment shall not relieve the Purchaser of its
obligations under the Offer or prejudice the rights of tendering stockholders to
receive payment for Shares properly tendered and accepted for payment.
3. PROCEDURE FOR TENDERING SHARES. Valid Tenders. Except as set forth
below, in order for Shares to be validly tendered pursuant to the Offer, the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry delivery of Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase on or
prior to the Expiration Date and either (i) Share Certificates evidencing
tendered Shares must be received by the Depositary at such address or such
Shares must be tendered pursuant to the procedure for book-entry transfer
described below and a Book-Entry Confirmation must be received by the
Depositary, in each case on or prior to the Expiration Date, or (ii) the
guaranteed delivery procedures described below must be complied with.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of the
Book-Entry Transfer Facility may make book-entry delivery of Shares by causing
the Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer at the Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer, and any other
documents required by the Letter of Transmittal, must in any case be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedures described below must be complied with.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
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<PAGE> 9
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF
BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. Signatures on Letters of Transmittal must be
guaranteed by a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of the Securities Transfer Agents
Medallion Program (each of the foregoing being referred to as an "Eligible
Institution"), except in cases where Shares are tendered (i) by a registered
holder of Shares who has not completed either the box labeled "Special Payment
Instructions" or the box labeled "Special Delivery Instructions" on the Letter
of Transmittal or (ii) for the account of an Eligible Institution. See
Instructions 1 and 5 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or Share
Certificates not accepted for payment or not tendered are to be returned, to a
person other than the registered holder, the Share Certificates must be endorsed
or accompanied by appropriate stock powers, in either case, signed exactly as
the name of the registered holder appears on such certificates, with the
signatures on such certificates or stock powers guaranteed as aforesaid. See
Instructions 1 and 5 of the Letter of Transmittal.
If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available, or such stockholder cannot deliver the Share Certificates and all
other required documents to reach the Depositary on or prior to the Expiration
Date, or such stockholder cannot complete the procedure for delivery by
book-entry transfer on a timely basis, such Shares may nevertheless be tendered,
provided that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form made available by the Purchaser is
received by the Depositary as provided below on or prior to the Expiration
Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation),
representing all tendered Shares in proper form for transfer, together with
the Letter of Transmittal (or a facsimile thereof) properly completed and
duly executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within three
Nasdaq National Market trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution and a representation that the
stockholder owns the Shares tendered within the meaning of, and that the tender
of the Shares effected thereby complies with, Rule 14e-4 under the Exchange Act,
each in the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering stockholders at the same
time and will depend upon
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<PAGE> 10
when Share Certificates or Book-Entry Confirmations of such Shares are received
into the Depositary's account at the Book-Entry Transfer Facility.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser, and each of them,
as such stockholder's attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser (and with respect to any
and all other Shares, other securities or rights issued or issuable in respect
of such Shares on or after the date hereof). All such powers of attorney and
proxies shall be considered irrevocable and coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, the Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior powers of attorney and proxies given by such stockholder with
respect to such Shares (and such other Shares and securities) will be revoked
without further action, and no subsequent powers of attorney and proxies may be
given nor any subsequent written consents executed (and, if given or executed,
will not be deemed effective). The designees of the Purchaser will, with respect
to the Shares (and such other Shares and securities) for which such appointment
is effective, be empowered to exercise all voting and other rights of such
stockholder as they in their sole discretion may deem proper at any annual or
special meeting of the Company's stockholders or any adjournment or postponement
thereof, by written consent in lieu of any such meeting or otherwise. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's payment for such Shares, the
Purchaser must be able to exercise full voting rights with respect to such
Shares and other securities, including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser in its sole discretion, which
determination shall be final and binding on all parties. The Purchaser reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may in the opinion of its
counsel be unlawful. The Purchaser also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender of
Shares of any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of the Purchaser, the Parent, any of their
affiliates or assigns, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
"backup withholding" provisions of federal income tax law, the Depositary may be
required to withhold 31% of the amount of any payments of cash pursuant to the
Offer. In order to avoid backup withholding, each stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the payor of such
cash with such stockholder's correct taxpayer identification number ("TIN") on a
substitute Form W-9 and certify, under penalties of perjury, that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such stockholder and payment of cash to such stockholder pursuant
to the Offer may be subject to backup withholding of 31%. All stockholders
surrendering Shares pursuant to the Offer should complete and sign the
substitute Form W-9 included in the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proved in a manner satisfactory to the
Depositary). Certain stockholders (including among others all corporations and
certain foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 of the
Letter of Transmittal.
Other Requirements. The Purchaser's acceptance for payment of Shares
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering stockholder and the
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<PAGE> 11
Purchaser upon the terms and subject to the conditions of the Offer, including
the tendering stockholder's representation and warranty that the stockholder is
the holder of the Shares within the meaning of, and that the tender of the
Shares complies with, Rule 14e-4 under the Exchange Act.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless theretofore accepted
for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after August 14, 1999. If the Purchaser extends the Offer, is delayed in
its acceptance for payment of Shares or is unable to purchase Shares validly
tendered pursuant to the Offer for any reason, then without prejudice to the
Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf
of the Purchaser, retain tendered Shares and such Shares may not be withdrawn
except to the extent that tendering stockholders are entitled to withdrawal
rights as described in this Section 4. Any such delay in acceptance for payment
will be accompanied by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If Share Certificates to be withdrawn have been delivered
or otherwise identified to the Depositary, then prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signatures on the notice of withdrawal must
be guaranteed by an Eligible Institution unless such Shares have been tendered
for the account of any Eligible Institution. If Shares have been tendered
pursuant to the procedure for book-entry transfer as set forth in Section 3, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. The Purchaser
reserves the absolute right to reject any and all withdrawals determined by it
not to be in proper form. The Purchaser also reserves the absolute right to
waive any defect or irregularity in any withdrawal of Shares of any particular
stockholder whether or not similar defects or irregularities are waived in the
case of the other stockholders. No withdrawal of Shares will be deemed to have
been validly made until all defects and irregularities have been cured or
waived. None of the Purchaser, the Parent, any of their affiliates or assigns,
the Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following is a discussion
of the material United States federal income tax consequences relating to the
sale or exchange of Shares pursuant to the Offer and/or the Merger. Unless
otherwise indicated, this summary deals only with U.S. Stockholders (as defined
below) who hold their Shares as capital assets. This discussion is based on the
Internal Revenue Code of 1986, as amended (the "Code"), the proposed, temporary
and final Treasury regulations promulgated thereunder, and any relevant
administrative rulings or pronouncements or judicial decisions, all as in effect
on the date hereof and all of which are subject to change, possibly with
retroactive effect. This discussion does not address all of the tax consequences
that may be relevant to a particular Stockholder in light of that Stockholder's
specific circumstances, nor does it discuss the U.S. federal income tax
consequences that may be applicable to certain types of Stockholders, such as
Stockholders who have received their Shares pursuant to the exercise of employee
stock options or otherwise as compensation, dealers in securities, financial
institutions, tax-exempt entities, life insurance companies, persons holding
their Shares as a part of a hedging, integrated, conversion or
8
<PAGE> 12
constructive sale transaction or as part of a straddle, or persons whose
functional currency is not the U.S. dollar, who may be subject to special rules
and/or limitations under the Code which are not discussed below. In addition,
the following discussion does not discuss the alternative minimum tax
consequences, if any, of the sale or exchange of Shares pursuant to the Offer or
the Merger, or the state, local or foreign tax consequence of such sale or
exchange of Shares.
For purposes of this discussion, (i) the term "Stockholder" refers to a
beneficial owner of Shares, (ii) the term "U.S. Stockholder" means a Stockholder
who is (a) a citizen or resident of the United States, (b) a corporation or
partnership created or organized in the United States or under the laws of the
United States or any political subdivision thereof, (c) an estate the income of
which is subject to United States federal income taxation regardless of its
source or (d) a trust that (x) is subject to the supervision of a court within
the United States and the control of one or more United States persons (as
defined in Section 7701 (a)(30) of the Code) or (y) has a valid election in
effect under applicable United States Treasury regulations to be treated as a
United States person and (iii) the term "Non-U.S. Stockholder" means a
Stockholder who is not a U.S. Stockholder. ALL STOCKHOLDERS SHOULD CONSULT WITH
THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND
THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE
MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS AND
CHANGES IN SUCH TAX LAWS.
The sale or exchange of Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes. A tendering U.S.
Stockholder generally will recognize gain or loss on such sale or exchange of
Shares in an amount equal to the difference between the cash received by such
U.S. Stockholder pursuant to the Offer or the Merger and the U.S. Stockholder's
adjusted tax basis in the Shares exchanged therefor. Gain or loss will be
calculated separately for each block of Shares (i.e., Shares acquired at the
same cost in a single transaction) tendered and purchased pursuant to the Offer
or converted in the Merger, as the case may be. For federal income tax purposes,
such gain or loss generally will be capital gain or loss and generally will be
long-term capital gain or loss if the relevant U.S. Stockholder held its Shares
for more than one year as of the date the Purchaser accepts such Shares for
payment pursuant to the Offer or as of the effective date of the Merger, as the
case may be. The long-term capital gains of individuals, estates and certain
trusts generally are eligible for reduced rates of taxation. Capital losses
generally must be used only to offset capital gains.
Any gain realized by a Non-U.S. Stockholder upon the sale or exchange of
Shares pursuant to the Offer and/or the Merger generally will not be subject to
U.S. federal income or withholding tax unless (i) such gain is effectively
connected with a U.S. trade or business conducted by the Non-U.S. Stockholder in
the United States, (ii) in the case of a Non-U.S. Stockholder who is an
individual, such individual is present in the United States for 183 days or more
in the taxable year during which the Purchaser accepts such Shares for payment
pursuant to the Offer or which includes the effective date of the Merger, as the
case may be, and certain other conditions are met, or (iii) in the case of a
Non-U.S. Stockholder who directly, indirectly or constructively owns more than
5% of the Shares at any time during the five year period ending on the date the
relevant Shares are disposed of, the Company is or has been a "U.S. real
property holding corporation" within the meaning of Section 897(c)(2) of the
Code (which the Company does not expect to be the case).
6. PRICE RANGE OF SHARES; DIVIDENDS. According to the Company's 1998 Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 (the "1998
Annual Report"), the Shares are listed and traded on the Nasdaq National Market
("Nasdaq") under the symbol "APCO." The following table sets forth, for the
quarters indicated, the high and low sales prices per Share on Nasdaq with
respect to periods occurring in
9
<PAGE> 13
1997, 1998 and 1999 as reported by the Dow Jones News Service. According to the
1998 Annual Report, the Company has not paid any dividends on the Shares.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1997:
First Quarter............................................. $ 5.00 $3.38
Second Quarter............................................ 4.00 3.19
Third Quarter............................................. 5.38 3.50
Fourth Quarter............................................ 7.63 4.75
YEAR ENDED DECEMBER 31, 1998:
First Quarter............................................. 13.50 6.00
Second Quarter............................................ 14.94 9.00
Third Quarter............................................. 11.50 5.00
Fourth Quarter............................................ 11.88 5.06
YEAR ENDED DECEMBER 31, 1999:
First Quarter............................................. 13.88 7.69
Second Quarter (through June 15, 1999).................... 13.25 7.50
</TABLE>
On June 10, 1999, the last full trading day prior to announcement of the
Offer, the closing sale price per Share reported on Nasdaq was $13.19. On June
15, 1999, the last full trading day before commencement of the Offer, the
closing sale price per Share reported on Nasdaq was $12.78. STOCKHOLDERS ARE
URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including financial
information, has been taken from or based upon publicly available documents and
records on file with the Commission and other public sources. The summary
information concerning the Company in this Section 7 and elsewhere in this Offer
to Purchase is derived from the Company's 1998 Annual Report, the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (the "1999
Quarterly Report") and other publicly available information. The summary
information set forth below is qualified in its entirety by reference to such
reports (which may be obtained and inspected as described below) and should be
considered in conjunction with the more comprehensive financial and other
information in such reports and other publicly available reports and documents
filed by the Company with the Commission and other publicly available
information. Although the Purchaser and the Parent do not have any knowledge
that would indicate that any statements contained herein based upon such reports
are untrue, neither the Purchaser nor the Parent assumes any responsibility for
the accuracy or completeness of the information contained therein, or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information but which are unknown to
the Purchaser and the Parent.
General. The Company was incorporated under the laws of the State of
Georgia in 1984. The Company is engaged principally in the marketing and
administration of extended vehicle service contracts and extended vehicle
warranty programs sold by automobile and recreational vehicle dealers located
throughout the United States. A subsidiary of the Company also provides
insurance brokerage services to the automotive industry.
The Company's principal executive offices are located at 15 Dunwoody Park
Drive, Suite 100, Atlanta, Georgia 30338. The telephone number of the Company at
such offices is (770) 394-7070.
Financial Information. Set forth below is certain selected consolidated
financial data for the Company which was derived from the 1998 Annual Report and
the 1999 Quarterly Report. More comprehensive financial information is included
in the reports (including management's discussion and analysis of financial
condition and results of operations) and other documents filed by the Company
with the Commission, and the following financial data is qualified in its
entirety by reference to such reports and other documents including the
financial information and related notes contained therein. Such reports and
other documents may be examined and copies thereof may be obtained from the
offices of the Commission and Nasdaq in the manner set forth below.
10
<PAGE> 14
AUTOMOBILE PROTECTION CORPORATION -- APCO
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, FISCAL YEAR ENDED DECEMBER 31,
------------------ ------------------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
(UNAUDITED) (AUDITED)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Total revenues.............................. $30,836 $25,814 $119,954 $93,935 $67,208
Income before provision for income taxes and
cumulative effect of accounting change... $ 2,793 $ 2,171 $ 10,488 $ 6,531 $ 2,527
Net income.................................. $ 1,762 $ 1,368 $ 6,606 $ 4,051 $ 1,564
Basic earnings per share.................... $ 0.15 $ 0.12 $ 0.57 $ 0.38 $ 0.16
Weighted average number of shares
outstanding.............................. 11,862 11,207 11,584 10,760 10,078
Diluted earnings per share.................. $ 0.14 $ 0.11 $ 0.53 $ 0.35 $ 0.14
Weighted average number of shares
outstanding (on a diluted basis)......... 12,796 12,287 12,508 11,584 10,980
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
------------------ ------------------
1999 1998 1998 1997
---- ---- ---- ----
(UNAUDITED) (AUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA
Working capital............................. $33,404 $24,152 $31,366 $21,034
Total assets................................ $60,290 $46,788 $55,518 $39,315
Total liabilities........................... $22,533 $19,487 $20,110 $15,040
Shareholders' equity........................ $37,757 $27,301 $35,408 $24,275
</TABLE>
The Shares are registered under the Exchange Act. Accordingly, the Company
is subject to the informational filing requirements of the Exchange Act and in
accordance therewith is obligated to file periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the Company's
directors and officers, their remuneration, options granted to them, the
principal holders of the Company's securities and any material interest of such
persons in transactions with the Company. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and should also be available for inspection and copying
at prescribed rates at the regional offices of the Commission located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and Seven World Trade Center, Suite 1300, New York, New York 10048. Such
reports, proxy statements and other information may also be obtained at the Web
site that the Commission maintains at http://www.sec.gov. Copies of this
material may also be obtained by mail, upon payment of the Commission's
customary fees, from the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. Such materials should also be available for
inspection at the library of Nasdaq, 1735 K Street, N.W., Washington, D.C.
20006.
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT. The
Purchaser, a Georgia corporation and a wholly owned subsidiary of the Parent,
was organized in connection with the Offer and the Merger and has not carried on
any activities to date other than those incident to its formation and the
commencement of the Offer. Both the Purchaser and the Parent have their
principal executive offices at The American Road, Dearborn, Michigan 48121. The
telephone number for the Parent and the Purchaser is (313) 322-3000.
The Parent, a Delaware corporation, is the world's largest producer of
trucks and the second largest producer of cars and trucks combined. The Parent
and its subsidiaries also engage in other businesses, such as manufacturing
automotive components and systems and financing and renting vehicles and
equipment.
11
<PAGE> 15
The name, citizenship, business address, present principal occupation or
employment, and five year employment history of each of the directors and
executive officers of the Purchaser and the Parent are set forth in Schedule I
hereto.
The Parent is subject to the informational filing requirements of the
Exchange Act and in accordance therewith is obligated to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. The Parent is required to
disclose in such proxy statements certain information, as of particular dates,
concerning the Parent's directors and officers, their remuneration, options
granted to them, the principal holders of the Parent's securities and any
material interest of such persons in transactions with the Parent. Such reports,
proxy statements and other information should be available for inspection at the
public reference facilities of the Commission located in Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and should also be available for
inspection and copying at prescribed rates at the regional offices of the
Commission located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New
York 10048. Such reports, proxy statements and other information may also be
obtained at the Web site that the Commission maintains at http://www.sec.gov.
Copies of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. Such materials should also be available
for inspection at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
Except as described in this Offer to Purchase, neither the Purchaser nor
the Parent nor, to their best knowledge, any of the persons listed on Schedule I
hereto or any associate or majority-owned subsidiary of the Purchaser or the
Parent or any of the persons so listed, beneficially owns or has a right to
acquire directly or indirectly any Shares, and neither the Purchaser nor the
Parent nor, to their best knowledge, any of the persons or entities referred to
above, or any of the respective executive officers, directors or subsidiaries of
any of the foregoing, has effected any transactions in the Shares during the
past 60 days.
9. SOURCE AND AMOUNT OF FUNDS. The aggregate amount to be paid to effect
the Offer and the Merger (including the payments of fees and expenses related
thereto) will be approximately $180 million. The Purchaser has not conditioned
its obligation to accept for payment and pay for Shares pursuant to the Offer on
obtaining financing. The Purchaser expects to obtain all funds needed for the
Offer and the Merger from the Parent by means of a capital contribution. The
Parent will obtain such funds from its cash on hand.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. In mid-November
1998, a representative of the Parent contacted Larry I. Dorfman, Chief Executive
Officer and President of the Company, by telephone regarding a potential
business relationship between the Parent and the Company. These persons agreed
to meet in person to pursue further discussions.
Representatives of the Parent met with representatives of the Company in
early December 1998 to continue the brief discussions held in November 1998. In
advance of this meeting, the Company and the Parent signed a confidentiality
agreement. At this meeting, the parties held broad-ranging discussions
concerning the business of the Company and a number of types of relationships
the two companies could pursue, ranging from cooperation on various products to
an acquisition, as well as the business of the Company generally. On December
11, 1998, representatives of the Parent informed the Company that the Parent was
interested in exploring an acquisition of the Company. The Company indicated
that it had been involved in discussions with another potential acquiror and was
subject to an exclusivity agreement that would have to be terminated before any
acquisition discussions with the Parent could take place.
In late January 1999, the Company informed the Parent that it had broken
off talks with the potential acquiror and that no formal offer had been made.
The Company indicated that it had terminated its agreement with the potential
acquiror and that it was interested in engaging in further discussions with the
Parent for the purpose of an acquisition. Thereafter on January 26, 1999,
representatives of the Parent met with representatives of the Company at the
Company's offices in Atlanta, Georgia. At this meeting, the parties discussed in
general terms the Company's business and financial condition. The parties held
initial discussions concerning potential values for the Company. Representatives
of the Parent also indicated that it was likely that the
12
<PAGE> 16
Parent would desire that certain members of management of the Company enter into
employment agreements to remain employed with the Company following any
acquisition.
During February and March of 1999, representatives of the Parent continued
to discuss the possibility of an acquisition of the Company and commenced its
due diligence investigation of the Company. On several occasions members of the
Parent's legal staff, Parent's customer service division and outside consultants
retained by the Parent visited the Company to conduct legal and business due
diligence.
On March 16, 1999, the Company Board met to review the status of
management's discussions with the Parent. No representatives of the Parent were
present at the Company Board meeting. Members of management of the Company gave
to the Company Board a detailed presentation concerning the potential terms and
structure of an acquisition of the Company by the Parent and the due diligence
that had been performed by the Parent to that point in time. The Company Board
authorized management of the Company to continue to pursue with the Parent the
terms of a potential acquisition of the Company. Following such Company Board
meeting, representatives of the Company and the Parent discussed various issues
related to the Parent's proposal to acquire the Company. Representatives of the
Parent indicated that a condition of its proposal was that Mr. Dorfman and
Martin J. Blank, the Company's Chairman and Chief Operating Officer, commit to
three-year employment agreements with the post-acquisition entity, and the
parties discussed the general terms of the employment, including compensation
levels, duties, non-competition and similar terms and other provisions.
In late March 1999, representatives of the Parent, the Company, Simpson
Thacher & Bartlett, counsel to Parent, and Graubard Mollen & Miller, counsel to
the Company, held a conference call to discuss the structure of a potential
acquisition. During this call, the Parent expressed its desire that Messrs.
Dorfman and Blank enter into agreements to support the transaction in their
capacities as significant shareholders of the Company and that the Company enter
into the Company Option Agreement.
Following this discussion, drafts of the Merger Agreement and the related
agreements were provided to the Company and Graubard Mollen & Miller.
During April and May 1999, the Parent continued its business and legal due
diligence. The Company provided copies of documentation essential to its
business, reviewed with the representatives of the Parent the terms of its
products, marketing arrangements and related legal filings and provided a review
of an actuarial study of the Company's underwriting data prepared by Tillinghast
& Company.
On May 14, 1999, after the Parent's due diligence reached an advanced
stage, senior management of the Parent considered the proposed transaction and
authorized negotiation of definitive terms for the acquisition, subject to
further approval and final approval by the Board of Directors of the Parent. On
May 17, representatives of the Parent indicated to the Company that the Parent
was interested in an acquisition of the Company at a price not to exceed $13.00
per share, subject to further due diligence, the negotiation of definitive
acquisition and related agreements and approval by the Parent's Board.
Thereafter, the Parent and the Company continued to discuss various due
diligence matters and the terms of the proposed acquisition.
On May 24, 1999 and again on June 2, 1999, representatives of the Parent
and its counsel met at the offices of Simpson Thacher & Bartlett with members of
senior management of the Company and the Company's counsel to discuss and
negotiate the Merger Agreement and the related agreements. The parties continued
to discuss the terms of such agreements during early June.
The Company Board held a meeting at the offices of the Company on June 9,
1999, at which it discussed the course of discussions between the parties to
date and the terms of the Offer and the Merger Agreement and the related
agreements. At this meeting, the Company Board received a presentation from
Robinson-Humphrey, financial advisors to the Company, concerning the financial
terms and effects of the transaction. At this time, the Company Board did not
approve the Offer or the Merger Agreement and related agreements, but did
authorize the officers of the Company to negotiate final terms of the Offer and
the Merger Agreement and related agreements. The Company Board resolved to hold
a subsequent meeting to consider the finalized terms of the agreements and a
formal offer approved by the Parent's Board of Directors.
13
<PAGE> 17
Following such meeting, representatives of the parties held several
telephone conferences in which the terms of the Merger Agreement and the related
agreements were finalized.
In the morning of June 10, 1999, the Board of Directors of the Parent
considered the acquisition of the Company and the terms of the Offer and the
Merger. The Board of Directors of Parent approved the acquisition of the Company
at a price of $13.00 per share. Following such meeting, a representative of the
Parent telephoned Mr. Blank to inform him that the Parent's Board had approved
the transaction.
The Company Board held a meeting later that day and reviewed the final
agreements relating to the Offer. Robinson-Humphrey rendered its opinion to the
Company Board that the consideration to be received by shareholders of the
Company in the Offer and the Merger is fair to such shareholders from a
financial point of view. The changes made to the agreements since the June 9
meeting were discussed, and the Company Board approved the Offer, the Merger and
the terms of the Merger Agreement and the related agreements in their final
form.
Shortly thereafter on June 10, 1999, the parties executed the Merger
Agreement and the related agreements and announced the transaction by joint
press release.
11. THE MERGER AGREEMENT; THE STOCK OPTION AND TENDER AGREEMENTS; THE
COMPANY OPTION AGREEMENT. The following is a summary of the Merger Agreement,
the Stock Option and Tender Agreements and the Company Option Agreement, which
summaries are qualified in their entirety by reference to the Merger Agreement,
the Stock Option and Tender Agreements and the Company Option Agreement. The
Offer, the Merger and the other transactions contemplated by the Merger
Agreement, the Stock Option and Tender Agreements and the Company Option
Agreement are referred to herein collectively as the"Transactions." The Company
has also entered into employment agreements with Martin J. Blank and Larry I.
Dorfman which are described in the Schedule 14D-9.
The Offer. The Merger Agreement provides for the commencement of the Offer
as soon as practicable but in no event later than five business days after the
date of the execution of the Merger Agreement. The obligation of the Purchaser
to accept for payment and pay for any Shares tendered pursuant to the Offer is
subject to the satisfaction or waiver (to the extent permitted by the Merger
Agreement) of the conditions set forth in Section 15 (the"Offer Conditions").
The Purchaser may waive any such condition in whole or in part and make any
other changes in the terms and conditions of the Offer, subject to the terms of
the Merger Agreement.
Under the terms of the Merger Agreement, however, without the consent of
the Company, the Purchaser will not reduce the number of Shares subject to the
Offer, reduce the price per Share to be paid pursuant to the Offer, modify or
add to the conditions of the Offer in any manner adverse to the holders of the
Shares, change the form of consideration payable in the Offer or, except as
otherwise provided in the Merger Agreement, extend the Offer. The Purchaser
shall have no obligation to pay interest on the purchase price of tendered
Shares, including in the event the Purchaser exercises its right to extend the
period of time during which the Offer is open. The rights reserved by the
Purchaser in this paragraph are in addition to the Purchaser's rights to
terminate the Offer pursuant to Section 15. The Merger Agreement provides that,
subject to the terms and conditions of the Offer and the Merger Agreement and
the satisfaction or waiver (to the extent permitted) of all the conditions to
the Offer as of the Expiration Date, the Purchaser will pay for all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the Expiration Date, provided the Purchaser may (i) extend the Offer, if
at the scheduled expiration date of the Offer any of the conditions to the
Purchaser's obligation to purchase the Shares are not satisfied, until such time
as such conditions are satisfied or waived, (ii) extend the Offer for a period
of not more than ten business days beyond the initial expiration date of the
Offer, if on the date of such extension less than 90% of the outstanding Shares
have been validly tendered and not properly withdrawn pursuant to the Offer,
(iii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Commission or the staff thereof applicable to
the Offer, (iv) extend the Offer in order to provide sufficient time for the
Parent to respond to any supplement or amendment to the disclosure delivered by
the Company to the Parent in accordance with
14
<PAGE> 18
the terms of the Merger Agreement or (v) extend the Offer for any reason for a
period of not more than ten business days beyond the latest expiration date that
would otherwise be permitted.
Composition of the Board of Directors After the Offer. The Merger Agreement
provides that, promptly upon the acceptance for payment of the Shares to be
purchased pursuant to the Offer, the Purchaser shall be entitled to designate
such number of directors on the Company Board (and on each committee of the
Company Board and on each board of directors of each subsidiary of the Company
designated by the Parent) as will give the Purchaser representation on the
Company Board (or such committee or subsidiary board of directors) equal to at
least that number of directors, rounded up to the next whole number, which is
the product of (a) the total number of directors on the Company Board (or such
committee or subsidiary board of directors) giving effect to the directors
appointed or elected pursuant to this sentence multiplied by (b) the percentage
that (i) such number of Shares so accepted for payment and paid for by the
Purchaser plus the number of Shares otherwise owned by the Purchaser or any
other subsidiary of the Parent bears to (ii) the number of Shares outstanding,
and the Company shall, at such time, cause the Purchaser's designees to be so
appointed or elected. The Company shall take all actions necessary to cause the
persons designated by the Parent to be directors on the Company Board (or a
committee of the Company Board or the board of directors of a subsidiary of the
Company designated by the Parent) pursuant to the preceding sentence to be so
appointed or elected (whether, at the request of the Parent, by means of
increasing the size of the Company Board (or such committee or subsidiary board
of directors) or seeking the resignation of directors and causing the Parent's
designees to be appointed or elected). The Purchaser intends, subject to
applicable law, to effect the foregoing changes upon acceptance for payment of
Shares pursuant to the Offer.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof (and including those described in Section 15) and in
accordance with the GBCC, at the Effective Time, the Purchaser shall be merged
with and into the Company. Following the Merger, the separate corporate
existence of the Purchaser shall cease and the Company shall continue as the
surviving corporation. However, the Parent may elect at any time prior to the
Merger, instead of merging Purchaser into the Company as provided above, to
merge the Company with and into Purchaser. In addition, at the Parent=s
election, any direct or indirect subsidiary or other affiliate the Parent may be
substituted for the Purchaser as a constituent corporation in the Merger.
Certificate of Incorporation, By-laws, Directors and Officers After the
Merger. The Merger Agreement provides that the articles of incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, shall be the
articles of incorporation of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law; provided, however, that
such articles of incorporation shall be amended to change the name of the
Surviving Corporation to the name of the Company. At the Effective Time, the
by-laws of the Purchaser shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law. The
Merger Agreement further provides that the directors of the Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation and shall hold office until their respective successors
are duly elected and qualified, or their earlier resignation or removal. The
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected and qualified, or their earlier
resignation or removal.
Conversion of Shares. Pursuant to the Merger Agreement, at the Effective
Time, each Share issued and outstanding immediately prior to the Effective Time
(other than any Shares owned by the Company or any of its subsidiaries, the
Parent or the Purchaser, which Shares, by virtue of the Merger, shall be
canceled and retired and shall cease to exist with no payment being made with
respect thereto, and other than Dissenting Shares) shall be converted into the
right to receive in cash the Merger Consideration, payable to the holder thereof
without interest, upon surrender of the certificate formerly representing such
Share.
Treatment of Stock Options. The Merger Agreement provides that, as soon as
practicable following the date of the Merger Agreement, the Company Board (or,
if appropriate, any committee administering the stock option or equity plans of
the Company (the "Company Stock Plans")) shall adopt such resolutions or take
such other actions as are required to adjust the terms of all outstanding
Company Employee Stock
15
<PAGE> 19
Options and Potential Stock Options to provide that, and shall offer to
substantially all holders of Third Party Stock Options to amend such options so
that, each such option outstanding immediately prior to the Effective Time shall
be canceled on the date following the Effective Time in exchange for a cash
payment by the Company to be made on such date of an amount equal to (i) the
excess, if any, of (x) the price per share of Company Common Stock to be paid
pursuant to the Offer over (y) the exercise price per share of Company Common
Stock subject to such option, multiplied by (ii) the number of Shares for which
such option shall not theretofore have been exercised, subject to certain
exceptions and conditions as described in the Merger Agreement.
Dissenting Shares. The Merger Agreement provides that Shares outstanding
immediately prior to the Effective Time and held by any person who is entitled
to demand and properly demands payment of the fair value of such Shares pursuant
to, and who complies in all respects with, Article 13 of the GBCC ("Dissenters'
Shares") shall not be converted into the Merger Consideration, but rather the
holders thereof shall be entitled to payment of the fair value of such
Dissenters' Shares in accordance with Article 13 of the GBCC; provided, however,
that if any such holder shall fail to perfect or otherwise shall waive, withdraw
or lose the right to receive payment of fair value under Article 13 of the GBCC,
then the right of such holder to be paid the fair value of such holder's
Dissenters' Shares shall cease and such Dissenters' Shares shall be treated as
if they had been converted as of the Effective Time into the Merger
Consideration. The Company shall serve prompt notice to the Parent of any
demands received by the Company for appraisal of any Shares, attempted
withdrawals of any such demands and any other documents received in connection
with any assertion of rights to payment of fair value under Article 13 of the
GBCC and the Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of the Parent, make any payment with
respect to, or settle or offer to settle, any such demands, or agree to do any
of the foregoing. See Section 12.
Conduct of Business Pending the Merger. The Company has agreed that, during
the period from the date of the Merger Agreement to the Effective Time, except
pursuant to the terms of the Merger Agreement, the Company shall, and shall
cause each of its subsidiaries to conduct its business in the usual, regular and
ordinary course in substantially the same manner as previously conducted and use
its commercially reasonable efforts to preserve intact its current business
organization, keep available the services of its officers and employees and
maintain its relationships with customers, suppliers, licensors, licensees,
distributors and agents and others having business dealings with them.
Without limiting the generality of the foregoing and except as otherwise
expressly permitted by the Merger Agreement, the Company has agreed that the
Company and its subsidiaries shall refrain from taking various actions without
the Parent's prior written consent until the Effective Time. These prohibitions
cover, among other things, declaring or paying any dividend or other
distribution, making changes in their capital stock, purchasing, redeeming or
acquiring any shares of capital stock of the Company or any subsidiary of the
Company, adopting a plan of complete or partial dissolution or liquidation,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its subsidiaries, authorizing for issuance, issuing,
delivering, selling or granting their capital stock, voting debt securities,
other voting securities, any securities convertible into or exchangeable for, or
any options warrants or rights to acquire any such shares or securities or any
"phantom" stock rights, other than the issuance of Shares pursuant to existing
options, making changes to their organizational documents, engaging in any
material corporate transaction, increasing the compensation or benefits to
directors, officers and current or former employees (except salary increases for
non-officer employees in the ordinary course of business consistent with past
practice), increasing any severance or termination pay, other than employment
agreements approved by the Parent, entering into or amending any employment,
consulting, indemnification, severance or termination agreements with any
present or former employee, officer or director, establishing, adopting,
entering into or amending in any material respect any collective bargaining
agreement or Company benefit plan, loan or advance money in excess of certain
limits to any present or former employee, officer or director, changing
accounting or tax policies, selling, licensing or otherwise disposing of or
permitting any properties or assets to become subject to any lien, other than
certain permitted liens, incurring debt or guaranteeing debt, except for short
term borrowing in the ordinary course of business consistent with past practice,
making any loans, advances or capital contributions
16
<PAGE> 20
or investments in any other person other than to the Company or any subsidiary
of the Company, making capital expenditures beyond specified limits, paying or
discharging any claims, liabilities or obligations outside the ordinary course
of business consistent with past practice, canceling any material indebtedness,
waiving the benefits of or modifying any confidentiality, standstill or similar
agreement, amending or entering into certain material contract and taking any
actions that would make any of the representations and warranties of the Company
contained in the Merger Agreement untrue and incorrect or result in any of the
Offer Conditions not being satisfied.
No Solicitation. The Merger Agreement provides that, except as permitted in
the next paragraph:
(a) the Company and the subsidiaries of the Company shall not, and
shall use commercially reasonable efforts to cause each of its directors,
officers, employees, agents, or representatives not to, directly or
indirectly, (i) encourage, solicit, initiate, engage or participate in
negotiations, or enter into any agreement with any person or entity (other
than the Parent or the Purchaser) concerning any tender offer or exchange
offer, proposal for a tender offer, exchange offer, merger, consolidation,
recapitalization or other business combination involving the Company or any
subsidiary of the Company, any proposal for the issuance by the Company of
a material amount of its equity securities as consideration for the assets
or securities of another person or any proposal or offer to acquire in any
manner, directly or indirectly, a material equity interest in, any voting
securities of, or a substantial portion of the assets of, the Company or
any subsidiary of the Company, other than the Offer, the Merger and the
other Transactions (a "Company Takeover Proposal"), or (ii) take any other
action intended or designed to facilitate the efforts of any person or
entity (other than the Parent or the Purchaser) relating to a possible
Company Takeover Proposal, and
(b) neither the Company Board nor any committee thereof shall withdraw
or modify, or propose to withdraw or modify, in a manner adverse to the
Parent or the Purchaser, the approval or recommendation by the Company
Board or any such committee of the Merger Agreement, the Offer or the
Merger.
The Merger Agreement also provides that any violation of the restrictions
set forth in the preceding sentences by any officer of the Company or any
subsidiary of the Company or any affiliate, director or investment banker,
attorney or other advisor or representative of the Company or any subsidiary of
the Company, whether or not such person is purporting to act on behalf of the
Company or any subsidiary of the Company or otherwise, shall be deemed to be a
breach by the Company. The Company has agreed to cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted prior to the date of the Merger Agreement with respect to any Company
Takeover Proposal.
Notwithstanding the foregoing, in the event that the Company receives a
Company Takeover Proposal that did not result from a breach of the foregoing
restrictions, the Company and each subsidiary of the Company, at their
discretion, shall be permitted to (i) furnish to and communicate with the party
making such Company Takeover Proposal any information (subject to a customary
confidentiality agreement) and otherwise negotiate with such party or (ii)
withdraw or modify its approval or recommendation of the Merger Agreement, the
Offer or the Merger, in each case, only if two business days prior written
notice shall have been given to the Parent and (A) the Company Board shall have
been advised in writing by its investment banker that it believes the party
making the Company Takeover Proposal is financially capable of consummating such
Company Takeover Proposal, which proposal does not have any financing
contingency, (B) the Company Board shall have been reasonably advised in
writing, by outside counsel to the Company, that any failure to provide such
information to the party or withdraw or modify such approval or recommendation,
respectively, would be reasonably likely to constitute a breach of the fiduciary
duties of the Company Board to the stockholders of the Company and (C) the
Company Board, after weighing such advice, determines in good faith that failing
to furnish such information or withdraw or modify such approval or
recommendation, respectively, would constitute a breach of its fiduciary duties
to the stockholders of the Company. In addition, if the Board of Directors of
the Company receives an unsolicited Company Takeover Proposal or any inquiry
with respect to or which could lead to any Company Takeover Proposal, then the
Company shall promptly inform the Parent orally and in writing of such proposal
and the identity of the person making it. The Merger Agreement also provides
that the Company shall keep the Parent fully informed of
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<PAGE> 21
significant developments including any change to the terms of any such Company
Takeover Proposal or inquiry.
Preparation of Proxy Statement; Stockholders Meeting. The Merger Agreement
provides that if required, the Company shall, as soon as practicable following
the Expiration Date, (i) duly call, give notice of, convene and hold a meeting
of its stockholders for the purpose of seeking from the holders of the majority
of the Shares approval of the Merger Agreement ("Company Stockholder Approval"),
(ii) prepare and file with the Commission a proxy statement relating to the
Merger and the Merger Agreement and use its commercially reasonable efforts to
respond as promptly as practicable to any comments made by the Commission with
respect to the proxy statement and cause a definitive proxy statement (the
"Proxy Statement") to be mailed to its stockholders. The Company shall, through
the Company Board, recommend to its stockholders that they give Company
Stockholder Approval, except to the extent that the Company Board shall have
withdrawn or modified its approval or recommendation of the Merger Agreement,
the Offer or the Merger in accordance with the terms of the Merger Agreement.
Pursuant to the Merger Agreement, the Parent also agrees that it will vote, or
cause to be voted, all of the Shares then owned by it, the Purchaser or any of
its other subsidiaries in favor of the approval of the Merger Agreement.
The Merger Agreement provides that, notwithstanding the foregoing, in the
event that the Purchaser or any other subsidiary of the Parent shall acquire at
least 90% of the outstanding Shares, the parties shall, at the request of the
Parent, take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
stockholders meeting in accordance with Section 1104 of the GBCC.
Access to Information. Pursuant to the Merger Agreement, the Company shall,
and shall cause each of its subsidiaries to, afford to the Parent and to the
Parent's officers, employees, accountants, counsel, financial advisors and other
representatives reasonable access during normal business hours during the period
prior to the Effective Time to the books, properties, contracts, commitments,
personnel and records of the Company and its subsidiaries, and the Company
shall, and shall cause each of its subsidiaries to, furnish promptly to the
Parent (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of Federal
or state securities laws and (b) all other information concerning its business,
properties and personnel as the Parent may reasonably request.
Commercially Reasonable Efforts. The Merger Agreement provides that subject
to terms and conditions set forth in the Merger Agreement and unless, to the
extent permitted, as described above under "No Solicitation", the Company Board
approves or recommends a Company Takeover Proposal, each of the parties shall
use commercially reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Offer, the
Merger and the other Transactions.
Indemnification; D&O Insurance. The Merger Agreement provides that all
rights to indemnification for acts or omissions occurring prior to the Effective
Time now existing in favor of the current or former directors, officers or
employees of the Company and the subsidiaries of the Company as provided in
their respective certificates of incorporation or by-laws shall survive the
Merger and shall continue in full force and effect in accordance with their
terms for a period of not less than six years from the Effective Time.
The Merger Agreement further provides that the Company will, and after the
consummation of the Offer, Parent will cause the Company to maintain in effect
for not less than three years after the Effective Time, the current policies of
directors' and officers' liability insurance maintained by the Company on June
10, 1999, with respect to matters occurring through the Effective Time and
covering parties who are covered by those current policies. The Merger Agreement
further provides that, prior to consummation of the Offer, the Company will
endeavor to, and will be permitted to, satisfy its obligation to maintain the
insurance policies by extending coverage thereunder pursuant to a three year
"tail" policy, provided that the lump sum payment to purchase the coverage does
not exceed $112,500. If a "tail" policy cannot be purchased on those terms prior
to the consummation of the Offer, then the Company will be obligated under the
Merger Agreement to endeavor to obtain coverage at the lowest premium cost
reasonably available, provided that the Company will not be
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<PAGE> 22
obligated to pay annual payments that exceed 125% of the annual premium payment
in effect on the date of the Merger Agreement.
Public Announcements. The Parent, the Purchaser and the Company agree to
consult with each other before issuing, and provide each other the opportunity
to review and comment upon, any press release or other public statements with
respect to the Offer, the Merger and the other Transactions and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law, court process or any listing
agreement with any national securities exchange.
Transaction Litigation. The Merger Agreement provides that the Company
shall give the Parent the opportunity to participate fully in the conduct of the
defense or the settlement of any litigation against the Company and its
directors relating to the Offer, the Merger and the other Transactions;
provided, however, that no such settlement shall be agreed to without the
Parent's prior written consent, which shall not be unreasonably withheld.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including, but
not limited to, representations and warranties by the Company concerning the
Company's capitalization, the Board of Directors' approval of the Merger
Agreement and the transactions contemplated thereby (including approvals so as
to render inapplicable thereto the "fair price" and "business combination"
provisions contained in Parts 2 and 3 of Article 11 of the GBCC), required
filings and consents, Commission filings and financial statements, absence of
certain changes or events, tax matters, employee benefit plans, absence of
litigation, compliance with applicable laws, material contracts, real and
personal property matters, intellectual property matters, year 2000 compliance,
transactions with affiliates, environmental matters, and fees and opinions of
financial advisors and brokers. Some of the representations are qualified by the
limitation that, in order for the representation to have been breached, the
event breaching the representation must have a Material Adverse Effect. A
"Material Adverse Effect" as to the Company means a material adverse effect on
the business, assets, results of operations, financial condition or prospects of
the Company, and the subsidiaries of the Company taken as a whole, on the
ability of the Company to perform its obligations under the transaction
agreements to which it is a party or on the ability of the Company to consummate
the Offer, the Merger and the other Transactions; provided, however, that only
with respect to a material adverse effect on the prospects of the Company and
the subsidiaries of the Company, events changes, effects and developments
relating to the economy in general and not specifically relating to the Company
or the subsidiaries of the Company are not included.
Pursuant to the Merger Agreement, the Company has a continuing obligation
to promptly supplement or amend the disclosure provided to the Parent with
respect to any matter arising or discovered after the date of the Merger
Agreement which would have been required to be disclosed in order for the
representations and warranties to be true and correct; provided, however, that
if (x) the Parent consents in writing to any such supplement or amendment or
fails to respond in writing to the Company by 11:59 p.m. on the fifth full
business day following the date of receipt by the Parent of such supplement or
amendment, such supplement or amendment shall be deemed a part of the disclosure
provided by the Company or an exception to the specified representation or
warranty, as the case may be, at all future times that the representations and
warranties of the Company are required to be true and correct and (y) the Parent
responds in writing but does not consent to any such supplement or amendment,
the matter so disclosed shall be deemed a failure of the conditions to the
obligations of Parent and Sub to complete the Offer and the Merger.
Conditions of the Merger. Under the Merger Agreement, the respective
obligations of the Parent, the Purchaser and the Company to effect the Merger
are subject to the satisfaction or waiver on or prior to the date of the closing
of the Merger of the following conditions: (i) if required by law, the Company
shall have obtained Company Stockholder Approval, (ii) the waiting period (and
any extension thereof) applicable to the Merger under the HSR Act shall have
been terminated or shall have expired and any consents, approvals and filings
under any foreign antitrust law, the absence of which would prohibit the
consummation of Merger, shall have been obtained or made, (iii) no temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect, (iv) the
representations and warranties of the Parent and the
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<PAGE> 23
Purchaser or of the Company, as the case may be, that are qualified as to
materiality shall be true and those not so qualified shall be true and correct
in all material aspects, (v) each of the Parent and the Purchaser or the
Company, as the case may be, shall have performed in all material respects all
obligations required to be performed by it under the Merger Agreement or the
other transaction agreements, and (vi) there shall not be pending or threatened
in writing any suit, action or proceeding that has a reasonable likelihood of
success and seeking certain adverse remedies. In addition, the obligations of
the Parent and the Purchaser to effect the Merger are further subject to the
following conditions: (i) since the date of the most recent audited financial
statements filed by the Company with the Commission, there shall not have been
any event or development that, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect; (ii) all
required consents, approvals and filings under the Auto Warranty Laws of any
state that are required to be made or obtained prior to the Effective Time shall
have been made or obtained; (iii) the Purchaser shall have accepted for payment
Shares pursuant to the Offer and (iv) each of the employment agreements with the
Company's chief executive officer and with its chief operating officer, the
Stock Option and Tender Agreements and the Company Option Agreement shall be in
full force and effect and shall have been complied with in all material
respects.
The conditions to the Merger set forth above are different from the
conditions to the Offer which are set forth in Section 15.
Termination Events. The Merger Agreement can be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
(a) by mutual written consent of the Parent, the Purchaser and the
Company;
(b) by the Parent or the Company, if
(i) the Merger is not consummated on or before November 30, 1999
(the "Outside Date"), unless the failure to consummate the Merger is the
result of a breach of the Merger Agreement by the party seeking to
terminate the Merger Agreement; provided, however, that (A) the passage
of such period shall be tolled for any part thereof during which any
party shall be subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the consummation of the
Merger and (B) the Merger Agreement may not be terminated pursuant to
this clause (i) if the Purchaser has accepted Shares for payment
pursuant to the Offer;
(ii) any Federal, state, local or foreign government or any court
of competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (each a
"Governmental Entity") issues an order, decree or ruling or takes any
other action permanently enjoining, restraining or otherwise prohibiting
the Merger and such order, decree, ruling or other action shall have
become final and nonappealable;
(iii) (A) the Purchaser shall have failed to commence the Offer
within 30 days following the date of the Merger Agreement or (B) the
Offer shall have terminated or expired in accordance with its terms
without the Purchaser having purchased any Shares pursuant to the Offer;
provided, however, that the right to terminate the Merger Agreement
pursuant to this clause (iii) shall not be available to any party whose
failure to fulfill any of its obligations under the Merger Agreement or
the failure of whose representations and warranties to be true results
in the failure of any such condition, unless such failure to fulfill
such party's obligations follows a failure by another party to fulfill
its obligations in a manner giving rise to a right by the first party to
terminate the Merger Agreement under this clause (iii) or subparagraph
(c) or (f) below; or
(iv) upon a vote at a duly held stockholders meeting to obtain
Company Stockholder Approval, Company Stockholder Approval is not
obtained;
(c) by the Parent, if the Company breaches or fails to perform in any
material respect any of its representations, warranties, covenants or
agreements contained in the Merger Agreement, which breach or failure to
perform (i) would give rise to the failure of a condition set forth in
Section 15 or the conditions to the Parent's and the Purchaser's
obligations to effect the Merger relating to compliance with
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<PAGE> 24
representations, warranties and covenants of the Company, and (ii) cannot
be or has not been cured within 30 days after the giving of written notice
to the Company of such breach (provided that the Parent or Purchaser are
not then in material breach of any representation, warranty or covenant
contained in the Merger Agreement); provided, however, that the Merger
Agreement may not be terminated pursuant to this clause (c) if the
Purchaser has accepted Shares for payment pursuant to the Offer;
(d) by the Parent if: (i) the Company Board or any committee thereof
withdraws or modifies in a manner adverse to the Parent its approval or
recommendation of the Offer, the Merger or the Merger Agreement or fails to
recommend to the Company's stockholders that they accept the Offer or give
Company Stockholder Approval, or the Company Board or any committee thereof
resolves to take any of the foregoing actions or (ii) the Company Board
fails to reaffirm publicly and unconditionally its recommendation to the
Company's stockholders that they accept the Offer and give Company
Stockholder Approval within 10 business days of the Parent's written
request to do so (which request may be made at any time following public
disclosure of a Company Takeover Proposal), which public reaffirmation must
also include the unconditional rejection of such Company Takeover Proposal;
(e) by the Company prior to the acceptance of Shares for payment
pursuant to the Offer if (i) the Company Board has received a bona fide
proposal to consummate a Company Takeover Proposal, (ii) the Company Board
has been advised in writing by its investment banker that it believes the
party making such proposal is financially capable of consummating such
Company Takeover Proposal, which proposal does not have any financing
contingency (iii) the Company Board shall have been reasonably advised in
writing, by outside counsel to the Company, that any failure to withdraw or
modify its approval or recommendation of the Merger Agreement, the Offer or
the Merger would be reasonably likely to constitute a breach of the
fiduciary duties of the Company Board to the stockholders of the Company,
(iv) the Company Board, after weighing such advice and the terms of such
Company Takeover Proposal, shall have reasonably determined in good faith
that failing to withdraw or modify its approval or recommendation of the
Offer, the Merger and this Agreement would constitute a breach of its
fiduciary duties to stockholders of the Company, (v) the Company has
notified the Parent in writing of the foregoing determinations, (vi) at
least five business days following receipt by the Parent of such notice,
and taking into account any revised proposal made by the Parent since
receipt of such notice, such Company Takeover Proposal remains a bona fide
Company Takeover Proposal, (vii) the Company Board has again received the
advice referred to above from its financial advisor and counsel and (viii)
the Company shall have paid the Termination Fee (as defined below under
"Termination Fees") to the Parent;
(f) by the Company, if the Parent or the Purchaser breaches or fails
to perform in any material respect any of its representations, warranties,
covenants or agreements contained in the Merger Agreement, which breach or
failure to perform (i) would give rise to the failure of a condition to the
Company's obligations to effect the Merger relating to compliance with
representations, warranties and covenants of the Parent or the Purchaser,
and (ii) cannot be cured or has not been cured within 30 days after the
giving of written notice to the Parent of such breach (provided that the
Company is not then in material breach of any representation, warranty or
covenant contained in the Merger Agreement); provided, however, that the
Merger Agreement may not be terminated pursuant to this clause (f) if the
Purchaser has accepted Shares pursuant to the Offer; or
(g) if the Company breaches or fails to perform in any material
respect any of its covenants or agreements contained in the Company Option
Agreement (described below under "Company Option Agreement").
Termination Fees. The Merger Agreement provides that (i) if the Parent
terminates the Merger Agreement as described under paragraph (d) under
"Termination Events" above or the Company terminates the Merger Agreement as
described under paragraph (e) under "Termination Events" above or (ii) (A) any
person or group (as defined under Section 13(d)(3) of the Exchange Act) shall
have become the beneficial owner of more than 35% of the Shares or any person
shall have made, or proposed, communicated or disclosed in a manner which is or
otherwise becomes public prior to or during the pendency of the Offer (including
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<PAGE> 25
being known by stockholders of the Company) an intention to make a Company
Takeover Proposal, (B) the Merger Agreement is terminated (other than as
described under paragraph (a) under "Termination Events" above) and (C) within
eighteen months of such termination the Company enters into a letter of intent
or agreement in principle for a Company Takeover Proposal or a definitive
agreement to consummate a Company Takeover Proposal, or the transactions
contemplated by a Company Takeover Proposal are consummated, then, in any such
case, the Company shall pay to the Parent a cash fee in an amount equal to
$6,300,000 (the "Termination Fee").
In the event the Termination Fee is or becomes payable, the Company shall
reimburse the Parent and the Purchaser for all out-of-pocket costs, fees and
expenses, including, without limitation, the reasonable fees and disbursements
of counsel and the expenses of litigation, incurred in connection with
collecting the Termination Fee.
Stock Option and Tender Agreements. Concurrently with the execution and
delivery of the Merger Agreement, the Parent and each of the Principal Company
Stockholders entered into a Stock Option and Tender Agreement.
Pursuant to the Stock Option and Tender Agreements, each Principal Company
Stockholder agrees to validly tender (or cause the record owner of such shares
to validly tender), pursuant to and in accordance with the terms of the Offer,
as soon as practicable after commencement of the Offer but in no event later
than 2 business days prior to the then scheduled expiration date of the Offer,
all of the Shares beneficially owned by such Principal Company Stockholder and
to not withdraw such Shares from the Offer.
The Stock Option and Tender Agreements also provides that the Principal
Company Stockholders (i) will vote their Shares during the term of the Stock
Option and Tender Agreements in favor of the Merger, the Merger Agreement, the
approval of the terms thereof and all transactions contemplated thereby; against
any action or agreement that would result in a breach in any material respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or under the Stock Option and Tender
Agreement; and against any other extraordinary corporate transaction or sale or
transfer of a material amount of assets of the Company or its subsidiaries, (ii)
have granted an irrevocable proxy to the Purchaser and the Parent to vote such
Shares during the term of the Stock Option and Tender Agreements on any matter
covered by clause (i) in a manner consistent therewith, (iii) have granted an
option to the Parent to purchase all (and not less than all) of the Shares
beneficially owned by the Principal Company Stockholder upon the occurrence of
certain events (set forth below), (iv) will not directly or indirectly solicit,
facilitate, participate in or initiate any inquiries or the making of any
proposal by any person or entity (other than the Parent or any affiliate of the
Parent) which constitutes or may reasonably be expected to lead to a Company
Takeover Proposal or any sale of any Shares, and (v) will not sell, transfer,
pledge, encumber, assign or otherwise dispose of any of their Shares (except for
a limited number of Shares sold in brokers' transactions pursuant to Rule 144
under the Securities Act).
The Principal Company Stockholders have granted to the Parent an
irrevocable, unconditional option to purchase all (and not less than all) of the
Shares held by them on the terms and subject to the conditions set forth herein
(the "Stockholder Option"). The Stockholder Option may be exercised by the
Parent, at any time, commencing upon the Stockholder Option Exercise Date (as
defined below) and prior to the Stockholder Option Expiration Date (as defined
below). "Stockholder Option Exercise Date" is defined in the Stock Option and
Tender Agreements as the date, if any, on which the first of any of the
following occurs: (i) any person (including the Company or any of its
subsidiaries or affiliates) or group (as defined in Section 13(d)(3) of the
Exchange Act) other than the Parent or any of its affiliates shall have made, or
proposed, communicated or disclosed in a manner which is or otherwise becomes
public prior to or during the pendency of the Offer (including being known by
stockholders of the Company) an intention to make a Company Takeover Proposal,
(ii) it shall have been publicly disclosed or the Parent shall have otherwise
learned that beneficial ownership (determined for the purposes of this paragraph
as set forth in Rule 13d-3 promulgated under the Exchange Act) of more than 35%
of the Shares has been acquired by any person, (iii) (A) any event as a result
of which the Parent is entitled to terminate the Merger Agreement as described
under paragraph (d) under "Termination Events" above or (B) the termination of
the Merger Agreement by
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the Company as described under paragraph (e) under "Termination Events" above or
(iv) the Principal Company Stockholder or the Company shall breach or fail to
perform or comply with in any material respect certain of their significant
obligations contained in the Stock Option and Tender Agreements or the Merger
Agreement, respectively. "Stockholder Option Expiration Date" is defined in the
Stock Option and Tender Agreements as the first to occur of any of the following
dates: (i) the Effective Time of the Merger, (ii) written notice of termination
of the Stock Option and Tender Agreements by the Parent to the Principal Company
Stockholders, (iii) the termination of the Merger Agreement pursuant to
paragraph (a) or (b)(ii) as described under "Termination Events" above or (iv)
the date that is twelve months from the date of termination of the Merger
Agreement; provided that if the Option has not become exercisable on or prior to
the date of termination of the Merger Agreement, then the Stockholder Option
Expiration Date shall be the date of termination of the Merger Agreement.
Pursuant to the Stock Option and Tender Agreements, if the Parent exercises
the option, the purchase and sale of the Shares shall be at a purchase price per
Share equal to the price per Share offered by the Purchaser in the Offer, but in
any event shall not be less than the highest price paid by the Purchaser for any
Shares, if any, purchased pursuant to the Offer (the "Exercise Price"). In the
event that the Parent exercises the Stockholder Options and purchases any or all
of the Shares pursuant to such options (the "Purchased Shares") and prior to the
Expiration Date the Company enters into a definitive agreement to consummate a
Company Takeover Proposal or transactions contemplated by a Company Takeover
Proposal are consummated and the price per Share paid in such Company Takeover
Proposal exceeds the price paid for the Purchased Shares, then upon the
consummation of such Company Takeover Proposal, the Parent shall pay to the
Stockholder an amount equal to such excess multiplied by the number of Purchased
Shares.
In addition, the Stock Option and Tender Agreements provide that the
Principal Company Stockholders, subject to certain limitations, jointly and
severally shall indemnify the Parent, the Purchaser and their affiliates and
agents from liabilities and losses due to any breach by the Company of the
representations and warranties made by the Company in the Merger Agreement. The
Principal Company Stockholders have agreed to deposit a portion of the
consideration to be paid to each such Principal Company Stockholder pursuant to
the Offer and the Merger into an escrow fund for the purpose of securing such
indemnification obligations.
Each of the Principal Company Stockholders has agreed that, subject to
certain exceptions, from the date of the Stock Option and Tender Agreement and
ending on the sixth year anniversary of the Effective Time (the "Restricted
Period"), he will not, on behalf of himself, or on behalf of any other person,
company, corporation, partnership or other entity or enterprise, directly or
indirectly, as an employee, proprietor, stockholder, partner, consultant, or
otherwise, engage in any business or activity competitive with the business of
the Company, anywhere in the United States (the"Territory"), provided that the
foregoing provisions shall terminate with respect to either Principal Company
Stockholder, notwithstanding that the Restricted Period may not have terminated,
three years following the termination of such Principal Company Stockholder's
employment with Company or its successor. Each Principal Company Stockholder has
also agreed that during the Restricted Period he shall not on behalf of himself
or on behalf of any other person, company, corporation, partnership or other
entity or enterprise (except on behalf of the Company or the Surviving
Corporation), directly or indirectly, solicit employees, agents or consultants
of the Company or the Surviving Corporation to become employees, agents or
consultants for him or for such businesses to the extent such businesses are
engaged in activities that compete with the business of the Company. In
addition, during the Restricted Period, each Principal Company Stockholder has
agreed that he shall not, directly or indirectly, as employee, agent,
consultant, stockholder, director, co-partner or in any other individual or
representative capacity intentionally solicit or encourage any present or future
customer or supplier of the Company or the Surviving Corporation to terminate or
otherwise alter his, her or its relationship with the Company or the Surviving
Corporation in any manner adverse to the Company or the Surviving Corporation.
Company Option Agreement. Simultaneously with the execution of the Merger
Agreement, the Parent and the Company entered into the Company Option Agreement.
The Company Option Agreement provides for the grant by the Company to the Parent
of an irrevocable option to purchase 2,375,406 shares of Company Common Stock
("Option Shares") (representing 19.9% of the Shares outstanding on June 10,
1999) on the terms and subject to the conditions set forth in the Company Option
Agreement (the "Option") at a purchase
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price equal to $13.00 per Share. In no event, however, shall the number of
Shares for which the Option is exercisable exceed 19.9% of the issued and
outstanding Shares at the time of exercise without giving effect to the issuance
of any Option Shares. The Option may be exercised by the Parent, in whole or in
part, at any time, or from time to time, commencing upon the Company Option
Exercise Date (as defined below) and prior to the Company Option Expiration Date
(as defined below). "Company Option Exercise Date" is defined in the Company
Option Agreement as the date, if any, on which the first of any of the following
occurs: (i) any corporation (including the Company or any of its subsidiaries or
affiliates), partnership, person, other entity or group (as defined in Section
13(d)(3) of the Exchange Act) other than the Parent or any of its affiliates
shall have made, or proposed, communicated or disclosed in a manner which is or
otherwise becomes public prior to or during the pendency of the Offer (including
being known by stockholders of the Company) an intention to make a Company
Takeover Proposal, (ii) it shall have been publicly disclosed or the Parent
shall have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of more than 35% of the Shares has been acquired by any person,
(iii) (A) any event as a result of which the Parent is entitled to terminate the
Merger Agreement as described under paragraph (d) under "Termination Events"
above or (B) the termination of the Merger Agreement by the Company as described
under paragraph (e) under "Termination Events" above or (iv) the Company shall
breach or fail to perform or comply with in any material respect certain of its
significant obligations, contained in the Merger Agreement. "Company Option
Expiration Date" is defined in the Company Option Agreement as the first to
occur of any of the following dates: (i) the Effective Time of the Merger, (ii)
written notice of termination of the Company Option Agreement by the Parent to
the Company, (iii) the termination of the Merger Agreement pursuant to paragraph
(a) or (b)(ii) as described under "Termination Events," above or (iv) the date
that is twelve months from the date of termination of the Merger Agreement;
provided that if the Option has not become exercisable on or prior to the date
of termination of the Merger Agreement, then the Company Option Expiration Date
shall be the date of termination of the Merger Agreement.
The Company Option Agreement also provides that at any time after the
Company Option Exercise Date, at the request of the Parent, delivered in writing
prior to the Company Option Expiration Date, the Company (or any successor
thereto) shall repurchase from the Parent (i) the Option or any part thereof as
the Parent shall designate at a price equal to the amount, by which (A) the
Market/Offer Price (as defined below) exceeds (B) the Exercise Price, multiplied
by the number of Option Shares as to which the Option is to be repurchased and
(ii) such number of the Option Shares as Parent shall designate at a price equal
to the Market/Offer Price multiplied by the number of Option Shares so
designated. The term "Market/Offer Price" shall mean the highest of (i) the
price per Share offered or paid in any event that causes or would cause a
Company Option Exercise Date, (ii) the highest closing price for Shares during
the 30 trading days immediately preceding the date the Parent gives notice of
the required repurchase of the Option or Option shares, as the case may be, or
(iii) in the event of a sale of all or substantially all of the Company's
assets, the sum of the net price paid in such sale for such assets and the
current market value of the remaining net assets of the Company as determined by
a nationally recognized investment banking firm selected by the Parent and
reasonably acceptable to the Company, divided by the number of Shares
outstanding at the time of such sale, which determination, absent manifest
error, shall be conclusive for all purposes of the Company Option Agreement.
The Company Option Agreement provides that if the Option is exercised and
if the Parent shall request in writing, the Company shall use, subject to
certain exceptions, commercially reasonable efforts as promptly as practicable
to effect the registration under the Securities Act and any applicable state law
(a "Demand Registration") of such number of Option Shares owned by the Parent
and its subsidiaries as the Parent shall request and to keep such Demand
Registration effective for a period of not less than 180 days, unless, in the
written opinion of counsel to the Company, which opinion shall be delivered to
the Parent and which shall be satisfactory in form and substance to the Parent
and its counsel, such registration under the Securities Act is not required in
order to lawfully sell and distribute such Option Shares in the manner
contemplated by the Parent. The Company shall only have the obligation to effect
two Demand Registrations. If the Company effects a registration under the
Securities Act of Shares for its own account or for any other stockholders of
the Company (other than on Form S-4 or Form S-8, or any successor form), it
shall allow the Parent the right to
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participate in such registration (an "Incidental Registration"). Participation
by the Parent in any incidental Registration shall not affect the obligation of
the Company to effect Demand Registrations for the Parent.
In the event that the Company enters into an agreement (i) to consolidate
with or merge into any person, other than the Parent or any subsidiary of the
Parent and the Company shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any person, other than the Parent
or any subsidiary of the Parent, to merge into the Company and the Company shall
be the continuing or surviving or acquiring corporation, but, in connection with
such merger, the then outstanding Shares shall be changed into or exchanged for
stock or other securities of any other person or cash or any other property or
the then outstanding Shares shall after such merger represent less than 50% of
the outstanding shares and share equivalents of the merged or acquiring company,
or (iii) to sell or otherwise transfer all or substantially all of its assets to
any person, other than the Parent or any subsidiary of the Parent, then, and in
each such case, the agreement governing such transaction shall make proper
provision so that, unless earlier exercised by the Parent, the Option shall,
upon the consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of the Parent, of either (x) the acquiring
person or (y) any person that controls the acquiring person. The Substitute
Option shall have the same terms as the Option, provided that if the terms of
the Substitute Option cannot, for legal reasons, be the same as the Option, such
terms shall be as similar as possible and in no event less advantageous to the
Parent. The issuer of the Substitute Option shall enter into an agreement with
the Parent in substantially the same form as the Company Option Agreement
(including the terms of the Repurchase Rights and Substitute Option), which
agreement shall be applicable to the Substitute Option. The exercise price of
the Substitute Option and the number of Shares for which the Substitute Option
is exercisable would also be equitably adjusted as described in the Company
Option Agreement.
In addition, the Company Option Agreement provides that notwithstanding any
other provision of that agreement, in no event shall the Parent's Total Profit
(as defined below) exceed $6,300,000 less the amount of any Termination Fee paid
and, if it otherwise would exceed such amount, the Parent, at its sole election,
shall either (i) reduce the number of Shares subject to this Option, (ii)
deliver to the Company for cancellation Option Shares previously purchased by
the Parent, (iii) limit the payment to be received from the Company pursuant to
the Repurchase Rights, (iv) pay cash to the Company, or (v) any combination
thereof, so that the Parent's actually realized Total Profit shall not exceed
such amount after taking into account the foregoing actions. For purposes of the
Company Option Agreement, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount received by the Parent
pursuant to the Company's repurchase of the Option (or any portion thereof),
(ii) (x) the amount received by the Parent pursuant to the Company's repurchase
of Option Shares, less (y) the Parent's purchase price for such Option Shares,
(iii) (x) the net cash amounts received by the Parent pursuant to the sale of
Option Shares (or any other securities into which such Option Shares are
converted or exchanged) to any unaffiliated party, less (y) the Parent's
purchase price of such Option Shares, (iv) any amounts received by the Parent on
the transfer of the Option (or any portion thereof) to any unaffiliated party,
and (v) any amount equivalent to the foregoing with respect to the Substitute
Option.
12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY. The purpose of
the Offer is to acquire control of, and the entire equity interest in, the
Company. The Offer is being made pursuant to the Merger Agreement. As promptly
as practicable following consummation of the Offer and after satisfaction or
waiver of all conditions to the Merger set forth in the Merger Agreement, the
Purchaser intends to acquire the remaining equity interest in the Company not
acquired in the Offer by consummating the Merger.
Vote Required to Approve the Merger; Stockholder Approval. The Board of
Directors of the Company has approved and adopted the Merger and the Merger
Agreement in accordance with the GBCC. The Board will be required to submit the
Merger Agreement to the Company's stockholders for approval at a stockholders'
meeting convened for that purpose in accordance with the GBCC, except as
otherwise described in the next paragraph. If stockholder approval is required,
the Merger Agreement must be approved by the vote of the holders of a majority
of the outstanding Shares. As a result, if the Minimum Tender Condition is
satisfied, the Purchaser will have the power, which it intends to exercise, to
approve the Merger Agreement and cause the Merger to be completed without the
affirmative vote of any other stockholder.
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The Merger Agreement provides that, notwithstanding the foregoing, in the
event that the Purchaser, or any other subsidiary of the Parent shall acquire at
least 90% of the outstanding Shares, at the request of the Parent, the parties
shall take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer, without a
meeting of the Company's stockholders, in accordance with Section 1104 of the
GBCC.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY
SPECIAL MEETING OF THE COMPANY'S STOCKHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY
SUCH SOLICITATION WHICH THE PURCHASER OR THE COMPANY MAY MAKE WILL BE MADE ONLY
PURSUANT TO SEPARATE PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF
SECTION 14(A) OF THE EXCHANGE ACT.
Dissenters' Rights. Stockholders do not have dissenters' rights as a result
of the Offer. However, if the Merger is consummated, stockholders of the Company
at the time of the Merger who do not vote in favor of the Merger and satisfy
procedural requirements will have the right under the GBCC to dissent from and
demand payment of the fair value of their Shares outstanding immediately prior
to the effective date of the Merger in accordance with Article 13 of the GBCC.
Under Article 13 of the GBCC, dissenting stockholders who comply with the
applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any appreciation
or depreciation in anticipation of the Merger) and to receive payment of such
fair value. Any such judicial determination of the fair value of such Shares
could be based upon considerations other than or in addition to the price paid
in the Offer and the Merger and the market value of the Shares. In Grace
Brothers, Ltd. v. Farley Industries, Inc., the Georgia Supreme Court stated,
among other things, that "any facts which shed light on the value of the
dissenting shareholders' interests are to be considered in arriving at 'fair
value.' " Stockholders should recognize that the value so determined could be
higher or lower than the price per Share paid pursuant to the Offer or the
consideration per Share to be paid in the Merger or other similar business
combination.
While Georgia courts have held that in certain circumstances a controlling
stockholder of a corporation involved in a merger has a fiduciary duty to other
stockholders, the remedy ordinarily available to minority stockholders in a
cash-out merger is the right to the appraisal procedure described above.
However, a damages remedy or injunctive relief may be available if there is a
failure to comply with procedural requirements or with the Company's articles of
incorporation or bylaws, or if the vote required to approve the Merger is
obtained by fraudulent and deceptive means.
THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE
PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF GEORGIA LAW.
The foregoing description of the GBCC is not necessarily complete and is
qualified in its entirety by reference to the GBCC.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger following the purchase of
Shares pursuant to the Offer in which the Purchaser seeks to acquire any
remaining Shares. Rule 13e-3 should not be applicable to the Merger if the
Merger is consummated within one year after the expiration or termination of the
Offer and the price paid in the Merger is not less than the per Share price paid
pursuant to the Offer. However, in the event that the Purchaser is deemed to
have acquired control of the Company pursuant to the Offer and if the Merger is
consummated more than one year after completion of the Offer or an alternative
acquisition transaction is effected whereby stockholders of the Company receive
consideration less than that paid pursuant to the Offer, in either case at a
time when the Shares are still registered under the Exchange Act, the Purchaser
may be required to comply with Rule 13e-3 under the Exchange Act. If applicable,
Rule 13e-3 would require, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
Merger or such alternative transaction and the consideration offered to minority
stockholders in the Merger or such alternative
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transaction, be filed with the Commission and disclosed to stockholders prior to
consummation of the Merger or such alternative transaction. The purchase of a
substantial number of Shares pursuant to the Offer may result in the Company
being able to terminate its Exchange Act registration. See Section 14. If such
registration were terminated, Rule 13e-3 would be inapplicable to any such
future Merger or such alternative transaction.
Plans for the Company. It is currently expected that initially following
the purchase of Shares pursuant to the Offer the business of the Company will
continue to be operated substantially as it is currently conducted. The Parent
does not have any current plans to dispose of any businesses or other assets of
the Company or to effect any changes in its operations.
Except as described in this Offer to Purchase, neither the Purchaser nor
the Parent, or, to the best knowledge of the Purchaser and the Parent or any of
the persons listed on Schedule I have any present plans or proposals that would
relate to or result in an extraordinary corporate transaction such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries
or a sale or other transfer of a material amount of assets of the Company or any
of its subsidiaries, any material change in the capitalization or dividend
policy of the Company or any other material change in the Company's corporate
structure or business or the composition of its Board of Directors or
management.
13. DIVIDENDS AND DISTRIBUTIONS. If the Company should, on or after the
date of the Merger Agreement, split, combine or otherwise change the Shares or
its capitalization, or disclose that it has taken any such action, then without
prejudice to the Purchaser's rights under Section 15 or under the Merger
Agreement, the Purchaser may make such adjustments to the purchase price and
other terms of the Offer as it deems appropriate to reflect such split,
combination or other change.
If on or after the date of the Merger Agreement, the Company should declare
or pay any cash or stock dividend or other distribution on, or issue any rights
with respect to, the Shares that is payable or distributable to stockholders of
record on a date prior to the transfer to the name of the Purchaser or the
nominee or transferee of the Purchaser on the Company's stock transfer records
of such Shares that are purchased pursuant to the Offer, then without prejudice
to the Purchaser's rights under Section 15 or under the Merger Agreement, (i)
the purchase price payable per Share by the Purchaser pursuant to the Offer will
be reduced to the extent any such dividend or distribution is payable in cash
and (ii) any non-cash dividend, distribution (including additional Shares) or
right received and held by a tendering stockholder shall be required to be
promptly remitted and transferred by the tendering stockholder to the Depositary
for the account of the Purchaser, accompanied by appropriate documentation of
transfer. Pending such remittance or appropriate assurance thereof, the
Purchaser will, subject to applicable law, be entitled to all rights and
privileges as owner of any such non-cash dividend, distribution or right and may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by the Purchaser in its sole discretion.
14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NASDAQ LISTING AND
EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and could reduce
the number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares. Following the completion of the Offer, at
least a majority of the outstanding Shares will be owned by the Purchaser.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq
National Market. If as a result of the purchase of Shares pursuant to the Offer
or otherwise, the Shares no longer meet the requirements of the NASD for
continued inclusion in the Nasdaq or in any other tier of the Nasdaq Stock
Market and the Shares are no longer included in Nasdaq or in any other tier of
the Nasdaq Stock Market, as the case may be, the market for the Shares could be
adversely affected.
If Nasdaq were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchanges or
through other sources. The extent of the public market therefor and the
availability of such quotations would depend, however, upon such factors as the
number of stockholders and/or the aggregate
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<PAGE> 31
market value of such securities remaining at such time, the interest in
maintaining a market in the Shares on the part of securities firms, the possible
termination of registration under the Exchange Act as described below and other
factors. The Purchaser cannot predict whether the reduction in the number of
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for or marketability of the Shares or whether it
would cause future market prices to be greater or less than the Offer price.
The Shares are currently registered under the Exchange Act. The purchase of
Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange and there are fewer than 300 record
holders. The termination of the registration of the Shares under the Exchange
Act would substantially reduce the information required to be furnished by the
Company to holders of the Shares and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
stockholders' meetings and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer applicable to the
Shares. Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of the
securities pursuant to Rule 144 under the Securities Act of 1933, as amended.
If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be eligible for Nasdaq reporting. If the Shares are
eligible for deregistration under the Exchange Act following the Offer, the
Parent expects to seek to deregister the Shares under the Exchange Act.
The Shares are currently "margin securities" under the rules of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), which
has the effect, among other things, of allowing brokers to extend credit on the
collateral of such Shares for the purpose of buying, carrying, or trading in
securities ("purpose loans"). Depending upon factors similar to those described
above with respect to listing and market quotations, it is possible that,
following the Offer, the Shares might no longer constitute "margin securities"
for the purposes of the Federal Reserve Board's margin regulations and therefore
could no longer be used as collateral for purpose loans made by brokers.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term of the
Offer or the Merger Agreement, the Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-l(c) under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after the termination
or withdrawal of the Offer), to pay for any Shares tendered pursuant to the
Offer unless (i) there shall have been validly tendered and not withdrawn prior
to the expiration of the Offer that number of Shares which would represent at
least a majority of the Fully Diluted Shares, (ii) the waiting period (and any
extension thereof) applicable to the purchase of Shares pursuant to the Offer
under the HSR Act shall have been terminated or shall have expired and any
consents, approvals and filings under any foreign antitrust law, the absence of
which would prohibit the purchase of all Shares tendered pursuant to the Offer
under the HSR Act, shall have been obtained or made and (iii) all consents,
approvals and filings under the Auto Warranty Laws of any state that are
required to be made or obtained prior to the acceptance of Shares pursuant to
the Offer shall have been made or obtained. The term "Fully Diluted Shares"
means all outstanding securities entitled generally to vote in the election of
directors of the Company on a fully diluted basis, after giving effect to the
exercise, conversion or termination of all options (including any Potential
Stock Options, but excluding the option granted pursuant to the Company Option
Agreement), rights and securities exercisable or convertible into such voting
securities. The Company has represented to the Parent that as of June 10, 1999,
(i) there were 11,936,716 Shares issued and outstanding, (ii) 1,233,129 Shares
were subject to outstanding Company Employee Stock Options, (iii) 464,822 Shares
were subject to Third Party Stock Options and (iv) up to 20,000 Shares may be
issuable in respect of Potential Stock Options. Based upon the foregoing, the
Purchaser believes that 6,827,334 Shares constitute a majority of the fully
diluted Shares.
In addition, notwithstanding any other term of the Offer or the Merger
Agreement, the Purchaser shall not be required to, accept for payment or,
subject as aforesaid, to pay for any Shares not theretofore accepted for payment
or paid for, and may terminate or amend the Offer, with the consent of the
Company or if, at any
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time on or after the date of the Merger Agreement and before the acceptance of
such shares for payment or the payment therefor, any of the following conditions
exists:
(a) there shall be threatened in writing or pending any suit, action
or proceeding that has a reasonable likelihood of success, (i) challenging
the acquisition by the Parent or Purchaser of any Shares, seeking to
restrain or prohibit the making or consummation of the Offer or the Merger
or any other Transaction, or seeking to obtain from the Company, the Parent
or Purchaser any damages that are material in relation to the Company and
its subsidiaries taken as a whole, (ii) seeking to prohibit or limit the
ownership or operation by the Company, the Parent or any of their
respective subsidiaries of any material portion of the business or assets
of the Company, the Parent or any of their respective subsidiaries, or to
compel the Company, the Parent or any of their respective subsidiaries to
dispose of or hold separate any material portion of the business or assets
of the Company, the Parent or any of their respective subsidiaries, as a
result of the Offer, the Merger or any of the other Transactions, (iii)
seeking to impose limitations on the ability of the Parent or Purchaser to
acquire or hold, or exercise full rights of ownership of, any Shares,
including the right to vote the Shares purchased by it on all matters
properly presented to the stockholders of the Company, (iv) seeking to
prohibit the Parent or any of its subsidiaries from effectively controlling
in any material respect the business or operations of the Company and the
subsidiaries of the Company, or (v) which otherwise is reasonably likely to
have a material adverse effect on the ability of the Parent or the
Purchaser to perform its obligations under the Merger Agreement or to
consummate the Offer, the Merger or the other Transactions or a Material
Adverse Effect on the Company;
(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be threatened, proposed, sought,
enacted, entered, enforced, promulgated, amended or issued with respect to,
or deemed applicable to, or any consent or approval withheld with respect
to the Offer, the Merger or any of the other Transactions, by any
Governmental Entity that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in paragraph (a) above;
(c) except as disclosed in any report, schedule, form, statement, or
other document required to be filed by the Company with the Commission
since January 1, 1996 and publicly available prior to June 10, 1999 ("Filed
Company SEC Documents") or as previously disclosed to the Parent and the
Purchaser by the Company, since the date of the most recent audited
financial statements included in the Filed Company SEC Documents there
shall have occurred any event, change, effect or development that,
individually or in the aggregate, has had or is reasonably likely to have,
a Material Adverse Effect on the Company;
(d) (i) it shall have been publicly disclosed or the Parent shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 35% of the outstanding Shares has been acquired by
another person or (ii) the Company Board or any committee thereof shall
have withdrawn or modified in a manner adverse to the Parent its approval
or recommendation of the Offer and the Merger Agreement or the Company
Board or any committee thereof shall have resolved to take any of the
foregoing actions;
(e) any of the representations and warranties of the Company in the
Merger Agreement that are qualified as to materiality shall not be true and
correct or any such representation and warranty that is not so qualified
shall not be true and correct in any material respect, as of the date of
the Merger Agreement and as of such time as though made at such time,
except (i) to the extent such representation and warranty expressly relates
to an earlier date (in which case on and as of such earlier date) or (ii)
to the extent the Parent has consented in writing (or is deemed to have
consented pursuant to the terms of the Merger Agreement) to any supplement
or amendment to the exceptions to the Company's representations and
warranties delivered by the Company to the Parent pursuant to the terms of
the Merger Agreement;
(f) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
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(g) the Merger Agreement shall have been terminated in accordance with
its terms; or
(h) any of the employment agreements between the Company and each of
the Principal Company Stockholders that were executed simultaneously with
the Merger Agreement, the Stock Option and Tender Agreements or the Company
Option Agreement shall not be in full force and effect or either of the
Principal Company Stockholders shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant to be performed or complied with by either of them
under any such agreement;
which, in the sole judgment of the Purchaser or the Parent, in any such case,
and regardless of the circumstances giving rise to any such condition (including
any action or inaction by the Parent or any of its affiliates), makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and the
Parent and may be asserted by the Purchaser or the Parent regardless of the
circumstances giving rise to such condition or may be waived by the Purchaser
and the Parent in whole or in part at any time and from time to time in their
sole discretion. The failure by the Parent, the Purchaser or any other affiliate
of the Parent at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances and each such right shall be deemed an ongoing
right that may be asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. Except as set forth
below, based upon its examination of publicly available filings by the Company
with the Commission and other publicly available information concerning the
Company, neither the Purchaser nor the Parent is aware of any licenses or other
regulatory permits that appear to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by the
Purchaser's acquisition of Shares (and the indirect acquisition of the stock of
the Company's subsidiaries) as contemplated herein, or of any filings, approvals
or other actions by or with any domestic (federal or state), foreign or
supranational governmental authority or administrative or regulatory agency that
would be required prior to the acquisition of Shares (or the indirect
acquisition of the stock of the Company's subsidiaries) by the Purchaser
pursuant to the Offer as contemplated herein. Should any such approval or other
action be required, it is the Purchaser's present intention to seek such
approval or action. However, the Purchaser does not presently intend to delay
the purchase of Shares tendered pursuant to the Offer pending the receipt of any
such approval or the taking of any such action (subject to the Purchaser's right
to delay or decline to purchase Shares if any of the conditions in Section 15
shall have occurred). There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company, the Parent
or the Purchaser or that certain parts of the businesses of the Company, the
Parent or the Purchaser might not have to be disposed of or held separate or
other substantial conditions complied with in order to obtain such approval or
other action or in the event that such approval was not obtained or such other
action was not taken, any of which could cause the Purchaser to elect to
terminate the Offer without the purchase of any Shares thereunder. The
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions, including conditions relating to the legal
matters discussed in this Section 16.
State Takeover Laws. A number of states have adopted takeover laws and
regulations which purport to varying degrees to be applicable to attempts to
acquire securities of corporations which are incorporated in such states or
which have or whose business operations have substantial economic effects in
such states, or which have substantial assets, security holders, principal
executive offices or principal places of business therein. To the extent that
certain provisions of certain of these state takeover statutes purport to apply
to the Offer, the Purchaser believes that such laws conflict with federal law
and constitute an unconstitutional burden on interstate commerce. In 1982, the
Supreme Court of the United States, in Edgar v. Mite Corp., invalidated on
constitutional grounds the Illinois Business Takeovers Act, which as a matter of
state securities law made takeovers of corporations meeting certain requirements
more difficult, and the reasoning in such decision is likely to apply to certain
other state takeover statutes. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court of the United States held that the State of
Indiana could, as a matter of
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corporate law and in particular those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without the prior approval of the
remaining stockholders, provided that such laws were applicable only under
certain conditions. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a
federal district court in Oklahoma ruled that the Oklahoma statutes were
unconstitutional insofar as they applied to corporations incorporated outside
Oklahoma in that they would subject such corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held in Grand
Metropolitan PLC v. Butterworth that the provisions of the Florida Affiliated
Transactions Act and the Florida Control Share Acquisition Act were
unconstitutional as applied to corporations incorporated outside of Florida.
Sections 1131-1133 of the GBCC limit the ability of a Georgia corporation
to engage in business combinations with an "interested shareholder" (defined as
any person, other than the corporation or its subsidiaries, that is the
beneficial owner of 10% or more of the voting power of the outstanding stock of
a corporation or any person who is an affiliate of the corporation who within
the prior two-year period was such a 10% beneficial owner) unless, among other
things, prior to the time the interested shareholder became an interested
shareholder the corporation's board of directors approved the business
combination or the transaction which resulted in the interested shareholder
becoming an interested shareholder. In addition, Sections 1110-1113 of the GBCC
require that a business combination transaction with an interested shareholder
be either unanimously approved by the members of the board of directors of the
corporation who are not affiliated or associated with the interested shareholder
or approved by two-thirds of such directors and a majority of the voting shares
other than voting shares beneficially owned by the interested shareholder,
unless the business combination meets certain fair price criteria.
Neither of the foregoing restrictions will apply to a business combination
with any corporation unless the by-laws of the corporation specifically provide
that either or both of such restrictions are applicable to the corporation. The
Company's by-laws do not provide that either of such restrictions apply to the
Company. In addition, the Merger Agreement, the Company Option Agreement and the
Stock Option and Tender Agreements have been unanimously approved by the Company
Board. Therefore, the restrictions contained in Sections 1131-1133 and Sections
1110-1113 of the GBCC are inapplicable to the Offer, the Merger or the other
Transactions.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in connection herewith is intended as a waiver of that right. In the event
that any state takeover statute is found applicable to the Offer, the Purchaser
might be unable to accept for payment or purchase Shares tendered pursuant to
the Offer or be delayed in continuing or consummating the Offer. In such case,
the Purchaser may not be obligated to accept for purchase or pay for, any Shares
tendered. See Section 15.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares pursuant to the Offer is subject to such
requirements. See Section 2.
The Parent intends to file by June 18, 1999 with the FTC and the Antitrust
Division a Premerger Notification and Report Form in connection with the
purchase of Shares pursuant to the Offer. Under the provisions of the HSR Act
applicable to the Offer, the purchase of Shares pursuant to the Offer may not be
consummated until the expiration of a 15-calendar day waiting period following
the filing by the Parent. The waiting period under the HSR Act applicable to
such purchases of Shares pursuant to the Offer will expire at 11:59 p.m., New
York City time, on such fifteenth day, unless such waiting period is extended by
a request from the FTC or the Antitrust Division for additional information or
documentary material prior to the expiration of the waiting period. If either
the FTC or the Antitrust Division were to request additional
31
<PAGE> 35
information or documentary material from the Parent, the waiting period would
expire at 11:59 p.m., New York City time, on the tenth calendar day after the
date of substantial compliance by the Parent with such request. Thereafter, the
waiting period could be extended only by court order. If the acquisition of
Shares is delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
Offer may, but need not, be extended and in any event the purchase of and
payment for Shares will be deferred until ten days after the request is
substantially complied with, unless the waiting period is sooner terminated by
the FTC and the Antitrust Division. See Section 2. Only one extension of such
waiting period pursuant to a request for additional information is authorized by
the HSR Act and the rules promulgated thereunder, except by court order or
agreement of the parties. Any such extension of the waiting period will not give
rise to any withdrawal rights not otherwise provided for by applicable law. See
Section 4.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the purchase by
the Purchaser of Shares pursuant to the Offer, either of the FTC or the
Antitrust Division could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
purchase of Shares pursuant to the Offer or seeking the divestiture of Shares
purchased by the Purchaser or the divestiture of substantial assets of the
Parent, its subsidiaries or the Company. Private parties and state attorneys
general may also bring legal action under federal or state antitrust laws under
certain circumstances.
Although the Purchaser believes that the acquisition of Shares pursuant to
the Offer would not violate the antitrust laws, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such
challenge is made, what the outcome will be. See Section 15 for certain
conditions to the Offer, including conditions with respect to litigation and
certain government actions.
Vehicle Warranty and Insurance Laws. A subsidiary of the Company is a
specialty insurer authorized to issue motor vehicle service agreements under
Section 634 of the Florida Statutes. Pursuant to Section 628.4615 of the Florida
Statutes, no person shall acquire 10 percent or more of the ownership interest
of a specialty insurer or of a controlling company of a specialty insurer
without filing an application with the Florida department of insurance and
receiving the approval of the department for such acquisition. The Purchaser
plans to make such filing and seek to obtain the approval of the department
(subject to Purchaser's right to delay or decline to purchase Shares if such
approval is not obtained).
Additionally, the Company does business in Louisiana as a foreign insurer.
Pursuant to Title 22, Section 990 of the Louisiana Revised Statutes, if a
foreign insurer is the surviving insurer of a statutory merger then the Company
shall file with the commissioner of insurance two copies of the agreement and
certificate of merger for such merger. In addition, if any of the insurers party
to such merger were not admitted to transact business in this state, a statement
of the financial condition and business of each of such insurers, as of the end
of the proceeding calendar year complying as to form, content, and verification
with the requirements of the Louisiana Code for annual statements, or a
financial statement as of such later date as the commissioner of insurance may
require. The Purchaser plans to make or cause to be made any filing required by
such section.
Although the Purchaser believes that the acquisition of Shares pursuant to
the Offer would not require consents or approvals under other vehicle warranty
and insurance laws, should any other such consents or approvals be required it
is Purchaser's present intention to seek such approvals or consents (subject to
the Purchaser's right to delay or decline to purchase Shares if any of the
conditions in Section 15 shall have occurred).
Margin Credit Regulations. Federal Reserve Board Regulations G, T, U and X
(the "Margin Credit Regulations") restrict the extension or maintenance of
credit for the purpose of buying or carrying margin stock, including the Shares,
if the credit is secured directly or indirectly thereby. Such secured credit may
not be extended or maintained in an amount that exceeds the maximum loan value
of the margin stock. Under the Margin Credit Regulations, the Shares are
presently margin stock and the maximum loan value thereof is generally 50% of
their current market value. The definition of "indirectly secured" contained in
the Margin
32
<PAGE> 36
Credit Regulations provides that the term does not include an arrangement with a
customer if the lender in good faith has not relied upon margin stock as
collateral in extending or maintaining the particular credit.
17. FEES AND EXPENSES. The Purchaser has retained D.F. King & Co., Inc. to
act as the Information Agent and First Chicago Trust Company of New York to act
as the Depositary in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interview and may request brokers, dealers and other nominee stockholders to
forward the Offer materials to beneficial owners. The Information Agent and the
Depositary will receive reasonable and customary compensation for services
relating to the Offer and will be reimbursed for reasonable out-of-pocket
expenses. The Purchaser and the Parent have also agreed to indemnify the
Information Agent and the Depositary against certain liabilities and expenses in
connection with the Offer, including certain liabilities under the federal
securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person for soliciting tenders of Shares pursuant to the Offer
(other than to the Information Agent). Brokers, dealers, commercial banks and
trust companies will, upon request, be reimbursed by the Purchaser for customary
mailing and handling expenses incurred by them in forwarding offering materials
to their customers.
18. MISCELLANEOUS. The Offer is being made solely by this Offer to Purchase
and the related Letter of Transmittal and is being made to all holders of
Shares. The Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with any such state statute.
If after such good faith effort, the Purchaser cannot comply with such state
statute, the Offer will not be made to nor will tenders be accepted from or on
behalf of the holders of Shares in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by one or more registered brokers or dealers that are licensed under
the laws of such jurisdiction.
The Purchaser and the Parent have filed with the Commission a Schedule
14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to the Offer. Such
statement and any amendments thereto, including exhibits, may be inspected and
copies may be obtained from the offices of the Commission (except that they will
not be available at the regional offices of the Commission) in the manner set
forth in Section 7 of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT NOT CONTAINED HEREIN OR
IN THE LETTER OF TRANSMITTAL AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
AM1 ACQUISITION COMPANY
June 16, 1999
33
<PAGE> 37
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF THE PURCHASER AND THE PARENT
1. Directors and Executive Officers of the Purchaser. The name, business
address, present principal occupation or employment and five-year employment
history of each director and executive officer of the Purchaser are set forth
below. All persons listed below are citizens of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AND ADDRESS POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---------------- --------------------------------------------------------------------
<S> <C>
Lance A. Miller........................... Director, Chairman of the Board, President and Treasurer.
2S 412 Regent Court
Dearborn, MI 48126 Beginning in 1998, Mr. Miller has served as Business Manager -- New
Business Office at Ford. From 1995-1998, he served as General
Manager -- Control Products, Manager of Business Development, and
Manager of Corporate Business Development at the General Electric
Company. From 1991-1995, he served as Engagement Manager at McKinsey
& Company, Inc.
L. Johanna Kaipainen...................... Director, Secretary and Vice President.
The American Road
Room 325, WHQ Before her appointment as an Attorney at Ford in 1999, Ms. Kaipainen
Dearborn, MI 48121 was an Associate at Miller, Canfield, Paddock & Stone, P.L.C. from
1998-1999. Prior to that time, she served as a Law Clerk at Ford
from 1996 to 1998.
John K. Dickerson......................... Director, Assistant Secretary and Vice President.
The American Road
Room 325, WHQ For the last four years, Mr. Dickerson has served as Counsel at
Dearborn, MI 48121 Ford. Prior to that time and beginning in 1990, he was a Senior
Attorney, also at Ford.
Susan J. Tarpley.......................... Vice President
2S Regent Court
Dearborn, MI 48126 Beginning March, 1999, Ms. Tarpley has served as Director, New
Business Office at Ford. From June, 1997 to March, 1999 she served
as Controller of Ford Investment Enterprises Corp. From March, 1995
to June, 1997 she served as Director and from March, 1994 to March,
1995 as Manager, of Corporate & Domestic Financing Treasurers
Office, Ford Motor Company.
Terrence F. Marrs......................... Vice President
2S Regent Court
Dearborn, MI 48126 Mr. Marrs has served as Controller, North American Operations, Ford
Customer Service Division since January, 1998. Prior to that, he
served as Controller, Ford Motor Credit Company from June, 1994 to
January, 1998.
Jeremiah F. Sullivan...................... Vice President
2N 259 Regent Court
Dearborn, MI 48126 Mr. Sullivan has served as ESP Brand Manager, New Business
Development Organization, Ford Customer Service Division since
October, 1998. From October, 1990 to October, 1993 he served as
Marketing Manager, Marketing Sales & Service Operations, Rental
Lease & Remarketing Group at Ford Motor Company.
</TABLE>
34
<PAGE> 38
2. Directors and Executive Officers of the Parent. The name, business
address, present principal occupation or employment and five-year employment
history of directors and executive officers of the Parent are set forth below.
All persons listed below are citizens of the United States unless otherwise
noted and have been employed by Ford or its subsidiaries in one or more
capacities during the past five years unless otherwise noted.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AND ADDRESS POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---------------- --------------------------------------------------------------------
<S> <C>
Michael D. Dingman........................ Director (since 1981); President and CEO, Shipston Group Ltd.,
The American Road Nassau, Bahamas.
Dearborn, MI 48121
Mr. Dingman is the former Chairman of the Board and a current
director of Fisher Scientific International. Other directorships:
Teekay Shipping Corporation.
Edsel B. Ford II.......................... Director (since 1988); Former Vice President, Ford Motor Company and
The American Road Former Chief Operating Officer, Ford Motor Credit Company.
Dearborn, MI 48121
Mr. Ford retired as President and Chief Operating Officer of Ford
Motor Credit Company in 1998 having served in that capacity since
May 1991. Mr. Ford was also a Vice President of the Company from
1993 through the end of 1998. Prior to 1991, he held numerous senior
executive positions at Ford and Lincoln-Mercury, both domestic and
abroad. Other directorships: Penske Motorsports, Inc.
William Clay Ford......................... Director (since 1948); Retired Chairman of the Finance Committee,
The American Road Ford Motor Company.
Dearborn, MI 48121
Mr. Ford served as Chairman of the Finance Committee of Ford's Board
of Directors from November 1987 to January 1995. He was elected a
Vice Chairman of Ford in 1980, retiring from that position in 1989.
He also owns and is President of The Detroit Lions, Inc.
William Clay Ford, Jr. ................... Director (since 1988); Chairman of the Board of Directors of the
The American Road Company effective January 1, 1999; Chairman of the Environmental and
Dearborn, MI 48121 Public Policy Committee; Chairman of the Finance Committee; Chairman
of the Organization Review and Nominating Committee.
Mr. Ford has held a number of management positions within Ford,
including Vice President -- Commercial Truck Vehicle Center, until
January 1, 1995, when be became Chairman of the Finance Committee of
the Board of Directors of the Company. Mr. Ford is Vice Chairman of
The Detroit Lions, Inc., and Chairman of the Board of Trustees of
the Henry Ford Museum and Greenfield Village.
Irvine O. Hockaday, Jr.................... Director (since 1987); President and CEO, Hallmark Cards, Inc.,
The American Road Kansas City, Missouri.
Dearborn, MI 48121
Mr. Hockaday has been President and CEO of Hallmark Cards, Inc.
since January 1, 1986, and a director since 1978. Other
directorships: Dow Jones, Inc.; Sprint Corporation; UtiliCorp
United, Inc.
</TABLE>
35
<PAGE> 39
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AND ADDRESS POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---------------- --------------------------------------------------------------------
<S> <C>
Marie-Josee Kravis........................ Director (since 1995); Senior Fellow, Hudson Institute, Inc.,
The American Road Indianapolis, Indiana.
Dearborn, MI 48121
Mrs. Kravis was appointed a senior fellow of the Hudson Institute
Inc. in 1994. Prior to that time, and since 1978, she served as
Executive Director of the Hudson Institute of Canada. Other
directorships: Canadian Imperial Bank of Commerce; Hasbro Inc.;
Hollinger International Inc.; The Seagram Co. Ltd.; UniMedia Inc.
Citizenship: Canada/Switzerland.
Ellen R. Marram........................... Director (since 1988); Former President and CEO, Tropicana Beverage
The American Road Group, New York, New York.
Dearborn, MI 48121
Ms. Marram served as President and CEO of Tropicana Beverage Group
from September 1997 until November 1998 and had previously served as
President of the Group since joining Seagram in 1993. She also
served as Executive Vice President of The Seagram Company Ltd. and
Joseph E. Seagram & Sons, Inc. She served as President and CEO of
Nabisco Biscuit Company and Senior Vice President of the Nabisco
Foods Group from June 1988 until April 1993. Other directorships:
The New York Times Company.
Jacques A. Nasser......................... Director (since 1998); President and Chief Executive Officer of the
The American Road Company effective January 1, 1999.
Dearborn, MI 48121
Prior to his election as President and CEO of the Company, Mr.
Nasser was Executive Vice President, President -- Ford Automotive
Operations. Before heading Ford Automotive Operations, Mr. Nasser
was Group Vice President -- Product Development from 1994-1996. He
was elected a Company Vice President in 1993 as the Chairman of Ford
of Europe. From 1990 to 1993, Mr. Nasser served as President of Ford
of Australia. He has held a number of other global positions in
Asia-Pacific and South America since joining the Company in 1968.
Citizenship: Australia.
Homer A. Neal............................. Director (since 1997); Director, ATLAS Project, Professor of
The American Road Physics, and Interim President Emeritus, The University of Michigan,
Dearborn, MI 48121 Ann Arbor, Michigan.
Dr. Neal served as Interim president of the University of Michigan
from July 1, 1996 to February 1, 1997. From 1987 to 1993, Dr. Neal
was Chair of the University of Michigan's Physics Department and
from 1993 to 1997 he served as Vice President of Research for the
University of Michigan. Other directorships: Ogden Corporation;
Center for Strategic and International Studies; Smithsonian
Institution.
</TABLE>
36
<PAGE> 40
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AND ADDRESS POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---------------- --------------------------------------------------------------------
<S> <C>
Carl E. Reichardt......................... Director (since 1986); retired Chairman and CEO, Wells Fargo &
The American Road Company, San Francisco, California.
Dearborn, MI 48121
Mr. Reichardt served as Chairman and CEO of Wells Fargo & Company
from 1983 until his retirement on December 31, 1994. Other
directorships: Columbia/HCA Healthcare Corporation; ConAgra, Inc.;
McKesson HBOC, Inc.; Newball Management Corporation; Pacific Gas and
Electric Company; PG&E Corporation.
John L. Thornton.......................... Director (since 1996); President and Co-Chief Operating Officer,
The American Road Goldman Sachs Group, L.P.
Dearborn, MI 48121
Mr. Thornton formerly served as Chairman of Goldman Sachs -- Asia.
He was previously co-chief executive of Goldman Sachs International,
the firm's business in Europe, the Middle East and Africa. Mr.
Thornton joined Goldman Sachs in 1980 and was named a partner in
1988. Other directorships: British Sky Broadcasting Group PLC;
Goldman Sachs Group, Inc.; Laura Ashley PLC; Pacific Century Group.
W. Wayne Booker........................... Vice Chairman.
The American Road
Dearborn, MI 48121
Peter J. Pestillo......................... Vice Chairman and Chief of Staff.
The American Road
Dearborn, MI 48121
John M. Devine............................ Executive Vice President and Chief Financial Officer.
The American Road
Dearborn, MI 48121
Carlos E. Mazzorin........................ Group Vice President -- Purchasing and Ford of Mexico.
The American Road
Dearborn, MI 48121
James J. Padilla.......................... Group Vice President -- Manufacturing.
The American Road
Dearborn, MI 48121
Richard Parry-Jones....................... Group Vice President -- Product Development and Quality.
The American Road Citizenship: U.K.
Dearborn, MI 48121
Wolfgang Reitzle.......................... Group Vice President -- Premier Automotive Group; Chairman of Jaguar
Ford Motor Company Limited Cars Ltd., and Chairman of Volvo Cars. Prior to joining Ford on
51 Berkley Square March 2, 1999 he was with BMW, AG for 23 years, where he had served
London, England as General Manager of the Development Division since 1985, a member
of the Board of Management with responsibility for Research and
Development since 1987 and was responsible for BMW Sales and
Marketing since 1995. Citizenship: Germany.
Robert L. Rewey........................... Group Vice President -- Marketing, Sales and Service.
The American Road
Dearborn, MI 48121
</TABLE>
37
<PAGE> 41
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AND ADDRESS POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---------------- --------------------------------------------------------------------
<S> <C>
Henry D.G. Wallace........................ Group Vice President -- Asia Pacific Operations and Associates.
The American Road Citizenship: U.K. (Scotland).
Dearborn, MI 48121
Gurminder S. Bedi......................... Vice President -- Truck Vehicle Center.
The American Road
Dearborn, MI 48121
William W. Boddie......................... Vice President -- Small and Medium Car Vehicle Center.
Ford-Werke AG
Niehl Plant, Hall A
Cologne
Germany
Mei Wei Cheng............................. Vice President (President, Ford Motor China, Ltd.). Prior to joining
Ford Motor (China) Limited Ford in January of 1999, Mr. Cheng was President and Regional
1 Jianguomenwai Street Executive of GE Appliance Ltd. in Hong Kong. Prior to that, he was
Beijing 100004 President of General Electric China, and prior to that, President of
China AT&T China Inc.
William J. Cosgrove....................... Vice President -- Business and Product Strategy.
The American Road
Dearborn, MI 48121
James D. Donaldson........................ Vice President (President, Ford of Europe Incorporated).
Ford of Europe
Niehl Plant, Hall A
Cologne
Germany
Wayne S. Doran............................ Vice President (Chairman, Ford Motor Land Development Corporation).
1 Parklane Boulevard, Suite 1500
Parklane Towers East
Dearborn, MI 48126
Louise K. Goeser.......................... Vice President -- Quality. Prior to joining Ford in March of 1999,
The American Road Ms. Goeser served at Whirlpool Corporation as General Manager,
Dearborn, MI 48121 Refrigeration Product Team, Whirlpool North American Appliance
Group, and before that, as Vice President, Corporate Quality.
Ronald E. Goldsberry...................... Vice President -- Global Service Business Strategy.
16800 Executive Plaza Drive
Dearborn, MI 48126
Elliott S. Hall........................... Vice President -- Dealer Development.
1350 I Street, N.W.
Washington, DC 20005
Earl J. Hesterberg........................ Vice President -- Marketing, Sales and Service -- Ford of Europe.
The American Road Prior to joining Ford on June 14, 1999, Mr. Hesterberg was with Gulf
Dearborn, MI 48121 Sales, Toyota, a private company that operates Toyota dealerships in
the Southern United States of America. Before that, Mr. Hesterberg
was with Nissan in the U.S. and Europe.
</TABLE>
38
<PAGE> 42
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AND ADDRESS POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---------------- --------------------------------------------------------------------
<S> <C>
Mark W. Hutchins.......................... Vice President (President, Lincoln and Mercury).
19 Technology Drive
Irvine, CA 92618
I. Martin Inglis.......................... Vice President (President, Ford South American Operations),
Ford Brasil Ltda. Citizenship: U.K.
Av. do Toboao 899
Sao Bernardo do Campo
09878-990
Brazil
Michael D. Jordan......................... Vice President -- Ford Customer Service Division.
The American Road
Dearborn, MI 48121
Brian P. Kelley........................... Vice President. Prior to joining Ford in June of 1999, Kelley served
The American Road as Vice President & General Manager of the Sales & Distribution
Dearborn, MI 48121 Appliance Division at General Electric. Prior to that, he was
General Manager -- Laundry Products at General Electric, and prior
to that, he was Appliance Division Marketing Director.
Vaughn A. Koshkarian...................... Vice President -- Public Affairs.
The American Road
Dearborn, MI 48121
Roman J. Krygier.......................... Vice President -- Powertrain Operations.
The American Road
Dearborn, MI 48124
Malcolm S. Macdonald...................... Vice President and Treasurer.
The American Road
Dearborn, MI 48121
J.C. Mays................................. Vice President -- Design. Prior to joining Ford in October of 1999,
The American Road Mr. Mays served as Vice President of Design Development at SHR
Dearborn, MI 48123 Perceptual Management in Scottsdale, Arizona. Prior to that, he was
design director responsible for worldwide design strategy,
development and execution for Audi AG.
James E. Miller........................... Vice President.
Mazda Motor Corporation
3-1, Shinchi, Fuchu-cho, Aki-gun
Hiroshima 730-91
Japan
Craig H. Muhlhauser....................... Vice President (President, Visteon Automotive Systems). Prior to
Visteon Headquarters joining Ford in January of 1999, Mr. Muhlhauser was an officer of
5500 Auto Club Drive United Technologies Corporation and held the positions of Senior
Dearborn, MI 48126 Vice President, Sales and Service -- Americas, and Senior Vice
President, Worldwide Aftermarket -- Pratt & Whitney.
Janet G. Mullins.......................... Vice President -- Washington Affairs.
1350 I Street, N.W.
Washington, DC 20005
</TABLE>
39
<PAGE> 43
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AND ADDRESS POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---------------- --------------------------------------------------------------------
<S> <C>
David L. Murphy........................... Vice President -- Human Resources. Citizenship: U.K.
The American Road
Dearborn, MI 48121
James G. O'Connor......................... Vice President (President, Ford Division).
16800 Executive Plaza Drive
Dearborn, MI 48121
Helen O. Petrauskas....................... Vice President -- Environmental and Safety Engineering.
The American Road
Dearborn, MI 48123
William F. Powers......................... Vice President -- Research.
20000 Rotunda
Dearborn, MI 48121
Neil W. Ressler........................... Vice President and Chief Technical Officer Research and Vehicle
The American Road Technology.
Dearborn, MI 48121
John M. Rintamaki......................... Vice President -- General Counsel and Secretary.
The American Road
Dearborn, MI 48121
Ross H. Roberts........................... Vice President (President Ford Investment Enterprises Corporation).
16800 Executive Plaza Drive
Dearborn, MI 48126
Dennis F. Ross............................ Vice President and Chief Tax Officer. Prior to joining Ford, he was
The American Road a partner in the New York law firm of Davis, Polk & Wardwell.
Dearborn, MI 48121
Shamel T. Rushwin......................... Vice President -- Advanced Manufacturing Engineering. Prior to
The American Road joining Ford in March of 1999, Mr. Rushwin was Vice
Dearborn, MI 48121 President -- International Manufacturing and Minivan Assembly
Operations at DaimlerChrysler AG. His prior positions at
DaimlerChrysler AG were: General Manager -- Minivan Platform
Assembly and Plant Manager -- Belvidere Assembly Plant.
Nicholas V. Scheele....................... Vice President (Senior Vice President, Marketing, Sales and Service,
Ford-Werke AG Ford of Europe, Inc.).
Niehl Plant, Hall A
Cologne
Germany
William A. Swift.......................... Vice President and Controller.
The American Road
Dearborn, MI 48121
Chris P. Theodore......................... Vice President -- Large and Luxury Car Vehicle Center. Prior to
The American Road joining Ford in March of 1999, Mr. Theodore was Senior Vice
Dearborn, MI 48121 President -- Platform Engineering at DaimlerChrysler AG. His prior
positions at DaimlerChrysler AG were: Vice President -- Platform
Engineering, General Manager -- Small Car Platform Engineering and
General Manager -- Minivan Platform Engineering.
</TABLE>
40
<PAGE> 44
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS,
NAME AND ADDRESS POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---------------- --------------------------------------------------------------------
<S> <C>
David W. Thursfield....................... Vice President -- Vehicle Operations. Citizenship: U.K.
The American Road
Dearborn, MI 48121
Robert J. Womac........................... Vice President (Executive Vice President, Operations, Visteon
The American Road Automotive Systems).
Dearborn, MI 48121
Martin B. Zimmerman....................... Vice President -- Governmental Affairs.
The American Road
Dearborn, MI 48121
Rolf Zimmermann........................... Vice President (Chairman, Ford Werke AG), Citizenship: Germany.
Forde-Werke AG
Niehl Plant, Hall A
Cologne
Germany
</TABLE>
41
<PAGE> 45
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Facsimile Transmission:
By Mail: (for Eligible Institutions only) By Hand: By Overnight Delivery:
-------- -------------------------------- -------- ----------------------
<S> <C> <C> <C>
First Chicago Trust Fax #'s (201) 222-4720 First Chicago Trust First Chicago Trust
Company of New York or Company of New York Company of New York
Corporate Actions (201) 222-4721 c/o Securities Transfer Corporate Actions, Suite
Suite 4660 Confirm by Telephone: and Reporting Services, 4680
P.O. Box 2569 (201) 222-4707 Inc. 14 Wall Street, 8th Floor
Jersey City, NJ Attn: Corporate Actions New York, NY 10005
07303-2569 100 William Street,
Galleria
New York, NY 10038
</TABLE>
For Information by Telephone:
1-800-251-4215
Any questions and requests for assistance may be directed to the
Information Agent at the telephone number and address listed below. Additional
copies of this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent. You may
also contact your broker, dealer, commercial bank or trust company for
assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 207-3156
<PAGE> 1
EXHIBIT (a)(2)
Letter of Transmittal
to Tender Shares of Common Stock
of
AUTOMOBILE PROTECTION CORPORATION -- APCO
Pursuant to the Offer to Purchase dated June 16, 1999
by
AM1 ACQUISITION COMPANY
a wholly owned subsidiary of
FORD MOTOR COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JULY 14, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Facsimile Transmission:
By Mail: (for Eligible Institutions only) By Hand: By Overnight Delivery:
-------- -------------------------------- -------- ----------------------
<S> <C> <C> <C>
First Chicago Trust Fax Nos. (201) 222-4720 or First Chicago Trust Company First Chicago Trust
Company of New York (201) 222-4721 of New York Company of New York
Corporate Actions Confirm by Telephone: c/o Securities Transfer and Corporate Actions,
Suite 4660 (201) 222-4707 Reporting Services, Inc. Suite 4680
P.O. Box 2569 Attn: Corporate Actions 14 Wall Street, 8th Floor
Jersey City, NJ 100 William Street, New York, NY 10005
07303-2569 Galleria
New York, NY 10038
</TABLE>
For Information by Telephone:
1-800-251-4215
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA FACSIMILE NUMBER OTHER THAN AS
SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders, either if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if
tenders of Shares are to be made by book-entry transfer into the account of
First Chicago Trust Company of New York, as Depositary (the "Depositary"), at
The Depository Trust Company ("DTC" or the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 3 of the Offer to Purchase (as
defined below). Stockholders who tender Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders".
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or who
cannot complete the procedure for book-entry transfer on a timely basis, must
tender their Shares according to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------------------------------------------
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S)
PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON CERTIFICATE(S) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- -------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARE OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
TOTAL SHARES
- -------------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Stockholders
** Unless otherwise indicated, all Shares represented by certificates delivered to the Depositary will be deemed
to have been tendered. See Instruction 4.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
--------------------------------------------------
Check box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
<TABLE>
<S> <C>
Account Number Transaction Code Number
------------------------------ ----------------------
</TABLE>
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
-------------------------------------------------
Window Ticket Number (if any):
--------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------
Name of Institution that Guaranteed Delivery:
-----------------------------------
If delivered by Book-Entry Transfer, check box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
<TABLE>
<S> <C>
Account Number Transaction Code Number
------------------------------ ----------------------
</TABLE>
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to AM1 Acquisition Company, a Georgia
corporation (the "Purchaser")and a wholly owned subsidiary of Ford Motor
Company, a Delaware corporation (the "Parent"), the above-described shares of
Common Stock, $.001 par value per share (the "Shares"), of Automobile Protection
Corporation -- APCO, a Georgia corporation (the "Company"), at a purchase price
of $13.00 per Share, net to the seller in cash without interest thereon, upon
the terms and subject to the conditions set forth in the Offer to Purchase dated
June 16, 1999 (as amended or supplemented from time to time, the "Offer to
Purchase") and in this Letter of Transmittal (which, as amended from time to
time, together constitute the "Offer"). The undersigned understands that the
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, receipt of which is hereby
acknowledged.
Subject to, and effective upon, acceptance for payment for the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Purchaser all
right, title and interest in and to all of the Shares that are being tendered
hereby and any and all non-cash dividends, distributions (including additional
Shares) or rights declared, paid or issued with respect to the tendered Shares
on or after June 10, 1999, and payable or distributable to the undersigned on a
date prior to the transfer to the name of the Purchaser or nominee or transferee
of the Purchaser on the Company's stock transfer records of the Shares tendered
herewith (collectively, a "Distribution"), and appoints the Depositary the true
and lawful agent and attorney-in-fact of the undersigned with respect to such
Shares (and any Distribution) with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest) to
(a) deliver such Share Certificates (as defined in the Offer to Purchase) (and
any Distribution) or transfer ownership of such Shares (and any Distribution) on
the account books maintained by the Book-Entry Transfer Facility, together in
either case with appropriate evidences of transfer, to the Depositary for the
account of the Purchaser, (b) present such Shares (and any Distribution) for
transfer on the books of the Company and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares (and any
Distribution), all in accordance with the terms and subject to the conditions of
the Offer.
The undersigned irrevocably appoints designees of the Purchaser as such
stockholder's proxy, with full power of substitution to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by the Purchaser and with respect to any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after June 10, 1999. Such appointment will be effective when, and only to the
extent that, the Purchaser accepts such Shares for payment. Upon such acceptance
for payment, all prior proxies given by such stockholder with respect to such
Shares (and such other Shares and securities) will be revoked without further
action, and no subsequent proxies may be given nor any subsequent written
consents executed (and, if given or executed, will not be deemed effective). The
designees of the Purchaser will be empowered to exercise all voting and other
rights of such stockholder as they in their sole discretion may deem proper at
any annual or special meeting of the Company's stockholders or any adjournment
or postponement thereof, by written consent in lieu of any such meeting or
otherwise. The Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon the Purchaser's payment for such
Shares the Purchaser must be able to exercise full voting rights with respect to
such Shares.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares (and
any Distribution) tendered hereby and (b) when the Shares are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title to the Shares (and any Distribution), free and clear of all
liens, restrictions, charges and encumbrances, and the same will not be subject
to any adverse claim. The undersigned, upon request, will execute and deliver
any additional documents deemed by the Depositary or the Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby (and any Distribution). In addition, the
<PAGE> 4
undersigned shall promptly remit and transfer to the Depositary for the account
of the Purchaser any and all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer; and pending such
remittance or appropriate assurance thereof, the Purchaser will be, subject to
applicable law, entitled to all rights and privileges as owner of any such
Distribution and may withhold the entire purchase price or deduct from the
purchase price the amount or value thereof as determined by the Purchaser in its
sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date (as defined in the Offer to Purchase) and, unless theretofore
accepted for payment by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after August 14, 1999. See Section 4 of the Offer to
Purchase.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions set forth in the
Offer, including the undersigned's representation that the undersigned owns the
Shares being tendered.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or issue or return any
certificate(s) for Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered". Similarly, unless otherwise indicated herein under "Special Delivery
Instructions", please mail the check for the purchase price and/or any
certificate(s) for Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered". In the event that
both the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or any
certificate(s) for Shares not tendered or accepted for payment in the name of,
and deliver such check and/or such certificates to, the person or persons so
indicated. The undersigned recognizes that the Purchaser has no obligation,
pursuant to the Special Payment Instructions, to transfer any Shares from the
name(s) of the registered holder(s) thereof if the Purchaser does not accept for
payment any of the Shares so tendered.
<PAGE> 5
- --------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be issued in the name of someone other than the undersigned.
Issue [ ] check [ ] certificates to:
Name
-----------------------------------------
(PLEASE PRINT)
Address
- ---------------------------------------------
- ---------------------------------------------
(INCLUDE ZIP CODE)
- ---------------------------------------------
(TAX ID, OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be sent to someone other than the undersigned at an address
other than that shown above.
Mail [ ] check [ ] certificates to:
Name
-----------------------------------------
(PLEASE PRINT)
Address
- ---------------------------------------------
- ---------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGN SIGN HERE SIGN
HERE AND COMPLETE SUBSTITUTE FORM W-9 HERE
- -- --
X
-------------------------------------------------------------------------------
X
-------------------------------------------------------------------------------
(Signature(s) of Holder(s))
Dated:
------------------------ , 1999
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
Share Certificate(s) or a security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by trustee, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please provide the following information and see
Instruction 5.)
Name(s)
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title)
-----------------------------------------------------------
Address
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
--------------------------------------------------
Tax Identification or
Social Security No.
-------------------------------------------------------------
COMPLETE SUBSTITUTE FORM W-9 ON REVERSE
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Authorized Signature
------------------------------------------------------------
Name
----------------------------------------------------------------------------
Name of Firm
--------------------------------------------------------------------
(Please Print)
Address
-------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number
--------------------------------------------------
Dated:
---------------------------------------------------------------------,1999
- --------------------------------------------------------------------------------
<PAGE> 6
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares tendered herewith, unless such holder(s) has
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" above, or (b) if such Shares are
tendered for the account of a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (each of the foregoing being referred to as an
"Eligible Institution"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5 of
this Letter of Transmittal.
2. Requirements of Tender. This Letter of Transmittal is to be completed by
stockholders either if certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if tenders are to be made pursuant to the procedure
for tender by book-entry transfer set forth in Section 3 of the Offer to
Purchase. Share Certificates, or timely confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility, as well as this Letter of
Transmittal (or a facsimile hereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase). Stockholders whose Share Certificates are not immediately
available or who cannot deliver their Share Certificates and all other required
documents to the Depositary prior to the Expiration Date or who cannot complete
the procedure for delivery by book-entry transfer on a timely basis may tender
their Shares by properly completing and duly executing a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of
the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made
by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made available
by the Purchaser, must be received by the Depositary prior to the Expiration
Date; and (iii) the Share Certificates (or a Book-Entry Confirmation)
representing all tendered Shares, in proper form for transfer, in each case
together with the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees (or, in the
case of a book-entry delivery, an Agent's Message) and any other documents
required by this Letter of Transmittal, must be received by the Depositary
within three Nasdaq National Market trading days after the date of execution of
such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto.
4. Partial Tenders. (Not Applicable to Book-Entry Stockholders) If fewer
than all the Shares evidenced by any Share Certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered". In such cases, new Share Certificates for
the Shares that were evidenced by your old Share Certificates, but were not
tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
Expiration Date. All Shares represented by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
<PAGE> 7
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or not purchased are to be issued in the
name of a person other than, the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear(s) on the
certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, the Purchaser will pay any stock transfer taxes with respect to the transfer
and sale of Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or if certificate(s) for Shares
not tendered or accepted for payment are to be registered in the name of, any
person other than the registered holder(s), or if tendered certificate(s) are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes, or an exemption therefrom, is submitted.
Except as otherwise provided in this Instruction 6, it will not be
necessary for transfer tax stamps to be affixed to the certificate(s) listed in
this Letter of Transmittal.
7. Special Payment and Delivery Instructions. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or if a check and/or such certificates are to be returned
to a person other than the person(s) signing this Letter of Transmittal or to an
address other than that shown in this Letter of Transmittal, the appropriate
boxes on this Letter of Transmittal must be completed.
8. Waiver of Conditions. Subject to the terms and conditions of the Merger
Agreement, the conditions of the Offer (other than the Minimum Tender Condition
(as defined in the Offer to Purchase)) may be waived by the Purchaser in whole
or in part at any time and from time to time in its sole discretion.
9. 31% Backup Withholding; Substitute Form W-9. Under U.S. federal income
tax law, a stockholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, the Internal Revenue Service may subject the
stockholder or other payee to a $50 penalty. In addition, payments that are made
to such stockholder or other payee with respect to Shares purchased pursuant to
the Offer may be subject to 31% backup withholding.
A stockholder who does not have a TIN may check the box in Part 3 of the
Substitute Form W-9 if the shareholder has applied for a number or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
shareholder must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding. If the box is
checked, payments made within 60 days of the date of the form will be subject to
backup withholding unless the shareholder has furnished the Exchange Agent with
his or her TIN. A shareholder who checks the box in Part 3 in lieu of furnishing
his or her TIN should furnish the Depositary with his or her TIN as soon as it
is received.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to
<PAGE> 8
that individual's exempt status. A Form W-8 can be obtained from the Depositary.
See the enclosed "Guidelines for Certification of Payer Identification Number on
Substitute Form W-9" for more instructions. Stockholders are urged to consult
their own tax advisors to determine whether they are exempt from these backup
withholding and reporting requirements.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder or other payee. Backup withholding is
not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service by filing a United States federal income return with the
Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has applied for a TIN but has not yet been issued a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
10. Requests for Assistance or Additional Copies. Questions or requests for
assistance may be directed to the Information Agent at the address and telephone
numbers set forth below. Additional copies of the Offer to Purchase, this Letter
of Transmittal and the Notice of Guaranteed Delivery may also be obtained from
the Information Agent or from brokers, dealers, commercial banks or trust
companies.
11. Lost, Destroyed or Stolen Certificates. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify the Transfer Agent by mail at; Continental Stock Transfer & Trust
Company, 2 Broadway -- 19th Floor, New York, NY 10004 Attn: Lost Securities
Department. The stockholder can also fax information regarding lost securities
to the Transfer Agent at facsimile number (212) 616-8438 to the attention of the
Lost Securities Department. This Letter of Transmittal and related documents
cannot be processed until the procedures for replacing lost or destroyed
certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR THE NOTICE OF
GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE.
<PAGE> 9
<TABLE>
<S><C>
- -----------------------------------------------------------------------------------------------------------
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- -----------------------------------------------------------------------------------------------------------
PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX
SUBSTITUTE AT RIGHT AND CERTIFY BY SIGNING AND DATING -----------------------------
FORM W-9 BELOW. Social Security Number
OR
--------------------------
Employer Identification Number
----------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART 2 -- Part 3 --
INTERNAL REVENUE SERVICE Certification -- Under penalties of perjury, Awaiting TIN [ ]
I certify that:
(1) The number shown on this form is my
correct Taxpayer Identification Number
(or I am waiting for a number to be issued
to me), and
(2) I am not subject to backup withholding
because (a) I am exempt from backup
withholding, or (b) I have not been
notified by the Internal Revenue Service
(the "IRS") that I am subject to backup
withholding as a result of a failure to
report all interest or dividends, or (c)
the IRS has notified me that I am no
longer subject to backup withholding.
----------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you have
PAYER'S REQUEST FOR been notified by the IRS that you are currently subject to backup withholding
TAXPAYER IDENTIFICATION because of under-reporting interest or dividends on your tax return. However,
NUMBER (TIN) if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out such item (2).
SIGN HERE --> SIGNATURE _________________________________ DATE __________________________
- -----------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER, PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF THE SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld.
SIGNATURE _____________________________________ DATE ________________ , 1999
-------------------------------------------------------------------------------
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 207-3156
Date: June 16, 1999
<PAGE> 1
EXHIBIT (a)(3)
Notice of Guaranteed Delivery
to Tender Shares of Common Stock
of
AUTOMOBILE PROTECTION CORPORATION -- APCO
As set forth in Section 3 of the Offer to Purchase described below, this
instrument or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if certificates for Shares (as defined below) are not
immediately available or the certificates for Shares and all other required
documents cannot be delivered to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) or if the procedure for delivery
by book-entry transfer cannot be completed on a timely basis. This instrument
may be delivered by hand or transmitted by facsimile transmission or mail to the
Depositary.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Facsimile Transmission:
By Mail: (for Eligible Institutions only) By Hand: By Overnight Delivery:
-------- -------------------------------- -------- ----------------------
<S> <C> <C> <C>
First Chicago Trust Fax Nos. (201) 222-4720 or First Chicago Trust Company First Chicago Trust
Company of New York (201) 222-4721 of New York Company of New York
Corporate Actions Confirm by Telephone: c/o Securities Transfer and Corporate Actions,
Suite 4660 (201) 222-4707 Reporting Services, Inc. Suite 4680
P.O. Box 2569 Attn: Corporate Actions 14 Wall Street, 8th Floor
Jersey City, NJ 100 William Street, New York, NY 10005
07303-2569 Galleria
New York, NY 10038
</TABLE>
For Information by Telephone:
1-800-251-4215
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box in the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tender(s) to AM1 Acquisition Company, a Georgia
corporation and a wholly owned subsidiary of Ford Motor Company, a Delaware
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated June 16, 1999 (as amended or supplemented from time to time,
the "Offer to Purchase"), and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"), receipt of which is
hereby acknowledged, the number of shares of Common Stock, $0.001 par value per
share (the "Shares"), of Automobile Protection Corporation -- APCO, a Georgia
corporation, pursuant to the guaranteed delivery procedure set forth in Section
3 of the Offer to Purchase.
<PAGE> 2
- ------------------------------------------------------
Signature(s)
-----------------------------------------
Name(s) of Record Holders
-----------------------------------------------------
Please Type or Print
Number of Shares
-----------------------------------------------------
Certificate Nos. (If Available)
-----------------------------------------------------
Dated
------------------------------------------, 1999
Address(es)
--------------------------------------------
- ------------------------------------------------------
Zip Code
Area Code and Tel.
No.(s)
-------------------------------------------------
(Check the box below if Shares will be tendered by
book-entry transfer)
[ ] The Depository Trust Company
Account Number
- ------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, (a) represents that the above
named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"),
(b) represents that such tender of Shares complies with Rule 14e-4, and (c)
guarantees to deliver to the Depositary either the certificates evidencing all
tendered Shares, in proper form for transfer, or to deliver Shares pursuant to
the procedure for book-entry transfer into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility"), in either case
together with the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase) in the case of a
book-entry delivery, and any other required documents, all within three Nasdaq
National Market trading days after the date hereof.
-----------------------------------------------------
Name of Firm
-----------------------------------------------------
Address
-----------------------------------------------------
Zip Code
Area Code and Tel.
No.
--------------------------------------------------
- ------------------------------------------------------
Authorized Signature
- ------------------------------------------------------
Please Type or Print
Title
-------------------------------------------------
Dated
-------------------------------------------, 1999
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS
NOTICE. CERTIFICATES MUST BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
- ------------------------------------------------------
2
<PAGE> 1
EXHIBIT (a)(4)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
AUTOMOBILE PROTECTION CORPORATION -- APCO
at
$13.00 NET PER SHARE
by
AM1 ACQUISITION COMPANY
a wholly owned subsidiary of
FORD MOTOR COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 14, 1999, UNLESS THE OFFER IS EXTENDED.
June 16, 1999
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We have been appointed by AM1 Acquisition Company, a Georgia corporation
(the "Purchaser"), and a wholly owned subsidiary of Ford Motor Company, a
Delaware corporation (the "Parent"), to act as the Information Agent in
connection with the Purchaser's offer to purchase for cash all the outstanding
shares of Common Stock, par value $.001 per share (the "Shares"), of Automobile
Protection Corporation -- APCO, a Georgia corporation (the "Company"), at a
purchase price of $13.00 per Share, net to the seller in cash without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated June 16, 1999 (as amended or supplemented from time to time the
"Offer to Purchase"), and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") enclosed herewith.
Holders of Shares whose certificates for such Shares (the "Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other required documents to the Depositary (as defined below) prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or who
cannot complete the procedures for book-entry transfer on a timely basis, must
tender their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated June 16, 1999.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares.
3. The Notice of Guaranteed Delivery for Shares to be used to accept
the Offer if Share Certificates are not immediately available or if such
certificates and all other required documents cannot be delivered to First
Chicago Trust Company of New York (the "Depositary") by the Expiration Date
or if the procedure for book-entry transfer cannot be completed by the
Expiration Date.
4. The Letter to Stockholders of the Company from the Chairman of the
Board, President and Chief Executive Officer of the Company, accompanied by
the Company's Solicitation/Recommendation Statement on Schedule 14D-9.
<PAGE> 2
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to First Chicago Trust Company of New
York, the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, JULY 14, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and other required documents should be sent to
the Depositary, and (ii) either Share Certificates representing the tendered
Shares should be delivered to the Depositary or such Shares should be tendered
by book-entry transfer into the Depositary's account maintained at the
Book-Entry Transfer Facility (as described in the Offer to Purchase), all in
accordance with the instructions set forth in the Letter of Transmittal and the
Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than to D.F. King & Co., Inc. (the "Information Agent")) for
soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however,
upon request, reimburse you for customary clerical and mailing expenses incurred
by you in forwarding any of the enclosed materials to your clients. The
Purchaser will pay or cause to be paid any stock transfer taxes payable on the
transfer of Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
Any questions and requests for assistance may be directed to the
Information Agent at the telephone number and address set forth on the back
cover of the Offer to Purchase. Additional copies of the Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained
from the Information Agent. You may also contact your broker, dealer, commercial
bank or trust company for assistance concerning the Offer.
Very truly yours,
D.F. King & Co., Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE PARENT, THE COMPANY, THE
DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
EXHIBIT (a)(5)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
AUTOMOBILE PROTECTION CORPORATION -- APCO
at
$13.00 NET PER SHARE
by
AM1 ACQUISITION COMPANY
a wholly owned subsidiary of
FORD MOTOR COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 14, 1999, UNLESS THE OFFER IS EXTENDED.
June 16, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated June 16,
1999 (as amended or supplemented from time to time, the "Offer to Purchase"),
and the related Letter of Transmittal relating to an offer by AM1 Acquisition
Company, a Georgia corporation (the "Purchaser") and a wholly owned subsidiary
of Ford Motor Company, a Delaware corporation (the "Parent"), to purchase all of
the outstanding shares of Common Stock, $.001, par value per share (the
"Shares"), of Automobile Protection Corporation -- APCO, a Georgia corporation
(the "Company"), at a purchase price of $13.00 per Share, net to the seller in
cash without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer"). We are the
holder of record of Shares held by us for your account. A tender of such Shares
can be made only by us as the holder of record and pursuant to your
instructions. The Letter of Transmittal is furnished to you for your information
only and cannot be used by you to tender Shares held by us for your account.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer to Purchase.
Your attention is directed to the following:
1. The tender price is $13.00 per share, net to the seller in cash
without interest thereon.
2. The Offer is made for all of the outstanding Shares.
3. The Board of Directors of the Company has unanimously determined
that the Merger Agreement (as defined below) and the transactions
contemplated thereby, including each of the Offer and the Merger (as
defined below), are fair to and in the best interests of the stockholders
of the Company and recommends that holders of the Shares accept the Offer
and tender their Shares to the Purchaser.
4. The Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of June 10, 1999 (as amended or supplemented from time to
time, the "Merger Agreement"), which provides that subsequent to the
consummation of the Offer, the Purchaser will merge with and into the
Company (the "Merger"). At the effective time of the Merger (the "Effective
Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares held by the Parent, the Purchaser,
the Company or any of its subsidiaries and other than Shares, if any, held
by stockholders who have not voted in favor of the Merger Agreement or
consented thereto in writing and have timely delivered to the Company
demand for appraisal of such Shares in accordance with the Georgia Business
<PAGE> 2
Corporation Code) shall be converted automatically into the right to
receive in cash the price paid pursuant to the Offer, without interest.
5. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Wednesday, July 14, 1999, unless the Offer is extended.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer.
7. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer a
number of Shares which constitutes a majority of all the outstanding Shares
(determined on a fully-diluted basis), (ii) the waiting period (and any
extension thereof) applicable to the purchase of Shares pursuant to the
Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, having been terminated or expired, and (iii) all consents,
approvals and filings under the Auto Warranty Laws (as defined in the Offer
to Purchase) of any state that are required to be made or obtained prior to
the acceptance of the Shares pursuant to the Offer having been made or
obtained.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. The Purchaser
is not aware of any State where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid State statute. If the
Purchaser becomes aware of any valid State statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a
good faith effort to comply with any such State statute. If, after such good
faith effort, the Purchaser cannot comply with such State statute, the Offer
will not be made to nor will tenders be accepted from or on behalf of the
holders of Shares in such State. In any jurisdiction where the securities, "blue
sky" or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Purchaser by one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
If you wish to have us tender any or all of the Shares held by us for your
account, please instruct us by completing, executing and returning to us the
instruction form contained in this letter. If you authorize a tender of your
Shares, all such Shares will be tendered unless otherwise specified in such
instruction form. Your instructions should be forwarded to us in ample time to
permit us to submit a tender on your behalf prior to the expiration of the
Offer.
2
<PAGE> 3
Instructions with respect to the Offer to Purchase for Cash
all Outstanding Shares of Common Stock
of
AUTOMOBILE PROTECTION CORPORATION -- APCO
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated June 16, 1999 (the "Offer to Purchase"), and the related
Letter of Transmittal pursuant to an offer by AM1 Acquisition Company, a Georgia
corporation and a wholly owned subsidiary of Ford Motor Company, a Delaware
corporation, to purchase all outstanding shares of Common Stock, par value $.001
per share (the "Shares"), of Automobile Protection Corporation-APCO, a Georgia
corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) which are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
Number of Shares to be Tendered*
------------------------------------------------------------------------------
Shares
Dated
------------------------------------------------------------------------------,
1999
SIGN HERE
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Signature(s)
------------------------------------------------------------------------------
Please print name(s)
------------------------------------------------------------------------------
Address
------------------------------------------------------------------------------
Area Code and Telephone Number
------------------------------------------------------------------------------
Tax Identification or Social Security Number
- -------------------------
* Unless otherwise indicated, it will be assumed that all of your Shares held by
us for your account are to be tendered.
3
<PAGE> 1
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU)
TO GIVE THE PAYER.--Social security numbers have nine digits separated by two
hyphens: i.e., 000-00-0000. Employee identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF--
- ----------------------------------------------------------------------
<S> <C>
1. Individual The individual
2. Two or more individuals The actual owner of the account or,
(joint account) if combined funds, the first
individual on the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state
law
5. Sole proprietorship The owner(4)
- ----------------------------------------------------------------------
GIVE THE EMPLOYER IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ----------------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or The legal entity(4)
pension trust
8. Corporate The corporation
9. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt organization
account
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a
state or local government,
school district, or prison)
that receives agricultural
program payments.
</TABLE>
- ------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
- ------------------------------------------------------------------
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Card, at the local
Social Administration office, or Form SS-4, Application for Employer
Identification Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from withholding include:
- - An organization exempt from tax under Section 501(a), an individual retirement
account (IRA), or a custodial account under Section 403(b)(7), if the account
satisfies the requirements of Section 401(f)(2).
- - The United States or a state thereof, the District of Columbia, a possession
of the United States, or a political subdivision or wholly-owned agency or
instrumentality of any one or more of the foregoing.
- - An international organization or any agency or instrumentality thereof.
- - A foreign government and any political subdivision, agency or instrumentality
thereof.
Payees that may be exempt from backup withholding include:
- - A corporation.
- - A financial institution.
- - A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a).
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- - A middleman known in the investment community as a nominee or who is listed in
the most recent publication of the American Society of Corporate Secretaries,
Inc., Nominee List.
- - A futures commission merchant registered with the Commodity Futures Trading
Commission.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends generally exempt from backup
withholding include:
- - Payments to nonresident aliens subject to withholding under Section 1441.
- - Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- - Payments of patronage dividends not paid in money.
- - Payments made by certain foreign organizations.
- - Section 404(k) payments made by an ESOP.
Payments of interest generally exempt from backup withholding include:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
- - Payments described in Section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid to you.
Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see the regulations under sections 6041, 6041A,
6042, 6044, 6045, 6049, 6050A and 6050N.
EXEMPT PAYEES DESCRIBED ABOVE MUST FILE FORM W-9 OR A SUBSTITUTE FORM W-9 TO
AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER,
FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE
FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
PRIVACY ACT NOTICE.--Section 6109 requires you to provide your correct taxpayer
identification number to payers, who much report the payments to the IRS. The
IRS uses the number for identification purposes and may also provide this
information to various government agencies for tax enforcement or litigation
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to payer. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish
your taxpayer identification number to a payer, you are subject to a penalty of
$50 for each such failure unless your failure is due to reasonable cause and not
to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated June 16,
1999, and the related Letter of Transmittal, and is being made to all holders of
Shares. The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making of the
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Shares of
Common Stock of Automobile Protection Corporation - APCO at $13.00 Net Per Share
by AM1 Acquisition Company a Wholly Owned Subsidiary of Ford Motor Company
AM1 Acquisition Company, a Georgia corporation (the "Purchaser") and a wholly
owned subsidiary of Ford Motor Company, a Delaware corporation ("Ford"), is
offering to purchase all outstanding shares of Common Stock, par value $.001 per
share (the "Shares"), of Automobile Protection Corporation - APCO, a Georgia
corporation (the "Company"), at $13.00 per Share, net to the seller in cash and
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated June 16, 1999 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer").
The Board of Directors of the Company has unanimously approved the Offer, has
determined that the terms of the Offer are fair to and in the best interests of
the Company's stockholders and recommends that the Company's stockholders accept
the Offer and tender their Shares. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, JULY 14, 1999, UNLESS THE
OFFER IS EXTENDED.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. Following the consummation of the Offer, the Purchaser
intends to consummate the Merger described below. The Offer is being made
pursuant to an Agreement and Plan of Merger, dated as of June 10, 1999 (the
"Merger Agreement"), among Ford, the Purchaser and the Company, which provides
that, following completion of the Offer, upon the terms and subject to the
conditions of the Merger Agreement and the Georgia Business Corporation Code
(the "GBCC"), the Purchaser will be merged with the Company and each outstanding
Share (other than Shares owned by the Company or any of its subsidiaries, Ford
or the Purchaser and Shares that are subject to dissenters' rights) will be
converted into the right to receive $13.00 in cash, without interest. Ford has
entered into Stock Option and Tender Agreements with Martin J. Blank and Larry
I. Dorfman (the "Principal Company Stockholders") with respect to approximately
16.5% in total of the issued and outstanding Shares on a fully diluted basis.
Pursuant to the Stock Option and Tender Agreements, each of the Principal
Company Stockholders have agreed, among other things, to tender (and not
withdraw) their Shares to the Purchaser pursuant to the Offer, to provide each
of Ford and the Purchaser with an irrevocable proxy and otherwise to support the
transaction with the Purchaser. The Principal Company Stockholders have also
granted to Ford an option to purchase, which is excercisable upon the occurrence
of certain events, all of the Shares beneficially owned by the Principal Company
Stockholders in the Stock Option and Tender Agreements. Ford and the Company
have entered into a Company Stock Option Agreement, pursuant to which the
Company has granted to Ford an irrevocable option to purchase 2,375,406 newly
issued Shares, representing 19.9% of the issued and outstanding Shares, upon the
terms and subject to the conditions of the Company Stock Option Agreement, at a
price of $13.00 per share. The option becomes exercisable upon the occurrence of
certain events. The Offer is conditioned upon, among other things, (i) there
being validly tendered and not withdrawn prior to the expiration of the Offer a
number of Shares which constitutes a majority of all the outstanding Shares
(determined on a fully-diluted basis), (ii) the expiration or termination of all
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and (iii) all consents, approvals and filings under any
state statute, law (including common law), ordinance, rule or regulation
applicable to automobile warranty or service contract providers, automobile
insurance providers or persons in other similar businesses or other businesses
operated by the Company or any subsidiary of the Company that are required to be
made or obtained prior to the acceptance of the Shares pursuant to the Offer
having been made or obtained. Tenders of Shares made pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless theretofore accepted
for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after August 14, 1999. The term "Expiration Date" means 12:00 Midnight, New
York City time, on Wednesday, July 14, 1999, unless and until the Purchaser, in
its discretion (but subject to the terms and conditions of the Merger
Agreement), shall have extended the period during which the Offer is open, in
which event the term "Expiration Date" shall mean the latest time and date at
which the Offer, as so extended by the Purchaser, shall expire.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by First Chicago Trust
Company of New York (the "Depositary") at one of its addresses set forth on the
back cover of the Offer to Purchase. Any notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holder, if different from that of
the person who tendered the Shares. If certificates for Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such certificates, the serial numbers shown on such
certificates must be submitted and, unless such Shares have been tendered by an
Eligible Institution (as defined in Section 3 of the Offer to Purchase), the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase, any notice
of withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility (as defined in Section 3 of the Offer to Purchase) to be
credited with the withdrawn Shares, in which case a notice of withdrawal will be
effective if delivered to the Depositary by any method described in the
preceding paragraph. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by the Purchaser, in its
sole discretion, whose determination will be final and binding. For purposes of
the Offer, the Purchaser will be deemed to have accepted for payment (and
thereby purchased) Shares validly tendered and not properly withdrawn as, if and
when the Purchaser gives oral or written notice to the Depositary of the
Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon
the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders whose Shares have been
accepted for payment. In all cases, payment for Shares purchased pursuant to the
Offer will be made only after timely receipt by the Depositary of certificates
for such Shares (or timely confirmation of a book-entry transfer of such Shares
into the Depositary's account at the Book-Entry Transfer Facility pursuant to
the procedures set forth in the Offer to Purchase), a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), or an Agent's
Message (as defined in Section 2 of the Offer to Purchase), in the case of a
book-entry transfer, and any other documents required by the Letter of
Transmittal. Under no circumstances will interest on the purchase price for
Shares be paid, regardless of any extension of the Offer or any delay in making
such payment.
Subject to the applicable rules and regulations of the Commission and the terms
of the Merger Agreement, the Purchaser expressly reserves the right (but shall
not be obligated), in its sole discretion, at any time and from time to time,
and regardless of whether or not any of the events set forth in Section 15 of
the Offer to Purchase shall have occurred or shall have been determined by the
Purchaser to have occurred, to (i) extend the period of time during which the
Offer is open and thereby delay acceptance for payment of, and the payment for,
any Shares, by giving oral or written notice of such extension to the Depositary
and (ii) amend the Offer in any respect by giving oral or written notice of such
amendment to the Depositary.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference. The
Company has provided the Purchaser with the Company's stockholder list and
security position listing for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal and other
relevant materials are being mailed to record holders of Shares and are being
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares. The Offer to Purchase and the related Letter of Transmittal
contain important information that should be read carefully before any decision
is made with respect to the Offer.
Questions and requests for copies of the Offer to Purchase, the Letter of
Transmittal and any other tender offer materials may be directed to the
Information Agent as set forth below, and copies will be furnished promptly at
the Purchaser's expense. No fees or commissions will be payable to brokers,
dealers or other persons other than the Information Agent for soliciting tenders
of Shares pursuant to the Offer. The Information Agent for the Offer is:
D.F.King & Co., Inc.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
All Others Call Toll Free: (800) 207-3156
June 16, 1999
<PAGE> 1
EXHIBIT (a)(8)
NEWS
Contact: Ford: Jennee Martin APCO: Anthony R. Levinson
313-337-2699 770-394-7070
IMMEDIATE RELEASE
FORD MOTOR COMPANY REACHES AGREEMENT TO BUY AUTOMOBILE PROTECTION
CORPORATION
DEARBORN, Mich., June 10, 1999 - Ford Motor Company [NYSE:F] and Automobile
Protection Corporation (APCO) [NASDAQ:APCO], a premier all-makes extended
service contract provider, have reached a definitive agreement for Ford to
acquire APCO for $13.00 per share in cash.
APCO's core business is the marketing and administration of the EasyCare(R)
Certified Pre-Owned Vehicle Merchandising Program and EasyCare(R) Vehicle
Service Contracts, sold primarily through car and truck dealerships. APCO also
administers warranty and service contract products under private labels.
"APCO is a nationally recognized company that has earned a top-tier position in
the all-makes extended service contract market," said Mike Jordan, vice
president, Ford Customer Service Division (FCSD). "We're pleased to add
EasyCare(R) to Ford Motor Company's portfolio of brands.
"This acquisition is directly aligned with Ford's goal of becoming the leading
consumer company that provides automotive products and services, and it
represents another significant step in FCSD's efforts to become the number one
aftersales and service operation in the world."
Headquartered in Atlanta, Georgia, APCO has 200 employees. The company will
retain its current officers, employees and independent sales representatives.
"APCO has a highly skilled and nimble management team with an outstanding track
record of growth, effective operating systems and best-in-class customer
service," Jordan said. "And APCO's leaders demonstrate the new entrepreneurial
spirit taking hold at Ford."
Ford Motor Company has agreed to commence a tender offer for all of the
outstanding shares of APCO common stock, at a purchase price of $13.00 per
share. The total amount of the tender offer is approximately $180 million.
This transaction is subject to regulatory approval and the valid tender of a
majority of APCO's shares, as well as other customary conditions. The directors
of APCO are unanimously recommending that all APCO shareholders accept Ford's
offer. APCO's founders and largest shareholders, Martin Blank and Larry Dorfman,
have agreed to tender their shares and support the transaction.
"The proposed merger with Ford Motor Company represents good value for our
stockholders, outstanding marketing opportunities for our agents, security for
our employees and strong growth opportunities for both companies," said Larry
Dorfman, president and chief executive officer of APCO.
<PAGE> 2
"Being able to operate independently while having the full backing of Ford will
place us in a unique and favorable position in the marketplace," Dorfman
continued. "We will continue to operate the way we do today, and will serve
present and future clients with the same industry-leading level of service we
have become known for."
Ford Motor Company is the world's second largest automaker. Its automotive
brands include Aston Martin, Ford, Jaguar, Lincoln, Mazda, Mercury and Volvo.
Its automotive-related services include Ford Credit, Quality Care, Hertz and
Visteon Automotive Systems.
<PAGE> 1
EXHIBIT (c)(1)
EXECUTION COPY
================================================================================
AGREEMENT AND PLAN OF MERGER
Dated as of June 10, 1999
Among
FORD MOTOR COMPANY,
AM1 ACQUISITION COMPANY
and
AUTOMOBILE PROTECTION CORPORATION - APCO
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
<S> <C>
Definitions.......................................................................................................2
SECTION 1.01. Definitions........................................................................................2
ARTICLE II
The Offer and the Merger..........................................................................................8
SECTION 2.01. The Offer..........................................................................................8
SECTION 2.02. Company Actions....................................................................................9
SECTION 2.03. Board of Directors; Section 14(f).................................................................10
SECTION 2.04. The Merger........................................................................................11
SECTION 2.05. Closing...........................................................................................11
SECTION 2.06. Effective Time....................................................................................11
SECTION 2.07. Effects...........................................................................................12
SECTION 2.08. Certificate of Incorporation and By-laws..........................................................12
SECTION 2.09. Directors.........................................................................................12
SECTION 2.10. Officers..........................................................................................12
ARTICLE III
Effect on the Capital Stock of the Constituent Corporations; Exchange of Certificates............................12
SECTION 3.01. Effect on Capital Stock...........................................................................12
SECTION 3.02. Exchange of Certificates..........................................................................13
ARTICLE IV
Representations and Warranties of the Company....................................................................15
SECTION 4.01. Organization, Standing and Power..................................................................15
SECTION 4.02. Company Subsidiaries; Equity Interests............................................................15
SECTION 4.03. Capital Structure.................................................................................16
SECTION 4.04. Authority; Execution and Delivery; Enforceability.................................................17
SECTION 4.05. No Conflicts; Consents............................................................................17
SECTION 4.07. Information Supplied..............................................................................19
SECTION 4.08. Absence of Certain Changes or Events..............................................................19
SECTION 4.09. Taxes.............................................................................................19
SECTION 4.10. Benefit Plans ERISA Compliance; Excess Parachute Payments.........................................20
SECTION 4.11. Litigation........................................................................................22
SECTION 4.12. Compliance with Applicable Laws...................................................................22
SECTION 4.13. Contracts; Debt Instruments.......................................................................22
SECTION 4.14. Title to Properties...............................................................................23
SECTION 4.15. Intellectual Property.............................................................................23
SECTION 4.16. Takeover Laws.....................................................................................24
SECTION 4.17. Year 2000.........................................................................................24
SECTION 4.18. Affiliate Transactions............................................................................24
SECTION 4.19. Environmental, Health, and Safety.................................................................25
SECTION 4.20. Brokers; Fees and Expenses........................................................................25
SECTION 4.21. Opinion of Financial Advisor......................................................................26
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
ARTICLE V
<S> <C>
Representations and Warranties of Parent and Sub.................................................................26
SECTION 5.01. Organization, Standing and Power..................................................................26
SECTION 5.02. Sub...............................................................................................26
SECTION 5.03. Financing.........................................................................................26
SECTION 5.04. Ownership of Company Common Stock.................................................................26
SECTION 5.05. Authority; Execution and Delivery; Enforceability.................................................26
SECTION 5.06. No Conflicts; Consents............................................................................27
SECTION 5.07. Information Supplied..............................................................................27
SECTION 5.08. Brokers...........................................................................................27
ARTICLE VI
Covenants Relating to Conduct of Business........................................................................28
SECTION 6.01. Conduct of Business...............................................................................28
SECTION 6.02. No Solicitation...................................................................................31
ARTICLE VII
Additional Agreements............................................................................................32
SECTION 7.01. Preparation of Proxy Statement; Stockholders Meeting..............................................32
SECTION 7.02. Access to Information; Confidentiality............................................................33
SECTION 7.03. Commercially Reasonable Efforts; Notification.....................................................33
SECTION 7.04. Stock Options.....................................................................................34
SECTION 7.05. Indemnification; D&O Insurance....................................................................35
SECTION 7.06. Public Announcements..............................................................................36
SECTION 7.07. Transfer Taxes....................................................................................36
SECTION 7.08. Transaction Litigation............................................................................36
ARTICLE VIII
Conditions Precedent.............................................................................................36
SECTION 8.01. Conditions to Each Party's Obligation To Effect The Merger........................................36
SECTION 8.02. Conditions to Obligations of Parent and Sub.......................................................37
SECTION 8.03. Conditions to Obligations of the Company..........................................................38
ARTICLE IX
Termination, Amendment and Waiver................................................................................39
SECTION 9.01. Termination.......................................................................................39
SECTION 9.02. Effect of Termination; Fees and Expenses..........................................................40
SECTION 9.03. Amendment.........................................................................................42
SECTION 9.04. Extension; Waiver.................................................................................42
SECTION 9.05. Procedure for Termination, Amendment, Extension or Waiver.........................................42
ARTICLE X
General Provisions...............................................................................................43
SECTION 10.01. Nonsurvival of Representations and Warranties....................................................43
SECTION 10.02. Notices..........................................................................................43
SECTION 10.03. Interpretation; Disclosure Letters...............................................................44
SECTION 10.04. Severability.....................................................................................44
SECTION 10.05. Counterparts.....................................................................................44
SECTION 10.06. Entire Agreement; No Third-Party Beneficiaries...................................................44
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 10.07. Governing Law....................................................................................44
SECTION 10.08. Assignment.......................................................................................45
SECTION 10.09. Enforcement......................................................................................45
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER dated as of June 10,
1999, among FORD MOTOR COMPANY, a Delaware corporation
("Parent"), AM1 ACQUISITION COMPANY, a Georgia
corporation ("Sub"), and a wholly owned subsidiary of
Parent, and AUTOMOBILE PROTECTION CORPORATION - APCO, a
Georgia corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes
to cause Sub to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all the issued and
outstanding shares of Company Common Stock (as defined herein) at a price per
share of Company Common Stock of not less than $13.00, net to the seller in
cash, upon the terms and subject to the conditions set forth in this Agreement;
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the merger (the "Merger") of Sub into the Company, or
(at the election of Parent) the Company into Sub, on the terms and subject to
the conditions set forth in this Agreement, whereby each issued share of Company
Common Stock not owned directly or indirectly by Parent or the Company, will be
converted into the right to receive the per share consideration paid pursuant to
the Offer;
WHEREAS simultaneously with the execution and delivery of this
Agreement Parent and the Principal Company Stockholders (as defined herein) are
entering into Stock Option and Tender Agreements (as defined herein) and the
Company and Parent are entering into the Company Stock Option Agreement (as
defined herein);
WHEREAS, as a condition to their willingness to enter into
this Agreement and consummate the transactions contemplated hereby, Parent and
Sub have required each of the Principal Company Stockholders, contemporaneously
with the execution and delivery of this Agreement, to execute the Principal
Stockholders Employment Agreements (as defined herein), to be effective upon the
consummation of the Merger, and in order to induce Parent and Sub to enter into
this Agreement, the Principal Company Stockholders have agreed to execute and
deliver the Principal Stockholders Employment Agreements; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE> 6
2
ARTICLE I
Definitions
SECTION 1.01. Definitions. (a) As used in this Agreement,
the following terms shall have the following meanings:
"affiliate" means, for any person, another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"Applicable Law" means any statute, law (including common law),
ordinance, rule or regulation applicable to the Company or any Company
Subsidiary or their respective properties or assets.
"Article 13" means Article 13 of the GBCC.
"Auto Warranty Law" means any statute, law (including common law),
ordinance, rule or regulation applicable to automobile warranty or service
contract providers, automobile insurance providers or persons in other similar
businesses or other businesses operated by the Company or the Company
Subsidiaries.
"Certificate" or "Certificates" mean the certificate or certificates
that immediately prior to the Effective Time represented outstanding shares of
Company Common Stock.
"Certificate of Merger" means a certificate of merger, or other
appropriate documents, to be filed with the Secretary of State of Georgia to
effect the Merger.
"Closing" means the closing of the Merger.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"commercially reasonable efforts" means spending $100,000 in a single
instance or $500,000 in the aggregate for all costs (including reasonable
attorney's, consultants and accountants fees and expenses) associated with a
specific action or all actions, respectively, which are required to be taken
under this Agreement.
"Company" has the meaning set forth in the heading hereof.
"Company Board" means the Board of Directors of the Company.
"Company By-laws" means the by-laws of the Company, as amended to the
date of this Agreement.
"Company Capital Stock" has the meaning set forth in Section 4.03.
<PAGE> 7
3
"Company Charter" means the articles of incorporation of the Company,
as amended to the date of this Agreement.
"Company Common Stock" means the common stock, par value $.001 per
share, of the Company.
"Company Employee Stock Option" means any option to purchase Company
Common Stock granted under any Company Stock Plan.
"Company Disclosure Letter" means the letter, dated as the date of this
Agreement, delivered by the Company to Parent and Sub which lists each Company
Subsidiary.
"Company Investment" has the meaning set forth in Section 4.02(b).
"Company Material Adverse Effect" means a material adverse effect on
the business, assets, results of operations, financial condition or prospects of
the Company, and the Company Subsidiaries taken as a whole, on the ability of
the Company to perform its obligations under the Transaction Agreements to which
it is a party or on the ability of the Company to consummate the Offer, the
Merger and the other Transactions; provided however, that only with respect to a
material adverse effect on the prospects of the Company and the Company
Subsidiaries, events changes, effects and developments relating to the economy
in general and not specifically relating to the Company or the Company
Subsidiaries shall not be included.
"Company Plans" has the meaning set forth in Section 4.10(a).
"Company Preferred Stock" has the meaning set forth in Section 4.03.
"Company SAR" means any stock appreciation right linked to the price of
Company Common Stock and granted under any Company Stock Plan.
"Company SEC Documents" means all reports, schedules, forms, statements
and other documents required to be filed by the Company with the SEC since
January 1, 1996.
"Company Stock Option Agreement" means the stock option agreement
between Parent and Sub pursuant to which the Company will grant Parent an option
to purchase shares of Company Common Stock on the terms and subject to the
conditions set forth therein.
"Company Stock Plans" means the 1988 Stock Option Plan of Automobile
Protection Corporation-APCO, the Automobile Protection Corporation-APCO Outside
Directors' Stock Option Plan, the Automobile Protection Corporation-APCO 1997
Performance Equity Plan, the Automobile Protection Corporation-APCO 1998
Performance Equity Plan and any other stock option or equity plan of the
Company.
"Company Stockholder Approval" has the meaning set forth in Section
4.04(c).
"Company Stockholders Meeting" means a meeting of the Company's
stockholders for the purpose of seeking Company Stockholder Approval.
<PAGE> 8
4
"Company Subsidiaries" means all the subsidiaries of the Company.
"Company Takeover Proposal" means any tender offer or exchange offer,
proposal for a tender offer, exchange offer, merger, consolidation,
recapitalization or other business combination involving the Company or any
Company Subsidiary, any proposal for the issuance by the Company of a material
amount of its equity securities as consideration for the assets or securities of
another person or any proposal or offer to acquire in any manner, directly or
indirectly, a material equity interest in, any voting securities of, or a
substantial portion of the assets of, the Company or any Company Subsidiary,
other than the Transactions.
"Confidentiality Agreement" means the confidentiality agreement, dated
December 8, 1998, between the Company and Parent.
"Consent" means any consent, approval, license, permit order or
authorization.
"Contract" means any contract, lease, license, indenture, note, bond,
mortgage, agreement, permit, concession, franchise, instrument, undertaking,
commitment, understanding or other arrangement (whether written or oral).
"D&O Insurance" means directors' and officers' insurance.
"Dissenters' Shares" means shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and that are held by any
person who is entitled to demand and properly demands payment of the fair value
of such shares pursuant to, and who complies in all respects with, Article 13 of
the GBCC.
"Effective Time" means the time the Merger becomes effective.
"Environmental, Health and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, common law, plans, injunctions, judgments, orders, decrees,
rulings and charges thereunder) of any Governmental Entity concerning pollution
or protection of the environment, public health and safety, or employee health
and safety, including laws relating to emissions, discharges, releases, or
threatened releases of Hazardous Substances into ambient air, surface water,
ground water, or lands or otherwise relating to the manufacture, generation,
processing, distribution, use, treatment, storage, disposal, clean-up,
transport, or handling of Hazardous Substances.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Fund" shall have the meaning set forth in Section 3.02(a).
"Filed Company SEC Documents" means all Company SEC Documents that were
filed and publicly available prior to the date of this Agreement.
<PAGE> 9
5
"Financial Statements" means the consolidated financial statements of
the Company included in each of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 and Quarterly Report on Form 10-Q for the
Quarter ended March 31, 1999, including in each case the footnotes thereto.
"Fully Diluted Shares" shall have the meaning set forth in Exhibit A
hereto.
"GAAP" means U.S. generally accepted accounting principles.
"GBCC" means the Business Corporation Code of the State of Georgia, as
amended from time to time.
"Governmental Entity" means any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign.
"Hazardous Substance" means any hazardous, acutely hazardous, or toxic
substance, waste or contaminant, or any other material, including, without
limitation, petroleum hydrocarbons and asbestos, regulated under any
Environmental, Health and Safety Law and applicable to the material, substance,
waste or contaminant in the jurisdiction in which such material, substance,
waste or contaminant is located.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"indebtedness" means, without duplication, (A) all obligations for
borrowed money, or with respect to deposits or advances of any kind, (B) all
obligations evidenced by bonds, debentures, notes or similar instruments, (C)
all obligations upon which interest charges are customarily paid, (D) all
obligations under conditional sale or other title retention agreements relating
to purchased property, (E) all obligations issued or assumed as the deferred
purchase price of property or services (excluding obligations to creditors for
raw materials, inventory, services and supplies incurred in the ordinary course
of business), (F) all capitalized lease obligations, (G) all obligations of
others secured by a Lien, other than Permitted Liens under clauses (a), (b) or
(c) of the definition thereof, on property or assets, whether or not the
obligations secured thereby have been assumed, (H) all obligations under
interest rate or currency hedging transactions (valued at the termination value
thereof), (I) all letters of credit and (J) all guarantees and arrangements
having the economic effect of a guarantee of any indebtedness of any other
person.
"Information Statement" means any information statement required under
Rule 14f-1 promulgated under the Exchange Act in connection with the Offer.
"Intellectual Property Rights" means, collectively, all patents, patent
rights, trademarks, trademark rights, trade names, trade name rights, service
marks, service mark rights, copyrights and other proprietary intellectual
property rights and all technology, know-how, data, computer programs and other
tangible or intangible proprietary information or material.
"Judgment" means any judgment, order, writ or decree.
<PAGE> 10
6
"knowledge" and "known" means, when used to modify any representation
or warranty of the Company, that Larry I. Dorfman, Martin J. Blank, Anthony
Levinson and William Carter Patterson have no knowledge, after due investigation
and inquiry, that such representation or warranty is not true and correct.
"Liens" means pledges, liens, charges, mortgages, encumbrances and
security interests of any kind or nature whatsoever.
"Material Contracts" means Contracts that are material to the business,
properties, assets, financial condition or results of operations of the Company
and the Company Subsidiaries taken as a whole and those which are set forth in
Section 4.13(a) of the Company Disclosure Letter.
"Material Intellectual Property Rights" means all Intellectual Property
Rights which are material to the conduct of the business of the Company and the
Company Subsidiaries taken as a whole.
"Maximum Premium" has the meaning set forth in Section 7.05(b).
"Merger" has the meaning set forth in the recitals hereto.
"Merger Consideration" means the price per share of Company Common
Stock paid pursuant to the Offer.
"Minimum Tender Condition" shall have the meaning set forth in Exhibit
A hereto.
"Offer" has the meaning set forth in the recitals hereto.
"Offer Documents" has the meaning set forth in Section 2.01(b).
"Outside Date" has the meaning set forth in Section 9.01(b)(i) .
"Parent" has the meaning set forth in the heading hereto.
"Parent Disclosure Letter" means the letter, dated as of the date of
this Agreement, delivered by Parent to the Company.
"Parent Material Adverse Effect" means a material adverse effect on the
ability of Parent or Sub to perform its obligations under this Agreement or on
the ability of Parent or Sub to consummate the Offer, the Merger and the other
Transactions.
"Paying Agent" means the bank or trust company selected by Parent prior
to the Effective Time to act as paying agent for the payment of the Merger
Consideration.
"Permitted Lien" has the meaning set forth in Section 4.14(a).
"person" means any individual, firm, corporation, partnership, company,
limited liability company, trust, joint venture, association, Governmental
Entity or other entity.
<PAGE> 11
7
"Potential Stock Options" means options to purchase Company Common
Stock issued to persons other than directors of the Company or alleged to have
been issued to such persons prior to the date hereof that the Company does not
have knowledge of as of the date hereof; provided that the number of Potential
Stock Options shall not exceed 20,000 shares.
"Principal Company Stockholders" means those stockholders of the
Company identified in Part A of the Parent Disclosure Letter.
"Principal Stockholders Employment Agreements" means employment
agreements between the Company and each of the Principal Company Stockholders.
"Proxy Statement" means a proxy or information statement of the Company
relating to the approval of this Agreement by the Company's stockholders.
"Schedule 14D-9" means the Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Option and Tender Agreements" means agreements entered into by
Parent and the Principal Company Stockholders pursuant to which each of the
Principal Company Stockholders has agreed to take specified actions in
furtherance of the Offer and the Merger.
"Stock Transfer Taxes" means any state, local, foreign or provincial
Tax which is attributable to the transfer of Company Common Stock pursuant to
this Agreement.
"Sub" has the meaning set forth in the heading hereto.
"subsidiary" means, with respect to any person, another person an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such first person.
"Surviving Corporation" shall have the meaning set forth in Section
2.04.
"Taxes" means and includes all forms of taxation, whenever created or
imposed, and whether of the United States or elsewhere, and whether imposed by a
local, municipal, governmental, state, foreign, Federal or other Governmental
Entity, or in connection with any agreement with respect to Taxes, including all
interest, penalties and additions imposed with respect to such amounts.
"Termination Fee" has the meaning set forth in Section 7.06(b).
<PAGE> 12
8
"Tax Return" means all Federal, state, local, provincial and foreign
Tax Returns, declarations, statements, reports, schedules, forms and information
Returns and any amended Tax Return relating to Taxes.
"Third Party Stock Options" means outstanding options to purchase
Company Common Stock granted to persons other than employees of the Company,
excluding Potential Stock Options.
"Transactions" means, collectively, the Offer, the Merger and the other
transactions contemplated by the Transaction Agreements.
"Transaction Agreements" means this Agreement together with the Stock
Option and Tender Agreements and the Company Stock Option Agreement.
"Transfer Taxes" means any state, local, foreign or provincial Tax
which is attributable to the transfer of the beneficial ownership of the
Company's or the Company's subsidiaries' real property.
"Voting Company Debt" means any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote.
"Year 2000 Compliant" means the ability to store and produce data
before, on or after January 1, 2000 (including taking into account that the
ability of software, systems, hardware and related equipment, data, interfaces
or processes (i) to operate such year is a leap year), as accurately and without
additional delay, corruption, interruption or error due to the fact that the
time at which and the date on which such items are operating is on or after
00:00 on January 1, 2000, or (ii) to accept, calculate, process, store,
maintain, write, output (to a system that is Year 2000 Compliant), as accurately
and without additional delay, interruption, corruption or error, any function
referencing a time or date on or after 00:00 on January 1, 2000, or both,
whether before, on or after 00:00 on January 1, 2000, and any time period
determined or to be determined based on any such times or dates, or both, in the
case of clause (i) and (ii), as compared to the functionality, data integrity
and performance of such software, systems, hardware and related equipment, data,
interfaces or processes as applied to times before 00:00 on January 1, 2000.
ARTICLE II
The Offer and the Merger
SECTION 2.01. The Offer. (a) As promptly as practicable but in
no event later than five business days after the date of this Agreement, Sub
shall, and Parent shall cause Sub to, commence the Offer within the meaning of
the applicable rules and regulations of the SEC. The obligation of Sub to, and
of Parent to cause Sub to, accept for payment, and pay for, any shares of
Company Common Stock tendered pursuant to the Offer shall be subject to the
conditions set forth in Exhibit A (any of which may be waived by Sub in its sole
discretion) and to the other conditions in this Agreement. Sub expressly
reserves the right to modify the terms of the Offer, except that, without the
consent of the Company (unless the Company takes any action permitted
<PAGE> 13
9
to be taken pursuant to Section 6.02(b)), Sub shall not (i) reduce the number of
shares of Company Common Stock subject to the Offer, (ii) reduce the price per
share of Company Common Stock to be paid pursuant to the Offer, (iii) modify or
add to the conditions set forth in Exhibit A in any manner adverse to the
holders of Company Common Stock, (iv) except as provided in the next sentence,
extend the Offer or (v) change the form of consideration payable in the Offer.
Notwithstanding the foregoing, Sub may, without the consent of the Company, (i)
extend the Offer, if at the scheduled expiration date of the Offer any of the
conditions to Sub's obligation to purchase shares of Company Common Stock are
not satisfied, until such time as such conditions are satisfied or waived, (ii)
extend the Offer for a period of not more than ten business days beyond the
initial expiration date of the Offer, if on the date of such extension less than
90% of the outstanding shares of Company Common Stock have been validly tendered
and not properly withdrawn pursuant to the Offer, (iii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the SEC
or the staff thereof applicable to the Offer, (iv) extend the Offer in order to
provide sufficient time to respond to any supplement or amendment to the Company
Disclosure Letter delivered to Parent pursuant to Section 6.01(c)(ii) and (v)
extend the Offer for any reason for a period of not more than ten business days
beyond the latest expiration date that would otherwise be permitted under clause
(i), (ii), (iii) or (iv) of this sentence. On the terms and subject to the
conditions of the Offer and this Agreement, Sub shall pay for all shares of
Company Common Stock validly tendered and not withdrawn pursuant to the Offer
that Sub becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer. Sub may, at any time, transfer or
assign to one or more corporations directly or indirectly majority owned by
Parent the right to purchase all or any portion of the shares of Company Common
Stock tendered pursuant to the Offer, but any such transfer or assignment shall
not relieve Sub of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for shares of Company Common Stock
properly tendered and accepted for payment. Parent and Sub agree that the
conditions set forth in paragraphs (a) through (h) of Exhibit A shall be subject
to the reasonable judgment of Parent or Sub.
(b) On the date of commencement of the Offer, Parent and Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"). Each of Parent, Sub
and the Company shall promptly correct any information provided by it for use in
the Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and each of Parent and Sub shall
take all steps necessary to amend or supplement the Offer Documents and to cause
the Offer Documents, as so amended or supplemented, to be filed with the SEC and
to be disseminated to the Company's stockholders, in each case as and to the
extent required by applicable Federal securities laws. Parent and Sub shall
provide the Company and its counsel in writing with any comments Parent, Sub or
their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
SECTION 2.02. Company Actions. (a) The Company hereby
approves of and consents to each of the Transactions.
<PAGE> 14
10
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC the Schedule 14D-9 containing the
recommendations described in Section 4.04(b) and shall mail the Schedule 14D-9
to the holders of Company Common Stock. Each of the Company, Parent and Sub
shall promptly correct any information provided by it for use in the Schedule
14D-9 if and to the extent that such information shall have become false or
misleading in any material respect, and the Company shall take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable Federal securities laws. The Company shall provide Parent and its
counsel in writing with any comments the Company or its counsel may receive from
the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Company Common Stock as of a recent date
and of those persons becoming record holders subsequent to such date, together
with copies of all lists of stockholders, security position listings and
computer files and all other information in the Company's possession or control
regarding the beneficial owners of Company Common Stock, and shall furnish to
Sub such information and assistance (including updated lists of stockholders,
security position listings and computer files) as Parent may reasonably request
in communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Transactions, Parent and Sub shall hold in confidence the information
contained in any such labels, listings and files, shall use such information
only in connection with the Offer and the Merger and, if this Agreement shall be
terminated, shall deliver to the Company all copies of such information then in
their possession.
SECTION 2.03. Board of Directors; Section 14(f). (a) If
requested by Parent, upon the acceptance for payment of the shares of Company
Common Stock to be purchased pursuant to the Offer, Sub shall be entitled to
designate such number of directors on the Company Board (and on each committee
of the Company Board and on each board of directors of each Company Subsidiary
designated by Parent) as will give Sub representation on the Company Board (or
such committee or Company Subsidiary board of directors) equal to at least that
number of directors, rounded up to the next whole number, which is the product
of (a) the total number of directors on the Company Board (or such committee or
Company Subsidiary board of directors) giving effect to the directors appointed
or elected pursuant to this sentence multiplied by (b) the percentage that (i)
such number of shares of Company Common Stock so accepted for payment and paid
for by Sub plus the number of shares of Company Common Stock otherwise owned by
Sub or any other subsidiary of Parent bears to (ii) the number of such shares
outstanding, and the Company shall, at such time, cause Sub's designees to be so
appointed or elected. The Company shall take all actions necessary to cause the
persons designated by Parent to be directors on the Company Board (or a
committee of the Company Board or the board of directors of a Company Subsidiary
designated by Parent) pursuant to the preceding sentence to be so appointed or
elected (whether, at the request of Parent, by means of increasing the size of
the Company Board (or such committee or Company Subsidiary board of directors)
or seeking the resignation of directors and causing Parent's designees to be
appointed or elected).
<PAGE> 15
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(b) The Company's obligation to appoint designees of Parent to
the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all actions
required pursuant to Section 14(f) and Rule l4f-1 in order to fulfill its
obligations under this Section 2.03, and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and directors as
is required under Section 14(f) and Rule 14f-1. Parent and Sub will supply to
the Company any information with respect to any of them and their nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's
designees pursuant to this Section 2.03 and prior to the Effective Time, any
amendment or termination of this Agreement, extension for the performance or
waiver of the obligations or other acts of Parent or Sub or waiver of the
Company's rights hereunder, will require the concurrence of a majority of the
members of the Company Board who are members of the Company Board on the date of
this Agreement.
SECTION 2.04. The Merger. On the terms and subject to the
conditions set forth in this Agreement, and in accordance with the GBCC, Sub
shall be merged with and into the Company at the Effective Time (as defined in
Section 2.06). At the Effective Time, the separate corporate existence of Sub
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation"). Notwithstanding the foregoing, Parent may elect at any
time prior to the Effective Time, instead of merging Sub into the Company as
provided above, to merge the Company with and into Sub. In such event, the
parties shall execute an appropriate amendment to this Agreement in order to
reflect the foregoing, including to provide the same benefits and protections to
third parties as are provided hereby under Section 7.05. At the election of
Parent, any direct or indirect subsidiary or other affiliate of Parent may be
substituted for Sub as a constituent corporation in the Merger. In such event,
the parties shall execute an appropriate amendment to this Agreement in order to
reflect the foregoing.
SECTION 2.05. Closing. The Closing shall take place at the
offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York
10017 at 10:00 a.m. on the second business day following the satisfaction (or,
to the extent permitted by law, waiver by all parties) of the conditions set
forth in Section 8.01, or, if on such day any condition set forth in Section
8.02 or 8.03 has not been satisfied (or, to the extent permitted by law, waived
by the party or parties entitled to the benefits thereof), as soon as
practicable after all the conditions set forth in Article VIII have been
satisfied (or, to the extent permitted by law, waived by the parties entitled to
the benefits thereof), or at such other place, time and date as shall be agreed
in writing between Parent and the Company.
SECTION 2.06. Effective Time. Prior to the Closing, Parent and
the Company shall prepare, and on the Closing Date, or as soon as practicable
thereafter, shall file with the Secretary of State of Georgia the Certificate of
Merger executed in accordance with the relevant provisions of the GBCC and shall
make all other filings or recordings required under the GBCC. The Merger shall
become effective at such time as the Certificate of Merger is duly filed with
the Secretary of State of the State of Georgia, or at such other time as Parent
and the Company shall agree and specify in the Certificate of Merger. No later
than the business day following the day on which the Certificate of Merger is
filed with the Secretary of State of the State of Georgia, the
<PAGE> 16
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Surviving Corporation shall cause to be published the notice required by Section
1105 of the GBCC.
SECTION 2.07. Effects. The Merger shall have the effects set
forth in Section 1106 of the GBCC.
SECTION 2.08. Certificate of Incorporation and By-laws. (a)
The articles of incorporation of Sub, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law; provided, however, that such Articles of Incorporation shall be
amended to change the name of the Surviving Corporation to the name of the
Company.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 2.09. Directors. Subject to Section 2.03, the
directors of Sub immediately prior to the Effective Time shall be the directors
of the Surviving Corporation, until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be.
SECTION 2.10. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE III
Effect on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent- Owned Stock.
Each share of Company Common Stock that is owned by the Company or any of its
subsidiaries, Parent or Sub shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and no Parent
Common Stock or other consideration shall be delivered in exchange therefor.
<PAGE> 17
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(c) Conversion of Company Common Stock and Options. (i)
Subject to Sections 3.01(b), and 3.01(d), each issued share of Company Common
Stock shall be converted into the price per share of Company Common Stock paid
pursuant to the Offer in cash.
(ii) As of the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have any
rights with respect thereto, except the right to receive Merger Consideration
upon surrender of such certificate in accordance with Section 3.02, without
interest.
(iii) Company Employee Stock Options, Potential Stock Options
and Third Party Stock Options shall be treated as set forth in Section 7.04.
(d) Dissenters' Rights. Notwithstanding anything in this
Agreement to the contrary, Dissenters' Shares shall not be converted into Merger
Consideration as provided in Section 3.01(c), but rather the holders of
Dissenters' Shares shall be entitled to payment of the fair value of such
Dissenters' Shares in accordance with Article 13; provided, however, that if any
such holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to receive payment of fair value under Article 13, then the right of such
holder to be paid the fair value of such holder's Dissenters' Shares shall cease
and such Dissenters' Shares shall be treated as if they had been converted as of
the Effective Time into Merger Consideration as provided in Section 3.01(c). The
Company shall serve prompt notice to Parent of any demands received by the
Company for appraisal of any shares of Company Common Stock, attempted
withdrawals of any such demands and any other documents received in connection
with any assertion of rights to payment of fair value under Article 13, and
Parent shall have the right to participate in and direct all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands, or agree to do any of the foregoing.
SECTION 3.02. Exchange of Certificates. (a) Paying Agent.
Prior to the Effective Time, Parent shall select a bank or trust company to act
as the Paying Agent for the payment of the Merger Consideration upon surrender
of certificates representing Company Common Stock. The Surviving Corporation
shall provide to the Paying Agent on a timely basis, as and when needed after
the Effective Time, cash necessary to pay for the shares of Company Common Stock
converted into the right to receive cash pursuant to Section 3.01(c) (such cash
being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a Certificate or Certificates, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount of cash into which the shares of Company Common
Stock theretofore represented by such Certificate shall have been
<PAGE> 18
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converted pursuant to Section 3.01, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Company Common
Stock which is not registered in the transfer records of the Company, payment
may be made to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 3.02, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the amount of cash, without
interest, into which the shares of Company Common Stock theretofore represented
by such Certificate shall have been converted pursuant to Section 3.01. No
interest shall be paid or shall accrue on the cash payable upon the surrender of
any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The
Merger Consideration paid in accordance with the terms of this Article III upon
conversion of any shares of Company Common Stock shall be deemed to have been
paid in full satisfaction of all rights pertaining to such shares, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time that may
have been declared or made by the Company on such shares in accordance with the
terms of this Agreement or prior to the date of this Agreement and which remain
unpaid at the Effective Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of shares of
Company Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, any certificates formerly representing
shares of Company Common Stock are presented to the Surviving Corporation or the
Paying Agent for any reason, they shall be canceled and exchanged as provided in
this Article III.
(d) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holder of Company Common Stock for six
months after the Effective Time shall be delivered to the Surviving Corporation
and any holder of Company Common Stock who has not theretofore complied with
this Article III shall thereafter look only to the Surviving Corporation for
payment of its claim for Merger Consideration.
(e) No Liability. None of Parent, Sub, the Company, the
Surviving Corporation or the Paying Agent shall be liable to any person in
respect of any cash from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificate has not been surrendered prior to five years after the Effective
Time (or immediately prior to such earlier date on which Merger Consideration in
respect of such Certificate would otherwise escheat to or become the property of
any Governmental Entity), any such shares, cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest
any cash included in the Exchange Fund, as directed by Parent, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
Parent.
<PAGE> 19
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(g) Withholding Rights. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable to any
holder of Company Common Stock pursuant to this Agreement such amounts as may be
required to be deducted and withheld with respect to the making of such payment
under the Code, or under any provision of state, local or foreign tax law. To
the extent that amounts are so withheld and paid over to the appropriate taxing
authority, the Surviving Corporation will be treated as though it withheld an
appropriate amount of the type of consideration otherwise payable pursuant to
this Agreement to any holder of Company Common Stock, sold such consideration
for an amount of cash equal to the fair market value of such consideration at
the time of such deemed sale and paid such cash proceeds to the appropriate
taxing authority.
ARTICLE IV
Representations and Warranties of the Company
The Company represents and warrants to Parent and Sub as
follows:
SECTION 4.01. Organization, Standing and Power. (a) Each of
the Company and each of the Company Subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its businesses as presently conducted, other than such
franchises, licenses, permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Company Material Adverse Effect. The Company and each Company
Subsidiary is duly qualified to do business in each jurisdiction where the
nature of its business or their ownership or leasing of its properties make such
qualification necessary, except in such jurisdictions where the failure to be so
qualified, individually or in the aggregate, has not had and could not
reasonably be expected to have a Company Material Adverse Effect. The Company
has delivered to Parent true and complete copies of the Company Charter and the
Company By-laws, and the comparable charter and organizational documents of each
Company Subsidiary, in each case as amended through the date of this Agreement.
The Company By-Laws do not conflict in any respect with the Company Charter.
SECTION 4.02. Company Subsidiaries; Equity Interests. (a)
Section 4.02 of the Company Disclosure Letter lists each Company Subsidiary. All
the outstanding shares of capital stock of each Company Subsidiary have been
validly issued and are fully paid and nonassessable and, except as set forth in
the Company Disclosure Letter, are owned by the Company, by another Company
Subsidiary or by the Company and another Company Subsidiary, free and clear of
all Liens.
(b) Except for its interests in the Company Subsidiaries and
except for the ownership interests set forth in Section 4.02 of the Company
Disclosure Letter, neither the Company nor any Company Subsidiary (i) owns, has
any right to, or is involved in negotiations to, acquire, directly or
indirectly, any capital stock, membership interest, partnership interest, joint
venture interest or other equity interest in any person or (ii) has the ability
to control (whether through the ownership of voting securities or otherwise) any
other person (any of such interests
<PAGE> 20
16
under clause (i) or (ii) other than a Company Subsidiary, a "Company
Investment"). No Company Investment is, individually or when taken together with
all other Company Investments, material to the business of the Company and the
Company Subsidiaries taken as a whole.
SECTION 4.03. Capital Structure. The authorized capital stock
of the Company consists of 40,000,000 shares of Company Common Stock, 900 shares
of Class A Convertible Preferred Stock, par value $1.00 per share, 600 shares of
Class B Convertible Preferred Stock, par value $1.00 per share, 300 shares of
Class C Preferred Stock, par value $.01 per share, and 5,000,000 shares of Class
D Preferred Stock, par value $.01 per share (all classes of such preferred stock
being collectively referred to herein as "Company Preferred Stock" and
collectively with the Company Common Stock, "Company Capital Stock"). As of the
date hereof, (i) 11,936,716 shares of Company Common Stock and no shares of
Company Preferred Stock were issued and outstanding, (ii) no shares of Company
Common Stock were held by the Company in its treasury, (iii) 1,233,129 shares of
Company Common Stock were subject to outstanding Company Employee Stock Options,
(iv) 464,822 shares of Company Common Stock were subject to Third Party Stock
Options and (v) up to 20,000 shares of Company Common Stock may be issuable in
respect of Potential Stock Options. The exercise price of all outstanding
Company Employee Stock Options and of all outstanding Third Party Stock Options
are as set forth in Section 4.03 of the Company Disclosure Letter. Except as
specifically set forth in Section 4.03 of the Company Disclosure Letter, upon
the Effective Time, all outstanding Third Party Stock Options will terminate in
accordance with their terms without any action on the part of the Company or the
holder thereof and without any cash payment by, or other obligation of, the
Company or the Surviving Corporation as a result thereof. Except as set forth
above, and except for the shares of Company Common Stock reserved for issuance
upon the exercise of the option granted to Parent pursuant to the Company Stock
Option Agreement, as of the date hereof, no shares of capital stock or other
voting securities of the Company were issued, reserved for issuance or
outstanding. There are no outstanding Company SARs. All outstanding shares of
Company Capital Stock are, and all such shares that may be issued prior to the
Effective Time will be when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to or issued in violation of any purchase
option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the GBCC, the Company Charter,
the Company By-laws or any Contract to which the Company is a party or otherwise
bound. There is no Voting Company Debt issued or outstanding. Except as set
forth above, as of the date of this Agreement, there are no options, warrants,
rights, convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, contracts,
arrangements or undertakings of any kind to which the Company or any Company
Subsidiary is a party or by which any of them is bound (i) obligating the
Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, the Company or of any
Company Subsidiary or any Voting Company Debt, (ii) obligating the Company or
any Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right, security, commitment, contract, arrangement or undertaking
or (iii) that give any person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights occurring to holders
of Company Capital Stock. There are not any (i) outstanding contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any Company
Subsidiary, (ii) voting trusts or other agreements or understandings to which
the Company or any of the
<PAGE> 21
17
Company Subsidiaries is a party with respect to the voting or transfer of
capital stock of the Company or any of the Company Subsidiaries.
SECTION 4.04. Authority; Execution and Delivery;
Enforceability. (a) The Company has all requisite corporate power and authority
to execute the Transaction Agreements to which it is a party and to consummate
the Transactions. The execution and delivery by the Company of each Transaction
Agreement to which it is a party and the consummation by the Company of the
Transactions have been duly authorized by all necessary corporate action on the
part of the Company, subject, in the case of the Merger, to receipt of Company
Stockholder Approval. The Company has duly and validly executed and delivered
each Transaction Agreement to which it is a party, and each Transaction
Agreement to which it is a party constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
(b) The Company Board, at a meeting duly called and held prior
to execution of any of the Transaction Agreements, duly and unanimously adopted
resolutions (i) approving this Agreement and the other Transaction Agreements,
the Merger and the other Transactions, (ii) determining that the terms of the
Offer, the Merger and the other Transactions are fair to and in the best
interests of the Company and its stockholders, (iii) recommending that the
holders of Company Common Stock accept the Offer and tender their shares of
Company Common Stock pursuant to the Offer, (iv) recommending that the Company's
stockholders approve and adopt this Agreement and (v) adopting this Agreement
and other Transaction Agreements. Such resolutions are sufficient to render
inapplicable to Parent and Sub and this Agreement and the other Transaction
Agreements, the Offer, the Merger and the other Transactions (A) the provisions
of Parts 2 and 3 of Article 11 of the GBCC. The Company has been advised by each
of its directors and executive officers that each such person intends to tender
all shares of Company Common Stock owned by such person pursuant to the Offer,
except to the extent of any restrictions created by Section 16(b) of the
Exchange Act.
(c) The only vote of holders of any class or series of Company
Capital Stock necessary to approve and adopt this Agreement and the Merger is
the approval of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock (the "Company Stockholder Approval"). The
affirmative vote of the holders of Company Capital Stock, or any of them, is not
necessary to approve any Transaction Agreement other than this Agreement or
consummate the Offer or any Transaction other than the Merger.
SECTION 4.05. No Conflicts; Consents. Except as set forth in
Section 4.05 of the Company Disclosure Letter, the execution and delivery by the
Company of each Transaction Agreement to which it is a party do not, and the
consummation of the Offer, the Merger and the other Transactions and compliance
with the terms hereof and thereof will not, conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien (other than Permitted Liens) upon
any of the properties or assets of the Company or any Company Subsidiary under,
any provision of (i) the Company Charter, the Company By-laws or the comparable
charter or organizational documents of any Company Subsidiary, (ii) any Material
Contract, (iii) any other Contract to which the Company or any Company
Subsidiary is a party or by which any of their respective
<PAGE> 22
18
properties or assets is bound or (iv) subject to the filings and other matters
referred to in the following sentence, any provision of any Judgment or
Applicable Law applicable to the Company or any Company Subsidiary or their
respective properties or assets, other than, in the cases of clause (iii) or
(iv) above, any such items that, individually or in the aggregate, have not had
and could not reasonably be expected to have a Company Material Adverse Effect;
provided that termination rights arising due to the consummation of the Offer or
the Merger under the Contracts listed in item (1) of Section 4.05 of the Company
Disclosure Letter will not constitute (x) a breach of the representations and
warranties contained herein or (y) an event which could reasonably be expected
to have a Company Material Adverse Effect. No Consent of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained
or made by or with respect to the Company or any Company Subsidiary in
connection with the execution, delivery and performance of any Transaction
Agreement to which it is a party or the consummation of the Transactions, other
than (i) compliance with and filings under the HSR Act, (ii) the filing with the
SEC of (A) the Schedule 14D-9, (B) a Proxy Statement, if such approval is
required by law, (C) any Information Statement and (D) such reports under
Section 13 of the Exchange Act, as may be required in connection with this
Agreement and the other Transaction Agreements, the Offer, the Merger and the
other Transactions, (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Georgia and appropriate documents with the
relevant authorities of the other jurisdictions in which the Company is
qualified to do business, (iv) such filings as may be required in connection
with the taxes described in Section 7.08, (v) compliance with and filings under
the Auto Warranty Laws of the States set forth in Section 4.05 of the Company
Disclosure Letter and (vi) such other items as are set forth in Section 4.05 of
the Company Disclosure Letter. For purposes of this Section 4.05 and any other
relevant representations and warranties of the Company, the representations and
warranties are made based upon the assumption that the Company shall be the
Surviving Corporation.
SECTION 4.06. SEC Documents; Financial Statements; Undisclosed
Liabilities. (a) The Company has filed with the SEC all Company SEC Documents.
As of its respective date, each Company SEC Document, including, without
limitation, any financial statements or schedules included therein, complied in
all material respects with the requirements of the Securities Act, as the case
may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such Company SEC Document, and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Except to the
extent that information contained in any Company SEC Document has been revised
or superseded by a later filed Filed Company SEC Document, none of the Company
SEC Documents contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) The Financial Statements when filed with the SEC will,
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
<PAGE> 23
19
adjustments). As of April 30, 1999, the Company and the Company Subsidiaries
have available to them cash, cash equivalents, deposits to secure licenses,
trading securities, held to maturity securities and available for sale
securities (current and non-current) in the amounts set forth in Section 4.06(b)
of the Company Disclosure Letter.
(c) Except as set forth in the Filed Company SEC Documents and
except for liabilities or obligations which have not had and could not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, neither the Company nor any Company Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
or in the notes thereto. None of the Company Subsidiaries is, or has at any time
been, subject to the reporting requirements of Sections 13(a) and 15(d) of the
Exchange Act.
SECTION 4.07. Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) Offer Documents, the Schedule 14D-9 or the Information
Statement will, at the time such document is filed with the SEC, at any time it
is amended or supplemented or at the time it is first published, sent or given
to the Company's stockholders, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) the Proxy Statement will, at
the date it is first mailed to the Company's stockholders or at the time of
Company Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Schedule 14D-9, the Information Statement and
the Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Sub for inclusion or incorporation by reference therein.
SECTION 4.08. Absence of Certain Changes or Events. Except as
disclosed in the Filed Company SEC Documents or in Section 4.08 of the Company
Disclosure Letter, from the date of the most recent audited financial statements
included in the Filed Company SEC Documents to the date of this Agreement, the
Company has conducted its business only in the ordinary course, and during such
period none of the Company or any Company Subsidiary has:
(i) experienced or been affected by any event, change, effect
or development that, individually or in the aggregate, has had or could
reasonably be expected to have a Company Material Adverse Effect;
(ii) any action that would not be permitted to be taken after
the date hereof under Section 6.01; or
(iii) entered into any material transaction, or conducted its
business or operations, other than in the ordinary course of business,
consistent with past practice.
SECTION 4.09. Taxes. (a) Each of the Company and each
Company Subsidiary has timely filed, or has caused to be timely filed on its
behalf, all Tax Returns required to be filed by it, and all such Tax Returns are
true, complete and accurate in all material respects. The
<PAGE> 24
20
Company and each Company Subsidiary (i) has timely paid in full
all Taxes due and owing (whether or not shown on such Tax Returns) and (ii) has
provided for all Taxes (in addition to deferred taxes established to reflect
differences between tax and book basis in assets) in the Financial Statements.
The Financial Statements reflect an adequate reserve for all Taxes payable by
the Company and the Company Subsidiaries for all taxable periods and portions
thereof through the date of such financial statements.
(b) No deficiency with respect to any Taxes has been proposed,
asserted or assessed against the Company or any Company Subsidiary, and no
requests for waivers of the time to assess any such Taxes are pending. The
Federal income Tax Returns of the Company and each Company Subsidiary
consolidated in such Returns have been examined by and settled with the United
States Internal Revenue Service for all years through 1994. No audit or other
proceeding with respect to Taxes or Tax Returns of the Company or any Company
Subsidiary is pending or being conducted by a Tax authority, and neither the
Company nor any Company Subsidiary has been notified in writing of any such
audit or other proceeding.
(c) Each of the Company and each Company Subsidiary has
withheld and paid all Taxes required to be withheld and paid in connection with
amounts paid or owing to any employee, creditor, stockholder or third party. The
Company and each Company Subsidiary have collected all material sales and use
Taxes required to be collected, and have remitted or will remit on a timely
basis, such amounts to the appropriate governmental authorities, or have been
furnished properly completed exemption certificates.
(d) There are no Liens for Taxes (other than for current Taxes
not yet due and payable) on the assets of the Company or any Company Subsidiary
and no material claims have been asserted with respect to any such Taxes.
(e) Except as disclosed in Section 4.09(e) of the Company
Disclosure Letter no issue relating to the Taxes of the Company or any Company
Subsidiary has been raised by any taxing authority in any audit or examination
which, by application of similar principles, could result in increased Taxes in
a taxable period (or portion thereof) ending after the Closing Date. Neither the
Company nor any Company Subsidiary has agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar provision of
state, local or foreign law by reason of a change in accounting method initiated
by the Company or any such Company Subsidiary or has any knowledge that the
Internal Revenue Service has proposed any such adjustment or change in
accounting method, or has any application pending with any taxing authority
requesting permission for any changes in accounting methods that relate to the
business or operations of the Company or any Company Subsidiary.
SECTION 4.10. Benefit Plans ERISA Compliance; Excess Parachute
Payments. (a) Section 4.10 of the Company Disclosure Letter contains a true and
complete list of each "employee benefit plan" (within the meaning of section
3(3) of ERISA, including, without limitation, multiemployer plans within the
meaning of ERISA section 3(37)), stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of any Transaction, including the Offer or the Merger or
otherwise), whether formal or informal, oral or written,
<PAGE> 25
21
legally binding or not, under which any employee or former employee of the
Company or the Company Subsidiaries has any present or future right to benefits
or under which the Company or the Company Subsidiaries has any present or future
liability. All such plans, agreements, programs, policies and arrangements shall
be collectively referred to as the "Company Plans".
(b) With respect to each Company Plan, the Company has
delivered to Parent a current, accurate and complete copy (or, to the extent no
such copy exists, an accurate description) thereof and, to the extent
applicable: (i) any related trust agreement or other funding instrument; (ii)
the most recent determination letter, if applicable; (iii) any summary plan
description and other written communications (or a description of any oral
communications) by the Company or the Company Subsidiaries to their employees
concerning the extent of the benefits provided under a Company Plan; and (iv)
for the three most recent years (A) the Form 5500 and attached schedules, (B)
audited financial statements, (C) actuarial valuation reports and (D) attorney's
response to an auditor's request for information.
(c) (i) Each Company Plan has been established and
administered in accordance with its terms, and in compliance with the applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations;
(ii) each Company Plan which is intended to be qualified within the meaning of
Code section 401(a) is so qualified and has received a favorable determination
letter as to its qualification, and nothing has occurred, whether by action or
failure to act, that could reasonably be expected to cause the loss of such
qualification; (iii) no event has occurred and no condition exists that would
subject the Company or the Company Subsidiaries, either directly or by reason of
their affiliation with any member of their "Controlled Group" (defined as any
organization which is a member of a controlled group of organizations within the
meaning of Code sections 414(b), (c), (m) or (o)), to any tax, fine, Lien,
penalty or other liability imposed by ERISA, the Code or other applicable laws,
rules and regulations; (iv) for each Company Plan with respect to which a Form
5500 has been filed, no material change has occurred with respect to the matters
covered by the most recent Form since the date thereof; (v) no "prohibited
transaction" (as such term is defined in ERISA section 406 and Code section
4975) has occurred with respect to any Company Plan; (vi) no Company Plan
provides retiree welfare benefits and none of the Company or any Company
Subsidiaries has any obligations to provide any retiree welfare benefits; and
(vii) all awards, grants or bonuses made pursuant to any Company Plan have been,
or will be, fully deductible to the Company or the Company Subsidiaries
notwithstanding the provisions of Section 162(m) of the Code and the regulations
promulgated thereunder.
(d) With respect to any Company Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or threatened in writing and (ii) no facts or circumstances exist that
could give rise to any such actions, suits or claims.
(e) Except as set forth in Section 4.10 of the Company
Disclosure Letter, no Company Plan exists that could result in the payment to
any present or former employee of the Company or the Company Subsidiaries of any
money or other property or accelerate or provide any other rights or benefits to
any present or former employee of the Company or any Company Subsidiary as a
result of the Transactions, including the Offer and the Merger, whether or not
such payment would constitute a parachute payment within the meaning of Code
section 280G. No Company Plan exists that could give rise to the payment of any
amount that would not be deductible by the Company or the Company Subsidiaries
under Section 162(m) of the Code.
<PAGE> 26
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SECTION 4.11. Litigation. Except as disclosed in the Filed
Company SEC Documents or in Section 4.11 of the Company Disclosure Letter and
except for claims made in the ordinary course of business with respect to
amounts to be reimbursed in the Company's capacity as administrator or obligor
under a service contract, there is no suit, action or proceeding pending or
threatened in writing or to the Company's knowledge which may be filed against
or affecting the Company or any Company Subsidiary that, individually or in the
aggregate, has had or could reasonably be expected to result in the payment of
damages in excess of $250,000, nor is there any Judgment outstanding against the
Company or any Company Subsidiary that has had or could reasonably be expected
to have a Company Material Adverse Effect.
SECTION 4.12. Compliance with Applicable Laws. Except as
disclosed in the Filed Company SEC Documents or in Section 4.12 of the Company
Disclosure Letter, the Company and the Company Subsidiaries are in compliance in
all material respects with all Applicable Laws. Except as set forth in the Filed
Company SEC Documents or in Section 4.12 of the Company Disclosure Letter, none
of the Company or a Company Subsidiary has received any written communication
during the past two years from a Governmental Entity that alleges that the
Company or a Company Subsidiary is not in compliance in any material respect
with any Applicable Law. This Section 4.12 does not relate to matters with
respect to Taxes or environmental, health and safety laws, which are the subject
of Section 4.09 and 4.19, respectively.
SECTION 4.13. Contracts; Debt Instruments. (a) Except as
disclosed in the Filed SEC Documents or in Section 4.13(a) of the Company
Disclosure Letter, there are no Material Contracts or other significant
agreements relating to the business of the Company. Neither the Company nor any
of the Company Subsidiaries is in violation of or in default under (nor does
there exist any condition which with the passage of time or the giving of notice
or both would cause such a violation of or default under) any Material Contract
to which it is a party or by which it or any of its properties or assets is
bound, except for violations or defaults that have not and could not,
individually or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect. Except with respect to any termination right arising
from the consummation of the Offer or the Merger, each Material Contract is in
full force and effect, and is a legal, valid and binding obligation of the
Company or a Company Subsidiary and, to the knowledge of the Company, each of
the other parties thereto, enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and general principles of equity (regardless of
whether considered in a proceeding in equity or at law). No condition exists or
event has occurred which (whether with or without notice or lapse of time or
both) would constitute a default by the Company or a Company Subsidiary or, to
the knowledge of the Company, any other party thereto under any Material
Contract or result (other than due to consummation of the Offer or the Merger)
in a right of termination of any Material Contract.
(b) Set forth in Section 4.13(b) of the Company Disclosure
Letter is (i) a list of all loan or credit agreements, notes, bonds, mortgages,
indentures and other agreements and instruments pursuant to which any
indebtedness of the Company or any of its subsidiaries in an aggregate principal
amount in excess of $50,000 is outstanding or may be incurred and (ii) the
respective principal amounts currently outstanding thereunder.
<PAGE> 27
23
SECTION 4.14. Title to Properties. (a) Except as set forth in
Section 4.14 of the Company Disclosure Letter, each of the Company and each
Company Subsidiary has good and marketable title to, or valid leasehold
interests in, all its properties and assets except for such as are no longer
used or useful in the conduct of its businesses or as have been disposed of in
the ordinary course of business and except for defects in title, easements,
restrictive covenants and similar encumbrances or impediments that, in the
aggregate, do not and will not materially interfere with its ability to conduct
its business as currently conducted. All such assets and properties, other than
assets and properties in which the Company or any of its subsidiaries has
leasehold interests, are free and clear of all Liens other than those set forth
in Section 4.14 of the Company Disclosure Letter and except for (i) Statutory
Liens of carriers, warehousemen, mechanics, repairmen, workmen and materialmen
incurred in the ordinary course of business for amounts not yet overdue or being
contested in good faith, (ii) Liens for taxes not yet due and payable or being
contested in good faith in appropriate proceedings during which collection or
enforcement is stayed, (iii) undetermined or inchoate Liens incidental to the
construction at 6010 Atlantic Boulevard, Norcross, Georgia and (iv) Liens that,
in the aggregate, do not and will not materially interfere with the ability of
the Company and its subsidiaries to conduct business as currently conducted (any
or all of such liens under clauses (i), (ii), (iii) or (iv), "Permitted Liens").
(b) Except as set forth in Section 4.14 of the Company
Disclosure Letter, each of the Company and each Company Subsidiary has complied
in all material respects with the terms of all leases to which it is a party and
under which it is in occupancy, and all such leases are in full force and
effect. Each of the Company and each Company Subsidiary enjoys peaceful and
undisturbed possession under all such material leases.
SECTION 4.15. Intellectual Property. (a) The Company and the
Company Subsidiaries own, or are validly licensed or otherwise have the
enforceable right to use, all Intellectual Property Rights which are currently
used in the conduct of the business of the Company and the Company Subsidiaries.
Section 4.15 of the Company Disclosure Letter sets forth a description of all
the Material Intellectual Property Rights. Either the Company or one of the
Company Subsidiaries is the sole and exclusive owner of, or the exclusive or
non-exclusive licensee of, with all right, title and interest in and to (and are
free and clear of any Liens), all Material Intellectual Property Rights, and in
the use of Material Intellectual Property Rights owned by the Company or any of
the Company Subsidiaries. The Company has sole and exclusive rights (and is not
contractually obligated to pay any compensation to any third party in respect
thereof) to the use of all the Material Intellectual Property Rights or the
material covered thereby in connection with the services or products in respect
of which the Material Intellectual Property Rights are being used.
(b) No claims with respect to any Intellectual Property Rights
owned or used by the Company and the Company Subsidiaries have been asserted or,
to the knowledge of the Company, are threatened in writing by any person (i) to
the effect that the manufacture, sale, licensing or use of any of the products
or services of the Company or any of the Company Subsidiaries as now
manufactured, sold or licensed or used or proposed for manufacture, use, sale or
licensing by the Company or any of the Company Subsidiaries infringes on any
Intellectual Property Rights of another person, (ii) against the use by the
Company or any of the Company Subsidiaries of any Intellectual Property Rights
of another person, or (iii) challenging the ownership by the Company or any of
the Company Subsidiaries or the validity of any of Intellectual Property Rights
owned or used by the Company and the Company Subsidiaries,
<PAGE> 28
24
except claims which have not had and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. All
registered trademarks service marks, and copyrights held by the Company are
valid and subsisting, except to the extent any failure has not had and could not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. To the knowledge of the Company, there is no
unauthorized use, infringement or misappropriation of any of the Intellectual
Property Rights owned or used by the Company and the Company Subsidiaries by any
third party, including any employee or former employee of the Company or any of
the Company Subsidiaries, which has had or could reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. No
Intellectual Property Rights owned or used by the Company and the Company
Subsidiaries or product of the Company or any of the Company Subsidiaries is
subject to any outstanding Judgment restricting in any manner the licensing
thereof by the Company or any of the Company Subsidiaries, except to the extent
any such restriction has not had and could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Neither the
Company nor any of the Company Subsidiaries has entered into any agreement under
which the Company or any of the Company Subsidiaries is restricted from selling,
licensing or otherwise distributing any of its products to any class of
customers, in any geographic area, during any period of time or in any segment
of the market.
SECTION 4.16. Takeover Laws. The Companies' By-laws do not
provide that Part 2 or Part 3 of Article 11 of the GBCC are applicable to the
Company and such statutes are not applicable to the Company, the Offer, the
Merger or any of the other transactions contemplated by the Transaction
Agreements. The Company's Board of Directors has taken all action necessary to
ensure that Part 2 or Part 3 of Article 11 of the GBCC, if such statutes were
applicable to the Company, would not impose any additional procedural, voting,
approval, fairness or other restrictions on the timely consummation of the
Transactions or restrict, impair or delay the ability of Parent to vote or
otherwise exercise all rights as a stockholder of the Company.
SECTION 4.17. Year 2000. All software, systems, hardware and
related equipment, data, interfaces and processes used in connection with the
Company's business (including in products or services supplied to the Company's
customers and in administrative functions or other internal operations of the
Company or the Company Subsidiaries) are Year 2000 Compliant.
SECTION 4.18. Affiliate Transactions. Except as disclosed and
described in Section 4.18 of the Company Disclosure Letter and for employment
arrangements filed as exhibits to or described in the Filed Company SEC
Documents, there is no contract, commitment or other arrangement, whether
written or oral, between the Company or any Company Subsidiary on the one hand
and any 5% or greater stockholder, director or officer of the Company or any
Company Subsidiary or any affiliate or family member of any such 5% or greater
stockholder, director or officer (other than the Company or a Company
Subsidiary) on the other hand and none of the Company or the Company
Subsidiaries receives any products, goods, services (other than services
provided as an employee, officer of director) or other rights from, or provides
any such products, goods, services or other rights to, any such stockholder,
director, officer, affiliate or family member.
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SECTION 4.19. Environmental, Health, and Safety. (a) The
Company, the Company Subsidiaries, and their respective predecessors and
affiliates have complied with all Environmental, Health, and Safety Laws, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed, commenced or to the Company's knowledge,
threatened against any of them alleging any failure so to comply. Without
limiting the generality of the preceding sentence, the Company, the Company
Subsidiaries and their respective predecessors and affiliates have obtained and
been in compliance with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and have complied
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are contained in, all
Environmental, Health, and Safety Laws.
(b) None of the Company or any Company Subsidiary has any
liability (and neither the Company, the Company Subsidiaries nor their
respective predecessors and affiliates has handled or disposed of any Hazardous
Substance, arranged for the disposal of any Hazardous Substance, exposed any
employee or other individual to any Hazardous Substance or condition, or owned
or operated any property or facility in any manner that, could form the basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against the Company or any Company
Subsidiary giving rise to any liability) for damage to any site, location, or
body of water (surface or subsurface), for any illness of or personal injury to
any employee or other individual, or for any reason under any Environmental,
Health, and Safety Law.
(c) All properties and equipment used in the business of the
Company, the Company Subsidiaries and their respective predecessors and
affiliates are and have been free from any Hazardous Substance.
SECTION 4.20. Brokers; Fees and Expenses. (a) No broker,
investment banker, financial advisor or other person, other than The
Robinson-Humphrey Company, LLC, the fees and expenses of which will be paid by
the Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the Offer, the Merger and or any
other Transaction based upon arrangements made by or on behalf of the Company.
The amount of the fees of The Robinson-Humphrey Company, LLC payable in
connection with the Transactions and the estimated amount of all other fees and
expenses incurred and to be incurred by the Company in connection with the
Offer, the Merger and the other Transactions (including the fees of the
Company's legal counsel) are set forth and itemized in Section 4.20 of the
Company Disclosure Letter. The Company has furnished to Parent a true and
complete copy of all agreements between the Company and The Robinson-Humphrey
Company, LLC relating to the Offer, the Merger and the other Transactions.
(b) No valid claim against the Company or the Surviving
Corporation or, to the Company's knowledge, against Parent or Sub exists or will
exist for payment of any "topping," "break-up," "bust-up" or "termination" fee
or any similar compensation or payment arrangement as a result of the
transactions contemplated hereby, including the Offer and the Merger.
SECTION 4.21. Opinion of Financial Advisor. The Company has
received the opinion of The Robinson-Humphrey Company, LLC, the Company's
financial advisor dated the date of this Agreement, that, as of such date, the
consideration to be received in the Offer and the
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Merger by the Company's stockholders is, in the opinion of such advisors, fair
to the Company's stockholders from a financial point of view, a signed copy of
which opinion has been delivered to Parent.
ARTICLE V
Representations and Warranties of Parent and Sub
Parent and Sub jointly and severally represent and warrant to
the Company as follows:
SECTION 5.01. Organization, Standing and Power. (a) Each of
Parent and Sub is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has full corporate
power and authority to conduct its businesses as presently conducted, other than
such franchises, licenses, permits, authorizations and approvals the lack of
which, individually or in the aggregate, has not had and could not reasonably be
expected to have a Parent Material Adverse Effect.
SECTION 5.02. Sub. Since the date of its incorporation,
Sub has not carried on any business or conducted any operations other than the
execution of the Transaction Agreements to which it is a party, the performance
of its obligations hereunder and thereunder and matters ancillary thereto.
SECTION 5.03. Financing. Parent has sufficient funds to
consummate all the transactions contemplated hereby and pay related fees and
expenses.
SECTION 5.04. Ownership of Company Common Stock. Except for
the transactions contemplated by the Stock Option and Tender Agreements and the
Company Stock Option Agreement, as of the date of this Agreement, neither Parent
nor Sub beneficially owns any Company Common Stock.
SECTION 5.05. Authority; Execution and Delivery;
Enforceability. Each of Parent and Sub has all requisite corporate power and
authority to execute each Transaction Agreement to which it is a party and to
consummate the Transactions. The execution and delivery by each of Parent and
Sub of each Transaction Agreement to which it is a party and the consummation by
it of the Transactions have been duly authorized by all necessary corporate
action on the part of Parent and Sub. Parent, as sole stockholder of Sub, has
adopted this Agreement. Each of Parent and Sub has duly executed and delivered
each Transaction Agreement to which it is a party, and each Transaction
Agreement to which it is a party constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
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SECTION 5.06. No Conflicts; Consents. The execution and
delivery by each of Parent and Sub of each Transaction Agreement to which it is
a party, do not, and the consummation of the Offer, the Merger and the other
Transactions and compliance with the terms hereof and thereof will not, conflict
with, or result in any violation of or default (with or without notice or lapse
of time, or both) under any provision of (i) the charter or organizational
documents of Parent or Sub, (ii) any material Contract to which Parent or Sub is
a party or by which any of their respective properties or assets is bound or
(iii) subject to the filings and other matters referred to in the following
sentence, any Judgment or Applicable Law applicable to Parent or Sub or their
respective properties or assets, other than, in the case of clauses (ii) and
(iii) above, any such items that, individually or in the aggregate, have not had
and could not reasonably be expected to have a Parent Material Adverse Effect.
No Consent of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Parent or Sub in
connection with the execution, delivery and performance of any Transaction
Agreement to which Parent or Sub is a party or the consummation of the
Transactions, other than (i) compliance with and filings under the HSR Act, (ii)
the filing with the SEC of (A) the Offer Documents and (B) such reports under
Sections 13 and 16 of the Exchange Act, as may be required in connection with
this Agreement and the other Transaction Agreements, the Offer, the Merger and
the other Transactions, (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Georgia, (iv) such filings as may be required
in connection with the taxes described in Section 7.08, (v) compliance with and
filings under the Auto Warranty Laws of the States set forth in Section 5.06 of
the Parent Disclosure Letter, (vi) Consents, registrations, declarations or
filings required to be made solely by reason of the Company's participation in
the Transactions and (vii) such other items as are set forth in Section 5.06 of
the Parent Disclosure Letter.
SECTION 5.07. Information Supplied. None of the information
supplied or to be supplied in writing by Parent or Sub for inclusion or
incorporation by reference in (i) Offer Documents, the Schedule 14D-9 or the
Information Statement will, at the time such document is filed with the SEC, at
any time it is amended or supplemented or at the time it is first published,
sent or given to the Company's stockholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, or (ii) the Proxy
Statement will, at the date it is first mailed to the Company's stockholders or
at the time of the Company Stockholders Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation is made by Parent or Sub with respect to statements made or
incorporated by reference therein based on information supplied by the Company
for inclusion or incorporation by reference therein.
SECTION 5.08. Brokers. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the Offer, the
Merger and the other Transactions based upon arrangements made by or on behalf
of Parent or Sub.
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ARTICLE VI
Covenants Relating to Conduct of Business
SECTION 6.01. Conduct of Business.
(a) Conduct of Business by the Company. Except for matters
expressly permitted by the Transaction Agreements, from the date of this
Agreement to the Effective Time the Company shall, and shall cause each Company
Subsidiary to, conduct its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted and use its commercially
reasonable efforts to preserve intact its current business organization, keep
available the services of its officers and employees and maintain its
relationships with customers, suppliers, licensors, licensees, distributors and
agents and others having business dealings with them. In addition, and without
limiting the generality of the foregoing, except for matters expressly permitted
by this Agreement, from the date of this Agreement to the Effective Time, the
Company shall not, and shall not permit any Company Subsidiary to, do any of the
following without the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other
than dividends and distributions by a direct or indirect wholly owned
subsidiary of the Company to its parent, (B) split, combine or
reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, (C) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any Company
Subsidiary or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities or (D) adopt a
plan of complete or partial liquidation or resolutions providing for or
authorizing such liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or reorganization of the Company or any
of the Company Subsidiaries;
(ii) authorize for issuance, issue, deliver, sell or grant
(A) any shares of its capital stock, (B) any Voting Company Debt or
other voting securities, (C) any securities convertible into or
exchangeable for, or any options, warrants or rights to acquire, any
such shares, voting securities or convertible or exchangeable
securities or (D) any "phantom" stock, "phantom" stock rights, stock
appreciation rights or stock-based performance units, other than (1)
the issuance of Company Common Stock upon the exercise of Company
Employee Stock Options, Potential Stock Options or Third Party Stock
Options outstanding on the date of this Agreement and in accordance
with their present terms, and (2) the issuance of Company Common Stock
pursuant to the Company Stock Option Agreement;
(iii) amend its articles of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) except as disclosed in Section 6.01(a)(iv) of the
Company Disclosure Letter, acquire or agree to acquire (A) by merging
or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation,
partnership, joint venture, association or other business organization
or
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division thereof or (B) any assets outside the ordinary course of
business consistent with past practice;
(v) except as disclosed in Section 6.01(a)(v) of the
Company Disclosure Letter, (A) grant to any present or former employee,
officer or director of the Company or any Company Subsidiary any
increase in compensation or fringe benefits, except for increases in
salary for non-officer employees in the ordinary course of business
consistent with past practice, (B) grant to any present or former
employee, officer or director of the Company or any Company Subsidiary
any increase in severance or termination pay, (C) other than entering
into employment agreements with employees of the Company approved in
advance by Parent, enter into or amend any employment, consulting,
indemnification, severance or termination agreement with any such
present or former employee, officer or director, (D) establish, adopt,
enter into or amend in any material respect any collective bargaining
agreement or Company Plan, (E) take any action to accelerate any rights
or benefits, or make any material determinations not in the ordinary
course of business consistent with prior practice, under any collective
bargaining agreement or Company Plan, (F) loan or advance money or
other property in excess of $250,000 in the aggregate, to any present
or former employee, officer or director of the Company or any Company
Subsidiary or (G) grant any new, or amend any existing, Third Party
Stock Option, Potential Stock Option or any agreement under which any
Third Party Stock Options or Potential Stock Option are issued;
(vi) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company, except insofar as
may have been required by a change in GAAP;
(vii) sell, lease, license or otherwise dispose of or permit
to become subject to any Lien, other than a Permitted Lien, any
properties or assets, tangible or intangible, except sales of inventory
and excess or obsolete assets in the ordinary course of business
consistent with past practice;
(viii) except as disclosed in Section 6.01(a)(viii) of the
Company Disclosure Letter, (A) incur any indebtedness for borrowed
money or guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to acquire any
debt securities of the Company or any Company Subsidiary, guarantee any
debt securities of another person, enter into any "keep well" or other
agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice, or (B) make
any loans, advances or capital contributions to, or investments in, any
other person, other than to or in the Company or any direct or indirect
wholly owned subsidiary of the Company;
(ix) make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $100,000 or, in the
aggregate, are in excess of $250,000, other than capital expenditures
in connection with the development and construction of the property
located at 6010 Atlantic Boulevard, Norcross, Georgia, and the related
furnishing and equipment for the building and Company operations
thereat not to exceed $5,500,000 in the aggregate.
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(x) make any material Tax election or settle or compromise
any material Tax liability or refund;
(xi) (A) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in the most recent consolidated financial statements of the
Company included in the Filed SEC Documents or incurred in the ordinary
course of business consistent with past practice, (B) cancel any
material indebtedness (individually or in the aggregate) or waive any
claims or rights of substantial value or (C) waive the benefits of, or
agree to modify in any manner, any confidentiality, standstill or
similar agreement to which the Company or any Company Subsidiary is a
party;
(xii) amend any Material Contract or Contract providing for
payments or otherwise involving amounts in excess of $100,000 or,
except in the ordinary course of business consistent with past
practice, enter into any Material Contract; and
(xiii) authorize any of, or commit or agree to take any of,
the foregoing actions.
(b) Other Actions. The Company shall not, and shall not permit
any Company Subsidiary to, take any action that would, or that could reasonably
be expected to, result in (i) any of the representations and warranties of the
Company set forth in any Transaction Agreement to which it is a party becoming
untrue or (ii) any condition to the Offer set forth in Exhibit A or any
condition to the Merger set forth in Article VIII not being satisfied.
(c) Advice of Changes. (i) The Company shall promptly advise
Parent orally and in writing of any change or event having, or which, insofar as
can reasonably be foreseen, would have, a Company Material Adverse Effect.
(ii) After the date hereof, the Company shall have the
continuing obligation promptly to supplement or amend the Company
Disclosure Letter with respect to any matter hereafter arising or
discovered which would be required to be set forth or described in the
Company Disclosure Letter or would have been required to be taken as an
exception to any representation or warranty of the Company in order for
the representations and warranties of the Company to be true and
correct at and as of the times such representations and warranties are
required to be true and correct in accordance with this Agreement;
provided, however, that if (x) Parent consents in writing to any such
supplement or amendment or fails to respond in writing to the Company
by 11:59 p.m. on the fifth full business day following the date of
receipt by Parent of such supplement or amendment, such supplement or
amendment shall be deemed a part of the Company Disclosure Letter or an
exception to the specified representation or warranty, as the case may
be, at all future times that the representations and warranties of the
Company are required to be true and correct and (y) Parent responds in
writing but does not consent to any such supplement or amendment, the
matter so disclosed shall be deemed a failure of the condition set
forth in Section 8.02(a) hereof and paragraph (e) of Exhibit A hereto
delivered pursuant to this Section 6.01(c)(ii).
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SECTION 6.02. No Solicitation. (a) Except as specifically
permitted in this Section 6.02, (i) the Company and the Company Subsidiaries
shall not, and the Company and the Company Subsidiaries shall use commercially
reasonable efforts to cause each of its officers, directors, employees,
representatives and agents not to, directly or indirectly, (x) encourage,
solicit, initiate, engage or participate in negotiations, or enter into any
agreement with any person or entity (other than the Parent or Sub) concerning
any Company Takeover Proposal or (y) take any other action intended or designed
to facilitate the efforts of any person or entity (other than Parent or Sub)
relating to a possible Company Takeover Proposal and (ii) neither the Company
Board nor any committee thereof shall withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Parent or Sub, the approval or recommendation
by the Company Board or any such committee of this Agreement, the Offer or the
Merger. Without limiting the foregoing, it is agreed that any violation of the
restrictions set forth in the preceding sentence by any officer of the Company
or any Company Subsidiary or any affiliate, director or investment banker,
attorney or other advisor or representative of the Company or any Company
Subsidiary, whether or not such person is purporting to act on behalf of the
Company or any Company Subsidiary or otherwise, shall be deemed to be a breach
of this Section 6.02(a) by the Company. The Company will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any Company Takeover Proposal.
(b) Notwithstanding anything herein to the contrary, in the
event that the Company receives a Company Takeover Proposal that did not result
from a breach of Section 6.02(a), the Company and Company Subsidiaries, at their
discretion, shall be permitted to (i) furnish to and communicate with the party
making such Company Takeover Proposal any information (subject to a customary
confidentiality agreement), and otherwise negotiate with such party or (ii)
withdraw or modify its approval or recommendation of this Agreement, the Offer
or the Merger, in each case only if (x) two (2) business days prior written
notice shall have been given to Parent and (y)(A) the Company Board shall have
been advised in writing by its investment banker that it believes the party is
financially capable of consummating such Company Takeover Proposal, which
proposal does not have any financing contingency, (B) the Company Board shall
have been reasonably advised in writing, by outside counsel to the Company, that
any failure to provide such information to the party or withdraw or modify such
approval or recommendation, respectively, would be reasonably likely to
constitute a breach of the fiduciary duties of the Company Board to the
stockholders of the Company and (C) the Company Board, after weighing such
advice, determines in good faith that failing to furnish such information or
withdraw or modify such approval or recommendation, respectively, would
constitute a breach of its fiduciary duties to stockholders of the Company.
Notwithstanding anything herein to the contrary, nothing shall prohibit the
Company Board from complying with its obligations under Rules 14d-9 or 14e- 2 of
the Exchange Act.
(c) The Company promptly shall advise Parent orally and in
writing of any Company Takeover Proposal or any inquiry with respect to or that
could lead to any Company Takeover Proposal and the identity of the person
making any such Company Takeover Proposal or inquiry. The Company shall keep
Parent fully informed of significant developments including any change to the
terms of any such Company Takeover Proposal or inquiry.
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(d) Neither the Company nor any Company Subsidiary will waive
any provision of any confidentiality or standstill agreement to which it is a
party without the prior written consent of Parent.
ARTICLE VII
Additional Agreements
SECTION 7.01. Preparation of Proxy Statement; Stockholders
Meeting. (a) If the approval of this Agreement (including as this Agreement may
be proposed by Parent to be amended pursuant to Section 2.04) by the Company's
stockholders is required by law, the Company shall, as soon as practicable
following the expiration of the Offer, prepare and file with the SEC the Proxy
Statement in preliminary form, and each of the Company and Parent shall use its
commercially reasonable efforts to respond as promptly as practicable to any
comments of the SEC with respect thereto. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and shall supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement. If at any time prior to receipt of Company Stockholder Approval there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company shall promptly prepare and mail to its
stockholders such an amendment or supplement. The Company shall not mail any
Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects. The Company shall use commercially reasonable efforts to
cause the Proxy Statement to be mailed to the Company's stockholders as promptly
as practicable after filing with the SEC.
(b) If the approval of this Agreement (including as this
Agreement may be proposed by Parent to be amended pursuant to Section 2.04) by
the Company's stockholders is required by law, the Company shall, as soon as
practicable following the expiration of the Offer, duly call, give notice of,
convene and hold the Company Stockholders Meeting for the purpose of seeking
Company Stockholder Approval. The Company shall, through the Company Board,
recommend to its stockholders that they give Company Stockholder Approval,
except to the extent that the Company Board shall have withdrawn or modified its
approval or recommendation of this Agreement, the Offer or the Merger as
permitted by Section 6.02(b). Without limiting the generality of the foregoing,
the Company agrees that its obligations pursuant to the first sentence of this
Section 7.01(b) shall not be affected by (i) the commencement, public proposal,
public disclosure or communication to the Company of any Company Takeover
Proposal or (ii) the withdrawal or modification by the Company Board of its
approval or recommendation of this Agreement, the Offer or the Merger.
Notwithstanding the foregoing, if Sub or any other subsidiary of Parent shall
acquire at least 90% of the outstanding shares of Company Common Stock, the
parties shall, at the request of Parent, take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
expiration of the Offer without a stockholders meeting in accordance with
Section 1104 of the GBCC.
(c) Parent shall cause all shares of Common Stock purchased
pursuant to the Offer and all other shares of Common Stock owned by Sub or any
other subsidiary of Parent to be voted in favor of the approval of this
Agreement.
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SECTION 7.02. Access to Information; Confidentiality. The
Company shall, and shall cause each of its subsidiaries to, afford to Parent,
and to Parent's officers, employees, accountants, counsel, financial advisers
and other representatives, reasonable access during normal business hours during
the period prior to the Effective Time to all their respective properties,
books, Contracts, commitments, personnel and records and, during such period,
the Company shall, and shall cause each of its subsidiaries to, furnish promptly
to Parent (a) a copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the requirements of Federal
or state securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Without limiting the
generality of the foregoing, the Company shall, within two business days of
request therefor, provide to Parent the information described in Rule
14a-7(a)(2)(ii) under the Exchange Act and any information to which a holder of
Company Common Stock would be entitled under Section 1602 of the GBCC (assuming
such holder met the requirements of such section). All information exchanged
pursuant to this Section 7.02 shall be subject to the Confidentiality Agreement.
SECTION 7.03. Commercially Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this Agreement,
unless, to the extent permitted by Section 6.02(b), the Board of Directors of
the Company approves or recommends a Company Takeover Proposal, each of the
parties shall use commercially reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Offer, the Merger and the other Transactions, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity,
including under the HSR Act and the Auto Warranty Laws identified in Section
4.05 or the Company Disclosure Letter and Section 5.06 of the Parent Disclosure
Letter, (ii) the obtaining of all necessary consents, approvals or waivers from
third parties, (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or any other
Transaction Agreement or the consummation of the Transactions, including seeking
to have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (iv) the execution and delivery of
any additional instruments necessary to consummate the Transactions and to fully
carry out the purposes of the Transaction Agreements. In connection with and
without limiting the foregoing, the Company and the Company Board shall (i) take
all commercially reasonable action necessary to ensure that no state takeover
statute or similar statute or regulation is or becomes applicable to any
Transaction or this Agreement or any other Transaction Agreement, and (ii) if
any state takeover statute or similar statute or regulation becomes applicable
to this Agreement or any other Transaction Agreement, take all commercially
reasonable action necessary to ensure that the Offer, the Merger and the other
Transactions may be consummated as promptly as practicable on the terms
contemplated by the Transaction Agreements and otherwise to minimize the effect
of such statute or regulation on the Offer, the Merger and the other
Transactions. Nothing in this Agreement shall be deemed to require any party to
waive any substantial rights or agree to any substantial limitation on the
nature, scope or geographic area of its operations or business or to dispose of
or hold separate (through the establishment of a trust or otherwise) any
significant asset or collection of assets.
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(b) The Company shall give prompt notice to Parent, and Parent
or Sub shall give prompt notice to the Company, of, and such party shall use
commercially reasonable efforts to prevent, or promptly remedy (i) any
representation or warranty made by it contained in any Transaction Agreement
that is qualified as to becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under any Transaction Agreement; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under any other Transaction Agreement.
SECTION 7.04. Stock Options. (a) As soon as practicable
following the date of this Agreement, the Company Board (or, if appropriate, any
committee administering the Company Stock Plans) shall adopt such resolutions or
take such other actions as are required to adjust the terms of all outstanding
Company Employee Stock Options and Potential Stock Options heretofore granted
under any Company Stock Plan or otherwise, to provide that each Company Employee
Stock Option and each Potential Stock Option outstanding immediately prior to
the Effective Time shall be canceled on the date following the Effective Time in
exchange for a cash payment by the Company to be made on such date of an amount
equal to (i) the excess, if any, of (x) the price per share of Company Common
Stock to be paid pursuant to the Offer over (y) the exercise price per share of
Company Common Stock subject to such Company Employee Stock Option or Potential
Stock Option, multiplied by (ii) the number of shares of Company Common Stock
for which such Company Employee Stock Option or Potential Stock Option shall not
theretofore have been exercised.
(b) Except with respect to the Third Party Stock Options set
forth on Section 7.04(b) of the Company Disclosure Letter, which shall be
treated as described in such Section, as soon as practicable following the date
of this Agreement, the Company shall offer to each holder of a Third Party Stock
Option the right to have each Third Party Stock Option outstanding immediately
prior to the acceptance for payment of shares of Company Common Stock pursuant
to the Offer canceled in exchange for a cash payment by the Company in an amount
equal to (i) the excess, if any, of (x) the price per share of Company Common
Stock to be paid pursuant to the Offer over (y) the exercise price per share of
Company Common Stock subject to such Third Party Stock Option, multiplied by
(ii) the number of shares of Company Common Stock for which such Third Party
Stock Option shall not theretofore have been exercised.
(c) All amounts payable pursuant to this Section 7.04 shall be
subject to any required withholding of taxes and shall be paid without interest.
The Company shall use commercially reasonable efforts to obtain all consents of
the holders of the Company Employee Stock Options and Potential Stock Options as
shall be necessary to effectuate the foregoing. Notwithstanding anything to the
contrary contained in this Agreement, payment shall, at Parent's request, be
withheld in respect of any Company Employee Stock Option, Potential Stock Option
or Third Party Stock Option until all necessary consents are obtained.
(d) The Company Stock Plans shall terminate as of the
Effective Time, and the provisions in any other Benefit Plan providing for the
issuance, transfer or grant of any capital stock of the Company or any interest
in respect of any capital stock of the Company shall be deleted as of the
Effective Time, and the Company shall ensure that following the Effective Time
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no holder of a Company Employee Stock Option, Potential Stock Option or Third
Party Stock Option or any participant in any Stock Plan or other Benefit Plan
shall have any right thereunder to acquire any capital stock of the Company or
the Surviving Corporation.
SECTION 7.05. Indemnification; D&O Insurance. (a) Parent and
Sub agree that all rights to indemnification for acts or omissions occurring
prior to the Effective Time now existing in favor of the current or former
directors, officers or employees of the Company and the Company Subsidiaries as
provided in their respective certificates of incorporation or by-laws shall
survive the Merger and shall continue in full force and effect in accordance
with their terms for a period of not less than six years from the Effective
Time.
(b) Parent shall cause to be maintained for a period of three
years from the Effective Time the Company's current D&O Insurance policy to the
extent that it provides coverage for events occurring prior to the Effective
Time for all persons who are directors and officers of the Company on the date
of this Agreement, so long as the annual premium therefor would not be in excess
of 125% of the last annual premium paid prior to the date of this Agreement
(such amount, the "Maximum Premium"). Upon request by Parent, the Company shall
use commercially reasonable efforts to extend coverage under the Company's D&O
Insurance by obtaining a three-year "tail" policy (provided that the lump sum
payment to purchase such coverage does not exceed three times the Maximum
Premium) and such "tail" policy shall satisfy Parent's obligations under this
Section 7.05(b). Parent's obligations under this Section 7.05(b) shall also be
satisfied if Parent's D&O Insurance provides (or is amended to provide)
substantially similar coverage for events occurring prior to the Effective Time
for persons who are directors and officers of the Company on the date of this
Agreement. If the Company's existing D&O Insurance expires, is terminated or
canceled during such three-year period or a "tail" policy cannot be purchased on
the terms set forth above and Parent cannot or determines not to satisfy its
obligations under this Section 7.05(b) pursuant to the preceding sentence,
Parent shall use commercially reasonable efforts to cause to be obtained as much
D&O Insurance as can be obtained for the remainder of such period for an
annualized premium not in excess of the Maximum Premium, on terms and conditions
no less advantageous than the existing D&O Insurance. The Company represents to
Parent that the last annual premium paid prior to the date of this Agreement is
not greater than $30,000.
(c) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Surviving Corporation assume the obligations set forth in this
Section 7.05.
(d) The provisions of this Section 7.05 are intended to be for
the benefit of, and shall be enforceable by, each identified party and his or
her heirs and representatives.
SECTION 7.06. Public Announcements. Parent and Sub, on the one
hand, and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Offer, the Merger
and the other Transactions and shall not issue any such press release or make
any such public statement prior to such consultation, except as may be required
<PAGE> 40
36
by applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
SECTION 7.07. Transfer Taxes. Either Sub or the Surviving
Corporation shall pay all Transfer Taxes, if any, and any penalties or interest
with respect to the Transfer Taxes, payable in connection with the consummation
of the Offer or the Merger, and all Stock Transfer Taxes, if any, and any
penalties or interest with respect to any such Stock Transfer Taxes. The Company
acknowledges that the amount of the Transfer Taxes payable with respect to any
shares of Company Common Stock may be withheld by Sub from the amount to be paid
pursuant to the Offer and the Merger with respect to such shares, unless the
date on which the beneficial owner of such shares acquired beneficial ownership
thereof is certified to Sub.
SECTION 7.08. Transaction Litigation. The Company shall give
Parent the opportunity to participate fully in the conduct of the defense or the
settlement of any litigation against the Company and its directors relating to
any Transaction; provided, however, that no such settlement shall be agreed to
without Parent's prior written consent, which shall not be unreasonably
withheld.
ARTICLE VIII
Conditions Precedent
SECTION 8.01. Conditions to Each Party's Obligation To Effect
The Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. If required by law, the Company
shall have obtained Company Stockholder Approval.
(b) Antitrust. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired and any consents, approvals and filings under any foreign antitrust
law, the absence of which would prohibit the consummation of Merger, shall have
been obtained or made.
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
the parties shall have used commercially reasonable efforts to prevent the entry
of any such injunction or other order and to appeal as promptly as possible any
such injunction or other order that may be entered.
SECTION 8.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company in this Agreement that are qualified as to materiality
shall be true and correct and those
<PAGE> 41
37
not so qualified shall be true and correct in all material respects, as of the
date of this Agreement and as of the Closing Date as though made on the Closing
Date, except (i) to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, on and as of such
earlier date) and (ii) to the extent Parent has consented in writing (or is
deemed pursuant to Section 6.01(c)(ii) to have consented) to any supplement or
amendment to the Company Disclosure Letter delivered to Parent pursuant to
Section 6.01(c)(ii). Parent shall have received a certificate signed on behalf
of the Company by the chief executive officer and the chief operating officer of
the Company to such effect.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to be
performed by it under any Transaction Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on behalf of the Company by
the chief executive officer and the chief operating officer of the Company to
such effect.
(c) No Litigation. There shall not be pending or threatened in
writing any suit, action or proceeding, in each case that has a reasonable
likelihood of success, (i) challenging the acquisition by Parent or Sub of any
Company Common Stock, seeking to restrain or prohibit the consummation of the
Merger or any of the other Transactions or seeking to obtain from the Company,
Parent or Sub any damages that are material in relation to the Company and its
subsidiaries taken as a whole, (ii) seeking to prohibit or limit the ownership
or operation by the Company, Parent or any of their respective subsidiaries of
any material portion of the business or assets of the Company, Parent or any of
their respective subsidiaries of any material portion of the business or assets
of the Company, Parent or any of their respective subsidiaries, or to compel the
Company, Parent or any of their respective subsidiaries to dispose of or hold
separate any material portion of the business or assets of the Company, Parent
or any of their respective subsidiaries, as a result of the Merger or any other
Transaction, (iii) seeking to impose limitations on the ability of Parent to
acquire or hold, or exercise full rights of ownership of, any shares of Company
Common Stock, including the right to vote the Company Common Stock purchased by
it on all matters properly presented to the stockholders of the Company, or (iv)
seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect the business or operations of the Company
and the Company Subsidiaries; provided that Parent and Sub shall be required
reasonably to contest or cooperate with the Company in contesting, as
applicable, the suit, action or proceeding.
(d) Absence of Company Material Adverse Effect. Except as
disclosed in the Filed Company SEC Documents or in the Company Disclosure
Letter, since the date of the most recent audited financial statements included
in the Filed Company SEC Documents there shall not have been any event or
development that, individually or in the aggregate, has had or would reasonably
be expected to have a Company Material Adverse Effect.
(e) Auto Warranty Laws. All consents, approvals and filings
under the Auto Warranty Laws of any state that are required to be made or
obtained prior to the Effective Time shall have been made or obtained.
<PAGE> 42
38
(f) Acceptance of Shares. Sub shall have accepted shares of
Company Common Stock for payment pursuant to the Offer.
(g) Other Agreements. Each of the Principal Stockholders
Employment Agreements, the Stock Option and Tender Agreements and the Company
Stock Option Agreement shall be in full force and effect and each of the Company
and the Principal Company Stockholders shall have performed in all material
respects all obligations to be performed by any of them under any such
agreement.
SECTION 8.03. Conditions to Obligations of the Company. The
obligations of Company to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub in this Agreement that are qualified as to
materiality shall be true and correct and those not so qualified shall be true
and correct in all material respects, as of the date of this Agreement and as of
the Closing Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date). Company shall have received
a certificate signed on behalf of the Parent and Sub by an officer of each of
Parent and Sub to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and
Sub shall have performed in all material respects all obligations required to be
performed by each of them under any Transaction Agreement to which the Company
is a party at or prior to the Closing Date, and the Company shall have received
a certificate signed on behalf of Parent and Sub by an officer of each of Parent
and Sub to such effect.
(c) No Litigation. There shall not be pending or threatened in
writing any suit, action or proceeding, in each case that has a likelihood of
success, challenging the acquisition by Parent or Sub of any Company Common
Stock or seeking to restrain or prohibit the consummation of the Merger that
would reasonably be expected to cause any of the transactions contemplated by
this Agreement to be rescinded following the Effective Date; provided that the
Company shall be required reasonably to contest or cooperate with Parent in
contesting, as applicable, the suit, action or proceeding.
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after Company
Stockholder Approval:
(a) by mutual written consent of Parent, Sub and the Company;
<PAGE> 43
39
(b) by either Parent or the Company:
(i) if the Merger is not consummated on or before
November 30, 1999 (the "Outside Date"), unless the failure to
consummate the Merger is the result of a breach of this
Agreement by the party seeking to terminate this Agreement;
provided, however, that (A) the passage of such period shall
be tolled for any part thereof during which any party shall be
subject to a nonfinal order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the
consummation of the Merger and (B) this Agreement may not be
terminated pursuant to this clause (i) if Sub has accepted
shares of Company Common Stock for payment pursuant to the
Offer;
(ii) if any Governmental Entity issues an order,
decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become
final and nonappealable;
(iii) (A) Sub shall have failed to commence the Offer
within 30 days following the date of this Agreement or (B) the
Offer shall have terminated or expired in accordance with its
terms without Sub having purchased any shares of Company
Common Stock pursuant to the Offer; provided, however, that
the right to terminate this Agreement pursuant to this clause
(iii) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement or the
failure of whose representations and warranties to be true
results in the failure of any such condition, unless such
failure to fulfill such party's obligations follows a failure
by another party to fulfill its obligations in a manner giving
rise to a right by the first party to terminate this Agreement
under this clause (iii) or subparagraph (c) or (f) below;
(iv) if, upon a vote at a duly held stockholders
meeting to obtain Company Stockholder Approval, Company
Stockholder Approval is not obtained;
(c) by Parent, if the Company breaches or fails to perform in
any material respect any of its representations, warranties, covenants or
agreements contained in this Agreement, which breach or failure to perform (i)
would give rise to the failure of a condition set forth in Exhibit A, Section
8.02(a) or 8.02(b), and (ii) cannot be or has not been cured within 30 days
after the giving of written notice to the Company of such breach (provided that
Parent or Sub are not then in material breach of any representation, warranty or
covenant contained in this Agreement); provided, however, that this Agreement
may not be terminated pursuant to this clause (c) if Sub has accepted shares of
Company Common Stock for payment pursuant to the Offer;
(d) by Parent:
(i) if the Company Board or any committee thereof withdraws or
modifies in a manner adverse to Parent its approval or recommendation
of the Offer, the Merger or this Agreement or fails to recommend to the
Company's stockholders that they accept the
<PAGE> 44
40
Offer or give Company Stockholder Approval, or the Company Board or any
committee thereof resolves to take any of the foregoing actions; or
(ii) if the Company Board fails to reaffirm publicly and
unconditionally its recommendation to the Company's stockholders that
they accept the Offer and give Company Stockholder Approval within 10
business days of Parent's written request to do so (which request may
be made at any time following public disclosure of a Company Takeover
Proposal), which public reaffirmation must also include the
unconditional rejection of such Company Takeover Proposal;
(e) by the Company prior to the acceptance of shares of
Company Common Stock for payment pursuant to the Offer in accordance with
Section 9.05(b); provided, however, that the Company shall have complied with
all provisions thereof, including the notice provisions therein and shall have
paid the Termination Fee to Parent;
(f) by the Company, if Parent or Sub breaches or fails to
perform in any material respect any of its representations, warranties,
covenants or agreements contained in this Agreement, which breach or failure to
perform (i) would give rise to the failure of a condition set forth in Section
8.03(a) or 8.03(b), and (ii) cannot be cured or has not been cured within 30
days after the giving of written notice to Parent of such breach (provided that
Company is not then in material breach of any representation, warranty or
covenant contained in this Agreement); provided, however, that this Agreement
may not be terminated pursuant to this clause (f) if Sub has accepted shares of
Company Common Stock pursuant to the Offer; or
(g) if the Company breaches or fails to perform in any
material respect any of its covenants or agreements contained in the Company
Stock Option Agreement.
SECTION 9.02. Effect of Termination; Fees and Expenses. (a) In
the event of termination of this Agreement by either the Company or Parent as
provided in Section 9.01, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Parent, Sub or the
Company, other than Section 4.20, Section 5.08, the last sentence of Section
7.02, this Section 9.02 and Article X and except to the extent that such
termination results from the breach by a party of any representation, warranty
or covenant set forth in this Agreement.
(b) The Company shall pay to Parent a fee in an amount equal
to $6,300,000 (the "Termination Fee") if:
(i) Parent terminates this Agreement pursuant to Section
9.01(d) or the Company terminates this Agreement pursuant to Section
9.01(e); or
(ii) (x) after the date of this Agreement, any person or group
(as defined under Section 13(d)(3) of the Exchange Act) shall have
become the beneficial owner of more than 35% of the outstanding shares
of Company Common Stock or any person shall have made, or proposed,
communicated or disclosed in a manner which is or otherwise becomes
public prior to or during the pendency of the Offer (including being
known by stockholders of the Company) an intention to make a Company
Takeover Proposal;
<PAGE> 45
41
(y) this Agreement is terminated (other than termination
pursuant to Section 9.01(a)); and
(z) within eighteen months of such termination the Company
enters into a letter of intent or agreement in principle for a
Company Takeover Proposal or a definitive agreement to
consummate a Company Takeover Proposal, or the transactions
contemplated by a Company Takeover Proposal are consummated.
Any fee due under this Section 9.02 shall be paid by wire
transfer of same-day funds on the date of termination of this
Agreement (except that in the case of a payment pursuant to
clause (ii) above such payment shall be made on the date of
execution of such letter of intent, agreement in principle or
definitive agreement or, if earlier, consummation of such
transaction).
(c) Except as provided below, all fees and expenses incurred
in connection with the Merger and the other Transactions shall be paid by the
party incurring such fees or expenses, whether or not the Merger is consummated;
provided that Parent shall pay the filing fees in connection with the HSR Act
and the filing fees in connection with the Offer Documents. Parent acknowledges
and agrees that the Company has disclosed that it is obligated and will become
further obligated for reasonable fees and expenses (including reasonable fees
and expenses of Graubard Mollen & Miller, its counsel, PricewaterhouseCoopers,
its independent accountants, and The Robinson-Humphrey Company, LLC, its
financial advisor) incurred by it in connection with the Merger and the
transactions contemplated hereby. It is understood and agreed that certain of
such fees and expenses may be paid by the Company prior to the execution of this
Agreement, and Parent and Sub agree to refrain from taking any action designed
to prevent or delay the payment of such reasonable fees and expenses by the
Company. Further, Parent agrees to take, and cause Sub to take, all action
necessary to cause the Surviving Corporation to pay promptly, following the
provision to Parent of adequate written support for such fees and expenses, any
of the foregoing reasonable fees and expenses incurred, but not paid, by the
Company prior to the Effective Time.
(d) In addition to the other provisions of this Section 9.02,
in the event a Termination Fee is or becomes payable pursuant to Section
9.02(b), the Company agrees promptly, but in no event later than two business
days following written notice thereof, to reimburse Parent and Sub for all
out-of-pocket costs, fees and expenses, including, without limitation, the
reasonable fees and disbursements of counsel and the expenses of litigation,
incurred in connection with collecting such amounts. The right to receive the
Termination Fee pursuant to Section 9.02(b) and other amounts pursuant to this
Section 9.02 shall not be the exclusive remedy for any breach by the Company of
any of the representations, warranties, covenants or other provisions of this
Agreement and shall be in addition to any other remedies available at law or in
equity to Parent or Sub.
SECTION 9.03. Amendment. This Agreement may be amended by the
parties at any time before or after receipt of Company Stockholder Approval;
provided, however, that after receipt of Company Stockholder Approval, there
shall be made no amendment that by law requires further approval by such
stockholders without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties.
<PAGE> 46
42
SECTION 9.04. Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 9.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.
SECTION 9.05. Procedure for Termination, Amendment, Extension
or Waiver. (a) A termination of this Agreement pursuant to Section 9.01, an
amendment of this Agreement pursuant to Section 9.03 or an extension or waiver
pursuant to Section 9.04 shall, in order to be effective, be in writing and
require in the case of Parent, Sub or the Company, action by its Board of
Directors or the duly authorized designee of its Board of Directors.
(b) The Company may terminate this Agreement pursuant to
Section 9.01(e) only if (i) the Company Board has received a bona fide proposal
to consummate a Company Takeover Proposal, (ii) the Company Board shall have
been advised in writing by its investment banker that it believes the party
making such proposal is financially capable of consummating such Company
Takeover Proposal, which proposal does not have any financing contingency, (iii)
the Company Board shall have been reasonably advised in writing, by outside
counsel to the Company, that any failure to withdraw or modify its approval or
recommendation of this Agreement, the Offer or the Merger would be reasonably
likely to constitute a breach of the fiduciary duties of the Company Board to
the stockholders of the Company, (iv) the Company Board, after weighing such
advice and the terms of such Company Takeover Proposal, shall have reasonably
determined in good faith that failing to withdraw or modify its approval or
recommendation of the Offer, the Merger and this Agreement would constitute a
breach of its fiduciary duties to stockholders of the Company, (v) the Company
has notified Parent in writing of the determinations described in clauses (ii),
(iii) and (iv) above, (vi) at least five business days following receipt by
Parent of such notice, and taking into account any revised proposal made by
Parent since receipt of such notice, such Company Takeover Proposal remains a
bona fide Company Takeover Proposal and the Company Board has again received the
advice referred to in clauses (ii) and (iii) above and made the determinations
referred to in clause (iv) above, (vii) the Company is in compliance with
Section 6.02, and (viii) the Company has previously paid the fee due under
Sections 9.01(e) and 9.02.
ARTICLE X
General Provisions
SECTION 10.01. Nonsurvival of Representations and Warranties.
Except as provided in the Stock Option and Tender Agreements, none of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 10.01
shall not limit any covenant or agreement contained in any Transaction Agreement
which by its terms contemplates performance after the Effective Time.
<PAGE> 47
43
SECTION 10.02. Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Ford Motor Company
The American Road
Dearborn, Michigan
Tel: (313) 322-3000
Fax: (313) 594-1297
Attention: John K. Dickerson, Esq.
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3954
Tel: (212) 455-2000
Fax: (212) 455-2502
Attention: David J. Sorkin, Esq.
(b) if to the Company, to
Automobile Protection Corporation-APCO
15 Dunwoody Park Drive, Suite 100
Atlanta, Georgia 30338
Tel: (770) 394-7070
Fax: (770) 673-0474
Attention: Martin J. Blank
with a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, NY 10016-2097
Tel: (212) 818-8800
Fax: (212) 818-8881
Attention: Andrew D. Hudders, Esq.
SECTION 10.03. Interpretation; Disclosure Letters. When a
reference is made in this Agreement to a Section, such reference shall be to a
Section of this Agreement unless
<PAGE> 48
44
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation".
SECTION 10.04. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 10.05. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. Delivery of an
executed counterpart of this Agreement by facsimile shall be effective to the
fullest extent permitted by applicable law.
SECTION 10.06. Entire Agreement; No Third-Party Beneficiaries.
The Transaction Agreements, the Company Disclosure Letter, the Parent Disclosure
Letter and all exhibits and schedules hereto and the Confidentiality Agreement,
taken together, (a) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the Transactions and (b) except for Section 7.05 and, from and after
the Effective Time, Section 3.01(c)(i), Section 7.04(a) and Section 9.02(c) are
not intended to confer upon any person other than the parties any rights or
remedies.
SECTION 10.07. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof, except to the extent the laws of Georgia are
mandatorily applicable to the Merger.
SECTION 10.08. Assignment. Neither this Agreement nor any of
the rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, except that Sub may assign, in
its sole discretion, any of or all its rights, interests and obligations under
this Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations under
this Agreement. Any purported assignment without such consent shall be void.
Subject to the preceding sentences, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their respective
successors and assigns.
SECTION 10.09. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of any Transaction
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of any Transaction
<PAGE> 49
45
Agreement and to enforce specifically the terms and provisions of each
Transaction Agreement in any New York state court or any Federal court located
in the State of New York, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any New York state
court or any Federal court located in the State of New York in the event any
dispute arises out of any Transaction Agreement or any Transaction, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, (c) agrees that it will not
bring any action relating to any Transaction Agreement or any Transaction in any
court other than any New York state court or any Federal court sitting in the
State of New York and (d) waives any right to trial by jury with respect to any
action related to or arising out of any Transaction Agreement or any
Transaction.
<PAGE> 50
46
IN WITNESS WHEREOF, Parent, Sub and the Company have duly
executed this Agreement, all as of the date first written above.
FORD MOTOR COMPANY,
by
/s/ Lance A. Miller
-----------------------------------------
Name: Lance A. Miller
Title: Business Manager, Ford Customer
Service Division
AM1 ACQUISITION COMPANY,
by
/s/ Lance A. Miller
-----------------------------------------
Name: Lance A. Miller
Title: Chairman of the Board and President
AUTOMOBILE PROTECTION CORPORATION-
APCO,
by
/s/ Martin J. Blank
-----------------------------------------
Name: Martin J. Blank
Title: Chairman of the Board, Chief
Operating Officer and Secretary
<PAGE> 51
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered shares of Company
Common Stock promptly after the termination or withdrawal of the Offer), to pay
for any shares of Company Common Stock tendered pursuant to the Offer unless (i)
there shall have been validly tendered and not withdrawn prior to the expiration
of the Offer that number of shares of Company Common Stock which would represent
at least a majority of the Fully Diluted Shares (the "Minimum Tender
Condition"), (ii) the waiting period (and any extension thereof) applicable to
the purchase of shares of Company Common Stock pursuant to the Offer under the
HSR Act shall have been terminated or shall have expired and any consents,
approvals and filings under any foreign antitrust law, the absence of which
would prohibit the purchase of all shares of Company Common Stock tendered
pursuant to the Offer under the HSR Act, shall have been obtained or made and
(iii) all consents, approvals and filings under the Auto Warranty Laws of any
state that are required to be made or obtained prior to the acceptance of shares
of Company Common Stock pursuant to the Offer shall have been made or obtained.
The term "Fully Diluted Shares" means all outstanding securities entitled
generally to vote in the election of directors of the Company on a fully diluted
basis, after giving effect to the exercise, conversion or termination of all
options (including any Potential Stock Options, but excluding the option granted
pursuant to the Company Stock Option Agreement), rights and securities
exercisable or convertible into such voting securities. Furthermore,
notwithstanding any other term of the Offer or this Agreement, Sub shall not be
required to, accept for payment or, subject as aforesaid, to pay for any shares
of Company Common Stock not theretofore accepted for payment or paid for, and
may terminate or amend the Offer, with the consent of the Company or if, at any
time on or after the date of this Agreement and before the acceptance of such
shares for payment or the payment therefor, any of the following conditions
exists:
(a) there shall be threatened in writing or pending any suit,
action or proceeding that has a reasonable likelihood of success, (i)
challenging the acquisition by Parent or Sub of any Company Common
Stock, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or any other Transaction, or seeking to obtain
from the Company, Parent or Sub any damages that are material in
relation to the Company and its subsidiaries taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation by the Company,
Parent or any of their respective subsidiaries of any material portion
of the business or assets of the Company, Parent or any of their
respective subsidiaries, or to compel the Company, Parent or any of
their respective subsidiaries to dispose of or hold separate any
material portion of the business or assets of the Company, Parent or
any of their respective subsidiaries, as a result of the Offer, the
Merger or any of the other Transaction, (iii) seeking to impose
limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any shares of Company Common
Stock, including the right to vote the Company Common Stock purchased
by it on all matters properly presented to the stockholders of the
Company, (iv) seeking to prohibit Parent or any of its subsidiaries
from effectively controlling in any
<PAGE> 52
2
material respect the business or operations of the Company and the
Company Subsidiaries, or (v) which otherwise is reasonably likely to
have a Parent Material Adverse Effect or a Company Material Adverse
Effect;
(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be threatened, proposed, sought,
enacted, entered, enforced, promulgated, amended or issued with respect
to, or deemed applicable to, or any consent or approval withheld with
respect to the Offer, the Merger or any of the other Transactions, by
any Governmental Entity that is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in paragraph (a)
above;
(c) except as disclosed in the Filed Company SEC Documents or the
Company Disclosure Letter, since the date of the most recent audited
financial statements included in the Filed Company SEC Documents there
shall have occurred any event, change, effect or development that,
individually or in the aggregate, has had or is reasonably likely to
have, a Company Material Adverse Effect;
(d)(i) it shall have been publicly disclosed or Parent shall have
otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under
the Exchange Act) of more than 35% of the outstanding shares of the
Company Common Stock has been acquired by another person or (ii) the
Company Board or any committee thereof shall have withdrawn or modified
in a manner adverse to Parent its approval or recommendation of the
Offer and this Agreement or the Company Board or any committee thereof
shall have resolved to take any of the foregoing actions;
(e) any of the representations and warranties of the Company in
this Agreement that are qualified as to materiality shall not be true
and correct or any such representation and warranty that is not so
qualified shall not be true and correct in any material respect, as of
the date of this Agreement and as of such time as though made at such
time, except (i) to the extent such representation and warranty
expressly relates to an earlier date (in which case on and as of such
earlier date) or (ii) to the extent Parent had consented in writing (or
is deemed to have consented) to any supplement or amendment to the
Company Disclosure Letter delivered to Parent pursuant to Section
6.01(c)(ii) of the Merger Agreement;
(f) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with
by it under this Agreement;
(g) this Agreement shall have been terminated in accordance with
its terms; or
(h) any of the Principal Stockholder Employment Agreements, the
Stock Option and Tender Agreements or the Company Stock Option
Agreement shall not be in full force and effect or either of the
Principal Company Stockholders shall have failed to perform in any
material respect any obligation or to comply in any material respect
with any agreement or covenant to be performed or complied with by
either of them under any such agreement;
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which, in the sole judgment of Sub or Parent, in any such case, and regardless
of the circumstances giving rise to any such condition (including any action or
inaction by Parent or any of its affiliates), makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and
Parent and may be asserted by Sub or Parent regardless of the circumstances
giving rise to such condition or may be waived by Sub and Parent in whole or in
part at any time and from time to time in their sole discretion. The failure by
Parent, Sub or any other affiliate of Parent at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
<PAGE> 1
EXHIBIT (c)(2)
EXECUTION COPY
STOCK OPTION AND TENDER AGREEMENT, dated as of June
10, 1999 (the "Agreement"), between FORD MOTOR COMPANY, a
Delaware corporation ("Parent"), and Martin J. Blank
("Stockholder").
WHEREAS, Parent, Automobile Protection Corporation - APCO, a
Georgia corporation (the "Company"), and AM1 Acquisition Company, a Georgia
corporation and a wholly owned subsidiary of Parent ("Sub"), are, concurrently
with the execution and delivery of this Agreement, entering into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger Agreement";
capitalized terms used without definition herein having the meanings assigned to
them in the Merger Agreement), pursuant to which Sub agrees to make a tender
offer (the "Offer") for all outstanding shares of common stock, par value $.001
per share ("Company Common Stock"), of the Company, at $13.00 per share, net to
the seller in cash, to be followed by a merger (the "Merger") of Sub with and
into the Company;
WHEREAS, as of the date hereof, Stockholder beneficially owns
directly the number of shares of Company Common Stock (the "Existing Shares",
together with any shares of Company Common Stock beneficial ownership of which
is acquired after the date hereof and prior to the termination hereof, whether
upon the exercise of options, conversion of convertible securities or otherwise,
collectively, referred to herein as the "Shares") set forth on Annex A hereto;
WHEREAS, Parent and Stockholder desire to deposit a portion of
the consideration to be paid to Stockholder pursuant to the Offer and the Merger
into an escrow fund for the purpose of securing the indemnification of Parent,
Sub, the Surviving Corporation and certain other persons after the expiration of
the Offer against certain Losses (as defined herein); and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement and make the Offer, Parent and Sub have required that
Stockholder agree, and Stockholder has agreed, among other things, to tender in
the Offer, grant to Parent a proxy to vote and grant to Parent an option to
purchase all of the Shares owned by Stockholder on the terms and conditions
provided for herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Agreement to Tender and Vote; Proxy.
SECTION 1.01 Tender. Subject to the provisions of Article II,
Stockholder hereby agrees to validly tender (or cause the record owner to
validly tender), pursuant to and in accordance with the terms of the Offer, as
soon as practicable after commencement of the Offer but in no event later than 2
business days prior to the then scheduled expiration date of the Offer, all of
the Shares by physical delivery of the certificates therefor (or by book entry
or appropriate
<PAGE> 2
2
instructions to brokers or custodians thereof, as the case may be) and to not
withdraw such Shares, except following termination of this Agreement pursuant to
Section 6.01 hereof. Stockholder hereby acknowledges and agrees that Parent's
and Sub's obligation to accept for payment and pay for the Shares is subject to
the terms and conditions of the Offer. Stockholder hereby permits Parent and Sub
to publish and disclose in the Offer Documents and, if approval of the Company's
stockholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC) his identity and ownership of
the Shares and the nature of his commitments, arrangements and understandings
under this Agreement.
SECTION 1.02 Voting. Subject to the provisions of Article II,
Stockholder hereby agrees that, during the time this Agreement is in effect, at
any meeting of the stockholders of the Company, however called, or pursuant to
any action by written consent, Stockholder shall (a) vote (or cause to be voted)
the Shares in favor of the Merger, the Merger Agreement, the approval of the
terms thereof and all the transactions contemplated thereby, and any other
transaction proposed by Parent; (b) vote (or cause to be voted) the Shares
against any action or agreement that would result in a breach in any material
respect of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or this Agreement; and (c)
vote (or cause to be voted) the Shares against any of the following (other than
the Merger Agreement (including as it may have been, or may have been proposed
by Parent to be, amended) or the transactions contemplated thereby) (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or its subsidiaries (including a
Company Takeover Proposal) or (ii) a sale or transfer of a material amount of
assets of the Company and its subsidiaries or a reorganization, recapitalization
or liquidation of the Company (any matter under clauses (a), (b) or (c), a
"Subject Proposal").
SECTION 1.03 Proxy. (a) Subject to the provisions of Article
II, during the time this Agreement is in effect, Stockholder hereby irrevocably
grants to, and appoints, Parent and Sub, or any of them, and any individual
designated in writing by any of them, and each of them individually, as the
Stockholder's proxy, agent and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of Stockholder, to vote (or
cause to be voted) the Shares, or grant a consent or approval in respect of the
Shares, in each case, with respect to a Subject Proposal, in a manner consistent
with Section 1.02 above. Parent and Sub agree that Stockholder is not granting
any proxy with respect to any matter to be voted on by stockholders of the
Company other than a Subject Proposal.
(b) Stockholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon Stockholder's execution and
delivery of this Agreement. Stockholder hereby affirms that the irrevocable
proxy set forth in this Section 1.03 is given in connection with the execution
of the Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of Stockholder under this Agreement. Stockholder
hereby further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked prior to the expiration of this
Agreement. Stockholder hereby ratifies and confirms all that such irrevocable
proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable
proxy is executed and intended to be irrevocable in accordance with the
provisions of 722 of the Georgia Business Corporation Code (the "GBCC").
Stockholder will
<PAGE> 3
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take such further action or execute such other instruments as may be necessary
to effectuate the intent of this proxy and hereby revokes any proxy previously
granted by him with respect to the Shares that would be inconsistent with the
proxy granted pursuant to Section 1.03(a). Stockholder shall not hereafter,
unless and until this Agreement terminates pursuant to Section 6.01 hereof,
purport to vote (or execute a consent with respect to) the Shares with respect
to any Subject Proposal (other than through this irrevocable proxy) or grant any
other proxy or power of attorney with respect to any Shares to vote with respect
to any Subject Proposal, deposit any Shares into a voting trust or enter into
any agreement (other than this Agreement), arrangement or understanding with any
person, directly or indirectly, to vote with respect to any Subject Proposal,
grant any proxy or give instructions with respect to the voting of such Shares
with respect to any Subject Proposal.
ARTICLE II
Option to Purchase Shares.
SECTION 2.01 Grant of Option. Without limiting any other
rights or remedies of Parent, Stockholder hereby grants to Parent an
irrevocable, unconditional option to purchase all (and not less than all) the
Shares, on the terms and subject to the conditions set forth herein (the
"Option").
SECTION 2.02 Exercise of Option. (a) The Option may be
exercised by Parent, at any time, or from time to time, commencing upon the
Exercise Date and prior to the Expiration Date. As used herein, the term
"Exercise Date" means the date on which any of the following first occurs:
(i) any corporation (including the Company or any of
its subsidiaries or affiliates), partnership, person, other entity or
group (as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) other than Parent or any of its
affiliates (collectively, "Persons") shall have made, or proposed,
communicated or disclosed in a manner which is or otherwise becomes
public prior to or during the pendency of the Offer (including being
known by stockholders of the Company) an intention to make a Company
Takeover Proposal;
(ii) it shall have been publicly disclosed or Parent
shall have otherwise learned that beneficial ownership (determined for
the purposes of this paragraph as set forth in Rule 13d-3 promulgated
under the Exchange Act) of more than 35% of the outstanding shares of
the Company Common Stock has been acquired by any Person;
(iii) (A) any event as a result of which Parent is
entitled to terminate the Merger Agreement pursuant to Section 9.01(d)
of the Merger Agreement or (B) the termination of the Merger Agreement
by the Company pursuant to Section 9.01(e) of the Merger Agreement; or
<PAGE> 4
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(iv) Stockholder shall breach or fail to perform or
comply with in any material respect any of its obligations, covenants
or agreements contained in Article I or in Section 4.01(a) of this
Agreement or the Company shall breach or fail to perform or comply with
in any material respect any of its obligations, covenants or agreements
contained in the first sentence of Section 2.02(b), the second sentence
of Section 7.01(b) or Sections 6.02, 9.02 or 9.05(b) of the Merger
Agreement.
As used herein, the term "Expiration Date" means the first to
occur of
(i) the Effective Time,
(ii) written notice of termination of this Agreement
by Parent to Stockholder,
(iii) the termination of the Merger Agreement
pursuant to Sections 9.01(a) or 9.01(b)(ii) thereof, or
(iv) the date that is twelve months from the date of
termination of the Merger Agreement; provided that if the Option has
not become exercisable on or prior to the date of termination of the
Merger Agreement, then the Expiration Date shall be the date of
termination of the Merger Agreement.
(b) In the event Parent wishes to exercise the Option, Parent
shall send a written notice to Stockholder of its intention to so exercise the
Option (a "Notice"), specifying the place in the United States, time and date of
the closing of such purchase (the "Closing Date" or the "Closing"), which date
shall not be less than two business days nor more than ten business days from
the date on which a Notice is delivered; provided, that the Closing shall be
held only if (i) such purchase would not otherwise violate or cause the
violation of, any applicable law or regulations (including, without limitation,
the HSR Act or the rules of the National Association of Securities Dealers, Inc.
("NASD")) and (ii) no statute, rule, regulation, decree, order or injunction
shall have been promulgated, enacted, entered into, or enforced by any
Governmental Entity which prohibits delivery of the Shares, whether temporary,
preliminary or permanent (provided, however, that the parties hereto shall use
commercially reasonable efforts to have any such order, decree or injunction
vacated or reversed). In the event the Closing is delayed pursuant to clause (i)
or (ii) above, the Closing Date shall be within five business days following the
cessation of such restriction, violation, potential violation, order, decree or
injunction, as the case may be; provided, further, that, notwithstanding any
prior notice of intention to exercise the Option, Parent shall be entitled to
rescind such notice and shall not be obligated to purchase any Shares in
connection with such exercise upon written notice to such effect to Stockholder.
(c) At any Closing, Stockholder shall deliver to Parent all of
the Shares to be purchased by delivery of certificates evidencing such Shares,
properly endorsed by Stockholder and accompanied by such stock powers and other
documents as may be necessary to transfer record ownership of the Shares into
Parent's name on the stock transfer books of the Company,
<PAGE> 5
5
together with evidence of payment of all applicable transfer and documentary
stamp taxes and other fees.
SECTION 2.03 Payments (a) The purchase and sale of the Shares
pursuant to Section 2.02 of this Agreement shall be at a purchase price per
Share equal to the price per Share offered by Sub in the Offer, but in any event
shall not be less than the highest price paid by Sub for any shares of Company
Common Stock, if any, purchased pursuant to the Offer (the "Exercise Price"). At
any Closing, Parent shall pay to Stockholder by wire transfer of immediately
available funds to an account specified by Stockholder an amount equal to the
Exercise Price multiplied by the number of Shares purchased pursuant to this
Article II.
(b) In the event that Parent exercises the Option and
purchases the Shares pursuant to the Option (the "Purchased Shares") and prior
to the Expiration Date the Company enters into a definitive agreement to
consummate a Company Takeover Proposal or transactions contemplated by a Company
Takeover Proposal are consummated and the price per share paid in such Company
Takeover Proposal exceeds the Exercise Price, then upon the consummation of such
Company Takeover Proposal, Parent shall pay to Stockholder by wire transfer of
immediately available funds to an account specified by Stockholder an amount in
cash equal to such excess multiplied by the number of Purchased Shares.
ARTICLE III
Representation and Warranties.
SECTION 3.01 Representation and Warranties of Parent. Parent
hereby represents and warrants to Stockholder that any Shares acquired by Parent
upon exercise of the Option will not be taken with a view to the public
distribution thereof and will not be transferred or otherwise disposed of except
in a transaction registered or exempt from registration under the Securities
Act.
SECTION 3.02 Representations and Warranties of Stockholder.
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Ownership of Shares and Options. Subject to Section
4.01(c), Stockholder (or accounts or trusts controlled or beneficially
owned by Stockholder) is the owner of the Existing Shares and options
to acquire Shares ("Stock Options") set forth on Annex A hereto and has
the power to vote and dispose of such Shares. To Stockholder's
knowledge, the Existing Shares are, and the other Shares upon issuance
will be, validly issued, fully paid and nonassessable. On the date
hereof, the Existing Shares are owned of record and beneficially by
Stockholder and, on the date hereof, the Existing Shares constitute all
of the shares of Company Common Stock owned of record or beneficially
by Stockholder. Stockholder has, with respect to the Existing Shares,
or will have, with respect to any other Shares, sole voting power and
sole power of disposition with respect to all of the Shares, with no
restrictions, subject to applicable federal securities laws, on
<PAGE> 6
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Stockholder's rights of disposition pertaining thereto. On the date
hereof, Stockholder has, and on the date of any Closing hereunder
Stockholder will have with respect to Shares to be sold on such date,
good, valid and marketable title to the Shares, other than the Shares
tendered and purchased pursuant to the Offer, free and clear of all
claims, liens, encumbrances, security interests and charges of any
nature whatsoever (other than the encumbrance created by this
Agreement), and shall not be subject to any preemptive right of any
stockholder of the Company. The sale of the Shares to Parent hereunder
will transfer to Parent good, valid and marketable title to the Shares,
free and clear of all claims, liens, encumbrances, security interests
and charges of any nature whatsoever.
(b) Power; Binding Agreement. Stockholder has the legal
capacity, power and authority to enter into and perform all of its
obligations under this Agreement, including, without limitation, power
and authority to sell, assign, transfer and deliver the Shares to
Parent pursuant to the terms and conditions of this Agreement. To the
knowledge of Stockholder, the execution, delivery and performance of
this Agreement by Stockholder will not violate any other agreement to
which Stockholder is a party including, without limitation, any voting
agreement, stockholders agreement or voting trust. This Agreement has
been duly and validly executed and delivered by Stockholder and
constitutes a valid and binding agreement of Stockholder, enforceable
against Stockholder in accordance with its terms.
(c) No Conflicts. Except for (i) filings under the HSR Act,
if applicable, (ii) the applicable requirements of the Exchange Act and
the Securities Act and (iii) filings under the Auto Warranty Laws of
the States as set forth in Schedule 2.02(c) to the Company Stock
Option Agreement, (A) to the knowledge of Stockholder, no filing with,
and no permit, authorization, consent or approval of, any Governmental
Entity is necessary for the execution of this Agreement by Stockholder
and the consummation by Stockholder of the transactions contemplated
hereby and (B) neither the execution and delivery of this Agreement by
Stockholder nor the consummation by Stockholder of the transactions
contemplated hereby nor compliance by Stockholder with any of the
provisions hereof shall (1) conflict with or result in any breach of
any provision of the certificate of incorporation, by-laws, trust or
charitable instruments (or similar documents), if any, of Stockholder,
(2) result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation to which Stockholder is a party or by which it
or any of its properties or assets may be bound or (3) violate any
order, writ, injunction, decree, statute, rule or regulation applicable
to Stockholder or any of its properties or assets.
<PAGE> 7
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ARTICLE IV
Certain Covenants of Stockholder
SECTION 4.01 Certain Covenants of Stockholder. Stockholder
hereby covenants and agrees as follows:
(a) No Solicitation. Stockholder shall not, and shall not
permit any representative or agent of Stockholder to, directly or
indirectly, solicit (including by way of furnishing information),
facilitate, participate in or initiate any inquiries or the making of
any proposal by any person or entity (other than Parent or any
affiliate of Parent) which constitutes, or may reasonably be expected
to lead to, a Company Takeover Proposal or any sale of any of the
Shares. If Stockholder or any representative or agent of Stockholder
receives an inquiry or proposal with respect to any sale of Shares,
then Stockholder shall promptly inform Parent of the terms and
conditions, if any, of such inquiry or proposal and the identity of the
person making it; provided that, if such inquiry or proposal
constitutes a Company Takeover Proposal, compliance by the Company with
Section 6.02(c) of the Merger Agreement shall constitute compliance by
Stockholder with this sentence. Stockholder shall, and shall cause its
representatives or agents to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing.
Notwithstanding anything in this Section 4.01(a) to the contrary, the
covenants and agreements set forth in Section 4.01(a) shall not be
deemed to prevent Stockholder from taking any action, subject to the
applicable provisions of the Merger Agreement, while acting in his
capacity as director or officer of the Company and other than with
respect to this Agreement, to the extent permitted by the Merger
Agreement.
(b) Restriction on Transfer, Proxies and Non-Interference.
Stockholder hereby agrees, while this Agreement is in effect, and
except as contemplated hereby, not to (i) except for pledges of
Existing Shares as described in Annex A, sell, transfer, pledge,
encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the sale,
transfer, pledge, encumbrance, assignment or other disposition of, any
of the Shares (provided that Stockholder may sell up to an aggregate of
150,000 Shares in bona fide brokers transactions, as that term is
described in Rule 144(g) under the Securities Act) or (ii) grant any
proxies with respect to any Shares, except with respect to the election
of one director and the approval of the 1998 Performance Equity Plan to
be voted on at the Company's 1999 annual meeting of stockholders, or
deposit any Shares into a voting trust or enter into a voting agreement
with respect to any Shares or (iii) take any action that would make any
representation or warranty of Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling Stockholder
from performing his obligations under this Agreement.
(c) Legending of Certificates; Nominees Shares. Stockholder
agrees to submit to Parent contemporaneously with or as promptly as
practicable following execution of this
<PAGE> 8
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Agreement all certificates representing the Shares (other than Shares
pledged as described on Annex A) so that Parent may note thereon a
legend referring to the proxy and other rights granted to it by this
Agreement. If any of such Shares beneficially owned by Stockholder are
held of record by a brokerage firm in "street name" or in the name of
any other nominee (a "Nominee", and, as to such Shares, "Nominee
Shares"), Stockholder agrees that Stockholder will within five days of
the date of this Agreement execute and deliver to Parent a limited
power of attorney in such form as shall be reasonably satisfactory to
Parent enabling Parent to require the Nominee to (i) grant to Parent an
irrevocable proxy to the same effect as Section 1.03 hereof with
respect to the Nominee Shares held by such Nominee, (ii) tender such
Nominee Shares in the Offer pursuant to Section 1.01 hereof, and (iii)
submit to Parent the certificates representing such Nominee Shares for
notation of the above-referenced legend thereon.
(d) Additional Shares. Stockholder hereby agrees, while this
Agreement is in effect, to promptly notify Parent of the number of any
new Shares acquired by Stockholder, if any, after the date hereof.
(e) Cooperation. Stockholder will not take any action which
could reasonably result in preventing the consummation of the
transactions contemplated by the Merger Agreement, including the Offer
and the Merger, the Company Option Agreement or this Agreement.
SECTION 4.02 Holdback Amount. (a) Stockholder hereby
irrevocably authorizes and directs the depositary for the Offer to withhold
payment to Stockholder of an amount of the aggregate purchase price payable in
the Offer for shares of Company Common Stock tendered by Stockholder in the
Offer equal to $500,000 (the "Holdback Amount") and to deposit such amount in
trust with the escrow agent (the "Escrow Agent") pursuant to an escrow agreement
among Parent, Sub, Stockholder, Larry I. Dorfman (the "Other Stockholder") and
the Escrow Agent substantially in the form of Schedule 4.02 hereto, with such
changes thereto as the Escrow Agent may propose (the "Escrow Agreement").
Without limiting any other provision contained herein, if Stockholder fails to
tender in the Offer a number of shares of Company Common Stock sufficient to
result in an amount at least equal to the Holdback Amount being deposited with
the Escrow Agent, then Stockholder hereby irrevocably authorizes and directs the
Paying Agent to withhold payment to Stockholder of an amount of Merger
Consideration payable to Stockholder pursuant to the Merger equal, when taken
together with the amount withheld pursuant to the first sentence of this Section
4.02(a), to the Holdback Amount and to deposit such amount in trust with the
Escrow Agent pursuant to the Escrow Agreement. All amounts deposited with the
Escrow Agent pursuant to this Section 4.02(a) and all amounts deposited with the
Escrow Agent by the Other Stockholder, together with all interest thereon, and
as such amounts may be disbursed from time to time in accordance with the terms
of the Escrow Agreement, are referred to herein as the "Escrow Fund."
(b) All matters relating to the Escrow Fund, to the extent
not provided in this Agreement, shall be governed by the Escrow Agreement. The
Escrow Agent shall hold, invest, reinvest and disburse the Escrow Fund, together
with any interest thereon, in accordance with the
<PAGE> 9
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terms of the Escrow Agreement. The right of Stockholder to receive any payment
from the Escrow Fund shall not be transferable or assignable in any manner
whatsoever, except by will or the laws of intestate succession.
SECTION 4.03 Indemnification. (a) Indemnification by
Stockholder. Subject to Section 4.03(b), Stockholder, jointly and severally with
the Other Stockholder, shall indemnify Parent, Sub, the Surviving Corporation,
their affiliates and their respective officers, directors, employees, agents and
representatives (the "Indemnified Parties") against, and shall hold them
harmless from, any and all losses, liabilities, debts, damages, claims, demands,
payments, judgments, settlements, expenses (including reasonable legal fees and
expenses) and costs of any kind ("Losses"), including in respect of third party
claims, but only out of and to the extent of the Escrow Fund, for or on account
of or arising from or in connection with or otherwise with respect to any breach
on the part of the Company of any representation or warranty made by it
contained in Article IV of the Merger Agreement; provided that (i) in
determining whether there has been a breach on the part of the Company of any
such representation or warranty, matters that would represent a debit for
balance sheet purposes may be offset to the extent that there are previously
undisclosed credits relating to the same subject matter as that of the debit,
(ii) solely for purposes of this Section 4.03, the representations and
warranties set forth in the second sentence of Section 4.04(b), Section 4.05
(other than clause (i) of the first sentence thereof), Section 4.06 (other than
the first sentence of Section 4.06(a), Section 4.07, Section 4.08 (other than
clauses (ii) and (iii) thereof), Section 4.09, Section 4.10, Section 4.11, the
first two sentences of Section 4.12, Section 4.13(a) (other than the first
sentence thereof), Section 4.14, Section 4.15, Section 4.16, Section 4.17 and
Section 4.19 of the Merger Agreement shall be deemed to be true and correct if,
to the knowledge (as such term is defined in the Merger Agreement, provided that
for purposes hereof such definition shall be deemed only to refer to the
knowledge of Stockholder) of Stockholder, such representations and warranties
that are qualified as to materiality are true and correct and those not so
qualified are true and correct in all material respects, as the case may be, at
the time each such representation and warranty was made or was required to be
true and correct (or true and correct in all material respects, as the case may
be) pursuant to the terms of the Merger Agreement and (iii) the Company has
supplemented or amended the Company Disclosure Letter pursuant to Section
6.01(c)(ii) of the Merger Agreement and Parent has consented (or is deemed to
have consented to such supplement or amendment pursuant to such Section), then
the Company Disclosure Letter, as so supplemented or amended, shall be deemed to
qualify the representations and warranties of the Company for purposes of this
Section 4.03, unless Stockholder had knowledge of the subject matter of the
amendment or supplement at the date of the execution of the Merger Agreement.
The procedures for the payment of claims for indemnification shall be as set
forth in the Escrow Agreement.
(b) Limitations Upon Indemnification. Notwithstanding
anything in this Section 4.03 to the contrary:
(i) Stockholder shall not be obligated to provide any
indemnification under Section 4.03 unless and until the aggregate
amount of Losses for which it is obligated to provide such
indemnification exceeds the sum of $500,000, after which Stockholder
and
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the Other Stockholder shall each be obligated, on a joint and several
basis, to provide indemnification for one-half of the entire amount of
such Losses; and
(ii) in no event shall the aggregate liability of
Stockholder together with the aggregate liability of the Other
Stockholder under this Section 4.03 exceed the entire amount of the
Escrow Fund.
SECTION 4.04 Survival of Representations and Warranties. For
purposes of Section 4.03 of this Agreement, all of the representations and
warranties of the Company set forth in Article IV of the Merger Agreement shall
survive the Effective Time of the Merger for a period of one year; provided,
however, that the termination of the survival of such representations and
warranties shall not affect any claim for breaches of representations or
warranties if written notice thereof is given to Stockholder and the Escrow
Agent in accordance with the terms of the Escrow Agreement prior to such
termination date.
ARTICLE V
Additional Agreements
SECTION 5.01 Covenant Not to Compete. (a) Stockholder's
Acknowledgment. Stockholder acknowledges that the covenants in this Section 5.01
are given in consideration for and in connection with this Agreement and the
Merger Agreement. Stockholder agrees and acknowledges that in order to assure
the Company, Parent and Sub that the Company will retain its value as a going
concern, it is necessary that Stockholder undertake not to utilize his special
knowledge of the Business (as defined below) and his relationships with customer
and suppliers to compete with the Company or the Surviving Corporation.
Stockholder further acknowledges that:
(i) the Company is and the Company and the Surviving
Corporation will be engaged in the business of the design, sale and
administration of extended service contracts and extended warranty
programs for motor vehicles (the "Business");
(ii) Stockholder's relationship with the Company has
given him, and can be expected to continue to give him, access to and
possession of trade secrets and confidential information concerning the
Company and the Business;
(iii) the agreements and covenants contained in this
Section 5.01 are essential to protect the business and goodwill of the
Company and the Surviving Corporation;
(iv) Parent would not enter into this Agreement or
the Merger Agreement but for these agreement and covenants; and
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(v) upon consummation of the transactions
contemplated by the Merger Agreement, including the Offer and the
Merger, and this Agreement, Stockholder will have adequate means of
support other than by engaging in the Business and the provisions of
this Section 5.01 will not impair such ability.
Accordingly, the parties hereto agree that the covenant not to
compete contained in this Section 5.01 is a reasonable covenant under the
circumstances, and further agree that if in the opinion of any court of
competent jurisdiction, such restraint is not reasonable in any respect, such
court shall have the right, power and authority to excise or modify such
provision or clause of this covenant as to the court shall appear not reasonable
and to enforce the remainder of the covenant as so amended.
(b) Competitive Activities. Stockholder hereby agrees that for
a period commencing on the date hereof and ending on the sixth year anniversary
of the Effective Time (the "Restricted Period"), he will not, on behalf of
himself, or on behalf of any other person, company, corporation, partnership or
other entity or enterprise, directly or indirectly, as an employee, proprietor,
stockholder, partner, consultant, or otherwise, engage in any business or
activity competitive with the Business, anywhere in the United States (the
"Territory"); provided that (x) Stockholder may have up to a 25% ownership
interest in, and be a member of the board of directors of, Safeguard Products
International, Inc. ("Safeguard"), so long as (i) Stockholder may not have any
control over (other than the control as a member of the board of directors of
Safeguard) or involvement with the operations or management of Safeguard, (ii)
no resources of the Company may be used or directed toward activities of
Safeguard, except for brokerage services provided by the Aegis Group
Incorporated, a subsidiary of the Company, to Safeguard on an arms'-length
basis, consistent with past practice, and (iii) no business opportunities of the
Company of which the Stockholder is aware, may be directed to Safeguard and (y)
nothing contained herein shall be construed to prevent Stockholder from
investing in the stock of any competing corporation listed on a national
securities exchange or traded in the over-the-counter market, but only if
Stockholder is not involved in the business of said corporation and if
Stockholder and his associates (as such term is defined in Regulation 14(A)
promulgated under the Exchange Act), collectively, do not own more than an
aggregate of two percent of the stock of such corporation. With respect to the
Territory, Stockholder specifically acknowledges that the Company has conducted
or plans to conduct the Business throughout those areas comprising the Territory
and the Company intends to continue to expand the Business throughout the
Territory.
(c) Solicitation of Employees. Without limiting the generality
of the provisions of Section 5.01(b) above, Stockholder agrees that during the
Restricted Period he shall not on behalf of himself or on behalf of any other
person, company, corporation, partnership or other entity or enterprise (except
on behalf of the Company or the Surviving Corporation), directly or indirectly,
solicit employees, agents or consultants of the Company or the Surviving
Corporation to become employees, agents or consultants for him or for such
businesses to the extent such businesses are engaged in activities that compete
with the Business.
<PAGE> 12
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(d) Interference with Relationships. During the Restricted
Period, Stockholder shall not, directly or indirectly, as employee, agent,
consultant, stockholder, director, co-partner or in any other individual or
representative capacity intentionally solicit or encourage any present or future
customer, agent or supplier of the Company or the Surviving Corporation to
terminate or otherwise alter his, her or its relationship with the Company or
the Surviving Corporation in any manner adverse to the Company or the Surviving
Corporation.
SECTION 5.02 Stop Transfer Order. In furtherance of this
Agreement, concurrently herewith, Stockholder shall and hereby does authorize
the Company's counsel to notify the Company's transfer agent that there is a
stop transfer order with respect to all of the Existing Shares (and that this
Agreement places limits on the voting and transfer of such shares).
SECTION 5.03 Public Announcements. Parent and Sub, on the one
hand, and Stockholder, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Offer, the Merger,
the Option and the other Transactions and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange.
SECTION 5.04 Commercially Reasonable Efforts; Further
Assurances. (a) Stockholder shall use commercially reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other Transactions;
(b) Stockholder shall, from time to time, execute and deliver,
or cause to be executed and delivered, such additional or further consents,
documents and other instruments and shall take all such further actions as
Parent may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement and the other Transaction
Agreements.
SECTION 5.05 Cooperation as to Regulatory Matters. If so
requested by Parent, promptly after the date hereof, Stockholder will use
commercially reasonable efforts to, and to cause the Company (if required) to,
make all filings which are required under the HSR Act and applicable
requirements and to seek all regulatory approvals required in connection with
the transactions contemplated hereby. The parties shall furnish to each other
such necessary information and reasonable assistance as may be requested in
connection with the preparation of filings and submissions to any governmental
agency, including, without limitation, filings under the provisions of the HSR
Act. Stockholder shall also use commercially reasonable efforts to cause the
Company to supply Parent with copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between the
Company and its representatives and the Federal Trade Commission, the Department
of Justice and any other governmental agency or authority and members of their
respective staffs with respect to this Agreement and the transactions
contemplated hereby.
<PAGE> 13
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SECTION 5.06 Adjustments to Prevent Dilution, Etc.. In the
event of a stock dividend or distribution, or any change in the Company Common
Stock by reason of any stock dividend, split-up, reclassification,
recapitalization, combination or the exchange of shares, the term "Shares" shall
be deemed to refer to and include the Shares as well as all such stock dividends
and distributions and any shares into which or for which any or all of the
Shares may be changed or exchanged. In such event, the amount to be paid per
share by Purchaser shall be proportionately adjusted, as shall the number of
shares referred to in the proviso to clause (i) of Section 4.01(b).
ARTICLE VI
Miscellaneous
SECTION 6.01 Termination; Survival of Representations and
Warranties. This Agreement (other than the provisions of Article III, Article V
and Article VI), shall terminate on the Expiration Date. Upon such termination,
this Agreement (other than the provisions of Article III, Article V and Article
VI) shall terminate and be of no further force and effect. The respective
representations and warranties of Stockholder and Parent contained herein or in
any certificates or other documents delivered at or prior to any Closing shall
not be deemed waived or otherwise affected by any investigation made by the
other party hereto, shall survive the exercise in full of the Option for one
year. The provisions of Articles V and VI shall survive the exercise in full of
the Option indefinitely in accordance with their terms; provided that the
provisions of Sections 5.01(a) and (b) shall terminate, notwithstanding that the
Restricted Period may not have terminated, three years following the termination
of Stockholder's employment with Company or its successor.
SECTION 6.03 Amendments. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
SECTION 6.04 Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent, to
Ford Motor Company
The American Road
Dearborn, Michigan 48121
Tel: (313) 322-3000
Fax: (313) 594-1297
Attention: John K. Dickerson, Esq.
with a copy to:
<PAGE> 14
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Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3954
Tel: (212) 455-2000
Fax: (212) 455-2502
Attention: David J. Sorkin, Esq.
(b) if to Stockholder, to
Martin J. Blank
c/o Automobile Protection Corporation - APCO
15 Dunwoody Park Drive, Suite 100
Atlanta, Georgia 30338
Tel: (770) 394-7070
Fax: (770) 673-0474
with a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, NY 10016-2097
Tel: (212) 818-8800
Fax: (212) 818-8881
Attention: Andrew D. Hudders, Esq.
SECTION 6.05 Descriptive Headings; Interpretation. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
SECTION 6.06 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
<PAGE> 15
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SECTION 6.07 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. Delivery of an
executed counterpart of this Agreement by facsimile shall be effective to the
fullest extent permitted by applicable law.
SECTION 6.08 Entire Agreement. This Agreement, together with
the other Transaction Agreements, constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and the Transaction.
SECTION 6.09 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 6.10 Assignment Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, provided that Parent may assign
its rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such obligations. Any
purported assignment without such consent shall be void. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 6.11 Enforcement. (a) The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any New York
state court or any Federal court located in the State of New York, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any New York state court or any Federal court located
in the State of New York in the event any dispute arises out of this Agreement
or any Transaction, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that it will not bring any action relating to this Agreement or any
Transaction in any court other than any New York state court or any Federal
court sitting in the State of New York and (iv) waives any right to trial by
jury with respect to any action related to or arising out of this Agreement or
any Transaction.
(b) Notwithstanding Section 6.11(a), if a dispute arises
between the parties relating to Sections 4.02 or 4.03 of this Agreement or the
terms of the Escrow Agreement, then the following procedure shall be implemented
before either party pursues other available remedies except that either party
may seek injunctive relief from a court of competent jurisdiction where
appropriate in order to maintain the status quo while this procedure is being
followed:
<PAGE> 16
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(i) The parties shall hold a meeting promptly,
attended by persons with decision-making authority regarding the
dispute, to attempt in good faith to negotiate a resolution of the
dispute; provided, however, that no such meeting shall be deemed to
vitiate or reduce the obligations and liabilities of the parties or be
deemed a waiver by a party hereto of any remedies to which such party
would otherwise be entitled.
(ii) If within 30 days after such meeting, the
parties have not succeeded in negotiating a resolution of the dispute,
then the parties agree to submit the matter to binding arbitration in
accordance with the Center for Public Resources Rules for Non-
Administered Arbitration of Business Disputes, by a sole arbitrator.
(iii) Arbitration shall take place in the City of New
York unless otherwise agreed by the parties. The substantive and
procedural law of the State of New York shall apply to the proceedings.
Equitable remedies shall be available in any arbitration. Punitive
damages shall not be awarded. This Section 6.11(b) is subject to the
Federal Arbitration Act, 9 U.S.C.A. ss. 1 et seq. and judgment upon the
award rendered by the arbitrator, if any, may be entered by any court
having jurisdiction thereof.
The parties agree to keep confidential the fact that a dispute
subject to the provisions of this Section 6.11(b) has arisen and the subject
matter thereof, except to the extent permitted by this Section 6.11(b) or to the
extent necessary to comply with applicable law, judicial or regulatory process
or stock exchange rules or regulations.
IN WITNESS WHEREOF, Parent and Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
Martin J. Blank
/s/ Martin J. Blank
----------------------------------------------
FORD MOTOR COMPANY
By: /s/ Lance A. Miller
-------------------------------------------
Name: Lance A. Miller
Title: Business Manager, Ford Customer
Service Division
<PAGE> 1
EXHIBIT (c)(3)
EXECUTION COPY
STOCK OPTION AND TENDER AGREEMENT, dated as of June 10,
1999 (the "Agreement"), between FORD MOTOR COMPANY, a
Delaware corporation ("Parent"), and Larry I. Dorfman
("Stockholder").
WHEREAS, Parent, Automobile Protection Corporation - APCO, a Georgia
corporation (the "Company"), and AM1 Acquisition Company, a Georgia corporation
and a wholly owned subsidiary of Parent ("Sub"), are, concurrently with the
execution and delivery of this Agreement, entering into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"; capitalized terms
used without definition herein having the meanings assigned to them in the
Merger Agreement), pursuant to which Sub agrees to make a tender offer (the
"Offer") for all outstanding shares of common stock, par value $.001 per share
("Company Common Stock"), of the Company, at $13.00 per share, net to the seller
in cash, to be followed by a merger (the "Merger") of Sub with and into the
Company;
WHEREAS, as of the date hereof, Stockholder beneficially owns directly
the number of shares of Company Common Stock (the "Existing Shares", together
with any shares of Company Common Stock beneficial ownership of which is
acquired after the date hereof and prior to the termination hereof, whether upon
the exercise of options, conversion of convertible securities or otherwise,
collectively, referred to herein as the "Shares") set forth on Annex A hereto;
WHEREAS, Parent and Stockholder desire to deposit a portion of the
consideration to be paid to Stockholder pursuant to the Offer and the Merger
into an escrow fund for the purpose of securing the indemnification of Parent,
Sub, the Surviving Corporation and certain other persons after the expiration of
the Offer against certain Losses (as defined herein); and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement and make the Offer, Parent and Sub have required that Stockholder
agree, and Stockholder has agreed, among other things, to tender in the Offer,
grant to Parent a proxy to vote and grant to Parent an option to purchase all of
the Shares owned by Stockholder on the terms and conditions provided for herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Agreement to Tender and Vote; Proxy.
SECTION 1.01 Tender. Subject to the provisions of Article II,
Stockholder hereby agrees to validly tender (or cause the record owner to
validly tender), pursuant to and in accordance with the terms of the Offer, as
soon as practicable after commencement of the Offer but in no event later than 2
business days prior to the then scheduled expiration date of the Offer, all of
the Shares by physical delivery of the certificates therefor (or by book entry
or appropriate
<PAGE> 2
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instructions to brokers or custodians thereof, as the case may be) and to not
withdraw such Shares, except following termination of this Agreement pursuant to
Section 6.01 hereof. Stockholder hereby acknowledges and agrees that Parent's
and Sub's obligation to accept for payment and pay for the Shares is subject to
the terms and conditions of the Offer. Stockholder hereby permits Parent and Sub
to publish and disclose in the Offer Documents and, if approval of the Company's
stockholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC) his identity and ownership of
the Shares and the nature of his commitments, arrangements and understandings
under this Agreement.
SECTION 1.02 Voting. Subject to the provisions of Article II,
Stockholder hereby agrees that, during the time this Agreement is in effect, at
any meeting of the stockholders of the Company, however called, or pursuant to
any action by written consent, Stockholder shall (a) vote (or cause to be voted)
the Shares in favor of the Merger, the Merger Agreement, the approval of the
terms thereof and all the transactions contemplated thereby, and any other
transaction proposed by Parent; (b) vote (or cause to be voted) the Shares
against any action or agreement that would result in a breach in any material
respect of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or this Agreement; and (c)
vote (or cause to be voted) the Shares against any of the following (other than
the Merger Agreement (including as it may have been, or may have been proposed
by Parent to be, amended) or the transactions contemplated thereby) (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or its subsidiaries (including a
Company Takeover Proposal) or (ii) a sale or transfer of a material amount of
assets of the Company and its subsidiaries or a reorganization, recapitalization
or liquidation of the Company (any matter under clauses (a), (b) or (c), a
"Subject Proposal").
SECTION 1.03 Proxy. (a) Subject to the provisions of Article II,
during the time this Agreement is in effect, Stockholder hereby irrevocably
grants to, and appoints, Parent and Sub, or any of them, and any individual
designated in writing by any of them, and each of them individually, as the
Stockholder's proxy, agent and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of Stockholder, to vote (or
cause to be voted) the Shares, or grant a consent or approval in respect of the
Shares, in each case, with respect to a Subject Proposal, in a manner consistent
with Section 1.02 above. Parent and Sub agree that Stockholder is not granting
any proxy with respect to any matter to be voted on by stockholders of the
Company other than a Subject Proposal.
(b) Stockholder understands and acknowledges that Parent is entering
into the Merger Agreement in reliance upon Stockholder's execution and delivery
of this Agreement. Stockholder hereby affirms that the irrevocable proxy set
forth in this Section 1.03 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of Stockholder under this Agreement. Stockholder
hereby further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked prior to the expiration of this
Agreement. Stockholder hereby ratifies and confirms all that such irrevocable
proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable
proxy is executed and intended to be irrevocable in accordance with the
provisions of 722 of the Georgia Business Corporation Code (the "GBCC").
Stockholder will
<PAGE> 3
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take such further action or execute such other instruments as may be necessary
to effectuate the intent of this proxy and hereby revokes any proxy previously
granted by him with respect to the Shares that would be inconsistent with the
proxy granted pursuant to Section 1.03(a). Stockholder shall not hereafter,
unless and until this Agreement terminates pursuant to Section 6.01 hereof,
purport to vote (or execute a consent with respect to) the Shares with respect
to any Subject Proposal (other than through this irrevocable proxy) or grant any
other proxy or power of attorney with respect to any Shares to vote with respect
to any Subject Proposal, deposit any Shares into a voting trust or enter into
any agreement (other than this Agreement), arrangement or understanding with any
person, directly or indirectly, to vote with respect to any Subject Proposal,
grant any proxy or give instructions with respect to the voting of such Shares
with respect to any Subject Proposal.
ARTICLE II
Option to Purchase Shares.
SECTION 2.01 Grant of Option. Without limiting any other rights or
remedies of Parent, Stockholder hereby grants to Parent an irrevocable,
unconditional option to purchase all (and not less than all) the Shares, on the
terms and subject to the conditions set forth herein (the "Option").
SECTION 2.02 Exercise of Option. (a) The Option may be exercised by
Parent at any time, or from time to time, commencing upon the Exercise Date and
prior to the Expiration Date. As used herein, the term "Exercise Date" means the
date on which any of the following first occurs:
(i) any corporation (including the Company or any of its
subsidiaries or affiliates), partnership, person, other entity or group (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) other than Parent or any of its affiliates
(collectively, "Persons") shall have made, or proposed, communicated or
disclosed in a manner which is or otherwise becomes public prior to or
during the pendency of the Offer (including being known by stockholders of
the Company) an intention to make a Company Takeover Proposal;
(ii) it shall have been publicly disclosed or Parent shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 35% of the outstanding shares of the Company Common Stock
has been acquired by any Person;
(iii) (A) any event as a result of which Parent is entitled to
terminate the Merger Agreement pursuant to Section 9.01(d) of the Merger
Agreement or (B) the termination of the Merger Agreement by the Company
pursuant to Section 9.01(e) of the Merger Agreement; or
<PAGE> 4
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(iv) Stockholder shall breach or fail to perform or comply with
in any material respect any of its obligations, covenants or agreements
contained in Article I or in Section 4.01(a) of this Agreement or the
Company shall breach or fail to perform or comply with in any material
respect any of its obligations, covenants or agreements contained in the
first sentence of Section 2.02(b), the second sentence of Section 7.01(b)
or Sections 6.02, 9.02 or 9.05(b) of the Merger Agreement.
As used herein, the term "Expiration Date" means the first to occur of
(i) the Effective Time,
(ii) written notice of termination of this Agreement by Parent
to Stockholder,
(iii) the termination of the Merger Agreement pursuant to
Sections 9.01(a) or 9.01(b)(ii) thereof, or
(iv) the date that is twelve months from the date of
termination of the Merger Agreement; provided that if the Option has
not become exercisable on or prior to the date of termination of the Merger
Agreement, then the Expiration Date shall be the date of termination of the
Merger Agreement.
(b) In the event Parent wishes to exercise the Option, Parent shall
send a written notice to Stockholder of its intention to so exercise the Option
(a "Notice"), specifying the place in the United States, time and date of the
closing of such purchase (the "Closing Date" or the "Closing"), which date shall
not be less than two business days nor more than ten business days from the date
on which a Notice is delivered; provided, that the Closing shall be held only if
(i) such purchase would not otherwise violate or cause the violation of, any
applicable law or regulations (including, without limitation, the HSR Act or the
rules of the National Association of Securities Dealers, Inc. ("NASD")) and (ii)
no statute, rule, regulation, decree, order or injunction shall have been
promulgated, enacted, entered into, or enforced by any Governmental Entity which
prohibits delivery of the Shares, whether temporary, preliminary or permanent
(provided, however, that the parties hereto shall use commercially reasonable
efforts to have any such order, decree or injunction vacated or reversed). In
the event the Closing is delayed pursuant to clause (i) or (ii) above, the
Closing Date shall be within five business days following the cessation of such
restriction, violation, potential violation, order, decree or injunction, as the
case may be; provided, further, that, notwithstanding any prior notice of
intention to exercise the Option, Parent shall be entitled to rescind such
notice and shall not be obligated to purchase any Shares in connection with such
exercise upon written notice to such effect to Stockholder.
(c) At any Closing, Stockholder shall deliver to Parent all of the
Shares to be purchased by delivery of certificates evidencing such Shares,
properly endorsed by Stockholder and accompanied by such stock powers and other
documents as may be necessary to transfer record ownership of the Shares into
Parent's name on the stock transfer books of the Company,
<PAGE> 5
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together with evidence of payment of all applicable transfer and documentary
stamp taxes and other fees.
SECTION 2.03 Payments (a) The purchase and sale of the Shares pursuant
to Section 2.02 of this Agreement shall be at a purchase price per Share equal
to the price per Share offered by Sub in the Offer, but in any event shall not
be less than the highest price paid by Sub for any shares of Company Common
Stock, if any, purchased pursuant to the Offer (the "Exercise Price"). At any
Closing, Parent shall pay to Stockholder by wire transfer of immediately
available funds to an account specified by Stockholder an amount equal to the
Exercise Price multiplied by the number of Shares purchased pursuant to this
Article II.
(b) In the event that Parent exercises the Option and purchases the
Shares pursuant to the Option (the "Purchased Shares") and prior to the
Expiration Date the Company enters into a definitive agreement to consummate a
Company Takeover Proposal or transactions contemplated by a Company Takeover
Proposal are consummated and the price per share paid in such Company Takeover
Proposal exceeds the Exercise Price, then upon the consummation of such Company
Takeover Proposal, Parent shall pay to Stockholder by wire transfer of
immediately available funds to an account specified by Stockholder an amount in
cash equal to such excess multiplied by the number of Purchased Shares.
ARTICLE III
Representation and Warranties.
SECTION 3.01 Representation and Warranties of Parent. Parent hereby
represents and warrants to Stockholder that any Shares acquired by Parent upon
exercise of the Option will not be taken with a view to the public distribution
thereof and will not be transferred or otherwise disposed of except in a
transaction registered or exempt from registration under the Securities Act.
SECTION 3.02 Representations and Warranties of Stockholder.
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Ownership of Shares and Options. Subject to Section 4.01(c),
Stockholder (or accounts or trusts controlled or beneficially owned by
Stockholder) is the owner of the Existing Shares and options to acquire
Shares ("Stock Options") set forth on Annex A hereto and has the power to
vote and dispose of such Shares. To Stockholder's knowledge, the Existing
Shares are, and the other Shares upon issuance will be, validly issued,
fully paid and nonassessable. On the date hereof, the Existing Shares are
owned of record and beneficially by Stockholder and, on the date hereof,
the Existing Shares constitute all of the shares of Company Common Stock
owned of record or beneficially by Stockholder. Stockholder has, with
respect to the Existing Shares, or will have, with respect to any other
Shares, sole voting power and sole power of disposition with respect to all
of the Shares, with no restrictions, subject to applicable federal
securities laws, on
<PAGE> 6
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Stockholder's rights of disposition pertaining thereto. On the date hereof,
Stockholder has, and on the date of any Closing hereunder Stockholder will
have with respect to Shares to be sold on such date, good, valid and
marketable title to the Shares, other than the Shares tendered and
purchased pursuant to the Offer, free and clear of all claims, liens,
encumbrances, security interests and charges of any nature whatsoever
(other than the encumbrance created by this Agreement), and shall not be
subject to any preemptive right of any stockholder of the Company. The sale
of the Shares to Parent hereunder will transfer to Parent good, valid and
marketable title to the Shares, free and clear of all claims, liens,
encumbrances, security interests and charges of any nature whatsoever.
(b) Power; Binding Agreement. Stockholder has the legal capacity,
power and authority to enter into and perform all of its obligations under
this Agreement, including, without limitation, power and authority to sell,
assign, transfer and deliver the Shares to Parent pursuant to the terms and
conditions of this Agreement. To the knowledge of Stockholder, the
execution, delivery and performance of this Agreement by Stockholder will
not violate any other agreement to which Stockholder is a party including,
without limitation, any voting agreement, stockholders agreement or voting
trust. This Agreement has been duly and validly executed and delivered by
Stockholder and constitutes a valid and binding agreement of Stockholder,
enforceable against Stockholder in accordance with its terms.
(c) No Conflicts. Except for (i) filings under the HSR Act, if
applicable, (ii) the applicable requirements of the Exchange Act and the
Securities Act and (iii) filings under the Auto Warranty Laws of the States
as set forth in Schedule 2.02(c) to the Company Stock Option Agreement,
(A) to the knowledge of Stockholder, no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary
for the execution of this Agreement by Stockholder and the consummation by
Stockholder of the transactions contemplated hereby and (B) neither the
execution and delivery of this Agreement by Stockholder nor the
consummation by Stockholder of the transactions contemplated hereby nor
compliance by Stockholder with any of the provisions hereof shall (1)
conflict with or result in any breach of any provision of the certificate
of incorporation, by-laws, trust or charitable instruments (or similar
documents), if any, of Stockholder, (2) result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default
(or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, contract,
agreement or other instrument or obligation to which Stockholder is a party
or by which it or any of its properties or assets may be bound or (3)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Stockholder or any of its properties or assets.
<PAGE> 7
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ARTICLE IV
Certain Covenants of Stockholder
SECTION 4.01 Certain Covenants of Stockholder. Stockholder
hereby covenants and agrees as follows:
(a) No Solicitation. Stockholder shall not, and shall not permit
any representative or agent of Stockholder to, directly or indirectly,
solicit (including by way of furnishing information), facilitate,
participate in or initiate any inquiries or the making of any proposal by
any person or entity (other than Parent or any affiliate of Parent) which
constitutes, or may reasonably be expected to lead to, a Company Takeover
Proposal or any sale of any of the Shares. If Stockholder or any
representative or agent of Stockholder receives an inquiry or proposal with
respect to any sale of Shares, then Stockholder shall promptly inform
Parent of the terms and conditions, if any, of such inquiry or proposal and
the identity of the person making it; provided that, if such inquiry or
proposal constitutes a Company Takeover Proposal, compliance by the Company
with Section 6.02(c) of the Merger Agreement shall constitute compliance by
Stockholder with this sentence. Stockholder shall, and shall cause its
representatives or agents to, immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. Notwithstanding
anything in this Section 4.01(a) to the contrary, the covenants and
agreements set forth in Section 4.01(a) shall not be deemed to prevent
Stockholder from taking any action, subject to the applicable provisions of
the Merger Agreement, while acting in his capacity as director or officer
of the Company and other than with respect to this Agreement, to the extent
permitted by the Merger Agreement.
(b) Restriction on Transfer, Proxies and Non-Interference.
Stockholder hereby agrees, while this Agreement is in effect, and except as
contemplated hereby, not to (i) except for pledges of Existing Shares as
described in Annex A, sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any of the Shares (provided that
Stockholder may sell up to an aggregate of 150,000 Shares in bona fide
brokers transactions, as that term is described in Rule 144(g) under the
Securities Act) or (ii) grant any proxies with respect to any Shares,
except with respect to the election of one director and the approval of the
1998 Performance Equity Plan to be voted on at the Company's 1999 annual
meeting of stockholders, or deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares or (iii) take any action
that would make any representation or warranty of Stockholder contained
herein untrue or incorrect or have the effect of preventing or disabling
Stockholder from performing his obligations under this Agreement.
(c) Legending of Certificates; Nominees Shares. Stockholder
agrees to submit to Parent contemporaneously with or as promptly as
practicable following execution of this
<PAGE> 8
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Agreement all certificates representing the Shares (other than Shares
pledged as described on Annex A) so that Parent may note thereon a
legend referring to the proxy and other rights granted to it by this
Agreement. If any of such Shares beneficially owned by Stockholder are
held of record by a brokerage firm in "street name" or in the name of
any other nominee (a "Nominee", and, as to such Shares, "Nominee
Shares"), Stockholder agrees that Stockholder will within five days of
the date of this Agreement execute and deliver to Parent a limited
power of attorney in such form as shall be reasonably satisfactory to
Parent enabling Parent to require the Nominee to (i) grant to Parent an
irrevocable proxy to the same effect as Section 1.03 hereof with
respect to the Nominee Shares held by such Nominee, (ii) tender such
Nominee Shares in the Offer pursuant to Section 1.01 hereof, and (iii)
submit to Parent the certificates representing such Nominee Shares for
notation of the above-referenced legend thereon.
(d) Additional Shares. Stockholder hereby agrees, while this
Agreement is in effect, to promptly notify Parent of the number of any
new Shares acquired by Stockholder, if any, after the date hereof.
(e) Cooperation. Stockholder will not take any action which
could reasonably result in preventing the consummation of the
transactions contemplated by the Merger Agreement, including the Offer
and the Merger, the Company Option Agreement or this Agreement.
SECTION 4.02 Holdback Amount; Repayment of Indebtedness. (a)
Stockholder hereby irrevocably authorizes and directs the depositary for the
Offer to withhold payment to Stockholder of an amount of the aggregate purchase
price payable in the Offer for shares of Company Common Stock tendered by
Stockholder in the Offer equal to $500,000 (the "Holdback Amount") and to
deposit such amount in trust with the escrow agent (the "Escrow Agent") pursuant
to an escrow agreement among Parent, Sub, Stockholder, Martin J. Blank (the
"Other Stockholder") and the Escrow Agent substantially in the form of Schedule
4.02 hereto, with such changes thereto as the Escrow Agent may propose (the
"Escrow Agreement"). Without limiting any other provision contained herein, if
Stockholder fails to tender in the Offer a number of shares of Company Common
Stock sufficient to result in an amount at least equal to the Holdback Amount
being deposited with the Escrow Agent, then Stockholder hereby irrevocably
authorizes and directs the Paying Agent to withhold payment to Stockholder of an
amount of Merger Consideration payable to Stockholder pursuant to the Merger
equal, when taken together with the amount withheld pursuant to the first
sentence of this Section 4.02(a), to the Holdback Amount and to deposit such
amount in trust with the Escrow Agent pursuant to the Escrow Agreement. All
amounts deposited with the Escrow Agent pursuant to this Section 4.02(a) and all
amounts deposited with the Escrow Agent by the Other Stockholder, together with
all interest thereon, and as such amounts may be disbursed from time to time in
accordance with the terms of the Escrow Agreement, are referred to herein as the
"Escrow Fund."
(b) All matters relating to the Escrow Fund, to the extent
not provided in this Agreement, shall be governed by the Escrow Agreement. The
Escrow Agent shall hold, invest, reinvest and disburse the Escrow Fund, together
with any interest thereon, in accordance with the
<PAGE> 9
9
terms of the Escrow Agreement. The right of Stockholder to receive any payment
from the Escrow Fund shall not be transferable or assignable in any manner
whatsoever, except by will or the laws of intestate succession.
(c) Stockholder agrees to repay all indebtedness owed to the Company
or any of its subsidiaries by Stockholder set forth on Appendix VI to the
Company Disclosure Letter (other than indebtedness indicated thereon for the
purchase of an automobile) upon Sub's payment for shares of Company Common Stock
accepted for payment pursuant to the Offer.
SECTION 4.03 Indemnification. (a) Indemnification by Stockholder.
Subject to Section 4.03(b), Stockholder, jointly and severally with the Other
Stockholder, shall indemnify Parent, Sub, the Surviving Corporation, their
affiliates and their respective officers, directors, employees, agents and
representatives (the "Indemnified Parties") against, and shall hold them
harmless from, any and all losses, liabilities, debts, damages, claims, demands,
payments, judgments, settlements, expenses (including reasonable legal fees and
expenses) and costs of any kind ("Losses"), including in respect of third party
claims, but only out of and to the extent of the Escrow Fund, for or on account
of or arising from or in connection with or otherwise with respect to any breach
on the part of the Company of any representation or warranty made by it
contained in Article IV of the Merger Agreement; provided that (i) in
determining whether there has been a breach on the part of the Company of any
such representation or warranty, matters that would represent a debit for
balance sheet purposes may be offset to the extent that there are previously
undisclosed credits relating to the same subject matter as that of the debit,
(ii) solely for purposes of this Section 4.03, the representations and
warranties set forth in the second sentence of Section 4.04(b), Section 4.05
(other than clause (i) of the first sentence thereof), Section 4.06 (other than
the first sentence of Section 4.06(a), Section 4.07, Section 4.08 (other than
clauses (ii) and (iii) thereof), Section 4.09, Section 4.10, Section 4.11, the
first two sentences of Section 4.12, Section 4.13(a) (other than the first
sentence thereof), Section 4.14, Section 4.15, Section 4.16, Section 4.17 and
Section 4.19 of the Merger Agreement shall be deemed to be true and correct if,
to the knowledge (as such term is defined in the Merger Agreement, provided that
for purposes hereof such definition shall be deemed only to refer to the
knowledge of Stockholder) of Stockholder, such representations and warranties
that are qualified as to materiality are true and correct and those not so
qualified are true and correct in all material respects, as the case may be, at
the time each such representation and warranty was made or was required to be
true and correct (or true and correct in all material respects, as the case may
be) pursuant to the terms of the Merger Agreement and (iii) the Company has
supplemented or amended the Company Disclosure Letter pursuant to Section
6.01(c)(ii) of the Merger Agreement and Parent has consented (or is deemed to
have consented to such supplement or amendment pursuant to such Section), then
the Company Disclosure Letter, as so supplemented or amended, shall be deemed to
qualify the representations and warranties of the Company for purposes of this
Section 4.03, unless Stockholder had knowledge of the subject matter of the
amendment or supplement at the date of the execution of the Merger Agreement.
The procedures for the payment of claims for indemnification shall be as set
forth in the Escrow Agreement.
(b) Limitations Upon Indemnification. Notwithstanding anything in this
Section 4.03 to the contrary:
<PAGE> 10
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(i) Stockholder shall not be obligated to provide any
indemnification under Section 4.03 unless and until the aggregate amount of
Losses for which it is obligated to provide such indemnification exceeds
the sum of $500,000, after which Stockholder and the Other Stockholder
shall each be obligated, on a joint and several basis, to provide
indemnification for one-half of the entire amount of such Losses; and
(ii) in no event shall the aggregate liability of Stockholder
together with the aggregate liability of the Other Stockholder under this
Section 4.03 exceed the entire amount of the Escrow Fund.
SECTION 4.04 Survival of Representations and Warranties. For purposes
of Section 4.03 of this Agreement, all of the representations and warranties of
the Company set forth in Article IV of the Merger Agreement shall survive the
Effective Time of the Merger for a period of one year; provided, however, that
the termination of the survival of such representations and warranties shall not
affect any claim for breaches of representations or warranties if written notice
thereof is given to Stockholder and the Escrow Agent in accordance with the
terms of the Escrow Agreement prior to such termination date.
ARTICLE V
Additional Agreements
SECTION 5.01 Covenant Not to Compete. (a) Stockholder's
Acknowledgment. Stockholder acknowledges that the covenants in this Section 5.01
are given in consideration for and in connection with this Agreement and the
Merger Agreement. Stockholder agrees and acknowledges that in order to assure
the Company, Parent and Sub that the Company will retain its value as a going
concern, it is necessary that Stockholder undertake not to utilize his special
knowledge of the Business (as defined below) and his relationships with customer
and suppliers to compete with the Company or the Surviving Corporation.
Stockholder further acknowledges that:
(i) the Company is and the Company and the Surviving Corporation
will be engaged in the business of the design, sale and administration of
extended service contracts and extended warranty programs for motor
vehicles (the "Business");
(ii) Stockholder's relationship with the Company has given him,
and can be expected to continue to give him, access to and possession of
trade secrets and confidential information concerning the Company and the
Business;
(iii) the agreements and covenants contained in this Section 5.01
are essential to protect the business and goodwill of the Company and the
Surviving Corporation;
<PAGE> 11
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(iv) Parent would not enter into this Agreement or the Merger
Agreement but for these agreement and covenants; and
(v) upon consummation of the transactions contemplated by the
Merger Agreement, including the Offer and the Merger, and this Agreement,
Stockholder will have adequate means of support other than by engaging in
the Business and the provisions of this Section 5.01 will not impair such
ability.
Accordingly, the parties hereto agree that the covenant not to compete
contained in this Section 5.01 is a reasonable covenant under the circumstances,
and further agree that if in the opinion of any court of competent jurisdiction,
such restraint is not reasonable in any respect, such court shall have the
right, power and authority to excise or modify such provision or clause of this
covenant as to the court shall appear not reasonable and to enforce the
remainder of the covenant as so amended.
(b) Competitive Activities. Stockholder hereby agrees that for a
period commencing on the date hereof and ending on the sixth year anniversary of
the Effective Time (the "Restricted Period"), he will not, on behalf of himself,
or on behalf of any other person, company, corporation, partnership or other
entity or enterprise, directly or indirectly, as an employee, proprietor,
stockholder, partner, consultant, or otherwise, engage in any business or
activity competitive with the Business, anywhere in the United States (the
"Territory"); provided that (x) Stockholder may have up to a 25% ownership
interest in, and be a member of the board of directors of, Safeguard Products
International, Inc. ("Safeguard"), so long as (i) Stockholder may not have any
control over (other than the control as a member of the board of directors of
Safeguard) or involvement with the operations or management of Safeguard, (ii)
no resources of the Company may be used or directed toward activities of
Safeguard, except for brokerage services provided by the Aegis Group
Incorporated, a subsidiary of the Company, to Safeguard on an arms'-length
basis, consistent with past practice, and (iii) no business opportunities of the
Company of which the Stockholder is aware, may be directed to Safeguard and (y)
nothing contained herein shall be construed to prevent Stockholder from
investing in the stock of any competing corporation listed on a national
securities exchange or traded in the over-the-counter market, but only if
Stockholder is not involved in the business of said corporation and if
Stockholder and his associates (as such term is defined in Regulation 14(A)
promulgated under the Exchange Act), collectively, do not own more than an
aggregate of two percent of the stock of such corporation. With respect to the
Territory, Stockholder specifically acknowledges that the Company has conducted
or plans to conduct the Business throughout those areas comprising the Territory
and the Company intends to continue to expand the Business throughout the
Territory.
(c) Solicitation of Employees. Without limiting the generality of the
provisions of Section 5.01(b) above, Stockholder agrees that during the
Restricted Period he shall not on behalf of himself or on behalf of any other
person, company, corporation, partnership or other entity or enterprise (except
on behalf of the Company or the Surviving Corporation), directly or indirectly,
solicit employees, agents or consultants of the Company or the Surviving
Corporation to become
<PAGE> 12
12
employees, agents or consultants for him or for such businesses to the extent
such businesses are engaged in activities that compete with the Business.
(d) Interference with Relationships. During the Restricted Period,
Stockholder shall not, directly or indirectly, as employee, agent, consultant,
stockholder, director, co-partner or in any other individual or representative
capacity intentionally solicit or encourage any present or future customer,
agent or supplier of the Company or the Surviving Corporation to terminate or
otherwise alter his, her or its relationship with the Company or the Surviving
Corporation in any manner adverse to the Company or the Surviving Corporation.
SECTION 5.02 Stop Transfer Order. In furtherance of this Agreement,
concurrently herewith, Stockholder shall and hereby does authorize the Company's
counsel to notify the Company's transfer agent that there is a stop transfer
order with respect to all of the Existing Shares (and that this Agreement places
limits on the voting and transfer of such shares).
SECTION 5.03 Public Announcements. Parent and Sub, on the one hand,
and Stockholder, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Offer, the Merger,
the Option and the other Transactions and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange.
SECTION 5.04 Commercially Reasonable Efforts; Further Assurances. (a)
Stockholder shall use commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger and the other Transactions;
(b) Stockholder shall, from time to time, execute and deliver, or
cause to be executed and delivered, such additional or further consents,
documents and other instruments and shall take all such further actions as
Parent may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement and the other Transaction
Agreements.
SECTION 5.05 Cooperation as to Regulatory Matters. If so requested by
Parent, promptly after the date hereof, Stockholder will use commercially
reasonable efforts to, and to cause the Company (if required) to, make all
filings which are required under the HSR Act and applicable requirements and to
seek all regulatory approvals required in connection with the transactions
contemplated hereby. The parties shall furnish to each other such necessary
information and reasonable assistance as may be requested in connection with the
preparation of filings and submissions to any governmental agency, including,
without limitation, filings under the provisions of the HSR Act. Stockholder
shall also use commercially reasonable efforts to cause the Company to supply
Parent with copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof) between the Company and its
representatives
<PAGE> 13
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and the Federal Trade Commission, the Department of Justice and any other
governmental agency or authority and members of their respective staffs with
respect to this Agreement and the transactions contemplated hereby.
SECTION 5.06 Adjustments to Prevent Dilution, Etc.. In the event of a
stock dividend or distribution, or any change in the Company Common Stock by
reason of any stock dividend, split-up, reclassification, recapitalization,
combination or the exchange of shares, the term "Shares" shall be deemed to
refer to and include the Shares as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Shares
may be changed or exchanged. In such event, the amount to be paid per share by
Purchaser shall be proportionately adjusted, as shall the number of shares
referred to in the proviso to clause (i) of Section 4.01(b).
ARTICLE VI
Miscellaneous
SECTION 6.01 Termination; Survival of Representations and Warranties.
This Agreement (other than the provisions of Article III, Article V and Article
VI), shall terminate on the Expiration Date. Upon such termination, this
Agreement (other than the provisions of Article III, Article V and Article VI)
shall terminate and be of no further force and effect. The respective
representations and warranties of Stockholder and Parent contained herein or in
any certificates or other documents delivered at or prior to any Closing shall
not be deemed waived or otherwise affected by any investigation made by the
other party hereto, shall survive the exercise in full of the Option for one
year. The provisions of Articles V and VI shall survive the exercise in full of
the Option indefinitely in accordance with their terms; provided that the
provisions of Sections 5.01(a) and (b) shall terminate, notwithstanding that the
Restricted Period may not have terminated, three years following the termination
of Stockholder's employment with Company or its successor.
SECTION 6.03 Amendments. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties.
SECTION 6.04 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given upon receipt by the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent, to
Ford Motor Company
The American Road
Dearborn, Michigan 48121
Tel: (313) 322-3000
Fax: (313) 594-1297
<PAGE> 14
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Attention: John K. Dickerson, Esq.
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3954
Tel: (212) 455-2000
Fax: (212) 455-2502
Attention: David J. Sorkin, Esq.
(b) if to Stockholder, to
Larry I. Dorfman
c/o Automobile Protection Corporation - APCO
15 Dunwoody Park Drive, Suite 100
Atlanta, Georgia 30338
Tel: (770) 394-7070
Fax: (770) 673-0474
with a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, NY 10016-2097
Tel: (212) 818-8800
Fax: (212) 818-8881
Attention: Andrew D. Hudders, Esq.
SECTION 6.05 Descriptive Headings; Interpretation. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
SECTION 6.06 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as
<PAGE> 15
15
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
SECTION 6.07 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties. Delivery of an executed
counterpart of this Agreement by facsimile shall be effective to the fullest
extent permitted by applicable law.
SECTION 6.08 Entire Agreement. This Agreement, together with the other
Transaction Agreements, constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof and the Transaction.
SECTION 6.09 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 6.10 Assignment Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, provided that Parent may assign its rights
and obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations hereunder
if such assignee does not perform such obligations. Any purported assignment
without such consent shall be void. Subject to the preceding sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 6.11 Enforcement. (a) The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any New York state
court or any Federal court located in the State of New York, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any New York state court or any Federal court located
in the State of New York in the event any dispute arises out of this Agreement
or any Transaction, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that it will not bring any action relating to this Agreement or any
Transaction in any court other than any New York state court or any Federal
court sitting in the State of New York and (iv) waives any right to trial by
jury with respect to any action related to or arising out of this Agreement or
any Transaction.
(b) Notwithstanding Section 6.11(a), if a dispute arises between the
parties relating to Sections 4.02 or 4.03 of this Agreement or the terms of the
Escrow Agreement, then
<PAGE> 16
16
the following procedure shall be implemented before either party pursues other
available remedies except that either party may seek injunctive relief from a
court of competent jurisdiction where appropriate in order to maintain the
status quo while this procedure is being followed:
(i) The parties shall hold a meeting promptly, attended by
persons with decision-making authority regarding the dispute, to
attempt in good faith to negotiate a resolution of the dispute;
provided, however, that no such meeting shall be deemed to vitiate or
reduce the obligations and liabilities of the parties or be deemed a
waiver by a party hereto of any remedies to which such party would
otherwise be entitled.
(ii) If within 30 days after such meeting, the parties have not
succeeded in negotiating a resolution of the dispute, then the parties
agree to submit the matter to binding arbitration in accordance with
the Center for Public Resources Rules for Non-Administered
Arbitration of Business Disputes, by a sole arbitrator.
(iii) Arbitration shall take place in the City of New York
unless otherwise agreed by the parties. The substantive and procedural
law of the State of New York shall apply to the proceedings. Equitable
remedies shall be available in any arbitration. Punitive damages shall
not be awarded. This Section 6.11(b) is subject to the Federal
Arbitration Act, 9 U.S.C.A. ss. 1 et seq. and judgment upon the award
rendered by the arbitrator, if any, may be entered by any court having
jurisdiction thereof.
The parties agree to keep confidential the fact that a dispute subject
to the provisions of this Section 6.11(b) has arisen and the subject matter
thereof, except to the extent permitted by this Section 6.11(b) or to the extent
necessary to comply with applicable law, judicial or regulatory process or stock
exchange rules or regulations.
IN WITNESS WHEREOF, Parent and Stockholder have caused this Agreement
to be duly executed as of the day and year first above written.
Larry I. Dorfman
/s/ Larry I. Dorfman
-------------------------------------------
FORD MOTOR COMPANY,
By: /s/ Lance A. Miller
----------------------------------------
Name: Lance A. Miller
Title: Business Manager, Ford Customer
Service Division
<PAGE> 1
EXHIBIT (c)(4)
EXECUTION COPY
STOCK OPTION AGREEMENT, dated as of June 10, 1999
(the "Agreement"), between FORD MOTOR COMPANY, a Delaware
corporation ("Parent"), and AUTOMOBILE PROTECTION CORPORATION
- APCO, a Georgia corporation (the "Company").
WHEREAS, Parent, the Company and AM1 Acquisition Company, a
Georgia corporation and a wholly owned subsidiary of Parent ("Sub"), are,
concurrently with the execution and delivery of this Agreement, entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"; capitalized terms used without definition herein having the meanings
assigned to them in the Merger Agreement), pursuant to which Sub agrees to make
a tender offer (the "Offer") for all outstanding shares of common stock, par
value $.001 per share ("Company Common Stock"), of the Company, at $13.00 per
share, net to the seller in cash, to be followed by a merger (the "Merger") of
Sub with and into the Company; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement and make the Offer, Parent and Sub have required that the
Company agree, and believing it to be in the best interests of the Company, the
Company has agreed, among other things, to grant to Parent the Option (as
hereinafter defined).
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
Option to Purchase Option Shares
SECTION 1.01 Grant of Option. (a) The Company hereby grants to
Parent an irrevocable option to purchase up to 2,375,406 duly authorized,
validly issued, fully paid and nonassessable shares of Company Common Stock (the
"Option Shares") (representing 19.9% of the outstanding shares of Company Common
Stock as of the date hereof) on the terms and subject to the conditions set
forth herein (the "Option"); provided, however, that in no event shall the
number of shares of Company Common Stock for which this Option is exercisable
exceed 19.9% of the issued and outstanding shares of Company Common Stock at the
time of exercise without giving effect to the issuance of any Option Shares. The
number of shares of Company Common Stock that may be received upon the exercise
of the Option and the Option Price are subject to adjustment as herein set
forth.
(b) In the event that any additional shares of
Company Common Stock are issued or otherwise become outstanding after the date
of this Agreement (other than pursuant to this Agreement and other than pursuant
to an event described in Section 3.01 hereof), the number of shares of Company
Common Stock subject to the Option shall be increased so that, after such
issuance, such number together with any shares of Company Common Stock
previously issued pursuant hereto, equals 19.9% of the number of shares of
Company Common Stock then issued and outstanding without giving effect to any
shares subject or issued pursuant to the Option. Nothing contained in this
Section 1.01(b) or elsewhere in this Agreement shall be deemed to authorize the
Company to breach any provision of the Merger Agreement.
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SECTION 1.02 Exercise of Option. (a) The Option may be
exercised by Parent, in whole or in part, at any time, or from time to time,
commencing upon the Exercise Date and prior to the Expiration Date. As used
herein, the term "Exercise Date" means the date on which any of the following
first occurs:
(i) any corporation (including the Company or any of
its subsidiaries or affiliates), partnership, person, other entity or
group (as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) other than Parent or any of its
affiliates (collectively, "Persons") shall have made, or proposed,
communicated or disclosed in a manner which is or otherwise becomes
public prior to or during the pendency of the Offer (including being
known by stockholders of the Company) an intention to make a Company
Takeover Proposal;
(ii) it shall have been publicly disclosed or Parent
shall have otherwise learned that beneficial ownership (determined for
the purposes of this paragraph as set forth in Rule 13d-3 promulgated
under the Exchange Act) of more than 35% of the outstanding shares of
the Company Common Stock has been acquired by any Person;
(iii) (A) any event as a result of which Parent is
entitled to terminate the Merger Agreement pursuant to Section 9.01(d)
of the Merger Agreement or (B) the termination of the Merger Agreement
by the Company pursuant to Section 9.01(e) of the Merger Agreement; or
(iv) the Company shall breach or fail to perform or
comply with in any material respect any of its obligations, covenants
or agreements contained in the first sentence of Section 2.02(b), the
second sentence of Section 7.01(b) or Sections 6.02, 9.02 or 9.05(b) of
the Merger Agreement.
As used herein, the term "Expiration Date" means the first to
occur of
(i) the Effective Time,
(ii) written notice of termination of this Agreement
by Parent to the Company,
(iii) the termination of the Merger Agreement
pursuant to Section 9.01(a) or Section 9.01(b)(ii) thereof, or
(iv) the date that is twelve months from the date of
termination of the Merger Agreement; provided that if the Option has
not become exercisable on or prior to the date of termination of the
Merger Agreement, then the Expiration Date shall be the date of
termination of the Merger Agreement.
(b) In the event Parent wishes to exercise the Option, Parent
shall send a written notice to the Company of its intention to so exercise the
Option (a "Notice"), specifying
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the number of Option Shares to be purchased (and the denominations of the
certificates, if more than one) and the place in the United States, time and
date of the closing of such purchase (the "Closing Date" or the "Closing"),
which date shall not be less than two business days nor more than ten business
days from the date on which a Notice is delivered; provided, that the Closing
shall be held only if (i) such purchase would not otherwise violate or cause the
violation of, any applicable law or regulations (including, without limitation,
the HSR Act or the rules of the National Association of Securities Dealers, Inc.
("NASD")) and (ii) no statute, rule, regulation, decree, order or injunction
shall have been promulgated, enacted, entered into, or enforced by any
Governmental Entity which prohibits delivery of the Option Shares, whether
temporary, preliminary or permanent (provided, however, that the parties hereto
shall use commercially reasonable efforts to have any such order, decree or
injunction vacated or reversed). In the event the Closing is delayed pursuant to
clause (i) or (ii) above, the Closing Date shall be within five business days
following the cessation of such restriction, violation, potential violation,
order, decree or injunction, as the case may be; provided, further, that,
notwithstanding any prior notice of intention to exercise the Option, Parent
shall be entitled to rescind such notice and shall not be obligated to purchase
any Option Shares in connection with such exercise upon written notice to such
effect to the Company.
(c) At any Closing, (i) the Company shall deliver to Parent
all of the Option Shares to be purchased by delivery of a certificate or
certificates evidencing such Option Shares in the denominations designated by
Parent in the Notice and (ii) if the Option is exercised in part, the Company
and Parent shall execute and deliver an amendment to this Agreement reflecting
the Option Shares for which the Option has not been exercised.
SECTION 1.03 Payments. The purchase and sale of the Option
Shares pursuant to Section 1.2 of this Agreement shall be at a cash purchase
price per Share equal to $13.00 per Share (the "Exercise Price"). At any
Closing, Parent shall pay to the Company by wire transfer of immediately
available funds to an account specified by the Company an amount equal to the
Exercise Price multiplied by the number of Option Shares purchased pursuant to
this Article I (the "Aggregate Purchase Price").
ARTICLE II
Representations and Warranties.
SECTION 2.01 Representations and Warranties of Parent. Parent
hereby represents and warrants to the Company that any Option Shares acquired by
Parent upon exercise of the Option will not be taken with a view to the public
distribution thereof and will not be transferred or otherwise disposed of except
in a transaction registered or exempt from registration under the Securities
Act.
SECTION 2.02 Representations and Warranties of the Company.
The Company hereby represents and warrants to Parent as follows:
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(a) Due Authorization; Good Standing. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby (including the issuance and exercise of the Option)
have been duly and validly authorized by the Board of Directors of the
Company and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a legal,
valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Georgia and has all requisite corporate power and authority to
execute and deliver this Agreement.
(b) Option Shares. Subject to Section 2.02(c), the
Company has taken all necessary corporate and other action to authorize
and reserve for issuance, and to permit it to issue, the Option Shares
and all additional shares or other securities which may be issued
pursuant to Section 3.01 upon exercise of the Option, and at all times
from the date hereof until such time as the obligation to deliver
Option Shares hereunder terminates will have reserved for issuance upon
exercise of the Option the Option Shares and such other additional
shares or securities, if any. All of the Option Shares and all
additional shares or other securities which may be issuable pursuant to
Section 3.01, upon exercise of the Option and issuance pursuant hereto,
shall be duly authorized, validly issued, fully paid and nonassessable,
shall be delivered free and clear of all claims, liens, encumbrances,
security interests and charges of any nature whatsoever, and shall not
be subject to any preemptive right of any stockholder of the Company.
(c) No Conflicts. Except for (i) filings under the
HSR Act, if applicable, (ii) the applicable requirements of the
Exchange Act and the Securities Act, (iii) listing requirements of the
NASDAQ National Market ("NASDAQ") and (vi) filings under the Auto
Warranty Laws of the states as identified and set forth in Schedule
2.02(c) hereto (A) no filing with, and no permit, authorization,
consent or approval of, any state, federal or foreign Governmental
Entity is necessary for the execution of this Agreement by the Company
and the consummation by the Company of the transactions contemplated
hereby (including the issuance and exercise of the Option) and (B)
neither the execution and delivery of this Agreement by the Company nor
the consummation by the Company of the transactions contemplated hereby
(including the issuance and exercise of the Option) nor compliance by
the Company with any of the provisions hereof shall (1) conflict with
or result in any breach of, or require any vote under any provision of
the Amended and Restated Articles of Incorporation or the By-Laws of
the Company, (2) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
agreement or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (3) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Company, any
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of its subsidiaries or any of their respective properties or assets,
except in the case of clause (2) for violations, breaches or defaults
which would not, in the aggregate, have a Material Adverse Effect or
materially impair the ability of the Company to perform its obligations
hereunder.
(d) Takeover Laws. The Company's By-laws do not
provide that Part 2 or Part 3 of Article 11 of the Georgia Business
Corporation Code ("GBCC") are applicable to the Company and such
statutes are not applicable to this Agreement or the transactions
contemplated hereby (including the issuance and exercise of the
Option). The Company's Board of Directors has taken all action
necessary to ensure that Part 2 or Part 3 of Article 11 of the GBCC, if
such statutes were applicable to the Company, would not impose any
additional procedural, voting, approval, fairness or other restrictions
on the issuance or exercise of the Option or the consummation of any of
the other transactions contemplated by this Agreement or restrict,
impair or delay the ability of Parent to vote or otherwise exercise all
rights of a stockholder of the Company. To the knowledge of the
Company, no other state takeover statutes are applicable to the Option,
this Agreement or any of the other transactions contemplated hereby.
ARTICLE III
Adjustment Upon Changes in Capitalization
SECTION 3.01 Adjustment Upon Changes in Capitalization. In
addition to the adjustment in the number of shares of Company Common Stock that
are purchasable upon exercise of the Option pursuant to Section 1.01 of this
Agreement, the number of shares of Company Common Stock purchasable upon the
exercise of the Option and the Exercise Price shall be subject to adjustment
from time to time as provided in this Section 3.01. In the event of any change
in the number of issued and outstanding shares of Company Common Stock by reason
of any stock dividend, split-up, merger, recapitalization, combination,
conversion, exchange of shares, spin-off or other change in the corporate or
capital structure of the Company which could have the effect of diluting or
otherwise diminishing Parent's rights hereunder, the number and kind of Option
Shares or other securities subject to the Option and the Exercise Price therefor
shall be appropriately adjusted so that Parent shall receive upon exercise (or,
if such a change occurs between exercise and Closing, upon Closing) of the
Option the number and kind of shares or other securities or property that Parent
would have received in respect of the Option Shares that Parent is entitled to
purchase upon exercise of the Option if the Option had been exercised (or the
purchase thereunder had been consummated, as the case may be) immediately prior
to such event or the record date for such event, as applicable. The rights of
Parent under this Section shall be in addition to, and shall in no way limit,
its rights against the Company for breach of any provision of the Merger
Agreement.
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ARTICLE IV
Registration of Option Shares Under the Securities Act.
SECTION 4.01 Registration of Option Shares Under the
Securities Act. (a) If the Option is exercised and if Parent shall request in
writing, the Company shall use commercially reasonable efforts as promptly as
practicable to effect the registration under the Securities Act and any
applicable state law (a "Demand Registration") of such number of Option Shares
owned by Parent and its subsidiaries as Parent shall request and to keep such
Demand Registration effective for a period of not less than 180 days, unless, in
the written opinion of counsel to the Company, which opinion shall be delivered
to Parent and which shall be satisfactory in form and substance to Parent and
its counsel, such registration under the Securities Act is not required in order
to lawfully sell and distribute such Option Shares in the manner contemplated by
Parent. The Company shall only have the obligation to effect two Demand
Registrations pursuant to this Section 4.01. The Company shall be entitled to
postpone for up to 90 days from receipt of Parent's request for a Demand
Registration the filing of any registration statement in connection therewith if
the Board of Directors of the Company determines in its good faith reasonable
judgment, that such registration would materially interfere with or require
premature disclosure of, and have a material adverse effect on, any material
acquisition, reorganization or other transaction involving the Company or any
other material contract under active negotiation by the Company; provided that
the Company shall not have postponed any Demand Registration pursuant to this
sentence during the immediately preceding twelve month period. Except for audits
to comply with the Company's reporting obligations under the Exchange Act, the
Company shall not be required to perform any special audit of its financial
statements to comply with this Section 4.01.
(b) If the Company effects a registration under the Securities
Act of Company Common Stock for its own account or for any other stockholders of
the Company (other than on Form S-4 or Form S-8, or any successor form), it
shall allow Parent the right to participate in such registration (an "Incidental
Registration" and, together with a Demand Registration, a "Registration");
provided, however, that, if the managing underwriters of such offering advise
the Company in writing that in their opinion the number of shares of Company
Common Stock requested to be included in such Incidental Registration exceeds
the number which can be sold in such offering, the Company shall include the
shares requested to be included therein by Parent pro rata with the shares
intended to be included therein by the Company and any other stockholder of the
Company. Participation by Parent in any Incidental Registration shall not affect
the obligation of the Company to effect Demand Registrations for Parent under
this Section 4.01. The Company shall be entitled to withdraw its registration
under the Securities Act that gives rise to an Incidental Registration without
the consent of Parent.
(c) In connection with any Registration pursuant to this
Section 4.01, the Company and Parent shall provide each other and any
underwriter of the offering with customary representations, warranties,
covenants, indemnification, and contribution in connection with such
Registration. In connection with any Registration pursuant to this Section 4.01,
the Company shall use commercially reasonable efforts to cause any Option Shares
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included in such Registration to be approved for listing on NASDAQ or any
national securities exchange upon which the Company's securities are then
listed, subject to official notice of issuance, which notice shall be given by
the Company upon issuance. The costs and expenses incurred by the Company in
connection with any Registration pursuant to this Section 4.01 shall be borne by
the Company, excluding legal fees of counsel to Parent and underwriting fees and
expenses relating to the Option Shares of Parent included in a Registration.
ARTICLE V
Repurchase Rights; Substitute Options
SECTION 5.01 Repurchase Rights. (a) Subject to Section 6.01,
at any time after the Exercise Date, at the request of Parent, delivered in
writing prior to the Expiration Date, the Company (or any successor thereto)
shall repurchase from Parent (i) the Option or any part thereof as Parent shall
designate at a price (the "Option Repurchase Price") equal to the amount,
subject at the sole discretion of Parent to clause (iii) of Section 6.01(a), by
which (A) the Market/Offer Price (as defined below) exceeds (B) the Exercise
Price, multiplied by the number of Option Shares as to which the Option is to be
repurchased and (ii) such number of the Option Shares as Parent shall designate
at a price (the "Option Share Repurchase Price") equal to the Market/Offer Price
multiplied by the number of Option Shares so designated. The term "Market/Offer
Price" shall mean the highest of (i) the price per share of Company Common Stock
offered or paid in any event set forth in Section 1.02(a) hereof, (ii) the
highest closing price for shares of Company Common Stock during the 30 trading
days immediately preceding the date Parent gives notice of the required
repurchase of the Option or Option Shares, as the case may be, or (iii) in the
event of a sale of all or substantially all of the Company's assets, the sum of
the net price paid in such sale for such assets and the current market value of
the remaining net assets of the Company as determined by a nationally recognized
investment banking firm selected by Parent and reasonably acceptable to the
Company, divided by the number of shares of Company Common Stock outstanding at
the time of such sale, which determination, absent manifest error, shall be
conclusive for all purposes of this Agreement. In determining the Market/Offer
Price, the value of consideration other than cash shall be determined by a
nationally recognized investment banking firm selected by Parent and reasonably
acceptable to the Company, which determination, absent manifest error, shall be
conclusive for all purposes of this Agreement.
(b) Parent may exercise its right to require the Company to
repurchase the Option or any part thereof and any Option Shares pursuant to this
Section 5.01 by surrendering for such purpose to the Company, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices (each a "Repurchase
Notice") stating that Parent elects to require the Company to repurchase the
portion of the Option and/or the Option Shares specified in such notice in
accordance with the provisions of this Section 5.01. As promptly as practicable,
and in any event within five business days after the surrender of the Option
and/or certificates representing Option Shares and the receipt of such notice or
notices relating thereto, the Company shall deliver or cause to be delivered to
Parent
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the Option Repurchase Price therefor or the Option Share Repurchase Price
therefor, as the case may be, or the portion thereof that the Company is not
then prohibited under applicable law and regulation from so delivering. At any
closing contemplated by the Repurchase Notice, (i) the Company shall pay to
Parent the Option Repurchase Price for the portion of the Option which is to be
repurchased or the Option Shares Repurchase Price for the number of Option
Shares to be repurchased, as the case may be, by wire transfer of immediately
available funds to an account specified by Parent and (ii) if the Option is
repurchased only in part, (A) the Company and Parent shall execute and deliver
an amendment to this Agreement reflecting the Option Shares for which the Option
is not being repurchased and (B) the Company shall deliver to Parent, a
certificate for the Option Shares that have been delivered by Parent but which
are not being repurchased. The closing of any cancellation of the Option
pursuant to this Section 5.01 shall take place in the United States at the
place, time and date specified in the Repurchase Notice, which date shall not be
less than two business days nor more than ten business days from the date on
which the Repurchase Notice is delivered.
(c) To the extent that the Company is prohibited under
applicable law or regulation from repurchasing the portion of the Option or the
Option Shares designated in such Repurchase Notice, the Company shall
immediately so notify Parent and thereafter deliver or cause to be delivered,
from time to time, to Parent the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within five business days after the date on which the Company
is no longer so prohibited; provided, however, that if the Company at any time
after delivery of a notice of repurchase pursuant to paragraph (b) of this
Section 5.01 is prohibited under applicable law or regulation from delivering to
Parent the full amount of the Option Repurchase Price and the Option Share
Repurchase Price for the Option or Option Shares to be repurchased,
respectively, Parent may revoke its notice of repurchase of the Option and/or
the Option Shares whether in whole or to the extent of the prohibition,
whereupon, in the latter case, (i) the Company shall promptly deliver to Parent
that portion of the Option Repurchase Price and/or the Option Share Repurchase
Price that the Company is not prohibited from delivering and (ii) (A) the
Company and Parent shall execute and deliver an amendment to this Agreement
reflecting the portion of the Option that the Company is then prohibited from
purchasing and (B) the Company shall deliver to Parent a certificate for the
Option Shares that it is then prohibited from repurchasing.
SECTION 5.02 Substitute Option. (a) In the event that the
Company enters into an agreement (i) to consolidate with or merge into any
person, other than Parent or any Subsidiary of Parent (each an "Excluded
Person"), and the Company shall not be the continuing or surviving corporation
of such consolidation or merger, (ii) to permit any person, other than an
Excluded Person, to merge into the Company and the Company shall be the
continuing or surviving or acquiring corporation, but, in connection with such
merger, the then outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any other
property or the then outstanding shares of Common Stock shall after such merger
represent less than 50% of the outstanding shares and share equivalents of the
merged or acquiring company, or (iii) to sell or otherwise transfer all or
substantially all of its assets to any person, other than an Excluded Person,
then, and in each such case, the agreement governing such transaction shall make
proper provision so that, unless earlier exercised by
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Parent, the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged for,
an option (the "Substitute Option"), at the election of Parent, of either (x)
the Acquiring Corporation (as hereinafter defined) or (y) any person that
controls the Acquiring Corporation.
(b) The Substitute Option shall have the same terms as the
Option; provided that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Parent. The Substitute Option Issuer shall
enter into an agreement with Parent in substantially the same form as this
Agreement (including the terms of this Article V), which agreement shall be
applicable to the Substitute Option. The Substitute Option shall be exercisable
for such number of Substitute Option Shares as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 5.02(a), divided by the Average Price. The exercise price of the
Substitute Option per Substitute Option Share shall then be equal to the
Exercise Price multiplied by a fraction, the numerator of which shall be the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section
5.02(a) and the denominator of which shall be the number of Substitute Option
Shares for which the Substitute Option is exercisable.
(c) In addition to any other restrictions or covenants, the
Company agrees that it shall not enter or agree to enter into any transaction
described in Section 5.01(a) unless (i) the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
the Company hereunder and (ii) the Substitute Option Issuer agrees to comply
with this Article V.
(d) For purposes of this Section 5.02, the following terms
have the meanings indicated:
"Acquiring Corporation" shall mean (i) the continuing or surviving
person of a consolidation or merger with the Company (if other than the
Company), (ii) the Company in a merger in which the Company is the continuing or
surviving or acquiring person, and (iii) the transferee of all or substantially
all of the Company's assets.
"Substitute Option Shares" shall mean the shares of capital stock (or
similar equity interest) with the greatest voting power in respect of the
election of directors (or other persons similarly responsible for direction of
the business and affairs) of the Company of the Substitute Option.
"Assigned Value" shall mean the Market/Offer Price, as defined in
Section 5.01.
"Average Price" shall mean the average closing price per Substitute
Option Share, on the principal trading market on which such shares are traded as
reported by a nationally recognized source, for the 30 trading days immediately
preceding the consolidation, merger or sale in question, but in no event higher
than the closing price of the Substitute Option Shares on such
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market on the day preceding such consolidation, merger or sale; provided that if
the Company is the issuer of the Substitute Option (the "Substitute Option
Issuer"), the Average Price shall be computed with respect to a share of common
stock issued by the person merging into the Company or by any entity which
controls or is controlled by such person, as Parent may elect.
ARTICLE VI
Miscellaneous.
SECTION 6.01 Total Profit. (a) Notwithstanding any other
provision of this Agreement, in no event shall Parent's Total Profit (as
hereinafter defined) exceed $6,300,000 less the amount of any Termination Fee
paid pursuant to Section 9.02 of the Merger Agreement and, if it otherwise would
exceed such amount, Parent, at its sole election, shall either (i) reduce the
number of shares of Company Common Stock subject to this Option, (ii) deliver to
the Company for cancellation Option Shares previously purchased by Parent, (iii)
limit the payment to be received from the Company pursuant to Section 5.01, (iv)
pay cash to the Company, or (v) any combination thereof, so that Parent's
actually realized Total Profit shall not exceed such amount after taking into
account the foregoing actions.
(b) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount received by
Parent pursuant to the Company's repurchase of the Option (or any portion
thereof) pursuant to Section 5.01, (ii) (x) the amount received by Parent
pursuant to the Company's repurchase of Option Shares pursuant to Section 5.01,
less (y) Parent's purchase price for such Option Shares, (iii) (x) the net cash
amounts received by Parent pursuant to an arm's-length sale of Option Shares (or
any other securities into which such Option Shares are converted or exchanged)
to any unaffiliated party, less (y) Parent's purchase price of such Option
Shares, (iv) any amounts received by Parent pursuant to an arm's-length transfer
of the Option (or any portion thereof) to any unaffiliated party, and (v) any
amount equivalent to the foregoing with respect to the Substitute Option.
SECTION 6.02 Further Assurances. From time to time, at the
other party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further action
as may be necessary or desirable to consummate the transactions contemplated by
this Agreement, including, without limitation, to vest in Parent good title to
any Option Shares purchased hereunder.
SECTION 6.03 Termination. This Agreement (other than the
provisions of Article II, Article IV, Section 5.02 and Article VI), shall
terminate on the Expiration Date. Upon such termination, this Agreement (other
than the provisions of Article II, Article IV, Section 5.02 and Article VI)
shall terminate and be of no further force and effect. The respective
representations and warranties of the Company and Parent contained herein or in
any certificates or other documents delivered at or prior to any Closing shall
not be deemed waived or otherwise affected by any investigation made by the
other party hereto and shall survive the exercise in full of the Option for one
year. The provisions of Article II, Article IV, Section 5.02
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and Article VI shall terminate on the fourth anniversary of the date hereof;
provided, however, that the provisions of Article IV shall terminate at such
earlier time, if any, as Parent is permitted to sell all the Option Shares
without registration pursuant to Rule 144 under the Securities Act without
regard to the volume limitations thereunder.
SECTION 6.04 Amendments. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
SECTION 6.05 Certain Filings. If so requested by Parent,
promptly after the date hereof, the Company shall make all filings which are
required under the HSR Act and any applicable state insurance laws, and the
parties shall furnish to each other such necessary information and reasonable
assistance as may be requested in connection with the preparation of filings and
submissions to any Governmental Entity, including, without limitation, filings
under the provisions of the HSR Act and any applicable state insurance laws. The
Company shall supply Parent with copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between the
Company and its representatives and the Federal Trade Commission, the Department
of Justice and any other Governmental Entity and members of their respective
staffs with respect to this Agreement and the transactions contemplated hereby.
SECTION 6.06 Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Ford Motor Company
The American Road
Dearborn, Michigan 48121
Tel: (313) 322-3000
Fax: (313) 594-1297
Attention: John K. Dickerson, Esq.
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017-3954
Tel: (212) 455-2000
Fax: (212) 455-2502
Attention: David J. Sorkin, Esq.
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(b) if to the Company, to
Automobile Protection Corporation - APCO
15 Dunwoody Park Drive, Suite 100
Atlanta, Georgia 30338
Tel: (770) 394-7070
Fax: (770) 673-0474
Attention: Martin J. Blank
with a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, NY 10016-2097
Tel: (212) 818-8800
Fax: (212) 818-8881
Attention: Andrew D. Hudders, Esq.
SECTION 6.07 Descriptive Headings; Interpretation. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
SECTION 6.08 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 6.09 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party. Delivery of
executed counterparts by facsimile shall be effective to the fullest extent
permitted by applicable law.
SECTION 6.10 Entire Agreement. This Agreement, together with
the other Transaction Agreements, constitute the entire agreement, and supersede
all prior agreements and
<PAGE> 13
13
understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
SECTION 6.11 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 6.12 Assignment Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, provided that Parent may assign
its rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent without such consent, but no such assignment shall relieve
Parent of its obligations hereunder if such assignee does not perform such
obligations. Except as aforesaid, any purported assignment without such consent
shall be void. Subject to the preceding sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION 6.13 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any New York state
court or any Federal court located in the State of New York, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any New York state court or any Federal court located
in the State of New York in the event any dispute arises out of this Agreement
or any Transaction, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(c) agrees that it will not bring any action relating to this Agreement or any
Transaction in any court other than any New York state court or any Federal
court sitting in the State of New York and (d) waives any right to trial by jury
with respect to any action related to or arising out of this Agreement or any
Transaction.
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IN WITNESS WHEREOF, the Company and Parent have caused this
Agreement to be duly executed as of the day and year first above written.
AUTOMOBILE PROTECTION CORPORATION-APCO,
By: /s/ Martin J. Blank
----------------------------------------------------
Name: Martin J. Blank
Title: Chairman of the Board, Chief Operating
Officer and Secretary
FORD MOTOR COMPANY,
By: /s/ Lance A. Miller
----------------------------------------------------
Name: Lance A. Miller
Title: Business Manager, Ford Customer
Service Division
