SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): October 5, 1997
Caliber System, Inc.
(Exact name of registrant as specified in its charter)
Ohio 0-10716 34-1365496
(State or Other (Commission File (IRS Employer
Jurisdiction Number) Identification Number)
of Incorporation)
3925 Embassy Parkway, Akron, Ohio 44333
(Address of principal executive offices) (Zip Code)
(330) 665-5646
(Registrant's telephone number, including area code)
None
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events.
Attached and incorporated herein by reference as
Exhibit 99.1 and Exhibit 99.2, respectively, are copies
of (1) a press release dated as of October 6, 1997, in
which Caliber System, Inc. announced that it had
entered into a definitive agreement pursuant to which
it will be acquired by Federal Express Corporation and
(2) an Agreement and Plan of Merger dated October 5,
1997 among Federal Express Corporation, Caliber System,
Inc., Fast Holding Inc., Fast Merger Sub Inc. and Tires
Merger Sub Inc.
Item 7(c) Exhibits.
99.1 Press release dated October 6, 1997 announcing the
signing of an agreement pursuant to which Caliber
System, Inc. will be acquired by Federal Express
Corporation.
99.2 Agreement and Plan of Merger dated October 5, 1997 among
Federal Express Corporation, Caliber System, Inc., Fast
Holding Inc., Fast Merger Sub Inc. and Tires Merger Sub Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
CALIBER SYSTEM, INC.
------------------------------
(Registrant)
Date: October 9, 1997 By: /s/ JOHN E. LYNCH
------------------------------
(Signature)
Name: John E. Lynch
Title: Vice President, General
Counsel and Secretary
<PAGE>
EXHIBIT INDEX
Exhibit Description
Item 7(c). Exhibits
99.1 Press release dated October 6, 1997 announcing
the signing of an agreement pursuant to which
Caliber System, Inc. will be acquired by Federal
Express Corporation.
99.2 Agreement and Plan of Merger dated October 5,
1997 among Federal Express Corporation, Caliber
System, Inc., Fast Holding Inc., Fast Merger Sub
Inc. and Tires Merger Sub Inc.
EXHIBIT 99.1
Contacts:
FedEx Media Relations
(901) 295-5007
For Immediate Release
FedEx to Acquire Caliber System, Inc. Including RPS
Subsidiary A Powerful Combination in the Transportation
and Logistics Industry
Memphis, Tennessee, (October 6, 1997) Federal Express Corp.
and Caliber System, Inc. jointly announced today that their
respective boards of directors have approved a transaction in
which FDX Corporation, a new holding company to be formed as part
of the transaction, will acquire Caliber System, Inc. and its
subsidiaries, including package carrier RPS, Inc. The parties
signed a definitive agreement yesterday, which is subject to a
number of conditions, including approval by the stockholders of
both Federal Express Corporation and Caliber System, Inc., and
the U.S. Government.
"This acquisition creates a powerful combination that will
propel both companies to new heights. Customers will now have a
broader portfolio of services unmatched by any competitor," said
Frederick W. Smith, chairman, president and chief executive
officer of Federal Express Corp.
"This transaction is a perfect fit at the right time for
Caliber System", said Daniel J. Sullivan, chairman, president and
chief executive officer of Caliber System, Inc. "Our
cost-competitive, reliable service in the nonexpress market and
use of leading edge information systems will complement the FedEx
brand."
The agreement provides that Caliber System shareholders will
receive 0.8 shares of FDX Corporation stock in exchange for each
share of Caliber System stock that they own. The transaction,
which is expected to close in early 1998, will be tax-free to the
shareholders of both companies and will be accounted for under
the "pooling of interests" method for business combinations.
FDX Corporation will become a $15 billion powerhouse in
global transportation and logistics. With two independent
networks serving the express and non-express markets through five
distinct business units, FDX Corporation will be able to offer:
<PAGE>
o fast, reliable and time-definite express delivery;
o expedited surface delivery of critical freight-
shipments;
o business-to-business non-express delivery of packages;
o regional less-than-truckload (LTL) freight service; and
o information and logistics solutions
Each business unit will be managed and operated separately to
achieve maximum productivity and superior customer service.
"Although the express and non-express networks will function
independently, the synergistic effect should boost volumes for
both businesses," said Smith. "Customers recognize that
distribution and logistics are becoming strategic weapons to cut
costs and to improve quality, productivity, and customer
satisfaction. With the addition of Caliber System, FDX
Corporation will be best positioned to provide such broad-based
supply chain solutions to companies both large and small."
Smith will serve as chairman, president and chief executive
officer of the new holding company and Alan B. Graf, Jr. and
Kenneth R. Masterson will serve as executive vice presidents.
Sullivan will serve as president and chief executive officer of
RPS, Inc. Ted Weise, a 25-year veteran of Federal Express, will
become president and chief executive officer of Federal Express.
The newly formed FDX Corporation companies will employ
approximately 170,000 people worldwide. Caliber System, Inc.
headquarters in Akron, Ohio will close, and the 150 employees
there will be offered positions at FDX Corporation or a
subsidiary. Employees who do not accept such positions will be
offered a severance package.
Federal Express connects areas that generate 90% of the
world's gross domestic product in 24-48 hours with door-to-door,
customs-cleared service backed by a money-back guarantee. The
company's unmatched air route authorities and infrastructure make
it the world's largest express transportation company, providing
fast and reliable services for 2.9 million items in 212 countries
each working day. The company employees approximately 137,000
people and has more than 42,500 drop-off locations, 590 aircraft
and 38,500 vehicles in its integrated global network. FedEx
maintains electronic connections with more than 750,000 customers
via FedEx Powership(R), FedEx Ship(R) and FedEx interNetShip(sm).
Federal Express reported revenues of $11.5 billion for its fiscal
year ended May 31, 1997.
<PAGE>
Caliber System, Inc., with 33,500 employees and contractors
and 500 facilities worldwide, is a leading provider of
value-added transportation, logistics and related information
services. Its operating companies include RPS, Inc., a
business-to-business non-express package carrier; Viking Freight,
Inc., a supplier of regional freight service in the West; Caliber
Logistics, Inc., a contract logistics provider; Roberts Express,
Inc., a critical-shipment carrier; and Caliber Technology, Inc.,
a producer of system-wide information services. Caliber System,
Inc. reported revenues of $2.7 billion for the year ended
December 31, 1996.
Federal Express is being advised in this transaction by
Merrill Lynch & Co. Caliber System, Inc. is being advised
by Goldman, Sachs & Co.
EXHIBIT 99.2
AGREEMENT AND PLAN OF MERGER
dated as of
October 5, 1997
among
FEDERAL EXPRESS CORPORATION,
CALIBER SYSTEM, INC.,
FAST HOLDING INC.,
FAST MERGER SUB INC.,
AND
TIRES MERGER SUB INC.
<PAGE>
TABLE OF CONTENTS
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PAGE
ARTICLE 1
THE MERGERS
SECTION 1.01. Tires Sub Merger.................. 1
SECTION 1.02. Buyer Sub Merger.................. 2
SECTION 1.03. Surrender and Payment............. 3
SECTION 1.04. Cancellation of Parent Stock...... 6
SECTION 1.05. The Merger Date................... 6
SECTION 1.06. Dissenting Shares................. 6
SECTION 1.07. Stock Options of the Company...... 7
SECTION 1.08. Adjustments....................... 8
SECTION 1.09. Fractional Shares................. 8
ARTICLE 2
THE SURVIVING CORPORATIONS
SECTION 2.01. Articles and Certificate of
Incorporation; Bylaws........... 9
SECTION 2.02. Directors and Officers............ 10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Corporate Existence and Power..... 10
SECTION 3.02. Corporate Authorization........... 11
SECTION 3.03. Governmental Authorization........ 11
SECTION 3.04. Non-Contravention................. 12
SECTION 3.05. Capitalization.................... 12
SECTION 3.06. Material Subsidiaries............. 13
SECTION 3.07. SEC Filings....................... 13
SECTION 3.08. Financial Statements.............. 14
SECTION 3.09. Disclosure Documents.............. 14
SECTION 3.10. Information Supplied.............. 15
SECTION 3.11. Absence of Certain Changes........ 16
SECTION 3.12. No Undisclosed Material
Liabilities..................... 17
SECTION 3.13. Litigation; Investigations........ 18
SECTION 3.14. Taxes............................. 18
SECTION 3.15. ERISA and Labor Matters........... 20
SECTION 3.16. Compliance with Laws.............. 23
SECTION 3.17. Intellectual Property Rights...... 23
SECTION 3.18. Environmental Matters............. 24
SECTION 3.19. Pooling; Tax Treatment............ 25
SECTION 3.20. Opinion of Financial Advisor...... 26
SECTION 3.21. Antitakeover Statutes............. 26
SECTION 3.22. Rights Agreement.................. 26
SECTION 3.23. Finders' Fees..................... 26
<PAGE>
PAGE
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 4.01. Corporate Existence and Power..... 27
SECTION 4.02. Corporate Authorization........... 27
SECTION 4.03. Governmental Authorization........ 28
SECTION 4.04. Non-Contravention................. 28
SECTION 4.05. Capitalization.................... 28
SECTION 4.06. SEC Filings....................... 29
SECTION 4.07. Financial Statements.............. 29
SECTION 4.08. Disclosure Documents.............. 30
SECTION 4.09. Information Supplied.............. 30
SECTION 4.10. Absence of Certain Changes........ 31
SECTION 4.11. No Undisclosed Material
Liabilities..................... 31
SECTION 4.12. Litigation; Investigations........ 32
SECTION 4.13. Compliance with Laws.............. 32
SECTION 4.14. Pooling; Tax Treatment............ 32
SECTION 4.15. Finders' Fees..................... 32
ARTICLE 5
COVENANTS OF THE COMPANY
SECTION 5.01. Conduct of the Company............ 33
SECTION 5.02. Shareholder Meeting; Proxy
Material........................ 36
SECTION 5.03. Other Offers...................... 36
ARTICLE 6
COVENANTS OF BUYER
SECTION 6.01. Conduct of Buyer.................. 38
SECTION 6.02. Shareholder Meeting; Proxy
Material........................ 38
ARTICLE 7
COVENANTS OF BUYER, THE COMPANY AND PARENT
SECTION 7.01. Reasonable Best Efforts........... 38
SECTION 7.02. Cooperation....................... 39
SECTION 7.03. Public Announcements.............. 39
SECTION 7.04. Access to Information............. 39
SECTION 7.05. Further Assurances................ 40
SECTION 7.06. Notices of Certain Events......... 40
<PAGE>
PAGE
SECTION 7.07. Tax-free Reorganization;
Pooling......................... 40
SECTION 7.08. Affiliates........................ 41
SECTION 7.09. Director and Officer
Liability....................... 41
SECTION 7.10. Registration Statement;
Form S-8........................ 43
SECTION 7.11. Governmental Authorization........ 43
SECTION 7.12. Listing of Stock.................. 43
SECTION 7.13. Certain Corporate Matters
with Respect to Parent.......... 43
SECTION 7.14. Employment........................ 44
SECTION 7.15. Certain Additional Benefits
Matters........................ 44
ARTICLE 8
CONDITIONS TO THE MERGERS
SECTION 8.01. Conditions to the Obligations
of Each Party................... 44
SECTION 8.02. Conditions to the Obligations
of Buyer........................ 45
SECTION 8.03. Conditions to the Obligations
of the Company.................. 46
ARTICLE 9
TERMINATION
SECTION 9.01. Termination....................... 47
SECTION 9.02. Effect of Termination............. 48
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices........................... 48
SECTION 10.02. Entire Agreement; Non-
Survival of Representations
and Warranties.................. 50
SECTION 10.03. Amendments; No Waivers............ 50
SECTION 10.04. Expenses.......................... 51
SECTION 10.05. Successors and Assigns............ 51
SECTION 10.06. Governing Law..................... 52
SECTION 10.07. Jurisdiction...................... 52
SECTION 10.08. Counterparts; Effectiveness....... 52
<PAGE>
Exhibit A Forms of Affiliate's Pooling Letters
<PAGE>
TABLE OF DEFINITIONS
Term Section
1933 Act 3.03(d)
1934 Act 3.03(c)
368 Reorganization 3.19(b)
Acquisition Proposal 5.03
Adjusted Option 1.07(a)(i)
Benefit Arrangements 3.15(d)
Buyer preamble
Buyer 10-K 4.06
Buyer Balance Sheet 4.07
Buyer Balance Sheet Date 4.07
Buyer Disclosure Documents 4.08(a)
Buyer Disclosure Schedule Article 4
Buyer Merger Consideration 1.02(b)
Buyer Merger Sub preamble
Buyer Merger Sub Common Stock 1.02(b)
Buyer Party 4.02
Buyer Preferred Stock 4.05(a)
Buyer Proxy Statement 4.08(b)
Buyer SEC Documents 4.06
Buyer Shareholder Meeting 6.02(a)
Buyer Stock 1.02(b)
Buyer Sub Merger 1.02(a)
Buyer Surviving Corporation 1.02(a)
Buyer Surviving Corporation Common Stock 1.02(b)
Claim 7.09(a)
Code 1.07(b)
Company preamble
Company 10-K 3.06(a)
Company 10-Qs 3.06(a)
Company Balance Sheet 3.08
Company Balance Sheet Date 3.08
Company Benefit Arrangements 3.15(d)
Company Certificate of Merger 1.05(a)
Company Disclosure Documents 3.09(a)
Company Disclosure Schedule Article 3
Company Merger Consideration 1.01(b)
Company Merger Sub preamble
Company Merger Sub Common Stock 1.01(b)
Company Proxy Statement 3.09(a)
Company Returns 3.14(a)(i)
Company SEC Documents 3.07
Company Securities 3.05
Company Shareholder Meeting 5.02(a)
Company Software 3.17(b)
Company Sub Merger 1.01(a)
Company Subsidiary Securities 3.06(b)
Company Surviving Corporation 1.01(a)
<PAGE>
Term Section
Company Surviving Corporation Common 1.01(b)
Stock
Company Stock 1.01(b)
Company Stock Options 1.07(a)(i)
Company Stock Plans 1.07(a)(i)
D&O Insurance 7.09(c)
Delaware Law 1.05
Employee Benefit Plan 3.15(a)
Employee Plan 3.15(a)
Employee Plans 3.15(a)
Environmental Laws 3.18(e)(i)
Environmental Permits 3.18(e)(ii
)
ERISA 3.15(a)
ERISA Affiliate 3.15(a)
Excess Shares 1.09
Exchange Agent 1.03(a)
Form S-4 4.08
GAAP 3.08
HSR Act 3.03(b)
Indemnified Party 7.09(a)
Lien 3.04(d)
Material Adverse Effect 3.01
Material Subsidiary 3.06(a)
Merger Consideration 1.02(b)
Merger Date 1.05(c)
Mergers 1.04
Multiemployer Plan 3.15(b)
Names 3.17
NYSE 1.09
Ohio Law 1.01(b)
Parent preamble
Parent Common Stock 1.01(b)
Pension Plans 3.15(a)
Person 1.03(c)
Pre-Merger Matters 7.09(a)
Providing Party 7.04
Receiving Party 7.04
Regulation S-X 3.11(i)
Retirement Plans 3.15(b)
Rights Agreement 3.22(a)
SEC 3.07
Subsequent Buyer SEC Documents 4.06
Subsequent Company SEC Documents 3.07
Subsidiary 1.01(b)
Superior Proposal 5.03
Tax Return 3.14(b)
Taxes 3.14(b)
Taxing Authorities 3.14(b)
Valuation Report 3.15(a)
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of October 5, 1997
among Federal Express Corporation, a Delaware corporation
("Buyer"), Caliber System, Inc., an Ohio corporation ( the
"Company"), Fast Holding Inc., a Delaware corporation and a
wholly-owned subsidiary of Buyer ("Parent"), Fast Merger Sub
Inc., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Buyer Merger Sub"), and Tires Merger Sub Inc., a
Delaware corporation and a wholly-owned subsidiary of Parent
("Tires Merger Sub").
The parties hereto agree as follows:
ARTICLE 1
THE MERGERS
SECTION 1.01. Tires Sub Merger. (a) Upon the terms and
subject to the conditions set forth herein, on the Merger Date,
Tires Merger Sub shall merge into the Company (the "Tires Sub
Merger") and the separate existence of Tires Merger Sub shall
cease. The Company shall be the surviving corporation in the
Tires Sub Merger (hereinafter sometimes referred to as the "Tires
Surviving Corporation") and its separate corporate existence,
with all its purposes, objects, rights, privileges, powers and
franchises, shall continue unaffected and unimpaired by the Tires
Sub Merger.
(b) Pursuant to the Tires Sub Merger:
(i) Each share of common stock without par value of the
Company (the "Company Stock") held by the Company as
treasury stock immediately prior to the Merger Date shall be
canceled and no payment shall be made with respect thereto;
(ii) Each share of Company Stock outstanding
immediately prior to the Merger Date shall, except as
otherwise provided in Section 1.01(b)(i) or as provided in
Section 1.06 with respect to shares of Company Stock as to
which dissenters' rights have been exercised (which shares
shall be treated in accordance with Section 1701.85 of the
General Corporation Law of Ohio (the "Ohio Law")), be
<PAGE>
converted into the right to receive 0.8 shares (the
"Tires Merger Consideration") of common stock, par
value $0.10 per share, of Parent ("Parent Common
Stock"); and
(iii) At the Merger Date, each share of common stock, par
value $0.01 per share, of Tires Merger Sub ("Tires
Merger Sub Common Stock") outstanding immediately prior
to the Merger Date shall be converted into an equal
number of shares of common stock, par value $0.01 per
share, of the Tires Surviving Corporation ("Tires
Surviving Corporation Common Stock").
From and after the Merger Date, all shares of Company Stock
converted in accordance with Section 1.01(b)(ii) shall no longer
be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of such shares shall
cease to have any rights with respect thereto, except the right
to receive the Tires Merger Consideration, the right to exercise
dissenters' rights in accordance with and subject to the
provisions of the Ohio Law and the other rights specified in this
Agreement. From and after the Merger Date, all certificates
representing Tires Merger Sub Common Stock shall be deemed for
all purposes to represent the number of shares of Tires Surviving
Corporation Common Stock into which they were converted in
accordance with Section 1.01(b)(iii). For the purposes of this
Agreement, "Subsidiary", when used with respect to any Person
means any other Person, whether incorporated or unincorporated,
of which securities or other ownership interests having ordinary
power to elect a majority of the board of directors or other
persons performing similar functions are directly or indirectly
owned or controlled by such Person or by any one or more of its
Subsidiaries. For purposes of this Agreement, "Person" means an
individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or
organization, including, without limitation, a government or
political subdivision or any agency or instrumentality thereof.
SECTION 1.02. Buyer Sub Merger. (a) Upon the terms and
subject to the conditions set forth herein, on the Merger Date,
Buyer Merger Sub shall merge into
<PAGE>
Buyer (the "Buyer Sub Merger") and the separate existence of
Buyer Merger Sub shall cease. Buyer shall be the surviving
corporation in the Buyer Sub Merger (hereinafter sometimes
referred to as the "Buyer Surviving Corporation") and its
separate corporate existence, with all its purposes, objects,
rights, privileges, powers and franchises, shall continue
unaffected and unimpaired by the Buyer Sub Merger.
(b) Pursuant to the Buyer Sub Merger:
(i) Each share of common stock, par value $0.10 per
share, of Buyer (the "Buyer Stock") held by Buyer as
treasury stock immediately prior to the Merger Date shall be
canceled and no payment shall be made with respect thereto;
(ii) Each share of Buyer Stock outstanding immediately
prior to the Merger Date shall, except as otherwise provided
in Section 1.02(b)(i), be converted into the right to
receive one share of Parent Common Stock (the "Buyer Merger
Consideration" and, together with the Tires Merger
Consideration, the "Merger Consideration"); and
(iii) At the Merger Date, each share of common stock,
par value $0.01 per share, of Buyer Merger Sub ("Buyer
Merger Sub Common Stock"), outstanding immediately prior to
the Merger Date shall be converted into an equal number of
shares of common stock, par value $0.01 per share, of the
Buyer Surviving Corporation ("Buyer Surviving Corporation
Common Stock").
From and after the Merger Date, all shares of Buyer Stock
converted in accordance with Section 1.02(b)(ii) shall no longer
be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of such shares shall
cease to have any rights with respect thereto, except the right
to receive the Buyer Merger Consideration and the other rights
specified in this Agreement. From and after the Merger Date, all
certificates representing Buyer Sub Common Stock shall be deemed
for all purposes to represent the number of shares of the Buyer
Surviving Corporation Common Stock into which they were converted
in accordance with Section 1.02(b)(iii).
<PAGE>
SECTION 1.03. Surrender and Payment. (a) Prior to the Merger
Date, Buyer shall cause Parent to appoint an agent reasonably
satisfactory to the Company (the "Exchange Agent") for the
purpose of exchanging certificates representing shares of Company
Stock for the Tires Merger Consideration. Parent will make
available to the Exchange Agent, as needed, certificates
representing the Parent Common Stock in respect of the Tires
Merger Consideration to be paid in respect of shares of Company
Stock, in accordance with the terms of Section 1.01(b). Promptly
after the Merger Date, Parent shall send, or shall cause the
Exchange Agent to send, to each holder of shares of Company Stock
at the Merger Date a letter of transmittal for use in such
exchange (which shall specify that delivery of the Tires Merger
Consideration shall be effected, and risk of loss and title shall
pass, only upon proper delivery of the certificates representing
shares of Company Stock, to the Exchange Agent). Upon the
conversion of Buyer Stock into Parent Common Stock in accordance
with Section 1.02(b), all shares of Buyer Stock so converted
shall be canceled and cease to exist, and each certificate
theretofore representing any such shares shall, without any
action on the part of the holder thereof, be deemed to represent
an equivalent number of shares of Parent Common Stock.
(b) Each holder of shares of Company Stock that have been
converted into a right to receive the Tires Merger Consideration,
upon surrender to the Exchange Agent of a certificate or
certificates representing such shares of Company Stock, together
with a properly completed letter of transmittal covering such
shares of Company Stock, will be entitled to receive the Tires
Merger Consideration payable in respect of such shares of Company
Stock, cash in lieu of any fractional shares and certain
dividends or other distributions in accordance with Section
1.03(g). Until so surrendered, each such certificate shall, after
the Merger Date, represent for all purposes only the right to
receive the Tires Merger Consideration, cash in lieu of any
fractional shares and certain dividends or other distributions in
accordance with Section 1.03(g).
(c) If any portion of the Tires Merger Consideration is to
be paid to a Person other than the
<PAGE>
registered holder of the shares of Company Stock represented by
the certificate or certificates surrendered in exchange therefor,
it shall be a condition to such payment that the certificate or
certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Exchange Agent any
transfer or other taxes required as a result of such payment to a
Person other than the registered holder of such shares of Company
Stock or establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(d) After the Merger Date, there shall be no further
registration of transfers of shares of Company Stock. If, after
the Merger Date, certificates representing shares of Company
Stock or Buyer Stock are presented to the respective surviving
corporations in the Mergers, they shall be canceled and exchanged
for the consideration provided for, and in accordance with the
procedures set forth, in this Article 1.
(e) Any portion of the Tires Merger Consideration made
available to the Exchange Agent pursuant to Section 1.03(a) that
remains unclaimed by the holders of shares of Company Stock
twelve months after the Merger Date shall be returned to Parent,
upon demand, and any such holder who has not exchanged his shares
of Company Stock for the Tires Merger Consideration in accordance
with this Section 1.03 prior to that time shall thereafter look
only to Parent for his claim for Tires Merger Consideration, any
cash in lieu of any fractional shares and certain dividends or
other distributions in accordance with Section 1.03(g).
Notwithstanding the foregoing, Parent shall not be liable to any
holder of shares of Company Stock for any amount paid to a public
official pursuant to applicable abandoned property laws. Any
amounts remaining unclaimed by holders of shares of Company Stock
two years after the Merger Date (or such earlier date immediately
prior to such time as such amounts would otherwise escheat to or
become property of any governmental entity) shall, to the extent
permitted by applicable law, become the property of Parent free
and clear of any claim or interest of any Person previously
entitled thereto.
<PAGE>
(f) Any portion of the Tires Merger Consideration made
available to the Exchange Agent pursuant to Section 1.03(a) to
pay for shares of Company Stock in respect of which dissenters
rights have been perfected shall be returned to Parent, upon
demand.
(g) No dividends or other distributions with respect to the
Parent Common Stock constituting all or a portion of the Tires
Merger Consideration shall be paid to the holder of any
unsurrendered certificate representing Company Stock until such
certificates are surrendered as provided in this Section 1.03.
Subject to the effect of applicable laws, following such
surrender, there shall be paid, without interest, to the record
holder of the certificates representing the Parent Common Stock
(i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Merger Date
payable prior to or on the date of such surrender with respect to
such whole shares of Parent Common Stock, and not paid, and the
amount of cash payable in lieu of any fractional shares, less the
amount of any withholding taxes which may be required thereon
under any provision of federal, state, local or foreign tax law,
and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Merger Date
but prior to the date of surrender and a payment date subsequent
to the date of surrender payable with respect to such whole
shares of Parent Common Stock, less the amount of any withholding
taxes which may be required thereon under any provision of
federal, state, local or foreign tax law. Parent shall make
available to the Exchange Agent cash for these purposes.
(h) If any certificate representing Company Stock shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the Person claiming such certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by
such Person of a bond in such reasonable amount as Parent may
direct as indemnity against any claim that may be made against it
with respect to such certificate, the Exchange Agent shall issue
in exchange for such lost, stolen or destroyed certificate the
Tires Merger Consideration and, if applicable, any unpaid
dividends and distributions on shares of Parent Common Stock
deliverable in respect thereof and any
<PAGE>
cash in lieu of fractional shares, in each case pursuant to this
Agreement.
SECTION 1.04. Cancellation of Parent Stock. All outstanding
shares of the capital stock of Parent immediately prior to the
Merger Date shall be canceled immediately upon consummation of
the Buyer Sub Merger. The Tires Sub Merger and the Buyer Sub
Merger are sometimes together referred to as the "Mergers".
SECTION 1.05. The Merger Date. As soon as practicable (but
in no event more than two business days) after the satisfaction
or, to the extent permitted hereunder or under applicable law,
waiver of all conditions to each of the Mergers, (a) the Company
shall file the certificate of merger required to effect the Tires
Sub Merger (the "Company Certificate of Merger") with the Ohio
Secretary of State and make all other filings or recordings
required by the Ohio Law in connection with the Tires Sub Merger,
(b) Buyer shall file a copy of this Agreement with the Delaware
Secretary of State and make all other filings or recordings
required by the Delaware Law in connection with the Buyer Sub
Merger, and (c) the Mergers shall become effective, it being
understood that the Buyer Sub Merger shall become effective
immediately prior to the Tires Sub Merger in accordance with the
terms of such Company Certificate of Merger and this Agreement
(such time and date are referred to as the "Merger Date").
Notwithstanding the first sentence of this Section 1.05, the
Merger Date shall occur no earlier than ten days after the date
on which the shareholders of the Company shall have approved the
Tires Sub Merger and, in any event, no earlier than January 2,
1998.
SECTION 1.06. Dissenting Shares. Notwithstanding Section
1.01 or Section 1.02, as applicable, shares of Company Stock
outstanding immediately prior to the Merger Date and held by a
holder who has not voted in favor of the Tires Sub Merger and who
has exercised dissenters' rights in respect of such shares of
Company Stock in accordance with the Ohio Law shall not be
converted into a right to receive the Tires Merger Consideration
unless such holder fails to perfect or withdraws or otherwise
loses his dissenters' or objecting shareholders' rights. Shares
of Company Stock in respect of which dissenters rights have been
<PAGE>
exercised shall be treated in accordance with Section 1701.85 of
the Ohio Law. If after the Merger Date such holder fails to
perfect or withdraws or otherwise loses his right to demand the
payment of fair value for shares of Company Stock under Ohio Law,
such shares of Company Stock shall be treated as if they had been
converted as of the Merger Date into a right to receive the Tires
Merger Consideration, cash in lieu of any fractional shares and
certain dividends or other distributions in accordance with
Section 1.03(g). The Company shall give Buyer prompt notice of
any demands received by the Company for the exercise of
dissenters rights with respect to shares of Company Stock and
Buyer shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not,
except with the prior written consent of Buyer, make any payment
with respect to, or settle or offer to settle, any such demands.
In the event any amounts shall become due and payable in respect
of any such demands, such amounts shall be paid by the Company.
SECTION 1.07. Stock Options of the Company. (a) As soon as
practicable following the date of this Agreement, the Directors
of the Company (or, if appropriate, any committee administering
the Company Stock Plans, as defined below) shall adopt such
resolutions or take such other actions as may be required to
effect the following:
(i) adjust the terms of all outstanding options to
purchase shares of Company Stock (the "Company Stock
Options") granted under any plan or arrangement providing
for the grant of options to purchase shares of Company Stock
to current or former officers, directors, employees or
consultants of the Company (the "Company Stock Plans"),
whether vested or unvested, as necessary to provide that, at
the Merger Date, each Company Stock Option outstanding
immediately prior to the Merger Date shall be amended and
converted into an option to acquire, on the same terms and
conditions as were applicable under the Company Stock
Option, the number of shares of Parent Common Stock (rounded
down to the nearest whole share) determined by multiplying
the number of shares of Company Stock subject to such
Company
<PAGE>
Stock Option by 0.8, at a price per share of Parent Common
Stock equal to (A) the aggregate exercise price for the
shares of Company Stock otherwise purchasable pursuant to
such Company Stock Option divided by (B) the aggregate
number of shares of Parent Common Stock deemed purchasable
pursuant to such Company Stock Option (each, as so adjusted,
an "Adjusted Option"); provided that such exercise price
shall be rounded up to the nearest whole cent; and
(ii) make such other changes to the Company Stock Plans
as Parent and the Company may agree are appropriate to give
effect to the Merger.
(b) The adjustments provided herein with respect to any
Company Stock Options that are "incentive stock options" as
defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") shall be and are intended to be effected in
a manner which is consistent with Section 424(a) of the Code.
(c) Prior to the Merger Date, Parent shall adopt an option
plan which shall provide for the issuance of the Adjusted Options
at the Merger Date and by virtue of the Merger and without the
need of any further corporate action, Parent shall assume all
obligations of the Company under the Company Stock Plans,
including with respect to the Company Stock Options outstanding
at the Merger Date.
(d) No later than the Merger Date, Parent shall prepare and
file with the SEC a registration statement on Form S-8 (or
another appropriate form) registering a number of shares of
Parent Common Stock equal to the number of shares subject to the
Adjusted Options. Such registration statement shall be kept
effective (and the current status of the initial offering
prospectus or prospectuses required thereby shall be maintained)
at least for so long as any Adjusted Options may remain
outstanding.
(e) As soon as practicable after the Merger Date, Parent
shall deliver to the holders of Company Stock Options appropriate
notices setting forth such holders' rights pursuant to the
respective Company Stock Plans and the agreements evidencing the
grants of such
<PAGE>
Company Stock Options and that such Company Stock Options and
agreements shall be assumed by Parent and shall continue in
effect on the same terms and conditions (subject to the
adjustments required by this Section 1.07 after giving effect to
the Merger).
(f) A holder of an Adjusted Option may exercise such
Adjusted Option in whole or in part in accordance with its terms
by delivering a properly executed notice of exercise to Parent,
together with the consideration therefor and any required United
States Federal withholding tax information and payment.
(g) Except as otherwise contemplated by this Section 1.07
and except to the extent required under the respective terms of
the Company Stock Options or other applicable agreements, all
restrictions or limitations on transfer and vesting with respect
to Company Stock Options awarded under the Company Stock Plans or
any other plan, program or arrangement of the Company, to the
extent that such restrictions or limitations shall not have
already lapsed, shall remain in full force and effect with
respect to such options after giving effect to the Merger and the
assumption by Parent as set forth above.
SECTION 1.08. Adjustments. If at any time during the period
between the date of this Agreement and the Merger Date, any
change in the outstanding shares of Buyer Stock or Company Stock
shall occur, including by reason of any reclassification,
recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a
record date during such period, the Merger Consideration shall be
appropriately adjusted.
SECTION 1.09. Fractional Shares. No fractional shares of
Parent Common Stock shall be issued in the Tires Sub Merger, but
in lieu thereof each holder of Company Stock otherwise entitled
to a fractional share of Parent Common Stock will be entitled to
receive, from the Exchange Agent in accordance with the
provisions of this Section 1.09, a cash payment in lieu of such
fractional shares of Parent Common Stock representing such
holder's proportionate interest, if any, in the net proceeds from
the sale by the Exchange Agent in one or more transactions (which
sale
<PAGE>
transactions shall be made at such times, in such manner and on
such terms as the Exchange Agent shall determine in its
reasonable discretion) on behalf of all such holders of the
aggregate of the fractional shares of Parent Common Stock which
would otherwise have been issued (the "Excess Shares"). The sale
of the Excess Shares by the Exchange Agent shall be executed on
the New York Stock Exchange, Inc. (the "NYSE") through one or
more member firms of the NYSE and shall be executed in round lots
to the extent practicable. Until the net proceeds of such sale or
sales have been distributed to the holders of shares of Company
Stock, the Exchange Agent will hold such proceeds in trust for
the holders of Company Stock. Parent shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs,
including, without limitation, the expenses and compensation of
the Exchange Agent, incurred in connection with such sale of the
Excess Shares. As soon as practicable after the determination of
the amount of cash, if any, to be paid to holders of Company
Stock in lieu of any fractional shares of Parent Common Stock the
Exchange Agent shall make available such amounts to such holders
of shares of Company Stock without interest.
ARTICLE 2
THE SURVIVING CORPORATIONS
SECTION 2.01. Articles and Certificate of Incorporation;
Bylaws. (a) The articles of incorporation and bylaws of the
Company in effect at the Merger Date shall be the articles of
incorporation and bylaws, respectively, of the Tires Surviving
Corporation until amended in accordance with applicable law. The
Tires Surviving Corporation shall succeed to all of the rights,
privileges, powers and franchises, of a public as well as of a
private nature, of the Company and Tires Merger Sub, all of the
properties and assets and all of the debts of the Company and
Tires Merger Sub, choses in action and other interests due or
belonging to the Company and Tires Merger Sub and shall be
subject to, and responsible for, all of the debts, liabilities
and duties of the Company and Tires Merger Sub with the effect
set forth in the Ohio Law.
<PAGE>
(b) The certificate of incorporation and bylaws of Buyer in
effect at the Merger Date shall be the certificate of
incorporation and bylaws, respectively, of the Buyer Surviving
Corporation until amended in accordance with applicable law. The
Buyer Surviving Corporation shall succeed to all of the rights,
privileges, powers and franchises, of a public as well as of a
private nature, of Buyer and Buyer Merger Sub, all of the
properties and assets of and all of the debts of Buyer and Buyer
Merger Sub, choses in action and other interests due or belonging
to Buyer and Buyer Merger Sub and shall be subject to, and
responsible for, all of the debts, liabilities and duties of
Buyer and Buyer Merger Sub with the effect set forth in the
Delaware Law.
SECTION 2.02. Directors and Officers. From and after the
Merger Date, until successors are duly elected or appointed and
qualified in accordance with applicable law, and subject to
Section 7.15 of the Company Disclosure Schedule, (a) the
directors of Buyer Merger Sub immediately prior to the Merger
Date shall be the directors of the Tires Surviving Corporation,
(b) the directors of Buyer immediately prior to the Merger Date
shall be the directors of the Buyer Surviving Corporation, (c)
the directors of Buyer immediately prior to the Merger Date shall
be the directors of Parent, (d) the officers of the Company
immediately prior to the Merger Date shall be the officers of the
Tires Surviving Corporation and (e) the officers of Buyer
immediately prior to the Merger Date shall be the officers of the
Buyer Surviving Corporation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule (each section
of which qualifies the correspondingly numbered representation
and warranty only, except where the information in any such
section is disclosed in such a way to make its relevance to any
other representation or warranty readily apparent, in which case,
such section shall be deemed to also qualify such
<PAGE>
other representation and warranty) of the Company attached hereto
(the "Company Disclosure Schedule") or as otherwise provided
herein, the Company represents and warrants to Buyer that:
SECTION 3.01. Corporate Existence and Power. The Company is
a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Ohio, and has all
corporate powers and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business
as now conducted and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary,
except (i) where the failure to have such licenses,
authorizations, permits, consents or approvals and (ii) for those
jurisdictions where the failure to be so qualified or in good
standing, is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on the Company. For
purposes of this Agreement, a "Material Adverse Effect" means,
with respect to any Person, a material adverse effect on the
financial condition, business, assets or results of operations of
such Person and its Subsidiaries taken as a whole or on the
ability of such Person to perform its obligations hereunder in
all material respects. The Company has heretofore delivered to
Buyer true and complete copies of the Company's articles of
incorporation and bylaws as currently in effect.
SECTION 3.02. Corporate Authorization. (a) The execution,
delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated
hereby are within the Company's corporate powers and, except for
the required approval of the shareholders of the Company in
connection with the consummation of the Tires Sub Merger, have
been duly authorized by all necessary corporate action. The
affirmative vote of a majority of the shares of the entire voting
power is the only vote of any class or series of the Company's
capital stock necessary to approve and adopt this Agreement and
the transactions contemplated by this Agreement. This Agreement
has been duly executed and delivered by the Company and
constitutes a valid and binding agreement
<PAGE>
of the Company enforceable against the Company in accordance with
its terms.
(b) The Directors of the Company, at a meeting duly called
and held, have (i) determined that this Agreement and the
transactions contemplated hereby (including the Tires Sub Merger)
are fair to and in the best interests of the shareholders of the
Company, (ii) approved and adopted this Agreement and the
transactions contemplated hereby (including the Tires Sub
Merger), and (iii) resolved to recommend approval and adoption of
this Agreement by the shareholders of the Company, subject to the
terms hereof.
SECTION 3.03. Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated by
this Agreement require no action, by or in respect of, or filing
with, any governmental body, agency, official or authority other
than (a) the filing of the Company Certificate of Merger in
accordance with the Ohio Law; (b) compliance with any applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"); (c) compliance with any
applicable requirements of the Securities and Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder (the "1934 Act"); (d) compliance with any applicable
requirements of the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "1933 Act");
(e) compliance with any applicable foreign or state securities or
Blue Sky laws; (f) compliance with any applicable pre-merger
notification or similar statutes and rules of the European
Community (or certain of its member states), Canada and Mexico;
(g) any applicable requirements of the Department of
Transportation; (h) filings and notices not required to be made
or given until after the Merger Date and (i) immaterial actions
or filings relating to ordinary operational matters.
SECTION 3.04. Non-Contravention. The execution, delivery and
performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated by this Agreement
do not and will not (a) contravene or conflict with the articles
of incorporation or bylaws of the Company, (b) assuming
<PAGE>
compliance with the matters referred to in Section 3.03,
contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or
decree binding upon or applicable to the Company or any
Subsidiary of the Company, (c) constitute a default (or an event
which with notice, the lapse of time or both would become a
default) under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of the
Company or any Subsidiary of the Company or to a loss of any
benefit to which the Company or any Subsidiary of the Company is
entitled under any provision of any agreement, contract or other
instrument binding upon the Company or any Subsidiary of the
Company or any license, franchise, permit or other similar
authorization held by the Company or any Subsidiary of the
Company, or (d) result in the creation or imposition of any Lien
on any asset of the Company or any Subsidiary of the Company,
other than, in the case of the events specified in clauses (b),
(c) and (d), any such event which, individually or in the
aggregate, has not had, and is not reasonably likely to have, a
Material Adverse Effect on the Company. For purposes of this
Agreement, "Lien" means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any
kind in respect of such asset.
SECTION 3.05. Capitalization. As of September 15, 1997, the
authorized capital stock of the Company consists of 200,000,000
shares of Company Stock and 40,000,000 shares of serial preferred
stock. As of September 13, 1997, there were (i) 39,206,414 shares
of Company Stock outstanding and (ii) no shares of serial
preferred stock outstanding. As of September 18, 1997, there were
employee and director stock options to purchase an aggregate of
663,681 shares of Company Stock outstanding (none of which
options were exercisable, other than options in respect of 22,460
shares of Company Stock). All outstanding shares of capital stock
of Company have been duly authorized and validly issued and are
fully paid and nonassessable. Except as set forth in this Section
3.05, and for changes since September 15, 1997 resulting from the
exercise of stock options outstanding on such date, there are
outstanding (a) no shares of capital stock or other voting
securities of the Company, (b) no
<PAGE>
securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company, and
(c) no options or other rights to acquire from the Company, and
no obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for
capital stock or voting securities of the Company (the items in
clauses (a), (b) and (c) being referred to collectively as the
"Company Securities"). There are no outstanding obligations of
the Company or any Subsidiary of the Company to repurchase,
redeem or otherwise acquire any Company Securities.
SECTION 3.06. Material Subsidiaries. (a) Each Material
Subsidiary of the Company is duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted and is duly qualified to
do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such
qualification necessary, except (i) where the failure to have
such licenses, authorizations, consents or approvals and (ii) for
those jurisdictions where failure to be so qualified or licensed
is not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect on the Company. All Material
Subsidiaries and their respective jurisdictions of incorporation
are identified in the Company's annual report on Form 10-K for
the fiscal year ended December 31, 1996 (the "Company 10-K"). For
the purposes of this Agreement, "Material Subsidiary" means those
Subsidiaries of the Company required to be identified as
significant subsidiaries of the Company in the Company 10-K
pursuant to Regulation S-X 1.02(w).
(b) All of the outstanding capital stock of, or other
ownership interests in, each Material Subsidiary of the Company,
is owned by the Company, directly or indirectly, free and clear
of any Lien and free of any other limitation or restriction
(including, without limitation, any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other
<PAGE>
ownership interests). There are no outstanding (i) securities of
the Company or any Subsidiary of the Company convertible into or
exchangeable for shares of capital stock or other voting
securities or ownership interests in any Subsidiary of the
Company, and (ii) options or other rights to acquire from the
Company or any Subsidiary of the Company, and no other obligation
of the Company or any Subsidiary of the Company to issue, any
capital stock, voting securities or other ownership interests in,
or any securities convertible into or exchangeable for, any
capital stock, voting securities or ownership interests in, any
Subsidiary of the Company (the items in clauses (i) and (ii)
being referred to collectively as the "Company Subsidiary
Securities"). There are no outstanding obligations of the Company
or any Subsidiary of the Company to repurchase, redeem or
otherwise acquire any outstanding Company Subsidiary Securities.
SECTION 3.07. SEC Filings. The Company has delivered to
Buyer (i) the Company's annual reports on Form 10-K for its
fiscal years ended December 31, 1996, 1995 and 1994, (ii) its
quarterly reports on Form 10-Q for its fiscal quarters ended
after December 31, 1996 (the "Company 10-Qs"), (iii) its proxy or
information statements relating to meetings of, or actions taken
without a meeting by, the shareholders of the Company held since
December 31, 1996, and (iv) all of its other reports, statements,
schedules and registration statements filed with the Securities
and Exchange Commission (the "SEC") since January 1, 1996 and
through the date of this Agreement. The Company has filed all
required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1995 (collectively, the
"Company SEC Documents"). As of their respective dates, or if
amended, as of the date of the last such amendment, the Company
SEC Documents complied, and all documents required to be filed by
the Company with the SEC after the date hereof and prior to the
Merger Date (the "Subsequent Company SEC Documents") will comply,
in all material respects with the requirements of the 1933 Act or
the 1934 Act, as the case may be, and the applicable rules and
regulations promulgated thereunder, and none of the Company SEC
Documents contained, and the Subsequent Company SEC Documents
will not contain, any untrue statement of a material fact or omit
to state
<PAGE>
any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading.
SECTION 3.08. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of the Company included in its annual reports on Form
10-K and the quarterly reports on Form 10-Q referred to in
Section 3.07 fairly present, in all material respects, in
conformity with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis (except as may
be indicated in the notes thereto), the consolidated financial
position of the Company and its consolidated Subsidiaries as of
the dates thereof and their consolidated results of operations
and cash flows for the periods then ended (subject to normal
year-ended adjustments in the case of any unaudited interim
financial statements). For purposes of this Agreement, "Company
Balance Sheet" means the consolidated balance sheet of the
Company as of December 31, 1996 set forth in the Company 10-K and
"Company Balance Sheet Date" means December 31, 1996.
SECTION 3.09. Disclosure Documents. (a) Each document
required to be filed by the Company with the SEC in connection
with the transactions contemplated by this Agreement (the
"Company Disclosure Documents"), including, without limitation,
the proxy or information statement of the Company (the "Company
Proxy Statement"), if any, to be filed with the SEC in connection
with the adoption of this Agreement by the holders of Company
Stock, and any amendments or supplements thereto, will, when
filed, comply as to form in all material respects with the
applicable requirements of the 1934 Act.
(b) At the time the Company Proxy Statement or any amendment
or supplement thereto is first mailed to shareholders of the
Company, and at the time such shareholders vote on the adoption
of this Agreement, the Company Proxy Statement, as supplemented
or amended, if applicable, will not contain any untrue statement
of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the
circumstances under
<PAGE>
which they were made, not misleading. At the time of the filing
of any Company Disclosure Document other than the Company Proxy
Statement and at the time of any distribution thereof, such
Company Disclosure Document will not contain any untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 3.09(b)
will not apply to statements included in or omissions from the
Company Disclosure Documents based upon information furnished to
the Company in writing by Buyer or Parent specifically for use
therein.
SECTION 3.10. Information Supplied. The information supplied
or to be supplied by the Company for inclusion or incorporation
by reference in (i) the Buyer Proxy Statement (as defined
hereinafter) or any amendment or supplement thereto will not, at
the time the Buyer Proxy Statement is first mailed to
stockholders of Buyer and at the time such stockholders vote on
the issuance of Parent Common Stock in connection with this
Agreement, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under
which they were made, not misleading, (ii) the Form S-4 or any
amendment or supplement thereto will not, at the time the Form
S-4 or any amendment or supplement thereto becomes effective
under the 1933 Act and on the Merger Date, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Buyer Disclosure Document
(other than the Buyer Proxy Statement, the Form S-4 and any
amendments or supplements to either) will not, at the time of
effectiveness of such Buyer Disclosure Document and at the time
of any distribution thereof, contain any untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
SECTION 3.11. Absence of Certain Changes. Since the Company
Balance Sheet Date and except as set forth
<PAGE>
in the Company SEC Documents, the Company and its Subsidiaries
have conducted their business in the ordinary course consistent
with past practice and there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect
on the Company other than any of the foregoing (i) relating to
the economy or securities markets in general, (ii) relating to
the Company's industry in general or (iii) arising from the
announcement or pendency of this Agreement or the transactions
contemplated hereby;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of
capital stock of the Company (other than payment of the Company's
regular quarterly dividend on Company Common Stock in an amount
not exceeding $0.10 per share and having customary record and
payment dates), or any repurchase, redemption or other
acquisition by the Company or any Subsidiary of the Company of
any amount of outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or
any of its Subsidiaries;
(c) (except for amendments to the Company's Rights Agreement
contemplated by Section 3.22) any amendment of any material term
of any outstanding security of the Company or any Subsidiary of
the Company;
(d) any incurrence, assumption or guarantee by the Company
or any Subsidiary of the Company of any indebtedness from any
third party for borrowed money other than in the ordinary course
of business and in amounts and on terms consistent with past
practices;
(e) any creation or assumption by the Company or any
Subsidiary of the Company of any Lien on any material asset other
than in the ordinary course of business consistent with past
practices;
(f) any making of any loan, advance or capital contribution
to or investment in any Person other than loans, advances or
capital contributions to or investments in wholly-owned
Subsidiaries of the Company
<PAGE>
or to employees of the Company made in the ordinary course of
business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the business or assets of
the Company or any Subsidiary of the Company which, individually
or in the aggregate, has had or is reasonably likely to have a
Material Adverse Effect on the Company;
(h) any transaction or commitment made, or any contract or
agreement entered into, by the Company or any Subsidiary of the
Company relating to its assets or business (including, without
limitation, the acquisition or disposition of any assets) (other
than transactions and commitments contemplated by this Agreement)
inconsistent with the Company's budget and/or spending plans
disclosed to Buyer prior to the date of this Agreement or any
relinquishment by the Company or any Subsidiary of the Company of
any material contract, license or right;
(i) any change in any method of accounting or accounting
principle or practice by the Company or any Subsidiary of the
Company, except for any such change required by GAAP or
Regulation S-X promulgated under the 1934 Act ("Regulation S-X");
(j) any (i) grant by the Company or any of its Subsidiaries
of any severance or termination pay to, or entry into any
employment, termination or severance arrangement with, any
director, officer or employee of the Company or any Subsidiary of
the Company other than any such grant or arrangement to or with
any employee of any Subsidiary of the Company in the ordinary
course in an amount not exceeding an amount equal to the annual
compensation plus expenses relating to "COBRA" and out-placement
benefits of such employee; (ii) entering into of any employment,
deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director,
officer or employee of the Company or any Subsidiary, (iii)
increase in benefits payable under any existing severance or
termination pay policies or employment agreements or (iv)
increase in compensation, bonus or other benefits payable to
directors, officers or
<PAGE>
employees of the Company or any Subsidiary, other than in the
ordinary course of business.
SECTION 3.12. No Undisclosed Material Liabilities. There are
no liabilities, commitments or obligations (whether pursuant to
contracts or otherwise) of the Company or any Subsidiary of the
Company of any kind whatsoever which, individually or in the
aggregate, have had or are reasonably likely to have a Material
Adverse Effect on the Company, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which is
reasonably likely to result in such a liability, commitment or
obligation, including, without limitation, any fines,
disciplinary actions or other adverse actions that may be taken
or reported concerning the conduct of the Company or any of its
Subsidiaries, other than:
(a) liabilities, commitments or obligations disclosed or
provided for in the Company Balance Sheet (including the notes
thereto) or in the Company 10-K;
(b) liabilities, commitments or obligations incurred in the
ordinary course of business consistent with past practice since
the Company Balance Sheet Date; and
(c) liabilities, commitments or obligations under this
Agreement.
SECTION 3.13. Litigation; Investigations. Except as set
forth in the Company SEC Documents, there is no action, claim,
suit, investigation, proceeding or examination pending against or
affecting, or to the knowledge of the Company, threatened or
reasonably likely to be brought against or affecting, the Company
or any Subsidiary of the Company or any of their respective
properties before any court or arbitrator or any governmental
body, agency, authority or official which, individually or in the
aggregate, has had or is reasonably likely to have a Material
Adverse Effect on the Company. The foregoing representation and
warranty does not include or relate to any action, claim, suit,
investigation, proceeding or examination, pending or threatened,
challenging or seeking to prevent, enjoin,
<PAGE>
alter or delay the Mergers or any of the transactions
contemplated hereby.
SECTION 3.14. Taxes. (a) Except as set forth in the Company
Balance Sheet (including the notes thereto) or on Schedule 3.14,
(i) all tax returns, statements, reports and forms (collectively,
the "Company Returns") required to be filed with any taxing
authority by, or with respect to, the Company and its
Subsidiaries have been filed in accordance with all applicable
laws; (ii) the Company and its Subsidiaries have timely paid all
taxes shown as due and payable on the Company Returns that have
been so filed, and, as of the time of filing, the Company Returns
and any other information required to be shown thereon were
correct and complete in all respects (other than taxes which are
being contested in good faith and which are adequately provided
for, under GAAP, on the Company Balance Sheet); (iii) the Company
and its Subsidiaries have made provision for all Taxes payable by
the Company and its Subsidiaries for which no Company Return has
yet been filed; (iv) there is no action, suit, proceeding, audit
or claim now proposed or pending against or with respect to the
Company or any of its Subsidiaries in respect of any Tax where
there is a reasonable possibility of an adverse determination;
(v) neither the Company nor any of its Subsidiaries has been a
United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code; (vi)
neither the Company nor any of its Subsidiaries has been a member
of an affiliated, consolidated, combined or unitary group other
than one of which the Company was the common parent; (vii) all
Returns filed with respect to tax years of the Company and its
Subsidiaries through the tax year ended December 31, 1989, have
been examined and closed or are returns with respect to which the
applicable period for assessment under applicable law, after
giving effect to extensions or waivers, has expired; (viii)
neither the Company nor any Subsidiary (or any member of any
affiliated, consolidated, combined or unitary group of the
Company or any Subsidiary is or has been a member) has been
granted any extension or waiver of the statute of limitations
period applicable to any return, which period (after giving
effect to such extension or waiver) has not yet expired; (ix) at
no time during the
<PAGE>
two years preceding the date hereof has there been pending any
request for a ruling or determination between the Company or any
Subsidiary and any Taxing Authority in respect of any Tax, net
operating loss, net capital loss, investment tax credit, foreign
tax credit, charitable deduction, depreciation or amortization
deduction or other tax deduction or credit; (x) none of the
property owned or used by the Company or any subsidiary is
subject to a tax benefit transfer lease executed in accordance
with Section 168(f)(8) of the Code; (xi) none of the property
owned or used by the Company or any Subsidiary is subject to a
lease, other than a "true" lease for federal income tax purposes;
(xii) none of the property owned by the Company or any Subsidiary
is "tax-exempt use property" within the meaning of Section 168(h)
of the Code; (xiii) a protective carryover election has been
filed in connection with each transaction consummated by the
Company or any Subsidiary prior to January 20, 1994 that
constituted a "qualified stock purchase" within the meaning of
Section 338 of the Code; (xiv) neither the Company nor any of its
Subsidiaries has any contractual obligations under any tax
sharing agreement or similar agreement or tax indemnity agreement
with any corporation or person which is not a member of the
affiliated group of corporations of which the Company is the
common parent; and (xv) neither the Company nor any of its
Subsidiaries owns any interest in real property in the State of
New York. For purposes of the representations contained in this
Section 3.14, none of these representations shall be deemed to
have been breached unless such breach would have, individually or
in the aggregate, a Material Adverse Effect on the Company.
(b) For purposes of this Agreement, "Taxes" means all United
States Federal, state, local and foreign taxes, levies and other
assessments, including, without limitation, all income, sales,
use, goods and services, value added, capital, capital gains, net
worth, transfer, profits, withholding, payroll, employer health,
unemployment insurance payments, excise, real property and
personal property taxes, and any other taxes, assessments or
similar charges in the nature of a tax, including, without
limitation, interest, additions to tax, fines and penalties,
imposed by a governmental or public body, agency, official or
<PAGE>
authority (the "Taxing Authorities"). "Tax Return" means any
return, report, information return or other document (including
any related or supporting information) required to be filed with
any Taxing Authority in connection with the determination,
assessment, collection, administration or imposition of any
Taxes.
SECTION 3.15. ERISA and Labor Matters. (a) Section 3.15(a)
of the Company Disclosure Schedule contains a list identifying
each "employee benefit plan", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), which
is subject to any provision of ERISA and is maintained,
administered or contributed to by the Company or any Affiliate of
the Company and covers any employee or former employee of the
Company or any Subsidiary of the Company or under which the
Company or any Subsidiary of the Company has any liability.
Copies of such plans (and, if applicable, related trust
agreements) and all amendments thereto and written
interpretations thereof have been furnished to Buyer together
with the three most recent annual reports (Form 5500 including,
if applicable, Schedule B thereto) prepared in connection with
any such plan and the most recent actuarial valuation report
prepared in connection with any such plan. Such plans are
referred to collectively herein as the "Employee Plans". For
purposes of this Section, "ERISA Affiliate" of the Company means
any other Person which, together with the Company, would be
treated as a single employer under Section 414 of the Code. The
only Employee Plans which individually or collectively would
constitute an "employee pension benefit plan" as defined in
Section 3(2) of ERISA (the "Pension Plans") are identified as
such in the list referred to above.
(b) No Employee Plan constitutes a "multiemployer plan", as
defined in Section 3(37) of ERISA (a "Multiemployer Plan"). No
"accumulated funding deficiency", as defined in Section 412 of
the Code, has been incurred with respect to any Employee Plan
subject to Title IV of ERISA, whether or not waived. The Company
knows of no "reportable event", within the meaning of Section
4043 of ERISA, and no event described in Section 4041, 4042, 4062
or 4063 of ERISA has occurred in connection with any Employee
Plan,
<PAGE>
other than a reportable event that is not reasonably likely to
have a Material Adverse Effect on the Company. No condition
exists and no event has occurred that could constitute grounds
for termination of any Employee Plan other than any such
terminations that would not individually or in the aggregate be
reasonably likely to have a Material Adverse Effect. Neither the
Company nor any of its ERISA Affiliates has any material
unsatisfied liability under Title IV of ERISA in connection with
the termination of, or complete or partial withdrawal from, any
plan covered or previously covered by Title IV of ERISA. Nothing
done or omitted to be done and no transaction or holding of any
asset under or in connection with any Employee Plan has or will
make the Company or any Subsidiary, any officer or director of
the Company or any Subsidiary subject to any liability under
Title I of ERISA or liable for any tax pursuant to Section 4975
of the Code that is reasonably likely to have a Material Adverse
Effect on the Company.
(c) Each Employee Plan which is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so
qualified during the period from its adoption to date, and each
trust forming a part thereof is exempt from tax pursuant to
Section 501(a) of the Code. The Company has furnished to Buyer
copies of the most recent IRS determination letters with respect
to each such Employee Plan. Each Employee Plan has been
maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code,
which are applicable to the Employee Plan, excluding any
instances of non-compliance that would not individually or in the
aggregate be reasonably likely to have a Material Adverse Effect
on the Company.
(d) Section 3.15(d) of the Company Disclosure Schedule
contains a list of each material employment, severance or other
similar contract, arrangement or policy and each plan or
arrangement (written or oral) providing for insurance coverage
(including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock
<PAGE>
options, stock appreciation or other forms of incentive
compensation or post-retirement insurance, compensation or
benefits which is not an Employee Plan, is entered into,
maintained or contributed to, as the case may be, by the Company
or any of its Affiliates and covers any employee or former
employee of the Company or any of its Subsidiaries. Such
contracts, plans and arrangements as are described above, copies
or descriptions of all of which have been furnished previously to
Buyer are referred to collectively herein as the "Benefit
Arrangements". Each Benefit Arrangement has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations
that are applicable to such Benefit Arrangement, excluding any
instances of non-compliance that would not individually or in the
aggregate be reasonably likely to have a Material Adverse Effect
on the Company.
(e) Except as would not be reasonably likely to have a
Material Adverse Effect on the Company, no Employee Plan, Benefit
Arrangement or related document contains any provision that would
prevent the Company or any Subsidiary from amending or
terminating any post-retirement health, medical or life insurance
benefits and no agent or representative of the Company or any of
its Affiliates has made any statements that would limit the
ability of the Company or any of its Subsidiaries to amend or
terminate any such benefits.
(f) There has been no amendment to, written interpretation
or announcement (whether or not written) by the Company or any of
its Affiliates relating to, or change in employee participation
or coverage under, any Employee Plan or Benefit Arrangement which
would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of the
expense incurred in respect thereof for the fiscal year ended on
the Company Balance Sheet Date.
(g) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon
the occurrence of any additional or subsequent events) constitute
an event under any Employee Plan, Benefit Arrangement, trust or
loan that will or may result in any payment (whether of severance
<PAGE>
pay or otherwise), acceleration, forgiveness of indebtedness,
vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any employee or former employee of the
Company or any of its Subsidiaries, or result in the triggering
or imposition of any restrictions or limitations on the right of
Parent, the Company or any Subsidiary of the Company to amend or
terminate any Employee Plan and receive the full amount of any
excess assets remaining or resulting from such amendment or
termination, subject to applicable taxes. Except as otherwise
identified in Section 3.15(d) of the Company Disclosure Schedule,
there is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company or any Subsidiary
that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to
the terms of Sections 162(a)(1), 162(i)(2) or 280G of the Code.
(h) Neither the Company nor any of its Subsidiaries is a
party to any collective bargaining agreement. There are no labor
unions voluntarily recognized or certified to represent any
bargaining unit of employees at the Company or any of its
Subsidiaries. No work stoppage, labor strike or slowdown against
the Company or any of its Subsidiaries is pending or threatened.
Neither the Company nor any of its Subsidiaries is involved in or
threatened with any labor dispute or grievance which individually
or in the aggregate has had or is reasonably likely to have a
Material Adverse Effect on the Company. To the knowledge of the
Company there is no organizing effort or representation question
at issue with respect to any employee of the Company or any of
its Subsidiaries. No collective bargaining agreement to which the
Company or any of its Subsidiaries is or may be a party is
currently under negotiation or renegotiation and no existing
collective bargaining agreement is due for expiration, renewal or
renegotiation within the one year period after the date hereof.
SECTION 3.16. Compliance with Laws. Except for any matter
that is not reasonably likely to have a Material Adverse Effect
on the Company, since January 1, 1996, neither the Company nor
any of its Subsidiaries is in violation of, or has violated, any
<PAGE>
applicable provisions of any laws, statutes, ordinances or
regulations.
SECTION 3.17. Intellectual Property Rights. (a) The Company
and its Subsidiaries own or have rights to use, free and clear of
all Liens, and have not assigned, hypothecated or otherwise
encumbered, the names "Caliber System," "RPS" and "Roberts
Express" (the "Names") and any of the Company's related material
trademarks, trade names, service marks or logos except for such
trademarks, trade names, service marks or logos the failure of
which to own or have rights to use individually or in the
aggregate is not reasonably likely to have a Material Adverse
Effect on the Company. The Company has no knowledge of any
current pending or threatened infringement or challenge by any
Person with respect to the Names and the related logos.
(b) Each of the Company and its Subsidiaries owns outright
or holds valid and enforceable licenses to all copies of the
operating and applications computer software programs and
databases material to the conduct by the Company and its
Subsidiaries of their respective businesses (other than programs
and databases that are generally commercially available) as of
the date hereof (collectively, the "Company Software") except for
such Company Software the failure of which to own or validly
license individually or in the aggregate is not reasonably likely
to have a Material Adverse Effect on the Company. To the
Company's knowledge, none of the Company Software used by the
Company and its Subsidiaries, and no use thereof, infringes upon
or violates any patent, copyright, trade secret or other
proprietary right of any other Person and, to the Company's
knowledge, no claim with respect to any such infringement or
violation is pending or threatened, except for any such
infringement or violation which, individually or in the
aggregate, has not had and is not reasonably likely to have a
Material Adverse Effect on the Company. Upon consummation of the
transactions contemplated by this Agreement, except for Company
Software sold or otherwise disposed of in the ordinary course of
business after the date hereof, each of the Company and its
Subsidiaries (i) will continue to own all the Company Software
owned by it, free and clear of all claims, Liens, encumbrances,
obligations and liabilities and (ii) with respect to all
agreements for
<PAGE>
the lease or license of Company Software which require consents
or other actions as a result of the consummation of the
transactions contemplated by this Agreement in order for the
Company and its Subsidiaries to continue to use and operate such
Company Software after the consummation of the transactions
contemplated by this Agreement, shall have obtained such consents
or taken such other actions so required prior to the Merger Date,
except for such consents or actions that if not obtained or
taken, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect on the Company.
SECTION 3.18. Environmental Matters. (a) (i) Except as set
forth in the Company 10-K or the Company 10-Qs, no notice,
notification, demand, request for information, citation, summons
or order has been received, no complaint has been filed, no
penalty has been assessed, no investigation, action, claim, suit,
proceeding or review is pending, or, to the knowledge of the
Company or any Subsidiary, threatened by any governmental entity
or other Person with respect to any matters relating to the
Company or any Subsidiary and arising out of any Environmental
Law which, individually or in the aggregate, is reasonably likely
to have a Material Adverse Effect on the Company; and
(ii) the Company and each Subsidiary are in compliance
with all Environmental Laws and have, and are in compliance
with, all Environmental Permits, except where any
noncompliance or failure to receive Environmental Permits is
not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect on the Company; and
(iii) there are no liabilities of, or relating to, the
Company or any Subsidiary of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or
otherwise, arising under or relating to any Environmental
Law which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on the Company.
(b) There are no liabilities disclosed in any environmental
assessment, investigation, study, audit,
<PAGE>
test, review or other analysis conducted of which the Company has
knowledge in relation to the current or prior business of the
Company or any Subsidiary or any property or facility now or
previously owned, leased or operated by the Company or any
Subsidiary which individually or in the aggregate are reasonably
likely to exceed $10,000,000 which have not been disclosed to
Buyer in writing as of the date hereof.
(c) Neither the Company nor any Subsidiary owns, leases or
operates or has owned, leased or operated any real property, or
conducts or has conducted any operations, in New Jersey or
Connecticut to which either the Connecticut Transfer Act or the
New Jersey Industrial Site Recovery Act is applicable.
(d) Neither the Company nor any Subsidiary owns or operates
or has owned or operated any underground storage tank which has
been closed in place, other than in compliance with Environmental
Laws, as in effect on the date hereof or abandoned and, each
underground storage tank owned, leased or operated by the Company
or any Subsidiary of the Company is in compliance with
Environmental Laws and, as of the date hereof, meets the
standards, including new system performance standards and
upgrading requirements contained in Subtitle I of the Resource
Conservation and Recovery Act, 42 U.S.C. 6991, et seq., as
amended, and any rules or regulations promulgated thereunder,
including 40 C.F.R. ss. 280.20, et seq., except to the extent
that any compliance, assessment or remediation costs arising from
or relating to underground storage tanks would not, individually
or in the aggregate, be reasonably likely to result in
liabilities in excess of $10,000,000.
(e) For purposes of this Section, the following terms shall
have the meanings set forth below:
(i) "Environmental Laws" means any federal, state,
local and foreign law (including, without limitation, common
law), treaty, judicial decision, regulation, rule, judgment,
order, decree, injunction, permit, license or governmental
restriction or any agreement or contract with any
governmental authority or other third party, whether now or
hereafter in effect,
<PAGE>
relating to human health and safety, the environment or to
pollutants, contaminants, wastes or chemicals or toxic,
radioactive, ignitable, corrosive, reactive or otherwise
hazardous substances, wastes or materials;
(ii) "Environmental Permits" means all permits,
licenses, franchises, certificates, approvals and other
similar authorizations of governmental authorities relating
to or required by Environmental Laws and affecting, or
relating in any way to the business of the Company or any
Subsidiary as currently conducted; and
(iii) "Company" and Subsidiary" shall include any
entity which is, in whole or in part, a predecessor of the
Company or any Subsidiary.
SECTION 3.19. Pooling; Tax Treatment. (a) The Company
intends that the Mergers be accounted for under the "pooling of
interests" method under the requirements of Opinion No. 16
(Business Combinations) of the Accounting Principles Board of the
American Institute of Certified Public Accountants (APB No. 16),
as amended by Statements of the Financial Accounting Standards
Board, and the related interpretations of the American Institute
of Certified Public Accountants, the Financial Accounting
Standards Board, and the rules and regulations of the SEC.
(b) Neither the Company nor any of its Affiliates has taken
or agreed to take any action that would prevent the Mergers from
qualifying (i) for "pooling of interests" accounting treatment as
described in (a) above or (ii) as a reorganization within the
meaning of Section 368 of the Code (a "368 Reorganization") or a
transfer governed by Section 351 of the Code.
SECTION 3.20. Opinion of Financial Advisor. The Directors of
the Company have received the opinion of Goldman, Sachs & Co.,
financial advisor to the Company, to the effect that, as of the
date of this Agreement, the Tires Merger Consideration is fair to
the shareholders of the Company from a financial point of view,
and such opinion has not been withdrawn.
<PAGE>
SECTION 3.21. Antitakeover Statutes. The Directors of the
Company have taken or will take all appropriate and necessary
actions such that Section 1704 of the Ohio Law will not have any
effect on the Mergers or the other transactions contemplated by
this Agreement. No other "fair price," "moratorium," "control
share acquisition," or other similar antitakeover statute or
regulation is applicable to the Tires Sub Merger or the other
transactions contemplated by this Agreement.
SECTION 3.22. Rights Agreement. (a) The Company has adopted
an amendment to the Rights Agreement dated August 22, 1996
between the Company and First Chicago Trust Company of New York
(as successor to Keybank National Association) (the "Rights
Agreement") with the effect that neither Buyer, Parent nor Buyer
Merger Sub shall be deemed to be either an Acquiring Person (as
defined in the Rights Agreement), the Distribution Date (as
defined in the Rights Agreement) shall not be deemed to occur and
that the Rights will not separate from the Company Stock, as a
result of entering into this Agreement or consummating the Tires
Sub Merger and/or the other transactions contemplated hereby.
(b) The Company has taken all necessary action with respect
to all of the outstanding Rights (as defined in the Rights
Agreement) so that, as of immediately prior to the Merger Date,
as a result of entering into this Agreement or consummating the
Tires Sub Merger and/or the other transactions contemplated by
this Agreement, (A) neither the Company nor Buyer will have any
obligations under the rights or the Rights Agreement as a result
of the Mergers and (B) the holders of the rights will have no
rights under the Rights or the Rights Agreement as a result of
the Mergers.
SECTION 3.23. Finders' Fees. Except for Goldman, Sachs &
Co., a copy of whose engagement agreement has been provided to
Buyer, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act
on behalf of the Company or any of its Subsidiaries who might be
entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
<PAGE>
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the disclosure schedule (each section
of which qualifies the correspondingly numbered representation
and warrant only, except where the information in any such
section is disclosed in such a way to make its relevance to any
other representation or warranty readily apparent, in which case,
such section shall be deemed to also qualify such other
representation and warranty) of Buyer attached hereto (the "Buyer
Disclosure Schedule"), Buyer represents and warrants to the
Company that:
SECTION 4.01. Corporate Existence and Power. (a) Buyer is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and has all
corporate powers and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business
as now conducted and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary,
except (i) where the failure to have such licenses,
authorizations, permits, consents or approvals and (ii) for those
jurisdictions where the failure to be so qualified or in good
standing is not, individually or in the aggregate, reasonably
likely to have a Material Adverse Effect on Buyer. Buyer has
heretofore delivered to the Company true and complete copies of
Buyer's certificate of incorporation and bylaws as currently in
effect.
(b) Each of Parent, Buyer Merger Sub and Tires Merger Sub is
a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and
has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry
on its business as now conducted. Since their respective dates of
incorporation, none of Parent, Buyer Merger Sub and Tires Merger
Sub has engaged in any activities other than in connection with
the transactions contemplated hereby.
<PAGE>
SECTION 4.02. Corporate Authorization. The execution,
delivery and performance by each of Buyer, Parent, Buyer Merger
Sub and Tires Merger Sub (each, a "Buyer Party") of this
Agreement and the consummation by each Buyer Party of the
transactions contemplated hereby are within the corporate powers
of such Buyer Party and, except for the required approval of the
stockholders of Buyer of the issuance of Parent Common Stock in
connection with this Agreement pursuant to the rules of the NYSE,
have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by each Buyer
Party which is a party thereto and constitutes a valid and
binding agreement of such Buyer Party enforceable against such
Buyer Party in accordance with its terms.
SECTION 4.03. Governmental Authorization. The execution,
delivery and performance by each Buyer Party of this Agreement
and the consummation by such Buyer Party of the transactions
contemplated by this Agreement require no action, by or in
respect of, or filing with, any governmental body, agency,
official or authority other than (a) the filing of this Agreement
in accordance with the Delaware Law; (b) compliance with any
applicable requirements of the HSR Act; (c) compliance with any
applicable requirements of the 1934 Act; (d) compliance with any
applicable requirements of the 1933 Act; (e) compliance with any
applicable foreign or state securities or Blue Sky laws; (f)
compliance with any applicable pre-merger notification or similar
statutes and rules of the European Community (or certain of its
member states), Canada and Mexico; (g) any applicable
requirements of the Department of Transportation; (h) filings and
notices not required to be made or given until after the Merger
Date and (i) immaterial actions or filings relating to ordinary
operational matters.
SECTION 4.04. Non-Contravention. The execution, delivery and
performance by each Buyer Party of this Agreement and the
consummation by such Buyer Party of the transactions contemplated
by this Agreement do not and will not (a) contravene or conflict
with the certificate of incorporation or bylaws of such Buyer
Party, (b) assuming compliance with the matters referred to in
Section 4.03, contravene or conflict
<PAGE>
with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or
applicable to Buyer or any Subsidiary of Buyer, (c) constitute a
default (or an event which with notice, the lapse of time or both
would become a default) under or give rise to a right of
termination, cancellation or acceleration of any right or
obligation of Buyer or any Subsidiary of Buyer or to a loss of
any benefit to which Buyer or any Subsidiary of Buyer is entitled
under any provision of any agreement, contract or other
instrument binding upon Buyer or any Subsidiary of Buyer or any
license, franchise, permit or other similar authorization held by
Buyer or any Subsidiary of Buyer, or (d) result in the creation
or imposition of any Lien on any asset of Buyer or any Subsidiary
of Buyer, other than, in the case of the events specified in
clauses (b), (c) and (d), any such event which, individually or
in the aggregate, has not had, and is not reasonably likely to
have, a Material Adverse Effect on Buyer.
SECTION 4.05. Capitalization. As of August 4, 1997, the
authorized capital stock of (a) Buyer consisted of 200,000,000
shares of Buyer Stock and 4,000,000 shares of series preferred
stock without par value ("Buyer Preferred Stock"), (b) Parent
consisted of 200,000,000 shares of Parent Common Stock, (c) Buyer
Merger Sub consisted of 1,000 shares of Buyer Merger Sub Stock,
and (d) Tires Merger Sub consisted of 1,000 shares of Tires
Merger Sub Common Stock. As of August 4, 1997, there were
115,011,018 shares of Buyer Stock outstanding and no shares of
Buyer Preferred Stock outstanding. As of August 4, 1997, an
aggregate of 7,580,010 shares of Buyer Stock were reserved for
issuance or issuable under employee benefit or other compensation
plans or programs or dividend reinvestment plans of Buyer. All
outstanding shares of capital stock of each Buyer Party have been
duly authorized and validly issued and are fully paid and
nonassessable. All shares of Parent Common Stock, when issued in
the Mergers, will be duly authorized and validly issued and will
be fully paid and non-assessable.
SECTION 4.06. SEC Filings. Buyer has furnished to the
Company (i) Buyer's annual reports on Form 10-K for its fiscal
years ended May 31, 1997 (the "Buyer 10-K"), 1996 and 1995, (ii)
its quarterly reports on Form 10-Q
<PAGE>
for its fiscal quarters ended after May 31, 1997, (iii) its proxy
or information statements relating to meetings of, or actions
taken without a meeting by, Buyer's shareholders held since May
31, 1997, and (iv) all of its other reports, statements,
schedules and registration statements filed with the SEC since
May 31, 1997 and through the date of this Agreement. Buyer has
filed all required reports, schedules, forms, statements and
other documents with the SEC since January 1, 1995 (collectively,
the "Buyer SEC Documents"). As of their respective dates, or if
amended, as of the date of the last such amendment, the Buyer SEC
Documents complied, and all documents required to be filed by
Buyer with the SEC after the date hereof and prior to the Merger
Date (the "Subsequent Buyer SEC Documents") will comply, in all
material respects with the requirements of the 1933 Act or the
1934 Act, as the case may be, and the applicable rules and
regulations promulgated thereunder, and none of the Buyer SEC
Documents contained, and the Subsequent Buyer SEC Documents will
not contain, any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 4.07. Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of Buyer included in its annual reports on Form 10-K
and the quarterly reports on Form 10-Q referred to in Section
4.06 fairly present, in all material respects, in conformity with
GAAP applied on a consistent basis (except as may be indicated in
the notes thereto), the consolidated financial position of Buyer
and its consolidated Subsidiaries as of the dates thereof and
their consolidated results of operations and cash flows for the
periods then ended (subject to normal yearended adjustments in
the case of any unaudited interim financial statements). For
purposes of this Agreement, "Buyer Balance Sheet" means the
consolidated balance sheet of Buyer as of May 31, 1997 set forth
in the Buyer 10-K and "Buyer Balance Sheet Date" means May 31,
1997.
<PAGE>
SECTION 4.08. Disclosure Documents. (a) Each document
required to be filed by Buyer and Parent with the SEC in
connection with the transactions contemplated by this Agreement
(the "Buyer Disclosure Documents"), including, without
limitation, the proxy or information statement and registration
statement of Buyer and Parent (the "Form S-4"), to be filed with
the SEC in connection with the issuance of Parent Common Stock
pursuant to this Agreement and any amendments or supplements
thereto, will, when filed, comply as to form in all material
respects with the applicable requirements of the 1933 Act and the
1934 Act.
(b) At the time the proxy statement which forms a part of
the Form S-4 (the "Buyer Proxy Statement") or any amendment or
supplement thereto is first mailed to shareholders of Buyer, at
the time such shareholders vote on the issuance of Parent Common
Stock in connection with this Agreement, the Buyer Proxy
Statement, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were
made, not misleading. At the time of the filing of any Buyer
Disclosure Document other than the Buyer Proxy Statement and at
the time of any distribution thereof, such Buyer Disclosure
Document will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under
which they were made, not misleading. The representations and
warranties contained in this Section 4.08 will not apply to
statements included in or omissions from the Buyer Disclosure
Documents based upon information furnished to Buyer or Parent in
writing by the Company specifically for use therein.
SECTION 4.09. Information Supplied. The information supplied
or to be supplied by Buyer or Parent for inclusion or
incorporation by reference in (i) the Company Proxy Statement or
any amendment or supplement thereto will not, at the time the
Company Proxy Statement is first mailed to shareholders of the
Company and at the time such shareholders vote on the approval
and adoption of this Agreement, contain any untrue statement of a
material fact or omit to state
<PAGE>
any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were
made, not misleading, and (ii) any Company Disclosure Document
(other than the Company Proxy Statement, and any amendments or
supplements to either) will not, at the time of effectiveness of
such Company Disclosure Document and at the time of any
distribution thereof, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements made therein, in light of the circumstances under
which they were made, not misleading.
SECTION 4.10. Absence of Certain Changes. Since the Buyer
Balance Sheet Date and except as set forth in the Buyer SEC
Documents, Buyer and its Subsidiaries have conducted their
business in the ordinary course consistent with past practice and
there has not been:
(a) any event, occurrence or development of a state of
circumstances or facts which has had or is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect
on Buyer other than any of the foregoing (i) relating to the
economy or securities markets in general, (ii) relating to
Buyer's industry in general or (iii) arising from the
announcement or pendency of this Agreement or the transactions
contemplated hereby;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of
capital stock of Buyer, or any repurchase, redemption or other
acquisition by Buyer or any Subsidiary of Buyer of any amount of
outstanding shares of capital stock or other securities of, or
other ownership interests in, Buyer or any of its Subsidiaries;
(c) any amendment of any material term of any outstanding
security of Buyer or any Subsidiary of Buyer; or
(d) any damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the business or assets of
Buyer or any Subsidiary of Buyer which, individually or in the
aggregate, has had or is
<PAGE>
reasonably likely to have a Material Adverse Effect on Buyer.
SECTION 4.11. No Undisclosed Material Liabilities. There are
no liabilities, commitments or obligations (whether pursuant to
contracts or otherwise) of Buyer or any Subsidiary of Buyer of
any kind whatsoever which, individually or in the aggregate, have
had or are reasonably likely to have a Material Adverse Effect on
Buyer, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition,
situation or set of circumstances which is reasonably likely to
result in such a liability, commitment or obligation, including,
without limitation, any fines, disciplinary actions or other
adverse actions that may be taken or reported concerning the
conduct of Buyer or any of its Subsidiaries, other than:
(a) liabilities, commitments or obligations disclosed or
provided for in the Buyer Balance Sheet (including the notes
thereto) or in the Buyer 10-K;
(b) liabilities, commitments or obligations incurred in the
ordinary course of business consistent with past practice since
the Buyer Balance Sheet Date; and
(c) liabilities, commitments or obligations under this
Agreement.
SECTION 4.12. Litigation; Investigations. Except as set
forth in the Buyer SEC Documents, there is no action, claim,
suit, investigation, proceeding or examination pending against or
affecting, or to the knowledge of Buyer, threatened or reasonably
likely to be brought against or affecting, Buyer or any
Subsidiary of Buyer or any of their respective properties before
any court or arbitrator or any governmental body, agency,
authority or official which, individually or in the aggregate,
has had or is reasonably likely to have a Material Adverse Effect
on Buyer. The foregoing representation and warranty does not
include or relate to any action, claim, suit, investigation,
proceeding or examination, pending or threatened, challenging or
seeking to prevent, enjoin,
<PAGE>
alter or delay the Mergers or any of the transactions
contemplated hereby.
SECTION 4.13. Compliance with Laws. Except for any matter
that is not reasonably likely to have a Material Adverse Effect
on Buyer, since January 1, 1996, neither Buyer nor any of its
Subsidiaries is in violation of, or has violated, any applicable
provisions of any laws, statutes, ordinances or regulations.
SECTION 4.14. Pooling; Tax Treatment. (a) Buyer intends that
the Mergers be accounted for under the "pooling of interests"
method under the requirements of Opinion No. 16 (Business
Combinations) of the Accounting Principles Board of the American
Institute of Certified Public Accountants (APB No. 16), as
amended by Statements of the Financial Accounting Standards
Board, and the related interpretations of the American Institute
of Certified Public Accountants, the Financial Accounting
Standards Board, and the rules and regulations of the SEC.
(b) Neither Buyer nor any of its Affiliates has taken or
agreed to take any action that would prevent the Mergers from
qualifying (i) for "pooling of interests" accounting treatment as
described in (a) above or (ii) as a reorganization within the
meaning of Section 368, or a transfer governed by Section 351, of
the Code.
SECTION 4.15. Finders' Fees. Except for Merrill Lynch & Co.,
Inc., a copy of whose engagement agreement has been provided to
the Company, there is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to
act on behalf of the Buyer or any of its Subsidiaries who might
be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
<PAGE>
ARTICLE 5
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 5.01. Conduct of the Company. From the date hereof
until the Merger Date, except as provided in the Company
Disclosure Schedule or as otherwise consented to by Buyer (which
consent shall not be unreasonably withheld or delayed), the
Company shall, and shall cause its Subsidiaries to, conduct their
business in all material respects in the ordinary course
consistent with past practice and use their commercially
reasonable efforts to preserve intact their business
organizations and relationships with third parties and to keep
available the services of their present officers and employees.
Without limiting the generality of the foregoing, except as
expressly permitted in this Agreement, from the date hereof until
the Merger Date:
(a) The Company will not adopt or propose any change in its
articles of incorporation or bylaws;
(b) The Company will not, and will not permit any Subsidiary
of the Company to, merge or consolidate with any other Person or,
other than as provided in the Company's capital expenditure
budget (included as Section 5.01(b) of the Company Disclosure
Schedule) in the ordinary course of business, acquire a material
amount of assets of any other Person;
(c) The Company will not, and will not permit any Subsidiary
of the Company to, sell, lease, license or otherwise dispose of
any material assets or property except (i) pursuant to existing
contracts or commitments and (ii) in the ordinary course
consistent with past practice;
(d) The Company will not, and will not permit any Subsidiary
of the Company to, declare, set aside or pay any dividend (other
than the payment of the Company's regular quarterly dividend on
Company Stock in an amount not exceeding $0.10 per share) or make
any other distribution with respect to any shares of the
Company's capital stock;
<PAGE>
(e) The Company will not, and will not permit any Subsidiary
of the Company to, create or assume any Lien on any material
asset other than in the ordinary course consistent with past
practices;
(f) The Company will not, and will not permit any Subsidiary
of the Company to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any Company
Securities, any Company Subsidiary Securities or any securities
convertible into or exchangeable for, or any rights, warrants or
options to acquire, any Company Securities or Company Subsidiary
Securities other than pursuant to the exercise of a Company Stock
Option;
(g) The Company (i) will not split, combine or reclassify,
or take any other similar action with respect to, any capital
stock of the Company, and (ii) the Company will not, and will not
permit any Subsidiary of the Company to, repurchase, redeem or
otherwise acquire an amount of shares of capital stock of, or
other ownership interests in, the Company or any Subsidiary of
the Company, which repurchase, redemption or other acquisition,
individually or in the aggregate, is material to the Company and
its Subsidiaries, taken as a whole;
(h) Except for borrowings or guarantees in the ordinary
course of business consistent with past practice, the Company
will not, and will not permit any Subsidiary of the Company to,
incur or assume any indebtedness from any third party for
borrowed money or guarantee any such indebtedness;
(i) Except for (i) loans, advances or capital contributions
to or investments in Subsidiaries of the Company, (ii) loans or
advances to employees in the ordinary course of business
consistent with past practice or (iii) investments in securities
consistent with past practices, the Company will not, and will
not permit any Subsidiary of the Company to, make any material
loans, advances or capital contributions to, or investments in,
any other Person;
(j) The Company will not, and will not permit any of its
subsidiaries to, (i) grant any severance or
<PAGE>
termination pay to, or enter into any employment, termination or
severance arrangement with, any director, officer or employee of
the Company or any Subsidiary of the Company, (ii) enter into any
employment, deferred compensation or other similar agreement (or
any amendment to any such existing agreement) with any director,
officer or employee of the Company or any Subsidiary, (iii)
increase benefits payable under any existing severance or
termination pay policies or employment agreements or (iv)
increase compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any
Subsidiary, other than in the ordinary course of business;
(k) The Company will not, and will not permit any of its
Subsidiaries to, authorize, recommend, propose or announce an
intention to adopt a plan of complete or partial liquidation or
dissolution of the Company or any Material Subsidiary of the
Company, or any plan of division or share exchange involving the
Company or any of its Material Subsidiaries;
(l) The Company will not, and will not permit any Subsidiary
of the Company to, change any material method of accounting or
any material accounting principle or practice used by the Company
or any Subsidiary of the Company, except for any such change
required by reason of a change in GAAP or Regulation SX;
(m) Neither the Company nor any Subsidiary shall, to the
extent it may affect or relate to the Company or any Subsidiary,
make or change any tax election, change any annual tax accounting
period, adopt or change any method of tax accounting, file any
amended Return, enter into any closing agreement, settle any Tax
claim or assessment, surrender any right to claim a Tax refund,
consent to any extension or waiver of the limitations period
applicable to any Tax claim or assessment or take or omit to take
any other action, if any such action or omission would have the
effect of, in the aggregate, materially increasing the Tax
liability, or in the aggregate, materially reducing any Tax asset
of the Company or any Subsidiary of the Company except to the
extent (i) consistent with past practice or in the ordinary
course of business,
<PAGE>
provided, however, that such action or omission will not have a
Material Adverse Effect on the Company or (ii) such increase or
reduction is adequately provided for, under GAAP, on the Company
Balance Sheet. Furthermore, this Section 5.01(m) shall not
preclude good faith efforts to comply with the Tax Matters
Agreement by and between the Company and Sub-10 entered into in
connection with the spin-off of Sub-10 on January 2, 1996.
(n) All Returns not required to be filed on or before the
date hereof (i) shall be filed when due in accordance with all
applicable laws and (ii) as of the time of filing, shall
correctly reflect the facts regarding the income, business,
assets, operations activities and status of the Company, its
Subsidiaries and any other information required to be shown
therein;
(o) Neither the Company nor any Subsidiary shall reserve any
amount for or make any payment of Taxes to any person or any
Taxing Authority, except for such Taxes as are due or payable or
have been properly estimated in accordance with applicable law as
applied in a manner consistent with past practice of the Company
or any such Subsidiary, as the case may be; and
(p) The Company will not, and will not permit any Subsidiary
of the Company to, agree to do any of the foregoing.
SECTION 5.02. Shareholder Meeting; Proxy Material. (a)
Subject to Section 5.03, the Company shall cause a meeting of its
shareholders (the "Company Shareholder Meeting") to be duly
called and held as soon as reasonably practicable for the purpose
of voting on the approval and adoption of this Agreement and, to
the extent submitted to the Company's shareholders for approval,
the transactions contemplated by this Agreement, and the
Directors of the Company shall recommend adoption of this
Agreement by the Company's shareholders; provided that such
meeting need not be called and held and, prior to the Company
Shareholder Meeting, such recommendation may be withdrawn,
modified or amended to the extent that, as a result of the
commencement or receipt of an Acquisition Proposal with respect
to the Company, the Directors of the Company
<PAGE>
determine in good faith that such Acquisition Proposal
constitutes a Superior Proposal.
(b) Subject to Section 5.03, in connection with the Company
Shareholder Meeting, the Company will (i) promptly prepare and
file with the SEC, will use commercially reasonable efforts to
have cleared by the SEC and will thereafter mail to its
shareholders as promptly as practicable the Company Proxy
Statement and all other proxy materials for such meeting, (ii)
use commercially reasonable efforts to obtain the necessary
approvals by its shareholders of this Agreement and the
transactions contemplated hereby, and (iii) otherwise comply with
all legal requirements applicable to such meeting.
SECTION 5.03. Other Offers. From the date hereof until the
termination of this Agreement, the Company will not, and will
cause its Subsidiaries and the directors, officers, employees,
financial advisors and other agents or representatives of the
Company or any of its Subsidiaries not to, directly or
indirectly, take any action to solicit, initiate or encourage any
Acquisition Proposal with respect to the Company or engage in
negotiations with, or disclose any non-public information
relating to the Company or any Subsidiary of the Company or
afford access to the properties, books or records of the Company
or any Subsidiary of the Company to, any Person that has informed
the Company that it is considering making, or has made, an
Acquisition Proposal with respect to the Company, provided
however, that the Company may, in response to an unsolicited bona
fide written proposal regarding an Acquisition Proposal by any
Person, disclose such non-public information to or engage in
negotiations with such Person, if the Board of Directors of the
Company determines in good faith that such Acquisition Proposal
is reasonably likely to be a Superior Proposal, and, provided
further, that prior to furnishing non-public information to, or
entering into discussions or negotiations with, such Person, the
Company receives from such Person an executed confidentiality
agreement with terms no less favorable to the Company than those
contained in the Letter Agreement dated as of March 5, 1997
between Buyer and the Company ("Confidentiality Agreement")
(provided that such confidentiality agreement need not include
the same standstill
<PAGE>
provisions as those in the Confidentiality Agreement, it being
understood that if there are no standstill provisions in such
confidentiality agreement or if such provisions are more
favorable to the other party than those in the Confidentiality
Agreement, the Confidentiality Agreement shall be deemed amended
to exclude the existing standstill provision or include such more
favorable provisions, as the case may be). The Company will
promptly (and in no event later than 24 hours after receipt of
the relevant Acquisition Proposal with respect to the Company),
notify (which notice shall be provided orally and in writing and
shall identify the Person making the relevant Acquisition
Proposal with respect to the Company and set forth the material
terms thereof) Buyer after receipt of any Acquisition Proposal or
any indication from any Person that such Person is considering
making an Acquisition Proposal with respect to the Company or any
request for nonpublic information relating to the Company or any
Subsidiary of the Company or for access to any properties, books
or records of the Company or any Subsidiary of the Company by any
Person that may be considering making, or has made, an
Acquisition Proposal with respect to the Company and will keep
Buyer fully informed of the status and details of any such
Acquisition Proposal with respect to the Company. The Company
shall give Buyer at least one business day's advance notice of
any information to be supplied to, and at least two days' advance
notice of any agreement to be entered into with, any Person
making such Acquisition Proposal with respect to the Company. The
Company shall, and shall cause its Subsidiaries and the
directors, officers, employees, financial advisors and other
agents or representatives of the Company or any of its
Subsidiaries to, cease immediately and cause to be terminated all
activities, discussions or negotiations, if any, with any Persons
conducted heretofore with respect to any Acquisition Proposal
with respect to the Company. For purposes of this Agreement,
"Acquisition Proposal" means any offer or proposal for, or any
indication of interest in, (i) a merger or other business
combination involving the Company or any Subsidiary of the
Company or (ii) the acquisition in any manner of an equity
interest in an amount equal to or greater than 20% of the class
of such equity security then outstanding, or a substantial
portion of the assets of, the Company or any Subsidiary
<PAGE>
of the Company, in each case other than the transactions
contemplated by this Agreement. For purposes of this Agreement,
"Superior Proposal" means an Acquisition Proposal with respect to
the Company which the Directors of the Company determine in good
faith (based on the advice of an investment banking firm of
national reputation taking into account all of the terms and
conditions of the Acquisition Proposal, including any conditions
to consummation) to be more favorable and provide greater value
to the Company's shareholders than the Tires Sub Merger.
ARTICLE 6
COVENANTS OF BUYER
Buyer agrees that:
SECTION 6.01. Conduct of Buyer. From the date hereof until
the Merger Date, Buyer shall, and shall cause its Subsidiaries
to, conduct their business in all material respects in the
ordinary course consistent with past practice and use their
commercially reasonable efforts to preserve intact their business
organizations and relationships with third parties and to keep
available the services of their present officers and employees.
Without limiting the generality of the foregoing, except as
expressly permitted in this Agreement, from the date hereof until
the Merger Date Buyer will not declare, set aside or pay any
dividend or make any other distribution with respect to any
shares of Buyer's capital stock.
SECTION 6.02. Shareholder Meeting; Proxy Material. (a) Buyer
shall cause a meeting of its shareholders (the "Buyer Shareholder
Meeting") to be duly called and held as soon as reasonably
practicable for the purpose of voting on the issuance of Parent
Common Stock in connection with this Agreement. The Board of
Directors of Buyer shall recommend approval of the issuance of
Parent Common Stock in connection with this Agreement by Buyer's
shareholders.
(b) In connection with the Buyer Shareholder Meeting, Buyer
(i) will promptly prepare and file with
<PAGE>
the SEC, will use its reasonable best efforts to have cleared by
the SEC and will thereafter mail to its shareholders as promptly
as practicable the Buyer Proxy Statement and all other proxy
materials for such meeting, (ii) will use its reasonable best
efforts to obtain the necessary approvals by its shareholders of
this Agreement and the transactions contemplated hereby and (iii)
will otherwise comply with all legal requirements applicable to
such meeting.
ARTICLE 7
COVENANTS OF BUYER, THE COMPANY AND PARENT
SECTION 7.01. Reasonable Best Efforts. (a) Subject to the
terms and conditions of this Agreement, each party will use its
reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate the Mergers and the other transactions contemplated by
this Agreement.
(b) Neither Buyer nor the Company shall take any action, or
omit to take any action, that would cause its representations and
warranties contained herein to be inaccurate such that the
conditions in Article 8 would not be satisfied.
SECTION 7.02. Cooperation. Without limiting the generality
of Section 7.01(a), Buyer and the Company shall together, or
pursuant to an allocation of responsibility to be agreed between
them, coordinate and cooperate (i) in connection with the
preparation of the Company Disclosure Documents and the Buyer
Disclosure Documents, (ii) in determining whether any action by
or in respect of, or filing with, any governmental body, agency,
official or authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to
any material contracts, in connection with the consummation of
the Mergers or the other transactions contemplated by this
Agreement and (iii) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing
information required in
<PAGE>
connection therewith or with the Company Disclosure Documents and
the Buyer Disclosure Documents, and timely seeking to obtain any
such actions, consents, approvals or waivers. Subject to the
terms and conditions of this Agreement, Parent, Buyer and the
Company will each use its reasonable best efforts to have the
Form S-4 declared effective by the SEC under the 1933 Act as
promptly as practicable after the Form S-4 is filed with the SEC.
SECTION 7.03. Public Announcements. Buyer and the Company
will consult with each other before issuing any press release or
making any public statement with respect to this Agreement and
the transactions contemplated by this Agreement and, except, as
may be required by applicable law or any listing or similar
agreement with any national securities exchange, will not issue
any such press release or make any such public statement prior to
such consultation.
SECTION 7.04. Access to Information. From the date hereof
until the Merger Date, the Company and Buyer (each, in such
capacity, a "Providing Party") will give (or cause to be given)
to the other party (the "Receiving Party"), its counsel,
financial advisors, auditors and other authorized representatives
full access, during regular business hours, to the offices,
properties, books and records of the Providing Party, will
furnish (or cause to be furnished) to the Receiving Party, its
counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other
information as such Receiving Party may reasonably request and
will instruct the employees, counsel and financial advisors of
the Providing Party and its Subsidiaries to cooperate with the
Receiving Party in its investigation of the business of the
Providing Party and its Subsidiaries; provided that no
investigation pursuant to this Section shall affect any
representation or warranty given by the Providing Party to the
Receiving Party hereunder. Unless otherwise required by
applicable law, each party hereto agrees that it shall, and it
shall cause its Subsidiaries and its and their respective
officers, directors, employees, auditors and agents to, hold in
confidence all non-public information so acquired and to use such
information solely for purposes of effecting the transactions
<PAGE>
contemplated by this Agreement. The information obtained pursuant
to this Section shall be subject to any confidentiality
agreements or other confidentiality obligations currently binding
upon the Providing Party or any of its Subsidiaries; provided
that the Providing Party shall use commercially reasonable
efforts to obtain any waivers under such agreements or
obligations to permit the Providing Party to comply with its
obligations hereunder.
SECTION 7.05. Further Assurances. At and after the Merger
Date, the directors and officers of each of the surviving
corporations in the Mergers will be authorized to execute and
deliver, in the name and on behalf of (x) the Company or Tires
Merger Sub, and (y) Buyer or Buyer Merger Sub, any deeds, bills
of sale, assignments or assurances and to take and do, in the
name and on behalf of (x) the Company or Tires Merger Sub, and
(y) Buyer or Buyer Merger Sub, any other actions and things to
vest, perfect or confirm of record or otherwise in such surviving
corporation any and all right, title and interest in, to and
under any of the rights, properties or assets of the Company or
Buyer, as applicable, acquired or to be acquired by such
surviving corporation as a result of, or in connection with, the
Mergers.
SECTION 7.06. Notices of Certain Events. the Company and
Buyer shall promptly notify the other parties hereto of:
(a) any notice or other communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental
or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge threatened against,
relating to or involving or otherwise affecting such party that,
if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 3.13 or
Section 4.12 only
<PAGE>
or that relate to the consummation of the transactions
contemplated by this Agreement.
SECTION 7.07. Tax-free Reorganization; Pooling. (a) Prior to
the Merger Date, each party shall use its reasonable best efforts
to cause each of the Mergers to qualify as a 368 Reorganization,
and will not take any action reasonably likely to cause either of
the Mergers not to so qualify. Buyer shall not take, or cause the
Company to take, any action after the Merger Date reasonably
likely to cause either of the Mergers not to qualify as a 368
Reorganization.
(b) Each party will use its reasonable best efforts to cause
the Mergers to qualify for pooling of interests accounting
treatment as described in Section 3.19 and Section 4.14 and will
not take any action (or suffer any omission) reasonably likely to
cause the Mergers not to so qualify.
SECTION 7.08. Affiliates. (a) At least 40 days prior to the
Merger Date, the Company shall deliver to Buyer a letter
identifying all known Persons who may be deemed affiliates of the
Company for the purposes of Rule 145 of the 1933 Act or for
purposes of applicable SEC accounting releases with respect to
pooling of interests accounting treatment. The Company shall use
its reasonable best efforts to obtain a written agreement from
each Person who may be so deemed as soon as practicable and, in
any event, at least 30 days prior to the Merger Date,
substantially in the form of Exhibit A-1 hereto.
(b) At least 40 days prior to the Merger Date, Buyer shall
deliver to the Company a letter identifying all known Persons who
may be deemed affiliates of Buyer for the purposes of Rule 145 of
the 1933 Act or for the purposes of applicable SEC accounting
releases with respect to pooling of interests accounting
treatment. Buyer shall use its reasonable best efforts to obtain
a written agreement from each Person who may be so deemed as soon
as practicable and, in any event, at least 30 days prior to the
Merger Date, substantially in the form of Exhibit A-2 hereto.
SECTION 7.09. Director and Officer Liability. (a) From and
after the Merger Date, Parent shall cause the
<PAGE>
Tires Surviving Corporation to indemnify, defend and hold
harmless any Person who is on the date hereof, or has been at any
time prior to the date hereof, or who becomes prior to the Merger
Date, an officer, director, or employee or agent (the
"Indemnified Party") of the Company or any of its Subsidiaries
against all losses, claims, damages, liabilities, costs and
expenses (including attorney's fees and expenses), judgments,
fines, losses, and amounts paid in settlement in connection with
any actual or threatened action, suit, claim, proceeding or
investigation (each a "Claim") to the extent that any such Claim
is based on, or arises out of, (i) the fact that such Person is
or was a director, officer, employee or agent of the Company or
any of its Subsidiaries at any time prior to the Merger Date or
is or was serving at the request of the Company or any of its
Subsidiaries as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise at any time prior to the Merger Date, or (ii) this
Agreement or any of the transactions contemplated hereby or
thereby in each case to the extent that any such Claim pertains
to any matter or fact arising, existing, or occurring prior to or
at the Merger Date, regardless of whether such Claim is asserted
or claimed prior to, at or after the Merger Date (the matters
described in clauses (i) and (ii) the "Pre-Merger Matters"), to
the fullest extent indemnified under the Company's articles of
incorporation, bylaws in effect as of the date hereof or
indemnification agreements in effect at the date hereof,
including provisions relating to advancement of expenses incurred
in the defense of any action or suit; provided that such
indemnification shall be subject to any limitation imposed from
time to time under applicable laws. Parent and the Tires
Surviving Corporation shall also honor the indemnification
agreements between the Company or any of its Subsidiaries, as the
case may be, and any officer or director of the Company or any
such Subsidiary, as the case may be, existing on the date of this
Agreement.
(b) Parent and the Tires Surviving Corporation agree that
all rights to indemnification and all limitations or exculpation
of liabilities existing in favor of the Indemnified Party as
provided in the Company's articles of incorporation and bylaws as
in effect as of the date hereof shall continue in full
<PAGE>
force and effect with respect to Pre-Merger Matters, without any
amendment thereto, for a period of six years from the Merger Date
to the extent such rights are consistent with Ohio Law; provided
that, in the event any Claim or Claims with respect to any such
PreMerger Matters are asserted or made within such six year
period, all rights to indemnification in respect of any such
Claim or Claims shall continue until disposition of any and all
such Claims; provided however, that any determination required to
be made with respect to whether an Indemnified Party's conduct
complies with the standards set forth under Ohio Law, the
Company's articles of incorporation or bylaws or such agreements,
as the case may be, shall be made by independent legal counsel
selected by the Indemnified Party and reasonably acceptable to
Parent, retained at Parent's expense; and provided further, that
nothing in this Section 7.09 shall impair any rights or
obligations of any present or former directors or officers of the
Company.
(c) Parent or the Tires Surviving Corporation shall maintain
the Company's officers' and directors' liability insurance policy
as of the Merger Date ("D&O Insurance") with respect to
Pre-Merger Matters for a period of not less than six years after
the Merger Date, provided, that Parent or the Tires Surviving
Corporation may substitute therefor policies of substantially
similar coverage and amounts containing terms no less
advantageous to such former directors or officers; provided
further that in satisfying its obligations under this Section,
Parent shall not be obligated to pay premiums in excess of 150%
of the premium for D&O Insurance paid by the Company per annum in
its last full fiscal year, which amount has previously been
disclosed to Buyer but provided further that Parent shall
nevertheless be obligated to provide such coverage as may be
obtained for such amount.
(d) The terms of Section 7.09(a) - 7.09(c) shall also apply,
mutatis mutandis, to Buyer, and Parent shall have obligations
with respect to Buyer corresponding to those of Parent with
respect to the Company set forth in Section 7.09.
SECTION 7.10. Registration Statement; Form S-8. Buyer shall
cause Parent to (i) promptly prepare and
<PAGE>
file with the SEC the Form S-4 with respect to the Parent Common
Stock (and a registration statement on Form S-8 as necessary to
register shares of Parent Common Stock underlying the Adjusted
Options) issuable in connection with the Mergers and shall cause
Parent to use its reasonable best efforts to cause the Form S- 4
(and such registration statement on Form S-8) to be declared
effective by the SEC as soon as practicable and (ii) take any
action required to be taken under applicable Blue Sky law in
connection with such issuance of Parent Common Stock or pursuant
to any Adjusted Option.
SECTION 7.11. Governmental Authorization. Buyer shall cause
Parent to take all actions by or in respect of, or filing with,
any governmental body, agency, official or authority required for
the execution, delivery and performance by Parent of this
Agreement and the consummation by Parent of the transactions
contemplated by this Agreement, including (a) compliance with any
applicable requirements of the HSR Act; (b) compliance with any
applicable requirements of the 1934 Act; (c) compliance with any
applicable requirements of the 1933 Act; (d) compliance with any
applicable foreign or state securities or Blue Sky laws; (e)
compliance with any applicable requirements of (i) the New Jersey
Industrial Site Recovery Act, as amended, and any rules or
regulations promulgated thereunder and (ii) the Connecticut
Hazardous Waste Establishment Transfer Act, as amended, and any
rules or regulations promulgated thereunder; (f) any applicable
requirements of the Department of Transportation and (g)
compliance with any applicable requirements under pre-merger
notification or similar statutes and rules of the European
Community, its member states, Canada and Mexico.
SECTION 7.12. Listing of Stock. Buyer shall make application
to the NYSE or such other stock exchanges as shall be agreed for
the listing of the Parent Common Stock to be used in connection
with the Mergers (and the shares of Parent Common Stock
underlying any Adjusted Options) and to use its reasonable best
efforts to cause such Parent Common Stock to be listed on the
NYSE, subject to official notice of issuance.
<PAGE>
SECTION 7.13. Certain Corporate Matters with Respect to
Parent. (a) Buyer shall cause Parent to take all necessary
corporate action for the establishment of the Parent stock option
plan contemplated by Section 1.07 hereof and agrees to vote the
shares of capital stock of Parent owned by it in favor of the
adoption of such plan as required under the laws of the State of
Delaware.
(b) From the date hereof until the Merger Date, Buyer shall
cause Parent (x) not to take any action inconsistent with the
provisions of this Agreement and (y) not to conduct business or
activity other than in connection with this Agreement.
SECTION 7.14. Employment. Buyer and Parent currently intend
to offer employment after the Merger Date to each employee at the
Company's Akron, Ohio headquarters who is willing to relocate his
or her place of employment to Memphis, Tennessee or any other
location designated by Buyer and Parent. As of the Merger Date,
Parent shall assume the obligation of the Company to perform any
and all Management Retention Agreements identified in the Company
Disclosure Schedules.
SECTION 7.15. Certain Additional Benefits Matters. Buyer,
the Company and Parent hereby agree (a) that the Company (or, as
appropriate, Buyer and Parent) shall take all such actions as are
necessary to carry out the matters described in Section 7.15 of
the Company Disclosure Schedule and (b) that such actions shall
not constitute a violation of any other provision of this
Agreement, including, without limitation, Section 5.01.
ARTICLE 8
CONDITIONS TO THE MERGERS
SECTION 8.01. Conditions to the Obligations of Each Party.
The obligations of the Company to consummate the Tires Sub Merger
and of Buyer to consummate the Buyer Sub Merger are subject to
the satisfaction of the following conditions:
<PAGE>
(a) this Agreement and the transactions contemplated by this
Agreement shall have been approved and adopted by the
shareholders of the Company in accordance with the Ohio Law;
(b) the issuance of Parent Common Stock in connection with
this Agreement shall have been approved by the shareholders of
Buyer in accordance with the rules and regulations of the NYSE;
(c) any applicable waiting period under the HSR Act relating
to the Mergers shall have expired;
(d) no provision of any applicable law or regulation and no
judgment, injunction, order or decree of a court of competent
jurisdiction shall prohibit the consummation of either of the
Mergers;
(e) the Form S-4 shall have been declared effective under
the 1933 Act and no stop order suspending the effectiveness of
the Form S-4 shall be in effect and no proceedings for such
purpose shall be pending before or threatened by the SEC;
(f) the shares of Parent Common Stock to be issued in the
Mergers (as well as the shares of Parent Common Stock to be
issued upon exercise of the Adjusted Options) shall have been
approved for listing on the NYSE, subject to official notice of
issuance;
(g) all actions by or in respect of or filings with any
governmental body, agency, official or authority required to
permit the consummation of the Tires Sub Merger and the Buyer Sub
Merger shall have been made or obtained other than any such
actions or filings, the failure of which to make or obtain shall
not be reasonably likely to have a Material Adverse Effect on
Buyer or the Company; and
(h) Buyer and the Company shall have received a letter of
Arthur Andersen LLP and Ernst & Young LLP, respectively, and
otherwise in form and substance reasonably satisfactory to Buyer
and the Company, that confirms Buyer's management's assessment
(in the case of Arthur Andersen LLP) and the Company's
management's assessment (in the case of Ernst & Young LLP) that
the
<PAGE>
Mergers will qualify for pooling of interests accounting
treatment under GAAP.
SECTION 8.02. Conditions to the Obligations of Buyer. The
obligations of Buyer to consummate the Buyer Sub Merger are
subject to the satisfaction of the following further conditions:
(a) (i) The Company shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Merger Date, (ii) the
representations and warranties of the Company contained in this
Agreement shall be true and correct at and as of the Merger Date,
as if made at and as of the Merger Date (except to the extent
expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to
any limitation as to "materiality" or "Material Adverse Effect"
set forth therein) is not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on the Company and
(iii) Buyer shall have received a certificate signed by an
executive officer of the Company to the foregoing effect.
(b) Holders of not more than 5% of the outstanding shares of
Company Stock shall have perfected dissenters' rights in respect
of such Company Stock pursuant to Section 1701.85 of the Ohio
Law.
(c) Buyer shall have received an opinion of its tax counsel,
Davis Polk & Wardwell, in form and substance reasonably
satisfactory to Buyer, and dated as of the Merger Date, to the
effect that the Mergers will constitute transactions described in
Section 351 and/or Section 368(a) of the Code and that neither
Buyer nor its shareholders shall recognize gain or loss for U.S.
Federal income tax purposes as a result of the Mergers (other
than with respect to cash paid in lieu of fractional shares). In
rendering such opinion, Davis Polk & Wardwell may require
delivery of and rely upon the customary representations letters
delivered by Parent, Buyer and its Subsidiaries in form and
substance reasonably satisfactory to Davis Polk & Wardwell.
<PAGE>
SECTION 8.03. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Tires Sub Merger
are subject to the satisfaction of the following further
conditions:
(a) (i) Buyer shall have performed in all material respects
all of its obligations hereunder required to be performed by it
at or prior to the Merger Date, (ii) the representations and
warranties of Buyer contained in this Agreement shall be true and
correct at and as of the Merger Date, as if made at and as of the
Merger Date (except to the extent expressly made as of an earlier
date, in which case as of such date), except where the failure of
such representations and warranties to be so true and correct
(without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) is not reasonably
like to have, individually or in the aggregate, a Material
Adverse Effect on Buyer and (iii) the Company shall have received
a certificate signed by an executive officer of Buyer to the
foregoing effect.
(b) The Company shall have received an opinion of its tax
counsel, Cravath, Swaine & Moore, in form and substance
reasonably satisfactory to the Company, and dated as of the
Merger Date, to the effect that the Mergers will constitute
transactions described in Section 351 and/or Section 368(a) of
the Code and that neither the Company nor its shareholders shall
recognize gain or loss for U.S. Federal income tax purposes as a
result of the Mergers (other than with respect to cash paid in
lieu of fractional shares). In rendering such opinion, Cravath,
Swaine & Moore may require delivery of and rely upon the
customary representations letters delivered by the Company and
its Subsidiaries in form and substance reasonably satisfactory to
Cravath, Swaine & Moore.
ARTICLE 9
TERMINATION
SECTION 9.01. Termination. This Agreement may be terminated
and the Mergers may be abandoned at any time prior to the Merger
Date (notwithstanding any approval
<PAGE>
of this Agreement by the shareholders of the Company or
Buyer):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if the Mergers have not
been consummated by June 30, 1998; provided, however, that the
right to terminate this Agreement pursuant to this Section
9.01(b) shall not be available to any party whose willful failure
to perform any of its obligations under this Agreement results in
the failure of the Mergers to be consummated by such time;
(c) by either the Company or Buyer, if there shall be any
law or regulation that makes consummation of either of the
Mergers illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Buyer or the Company from
consummating their respective Mergers is entered and such
judgment, injunction, order or decree shall have become final and
non-appealable (provided that any judgment, injunction, order or
decree other than a temporary restraining order shall be deemed
to have become final and non-appealable thirty days following the
entry thereof);
(d) (i) by the Company, if the approval of the shareholders
of Buyer contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at
a duly held meeting of shareholders or any adjournment thereof or
(ii) by Buyer, if the Directors of the Company determine not to
call or hold the Company Shareholders' Meeting as provided in
Section 5.02 or if the approvals of the shareholders of the
Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at
a duly held meeting of shareholders or any adjournment thereof;
(e) by Buyer, if prior to the Company Shareholder Meeting,
the Directors of the Company shall have withdrawn, modified or
changed in a manner adverse to Buyer their approval or
recommendation of this Agreement;
(f) by Buyer, upon a breach of any representation, warranty,
covenant or agreement of the Company, or if
<PAGE>
any representation or warranty of the Company shall become
untrue, the effect of which is a Material Adverse Effect on the
Company, in either case such that the conditions set forth in
Section 8.02(a) would be incapable of being satisfied by June 30,
1998 (or as otherwise extended);
(g) by the Company, upon a breach of any representation,
warranty, covenant or agreement of Buyer, or if any
representation or warranty of Buyer shall become untrue, the
effect of which is a Material Adverse Effect on Buyer, in either
case such that the conditions set forth in Section 8.03(a) would
be incapable of being satisfied by June 30, 1998 (or as otherwise
extended);
(h) by the Company, upon payment to Buyer of the amounts
referred to in Section 10.04(b), if prior to the Company
Shareholder Meeting, the Directors of the Company shall have
withdrawn or modified in a manner adverse to Buyer their approval
or recommendation of this Agreement or the Tires Sub Merger in
order to permit the Company to execute a definitive agreement in
connection with a Superior Proposal.
The party desiring to terminate this Agreement pursuant to
this Section 9.01 shall give written notice of such termination
to the other party in accordance with Section 10.01.
SECTION 9.02. Effect of Termination. If this Agreement is
terminated pursuant to Section 9.01, this Agreement shall become
void and of no effect with no liability on the part of any party
hereto, except that (a) the agreements contained in the last
sentence of Section 7.04, this Section 9.02 and in Article 10
shall survive the termination hereof and (b) no such termination
shall relieve any party of any liability or damages resulting
from any wilful breach by that party of this Agreement.
<PAGE>
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. Notices. Except as provided in Section 5.03,
all notices, requests and other communications to any party
hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to any Buyer Party, to:
Federal Express Corporation
1980 Nonconnah Boulevard
Memphis, TN 38132
Fax: (901) 395-5034
Attention: Kenneth R. Masterson
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
Attention: Dennis S. Hersch
if to the Company, to:
Caliber System, Inc.
3925 Embassy Parkway
Akron, OH 44333
Fax: (330) 665-8937
Attention: John E. Lynch, Jr.
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Fax: (212) 474-3700
Attention: Robert A. Kindler
and
<PAGE>
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Fax: (212) 755-7306
Attention: Robert A. Profusek
or to such other address or telecopy number as such party may
hereafter specify for the purpose by notice to the other parties
hereto. Each such notice, request or other communication shall be
effective (a) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section and
the appropriate telecopy confirmation is received (b) if by
overnight delivery service, which shall be Buyer, with proof of
delivery, the next business day or (c) if given by any other
means, when delivered at the address specified in this Section.
SECTION 10.02. Entire Agreement; Non-Survival of
Representations and Warranties. (a) This Agreement and the
Confidentiality Agreement constitute the entire agreement among
the parties with respect to the subject matter hereof and thereof
and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with
respect to such subject matter. None of this Agreement or any
other agreement contemplated hereby or thereby (or any provision
hereof or thereof) is intended to confer on any Person other than
the parties hereto or thereto any rights or remedies (except that
Sections 7.09 and 7.15 are intended to confer rights and remedies
on the Persons specified therein).
(b) The representations and warranties contained herein
shall not survive the Merger Date.
SECTION 10.03. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Merger Date
if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Company, Buyer and
Parent or, in the case of a waiver, by the party against whom the
waiver is to be effective; provided that after the adoption of
this Agreement by the shareholders of (i) the Company, no such
amendment or waiver shall, without the further approval of such
shareholders, alter or change (A) the amount or kind of
consideration to be received in exchange for any shares of
capital stock of the Company, or (B) any of the terms or
conditions of
<PAGE>
this Agreement if such alteration or change would adversely
affect the holders of any shares of capital stock of the Company
and (ii) Buyer, no such amendment or waiver shall, without the
further approval of such shareholders, alter or change (A) the
amount or kind of consideration to be received in exchange for
any shares of capital stock of Buyer or (B) any of the terms or
conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of
Buyer.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 10.04. Expenses. (a) Except as otherwise provided in
this Section, all costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or
expense.
(b) The Company agrees to pay Buyer in immediately available
funds by wire transfer an amount equal to
(i) $50,000,000 promptly, but in no event later than
two business days, after the termination of this Agreement
as a result of the occurrence of any of the events in (A)
Section 9.01(d) or (B) Section 9.01(e); provided, however,
that the Company shall not be obligated to pay such amount
if immediately prior to the time such amount would otherwise
be payable, the condition set forth in Section 8.03(a) would
not have been satisfied; or
(ii) $100,000,000, promptly, but in no event later than
two business days, after the termination of this Agreement
as a result of the occurrence of any of the events set forth
in Section 9.01(h).
(c) In the event of a termination of this Agreement pursuant
to Section 9.01(d) or Section
<PAGE>
9.01(e) when an Acquisition Proposal is pending, the Company
agrees to pay to Buyer in immediately available funds by wire
transfer an amount (in addition to the amounts specified in
Section 10.04(b)(i)) equal to $50,000,000 if, within 12 months of
such termination, the Company shall enter into an agreement
providing for, or there shall be consummated, a transaction which
would constitute an Acquisition Proposal. Such additional amount
shall be paid within two business days of the date such agreement
is entered into or such transaction is consummated, as the case
may be.
(d) Buyer agrees to pay to the Company in immediately
available funds by wire transfer an amount equal to $50,000,000
promptly, but in no event later than two business days, after the
termination of this Agreement as a result of the occurrence of
any of the events set forth in Section 9.01(d); provided,
however, that Buyer shall not be obligated to pay such amount if
immediately prior to the time such amount would otherwise be
payable, the condition set forth in Section 8.02(a) would not
have been satisfied.
SECTION 10.05. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns;
provided that no party may assign, delegate or otherwise transfer
any of its rights or obligations under this Agreement without the
consent of the other parties hereto; provided further that Buyer
may assign its rights, but not its obligations, under this
Agreement to a wholly-owned subsidiary of Buyer.
SECTION 10.06. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the State
of Delaware (without regard to principles of conflict of laws).
SECTION 10.07. Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the
transactions contemplated by this Agreement may be brought
against any of the parties in the United States District Court
for the Southern District of New York or any state court sitting
in the City of New York, Borough of Manhattan,
<PAGE>
and each of the parties hereto hereby consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate
courts) in any such suit, action or proceeding and waives any
objection to venue laid therein. Process in any such suit, action
or proceeding may be served on any party anywhere in the world,
whether within or without the State of New York. Without limiting
the generality of the foregoing, each party hereto agrees that
service of process upon such party at the address referred to in
Section 10.01, together with written notice of such service to
such party, shall be deemed effective service of process upon
such party.
SECTION 10.08. Counterparts; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
FEDERAL EXPRESS CORPORATION
By: /s/ Kenneth R. Masterson
Name: Kenneth R. Masterson
Title: Executive Vice
President, General
Counsel and Secretary
FAST HOLDING INC.
By: /s/ Scott E. Hansen
Name: Scott E. Hansen
Title: Vice President
FAST MERGER SUB INC.
By: /s/ Scott E. Hansen
Name: Scott E. Hansen
Title: Vice President
TIRES MERGER SUB INC.
By: /s/ Scott E. Hansen
Name: Scott E. Hansen
Title: Vice President
CALIBER SYSTEM, INC.
By: /s/ Daniel J. Sullivan
Name: Daniel J. Sullivan
Title: Chairman, President
and Chief Executive
Officer
