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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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MARK VII, INC.
(Name of Subject Company)
MARK VII, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.05 PER SHARE
(Title of Class of Securities)
570414102
(CUSIP Number of Class of Securities)
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JAMES T. GRAVES
SECRETARY AND GENERAL COUNSEL
MARK VII, INC.
P.O. BOX 939
ST. JOSEPH, MISSOURI 64502-0939
(816) 387-4291
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of person(s) filing statement)
WITH COPIES TO:
ROBERT M. SMITH, ESQ.
DENISE A. CERASANI, ESQ.
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 259-8000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Mark VII, Inc., a Delaware corporation
(the "Company"). The address of the principal executive offices of the Company
is 965 Ridge Lake Boulevard, Suite 100, Memphis, Tennessee 38120. The title of
the class of equity securities to which this Solicitation/Recommendation
Statement on Schedule 14D-9 (this "Schedule 14D-9") relates is the common stock,
par value $0.05 per share (the "Common Stock"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer by MSAS Acquisition Corporation,
a Delaware corporation ("Purchaser") and a newly formed wholly owned subsidiary
of MSAS Global Logistics Inc., a New York corporation ("Parent"), which is an
indirect wholly owned subsidiary of Ocean Group plc, a public limited company
organized under the laws of England and Wales ("Ocean Group"), to purchase all
of the issued and outstanding shares of Common Stock of the Company (the
"Shares") at a purchase price of $23.00 per Share (such purchase price, as it
may be increased pursuant to the terms of the Merger Agreement (as defined
below) is hereinafter referred to as the "Offer Price"), net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated July 29, 1999 (the "Offer to Purchase"),
and the related Letter of Transmittal (which, together with the Offer to
Purchase and any amendments or supplements thereto, constitute the "Offer"). The
Offer is disclosed in a Tender Offer Statement on Schedule 14D-1, dated July 29,
1999 (the "Schedule 14D-1"), as filed by Ocean Group, Parent and Purchaser with
the Securities and Exchange Commission (the "SEC"). The Schedule 14D-1 states
that the address of the principal executive offices of Ocean Group and Purchaser
is Ocean House, The Ring, Bracknell, Berkshire RG12 1AW, United Kingdom. The
Schedule 14D-1 states that the address of the principal executive offices of
Parent is 4120 Point Eden Way, Suite 200, Hayward, California 94545.
The Offer is being made pursuant to the terms of an Agreement and Plan of
Merger, dated as of July 27, 1999 (the "Merger Agreement"), by and among the
Company, Parent and Purchaser. Pursuant to the Merger Agreement, following the
consummation of the Offer, upon the satisfaction or waiver of certain
conditions, Purchaser will be merged (the "Merger") with and into the Company,
with the Company surviving the Merger (the "Surviving Corporation") as a wholly
owned subsidiary of Parent. In the Merger, each Share outstanding immediately
prior to the effective time (the "Effective Time") of the Merger (other than
Shares held in the Company's treasury or Shares owned by Parent or Purchaser or
any subsidiary of the Company or Parent or by stockholders, if any, who are
entitled to and who properly exercise appraisal rights under the General
Corporation Law of the State of Delaware (the "DGCL") with respect to their
Shares) will, by virtue of the Merger and without any action by the holder
thereof, be converted into the right to receive the Offer Price, net to the
record holder thereof, in cash, without interest thereon (the "Merger
Consideration"), upon surrender of the certificate formerly representing such
Shares.
The Merger Agreement is more fully described below in Item 3. Copies of the
Merger Agreement and the press release issued by the Company on July 27, 1999,
are filed as exhibits to the Company's Current Report on Form 8-K filed on July
28, 1999 (the "Form 8-K"), are identified as exhibits hereto and are
incorporated herein by reference in their entirety.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person filing
this Schedule 14D-9, are set forth in Item 1 above.
(b) Except as set forth below, to the knowledge of the Company, as of the
date hereof, there are no material contracts, agreements, arrangements or
understandings or any actual or potential
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conflict of interest between the Company or its affiliates and: (i) the
Company, its executive officers, directors or affiliates; or (ii) Parent,
its executive officers, directors or affiliates.
CONTRACTS, AGREEMENTS, ARRANGEMENTS OR UNDERSTANDINGS BETWEEN THE COMPANY AND
ITS EXECUTIVE OFFICERS, DIRECTORS AND AFFILIATES
Certain contracts, agreements, arrangements or understandings between the
Company and its affiliates and certain of its executive officers, directors or
affiliates are described in the Information Statement of the Company attached to
this Schedule 14D-9 as Annex A (the "Information Statement"). The Information
Statement is being furnished to the Company's stockholders pursuant to Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and Rule 14f-1 promulgated thereunder in connection with Parent's right (upon
the acquisition by Purchaser of Shares pursuant to the Offer) to designate
persons to be appointed to the board of directors of the Company (the "Board")
without a meeting of the stockholders of the Company. The Information Statement
is incorporated herein by reference.
Stockholders should be aware that certain members of the Company's
management and Board have interests in the Merger in addition to the interests
of the stockholders of the Company in general, as described further below and in
the Information Statement.
The Company has employment agreements with certain of its officers as
described in the Information Statement. In addition to the employment agreements
described in the Information Statement, the Company has also entered into an
Employment and Noncompete Agreement with Paul Stone, its Chief Financial
Officer, dated May 19, 1999. This agreement provides for, among other things, a
three year term of employment, compensation, nondisclosure of certain
confidential information for three years after the date of the agreement, a
covenant against competition for three years after the date of the agreement,
and payments upon termination of employment. A copy of Mr. Stone's Employment
and Noncompete Agreement is filed as an exhibit hereto and incorporated herein
by reference.
On July 6, 1999, the Board appointed a special committee (the "Special
Committee") of directors, members of which are Thomas J. Fitzgerald (Chairman)
and James T. Graves, to assist the Board in its review of Ocean Group's
indication of interest in acquiring the Company and in negotiations that might
occur between the Company and Ocean Group. In connection with his service as
Chairman of the Special Committee, Mr. Fitzgerald will be entitled to receive a
fee of $200,000, which fee is payable whether or not a transaction with Ocean
Group or any other entity is consummated.
CONTRACTS, AGREEMENTS, ARRANGEMENTS OR UNDERSTANDINGS BETWEEN THE COMPANY AND
PARENT, PURCHASER OR THE EXECUTIVE OFFICERS, DIRECTORS AND AFFILIATES OF
PARENT AND PURCHASER
In connection with the transactions contemplated by the Offer and the
Merger, (i) the Company entered into the Merger Agreement, (ii) certain
stockholders of the Company entered into a Tender and Voting Agreement and
Irrevocable Proxy, (iii) certain officers of the Company entered into a Stock
Purchase and Stockholder Agreement, and (iv) the Company entered into a
Confidentiality Agreement.
THE MERGER AGREEMENT
The following is only a summary of certain provisions of the Merger
Agreement. This summary does not purport to be complete and is qualified in its
entirety by reference to the full text of the Merger Agreement. A copy of the
Merger Agreement is filed as an exhibit to the Schedule 14D-1, identified as an
exhibit hereto and incorporated herein by reference. Company stockholders should
read the Merger Agreement in its entirety. Capitalized terms not otherwise
defined below shall have the meaning set forth in the Merger Agreement.
THE OFFER. The Merger Agreement provides for the making of the Offer.
Pursuant to the Offer, each tendering stockholder will receive the Offer Price
for each Share tendered in the Offer. Purchaser's
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obligation to accept for payment or pay for Shares is subject to the
satisfaction of the conditions that are described below under "--CERTAIN
CONDITIONS OF THE OFFER," including the Minimum Condition (as defined herein).
Pursuant to the Merger Agreement, Purchaser expressly reserves the right to
waive any of the conditions to the Offer (except for the Minimum Condition or as
otherwise provided in the Merger Agreement), and to make any change in the terms
or conditions of the Offer; provided that, without the written consent of the
Company, Purchaser may not (i) decrease the Offer Price, (ii) change the form of
consideration payable in the Offer, (iii) decrease the number of Shares sought
pursuant to the Offer, (iv) add additional conditions to the Offer, (v) amend
the conditions to the Offer set forth in Annex A to the Merger Agreement to
broaden their scope, (vi) extend the Offer except as permitted by the terms of
the Merger Agreement, (vii) amend the Minimum Condition, or (viii) make other
changes to the Offer that are adverse to the holders of Company Common Stock.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Board, (i) extend the Offer for any period required by any rule, regulation,
interpretation or position of the SEC applicable to the Offer and (ii) extend
the Offer on one occasion for an aggregate period of not more than 20 business
days beyond the latest expiration date that would otherwise be permitted under
clause (i) of this sentence if on such expiration date the Minimum Condition has
been satisfied and there shall not have been tendered at least 90% of the
outstanding Shares. In addition, if by the time of any scheduled expiration date
any one or more of the conditions to the Offer set forth on Annex A to the
Merger Agreement are not satisfied, then provided that such conditions are
reasonably capable of being satisfied on or prior to October 7, 1999, Purchaser
will extend the Offer from time to time unless any such condition is no longer
reasonably capable of being satisfied. In no event, however, will Purchaser be
required to extend the Offer beyond October 7, 1999.
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the
Offer or the Merger Agreement, and subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination of
the Offer, Purchaser will not be required to accept for payment or pay for any
Shares, may delay the acceptance for payment of any Shares pursuant to Section
1.1(b) of the Merger Agreement, may extend the Offer one or more times, and may
terminate the Offer at any time after March 31, 2000 if (a) there has not been
tendered and not properly withdrawn a number of Shares which, together with any
Shares owned by Parent and Purchaser, constitutes at least a majority of the
outstanding shares on a fully-diluted basis (including for purposes of such
calculation all Shares issuable upon exercise of all vested Company Stock
Options and unvested Company Stock Options that vest prior to March 31, 2000,
but excluding any Shares held by the Company or any of its subsidiaries) (the
"Minimum Condition"), (b) any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") has not
expired or terminated, (c) approval of all necessary government officials and
agencies shall not have been obtained on terms and conditions reasonably
satisfactory to Parent, or (d) at any time after July 27, 1999, and before
acceptance for payment of any Shares, any of the following events has occurred
and is continuing:
(a) (1) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or deemed applicable to the Offer or the Merger by any
domestic or foreign court or other government officials and agencies which
directly or indirectly prohibits or makes illegal, the acceptance of payment
for or purchase of Shares or the consummation of the Offer or the Merger or
the other transactions contemplated by the Merger Agreement, renders
Purchaser unable to accept for payment, pay for or purchase some or all of
the Shares, imposes material limitations on the ability of Parent
effectively to exercise full rights of ownership of the Shares, including
the right to vote the Shares purchased by it on all matters properly
presented to the Company's stockholders, or otherwise has a Material Adverse
Effect (as defined in the Merger Agreement) on the Company, or (2) in
connection with the compliance by Parent and Purchaser with any applicable
law or obtaining any requisite consent, Parent will be required to sell or
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divest any assets or business or prohibited from owning any material portion
of the Company's business or assets;
(b) (i) the representations and warranties of the Company contained in
the Merger Agreement as of July 27, 1999, and as of the consummation of the
Offer with the same effect as if made at and as of the consummation of the
Offer (except as to any such representation or warranty which speaks as of a
specific date) are not true and correct in any respect that is reasonably
likely to have a Material Adverse Effect (or if such representations and
warranties are qualified by reference to materiality or a Material Adverse
Effect, are not true and correct), (ii) the Company shall have failed to
perform in all material respects its covenants or agreements contained in
the Merger Agreement which would have a Material Adverse Effect on the
Company or materially adversely affect (or materially delay) the ability of
Purchaser to consummate the Offer or of Parent, Purchaser or the Company to
consummate the Merger, and the Company has not cured such breach within five
business days after notice by Parent or Purchaser of such breach, or (iii)
there has occurred since January 2, 1999, any events or changes which
constitute a Material Adverse Effect on the Company;
(c) it shall have been publicly disclosed or Parent shall have otherwise
learned that (i) any person or "group" (as defined in Section 13(d)(3) of
the Exchange Act) shall have acquired or entered into a definitive agreement
or agreement in principle to acquire beneficial ownership of more than 35%
of the Shares or any other class of capital stock of the Company, through
the acquisition of stock, the formation of a group or otherwise, or has been
granted any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 35% of the Shares, and (ii) such person or
group has not tendered such Shares pursuant to the Offer;
(d) the Board has withdrawn, modified or changed in a manner adverse to
Parent (including by amendment of the Schedule 14D-9) its recommendation of
the Offer, the Merger Agreement, or the Merger, or recommended another
proposal or offer, or the Board has resolved to do any of the foregoing;
(e) the Merger Agreement has been terminated in accordance with its
terms; or
(f) there has occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange or the
Nasdaq National Market, for a period in excess of 24 hours, (ii) the
commencement of a war, armed hostilities or other national or international
calamity directly or indirectly involving the United States that constitutes
a Material Adverse Effect on the Company or materially adversely affects or
delays the consummation of the Offer, (iii) the average of the closing
prices of the Standard & Poor's 500 Index for any 20 consecutive trading
days shall be 25% or more below the closing price of such index on any
trading day on or after the date hereof that precedes the commencement of
such 20-trading day period, or (iv) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
which in the good faith judgment of Parent, in any such case and regardless of
the circumstances giving rise to such condition, makes it inadvisable to proceed
with the Offer or the acceptance for payment of tendered Shares.
The foregoing conditions, other than the Minimum Condition, are for the
benefit of Parent and Purchaser and may be waived by Parent and Purchaser, in
whole or in part at any time and from time to time, in the sole discretion of
Parent and Purchaser. The failure by Parent or Purchaser at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
BOARD REPRESENTATION. Promptly upon the purchase by Purchaser of the Shares
pursuant to the Offer and if the Minimum Condition has been met, Parent will be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board as is equal to the product of the total number of
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directors on the Board (determined after giving effect to the directors elected
pursuant to this sentence) and the percentage that the aggregate number of
Shares so purchased bears to the total number of Shares then outstanding on a
fully diluted basis. Notwithstanding the foregoing, the Company shall ensure
that three of the members of the Board as of July 27, 1999 who are neither
officers of the Company or any of its subsidiaries nor officers or directors of
Purchaser or any of its affiliates (the "Continuing Directors") will remain
members of the Board until the Effective Time (as defined herein). If a
Continuing Director resigns from the Board, Parent, Purchaser and the Company
will permit the remaining Continuing Director or Directors to appoint the
resigning Director's successor who shall be deemed to be a Continuing Director.
Following the election or appointment of Parent's designees to the Board
pursuant to the Merger Agreement and prior to the Effective Time (as defined
herein), the following shall require the written concurrence of a majority of
the Continuing Directors: (i) any amendment or waiver of any term or condition
of the Merger Agreement or the Certificate of Incorporation or bylaws of the
Company, (ii) any termination of the Merger Agreement by the Company, (iii) any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Purchaser, (iv) any exercise or waiver of
any of the Company's rights or remedies under the Merger Agreement or (v) any
other determination with respect to any action to be taken or not to be taken by
the Company relating to the Merger Agreement. The Company's obligation to
appoint designees of Parent to the Board will be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder.
THE MERGER. No later than the second business day after the satisfaction or
waiver of the conditions to the Merger, Purchaser will be merged with and into
the Company, as a result of which the separate corporate existence of Purchaser
will cease and the Company will continue as the Surviving Corporation and a
wholly owned subsidiary of Parent. The effective time of the Merger (the
"Effective Time") will occur at the date and time that a certificate of merger
in such form and manner as required by the DGCL (the "Certificate of Merger") is
filed with the Secretary of State of the State of Delaware, or such later time
as Parent and the Company may agree upon and as may be set forth in the
Certificate of Merger. The Surviving Corporation will continue its corporate
existence under the laws of the State of Delaware. The Certificate of
Incorporation of Purchaser in effect immediately prior to the Effective Time
will be the Certificate of Incorporation of the Surviving Corporation. The
bylaws of Purchaser in effect immediately prior to the Effective Time shall be
the bylaws of the Surviving Corporation. The directors of Purchaser at the
Effective Time will be the directors of the Surviving Corporation until their
successors are duly elected and qualified, and the officers of the Company at
the Effective Time will be the officers of the Surviving Corporation until their
successors are duly elected and qualified.
CONSIDERATION TO BE PAID IN THE MERGER. In the Merger, each outstanding
Share (except for Shares held in the Company's Treasury or Shares owned by
Parent or Purchaser or by any subsidiary of the Company or Parent, which will be
canceled and retired without any payment with respect thereto, and except for
Shares held by the Company's stockholders who have properly exercised appraisal
rights under Delaware law) will be converted into the right to receive the Offer
Price, without interest thereon (the "Merger Consideration"). Each share of
common stock of Purchaser issued and outstanding immediately prior to the
Effective Time will be converted into one share of common stock of the Surviving
Corporation.
At or immediately prior to the Effective Time, each option, warrant or other
right to purchase shares of Common Stock (in each case, a "Company Stock
Option") which is outstanding and each then outstanding stock appreciation right
with respect to shares of Common Stock (in each case, an "SAR"), whether or not
then vested or exercisable, will be canceled by the Company. In consideration of
such cancellation of Company Stock Options and SARs with an exercise price of
less than the Offer Price, the Company (or, at Parent's option, Purchaser) will
pay to such holders of Company Stock Options and SARs an amount equal to the
product of (i) the excess of the Offer Price over the exercise price of each
such Company Stock Option or SAR, as applicable, and (ii) the number of Shares
previously subject to such Company Stock Option or SAR, as applicable,
immediately prior to its cancellation (such payment to be net of withholding
taxes and without interest).
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REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains
representations and warranties by the Company, on the one hand, and Parent and
Purchaser, on the other hand. These include:
- due organization, existence, good standing and qualification to do
business and, in the case of the Company, its subsidiaries.
- corporate power and authority to enter into the Merger Agreement and
perform its obligations under the Merger Agreement; proper execution,
delivery and enforceability of the Merger Agreement.
- material governmental and third party approvals.
- compliance of the Merger Agreement with each party's charter documents,
material agreements and applicable law.
- absence of material legal proceedings and injunctions.
- absence of broker's fees arising from the transactions contemplated by the
Merger Agreement.
The Merger Agreement contains additional representations and warranties of
the Company. These include:
- capitalization of the Company and its subsidiaries.
- approval of the Merger Agreement by the Board.
- absence of existing defaults under its charter documents, material
agreements and applicable law.
- filings with the SEC and accuracy of financial statements.
- absence of undisclosed liabilities of the Company and its subsidiaries and
since January 2, 1999, absence of material changes in the business of the
Company and its subsidiaries.
- the Company's and its subsidiaries' compliance with applicable law.
- employee benefit plans, labor, employment and related matters.
- absence of material environmental liabilities.
- payment of taxes and filing of tax returns.
- intellectual property.
- "Year 2000" compliance.
- insurance.
- certain business practices.
- customers.
- stockholder vote necessary for approval of the Merger Agreement and the
Merger.
- inapplicability of takeover statutes.
The Merger Agreement contains additional representations and warranties of
Parent and Purchaser. These include:
- availability of financing.
- operations of Purchaser.
No representations or warranties made by the Company, Parent or Purchaser
shall survive beyond the Effective Time.
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CONDUCT OF BUSINESS BEFORE THE MERGER. Each of the Company, Parent and
Purchaser has agreed to do certain things before the Merger occurs. These
include the Company and its subsidiaries each:
- using commercially reasonable efforts to conduct its business in the
ordinary course of business consistent with past practice.
- using commercially reasonable efforts to preserve intact its business
organization.
- using commercially reasonable efforts to keep available the services of
its current key officers and employees.
- using commercially reasonable efforts to preserve its relationships with
key customers, suppliers, lessors, creditors, employees, contractors and
others having business dealings with it.
Parent, and in certain cases Purchaser, and the Company have also agreed to:
- cause the information supplied or to be supplied by it for inclusion or
incorporation by reference in the proxy statement relating to the meeting
of the Company's stockholders to be held in connection with the Merger
(the "Proxy Statement") in the case of the Company, or in the Schedule
14D-1, the Offer to Purchase and the Proxy Statement, in the case of
Parent and Purchaser, not to contain any materially untrue statements or
misleading omissions.
- use all reasonable efforts to cooperate in the preparation and filing of
the Proxy Statement and antitrust filings, obtain consents and approvals
of all third parties and governmental authorities necessary to complete
the transactions contemplated by the Merger Agreement, contest any legal
proceeding relating to the Merger and execute additional instruments
necessary to consummate the transactions contemplated by the Merger
Agreement.
- not issue any press release or make any other public statements without
the prior approval of the other party, which approval may not be
unreasonably withheld except as required by law, by the rules and
regulations of the Nasdaq National Market, following a change in the
recommendation of the Merger by the Board, or if the Board is advised that
such release or statement is required by law and such release or statement
relates to a Third Party Acquisition (as defined herein).
- promptly tell the other party about any events or circumstances that would
cause any representations or warranties to be untrue or inaccurate in any
material respect or any failure to comply with or satisfy in any material
respect its obligations under the Merger Agreement.
Subject to certain agreed exceptions, the Company has agreed for itself and
on behalf of its subsidiaries not to:
- amend its charter documents.
- issue or agree to issue any stock of any class or any other debt or equity
securities or equity equivalents, except for shares of Common Stock issued
under options outstanding on July 27, 1999.
- split, combine or reclassify any shares of Common Stock or declare, set
aside or pay any dividend or other distribution of any kind in respect of
its capital stock.
- adopt a plan of complete or partial liquidation, dissolution, merger or
other reorganization other than the Merger.
- alter any material subsidiary's corporate structure, other than as a
result of the transactions contemplated by the Merger Agreement.
- incur or assume any long-term or short-term debt or issue any debt
securities, except under existing lines of credit in the ordinary course
of business, or materially change the terms of such long-term or
short-term debt or debt securities.
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- become responsible for the obligations of any other person, except for
third party guarantees and lease agreements not to exceed $250,000 in the
aggregate and obligations of the Company's subsidiaries incurred in the
ordinary course of business consistent with past practice.
- make any loans to or investments in any other person, except for loans to
or investments in its subsidiaries or customary loans or advances to
employees in the ordinary course of business consistent with past
practice.
- encumber its capital stock.
- mortgage or pledge any of its material assets or create or permit any
material lien on these assets.
- except as required by law, enter into, adopt, amend or terminate any
employee compensation, benefit or similar plan, materially increase the
compensation or fringe benefits of any director, officer or employee or
pay any benefit not required by any plan or arrangement in effect as of
July 27, 1999.
- grant any severance or termination pay, except as required by law, any
written agreements existing on July 27, 1999, or current severance
policies.
- accelerate the vesting of any stock options, except as provided in any
policy, plan, agreement or other arrangement in effect as of July 27,
1999.
- sell, lease, license or dispose of any assets in any single transaction or
series of related transactions having a fair market value in excess of
$250,000 in the aggregate.
- enter into any exclusive license, distribution, marketing, sales or other
agreement other than in the ordinary course of business.
- except as required as a result of a change in law or in generally accepted
accounting principles, change any of its accounting principles, practices
or methods.
- revalue in any material respect any of its assets other than in the
ordinary course of business consistent with past practice or as required
by generally accepted accounting principles.
- acquire any other business or entity or any material equity interest of
any business or entity.
- enter into any material agreement.
- modify or waive any material right under its or its subsidiaries' material
contracts.
- modify its standard warranty or contract terms or modify any existing
warranty or contract terms in any material and adverse manner.
- authorize any new or additional capital expenditure(s) in excess of
$250,000.
- acquire any other asset or related group of assets, or make any
investment, in a single transaction or series of related transactions with
a cost in excess of $250,000.
- make any material tax election or settle or compromise any material income
tax liability.
- permit any insurance policy naming it as a beneficiary or loss payee to
expire, be canceled or be terminated, unless a comparable insurance policy
is obtained and in effect.
- fail to file any tax returns when due or fail to cause such tax returns
when filed to be complete and accurate in all material respects.
- fail to pay any taxes or other material debts when due.
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- settle or compromise any legal proceeding which relates to the Merger
Agreement, the settlement or compromise of which would involve more than
$250,000 or which would otherwise have a Material Adverse Effect on the
Company.
- take or agree in writing to take any of the actions described above or any
action that would make any of the Company's representations and warranties
contained in the Merger Agreement untrue or incorrect in any material
respect.
The Company also has agreed that it will:
- provide Parent with reasonable access to the Company's books and records,
offices, facilities, employees and personnel files of current employees.
- provide Parent with such financial and operating data and other
information with respect to its business and properties and its
subsidiaries' business and properties as reasonably requested by Parent.
Each of Parent and Purchaser has agreed to hold and treat in confidence all
information concerning the Company and its subsidiaries furnished to it in
connection with the transactions contemplated by the Merger Agreement, pursuant
to the Confidentiality Agreement, dated July 8, 1999, between the Company and
Parent.
In addition, Parent has agreed to furnish the Company with a letter from
Ocean Group stating that Ocean Group will provide sufficient funds to Parent and
Purchaser so that Parent and Purchaser can pay for tendered Shares, pay for
Shares exchanged in the Merger and make payments in cancellation of stock
options and stock appreciation rights.
INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Pursuant to the Merger
Agreement, the Surviving Corporation (or any successor) will, to the fullest
extent permitted by law, indemnify the present and former officers and directors
of the Company and its subsidiaries who suffer liabilities or losses from any
threatened or actual claim or proceeding based on the fact that the person is or
was a director or officer of the Company or any of its subsidiaries or based on
the Merger Agreement.
The Merger Agreement further provides that Parent will cause the Surviving
Corporation to fulfill the obligations of the Company pursuant to any
indemnification agreements between the Company and its directors and officers as
of or prior to July 27, 1999 (or indemnification agreements in the Company's
customary form for directors joining the Board prior to the Effective Time), and
to keep in effect any indemnification provisions under the Company's Certificate
of Incorporation or bylaws as in effect immediately prior to the Effective Time.
For a period of six years after the Effective Time, Parent will maintain or
cause the Surviving Corporation to maintain in effect, at no expense to the
beneficiaries, directors' and officers' liability insurance covering those
persons who, as of immediately prior to the Effective Time, are covered by the
Company's directors' and officers' liability insurance policy (the "Insured
Parties") on terms no less favorable to the Insured Parties than those of the
Company's current directors' and officers' liability insurance policy. However,
in no event will Parent or the Company be required to expend on an annual basis
in excess of 150% of the annual premium currently paid by the Company for such
coverage (the "Maximum Premium"). If the Surviving Corporation is unable to
obtain this insurance for the Maximum Premium, it will obtain as much comparable
insurance as possible for an annual premium equal to the Maximum Premium.
Instead of maintaining such existing insurance, Parent, at its election, may
cause coverage to be provided under any policy maintained for the benefit of
Parent or any of its subsidiaries, so long as the terms are not materially less
advantageous to the intended beneficiaries thereof than such existing insurance.
In the event any claim is made against present or former directors, officers or
employees of the Company that is covered or potentially covered by insurance,
neither the Surviving
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Corporation nor Parent shall do anything that would forfeit, jeopardize,
restrict or limit the insurance coverage available for that claim until final
disposition thereof.
Notwithstanding anything contained in the Merger Agreement to the contrary,
if any claim, action, suit, proceeding or investigation (whether arising before,
at or after the Effective Time) is made against any Indemnified Persons within
six years of the Effective Time, the indemnification provisions of the Merger
Agreement will continue in effect until the final disposition of such claim,
action, suit, proceeding or investigation.
In the event that the Surviving Corporation or Parent or any of their
respective successor or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision will be made so that the successors and assigns of the
Surviving Corporation or Parent will succeed to the obligations with respect to
indemnification and directors' and officers' insurance imposed by the Merger
Agreement.
EMPLOYEES AND EMPLOYEE BENEFITS. Parent has agreed in the Merger Agreement
that, as of the Effective Time, Parent shall cause the Company to employ all
persons employed by the Company immediately prior to the earlier of the
Effective Time or the time that Parent designates directors to the Board (the
"Company Employees"). Additionally, for a period of two years following the
Effective Time, Parent has agreed to provide or cause to be provided to the
Company Employees employee pension and welfare benefits plans (the "Parent
Plans") that are substantially comparable in the aggregate to the employee
pension and welfare benefit plans provided to the Company Employees immediately
prior to the earlier of the Effective Date or the time the Parent designates
directors to the Company Board (the "Company Plans").
The Parent has agreed in the Merger Agreement that, following the Effective
Time, Parent shall cause the Parent Plans to recognize all prior service of the
Company Employees for purposes of participation, eligibility and vesting of
benefits, to take into account all expenses incurred by the Company Employees
prior to the Effective Time and to waive any preexisting condition limitations
that would otherwise apply to the Company Employees.
ACQUISITION PROPOSALS. The term "Third Party Acquisition" is used herein to
mean any of the following:
- the acquisition of the Company by anyone other than Parent, Purchaser or
any of their affiliates (a "Third Party").
- the acquisition by a Third Party of any material portion (which shall
include 20% or more) of the assets of the Company and its subsidiaries,
taken as a whole.
- the acquisition by a Third Party who beneficially owns 20% or more of the
Shares as of July 27, 1999 of an additional 5% or more of the Shares or
the acquisition by any other Third Party of 20% or more of the Shares.
The Company has agreed that it will:
- cease any discussions or negotiations with any other persons with respect
to any Third Party Acquisition.
- not encourage, solicit, participate in or initiate discussions or
negotiations with or provide any information to anyone except Parent and
Purchaser concerning any Third Party Acquisition. However, if the Board
determines in its good faith judgment, after consultation with legal
counsel, that it is necessary to do so in order to comply with its
fiduciary obligations to the Company's stockholders under applicable
Delaware law, the Company may, in response to a proposal or offer
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for a Third Party Acquisition that was not solicited and that the Board
determines, after consultation with the Company's financial advisor, is
from a Third Party that is capable of consummating a Superior Proposal (as
defined herein) and only for so long as the Board so determines that its
actions are likely to lead to a Superior Proposal, (i) furnish information
with respect to the Company to any such person pursuant to a customary
confidentiality agreement so long as any information so provided which has
not previously been provided by the Company to Parent will be promptly
delivered to Parent, and (ii) participate in the discussions and
negotiations regarding such proposal or offer.
- promptly notify Parent if the Company or any of its subsidiaries and other
affiliates or any of their respective officers, directors, employees or
agents receives any proposal or inquiry regarding a Third Party
Acquisition.
- provide copies of any written agreements, proposals, or other materials
the Company receives with respect to a Third Party Acquisition.
- advise Parent of the status of any Third Party Acquisition, at any time
upon Parent's request, and from time to time promptly following any
material developments concerning the same.
Except as described below, the Board may not withdraw or modify its
recommendation of the Offer or the Merger. It also may not approve or recommend,
or cause or permit the Company to enter into, any agreement or obligation with
respect to any Third Party Acquisition. However, if the Board by a majority vote
determines in its good faith judgment, after consultation with and after
receiving the advice of legal counsel, that its fiduciary duties require it to
do so, the Board may withdraw its recommendation of the Offer or the Merger or
approve or recommend a Superior Proposal. A "Superior Proposal" means any BONA
FIDE proposal to acquire, directly or indirectly, solely for cash and/or
securities, all Shares then outstanding, or all or substantially all of the
Company's assets that:
- is not subject to a financing contingency and contains terms that the
Board determines in its good faith judgment, following consultation with
the Company's financial advisor or another financial advisor of nationally
recognized reputation, to be more favorable to the Company's stockholders
than the Offer and Merger;
- the Board determines in its good faith judgment (following consultation
with the Company's financial advisor or another financial advisor of
nationally recognized reputation and its legal or other advisers) to be
likely to be completed (taking into account all legal, financial,
regulatory and other aspects of the proposal);
- does not contain a "right of first refusal" or "right of first offer" with
respect to any counter-proposal that Parent may make; and
- is not subject to satisfactory diligence by the person making the
proposal.
The Board may withdraw its recommendation of the Offer or the Merger or
approve or recommend any Superior Proposal only (a) after providing written
notice to Parent advising Parent that the Board has received a Superior
Proposal, specifying the material terms and conditions and identifying the
person making the Superior Proposal, and (b) if Parent does not, within 48 hours
of receipt of notice of such Superior Proposal, make an offer that the Board by
a majority vote determines in its good faith judgment, after consultation with
the Company's financial advisor or another financial advisor of nationally
recognized reputation, to be at least as favorable to the Company stockholders
as such Superior Proposal. In addition, the Company may enter into an agreement
with respect to such Superior Proposal only if the Merger Agreement has been
terminated in accordance with its terms and the Company has paid any liquidated
damages and has made reimbursement of any fees, costs and expenses which are
payable to Parent under the Merger Agreement (as described below under
"--LIQUIDATED DAMAGES AND EXPENSES").
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CONDITIONS TO THE MERGER. The obligation of each of the Company, Parent and
Purchaser to consummate the Merger is subject to the satisfaction of each of the
following conditions:
- the Merger Agreement has been approved and adopted by the requisite vote
of the Company's stockholders, if such vote is required by applicable law.
- no law or order by any United States federal or state court or
governmental authority prohibits, enjoins or restricts the Merger.
- Purchaser has purchased tendered Shares pursuant to the Offer.
Assurances cannot be given that all of the conditions to completion of the
Merger will be satisfied.
TERMINATION. The Merger Agreement may be terminated and the Merger
abandoned at any time prior to the completion of the Merger, even though the
Company's stockholders may have approved the Merger Agreement and the Merger.
This termination may occur in the following ways:
- Parent, Purchaser and the Company agree by mutual written consent to
terminate the Merger Agreement.
- Either Parent and Purchaser or the Company decide to terminate the Merger
Agreement if:
1. any state or federal court or other governmental authority has issued a
final, non-appealable ruling prohibiting the Merger; or
2. the Merger is not completed by March 31, 2000, unless the failure to
complete the Merger by that date is due principally to the failure of
the party seeking to terminate the Merger Agreement to perform its
obligations under the Merger Agreement.
- The Company decides to terminate the Merger Agreement if:
x. Purchaser fails to commence the Offer in accordance with the Merger
Agreement.
y. Purchaser fails to pay for tendered Shares pursuant to the Offer within
120 days after July 27, 1999, unless such failure to pay is the result
of (a) the failure of the Company to perform any of its covenants and
agreements contained in the Merger Agreement or (b) termination of the
Offer in accordance with the provisions of Annex A to the Merger
Agreement, which provisions are described above under "--CERTAIN
CONDITIONS OF THE OFFER."
z. the Board has received a Superior Proposal and has complied with the
provisions of the Merger Agreement requiring the Company to provide
notice to Parent, pay certain liquidated damages and reimburse certain
fees, costs and expenses.
- Parent or Purchaser decides to terminate the Merger Agreement if:
a. due to an occurrence or circumstance that would result in a failure to
satisfy any of the conditions set forth in Annex A to the Merger
Agreement, Purchaser has terminated the Offer in accordance with the
provisions of Annex A, which conditions and provisions are described
above under "--CERTAIN CONDITIONS OF THE OFFER."
b. due to an occurrence or circumstance that would result in a failure to
satisfy any of the conditions set forth in Annex A to the Merger
Agreement, Purchaser has failed to pay for Shares pursuant to the Offer
within 120 days after July 27, 1999, unless such failure to pay for
Shares is a result of the failure of Parent or Purchaser to perform any
of its covenants and agreements contained in the Merger Agreement.
c. the Company has materially breached its obligations with respect to
Third Party Acquisitions described in "--ACQUISITION PROPOSALS" above.
d. the Board has recommended to the Company's stockholders a Superior
Proposal.
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e. the Board has withdrawn or adversely modified (including by amendment
of the Schedule 14D-9) its approval or recommendation of the Merger
Agreement, the Offer or the Merger.
f. the Minimum Condition has not been satisfied by the expiration date of
the Offer and on or prior to such date (a) any person (other than
Parent or Purchaser) has made and not withdrawn a BONA FIDE proposal or
public announcement or commitment to the Company with respect to a
Third Party Acquisition or (b) any person (including the Company or any
of its affiliates or subsidiaries), other than Parent or Purchaser, has
become the beneficial owner of 25% of the Shares.
EFFECT OF TERMINATION. Even after the Merger Agreement has been terminated,
certain provisions for payment of certain fees and expenses will remain in
effect. Also, termination of the Merger Agreement will not relieve any party
from liability for any breach by it of the Merger Agreement. However, no
representations or warranties made by the Company, Parent or Purchaser will
survive beyond the termination of the Merger Agreement.
LIQUIDATED DAMAGES AND EXPENSES. If any of the following occur (each, a
"Fee Termination Event"):
1. Parent and Purchaser terminate the Merger Agreement because of reasons
(c), (d), (e) or (f) listed above in "--TERMINATION";
2. the Company terminates the Merger Agreement because of reason (z) listed
above in "--TERMINATION"; or
3. the Company terminates the Merger Agreement because of reason (y) listed
above in "--TERMINATION" at a time when Parent and Purchaser had a right
to terminate the Merger Agreement because of reasons (c), (d), (e) or (f)
listed above in "--TERMINATION"
then the Company will pay Parent a fee of $2,500,000 and an additional fee of
$2,500,000 immediately if, within 12 months after such a termination by Parent
and Purchaser, the Company enters into any agreement with respect to a Third
Party Acquisition or consummates a Third Party Acquisition without the entering
into of any such agreement during such period.
In addition, if Parent and Purchaser terminate the Merger Agreement because
of reasons (a) or (b) listed above in "--TERMINATION" in connection with a
willful act or omission by the Company which results in a failure to satisfy any
of the conditions set forth in Annex A of the Merger Agreement, which conditions
are described in "--CERTAIN CONDITIONS OF THE OFFER," then, the Company shall
pay Parent a fee of $1,000,000 immediately upon such termination. Furthermore,
if Parent and Purchaser terminate the Merger Agreement because of reasons (a) or
(b) listed above in "--TERMINATION" in connection with a willful act or omission
by the Company which results in a failure to satisfy any of the conditions set
forth in Annex A of the Merger Agreement, which conditions are described in
"--CERTAIN CONDITIONS OF THE OFFER," the Company shall pay Parent a fee of
$5,000,000 if, within 12 months after such a termination by Parent and
Purchaser, the Company enters into any agreement with respect to a Third Party
Acquisition or consummates a Third Party Acquisition without the entering into
of any such agreement during such period. The $5,000,000 fee shall be reduced by
the sum paid, if any, of the $1,000,000 fee payable under the circumstances
described in the first sentence of this paragraph.
The Company, Parent and Purchaser have specifically agreed that the amount
to be paid upon the occurrence of a Fee Termination Event as described above
represents liquidated damages and not a penalty.
The Company is required to reimburse Parent the amount of $500,000 as
reimbursement for the out-of-pocket costs, fees and expenses incurred by any of
them or on their behalf in connection with the Merger Agreement, the Offer, the
Merger and the consummation of the transactions contemplated by the
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Merger Agreement (including fees payable to investment bankers, counsel to any
of the foregoing and accountants) upon termination of the Merger Agreement
pursuant to:
1. a termination by Parent or Purchaser because of reasons (a) or (b)
listed above in "--TERMINATION";
2. a termination by the Company because of reason (z) listed above in
"--TERMINATION"; or
3. a termination by Parent or Purchaser because of reasons (c), (d), (e) or
(f) listed above in "--TERMINATION."
Parent is required to reimburse the Company the amount of $500,000 as
reimbursement for the out-of-pocket costs, fees and expenses incurred by any of
them or on their behalf in connection with the Merger Agreement, the Offer, the
Merger and the consummation of the transactions contemplated by the Merger
Agreement (including fees payable to investment bankers, counsel to any of the
foregoing and accountants) upon termination of the Merger Agreement by the
Company because of reasons (x) or (y) listed above in "--TERMINATION."
Except as described above, irrespective of whether the Merger occurs,
Parent, Purchaser and the Company have agreed to pay their own fees and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby.
EXTENSION AND WAIVER. At any time prior to the Merger, Parent, Purchaser
and the Company (subject to approval by the Continuing Directors as described
above under "--BOARD REPRESENTATION") may agree to:
- extend the time for the performance of any of the obligations or other
acts of the other party;
- waive any inaccuracies in the other's representations and warranties; or
- waive the other's compliance with any of the agreements or conditions in
the Merger Agreement.
AMENDMENT. The Merger Agreement may be amended by the parties (subject to
approval by the Continuing Directors as described above under "--BOARD
REPRESENTATION"), at any time before or after the Company's stockholders approve
the Merger. However, any such amendment which by law requires the approval of
the Company's stockholders will require such approval to be effective.
APPRAISAL RIGHTS IN THE MERGER
Each Share held by a stockholder exercising appraisal rights with respect to
such Shares pursuant to the DGCL, who has not effectively withdrawn or lost such
rights, will not be converted into or represent a right to receive the Merger
Consideration, but such stockholder will be entitled only to such rights as are
granted by Section 262 of the DGCL. Specifically, if the Merger is consummated,
stockholders of the Company have certain rights under the DGCL to dissent and
demand appraisal of, and payment in cash of the fair value of, their Shares. In
the event that appraisal rights are available, an objecting stockholder shall
cease to have any rights as a stockholder with respect to the Shares except the
right to receive payment of the fair value thereof. The stockholder's rights may
be restored only upon (i) the withdrawal, with the consent of the Company, of
the demand for payment, (ii) the non-filing of a petition for appraisal within
the time required, (iii) a determination of the court that the stockholder is
not entitled to an appraisal, or (iv) the abandonment or rescission of the
Merger. Each Share held by a stockholder at the Effective Time who will, after
the Effective Time, lose his or her appraisal rights or withdraw such demand for
appraisal or payment of fair market value pursuant to the DGCL, will be deemed
to be converted, as of the Effective Time, into the right to receive the Merger
Consideration. The Company may not voluntarily make any payment with respect to
any demands for appraisal or payment of fair market value or settle or offer to
settle any such demands.
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Appraisal rights, if the statutory procedures set forth in Section 262 of
the DGCL are complied with, could lead to a judicial determination of the fair
value (excluding any element of value arising from the accomplishment or
expectation of the Merger) required to be paid in cash to such dissenting
stockholders for their Shares. Any such judicial determination of the fair value
of Shares could be based upon considerations other than or in addition to the
price paid in the Offer and the market value of the Shares, including asset
values and the investment value of the Shares. The value so determined could be
more or less than the purchase price per Share pursuant to the Offer or the
Merger Consideration.
THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE THEIR APPRAISAL RIGHTS. THE PRESERVATION AND
EXERCISE OF APPRAISAL RIGHTS ARE CONDITIONED ON STRICT ADHERENCE TO THE
APPLICABLE PROVISIONS OF THE DGCL.
FAILURE TO FOLLOW THE STEPS REQUIRED BY THE DGCL FOR PERFECTING APPRAISAL
RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
TENDER AND VOTING AGREEMENT AND IRREVOCABLE PROXY
The following is only a summary of certain provisions of the Tender and
Voting Agreement and Irrevocable Proxy (the "Voting Agreement") executed by
certain stockholders. This summary does not purport to be complete and is
qualified in its entirety by reference to the full text of the Voting
Agreements. Copies of the Voting Agreements are filed as exhibits to the
Schedule 14D-1, identified as exhibits hereto and incorporated herein by
reference. Company stockholders should read the Voting Agreements in their
entirety. Capitalized terms not otherwise defined below shall have the meaning
set forth in the Voting Agreements.
TENDER OF SHARES. In connection with the execution of the Merger Agreement,
Parent and Purchaser have entered into Voting Agreements with the following six
stockholders of the Company (the "Proxy Grantors") who beneficially own in the
aggregate 751,272 outstanding Shares, representing approximately 8.4% of the
issued and outstanding Shares: (a) R.C. Matney, Chairman of the Board and Chief
Executive Officer of the Company, beneficially owns 701,380 outstanding Shares,
(b) David H. Wedaman, a director and Executive Vice President and Chief
Operating Officer, beneficially owns 2,742 outstanding Shares, (c) James T.
Graves, a director and General Counsel of the Company, beneficially owns 10,600
outstanding Shares, (d) William E. Greenwood, a director of the Company,
beneficially owns 9,800 outstanding Shares, (e) Thomas J. Fitzgerald, a director
of the Company, beneficially owns 13,650 outstanding Shares, and (f) Dr. Jay U.
Sterling, a director of the Company, beneficially owns 13,100 outstanding
Shares. Pursuant to the Voting Agreements, upon the terms and subject to the
conditions therein, each Proxy Grantor has agreed, provided the Merger Agreement
has not been terminated, to promptly after the date of commencement of the Offer
(but in all events not later than five business days thereafter) tender to
Purchaser and not withdraw all Shares beneficially owned by such Proxy Grantor.
VOTING OF SHARES. Each Proxy Grantor has also agreed, provided the Merger
Agreement has not been terminated, and subject to the receipt of proper notice
and in the absence of a preliminary injunction or other final order by any court
or other administrative or judicial authority barring such action, to vote the
Shares beneficially owned by such Proxy Grantor in accordance with the Voting
Agreement, including (i) in favor of approval of the Merger Agreement and any
actions required in furtherance of the transactions contemplated by the Merger
Agreement (including the election of designees of Parent as directors of the
Company); (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement; and (iii) except as
otherwise agreed to in writing in advance by Parent, against: (A) any Third
Party Acquisition, (B) any change in a majority of the individuals who, as of
July 27, 1999,
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constitute the Board (other than as contemplated by the Merger Agreement), (C)
any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company or any of its subsidiaries and
any third party, (D) a sale, lease, transfer or disposition of any assets of the
Company's or any of its subsidiaries' business outside the ordinary course of
business, (E) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or bylaws, (F) any other
material change in the Company's corporate structure or affecting its business,
or (G) any other action which is intended, or could reasonably be expected, to
impede, interfere with, delay, postpone or materially adversely affect the
Offer, the Merger or any of the other transactions contemplated by the Merger
Agreement or the Voting Agreement.
IRREVOCABLE PROXY. Each Proxy Grantor has also, provided the Merger
Agreement has not been terminated, appointed Purchaser and certain designees of
Purchaser, in their respective capacities as designees of Purchaser, as such
Proxy Grantor's true and lawful irrevocable proxy and attorney-in-fact to vote
all outstanding Shares beneficially owned by such Proxy Grantor at any
Stockholders' Meeting called for purposes of considering whether to approve the
Merger Agreement, the Merger or any of the other transactions contemplated by
the Merger Agreement, or any Third Party Acquisition, or to execute a written
consent of stockholders in lieu of any such meeting. In any such vote or other
action pursuant to such proxy, the proxy holders do not have the right to vote
to reduce the Offer Price or otherwise modify or amend the Merger Agreement to
reduce the rights or benefits of the Company or any stockholders of the Company
under the Offer or the Merger Agreement or to reduce the rights or obligations
of Parent or Purchaser thereunder.
PURCHASE OPTION. Each Proxy Grantor granted to Parent and Purchaser an
irrevocable option (the "Purchase Option") to purchase for cash, in a manner set
forth below, any or all of the Shares (and including Shares acquired after July
27, 1999, by such Proxy Grantor) beneficially owned by the Proxy Grantor at a
price (the "Exercise Price") per Share equal to the Offer Price. In the event of
any stock dividends, stock splits, recapitalizations, combinations, exchanges of
Shares or similar events, the Exercise Price will be appropriately adjusted for
this purpose. The Voting Agreements provide that subject to the conditions set
forth below, the Purchase Option may be exercised by Parent or Purchaser, in
whole or in part, at any time or from time to time after the occurrence of any
Trigger Event (as defined below).
A "Trigger Event" means any one of the following: (i) the Merger Agreement
becomes terminable under circumstances that entitle Parent or Purchaser to
receive the liquidated damages or the fees and expenses under the Merger
Agreement (regardless of whether the Merger Agreement is actually terminated and
whether such liquidated damages or fees and expenses are then actually paid),
(ii) the Offer is consummated but, due to the failure of the Proxy Grantor to
validly tender and not withdraw all of the then outstanding Shares beneficially
owned by such Proxy Grantor, Purchaser has not accepted for payment or paid for
all of such Shares, (iii) a tender or exchange offer for at least 10% of the
Shares shall have been publicly proposed to be made or shall have been made by
another person, or (iv) it shall have been publicly disclosed or Parent or
Purchaser shall have otherwise learned that (A) any person or "group" (as
defined in Section 13(d)(3) of the Exchange Act) (other than Parent or
Purchaser) shall have acquired or proposed to acquire beneficial ownership of
more than 10% of any class or series of capital stock of the Company (including
Shares), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted any option, right or warrant, conditional
or otherwise, to acquire beneficial ownership of more than 10% of any class or
series of capital stock of the Company or any of its subsidiaries, or (B) any
person or group (other than Parent and Purchaser) shall have entered into or
publicly offered to enter into a definitive agreement or an agreement in
principle with respect to a merger, consolidation or other business combination
with the Company or any of its subsidiaries.
Pursuant to the Voting Agreements, if requested by Parent and Purchaser in a
written notice, such Proxy Grantor will exercise all options (to the extent
exercisable) and other rights (including conversion or exchange rights)
beneficially owned by such Proxy Grantor and will sell or, if directed by Parent
and
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Purchaser, tender the Shares acquired pursuant to such exercise to Parent or
Purchaser as provided in the Voting Agreements. The Purchase Option will
terminate (a) as it relates to a Proxy Grantor, upon purchase by Parent or
Purchaser of the Shares owned by such Proxy Grantor pursuant to the Offer or (b)
upon the earliest of: (i) the date on which Purchaser accepts tendered Shares
for payment (the "Acceptance Date"); (ii) termination of the Merger Agreement
other than upon, during the continuance of or after a Trigger Event; or (iii) 90
days following any termination of the Merger Agreement upon, during the
continuance of or after a Trigger Event (or if, at the expiration of such 90 day
period the Purchase Option cannot be exercised by reason of any applicable
judgment, decree, order, injunction, law or regulation, 10 business days after
such impediment to exercise has been removed or has become final and not subject
to appeal).
In the Voting Agreements, the obligation of each Proxy Grantor to sell such
Proxy Grantor's Shares to Parent or Purchaser is subject to the conditions that
(i) all waiting periods, if any, under the HSR Act, applicable to the sale of
the Shares or the acquisition of the Shares by Parent or Purchaser, as the case
may be, hereunder have expired or have been terminated; (ii) all consents,
approvals, orders or authorizations of, or registrations, declarations or
filings with, any court, administrative agency or other Governmental Entity, if
any, required in connection with sale of the Shares or the acquisition of the
Shares by Parent or Purchaser hereunder have been obtained or made; and (iii) no
preliminary or permanent injunction or other order by any court of competent
jurisdiction prohibiting or otherwise restraining such sale or acquisition is in
effect. The Voting Agreements provide that the Company shall provide Parent and
Purchaser certain registration rights with respect to the Shares purchased
pursuant to the Purchase Option.
RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. Each Proxy Grantor
has agreed not to, directly or indirectly, except as contemplated by the Voting
Agreements: (i) offer for sale, sell, transfer, tender, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to or consent to the offer for sale, sale,
transfer, tender, pledge, encumbrance, assignment or other disposition of, any
or all of such Proxy Grantor's Shares or any interest therein; (ii) grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares; or (iii) take any action
that would make any representation or warranty made by such Proxy Grantor untrue
or incorrect or have the effect of preventing or disabling such Proxy Grantor
from performing such Proxy Grantor's obligations under the applicable Voting
Agreement.
OTHER POTENTIAL ACQUIRORS. Each Proxy Grantor (i) will immediately cease
any existing discussions or negotiations with any parties with respect to any
acquisition of all or any material portion of the assets of, or any equity
interest in, the Company or any of its subsidiaries, or any business combination
with the Company or any of its subsidiaries, in his, her or its capacity as
such; (ii) from and after the date of the Voting Agreements until the earlier of
the termination of the Merger Agreement and the Effective Time, will not, in
such capacity, directly or indirectly, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information or assistance), or take
any other action to facilitate knowingly, any inquiries or the making of any
Third Party Acquisition; and (iii) will promptly notify Parent of any proposals
for, or inquiries with respect to, a potential Third Party Acquisition received
by the Proxy Grantor or of which such Proxy Grantor otherwise has knowledge.
REPRESENTATIONS AND WARRANTIES. The Voting Agreements contain certain
customary representations and warranties of the parties thereto, including,
without limitation, representations and warranties by the Proxy Grantors as to
ownership of Shares and power and authority.
TERMINATION. Generally, the Voting Agreements expire upon the earliest of
(a) the date on which the Merger Agreement terminates in accordance with its
terms, (b) the Acceptance Date and (c) July 31, 2000.
18
<PAGE>
STOCK PURCHASE AND STOCKHOLDERS AGREEMENT
The following is only a summary of the Stock Purchase and Stockholder
Agreement (the "Stock Purchase Agreement"), to be entered into between each of
R.C. Matney and David H. Wedaman (the "Investors") and Ocean Group. This summary
does not purport to be complete and is qualified in its entirety by reference to
the full text of the Stock Purchase Agreements, copies of which are filed as
exhibits to the Schedule 14D-1, and are identified as exhibits hereto and
incorporated herein by reference.
Pursuant to the Stock Purchase Agreements, the Investors will agree to
invest between them approximately $2.2 million in the purchase of Ocean Group
ordinary shares, as soon as reasonably practicable, and not dispose of the
shares acquired by them for a period of four years from the purchase. If certain
performance criteria are achieved, the Investors may dispose of up to 25% of the
shares following each of the first four fiscal years following the Merger. In
the event that the employment arrangement between Mr. Wedaman and the Company
shall not be renewed prior to its scheduled termination, the restrictions on
disposition by Mr. Wedaman would lapse.
CONFIDENTIALITY AGREEMENT
The following is only a summary of certain provisions of the Confidentiality
Agreement, dated July 8, 1999, between the Company and Ocean Group (the
"Confidentiality Agreement"). This summary does not purport to be complete and
is qualified in its entirety by reference to the full text of the
Confidentiality Agreement. A copy of the Confidentiality Agreement is filed as
an exhibit to the Schedule 14D-1, identified as an exhibit hereto and
incorporated herein by reference.
The Confidentiality Agreement contains customary provisions pursuant to
which Ocean Group agrees to, and to cause its representatives to, among other
things, keep confidential for a period of three years from the date of the
Confidentiality Agreement all non-public information concerning the Company
which is furnished to Ocean Group and its representatives by or on behalf of the
Company (the "Confidential Information"), and to use the Confidential
Information solely for the purpose of evaluating, negotiating or advising with
respect to a possible business transaction involving the Company and Ocean
Group.
Pursuant to the Confidentiality Agreement, Ocean Group and its
representatives have agreed not to acquire or offer to acquire any Shares or
rights or options to acquire Shares, subject to certain exceptions, or make a
proposal or offer to the stockholders of the Company for a business combination
involving the Company for a period of three years from the date of the
Confidentiality Agreement without the prior written consent of the Board. Ocean
Group and its representatives have also agreed not to solicit any employee of
the Company for employment, subject to certain exceptions, without the prior
written consent of the Company. The Confidentiality Agreement prohibits both the
Company and Ocean Group and their respective representatives from disclosing to
any other person that the Confidential Information was made available to Ocean
Group and its representatives, or that any discussions or negotiations were
taking place concerning a possible transaction without the prior written consent
of the other party.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(A) RECOMMENDATION
The Board has unanimously approved the Offer and the Merger and has
determined that the terms of the Offer and the Merger are in the best interests
of the Company's stockholders. Accordingly, the Board unanimously recommends
that the Company's stockholders accept the Offer and tender their Shares.
(B)(1) BACKGROUND OF THE OFFER
Over a period of years, the Company and Ocean Group have exchanged basic
financial information and discussed from time to time various strategic
relationships.
19
<PAGE>
In December 1998, R.C. Matney, Chief Executive Officer of the Company, met
with John Allan, Ocean Group's Chief Executive Officer, to discuss a strategic
fit between the two companies and other companies in the industry. At that time,
the companies signed a confidentiality agreement and the Company provided
certain financial information to Ocean Group.
In January 1999, Ian Smith, Group Commercial Director of Ocean Group, and
Stuart Young, Director of Merger & Acquisitions of Ocean Group, met with Mr.
Matney in New York. At this meeting, the parties exchanged information on the
trading performance and the strategic prospects of the two companies. The
parties discussed perceived and actual strengths and weaknesses of their
respective companies and the industry. The parties agreed to further
discussions.
On February 11, 1999, during a BT Alex. Brown Transportation conference in
Naples, Florida, Mr. Smith briefly met with Mr. Matney and Mark Skoda, the newly
appointed President of the Company, and suggested additional meetings.
In March 1999, Mr. Allan sent a letter to Mr. Matney, indicating that Ocean
Group wished to suspend contact with the Company for several months so that
Ocean Group could focus its attention on other matters.
In late May 1999, Mr. Allan sent a letter to Mr. Matney suggesting a meeting
between Messrs. Smith, Young and Michael Fountain, Regional Chief Executive of
the Americas Pacific Region for Parent, and representatives of the Company.
On June 4, 1999, Messrs. Smith, Young and Fountain met with Mr. Matney in
Indianapolis. At this meeting, the strategic fit between the two companies was
discussed. Mr. Matney requested Ocean Group to submit a letter of interest
outlining a proposal within ten days of the meeting if it desired to pursue a
possible transaction with the Company.
On June 14, 1999, Mr. Smith sent a letter of interest to Mr. Matney. The
letter outlined a nonbinding offer by Ocean Group to acquire the Company. In a
telephone conversation later that day, Mr. Matney told Mr. Smith that he felt
the letter provided the basis for him to inform the Board that he had received
an offer from Ocean Group which he felt was worthy of consideration.
On June 28, 1999, Messrs. Smith and Young met with Mr. Matney in
Indianapolis and discussed possible structures for an acquisition and set a
timetable for proceeding forward.
On June 29, 1999, Messrs. Smith, Young and Fountain met in Memphis with
Messrs. Matney, Skoda, David Wedaman, Executive Vice President and Chief
Operating Officer, Michael Musacchio, President of an indirect subsidiary of the
Company, Robert Liss, President of the Special Services Division of the
Company's transportation services subsidiary, and James Graves, General Counsel.
At this meeting, the two sides exchange detailed descriptions of their
businesses. At the conclusion of the meeting, the parties decided that they
should move forward and attempt to negotiate a definitive agreement.
On June 30, 1999, Messrs. Smith and Fountain met individually with the
senior officers of the Company to discuss financial and business diligence. Also
on June 30, 1999, the Company engaged Deutsche Bank Securities Inc. (also known
as Deutsche Banc Alex. Brown) to act as its financial advisor in connection with
the proposed transaction with Ocean Group.
On July 6, 1999, Messrs. Smith, Allan, Fountain and John Coghlan, Finance
Director of Parent, met with members of the Board and outlined Ocean Group's
strategy and the reasons why the Company would provide a compelling strategic
fit. Messrs. Smith, Allan, Fountain and Coghlan then met with members of the
Company's senior management.
From July 7, 1999 until July 14, 1999, Ocean Group, together with its legal
and financial advisors, conducted its due diligence review of the Company.
During the course of this review, the Company made available to Ocean Group and
its representatives legal and financial information and discussed the Company's
business and operations.
20
<PAGE>
On July 8, 1999, the Company and Ocean Group entered into a Confidentiality
and Standstill Agreement, which provided for the exchange of confidential and
non-public information between the two companies to enable both parties to
evaluate their interest in a potential transaction. Ocean Group began a due
diligence investigation of the Company beginning that week which continued
through the weekend.
On July 9, 1999, drafts of the Merger Agreement, the Voting Agreement and
related documentation were distributed by Ocean Group. On July 12, 1999, members
of the Special Committee met in New York City with representatives of Dewey
Ballantine LLP, the Company's legal advisor, and Deutsche Banc Alex. Brown to
discuss the draft documents and various legal and business aspects of the
potential transaction.
On July 13 and 14, 1999, members of the Special Committee and the Company's
legal and financial advisors met with representatives of Ocean Group and its
legal and financial advisors to negotiate the terms of the Merger Agreement and
the Voting Agreements.
On July 14, 1999, having failed to reach an agreement on the price to be
paid to the Company's stockholders in the Offer and Merger and certain other key
terms of the Merger Agreement, the Company and Ocean Group elected to suspend
negotiations.
On July 15, 1999, Mr. Fountain called Mr. Matney and they discussed the
major open issues, including price.
On July 16, 1999, at a previously scheduled meeting of the Board, the
Special Committee made a presentation in which it advised Board members of the
status of the negotiations with Ocean Group and the failure to reach an
agreement on price and certain other key terms, including "deal protection"
features sought by Ocean Group. Representatives of the Company's legal and
financial advisors were also present and participated in the meeting.
On July 19, 1999, Messrs. Young and Smith called Mr. Matney to say that
Ocean Group desired to continue discussions in order to attempt to reach
agreements on the key transaction terms.
On July 20, 1999, Mr. Matney telephoned Mr. Allan and indicated that the
Company was interested in restarting negotiations and that he believed that the
parties could reach an agreement on the terms of the Merger Agreement.
On July 22, 1999 Messrs. Smith and Allan spoke with Mr. Matney. Various
aspects of the deal were discussed, including price and deal protection.
Although no agreement was reached, the parties believed that their differences
were narrowing and the parties agreed to talk again the next day.
On the morning of July 23, 1999, Mr. Allan spoke with Mr. Matney, and they
agreed that the parties should resume face to face negotiations. Later that day,
revised transaction documentation was circulated by counsel for Ocean Group.
On July 23, 1999, a special meeting of the Board was held at which Mr.
Matney advised members of the conversations which had occurred between
representatives of the Company and Ocean Group since the July 16, 1999, Board
meeting. Representatives of the Company's legal and financial advisors were also
present and participated in the meeting.
On July 26, 1999, Mr. Fitzgerald and representatives of the Company's legal
advisors met with representatives of Ocean Group and its legal and financial
advisors in an attempt to conclude negotiations with respect to the terms of the
Merger Agreement and the Voting Agreements. Negotiations continued for the
balance of the day and into the evening.
During this time, a special meeting of the Board was convened to consider
the Merger Agreement and related transactions, including the Offer.
Representatives of the Company's legal and financial advisors were also present
and participated in the meeting. Mr. Fitzgerald, as Chairman of the Special
Committee, chaired the meeting and summarized the negotiations that had taken
place, including the $23.00 per Share proposed to be paid pursuant to the Offer
and the Merger. Following a detailed description of the analyses it had
performed, Deutsche Banc Alex. Brown then rendered to the Board its oral
opinion, subsequently
21
<PAGE>
confirmed in writing, that the consideration to be received by the holders of
Shares pursuant to the Merger Agreement was fair, as of such date, to such
holders from a financial point of view. Thereafter, the Board unanimously
approved the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger, determined that the terms of the Offer and
the Merger are in the best interests of the Company's stockholders and
recommended that the Company's stockholders accept the Offer and tender their
Shares.
On July 27, 1999, the Merger Agreement and the related agreements were
executed.
The Company announced the transaction in a press release on July 27, 1999.
(B)(2) REASONS FOR THE RECOMMENDATION
In making its recommendation set forth in paragraph (a) above, the Board
considered a number of factors, including, without limitation:
(i) the financial condition, results of operations, business and prospects
of the Company, including the prospects if the Company were to remain
independent;
(ii) historical market prices and trading information with respect to the
Shares;
(iii) the fact that the Merger and Offer will provide stockholders of the
Company the opportunity to receive a premium of approximately 30.5% over the
closing price for the Shares on July 21, 1999, the last trading day on which any
Shares were traded prior to the date of Deutsche Bank's opinion;
(iv) the financial and other terms and conditions of the Merger Agreement;
(v) the financial presentation of Deutsche Banc Alex. Brown to the Board in
connection with the Offer and the Merger, including its written opinion dated
July 26, 1999, to the effect that, as of such date and based upon and subject to
certain matters stated in its opinion, the $23.00 per Share cash consideration
to be received in the Offer and the Merger by holders of Shares (other than
Parent and its affiliates) pursuant to the Merger Agreement was fair, from a
financial point of view, to such holders. The full text of Deutsche Banc Alex.
Brown's written opinion dated July 26, 1999, which sets forth the assumptions
made, matters considered and limitations on the review undertaken, is attached
hereto as Annex B, and is incorporated herein by reference. Deutsche Banc Alex.
Brown's opinion is directed only to the fairness, from a financial point of
view, of the $23.00 per Share cash consideration to be received by the holders
of Shares pursuant to the Merger Agreement, and is not intended to constitute,
and does not constitute, a recommendation as to whether any stockholder should
tender Shares pursuant to the Offer. HOLDERS OF SHARES ARE URGED TO READ THE
OPINION CAREFULLY IN ITS ENTIRETY;
(vi) the likelihood that the Merger would be consummated, including the
likelihood of satisfaction of the regulatory approvals required pursuant to, and
the other conditions to, the Offer and the Merger contained in the Merger
Agreement; and
(vii) the recommendation of the Company's management with respect to the
proposed transaction.
The foregoing discussion of the information and factors considered is not
intended to be exhaustive. Furthermore, the Board did not assign relative
weights to the above factors nor did it determine that any one factor was of
special importance. Rather, the Board viewed its position and recommendations as
being based on the totality of the information presented to and considered by
it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company has retained Deutsche Banc Alex. Brown to act as its financial
advisor in connection with the Offer and the Merger. Pursuant to the terms of
this engagement, the Company has agreed to pay Deutsche Banc Alex. Brown for its
services upon completion of the Offer and the Merger an aggregate financial
advisory fee of approximately $2.0 million, less certain credits. The Company
also has agreed to reimburse Deutsche Banc Alex. Brown for reasonable travel and
other out-of-pocket expenses, including the fees and expenses of legal counsel,
and to indemnify Deutsche Banc Alex. Brown and related parties
22
<PAGE>
against certain liabilities, including liabilities under the federal securities
laws, relating to or arising out of their engagement. Deutsche Banc Alex. Brown
is an affiliate of Deutsche Bank AG (together with its affiliates, the "DB
Group"). One or more members of the DB Group have, from time to time, provided
investment banking services to the Company and Ocean Group, for which services
the DB Group has received compensation. A member of the DB Group will be
participating as the sole arranger of the credit facility provided to Ocean
Group for the financing of the Offer and the Merger, for which services such
member of the DB Group will receive compensation. In the ordinary course of
business, members of the DB Group and their successors and affiliates may
actively trade or hold the securities of the Company and Ocean Group for their
own accounts or for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best knowledge of the Company, no transaction in the Shares have
been effected within the past 60 days by the Company or by any executive
officer, director, affiliate or subsidiary of the Company except that on June
30, 1999, each of Douglas Wm. List, William E. Greenwood, Thomas J. Fitzgerald
and Dr. Jay U. Sterling, received 400 Shares from the Company as partial
compensation for services as a director of the Board pursuant to the 1995 Plan
(as described in the Information Statement under "Directors' Fees and
Compensation").
(b) To the best knowledge of the Company, the persons referred to in Item
6(a) who own Shares currently intend to tender all such Shares to Purchaser
pursuant to the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result in:
(i) an extraordinary transaction such as a merger or reorganization, involving
the Company or any subsidiary of the Company; (ii) a purchase, sale or transfer
of a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or dividend
policy of the Company.
(b) Except as set forth in this Schedule 14D-9, there are no transactions,
Board resolutions, agreements in principle or signed contracts in response to
the Offer which relate to or would result in one or more of the matters referred
to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
The information contained in all of the Exhibits referred to in Item 9 below
is incorporated herein by reference in its entirety.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase, dated July 29, 1999.(1)
(a)(2) Letter of Transmittal.(1)
(a)(3) Press release issued by the Company, dated July 27, 1999.(3)
(a)(4) Opinion of Deutsche Bank Securities Inc., dated July 26, 1999 (included as Annex B hereto).*
(a)(5) Letter to stockholders of the Company, dated July 29, 1999.*
(a)(6) Form of summary advertisement.(1)
(c)(1) Company Information Statement pursuant to Section 14(f) of the Securities Exchange Act of 1934 and Rule
14f-1 thereunder (included as Annex A hereto).*
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------
<S> <C>
(c)(2) Agreement and Plan of Merger, dated as of July 27, 1999.(3)
(c)(3) Form of Tender and Voting Agreement and Irrevocable Proxy, dated as of July 27, 1999, among Parent,
Purchaser and David H. Wedaman.(1)
(c)(4) Form of Tender and Voting Agreement and Irrevocable Proxy, dated as of July 27, 1999, among Parent,
Purchaser and R.C. Matney.(1)
(c)(5) Form of Tender and Voting Agreement and Irrevocable Proxy, dated as of July 27, 1999, among Parent,
Purchaser and James T. Graves. (1)
(c)(6) Form of Tender and Voting Agreement and Irrevocable Proxy, dated as of July 27, 1999, among Parent,
Purchaser and William E. Greenwood.(1)
(c)(7) Form of Tender and Voting Agreement and Irrevocable Proxy, dated as of July 27, 1999, among Parent,
Purchaser and Thomas J. Fitzgerald.(1)
(c)(8) Form of Tender and Voting Agreement and Irrevocable Proxy, dated as of July 27, 1999, among Parent,
Purchaser and Dr. Jay U. Sterling.(1)
(c)(9) Confidentiality Agreement, dated July 8, 1999, by and between the Company and Ocean Group.(1)
(c)(10) Employment and Noncompete Agreement between R.C. Matney and the Company, dated as of April 1, 1992.(2)
(c)(11) Addendum No. 4 to Employment and Noncompete Agreement between R.C. Matney and the Company, dated as of
February 1, 1993.(2)
(c)(12) Employment and Noncompete Agreement between David H. Wedaman and the Company, dated as of January 1,
1999.(2)
(c)(13) Employment and Noncompete Agreement between Mark A. Skoda and the Company, dated as of December 15,
1998.(2)
(c)(14) Employment and Noncompete Agreement between Robert E. Liss and Taurus Trucking, Inc., dated as of July
1, 1994.(2)
(c)(15) Addendum to Employment and Noncompete Agreement between Robert E. Liss and Taurus Trucking, Inc., dated
as of December 23, 1998.(2)
(c)(16) Employment and Noncompete Agreement between Michael J. Musacchio and Mark VII Logistics, dated as of
June 1, 1995.(2)
(c)(17) Addendum to Employment and Noncompete Agreement between Michael Musacchio and Mark VII Logistics, dated
as of September 1, 1995.(2)
(c)(18) Form of Employment and Noncompete Agreement between Paul Stone and the Company, dated as of May 19,
1999.
(c)(19) MNX Incorporated Amended and Restated 1986 Incentive Stock Option Plan.(2)
(c)(20) Amendment No. 5 to MNX Incorporated Amended and Restated 1986 Incentive Stock Option Plan.(2)
(c)(21) MNX Incorporated 1992 Non-Qualified Stock Option Plan.(2)
(c)(22) Amendment No. 1 to MNX Incorporated 1992 Non-Qualified Stock Option Plan.(2)
(c)(23) MNX Incorporated Stock Appreciation Rights Program, dated April 24, 1990.(2)
(c)(24) The Company's 1995 Omnibus Stock Incentive Plan.(2)
(c)(25) Amendment No. 1 to the Company's 1995 Omnibus Stock Incentive Plan.(2)
(c)(26) Stock Purchase and Stockholder Agreement, dated as of July 27, 1999, between Ocean Group and R.C.
Matney.(1)
(c)(27) Form of Stock Purchase and Stockholder Agreement between Ocean Group and David H. Wedaman.(1)
</TABLE>
- ------------------------
* Included in materials delivered to stockholders of the Company.
(1) Filed as an exhibit to Ocean Group's, Parent's and Purchaser's Tender Offer
Statement on Schedule 14D-1, dated July 29, 1999, and incorporated herein by
reference.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-K, dated
January 2, 1999, and incorporated herein by reference.
(3) Filed as an exhibit to the Company's Current Report on Form 8-K, dated July
28, 1999, and incorporated herein by reference.
24
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
MARK VII, INC.
By: /s/ R.C. Matney
--------------------------------------
R.C. Matney
Chairman of the Board and
Chief Executive Officer
Dated: July 29, 1999
25
<PAGE>
ANNEX A
MARK VII, INC.
965 RIDGE LAKE BOULEVARD, SUITE 100
MEMPHIS, TENNESSEE 38120
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about July 29, 1999, as part of
the Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") to holders of the outstanding shares of common stock, par value $0.05
per share (the "Shares"), of Mark VII, Inc., a Delaware corporation (the
"Company"). You are receiving this Information Statement in connection with the
possible election of persons designated by MSAS Global Logistics Inc. ("Parent")
to a majority of the seats on the board of directors of the Company (the
"Board").
On July 27, 1999, the Company, Parent, and MSAS Acquisition Corporation
("Purchaser") entered into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which Parent is required to cause Purchaser to commence
a tender offer (the "Offer") to purchase any and all Shares at a price of $23.00
per Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Purchaser's Offer to Purchase
dated July 29, 1999 (the "Offer to Purchase") and in the related Letter of
Transmittal (as amended or supplemented, collectively, the "Offer Documents"),
copies of which have been mailed to stockholders of the Company and are filed as
Exhibits (a)(1) and (a)(2), respectively, to the Tender Offer Statement on
Schedule 14D-1 (as amended from time to time, the "Schedule 14D-1") filed by
Parent and Purchaser with the Securities and Exchange Commission (the "SEC").
Pursuant to the Merger Agreement, Purchaser commenced the Offer on July 29,
1999. The Offer is scheduled to expire at 12:00 Midnight, New York City time, on
Thursday, August 26, 1999, unless extended.
The Merger Agreement contemplates that, following consummation of the Offer,
Purchaser will be merged (the "Merger") with and into the Company with the
Company as the surviving corporation and stockholders of the Company receiving
an amount in cash equal to $23.00. The Offer, the Merger and the Merger
Agreement are more fully described in the Schedule 14D-9 to which this
Information Statement forms Annex A, which was filed by the Company with the SEC
on July 29, 1999 and which is being mailed to stockholders of the Company along
with this Information Statement.
This Information Statement is being mailed to you in accordance with Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and Rule 14f-1 promulgated thereunder. The information set forth herein
supplements certain information set forth in the Schedule 14D-9. Information set
forth herein related to Parent, Purchaser or the Designees (as defined herein)
has been provided by Parent and the Company assumes no responsibility for the
accuracy, completeness or fairness of such information. You are urged to read
this Information Statement carefully. You are not, however, required to take any
action in connection with the matters set forth herein.
GENERAL
The Shares are the only class of voting securities of the Company
outstanding that are entitled to vote at a meeting of the stockholders of the
Company. At the close of business on July 21, 1999, there were 8,995,515 Shares
outstanding, and each Share is entitled to one vote.
The Board currently consists of seven members and there are currently no
vacancies on the Board. Each director serves a term of three years or until his
or her successor is duly elected and qualified. The Board is staggered and
divided into three classes as nearly equal in numbers as the then total number
of directors constituting the entire Board permits with the term of office of
one class expiring each year.
A-1
<PAGE>
RIGHT TO DESIGNATE DIRECTORS
The Merger Agreement provides that promptly after the purchase by Purchaser
of Shares pursuant to the Offer such that Parent and Purchaser own at least a
majority of Shares on a fully-diluted basis, Parent shall be entitled, to the
extent permitted by law, to designate such number of directors (the
"Designees"), rounded up to the next whole number, on the Board, subject to
compliance with Section 14(f) of the Exchange Act and Rule 14f-1, promulgated
thereunder, as is equal to the product of the total number of directors on the
Board multiplied by the percentage that such number of Shares so purchased bears
to the total number of outstanding Shares on a fully-diluted basis. The Company
has agreed, upon request of Parent, to use its reasonable efforts promptly
(i)(a) either to increase the size of the Board or (b) secure the resignation of
such number of incumbent directors as is necessary to enable the Designees to be
elected to the Board and (ii) to cause the Designees to be so elected. The
Company is also obligated at such times to use reasonable efforts to cause the
Designees to constitute the same percentage as is on the Board of each committee
of the Board, each board of directors of each subsidiary of the Company and each
committee of each such board.
Notwithstanding the foregoing, the Merger Agreement provides that (i) the
Company shall ensure that three of the members of the Board as of July 27, 1999
(the "Continuing Directors"), who are neither officers of the Company or any of
its subsidiaries nor officers or directors of Purchaser or any of its affiliates
shall remain members of the Board until the Effective Time and (ii) if a
Continuing Director resigns from the Board, Parent, Purchaser and the Company
shall permit the remaining Continuing Director or Directors to appoint the
resigning director's successor who shall be deemed to be a Continuing Director.
INFORMATION WITH RESPECT TO DESIGNEES
Parent has informed the Company that it will choose the Designees from the
persons listed below. Parent has also informed the Company that each of the
Designees has consented to act as a director, if so designated. Biographical
information concerning each of the Designees is presented below. The following
biographical information provided herein has been furnished to the Company by
Parent, and the Company assumes no responsibility for the accuracy or
completeness of such information.
None of the Designees (i) is currently a director of, or holds any position
with, the Company, (ii) has a familial relationship with any of the directors of
executive officers of the Company or (iii) to Parent's knowledge, beneficially
owns any securities (or rights to acquire any securities) of the Company. The
Company has been advised by Parent that, to Parent's knowledge, none of the
Designees has been involved in any transaction with the Company or any of its
directors, executive officers or affiliates that is required to be disclosed
pursuant to the rules and regulations of the SEC, except as may be disclosed
herein or in the Schedule 14D-9.
The following table sets forth the name, age, citizenship, business or
residence address, principal occupation or employment at the present time and
during the last five years, and the name of any corporation or other
organization in which such employment is conducted or was conducted of each
executive officer or director of Ocean Group plc ("Ocean Group"), MSAS Global
Logistics Inc. ("Parent") and MSAS Acquisition Corporation ("Purchaser") whom
Parent has identified as the candidates to be Parent Designees. Each occupation
set forth opposite a person's name, unless otherwise indicated, refers to
employment with Ocean Group. Unless otherwise indicated, the principal business
address of each director or executive officer is Ocean Group plc, Ocean House,
The Ring, Bracknell, Berkshire RG12 1AW, United Kingdom. Messrs. Smith, Young
and Fountain are directors and executive officers of Purchaser as well as of
Parent. In the event that additional Parent Designees are required in order to
constitute a majority of the Board, such additional Parent Designees will be
selected by Parent from among the directors and executive officers of Ocean
Group and Parent, information about whom is contained in Schedule I to the Offer
to Purchase, which is incorporated herein by reference.
A-2
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE, CITIZENSHIP AND PRESENT OCCUPATION OR OTHER MATERIAL POSITIONS
CURRENT BUSINESS ADDRESS EMPLOYMENT HELD DURING THE PAST FIVE YEARS
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
John Murray Allen, 50 Chief Executive Non-Executive Director- Wolseley plc
British citizenship since 1999; Non-Executive
Director-Hamleys plc since 1996;
Director-BET plc from 1987 to 1994
John Bernard Coghlan, 41 Finance Director Director Financial Services of
Irish citizenship Tomkins plc from 1987 to 1995
Ian Richard Smith, 45 Group Commercial Director Managing Director-Monitor Company
British citizenship from 1985 to 1998
Stuart Anthony Young, 42 Director of Mergers and Acquisitions Group Financial Controller from 1994
British citizenship to 1997
Michael Peter Fountain, 45 Director, President, Chief Executive None
British citizenship Officer, Chief Operating Officer and
Regional Chief Executive Americas
Pacific Region-MSAS Global Logistics
Inc.
Timothy Charles Jones, 35 Director and Vice President Finance Finance Director-Cory Environmental
British citizenship Americas Pacific Region-MSAS Global Limited from 1995 to 1998; Deputy
Logistics Inc. Group Financial Controller-Ocean
Group plc during 1995
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
Listed below is the name, age, principal occupation, five year employment
history and public directorships, if any, of each current member of the Board.
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION FOR
DIRECTOR SINCE AGE LAST FIVE YEARS AND DIRECTORSHIPS
- ------------------------------------ ----------- --- -----------------------------------------------------------
<S> <C> <C> <C>
R. C. Matney........................ 1989 61 Mr. Matney has served as Chairman of the Board of the
Company since February 1992, and Chief Executive Officer of
the Company since July 1994. From May 1991 until January
1999, Mr. Matney was President of the Company. Since July
1987, Mr. Matney has also been Chairman of the Board and
Chief Executive Officer of Mark VII Transportation Company,
Inc. ("Mark VII Transportation"), the Company's principal
operating subsidiary. From July 1987 to February 1993, he
was also President of Mark VII Transportation.
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION FOR
DIRECTOR SINCE AGE LAST FIVE YEARS AND DIRECTORSHIPS
- ------------------------------------ ----------- --- -----------------------------------------------------------
<S> <C> <C> <C>
Douglass Wm. List................... 1993 43 Since January 1988, Mr. List has been President of List &
(1, 2, 4) Company, Inc., a management consulting firm in Baltimore,
Maryland. Mr. List has also been President, since 1992, of
Railway Engineering Associates, a firm involved in
developing railroad technology. From 1988 to 1992, he was
Vice President and General Manager of Railway Engineering
Associates. Since January 1997, Mr. List has also been
President of Moorgate, Inc., a registered investment
adviser. Mr. List is a director of Harmon Industries, Inc.,
a publicly held company headquartered in Blue Springs,
Missouri. Harmon Industries, Inc. is a supplier of
communication and safety-related equipment for railroads
worldwide.
William E. Greenwood................ 1994 61 Mr. Greenwood is currently a self-employed consultant. He
(2, 3, 4) served with the Burlington Northern Railroad Company, one
of the largest railroads in the United States and the
principal subsidiary of Burlington Northern Inc., a
publicly held company headquartered in Fort Worth, Texas,
in various capacities from 1963 to 1994, serving as Chief
Operating Officer from 1990 to 1994. Mr. Greenwood is a
director of AmeriTruck Distribution Corporation, a large
specialized trucking company located in Fort Worth, Texas,
that is privately held and is an SEC registrant due to its
public debt securities. He is a director of Transport
Dynamics, Inc., a privately held logistics software
development and service company located in Princeton, New
Jersey. He is a director of Box Energy Corporation, located
in Dallas, Texas, a publicly held, independent exploration
and production company primarily engaged in the exploration
for and the development and production of oil and natural
gas.
James T. Graves..................... 1987 64 Mr. Graves has served as Secretary of the Company since May
1992, General Counsel of the Company since March 1993, and
Vice Chairman since May 1993. He was President of
Missouri-Nebraska Express, Inc. ("Mo-Neb"), a subsidiary of
the Company, from September 1991 to May 1993.
Thomas J. Fitzgerald................ 1995 57 Mr. Fitzgerald has a law and transportation consulting
(1, 3, 4) practice based in Lake Forest, Illinois, in which he has
been engaged since 1990. In that capacity he has counseled
transportation companies, purchasers of transportation and
government agencies on a variety of projects, including
logistics, marketing, strategic positioning and
acquisitions.
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION FOR
DIRECTOR SINCE AGE LAST FIVE YEARS AND DIRECTORSHIPS
- ------------------------------------ ----------- --- -----------------------------------------------------------
<S> <C> <C> <C>
David H. Wedaman.................... 1994 41 Mr. Wedaman has been Executive Vice President of the
Company since May 1991, and Chief Operating Officer,
Assistant Secretary and Assistant Treasurer of the Company
since September 1994. He has also served as President,
Chief Operating Officer and Assistant Secretary of Mark VII
Transportation since February 1993. From March 1991 to
February 1993, he was Executive Vice President of Mark VII
Transportation.
Dr. Jay U. Sterling................. 1995 65 Dr. Sterling has been an Associate Professor of Marketing
(1, 2, 3) and Logistics at the University of Alabama, Tuscaloosa
since 1984. Dr. Sterling has a Doctor of Philosophy
("Ph.D.") degree in marketing and logistics from Michigan
State University. In addition to his teaching
responsibilities, he has performed research and written
extensively in the areas of transportation, distribution
and logistics management and has also consulted extensively
in the areas of transportation and logistics management.
Prior to obtaining his Ph.D., Dr. Sterling spent 25 years
in industry with Whirlpool Corporation and The Limited in
various logistics related positions.
</TABLE>
Each of the directors has been engaged in the principal occupation(s)
described above during the past five years.
- ------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation/Stock Option Committee.
(3) Member of the Strategic Planning Committee.
(4) Member of the Corporate Governance Committee.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors held six meetings during 1998.
The Audit Committee consists of Dr. Jay U. Sterling (Chairman), Thomas J.
Fitzgerald and Douglass Wm. List. The functions of the Audit Committee are to
review significant financial information of the Company, ascertain the existence
of an effective accounting and internal control system, oversee the audit
function and recommend the appointment of independent auditors for the Company.
The Audit Committee held six meetings in 1998. A representative of the Company's
independent auditors was present at those meetings, as well as at all of the
regular Board meetings.
The Compensation/Stock Option Committee consists of Douglass Wm. List
(Chairman), William E. Greenwood and Dr. Jay U. Sterling. The Compensation/Stock
Option Committee reviews salaries and bonuses of executive officers and
administers employee bonus plans, including grants of stock options under the
1995 Plan, and other Company compensation programs. The Compensation/Stock
Option Committee held six meetings in 1998.
A-5
<PAGE>
The Strategic Planning Committee consists of William E. Greenwood
(Chairman), Dr. Jay U. Sterling and Thomas J. Fitzgerald. The Strategic Planning
Committee conducted its initial meeting on September 18, 1998, and is
responsible for developing and guiding an effective short and long-term planning
process that will fully develop the potential of the Company. The Strategic
Planning Committee held three meetings in 1998.
The Corporate Governance Committee conducted its initial meeting on
September 18, 1998, and consists of Thomas J. Fitzgerald (Chairman), William E.
Greenwood and Douglass Wm. List. The Corporate Governance Committee serves as
the nominating committee for the Board, assisting the Board in matters
pertaining to the overall structure and organization of the Board and its
effective operation and conduct. The Corporate Governance Committee held three
meetings in 1998.
All directors attended at least 75% of the total number of meetings held in
1998 of the Board and committees on which they served.
DIRECTORS' FEES AND COMPENSATION
Non-employee directors are compensated as follows: (i) a $500 per month
retainer, with an additional $250 per month for the chairman of each of the
Board Committees, (ii) meeting fees of $1,500, $750 and $500 for each Board,
committee and telephonic Board meeting attended, respectively, (iii) an annual
grant of options to purchase 4,000 shares of common stock pursuant to the 1995
Plan, which options are immediately exercisable and expire three years from the
date of grant, (iv) grants of 400 shares of common stock each quarter pursuant
to the 1995 Plan and (v) a standard per diem rate of $1,500 per day spent on
Company affairs which are outside of normal director duties. In addition, the
Company requires that each director maintain a minimum shareholding in Company
common stock of 700 shares for each year of service as a director.
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY
Set forth below is certain information regarding each of the current
executive officers and key employees of the Company. See "Board of Directors and
Committees" for further information about Messrs. Matney, Wedaman and Graves.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------ ----- --------------------------------------------------------------------
<S> <C> <C>
R. C. Matney........................ 61 Chairman of the Board and Chief Executive Officer
Mark A. Skoda....................... 45 President since January 1999. From June 1998 to January 1999, Mr.
Skoda was Executive Vice President of Penske Logistics, a division
of Penske Truck Leasing, Inc. From June 1995 to May 1998, he was
Senior Vice President of TNT Logistics, Inc. and from March 1994 to
May 1995, he was Vice President of FedEx Logistics, a division of
Federal Express Corporation. Mr. Skoda was Director of Sales and
Marketing for Business Logistics Services, a division of Federal
Express Corporation, from May 1993 to February 1994. He was Vice
President of UPS Worldwide Logistics, a division of United Parcel
Service, Inc. from September 1992 to April 1993, and Executive Vice
President of UPS Yomato, Inc. from January 1990 to August 1992.
</TABLE>
A-6
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------ ----- --------------------------------------------------------------------
<S> <C> <C>
David H. Wedaman.................... 41 Executive Vice President, Chief Operating Officer, Assistant
Secretary and Assistant Treasurer of the Company. President of Mark
VII Transportation.
Michael J. Musacchio................ 47 President of Mark VII Worldwide Logistics, Inc., a wholly-owned
subsidiary of Mark VII Transportation, since October 1998. President
of Logistics Services Division of Mark VII Transportation from June
1995 to October 1998. From January 1993 to June 1995, Mr. Musacchio
was Executive Vice President of Logistics Services Division of Mark
VII Transportation.
Robert E. Liss...................... 48 President of Special Services Division of Mark VII Transportation
since January 1995, and Vice President of Special Services Division
of Mark VII Transportation from May 1993 to January 1995.
James T. Graves..................... 64 Vice Chairman of the Board, General Counsel and Secretary.
Paul Stone.......................... 35 Chief Financial Officer and Executive Vice President since June
1999. Chief Financial Officer of Geo Logistics Network Solutions
from January 1997 to June 1999. Vice President and Controller of the
Bekins Company from September 1994 to January 1997.
</TABLE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth with respect to the common stock as of July
27, 1999 (unless otherwise indicated): (i) the only persons known to be
beneficial owners of more than five percent of the common stock; (ii) shares
beneficially owned by all directors and nominees for election as a director of
the Company; (iii) shares beneficially owned by the persons named in the Summary
Compensation Table in this Information Statement; and (iv) shares beneficially
owned by all directors and executive officers as a group. On July 27, 1999, the
Company had 8,995,515 shares of common stock issued and outstanding. Beneficial
ownership is direct, and the holders have sole investment power and sole voting
power, unless otherwise indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND NATURE
OF BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS (1) OWNERSHIP OF CLASS
- ----------------------------------------------------------------------------- ---------------------- -----------
<S> <C> <C>
Warburg Pincus Asset Management, Inc. ....................................... 1,992,200(2) 22.1%
466 Lexington Avenue
New York, NY 10017
R.C. Matney.................................................................. 1,141,880(3) 12.1%
Dresdner RCM Global Investors L.L.C. ........................................ 1,346,400(4) 15.0%
Dresdner RCM Global Investors U.S. Holdings L.L.C.
Dresdner Bank AG
Four Embarcadero Center, Suite 2900
San Francisco, CA 94111
The Northwestern Mutual Life Insurance Company............................... 873,700(5) 9.7%
720 East Wisconsin Avenue
Milwaukee, WI 53202
</TABLE>
A-7
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND NATURE
OF BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS (1) OWNERSHIP OF CLASS
- ----------------------------------------------------------------------------- ---------------------- -----------
<S> <C> <C>
FMR Corp. ................................................................... 914,200(6) 10.2%
82 Devonshire Street
Boston, MA 02109
Wellington Management Company, L.L.P. ....................................... 657,400(7) 7.3%
75 State Street
Boston, MA 02109
Roger O. Brown .............................................................. 470,000(8) 5.2%
Brown & Brown L.L.C.
225 W. Washington Street, Suite 1650
Chicago, IL 60606
Dimensional Fund Advisors Inc. .............................................. 466,600(9) 5.2%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
David H. Wedaman............................................................. 150,342(10) 1.6%
James T. Graves.............................................................. 130,600(11) 1.4%
William E. Greenwood......................................................... 31,800(12) .4%
Dr. Jay U. Sterling.......................................................... 25,100(13) .3%
Thomas J. Fitzgerald......................................................... 25,650(14) .3%
Michael J. Musacchio......................................................... 17,334(15) .2%
Douglass Wm. List............................................................ 18,660(16) .2%
Paul Stone................................................................... -- --
All Executive Officers and Directors as a Group.............................. 1,575,082(17) 16.1%
(10 persons)
</TABLE>
- ------------------------
(1) Unless otherwise indicated, the address is the Company's principal office.
(2) Warburg Pincus Asset Management, Inc. ("Warburg"), a registered investment
adviser, is deemed to have beneficial ownership of 1,992,200 shares as of
December 31, 1998, which are owned by numerous investment advisory clients.
Warburg has sole voting power with regard to 1,587,200 shares, sole
investment power with regard to 1,992,200 shares and shared voting power
with regard to 389,700 shares. The information as to the beneficial
ownership of Warburg was obtained from the Schedule 13G/A filed by that
company.
(3) Includes 610,860 shares owned indirectly through Mr. Matney's living trust,
90,520 shares owned indirectly through Mr. Matney's individual retirement
account, 440,500 shares issuable pursuant to stock options granted under the
Company's 1995 Omnibus Stock Incentive Plan, as amended (the "1995 Plan"),
the 1992 Non-Qualified Stock Option Plan (the "1992 Plan") and the 1986
Incentive Stock Option Plan (the "1986 Plan").
(4) Dresdner RCM Global Investors L.L.C. ("Dresdner RCM"), a registered
investment adviser and wholly-owned subsidiary of Dresdner RCM U.S. Holdings
L.L.C. ("DRCM Holdings") is deemed to have beneficial ownership of 1,346,400
shares as of December 31, 1998. DRCM Holdings is a wholly-owned subsidiary
of Dresdner Bank AG. Dresdner Bank AG and DRCM Holdings are deemed to have
beneficial ownership of securities managed by Dresdner RCM. Dresdner RCM has
sole voting
A-8
<PAGE>
power with regard to 1,101,325 shares, sole investment power with regard to
1,276,400 shares and shared investment power with regard to 70,000 shares.
The information as to the beneficial ownership of Dresdner RCM, DRCM
Holdings and Dresdner Bank AG was obtained from the Schedules 13G/A filed by
those companies.
(5) The Northwestern Mutual Life Insurance Company ("Northwestern"), an
insurance company, is deemed to have beneficial ownership of 873,700 shares
as of December 31, 1998. Northwestern has sole voting power with regard to
632,100 shares, shared voting power with regard to 241,600 shares, sole
investment power with regard to 632,100 shares and shared investment power
with regard to 241,600 shares. The information as to the beneficial
ownership of Northwestern was obtained from the Schedule 13G/A filed by that
company.
(6) FMR Corp. ("FMR") is deemed to have beneficial ownership of 914,200 shares
as of December 31, 1998. Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR and a registered investment
adviser, is the beneficial owner of 628,800 shares and Fidelity Management
Trust Company, a wholly-owned subsidiary of FMR and a bank as defined in
Section 3(a)(6) of the Securities Exchange Act of 1934, is the beneficial
owner of 285,400 shares. FMR has sole voting power with regard to 285,400
shares and sole investment power with regard to 914,200 shares. The
information as to the beneficial ownership of FMR was obtained from the
Schedule 13G/A filed by that company.
(7) Wellington Management Company, L.L.P. ("Wellington"), a registered
investment adviser, is deemed to have beneficial ownership of 657,400 shares
as of December 31, 1998, which are owned by numerous investment advisory
clients. Wellington has shared voting power with regard to 429,000 shares
and shared investment power with regard to 657,400 shares. The information
as to the beneficial ownership of Wellington was obtained from the Schedule
13G/A filed by that company.
(8) Roger O. Brown, an individual, is deemed to have beneficial ownership of
470,000 shares as of April 12, 1999, which are owned by numerous trusts and
LLCs. Mr. Brown has sole voting power with regard to 470,000 shares and sole
investment power with regard to 470,000 shares. The information as to the
beneficial ownership of Mr. Brown was obtained by the Schedule 13G filed by
Mr. Brown.
(9) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 466,600 shares as of
December 31, 1998, which are owned by numerous investment advisory clients.
Dimensional has sole voting power with regard to 466,600 shares and sole
investment power with regard to 466,600 shares. The information as to the
beneficial ownership of Dimensional was obtained from the Schedule 13G/A
filed by that company.
(10) Includes 147,600 shares issuable pursuant to stock options granted under
the 1986 Plan and the 1995 Plan, and 2,742 shares allocated to the Mark VII,
Inc. Savings and Investment Plan (the "SIP Plan") account of Mr. Wedaman.
Mr. Wedaman has sole investment power and shared voting power with respect
to the shares allocated to his SIP Plan account.
(11) Includes 10,600 shares held in Mr. Graves' individual retirement account
and 120,000 shares issuable pursuant to stock options granted under the 1992
Plan. Of the 120,000 shares issuable pursuant to stock options, 80,000 are
held indirectly through the James T. Graves Family Trust.
(12) Includes 22,000 shares issuable pursuant to stock options granted under the
1992 and 1995 Plans.
(13) Includes 12,000 shares issuable pursuant to stock options granted under the
1995 Plan.
(14) Includes 13,250 shares owned jointly with Mr. Fitzgerald's wife and 12,000
shares issuable pursuant to stock options granted under the 1995 Plan.
(15) Includes 13,434 shares owned jointly with Mr. Musacchio's wife.
(16) Includes 3,000 shares owned indirectly through Mr. List's individual
retirement account and 12,000 shares issuable pursuant to stock options
granted under the 1995 Plan.
(17) Includes 766,100 shares issuable pursuant to stock options granted under
the 1986, 1992 and 1995 Plans.
A-9
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes, for each of the three fiscal years in the
period ended January 2, 1999, the compensation awarded, paid to or earned by (i)
the Chief Executive Officer (the "CEO") of the Company during 1998 and (ii) each
of the four most highly compensated executive officers (other than the CEO)
whose total annual salary and bonus exceeded $100,000 and who served as an
executive officer of the Company or its subsidiaries as of January 2, 1999
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------
ANNUAL COMPENSATION SECURITIES
NAME AND ---------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY (1) BONUS OPTIONS/SARS (#) COMPENSATION
- ----------------------------------------- --------- ---------- ---------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
R. C. Matney, Chairman 1998 $ 279,135 $ 256,279 -- $ 35,000(5)
of the Board and Chief 1997 234,988 302,578 $ 40,000
Executive Officer 1996 239,507 130,660 --
David H. Wedaman, 1998 240,000 176,875(3) -- 570(6)
Executive Vice President, 1997 239,231 295,938(3) 68,000 570(6)
Chief Operating Officer 1996 203,365 150,000 -- 315(6)
and Director; President
of Mark VII Transportation
Michael J. Musacchio, 1998 125,000 564,230 -- 1,002(6)
President of Mark VII 1997 125,000 323,788 -- 1,000(6)
Worldwide Logistics, Inc. 1996 127,404 319,851 -- 1,000(6)
James T. Graves, 1998 189,520 15,000 -- 1,002(6)
Vice Chairman of the 1997 189,520 15,000 -- 855(6)
Board, Secretary, General 1996 179,896 18,644 -- --
Counsel and Director
Philip L. Dunavant(2), 1998 141,827 90,000(4) -- 570(6)
Executive Vice President, 1997 118,268 65,625(4) -- 570(6)
Chief Financial Officer, 1996 96,082 35,984 -- 580(6)
Treasurer and Assistant
Secretary
</TABLE>
- ------------------------
(1) Salary amounts included 52 weeks in 1998 and 1997 and 53 weeks in 1996.
(2) Mr. Dunavant resigned from the Company effective May 28, 1999.
(3) Includes performance bonuses of $120,000 and $180,000 and cash payments
pursuant to stock appreciation rights ("SARs") of $56,875 and $115,938 in
1998 and 1997, respectively.
(4) Includes performance bonuses of $60,000 and $60,000 and cash payments
pursuant to stock appreciation rights ("SARs") of $30,000 and $5,625 in 1998
and 1997, respectively.
(5) Initial club dues.
(6) Company matching contribution to the SIP Plan (a defined contribution plan).
No options were granted to any of the Named Executive Officers for the last
completed fiscal year. The following table presents information for exercises of
stock options for the last completed fiscal year and holdings at January 2,
1999, by the Named Executive Officers of unexercised stock options granted
pursuant to the 1986 Plan, the 1992 Plan and the 1995 Plan, and SARs granted
pursuant to the Company's Stock Appreciation Rights Program.
A-10
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
SHARES UNEXERCISED OPTIONS/SARS OPTIONS/SARS AT
ACQUIRED AT FISCAL YEAR END FICAL YEAR END (1)
ON VALUE -------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------ ----------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
R. C. Matney.............................. None None 378,000 282,000 $ 4,678,250 $ 3,034,250
David H. Wedaman.......................... None None 139,600 103,400(2) 1,806,400 596,350
Michael J. Musacchio...................... None None -- -- -- --
James T. Graves........................... None None 120,000 -- 1,740,000 --
Philip L. Dunavant........................ None None 33,866 40,134(3) 312,297 190,953
</TABLE>
- ------------------------
(1) Based on the year end market price of $18.625.
(2) Includes 14,000 shares of common stock with respect to which SARs have been
granted.
(3) Includes 6,000 shares of common stock with respect to which SARs have been
granted.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Each of the Named Executive Officers has an employment contract with the
Company which could result in termination or resignation payments in excess of
$100,000. A summary of the base salary and terms provided in the employment
contracts follows:
<TABLE>
<CAPTION>
EXPIRATION OF
NAME BASE SALARY CONTRACT
- ------------------------------------------------------------------------------ ----------- --------------------
<S> <C> <C>
R. C. Matney.................................................................. $ 330,000 April 1, 2002
Mark A. Skoda (1)............................................................. 300,000 January 15, 2001
David H. Wedaman.............................................................. 260,000 January 1, 2000
Michael J. Musacchio.......................................................... 125,000 30 days' notice by)
either party (2
James T. Graves............................................................... 190,000 30 days' notice by)
either party (2
</TABLE>
- ------------------------
(1) Mr. Skoda is not a Named Executive Officer for the purposes of this
Information Statement. Mr. Skoda was appointed President of the Company in
January 1999. The Company has elected to disclose the terms of his
employment contract herein.
(2) Subject to the termination payments discussed below.
Each of the contracts provides for payment of the contracted base salary and
benefits after termination as follows:
<TABLE>
<CAPTION>
EVENT OF TERMINATION PAY SUBSEQUENT TO TERMINATION
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Death or Disability..................................... One year
Termination by Company, except for cause................ Remainder of contract term (or one year if no specified
term,
</TABLE>
Under each of the contracts, the Company's obligation is reduced following an
event of termination if the terminated executive becomes employed during the
payment period. Mr. Wedaman may be terminated by the Company for failure to
achieve in any given year 50% of the pretax profit projected in the Company's
business plan for his business unit for such year, in which case he will receive
his base salary and benefits
A-11
<PAGE>
for only one year following the date of termination. Mr. Musacchio may be
terminated by the Company with no further payments for failure to achieve pretax
profit (as defined in his agreement) of $250,000 in his business unit for any
year. If Mr. Musacchio is terminated following a year in which $250,000 of
pretax profit was achieved, he will receive the greater of (i) three times his
prior year's compensation or (ii) $1.4 million. In the event this contract is
terminated because pretax profit of $250,000 was not attained but the respective
business unit was profitable, the Company may extend for up to three years the
confidentiality, non-compete and prohibition against solicitation of employees
provisions of the agreement by continuing to pay the base salary and making
advance annual payments of $250,000 for the first year, $200,000 for the second
year and $200,000 for the third year to Mr. Musacchio. The Company may extend
the confidentiality, non-compete and prohibition against solicitation of
employees provisions for up to three years beyond the terms of the contracts of
Messrs. Matney, Skoda, Wedaman and Graves by continuing to pay all base salary,
bonuses and benefits set forth under each of their respective contracts. Upon
Mr. Graves' termination of employment, he will receive one year's base salary
and benefits.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation/Stock Option Committee of the Board of Directors (the "Committee"),
which is comprised of three non-employee directors.
The objective of the Company's executive compensation program is to provide
the compensation necessary to attract, motivate and retain dedicated and
talented executives and to provide a link between the success of the Company's
executives and its shareholders. The Committee believes that a significant
portion of the compensation of the Company's executive officers should be tied
to the performance of the Company and, where appropriate, to the performance of
specific business units for which the executives are responsible. Thus, the
program seeks to achieve these objectives through a combination of annual
salaries, performance-based bonuses and stock options.
The Committee reviews its executive compensation program continually to
ensure that the Company's executive officers are being appropriately compensated
in comparison to their respective responsibilities with the Company, the results
of the Company's business operations and compensation paid to comparable
executives at similar companies. The Committee considers several factors in its
review of executive compensation, including: (i) compensation of executives
holding comparable positions of responsibility at other transportation services
companies, including Hub Group, Inc., Fritz Companies, Inc., Air Express
International Corporation, Circle Financial Group, Expeditors International of
Washington, Inc. and C.H. Robinson Worldwide, Inc. (the "Peer Group"); (ii) each
executive's experience and performance history with the Company and with
previous employers and his or her suitability for his or her present assignment;
(iii) each executive's past compensation arrangements with the Company; (iv)
corporate performance; and (v) performance of business units for which the
executive is responsible. The Committee believes that the Company's executive
officers' total compensation is competitive with the industry.
BASE SALARY
The minimum base salary of each of the Company's executive officers is
established in employment agreements between each such officer and the Company.
The Committee reviews the base salaries of the Company's executives annually
based on the factors described above and recommends adjustments where
appropriate. Based on the Committee's review, Mr. Matney, Mr. Wedaman and Mr.
Dunavant have received salary increases. Under Mr. Matney's addendum to his
employment agreement dated February 1, 1999, his base salary was increased to
$330,000 from $280,000 in 1998. Mr. Wedaman's salary was increased from $240,000
to $260,000 effective January 1, 1999, and Mr. Dunavant's salary was increased
from $150,000 to $175,000 pursuant to an addendum to his employment agreement
dated January 1, 1999.
A-12
<PAGE>
ANNUAL BONUS
The Committee establishes a bonus program for each executive officer that is
designed to implement the Committee's compensation philosophy with respect to
bonus payments. The bonus programs for executives who are in charge of
particular business units are based on the profitability of their respective
business units. In most circumstances, this program is set forth in the
executive's employment agreement.
According to Mr. Wedaman's employment agreement, his bonus program is based
on the pretax profit earned by his business unit as compared to the pretax
profit of the unit for the prior fiscal year. Effective January 1, 1999, Mr.
Wedaman's bonus ranges from 50% of his base salary if the pretax profit of his
business unit exceeds 110% of the pretax profit of the unit for the prior fiscal
year up to 100% of his base salary if the pretax profit of his business unit
exceeds the target set by the committee, approximately 117% of the pretax profit
of the unit for the prior fiscal year. Prior to January 1, 1999, Mr. Wedaman's
bonus ranged from 30% of his base salary if the pretax profit of his business
unit exceeded the pretax profit of the unit for the prior fiscal year by 110% up
to 70% of his base salary if the pretax profit of his business unit exceeded the
pretax profit of the unit for the prior fiscal year by 125%.
Mr. Musacchio's employment agreement provides for an annual bonus of 25% of
pretax profit (computed on the basis of generally accepted accounting principles
consistently applied and defined in the agreement) earned by his business unit,
subject to specific reductions under certain circumstances. Mr. Dunavant
receives an annual bonus of 40% of his base salary if the Company's consolidated
pre-tax profit meets or exceeds 120% of the Company's prior year consolidated
pre-tax profit, as defined in the agreement. If this earnings target is not
achieved in any given year, Mr. Dunavant receives a bonus of 25% of his base
salary.
STOCK OPTIONS/SARS
The Committee has the discretion to grant awards of stock options or SARs to
the Company's executive officers. The Committee has not established performance
factors of general application for the grant of stock options or SAR awards, but
instead makes such decisions based on specific issues. There were no grants of
SARs or options to any of the Company's named executive officers during the year
ended January 2, 1999.
Both Mr. Wedaman and Mr. Dunavant hold stock appreciation rights which
provide for cash payments to holders of the rights for increases in the market
prices of the Company's common stock as of April 1 of each year. The adjusted
base price as of April 1, 1998, was $18.50, as compared to the base price of
$15.25 per share at April 1, 1997. Accordingly, payments of $56,875 and $30,000
were made to Mr. Wedaman and Mr. Dunavant, respectively, under this program in
1998. The base price is adjusted each April 1 if the market closing price on
that date is greater than the previous base price.
CEO COMPENSATION
As with all executive officers of the Company, the compensation of the CEO
is reviewed by the Committee on a regular basis in comparison to compensation
paid to executives holding comparable positions of responsibility, including
those employed at Peer Group companies. The Committee considers the same factors
when determining CEO compensation as it does when it sets compensation of the
Company's other executive officers. Based on such review and as set forth above,
Mr. Matney's base salary was increased to $330,000 for 1999.
Pursuant to his employment agreement, Mr. Matney is paid two annual cash
bonuses. The first bonus is based upon the increase in consolidated income from
continuing operations before income tax ("net pre-tax income") as compared to
the increase prescribed in the Company's operating plan. If the Company's
increase in net pre-tax income is equal to or greater than the planned increase
in net pre-tax income, Mr. Matney will receive a bonus in the amount of 50% of
his base salary (the "target payment"),
A-13
<PAGE>
plus the percentage by which the increase in net pre-tax income exceeds the
planned percentage increase, if any, multiplied by the target payment. If the
increase in net pre-tax income is less than the planned increase but greater
than 25% of the planned increase, Mr. Matney will receive the percentage of the
planned increase in net pre-tax income attained multiplied by the target
payment. If the increase in net pre-tax income attained is less than 25% of the
planned increase, Mr. Matney will receive no bonus under this provision of the
agreement. For 1998, this calculation resulted in a bonus of $182,000 for Mr.
Matney. The second bonus is an amount equal to his base salary multiplied by the
percentage increase (if any) in the Company's stock price per share in excess of
the increase in the stock price per share of the Peer Group measured from July 1
to June 30. This bonus computation resulted in no bonus for Mr. Matney for the
period July 1, 1997 to June 30, 1998. This second bonus was discontinued as of
January 1, 1999, with a partial year payment of $42,647 for the period July 1,
1998 to December 31, 1998.
Mr. Matney also receives an additional bonus, payable monthly, that is
directly linked to the ability of shareholders to realize the value of their
investment in the Company on a current basis. Effective January 1, 1999, this
additional bonus is an amount equal to 800 times the average fair market value
of the Common Stock during the month for which the bonus is paid. From January
1, 1998 to December 31, 1998, the bonus was equal to 600 times the average fair
market value of the Common Stock. Mr. Matney received monthly bonuses pursuant
to this provision of $74,279 in the aggregate during 1998. Prior to January 1,
1998, the bonus was an amount equal to 400 times the average fair market value
of the Common Stock.
The Committee has not yet adopted a policy with respect to the $1,000,000
limitation of deductibility of executive compensation under Section 162(m) of
the Internal Revenue Code of 1986, as amended, since current compensation levels
fall well below that amount.
<TABLE>
<S> <C> <C>
Douglass Wm. List William E. Greenwood Jay U. Sterling, Ph.D.
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with affiliates of the Company have been and will be made on
terms no less favorable to the Company than could be obtained from unaffiliated
third parties. In addition, the Board has adopted a formal policy of not
entering into transactions with officers or affiliates of the Company unless the
Board makes a specific finding that not to enter into such transaction would be
contrary to the best interests of the Company and its public shareholders. Any
such transactions, including loans, with officers or affiliates and/or
shareholders of the Company require the approval of a majority of the
disinterested directors.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than ten percent
(10%) of the Company's stock, to file initial reports of ownership (on Form 3)
and reports of changes in ownership (on Form 4 or Form 5) with the SEC and the
NASD. Executive officers, directors and greater than ten percent (10%)
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers, directors and greater than ten percent (10%) beneficial
owners were met.
A-14
<PAGE>
PERFORMANCE GRAPH
The following chart compares cumulative total stockholder returns, assuming
the investment of $100 on December 31, 1993: (i) in the Company's common stock;
(ii) in the Nasdaq Stock Market-U.S. Index; and (iii) in the Nasdaq Trucking and
Transportation Index. Total return assumes reinvestment of dividends for the
indexes. The Company has never paid dividends on its common stock and has no
plans to do so.
<TABLE>
<CAPTION>
NASDAQ STOCK NASDAQ TRUCKING AND
MARK VII, INC. MARKET--U.S. TRANSPORTATION
------------------- --------------------- -----------------------------
<S> <C> <C> <C>
12/94............................................. 96 98 91
12/95............................................. 132 138 106
12/96............................................. 236 170 117
12/97............................................. 283 209 149
12/98............................................. 317 293 132
</TABLE>
The Company will provide to shareholders, without charge, a list of the
component companies in the Nasdaq Trucking and Transportation Index. Requests
for the list should be addressed to Mark VII, Inc., 965 Ridge Lake Boulevard,
Suite 100, Memphis, Tennessee 38120, Attention: Carol Davis, Assistant Vice
President.
A-15
<PAGE>
ANNEX B
July 26, 1999
[LETTERHEAD OF DEUTSCHE BANK SECURITIES INC.]
Board of Directors
Mark VII, Inc.
965 Ridge Lake Boulevard, Suite 103
Memphis, Tennessee 38120
Gentlemen:
Deutsche Bank Securities Inc. ("Deutsche Bank") has acted as financial advisor
to Mark VII, Inc. (the "Company") in connection with the proposed acquisition of
the Company by MSAS Global Logistics, Inc. ("Parent") pursuant to the Agreement
and Plan of Merger, to be dated as of July 27, 1999, among the Company, Parent
and MSAS Acquisition Corporation, a wholly owned subsidiary of Parent
("Acquisition") (the "Merger Agreement"), which provides, among other things,
for (i) the commencement of a tender offer (the "Offer") to acquire all of the
outstanding shares (the "Shares") of common stock, $0.05 per value, of the
Company (the "Company Common Stock"), at a price of $23.00 per share, net to the
seller in cash, and (ii) following the Offer, the merger of Acquisition with and
into the Company (the "Merger", and together with the Offer, the "Transaction"),
as a result of which the Company will become a wholly owned subsidiary of
Parent. As set forth more fully in the Merger Agreement, as a result of the
Merger, each share of Company Common Stock not owned directly or indirectly by
the Company or Parent or as to which appraisal rights have been properly
exercised will be converted into the right to receive $23.00, net to the Seller
in cash. The terms and conditions of the Transaction are more fully set forth in
the Merger Agreement.
You have requested Deutsche Bank's opinion, as investment bankers, as to the
fairness, as of the date hereof, of the consideration to be received by the
holders of Company Common Stock pursuant to the Merger Agreement to such holders
from a financial point of view.
In connection with Deutsche Bank's role as financial advisor to the Company, and
in arriving at its opinion, Deutsche Bank has reviewed certain publicly
available financial and other information concerning the Company and certain
internal analyses and other information furnished to it by the Company and Ocean
Group plc ("Ocean"), which owns all of the outstanding common stock of Parent.
Deutsche Bank has also held discussions with members of the senior management of
the Company regarding the businesses and prospects of the Company. In addition,
Deutsche Bank has (i) reviewed the reported prices and trading activity for
Company Common Stock, (ii) compared certain financial and stock market
information for the Company with similar information for certain other companies
whose securities are publicly traded, (iii) reviewed the financial terms of
certain recent business combinations which it deemed comparable in whole or in
part and compared such terms to the proposed terms of the Transaction, (iv)
reviewed the terms of the Merger Agreement and certain related documents, and
(v) performed such other studies and analyses and considered such other factors
as it deemed appropriate.
B-1
<PAGE>
Deutsche Bank has not assumed responsibility for independent verification of,
and has not independently verified, any information, whether publicly available
or furnished to it, concerning the Company or Ocean, including, without
limitation, any financial information, forecasts or projections considered in
connection with the rendering of its opinion. Accordingly, for purposes of its
opinion, Deutsche Bank has assumed and relied upon the accuracy and completeness
of all such information and Deutsche Bank has not conducted a physical
inspection of any of the properties or assets, and has not prepared or obtained
any independent evaluation or appraisal of any of the assets or liabilities, of
the Company. With respect to the financial forecasts and projections made
available to Deutsche Bank and used in its analyses, Deutsche Bank has assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the management of the Company as to the
matters covered thereby. In rendering its opinion, Deutsche Bank expresses no
view as to the reasonableness of such forecasts and projections or the
assumptions on which they are based. Deutsche Bank's opinion is necessarily
based upon economic, market and other conditions as in effect on, and the
information made available to it as of, the date hereof.
For purposes of rendering its opinion, Deutsche Bank has assumed that, in all
respects material to its analysis, the representations and warranties of Parent,
Acquisition and the Company contained in the Merger Agreement are true and
correct, Parent, Acquisition and the Company will each perform all of the
covenants and agreements to be performed by it under the Merger Agreement and
all conditions to the obligations of each of Parent, Acquisition and the Company
to consummate the Transaction will be satisfied without any waiver thereof.
Deutsche Bank has also assumed that all material governmental, regulatory or
other approvals and consents required in connection with the consummation of the
Transaction will be obtained and that in connection with obtaining any necessary
governmental, regulatory or other approvals and consents, or any amendments,
modifications or waivers to any agreements, instruments or orders to which
either Parent, Acquisition or the Company is a party or is subject or by which
it is bound, no limitations, restrictions or conditions will be imposed or
amendments, modifications or waivers made that would have a material adverse
effect on the Company or materially reduce the contemplated benefits of the
Transaction to the holders of Company Common Stock. Deutsche Bank has not, and
has not been asked to, solicit indications of interest from third parties.
This opinion is addressed to, and for the use and benefit of, the Board of
Directors of the Company and is not a recommendation to any holder of Company
Common Stock whether or not to tender his Shares in the Offer or, if required,
how to vote, or whether or not to take any other action, with respect to the
Transaction. This opinion is limited to the fairness, as of the date hereof, to
the holders of Company Common Stock of the consideration to be received by such
holders pursuant to the Merger Agreement from a financial point of view, and
Deutsche Bank expresses no opinion as to the merits of the underlying decision
by the Company to engage in the Transaction.
Deutsche Bank will be paid a fee for its services as financial advisor to the
Company in connection with the Transaction, a substantial portion of which is
contingent upon consummation of the Transaction. We are an affiliate of Deutsche
Bank AG (together with its affiliates, the "DB Group"). One or more members of
the DB Group have, from time to time, provided investment banking services to
the Company for which it has received compensation. A member of the DB Group
will be participating, with your consent, as the sole arranger of the credit
facility provided to Ocean for the financing of the Transaction, for which
services such member of the DB Group will receive compensation. In the ordinary
course of business, members of the DB Group may actively trade in the securities
and other instruments and obligations of Ocean and the Company for their own
accounts and for the accounts of their customers. Accordingly, the DB Group may
at any time hold a long or short position in such securities, instruments and
obligations.
Based upon and subject to the foregoing, it is Deutsche Bank's opinion as
investment bankers that the consideration to be received by the holders of
Company Common Stock pursuant to the Merger Agreement is fair, as of the date
hereof, to such holders from a financial point of view.
Very truly yours,
/s/ Deutsche Bank Securities Inc.
DEUTSCHE BANK SECURITIES INC.
B-2
<PAGE>
Exhibit (a)(5)
[LOGO]
July 29, 1999
Dear Stockholder:
We are pleased to inform you that on July 27, 1999, Mark VII, Inc. (the
"Company") entered into an Agreement and Plan of Merger (the "Merger Agreement")
with MSAS Global Logistics Inc. ("Parent") and its wholly owned subsidiary, MSAS
Acquisition Corporation ("Purchaser"). Under the terms of the Merger Agreement,
Purchaser today commenced a tender offer (the "Offer") to purchase all of the
Company's outstanding shares of common stock (the "Shares") for $23.00 per
Share, net to the seller in cash, without interest. The Merger Agreement further
provides that, following the consummation of the Offer, Purchaser will be merged
with the Company (the "Merger") and any remaining Shares not acquired through
the Offer will be be converted in the Merger into the right to receive the same
consideration as paid in the Offer. The Offer is currently scheduled to expire
at 12:00 midnight, New York City time, on Thursday, August 26, 1999.
THE COMPANY'S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE OFFER AND THE
MERGER AND HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE IN THE
BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS. ACCORDINGLY, THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES.
In arriving at its recommendation, the Board of Directors considered a
number of factors which are described in the enclosed
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which is being filed today with the Securities and Exchange Commission.
Additional information with respect to the Offer is contained in the
enclosed Schedule 14D-9, the Offer to Purchase, dated July 29, 1999, of the
Purchaser, and related materials, including a Letter of Transmittal to be used
for tendering your Shares. These documents set forth the terms and conditions of
the Offer and provide instructions on how to tender your Shares. I urge you to
read all of the enclosed materials and consider this information carefully.
On behalf of the Board of Directors and management of the Company, I thank
you for the support you have given to the Company.
Sincerely,
/s/ R.C. Matney
R.C. Matney
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
<PAGE>
Exhibit (c)(18)
EMPLOYMENT AND NONCOMPETE AGREEMENT
PAUL STONE, CHIEF FINANCIAL OFFICER
THIS AGREEMENT, dated this 19th day of May, 1999, is made by and among
PAUL STONE, a resident of the State of _______________ ("Executive"); and MARK
VII, INC., a Delaware corporation ("Employer").
RECITALS
A. Employer and its subsidiaries, are engaged in the business of
freight transportation services, both providing and arranging transportation of
goods. Subsequent references to Employer herein shall be deemed to also include
its subsidiary corporations.
B. Executive desires to be employed by Employer as its Chief
Financial Officer and Employer desires to employ Executive in such capacity
under the terms set forth herein.
AGREEMENT
In consideration of the mutual promises, covenants and agreements
contained herein and other good and valuable consideration, sufficiency of which
is hereby acknowledged by Executive and Employer, the parties agree as follows:
1. EMPLOYMENT AND TERM OF EMPLOYMENT.
Employer hereby employs Executive and Executive hereby accepts
employment with Employer for the term commencing on June 21, 1999 and
continuing until June 20, 2002 unless sooner terminated as provided in
Section 5.
2. DUTIES AND AUTHORITY.
2.01 DUTIES AND POSITION OF EXECUTIVE.
(a) Executive shall undertake and assume the responsibility
for those duties that Employer's Board of Directors shall,
from time to time, assign to Executive. Executive's principal
duties as of the start date of this Agreement shall be and
are those typically performed by a Chief Financial Officer of
a company.
(b) By appropriate action of Employer's Board of Directors,
Executive has been elected as Chief Financial Officer of
Employer. Executive shall be permitted to continue to serve
as Chief Financial Officer of Employer for the duration of
this Agreement provided and for so long as the performance
standards of Paragraph 5.02 (c) below are attained.
(c) Executive shall, at all times, faithfully and to the
best of his ability, experience and talents, perform the
duties set forth herein or to which Executive may, in the
future, be assigned, always acting solely in the best
interests of the Employer.
<PAGE>
2.02 TIME DEVOTED TO EMPLOYMENT. Executive shall devote full
time and attention to performance of assigned employment duties; provided,
however, he shall be allowed to also pursue those separate and personal business
interests which do not conflict or compete with the business of the employer
directly or indirectly and which do not require personal services of the
Executive. During the term of this Agreement, the Executive will not be involved
in any transportation ventures other than those of the employer without the
advance written authorization of the Employer's Board of Directors.
It is also understood that the Executive is not hereby precluded from
engaging in limited appropriate civic, charitable or religious activities.
In the event the Employer's Board of Directors shall reassign the
duties of Executive as Chief Financial Officer to another person, the Executive
shall thereafter continue to serve the Employer engaged in the consultation,
performance and management of those specific projects or duties to which he is
assigned by the Employer and which are consistent with his experience and
competence.
3. COMPENSATION.
During the term of this Agreement, Employer shall pay to Executive
the following compensation:
3.01 BASE SALARY. Executive shall be paid an initial base salary
of One Hundred Seventy-Five Thousand Dollars and No/100 Dollars ($175,000) per
year ("Base Salary") payable in equal weekly installments. The Compensation
Committee of the Employer's Board of Directors ("Committee") may review
Executive's performance and adjust his Base Salary in its sole and absolute
discretion. The Committee may increase the salary of the Executive at any time;
provided, however, that the Committee may not reduce the Base Salary fixed in
this Agreement.
3.02 BONUS. In addition to the Base Salary, in each fiscal year
(commencing with the fiscal year ending December 31, 1999), in which
consolidated pre-tax profit (calculated on the basis of generally accepted
accounting principles consistently applied) earned by Mark VII is equal to the
consolidated Business Plan (as defined at 5.02 (c)) or exceeds 120% of the
consolidated pre-tax profit earned in the previous fiscal year, Employer will
pay Executive within 90 days following the close of the fiscal year a bonus
equal to 50% of his base salary.
In each plan year business plan revenue or business plan pre-tax profit
shall be adjusted by the amount of the following items:
(a) All charges of Employer to any affiliated company for
services rendered shall be at present standards with any new
services to be to charged at cost;
(b) Any gain on the sale, casualty or other disposition of
any capital asset of the Employer shall be deducted;
(c) Any other income which was not the result of ordinary
operations of the Employer shall be excluded;
2
<PAGE>
(d) Services of affiliated companies or business units
shall be at cost or as agreed. If not, Executive may cause
Employer to purchase such goods or services from unaffiliated
sources.
"Pre-tax profit", as defined above shall be based upon generally accepted
accounting principles consistently applied and as finally determined by the
Company's independent CPA auditing firm.
3.03 CAR ALLOWANCE. In addition, the Executive shall receive $500
a month as a car allowance, plus the costs he incurs in operating his private
automobile with respect to insurance, fuel, oil, filters, hoses, belts, license
tags, one set of tires every four years and sales tax upon acquisition.
3.04 FRINGE BENEFITS/VACATION. Executive shall receive standard
Mark VII fringe benefits, including three (3) weeks of vacation with pay each
year.
3.05 REIMBURSEMENT OF EXPENSES. Employer shall reimburse Executive
for ordinary, necessary and reasonable business expenses incurred to conduct or
promote Employer's business, including travel and entertainment, provided
Executive submits an itemization of such expenses and supporting documentation
thereof, all according to Employer's generally applicable procedures.
3.06 STOCK OPTIONS. By separate agreement, Employer shall provide
Executive with a non-qualified option to purchase 25,000 shares of the common
stock of Mark VII, Inc. exercisable at the closing price per share on the first
business date of employment. The option shall vest in five equal annual
installments of 5,000 shares each commencing on June 21, 2000. Each portion of
the option shall be exercisable subsequent to vesting and the entire option
shall lapse on June 20, 2010.
4. NONDISCLOSURE AND NONCOMPETITION.
Executive hereby covenants and agrees as follows:
4.01 CONFIDENTIALITY. Executive acknowledges that as a result of
his employment by Employer, he has, in the past, used and acquired and, in the
future, will use and acquire knowledge and information used by Employer in its
business and which is not generally available to the public or to persons in the
transportation industry, including, without limitation, its future products,
services, patents and trademarks; designs; plans; specifications; models;
computer software programs; test results; data; manuals; methods of accounting;
financial information; devices; systems; procedures; manuals; internal reports;
lists of shippers and carriers; methods used for and preferred by its customers;
and the pricing structure of its existing and contemplated products and service,
except such information known by Executive prior to his employment by Employer
("Confidential Information"). As a material inducement to Employer to enter into
this Agreement, and to pay to Executive the compensation set forth herein,
Executive agrees that, during the term of this Agreement and, subject to the
provisions of section 6.05 below, for a period of three (3) years after the
termination of this Agreement, Executive shall not, directly or indirectly,
divulge or disclose to any person, for any purpose, any Confidential
Information, except to those persons authorized by Employer to receive
Confidential Information and then only if use by such person is for Employer's
benefit.
3
<PAGE>
4.02 COVENANT AGAINST COMPETITION. During the term of this
Agreement and for a period of three (3) years after the termination of this
Agreement and subject to the provisions of section 6.05 below, Executive shall
not have any interest in or be engaged by any business or enterprise that is in
the business of providing motor freight transportation services or arranging for
the transportation of goods, including any business that acts as a licensed
property broker or shipper's agent, which is directly competitive with any
aspect of the business Employer now conducts or which Employer is conducting or
is in the process of developing at the time of any competitive actions by
Executive ("Prohibited Activity") except to the extent provided in section 2.
For purposes of this Section 4.02, Executive shall be deemed to have an
"interest in or be engaged by a business or enterprise" if Executive acts (a)
individually, (b) as a partner, officer, director, shareholder, employee,
associate, agent or owner of any entity or (c) as an advisor, consultant, lender
or other person related, directly or indirectly, to any business or entity that
is engaging in, or is planning to engage in, any Prohibited Activity. Ownership
of less than five percent (5%) of the outstanding capital stock of a publicly
traded entity that engages in any Prohibited Activity shall not be a violation
of this Section 4.02.
4.03 EMPLOYMENT OF OTHER EMPLOYEES BY EXECUTIVE. During the term
of this Agreement and, subject to the provisions of section 6.05 below, for a
period of three (3) years after the termination of this Agreement, Executive
shall not directly or indirectly solicit for employment, or employ, except on
behalf of Employer, any person who was an employee of Employer at any time
during the six (6) months preceding such solicitation or employment.
4.04 JUDICIAL AMENDMENT. If a court of competent jurisdiction
determines any of the limitations contained in this Agreement are unreasonable
and may not be enforced as herein agreed, the parties hereto expressly agree
this Agreement shall be amended to delete all limitations judicially determined
to be unreasonable and to substitute for those limitations found to be
unreasonable the maximum limitations such court finds to be reasonable under the
circumstances.
4.05 IRREPARABLE INJURY. Executive acknowledges that his abilities
and the services he will provide to Employer are unique and that his failure to
perform his obligations under this Section 4 would cause Employer irreparable
harm and injury. Executive further acknowledges that the only adequate remedy is
one that would prevent him from breaching the terms of Section 4. As a result,
Executive and Employer agree that Employer's remedies may include preliminary
injunction, temporary restraining order or other injunction relief against any
threatened or continuing breach of this Section 4 by Executive. Nothing
contained in this Section 4.05 shall prohibit Employer from seeking and
obtaining any other remedy, including monetary damages, to which it may be
entitled.
5. TERMINATION.
5.01 EVENTS CAUSING TERMINATION. This Agreement shall terminate
upon the first of the following events to occur:
(a) Lapse of the term hereof on June 20, 2002.
(b) On the date of Executive's death;
4
<PAGE>
(c) At Employer's option, upon Executive's disability as
defined in section 5.02 (a) below, effective on the day
Executive receives notice from Employer that it is exercising
its option granted by this Section to terminate this
Agreement;
(d) On the day Executive receives written notice from
Employer that Executive's employment is being terminated for
cause, as defined in section 5.02 (b) below;
(e) Fifteen (15) days after receipt by Executive of notice
from Employer specifying any act of insubordination or
failure to comply with any instructions of the Chief
Executive Officer of Mark VII or any act or omission that the
Chief Executive Officer believes, in good faith, does, or
may, adversely affect Employer's business or operations
provided Executive fails to remedy or cease said acts within
said fifteen (15) day period;
(f) On the date Executive resigns or, at the Employer's
option, the date Executive commits any act that is a material
breach of this Agreement; and
(g) At Executive's option, on the date Employer commits any
act that is a material breach of this Agreement,
5.02 DEFINITIONS. For purposes of Section 5.01 the following
definitions shall apply:
(a) "Disability" means Executive's inability, because of
sickness or other incapacity, whether physical or mental, to
perform his duties under this Agreement for a period in
excess of one hundred eighty (180) substantially consecutive
days, as professionally determined by two medical doctors
licensed to practice medicine, one of which is selected by
the Employer and one of which is selected by the Executive.
In the event the doctors should disagree as to whether the
Executive is disabled, they shall select a third licensed
medical doctor to make such termination which shall be
binding on the parties hereto.
(b) "Cause" means (i) a willful failure by Executive to
substantially perform his duties hereunder, other than a
failure resulting from Executive's incapacity to do so
because of physical or mental illness (ii) a willful act by
Executive that constitutes gross misconduct and which is
materially injurious to Employer, (iii) Executive's
commitment of any act of dishonesty toward Employer, theft of
corporate property or unethical business conduct or (iv)
Executive's conviction of any felony involving dishonest, or
immoral conduct.
(c) "Business Plan" means that the Executive has
participated in the preparation of a business plan of Mark
VII for 1999, which has been submitted to, and approved by,
the Board of Directors of MARK VII and Executive. For each
calendar year thereafter, through and including 2003, annual
business plans shall be submitted to, and approved by, the
Board of Directors of MARK VII and Executive, which shall
constitute the basis of annual performance reviews.
5
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6. PAYMENTS UPON TERMINATION.
6.01 PAYMENTS UPON EXECUTIVE'S DEATH OR DISABILITY. Upon the
termination of this Agreement pursuant to Section 5.01 (b) (death) or Section
5.01 (e) (disability), Employer shall pay, or cause to be paid, to Executive,
his designated beneficiary or his legal representative,
(a) the current Base Salary as provided in Section 3.02 and
fringe benefits as set forth in Section 3.04 through the
period ending twelve (12) months after occurrence of the
event causing termination; and
(b) all necessary, ordinary, and reasonable business
expenses incurred by Executive prior to termination of this
Agreement.
(c) plus in the event of death or disability, bonus pursuant
to Section 3.02 pro-rated to the date of termination.
Employer shall not be obligated to make any other payments to Executive.
6.02 PAYMENTS UPON TERMINATION FOR CAUSE, INSUBORDINATION,
RESIGNATION OR BREACH BY EXECUTIVE. Upon termination of this Agreement pursuant
to Section 5.01 (d) (cause), Section 5.01 (e) (insubordination), or Section 5.01
(f) (resignation or breach by Executive), Employer shall pay, or cause to be
paid, to Executive,
(a) the Base Salary and fringe benefits (not including
bonus) for the period ending on the date this Agreement is
terminated pursuant to the appropriate subsection of Section
5.01; and
(b) all necessary, ordinary, and reasonable business
expenses incurred by Executive prior to termination hereof.
Employer shall not be obligated to make any other payments to Executive.
6.03 PAYMENTS UPON EXPIRATION OF TERM OR TERMINATION FOR BREACH BY
EMPLOYER. Upon termination of this Agreement pursuant to Section 5.01 (g)
(Employer's breach), Employer shall pay to Executive the Base Salary set forth
in Section 3.01, through June 20, 2002 plus bonus pursuant to Section 3.02. All
compensation paid by Employer under the terms of this Section 6.03 shall be paid
in the manner set forth in Section 3.
6.04 PAYMENT OF AMOUNTS DUE UPON TERMINATION AND MITIGATION. If
Executive is entitled to payment of Base Salary, fringe benefits or business
expenses upon termination of this Agreement, Employer shall make said payments
within the ordinary course of its business and pursuant to the terms hereof.
All compensation to which the Executive is entitled following termination such
payment shall be reduced by the amount of compensation earned by the Executive
from other employment.
6.05 EFFECT OF TERMINATION ON NONDISCLOSURE, NONCOMPETE AND
NONSOLICITATION PROVISIONS.
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(a) The provisions of Sections 4.01, 4.02 and 4.03
(confidentiality, non-compete and nonemployment of other
employees) of this Agreement shall survive termination hereof
pursuant to Section 5.01 (d) (cause), Section 5.01 (e)
(insubordination) or Section 5.01 (f) (resignation) even
though the remaining terms and provisions of this Agreement
shall be void, including the terms of Section 3
(compensation).
(b) Upon termination of this Agreement pursuant to Section
5.01 (a) (lapse of term), Employer may elect to continue the
obligations of Executive set forth in Section 4
(confidentiality, noncompete and nonemployment of other
employees) for so long as the Employer continues to provide
125% of base compensation set forth in Section 3, but not to
exceed three years subsequent to termination.
(c) Upon termination pursuant to Section 5.01 (c)
(disability) the provisions of Section 4 (confidentiality,
noncompete and nonemployment of other employees) shall
survive for one year thereafter.
(d) Upon termination of this Agreement pursuant to Section
5.01 (g) (Employer breach), all of the provisions of Section
4 (confidentiality, noncompete and nonemployment of other
employees) shall be void.
7. CONFLICT OF INTEREST.
During the term of this Agreement, Executive shall not, directly or
indirectly, have any interest in any business which is a supplier of Employer
without the express written consent of Employer's Board of Directors. Such
interest shall include, without limitation, an interest as a partner, officer,
director, stockholder, advisor or employee of or lender to such a supplier. An
ownership interest of less than five percent (5%) in a supplier whose stock is
publicly held or regularly traded shall not be a violation of this Section 7.
8. INDEMNIFICATION OF EXECUTIVE.
The Employer will indemnify the Executive and hold him harmless
(including reasonable attorney fees and expenses) to the fullest extent now or
hereafter permitted by law in connection with any actual or threatened civil,
criminal, administrative or investigative action, suit or proceeding in which
the Executive is a party or witness as a result of his employment with the
Employer. This indemnification shall survive the termination of this Agreement.
9. GENERAL PROVISIONS.
9.01 LOCATION OF EMPLOYMENT. Executive's principal office shall be
located at Memphis, Tennessee, or at such other location where Employer and
Executive shall mutually agree.
9.02 ASSIGNMENT. Neither party may assign any of the rights or
obligations under this Agreement without the express written consent of the
other party. For purposes of the foregoing sentence, the term "assign" shall NOT
include an assignment of this Agreement by written agreement or by operation of
law to any of Employer's wholly owned subsidiaries.
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9.03 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties' heirs, successors and assigns, to the
extent allowed herein.
9.04 SEVERABILITY. The provisions of this Agreement are severable.
The invalidity or unenforceability of any one or more of the provisions hereof
shall not affect the validity or enforceability of any other part of this
Agreement.
9.05 WAIVER. Waiver of any provision of this Agreement or any
breach thereof by either party shall not be construed to be a waiver of any
other provision or any subsequent breach of this Agreement.
9.06 NOTICES. Any notice or other communication required or
permitted herein shall be sufficiently given if delivered in person or sent by
certified mail, return receipt requested, postage prepaid addressed to:
Employer: R. C. Matney, Chairman
Mark VII, Inc.
600 N. Emerson
Greenwood, IN 46143
cc: James T. Graves
Vice Chairman and General Counsel
Mark VII, Inc.
5310 St. Joseph Avenue
St. Joseph, Missouri 64505
Executive: Paul Stone
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or such other address as shall be furnished in writing by any such party. Any
notice sent by the above-described method shall be deemed to have been received
on the date personally delivered or so mailed. Notices sent by any other method
shall be deemed to have been received when actually received by the addressee or
its or his authorized agent.
9.07 APPLICABLE LAW. Except to the extent preempted by federal
law, this Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Tennessee, without considering its
laws or rules related to choice of law.
9.08 OWNERSHIP AND RETURN OF DOCUMENTS AND OBJECTS. Every plan,
drawing, blueprint, flowchart, listing of source or object code, notation,
record, diary, memorandum, worksheet, manual or other document, magnetic media
and every physical object created or acquired by Executive as part of his
employment by Employer, or which relates to any aspect of Employer's business,
is and shall be the sole and exclusive property of Employer. Executive shall,
immediately upon Employer's request or upon termination of this Agreement for
any reason, deliver to Employer each and every original, copy, complete or
partial reproduction, abstract or
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summary, however reproduced, of all documents and all original and complete or
partial reproductions of all magnetic media or physical objects owned by
Employer then in Executives' possession.
9.09 ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration rules of the American
Arbitration Association and judgement upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
9.10 ATTORNEY'S FEES. If either party initiates arbitration
proceedings to enforce the terms hereof, the prevailing party in such
proceeding, on arbitration hearing, judicial trial or appeal, shall be entitled
to its reasonable attorney's fees, costs and expenses to be paid by the losing
party as fixed by the arbitrator.
WITNESS WHEREOF, the parties have executed this Agreement on the 19th day of
May, 1999 to be effective on the day and year first above written.
THIS AGREEMENT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
MARK VII, INC.
By:
--------------------------------
R. C. MATNEY, CHAIRMAN
-----------------------------------
PAUL STONE, IN HIS
INDIVIDUAL CAPACITY (EXECUTIVE)
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