Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NACO, INC.,
ABC RAIL PRODUCTS CORPORATION
AND
ABCR ACQUISITION SUB, INC.
DATED AS OF SEPTEMBER 17, 1998
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TABLE OF CONTENTS
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Page
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ARTICLE I
THE MERGER AND THE CLOSING.......................................................... 2
SECTION 1.1 -- The Merger........................................................... 2
SECTION 1.2 -- Effective Time....................................................... 2
SECTION 1.3 -- Effect of the Merger................................................. 2
SECTION 1.4 -- Subsequent Actions................................................... 2
SECTION 1.5 -- Certificate of Incorporation; By-Laws; Directors, Officers and
Committees.................................................................... 3
SECTION 1.6 -- The Closing.......................................................... 4
ARTICLE II
EFFECT ON STOCK OF THE SURVIVING
CORPORATION AND THE MERGED CORPORATION.............................................. 4
SECTION 2.1 -- Conversion of Securities............................................. 4
SECTION 2.2 -- Conversion of Shares................................................. 4
SECTION 2.3 -- Cancellation of Treasury Shares...................................... 6
SECTION 2.4 -- Conversion of Common Stock of Merger Subsidiary into Common
Stock of the Surviving Corporation............................................ 6
SECTION 2.5 -- Exchange of Shares Other Than Treasury Shares........................ 6
SECTION 2.6 -- Transfer Books....................................................... 7
SECTION 2.7 -- No Fractional Share Certificates..................................... 7
SECTION 2.8 -- Rights to Purchase NACO Common Stock................................. 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NACO............................................. 9
SECTION 3.1 -- Organization, Qualification, and Corporate Power.................... 9
SECTION 3.2 -- Authorization of Transaction; Required Filings and Consents......... 9
SECTION 3.3 -- Capitalization; Subsidiaries........................................ 10
SECTION 3.4 -- Noncontravention.................................................... 11
SECTION 3.5 -- Brokers' Fees....................................................... 11
SECTION 3.6 -- Registration Statement.............................................. 11
SECTION 3.7 -- Financial Statements................................................ 11
SECTION 3.8 -- Absence of Undisclosed Liabilities.................................. 12
SECTION 3.9 -- Events Subsequent to Fiscal Year End................................ 12
SECTION 3.10 -- Legal Compliance................................................... 12
SECTION 3.11 -- Tax Matters........................................................ 12
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SECTION 3.12 -- Real Property.......................................................... 13
SECTION 3.13 -- Intellectual Property.................................................. 13
SECTION 3.14 -- Contracts and Commitments.............................................. 14
SECTION 3.15 -- Litigation............................................................. 15
SECTION 3.16 -- Employee Benefits...................................................... 15
SECTION 3.17 -- Environmental Matters.................................................. 17
SECTION 3.18 -- Labor Matters.......................................................... 18
SECTION 3.19 -- Certain Business Relationships......................................... 18
SECTION 3.20 -- Approval Required...................................................... 18
SECTION 3.21 -- No Negotiations........................................................ 19
SECTION 3.22 -- Accounting Matters..................................................... 19
SECTION 3.23 -- Opinion of Financial Advisor........................................... 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ABC
AND MERGER SUBSIDIARY.................................................................. 19
SECTION 4.1 -- Organization, Qualification, and Corporate Power........................ 19
SECTION 4.2 -- Authorization of Transaction; Required Filings and Consents............. 20
SECTION 4.3 -- Capitalization; Subsidiaries; Affiliated Entities....................... 21
SECTION 4.4 -- Noncontravention........................................................ 22
SECTION 4.5 -- Brokers' Fees........................................................... 22
SECTION 4.6 -- SEC Documents........................................................... 22
SECTION 4.7 -- Financial Statements.................................................... 23
SECTION 4.8 -- Absence of Undisclosed Liabilities...................................... 23
SECTION 4.9 -- Events Subsequent to Fiscal Year End.................................... 24
SECTION 4.10 -- Legal Compliance....................................................... 24
SECTION 4.11 -- Tax Matters............................................................ 24
SECTION 4.12 -- Real Property.......................................................... 25
SECTION 4.13 -- Intellectual Property.................................................. 25
SECTION 4.14 -- Contracts and Commitments.............................................. 26
SECTION 4.15 -- Litigation............................................................. 27
SECTION 4.16 -- Employee Benefits...................................................... 27
SECTION 4.17 -- Environmental Matters.................................................. 29
SECTION 4.18 -- Labor Matters.......................................................... 30
SECTION 4.19 -- Certain Business Relationships......................................... 31
SECTION 4.20 -- Approval Required...................................................... 31
SECTION 4.21 -- No Negotiations........................................................ 31
SECTION 4.22 -- Tax Treatment.......................................................... 31
SECTION 4.23 -- Merger Subsidiary...................................................... 31
SECTION 4.24 -- The Rights Agreement................................................... 31
SECTION 4.25 -- Accounting Matters..................................................... 31
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SECTION 4.26 -- Opinion of Financial Advisor.......................................... 32
SECTION 4.27 -- Affiliated Entities................................................... 32
ARTICLE V
COVENANTS AND AGREEMENTS.............................................................. 32
SECTION 5.1 -- Conduct of NACO and ABC................................................ 32
SECTION 5.2 -- Stockholders' Meetings; Proxy Material................................. 35
SECTION 5.3 -- Registration Statement; Joint Proxy Statement; Other Actions........... 35
SECTION 5.4 -- No Solicitation........................................................ 37
SECTION 5.5 -- Takeover Statute....................................................... 39
SECTION 5.6 -- Tax Treatment.......................................................... 39
SECTION 5.7 -- Conveyance Taxes....................................................... 39
SECTION 5.8 -- Access to Information; Confidentiality Agreement....................... 39
SECTION 5.9 -- Affiliate Agreements................................................... 40
SECTION 5.10 -- Obligations of Merger Subsidiary...................................... 40
SECTION 5.11 -- Director and Officer Liability........................................ 40
SECTION 5.12 -- Notices and Consents.................................................. 40
SECTION 5.13 -- Notice; Supplements to Disclosure Schedule............................ 41
SECTION 5.14 -- Tax Certificates...................................................... 41
SECTION 5.15 -- Pooling of Interests.................................................. 42
SECTION 5.16 -- Further Assurances.................................................... 42
ARTICLE VI
CONDITIONS TO THE MERGER.............................................................. 42
SECTION 6.1 -- Conditions to Obligations of Each Party to Effect the Merger........... 42
SECTION 6.2 -- Additional Conditions to Obligations of NACO........................... 43
SECTION 6.3 -- Additional Conditions to Obligations of ABC............................ 44
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER..................................................... 45
SECTION 7.1 -- Termination............................................................ 45
SECTION 7.2 -- Effect of Termination.................................................. 48
SECTION 7.3 -- Amendment.............................................................. 49
SECTION 7.4 -- Waiver................................................................. 49
ARTICLE VIII
GENERAL PROVISIONS.................................................................... 49
SECTION 8.1 -- Non-Survival of Representations, Warranties and Agreements............. 49
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SECTION 8.2 -- Notices.............................................. 50
SECTION 8.3 -- Expenses............................................. 50
SECTION 8.4 -- Certain Definitions.................................. 51
SECTION 8.5 -- Headings............................................. 53
SECTION 8.6 -- Severability......................................... 53
SECTION 8.7 -- Entire Agreement; No Third-Party Beneficiaries....... 53
SECTION 8.8 -- Assignment........................................... 54
SECTION 8.9 -- Governing Law........................................ 54
SECTION 8.10 -- Consent to Jurisdiction.............................. 54
SECTION 8.11 -- Costs of Enforcement................................. 54
SECTION 8.12 -- Publicity............................................ 54
SECTION 8.13 -- Incorporation of Exhibits and Disclosure Schedule.... 54
SECTION 8.14 -- Counterparts......................................... 54
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DISCLOSURE SCHEDULE
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SECTION DESCRIPTION
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1.5(c) Officers and Directors of Surviving Corporation
1.5(d) Officers of ABC
3.3(b) NACO Securities
3.3(c)(i) NACO Subsidiaries
3.3(c)(i)(i) Liens on NACO Securities
3.4 NACO Noncontravention
3.5 NACO Brokers' Fees
3.6 NACO Draft Registration Statement
3.8 NACO Undisclosed Liabilities
3.12 NACO Real Property
3.13(a) NACO Intellectual Property
3.14(a) NACO Contracts
3.14(b) Exceptions to NACO Contracts
3.16(a) NACO Employee Benefit Plans
3.16(d) NACO Contributions to Multi-Employer Plans
3.16(f) NACO Retiree Medical/Life Insurance Benefits
3.17 NACO Environmental Matters
3.18 NACO Labor Matters
4.3(b) ABC Securities
4.3(c) ABC Affiliated Entities
4.4 ABC Noncontravention
4.5 ABC Brokers' Fees
4.8 ABC Undisclosed Liabilities
4.9 ABC Events Subsequent to Fiscal Year End
4.11 ABC Taxes
4.12 ABC Real Property
4.13(a) ABC Intellectual Property
4.13(c) ABC Intellectual Property to Affiliated Entities
4.14(a) ABC Contracts
4.14(b) Exceptions to ABC Contracts
4.16(a) ABC Employee Benefit Plans
4.16(c) ABC Non-Multi-Employer Plans
4.16(d) ABC Contributions to Multi-Employer Plans
4.16(f) ABC Retiree Medical/Life Insurance Benefits
4.17 ABC Environmental Matters
4.18 ABC Labor Matters
4.27(a) ABC Affiliated Entities
5.1(g) Conduct of NACO and ABC
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SECTION DESCRIPTION
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6.2(d) ABC Required Consents
6.2(h) Parties to Change-of-Control Agreements
6.3(d) NACO Required Consents
8.3(i) ABC Estimated Transaction Expenses
8.3(ii) NACO Estimated Transaction Expenses
8.4(h)(i) ABC Knowledge Officers
8.4(h)(ii) NACO Knowledge Officers
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EXHIBITS
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EXHIBIT DESCRIPTION
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A Voting Agreement
B Form of Restated Certificate of Incorporation of
the Surviving Corporation
C Form of Amended and Restated By-laws of
the Surviving Corporation
D Form of NACO Affiliate's Agreement
E Form of ABC Affiliate's Agreement
F Form of ABC Tax Certificate
G Form of NACO Tax Certificate
H Form of Registration Rights Agreement
I Form of Opinion of Counsel to ABC
J Form of Opinion of Counsel to NACO
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INDEX OF DEFINED TERMS
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DEFINITION PAGE
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ABC ............................................................... 1
ABC Acquisition Proposal........................................... 38
ABC Balance Sheet.................................................. 53
ABC Common Stock................................................... 4
ABC Contract....................................................... 26
ABC Employee Benefit Plans......................................... 27
ABC Financial Statements........................................... 23
ABC Intellectual Property.......................................... 25
ABC Preferred Stock................................................ 21
ABC SEC Documents.................................................. 22
ABC Special Meeting................................................ 35
ABC Stock Options.................................................. 21
ABC Superior Proposal.............................................. 47
Affiliated Entity.................................................. 51
Agreement.......................................................... 1
APB 16............................................................. 19
Applicable Law..................................................... 11
Average ABC Trading Price.......................................... 48
Business Day....................................................... 51
Certificate of Merger.............................................. 2
Cleanup............................................................ 51
Closing............................................................ 4
Closing Date....................................................... 4
Code............................................................... 1
Confidentiality Agreement.......................................... 39
Control Group...................................................... 51
Delaware Law....................................................... 2
Disclosure Schedule................................................ 9
Draft Registration Statement....................................... 11
Effective Time..................................................... 2
Environmental Claim................................................ 51
Environmental Laws................................................. 52
ERISA.............................................................. 15
Exchange Act....................................................... 20
Exchange Agent..................................................... 6
Exchange Fund...................................................... 6
Exchange Ratio..................................................... 4
Fully Diluted Locomotive Shares.................................... 5
Fully Diluted Track Option Shares.................................. 5
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DEFINITION PAGE
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Fully Diluted Track Shares.............................................. 5
GAAP.................................................................... 1
Governmental Authority.................................................. 9
Governmental Licenses................................................... 9
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act................................................... 10
Hazardous Materials..................................................... 52
In-The-Money Track Stock Option......................................... 5
IRS..................................................................... 13
Joint Proxy Statement................................................... 35
Knowledge............................................................... 52
Liens................................................................... 10
Material Adverse Effect................................................. 52
Merged Corporation...................................................... 2
Merger.................................................................. 1
Merger Subsidiary....................................................... 1
Multi-Employer Plan..................................................... 15
NACO.................................................................... 1
NACO Acquisition Proposal............................................... 37
NACO Balance Sheet...................................................... 52
NACO Common Stock....................................................... 5
NACO Contract........................................................... 14
NACO Employee Benefit Plans............................................. 15
NACO Financial Statements............................................... 12
NACO Intellectual Property.............................................. 13
NACO Rights............................................................. 8
NACO Shares............................................................. 5
NACO Special Meeting.................................................... 35
NACO Superior Proposal.................................................. 46
Nasdaq.................................................................. 4
Nasdaq NMS.............................................................. 5
Parties................................................................. 2
Party................................................................... 2
Permits................................................................. 12
Permitted Liens......................................................... 52
Person.................................................................. 52
Pre-Surrender Dividends................................................. .7
Registration Statement.................................................. 20
Release................................................................. 52
Representatives......................................................... 39
Restraints.............................................................. 42
Rights Agreement........................................................ 20
SEC..................................................................... 11
SEC Regulations......................................................... 20
Securities Act.......................................................... 10
Special Meetings........................................................ 35
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DEFINITION PAGE
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Subsidiary............................................................... 53
Surviving Corporation.................................................... 2
Surviving Corporation Common Stock....................................... 6
Tax...................................................................... 53
Tax Return............................................................... 53
Taxes.................................................................... 53
Termination Date......................................................... 45
Voting Agreement......................................................... 1
Weighted Average ABC Trading Price....................................... 4
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 17, 1998, (this
"Agreement"), by and among NACO, Inc., a Delaware corporation ("NACO"), ABC Rail
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Products Corporation, a Delaware corporation ( "ABC"), and ABCR Acquisition Sub,
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Inc., a Delaware corporation and a wholly owned subsidiary of ABC ("Merger
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Subsidiary").
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W I T N E S S E T H
WHEREAS, the Boards of Directors of NACO, ABC and Merger Subsidiary have
each determined that it is in the best interests of their respective
stockholders for NACO and ABC to enter into a business combination in a "merger
of equals" under which Merger Subsidiary will, upon the terms and subject to the
conditions set forth herein, merge with and into NACO (the "Merger") so that
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NACO will become a wholly owned subsidiary of ABC;
WHEREAS, the Boards of Directors of NACO, ABC and Merger Subsidiary (and
ABC as the sole stockholder of Merger Subsidiary) have each determined that the
Merger and the other transactions contemplated hereby are consistent with, and
in furtherance of, their respective business strategies and goals and have each
approved the Merger upon the terms and subject to the conditions set forth
herein;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall constitute a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"); and
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WHEREAS, for financial accounting purposes, it is intended that the Merger
shall be accounted for as a "pooling of interests" under United States generally
accepted accounting principles ("GAAP");
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WHEREAS, concurrently with the execution of this Agreement and as an
inducement to ABC to enter into this Agreement, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the Chairman,
Chief Executive Officer and majority stockholder of NACO, and ABC have entered
into a Voting Agreement as set forth in Exhibit A hereto (the "Voting
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Agreement") pursuant to which ▇▇. ▇▇▇▇▇ has agreed to vote his shares of NACO
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Common Stock in favor of the Merger and the transactions contemplated by this
Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
THE MERGER AND THE CLOSING
SECTION 1.1 -- The Merger. At the Effective Time and subject to and upon
the terms and conditions of this Agreement and the Delaware General Corporation
Law ("Delaware Law"), Merger Subsidiary shall be merged with and into NACO, the
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separate corporate existence of Merger Subsidiary shall cease, and NACO shall
continue as the surviving corporation which shall be a wholly owned subsidiary
of ABC. NACO as the surviving corporation after the Merger is herein sometimes
referred to as the "Surviving Corporation" and Merger Subsidiary as the non-
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surviving corporation after the Merger is herein sometimes referred to as the
"Merged Corporation." NACO, ABC and Merger Subsidiary are herein referred to
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collectively as the "Parties" and each individually as a "Party."
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SECTION 1.2 -- Effective Time. As promptly as practicable on the Closing
Date, the Parties shall cause the Merger to be consummated by filing a
Certificate of Merger (the "Certificate of Merger") with the Secretary of State
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of the State of Delaware with respect to the Merger, in such form as required
by, and executed in accordance with, the relevant provisions of Delaware Law.
The Merger shall become effective at such time as the Certificate of Merger is
duly filed with the Secretary of State of Delaware, or at such later date or
time as may be set forth in the Certificate of Merger (such time as the Merger
becomes effective being hereinafter referred to as the "Effective Time").
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SECTION 1.3 -- Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
NACO and Merger Subsidiary shall continue with, or vest in, as the case may be,
NACO as the Surviving Corporation, and all debts, liabilities and duties of NACO
and Merger Subsidiary shall continue to be, or become, as the case may be, the
debts, liabilities and duties of NACO as the Surviving Corporation. At the
Effective Time, the Surviving Corporation shall be a direct wholly owned
subsidiary of ABC.
SECTION 1.4 -- Subsequent Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to continue in, vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties, privileges, franchises or assets of either
of its constituent corporations acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, the officers and directors of the Surviving
Corporation shall be directed and authorized to execute and deliver, in the name
and on behalf of either of such constituent corporations, all such deeds, bills
of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under
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such rights, properties, privileges, franchises or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
SECTION 1.5 -- Certificate of Incorporation; By-Laws; Directors, Officers
and Committees. Unless otherwise agreed by NACO and ABC before the Effective
Time, at the Effective Time:
(a) The restated certificate of incorporation of NACO, as in effect
immediately prior to the Effective Time, shall be amended at and as of the
Effective Time as set forth in Exhibit B hereto and, as so amended, such
restated certificate of incorporation shall be the restated certificate of
incorporation of the Surviving Corporation until thereafter amended as provided
by law and such certificate of incorporation;
(b) The amended and restated by-laws of NACO, as in effect immediately
prior to the Effective Time, shall be amended at and as of the Effective Time as
set forth in Exhibit C hereto and, as so amended, such amended and restated by-
laws shall be the amended and restated by-laws of the Surviving Corporation
until thereafter amended as provided by law and by the restated certificate of
incorporation and the amended and restated by-laws of the Surviving Corporation;
(c) The members of the Board of Directors and the officers of the
Surviving Corporation at the Effective Time shall be as designated in Section
1.5(c) of the Disclosure Schedule and shall serve in such capacities for the
applicable period specified in accordance with the by-laws of the Surviving
Corporation. If any director designated in accordance with Section 1.5(c) of
the Disclosure Schedule shall be unable to serve as a director at the Effective
Time, or if any officer designated in accordance with Section 1.5(c) of the
Disclosure Schedule ceases to be a full-time employee of either NACO or ABC
before the Effective Time, the Parties will agree upon another person to serve
in such person's stead; and
(d) The members of the Board of Directors (including the classes into
which such members shall be classified) and the members of the committees of the
Board of Directors (including the chairmen thereof) at the Effective Time shall
be mutually agreed upon by NACO and ABC, provided that the Board of Directors of
ABC shall consist of eight (8) persons: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
three persons to be named by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and the Board of Directors of NACO,
and three persons to be named by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the Board of Directors of
ABC. All directors designated herein shall serve in such capacities for the
applicable period specified in accordance with the restated certificate of
incorporation (as to be amended to provide for the classified Board of
Directors) and by-laws of ABC. If any director designated herein shall be
unable to serve as a director (including as a member or chairman of any
committee) at the Effective Time, the Party which designated such individual
shall designate another individual to serve in such individual's place. The
officers of ABC at the Effective Time shall be as designated in Section 1.5(d)
of the Disclosure Schedule and shall serve in such capacities for the applicable
period specified in accordance with the by-laws of ABC. If any officer
designated in accordance with
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Section 1.5(d) of the Disclosure Schedule ceases to be a full-time employee of
either NACO or ABC before the Effective Time, the Parties will agree upon
another person to serve in such person's stead.
(e) The restated certificate of incorporation of ABC shall be amended
at and as of the Effective Time to provide for (i) a change in the name of ABC
to "ABC-NACO Inc." and (ii) a classified Board of Directors as contemplated by
Section 1.5(d).
SECTION 1.6 -- The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at 10:00 a.m. on a date (the
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"Closing Date") and at a place to be specified by the parties, which shall be
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(i) no later than the second Business Day following the satisfaction or waiver
of all conditions to the obligations of the Parties to consummate the
transactions set forth in Article VI hereof (other than conditions with respect
to actions the respective Parties will take at the Closing itself), or (ii) at
such other time and place and on such other date as NACO and ABC shall agree.
ARTICLE II
EFFECT ON STOCK OF THE SURVIVING
CORPORATION AND THE MERGED CORPORATION
SECTION 2.1 -- Conversion of Securities. The manner and basis of
converting the shares of common stock of the Surviving Corporation and of the
Merged Corporation at the Effective Time, by virtue of the Merger and without
any action on the part of any of the Parties or the holder of any of such
securities, shall be as hereinafter set forth in this Article II.
SECTION 2.2 -- Conversion of Shares.
(a) Each NACO Share and all rights in respect thereof shall, at the
Effective Time and without any action on the part of any holder thereof,
forthwith cease to exist and be converted into the right to receive (in addition
to cash in lieu of fractional shares pursuant to Section 2.7) that number of
shares of ABC Common Stock (rounded up to the nearest one thousandth) equal to
the number of Fully Diluted ABC Shares divided by the number of Fully Diluted
NACO Shares (the "Exchange Ratio").
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(b) As used herein:
(i) "Weighted Average ABC Trading Price" means, during the fifteen
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(15) Business Days immediately preceding the fourth Business Day prior to
the later of the date of the ABC Special Meeting and the date of the NACO
Special Meeting as specified in the Joint Proxy Statement, the sum of the
per share sale prices of the common stock, par value $0.01 per share, of
ABC (the "ABC Common Stock") sold on and reported by the Nasdaq
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Stock Market's ("Nasdaq") National Market System (the "Nasdaq NMS") during
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such period, divided by the aggregate number of such shares of ABC Common
Stock;
(ii) "Fully Diluted NACO Shares" means the sum of (A) the number of
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shares of common stock, par value $.01 per share, of NACO (the "NACO Common
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Stock") outstanding immediately prior to the Effective Time (excluding
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those shares to be canceled in accordance with Section 2.3, the "NACO
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Shares") and (B) the number of shares of NACO Common Stock issuable upon
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the exercise of NACO Rights outstanding immediately prior to the Effective
Time;
(iii) "Fully Diluted ABC Option Shares" means the product of (A) a
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fraction, the numerator of which is equal to (1) the Weighted Average ABC
Trading Price minus (2)(i) the sum of the per option exercise prices for
each In-The-Money ABC Stock Option divided by (ii) the aggregate number of
In-The-Money ABC Stock Options, and the denominator of which is equal to
the Weighted Average ABC Trading Price, and (B) the aggregate number of In-
The-Money ABC Stock Options;
(iv) "Fully Diluted ABC Shares" means the sum of (A) the number of
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shares of ABC Common Stock outstanding immediately prior to the Effective
Time, (B) the 333,333 shares of ABC Common Stock that are issuable pursuant
to the Supplemental Agreement by and among ABC and the shareholders of
American System Technologies, Inc., dated as of December 17, 1996, and the
Supplemental Agreement by and among ABC and the shareholders of United
Railway Signal Group, Inc., dated as of October 31, 1997, less any of such
shares issued after the date hereof and prior to the Effective Time and (C)
the Fully Diluted ABC Option Shares; and
(v) "In-The-Money ABC Stock Option" means each ABC Stock Option
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outstanding immediately prior to the Effective Time, the exercise price of
which is less than the Weighted Average ABC Trading Price.
(c) The Exchange Ratio shall be appropriately adjusted to eliminate
the impact of any dividend (whether in cash, securities or other property, but
excluding any regular, quarterly cash dividend of ABC), stock split,
reclassification, recapitalization, reverse split, or similar event, announced
or occurring, with respect to ABC Common Stock and with a record date after
execution of this Agreement and before the Effective Time.
(d) As of the Effective Time, all NACO Shares shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any NACO Shares shall cease
to have any rights with respect thereto, except the right to receive the
certificates representing shares of ABC Common Stock into which such NACO Shares
have been converted and any cash in lieu of fractional shares of ABC Common
Stock to be issued or paid in consideration therefor upon surrender of such
certificate in accordance with Section 2.5, without interest, subject to the
limitations set forth in Sections 2.3 and 2.7 hereof.
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SECTION 2.3 -- Cancellation of Treasury Shares. At the Effective Time,
each share of NACO Common Stock held in the treasury of NACO or by any of NACO's
Subsidiaries, and each share of NACO Common Stock that is owned by ABC, Merger
Subsidiary or any other Subsidiary of ABC, immediately prior to the Effective
Time shall be canceled and retired and no shares of stock or other securities of
ABC or the Surviving Corporation shall be issuable, and no payment or other
consideration shall be made, with respect thereto.
SECTION 2.4 -- Conversion of Common Stock of Merger Subsidiary into Common
Stock of the Surviving Corporation. At the Effective Time, the shares of common
stock, par value $0.01 per share, of Merger Subsidiary issued and outstanding
immediately prior to the Effective Time, and all rights in respect thereof,
shall, without any action on the part of ABC, forthwith cease to exist and be
converted into an aggregate of 1,000 validly issued, fully paid and
nonassessable shares of common stock of the Surviving Corporation, par value
$0.01 per share (the "Surviving Corporation Common Stock"). Immediately after
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the Effective Time and upon surrender by ABC of the certificate representing the
shares of the common stock of Merger Subsidiary, the Surviving Corporation shall
deliver to ABC an appropriate certificate or certificates representing the
shares of Surviving Corporation Common Stock created by conversion of the common
stock of Merger Subsidiary owned by ABC.
SECTION 2.5 -- Exchange of Shares Other Than Treasury Shares. Subject to
the terms and conditions hereof, at or prior to the Effective Time, ABC shall
enter into an agreement with American Stock Transfer and Trust Co. or such other
bank or trust company as may be designated by ABC and as shall be reasonably
satisfactory to NACO (the "Exchange Agent") to effect the exchange of NACO
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Shares for ABC Common Stock in accordance with the provisions of this Article
II. At or prior to the Effective Time, ABC shall deposit, or cause to be
deposited, with the Exchange Agent for the benefit of the holders of NACO Shares
certificates representing ABC Common Stock for conversion of NACO Shares in
accordance with the provisions of Section 2.2 hereof (such certificates,
together with any dividends or distributions with respect thereto and any cash
payable in lieu of any fractional shares of ABC Common Stock being herein
referred to as the "Exchange Fund"). Commencing immediately after the Effective
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Time and until the appointment of the Exchange Agent shall be terminated, each
holder of a certificate or certificates theretofore representing NACO Shares may
surrender the same to the Exchange Agent, and, after the appointment of the
Exchange Agent shall be terminated, any such holder may surrender any such
certificate to ABC. Such holder shall be entitled upon such surrender to receive
in exchange therefor a certificate or certificates representing the number of
full shares of ABC Common Stock into which NACO Shares theretofore represented
by the certificate or certificates so surrendered shall have been converted in
accordance with the provisions of Section 2.2 hereof, together with a cash
payment in lieu of fractional shares, if any, in accordance with Section 2.7
hereof, and all such shares of ABC Common Stock shall be deemed to have been
issued at the Effective Time. Until so surrendered and exchanged, each
outstanding certificate which, prior to the Effective Time, represented issued
and outstanding NACO Shares shall be deemed for all corporate purposes of ABC,
other than the payment of dividends and other distributions, if any, to evidence
ownership of the number of full shares of ABC Common Stock into which NACO
Shares theretofore represented thereby shall have
6
been converted at the Effective Time. Unless and until any such certificate
theretofore representing NACO Shares is so surrendered, no dividend or other
distribution, if any, payable to the holders of record of ABC Common Stock as of
any date subsequent to the Effective Time shall be paid to the holder of such
certificate in respect thereof. Except as otherwise provided in Section 2.6
hereof, upon the surrender of any such certificate theretofore representing NACO
Shares, however, the record holder of the certificate or certificates
representing shares of ABC Common Stock issued in exchange therefor shall
receive from the Exchange Agent or from ABC, as the case may be, payment of the
amount of dividends and other distributions, if any, which as of any date
subsequent to the Effective Time and until such surrender shall have become
payable with respect to such number of shares of ABC Common Stock ("Pre-
---
Surrender Dividends"). No interest shall be payable with respect to the payment
-------------------
of Pre-Surrender Dividends upon the surrender of certificates theretofore
representing NACO Shares. After the appointment of the Exchange Agent shall have
been terminated, any holders of certificates representing NACO Shares which have
not received payment of Pre-Surrender Dividends shall look only to ABC for
payment thereof. Notwithstanding the foregoing provisions of this Section 2.5,
neither the Exchange Agent nor any Party shall be liable to a holder of NACO
Shares for any ABC Common Stock, any dividends or distributions thereon or any
cash payment for fractional shares as contemplated by Section 2.7 hereof,
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
SECTION 2.6 -- Transfer Books. The stock transfer books of NACO shall be
closed at the Effective Time and no transfer of any NACO Shares will thereafter
be recorded on any of such stock transfer books. In the event of a transfer of
ownership of NACO Shares that is not registered in the stock transfer records of
NACO at the Effective Time, a certificate or certificates representing the
number of full shares of ABC Common Stock into which such NACO Shares shall have
been converted shall be issued to the transferee together with a cash payment in
lieu of fractional shares, if any, in accordance with Section 2.7 hereof, and a
cash payment in the amount of Pre-Surrender Dividends, if any, in accordance
with Section 2.5 hereof, if the certificate or certificates representing such
NACO Shares is or are surrendered as provided in Section 2.5 hereof, accompanied
by all documents required to evidence and effect such transfer and by evidence
of payment of any applicable stock transfer tax.
SECTION 2.7 -- No Fractional Share Certificates. (a) No scrip or
fractional share certificate for ABC Common Stock will be issued upon the
surrender for exchange of certificates evidencing NACO Shares, and an
outstanding fractional share interest will not entitle the owner thereof to
vote, to receive dividends or to any rights of a stockholder of ABC or of the
Surviving Corporation with respect to such fractional share interest.
(b) As promptly as practicable following the Effective Time, ABC
shall deliver to the Exchange Agent for deposit in the Exchange Fund an amount
sufficient for the Exchange Agent to pay each holder of NACO Common Stock an
amount in cash equal to the product obtained by multiplying the fractional share
interest to which such holder would otherwise be entitled (after taking into
account all NACO Shares held of record at the Effective Time by such holder) by
the Average ABC Trading Price.
7
(c) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of NACO Shares with respect to any
fractional share interests, the Exchange Agent shall make available such
amounts, net of any required withholding, to such holders of NACO Shares,
subject to and in accordance with the terms of Section 2.5 hereof.
(d) Any portion of the Exchange Fund which remains undistributed for
six months after the Effective Time shall be delivered to ABC, upon demand, and
any holders of NACO Shares who have not theretofore complied with the provisions
of this Article II shall thereafter look only to ABC for satisfaction of their
claims for ABC Common Stock, any cash in lieu of fractional shares of ABC Common
Stock and any Pre-Surrender Dividends, in each case, without any interest
thereon.
(e) The Exchange Agent shall invest all cash included in the Exchange
Fund, as directed by ABC. Any interest and other income resulting from such
investments shall be paid to ABC.
SECTION 2.8 -- Rights to Purchase NACO Common Stock. At the Effective
Time, each warrant, option and other right granted by NACO to purchase shares of
NACO Common Stock ("NACO Rights") which is outstanding and unexercised
-----------
immediately prior to the Effective Time shall be converted into a warrant,
option or other right, as the case may be, to purchase shares of ABC Common
Stock in such amount and at such exercise price as provided below and otherwise
having the same terms and conditions as are in effect immediately prior to the
Effective Time (except to the extent that such terms, conditions and
restrictions are altered in accordance with their terms as a result of the
transactions contemplated hereby):
(a) the number of shares of ABC Common Stock to be subject to the
converted warrant, option or right, as the case may be, shall be equal to the
product of (i) the number of shares of NACO Common Stock subject to the original
NACO Right and (ii) the Exchange Ratio;
(b) the exercise price per share of ABC Common Stock under the
converted warrant, option or right, as the case may be, shall be equal to (i)
the exercise price per share of NACO Common Stock under the original NACO Right
divided by (ii) the Exchange Ratio; provided, however, that in no event shall
the exercise price per share of ABC Common Stock be less than par value per
share of ABC Common Stock; and
(c) upon each exercise of NACO Rights by a holder thereof, the
aggregate number of shares of ABC Common Stock deliverable upon such exercise
shall be rounded down, if necessary, to the nearest whole share and the
aggregate exercise price shall be rounded up, if necessary, to the nearest cent.
8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NACO
NACO represents and warrants to ABC that the statements contained in this
Article III are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article III), except as set forth in specifically referenced
sections of the disclosure schedule attached hereto (the "Disclosure Schedule").
-------------------
SECTION 3.1 -- Organization, Qualification, and Corporate Power. Each
of NACO and its Subsidiaries is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its incorporation.
Each of NACO and its Subsidiaries is duly authorized to conduct business and is
in good standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification would not have a Material
Adverse Effect. Each of NACO and its Subsidiaries has all corporate power and
all governmental licenses, authorizations, consents and approvals (collectively,
"Governmental Licenses") required to carry on the business in which it is
---------------------
engaged, except for failures to have any such Governmental License which would
not, individually or in the aggregate, have a Material Adverse Effect. NACO has
heretofore delivered to ABC complete and correct copies of the certificate of
incorporation and the by-laws of NACO and each of its Subsidiaries as currently
in effect.
SECTION 3.2 -- Authorization of Transaction; Required Filings and Consents.
NACO has full power and authority (including full corporate power and authority)
to enter into, execute and deliver this Agreement and to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the performance of NACO's obligations
hereunder have been duly and validly authorized by the Board of Directors of
NACO and, except for the approval and adoption of this Agreement by NACO's
stockholders, no other corporate proceedings on the part of NACO are necessary
to authorize the execution, delivery and performance of this Agreement and to
consummate the transactions contemplated hereby. The Board of Directors of NACO
has determined that the transactions contemplated by this Agreement are in the
best interest of NACO and its stockholders and to recommend to such stockholders
that they approve and adopt this Agreement and the transactions contemplated
hereby. Subject to the approval and adoption of this Agreement by NACO's
stockholders, this Agreement has been duly executed and delivered by NACO and
constitutes, assuming due authorization, execution and delivery of this
Agreement by ABC and Merger Subsidiary, the valid and binding obligation of
NACO, enforceable against NACO in accordance with its terms. NACO does not need
to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any Federal, state, local or foreign government, court
of competent jurisdiction, administrative agency, commission or other
governmental authority or instrumentality (each, a "Governmental Authority") in
----------------------
connection with the execution and delivery of this Agreement in order for the
Parties to consummate the transactions contemplated by this Agreement, except
for (a) the filing of the Certificate of Merger with the Delaware Secretary of
State and appropriate documents with the
9
relevant authorities of the other states in which NACO is qualified to do
business; (b) the filing of a pre-merger notification and report form by NACO
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act"); (c) compliance with any applicable requirements of
---------------------
state blue sky or takeover laws; and (d) such other notices, filings,
authorizations, consents or approvals (i) the failure of which to be given, made
or obtained individually or in the aggregate would not reasonably be expected to
have a Material Adverse Effect or (ii) that become applicable as a result of the
business or activities in which ABC or any of its Subsidiaries or Affiliated
Entities is or proposes to be engaged or any acts or omissions by, or facts
pertaining to, ABC.
SECTION 3.3 -- Capitalization; Subsidiaries.
(a) The authorized capital stock of NACO consists of 2,000,000 shares
of NACO Common Stock, of which 400,000 shares have been designated as Class A
Common Stock. As of September 15, 1998, 1,024,106 shares of NACO Common Stock
were outstanding, 1,035 shares of NACO Common Stock were held in NACO's treasury
and no shares of NACO's Class A Common Stock were issued or outstanding or held
in NACO's treasury. All of the issued and outstanding shares of NACO Common
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof arising from NACO. All prior sales of NACO's
securities have been made in compliance with or under an exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, and no shareholders of
---------------
NACO have any rescission rights with respect to any NACO Common Stock or other
NACO securities.
(b) An aggregate of 49,377 shares of NACO Common Stock are reserved
and authorized for issuance pursuant to NACO's Omnibus Stock Option Plan.
Except as set forth in Section 3.3(b) of the Disclosure Schedule, NACO does not
have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character to or by which NACO is a party
or is bound which, directly or indirectly, obligate NACO to issue, deliver,
sell, redeem, repurchase or otherwise acquire any shares of NACO Common Stock or
any other equity security of NACO or any securities representing the right to
purchase or otherwise receive any shares of NACO Common Stock or any other
equity security of NACO.
(c) Section 3.3(c)(i) of the Disclosure Schedule sets forth a true and
correct list of all of NACO's Subsidiaries. NACO owns, directly or indirectly,
all of the outstanding capital stock of each of its Subsidiaries. Each share of
each Subsidiary owned directly or indirectly by NACO is duly authorized and
validly issued and is fully paid, nonassessable and free of preemptive rights,
and, except as set forth in Section 3.3(c)(ii) of the Disclosure Schedule, each
share is free and clear of all mortgages, liens, security interests, charges,
easements, leases, subleases, covenants, rights of way, options, claims,
restrictions or encumbrances of any kind (collectively "Liens"), and all rights
-----
of first refusal and limitations on NACO's voting rights. None of NACO's
Subsidiaries has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the sale
or issuance by such Subsidiary or by NACO or any
10
other Subsidiary of NACO, of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to purchase
or otherwise receive any shares of capital stock or any other equity security of
such Subsidiary.
SECTION 3.4 -- Noncontravention. Neither the execution and delivery of this
Agreement by NACO, nor the performance by NACO of its obligations hereunder,
will, assuming the receipt of the consents listed in Section 6.3(d) of the
Disclosure Schedule, (a) conflict with or result in a breach of any provision of
the certificate of incorporation, by-laws or equivalent organizational
instrument of NACO or any of its Subsidiaries, (b) violate any Applicable Law,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority applicable to NACO or any of its Subsidiaries or by which
NACO or any of its Subsidiaries is bound or to which any of their assets is
subject or (c) except as set forth in Section 3.4 of the Disclosure Schedule,
conflict with, result in a violation or breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
indenture, lease, Governmental License, instrument, or other arrangement to
which NACO or any of its Subsidiaries is a party or by which NACO or any of its
Subsidiaries is bound or to which any of their assets is subject (or result in
the imposition of any Lien upon any of their assets), except, with respect to
clauses (b) and (c) above, where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Lien would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. As used herein, the term "Applicable Law" means
--------------
any statute, law (including common law), ordinance, rule or regulation
applicable to the Person referenced.
SECTION 3.5 -- Brokers' Fees. Except as set forth in Section 3.5 of the
Disclosure Schedule, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
NACO or any of its Subsidiaries that would be entitled to any fee or commission
from NACO or any of its Subsidiaries, the Surviving Corporation, ABC or any of
ABC's Affiliates, in connection with, or as a result of the consummation of, the
transactions contemplated by this Agreement.
SECTION 3.6 -- Registration Statement. As of the date hereof, neither NACO
nor any of its Subsidiaries is required to file any reports, proxy statement,
forms, registration statements or other documents with the Securities and
Exchange Commission (the "SEC"). Except as set forth in Section 3.6 of the
---
Disclosure Schedule, the draft Registration Statement on Form S-1 dated August
6, 1998 (the "Draft Registration Statement") previously furnished to ABC, as of
----------------------------
its date, (a) complied in all material respects with the requirements of the
Securities Act and applicable SEC Regulations and (b) contained no untrue
statement of a material fact nor omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading.
SECTION 3.7 -- Financial Statements. The audited consolidated balance
sheets, statements of operations and comprehensive income, statements of
stockholders' equity and statements of cash flows of NACO and its consolidated
Subsidiaries as of and for each of the fiscal years ended March
11
31, 1996, March 30, 1997 and March 29, 1998, and the unaudited consolidated
balance sheets, statements of operations and comprehensive income and statements
of cash flows of NACO and its consolidated Subsidiaries as of and for the three
month period ended June 28, 1998 (collectively, the "NACO Financial Statements")
-------------------------
(including, in each case, any notes and schedules thereto), a true and correct
copy of which has previously been furnished to ABC, (a) have been prepared in
accordance with GAAP consistently applied during the periods involved (except as
may be indicated in the related notes and schedules thereto) and (b) fairly
present in all material respects the consolidated financial condition of NACO
and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of the unaudited NACO Financial Statements, to normal year-end
adjustments which are not expected to be, individually or in the aggregate,
material in amount).
SECTION 3.8 -- Absence of Undisclosed Liabilities. Except as set forth in
Section 3.8 of the Disclosure Schedule and except for liabilities and
obligations incurred in the ordinary course of business since the date of NACO
Balance Sheet, neither NACO nor any of its Subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of NACO and its
consolidated Subsidiaries or in the notes thereto except for those that would
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 3.9 -- Events Subsequent to Fiscal Year End. Since the date of NACO
Balance Sheet, NACO and its Subsidiaries have conducted their businesses in the
ordinary course of business, and neither NACO nor any of its Subsidiaries has
experienced any change in its financial condition, business, assets, properties
or prospects which, individually or in the aggregate, has had, or could
reasonably be expected to have, a Material Adverse Effect. Since the date of
NACO Balance Sheet, neither NACO nor any of its Subsidiaries has taken any of
the actions or permitted to occur any of the events specified in Section 5.1(a)
through (o).
SECTION 3.10 -- Legal Compliance. NACO and its Subsidiaries are in
compliance with all Applicable Laws, ordinances, judgments, decrees, rules and
regulations of any Governmental Authority applicable to their business and
operations, except for such violations, if any, which, individually or in the
aggregate, has not had or could not reasonably be expected to have, a Material
Adverse Effect. All governmental approvals, permits and Governmental Licenses
(collectively, "Permits") required to conduct the business of NACO and its
-------
Subsidiaries have been obtained, are in full force and effect and are being
complied with, except for failures to obtain such Permits, to have such Permits
in full force and effect or to be in compliance with such Permits, if any,
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
SECTION 3.11 -- Tax Matters.
(a) Complete and correct copies of all material Tax Returns and all
amendments or modifications thereto filed or caused to be filed by NACO and its
Subsidiaries for the last five full fiscal years have been delivered to ABC.
Each such Tax Return reflects accurately all liability for
12
Taxes of NACO and its Subsidiaries for the periods covered thereby and is
complete and correct in all material respects. Except for Taxes the non-filing
or non-payment of which would not have a Material Adverse Effect, NACO and its
Subsidiaries have filed all material Tax Returns for Taxes required to be filed
and have paid all Taxes due with respect to such Tax Returns.
(b) NACO has established adequate reserves on the Financial Statements
for payment for Taxes by NACO and its Subsidiaries relating to periods (or
portions thereof) for which a Tax Return was required to be filed, for Taxes
that are not then due or payable and have or will establish adequate reserves
for Taxes relating to subsequent periods through the Closing.
(c) Neither NACO nor any of its Subsidiaries is currently under
examination by the Internal Revenue Service (the "IRS") or any other
---
Governmental Authority with respect to Taxes; and neither NACO nor any of its
Subsidiaries has been contacted by or is currently corresponding with any state
or local government with respect to the requirement to file Tax Returns and/or
pay any Taxes. No waivers of statute of limitations have been given to or
requested by any Governmental Authority.
SECTION 3.12 -- Real Property. Section 3.12 of the Disclosure Schedule sets
forth (a) a correct and complete list of all leases of real property to which
NACO or any of its Subsidiaries is a party as lessee as of the date hereof
involving an annual lease payment of more than $100,000, including an
identification of the parties, the property, the term of the lease and the rent
or lease payments thereunder, and (b) a correct and complete list of all real
property owned by NACO and its Subsidiaries as of the date hereof, including an
identification of the property, the record owner and the principal structures
thereon.
SECTION 3.13 -- Intellectual Property.
(a) Section 3.13(a) of the Disclosure Schedule sets forth a correct
and complete list (the "NACO Intellectual Property") of (i) all letters patent
--------------------------
and patent applications, and (ii) all registered and other material utility
models, utility model applications, trade names, brand names, trademarks,
service marks, trademark and service ▇▇▇▇ registrations and applications,
copyright registrations and applications; with respect to both clauses (i) and
(ii), both domestic and foreign, presently owned, possessed, used or held by
NACO and its Subsidiaries. Section 3.13(a) of the Disclosure Schedule also
identifies each license, agreement, or other permission which NACO or its
Subsidiaries has granted to or received from any third party with respect to any
NACO Intellectual Property.
(b) NACO and its Subsidiaries own or have a binding, enforceable right
to use NACO Intellectual Property, are the owner of record of any application,
registration or grant for each item of NACO Intellectual Property, and have
properly executed and recorded all documents necessary to perfect their title to
such NACO Intellectual Property. Neither the conduct of NACO's or any of its
Subsidiaries' business nor any of the products sold or services provided by NACO
or its Subsidiaries in connection therewith (except for such infringements or
violation of rights which,
13
in the aggregate, would not be reasonably expected to have a Material Adverse
Effect) infringes upon or is inconsistent with the intellectual property rights
of any other Person. To the Knowledge of NACO, neither the conduct of any other
Person's business, nor the nature of any of the products it sells or services it
provides, infringes upon or is inconsistent with any NACO Intellectual Property.
Neither NACO nor any of its Subsidiaries has any liability for, or has given any
indemnification for, patent, trademark or copyright infringement with respect to
any products manufactured, used, distributed or sold by NACO or its
Subsidiaries. NACO and its Subsidiaries have filed all documents and paid all
taxes, fees, and other financial obligations required to maintain in force and
effect all NACO Intellectual Property until Closing.
SECTION 3.14 -- Contracts and Commitments.
(a) Except as set forth in Section 3.14(a) of the Disclosure Schedule,
neither NACO nor any of its Subsidiaries is a party to or is bound by any
contract, arrangement, commitment or understanding (whether written or oral) (i)
with respect to the employment of any director, officer, employee or consultant
which, solely in the case of employees or consultants, provide for payments in
excess of $125,000 per annum or cannot be terminated upon 30 days' or less
notice without penalty or premium, (ii) which, upon consummation of the
transactions contemplated by this Agreement will (either alone or upon the
occurrence of any additional acts or events) result in any payment (including,
without limitation, severance payments, golden parachute payments, change in
control payments, unemployment compensation payments or otherwise) becoming due
from ABC, NACO, the Surviving Corporation or any of their respective
Subsidiaries to any director, officer or employee (current, former or retired)
thereof, (iii) which is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this Agreement,
(iv) which is a contract or agreement not otherwise described by clause (iii)
hereof involving the payment of more than $125,000 per annum, (v) which
materially restricts the conduct of any line of business by NACO or any of its
Subsidiaries or (vi) under which any of the benefits will be increased, or the
vesting of the benefits will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement, or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement. Each contract, arrangement, commitment or understanding of
the type described in this Section 3.14(a), whether or not set forth in Section
3.14(a) of the Disclosure Schedule, is referred to herein as a "NACO Contract."
-------------
NACO has previously delivered to ABC true and correct copies of each NACO
Contract.
(b) Except as set forth in Section 3.14(b) of the Disclosure Schedule,
(i) each NACO Contract is valid and binding and in full force and effect, (ii)
NACO and each of its Subsidiaries have performed all obligations required to be
performed by it to date under each NACO Contract, except where such
noncompliance, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect, (iii) no event or
condition exists which constitutes or, after notice or lapse of time or both,
would constitute, a material default on the part of NACO or any of its
Subsidiaries under any such NACO Contract, except where such default,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect and (iv) no other party to such NACO
Contract is, to the Knowledge of NACO, in
14
default in any respect thereunder, except where such default, individually or in
the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect.
SECTION 3.15 -- Litigation. Neither NACO nor any of its Subsidiaries or any
of their respective directors, officers, agents or employees (in their
respective capacities as such) (a) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (b) is a party to, or to the
Knowledge of NACO, threatened to be made a party to, any action, suit,
proceeding, hearing, or investigation of, in, or before any court or quasi-
judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, except where the injunction, judgment, order, decree, ruling,
charge, action, suit, proceeding, hearing, or investigation could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 3.16 -- Employee Benefits.
(a) Section 3.16(a) of the Disclosure Schedule contains a complete
list of each employee benefit plan or arrangement sponsored, maintained or
contributed to by NACO or any other member of a Control Group of NACO for the
benefit of any current or former employee, officer or director, or their
dependents or beneficiaries, or providing benefits to such persons in respect of
services provided to any such entity, including, but not limited to, employee
benefit plans subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), deferred compensation plans, bonus plans, stock option plans,
-----
employment agreements, change in control agreements, hospitalization, disability
and other insurance plans, severance or termination pay plans and policies
("NACO Employee Benefit Plans") (true and accurate copies of which, together
-----------------------------
with, where applicable, the most recent annual reports on Form 5500, summary
plan descriptions with respect thereto and actuarial or valuation reports, were
furnished to ABC).
(b) With respect to each NACO Employee Benefit Plan which is not a
multi-employer plan described in Section 3(37)) of ERISA ("Multi-Employer
--------------
Plan"): (i) each has been operated and administered in all material respects in
compliance with its terms and with all applicable laws, including, but not
limited to, ERISA and the Code; (ii) no actions, suits, claims or disputes are
pending or, to the Knowledge of NACO, threatened or anticipated (other than
routine claims for benefits); (iii) no audits, inquiries, reviews, proceedings,
claims, or demands are pending with any Governmental Authority; (iv) to the
Knowledge of NACO, there are no facts which exist which could give rise to any
material liability to NACO or any of its Subsidiaries in the event of any such
investigation, claim, action, suit, audit, review, or other proceeding (other
than for routine claims for benefits, funding obligations in the ordinary course
and liability due to the Pension Benefit Guaranty Corporation for premiums in
the ordinary course); (v) all reports, returns, and similar documents required
to be filed with any Governmental Authority or distributed to any plan
participant have been duly or timely filed or distributed; and (vi) no non-
exempt "prohibited transaction" has occurred within the meaning of the
applicable provisions of ERISA or the Code.
(c) With respect to each NACO Employee Benefit Plan which is not a
Multi-Employer Plan: (i) the IRS has issued a favorable determination letter,
true and correct copies of
15
which have been furnished to ABC with respect to each such plan intended to
qualify under Code Section 401(a), that such plans are qualified and exempt from
federal income taxes; (ii) no reportable event (within the meaning of Section
4043 of ERISA) has occurred with respect to any such plan subject to Title IV of
ERISA, other than one for which the 30-day notice requirement has been waived;
(iii) the greatest of the projected benefit obligations or the accumulated
benefit obligations (under Financial Accounting Standard 87) and the current
liability within the meaning of Section 412(l)(7) of the Code with respect to
any such plan subject to Title IV of ERISA (as of most recent actuarial
valuation for such plan), did not exceed the then current fair market value of
the assets of such plan (determined using the actuarial assumptions used for the
most recent actuarial valuation for such plan); (iv) all contributions or other
payments to, and payments from and with respect to, such plans, including to any
Governmental Authority, which may have been required to be made in accordance
with such plans and ERISA or the Code or other Applicable Law have been timely
made; (v) all such contributions or other payments to the plans, and all
payments under the plans (except those to be made from a trust qualified under
Section 401(a) or exempt from tax by reason of Section 501(c)(9) of the Code)
and all payments with respect to the plans (including, without limitation, to
the Pension Benefit Guaranty Corporation or any Governmental Authority and
insurance premiums) for any period ending before the Closing Date that are not
yet, but will be, required to be made are properly accrued and reflected on the
NACO Balance Sheet.
(d) Except as set forth in Section 3.16(d) of the Disclosure Schedule,
neither NACO nor any other member of a Control Group of NACO contributes to, or
within the past ten years has contributed to, a Multi-Employer Plan. To the
extent that either NACO or any other member of a Control Group of NACO has so
contributed to any such plan, (i) all contributions required to be made to such
Multi-Employer Plans by NACO and such Control Group members have been timely
made, (ii) neither NACO nor any other member of a Control Group of NACO has
incurred any material liability (including secondary liability) to any Multi-
Employer Plan which has not been satisfied as a result of a complete or partial
withdrawal from such Multi-Employer Plan under (S) 4201 of ERISA or as a result
of a sale of assets described in (S) 4204 of ERISA, and (iii) neither NACO or
any member of a Control Group of NACO has been notified that any Multi-Employer
Plan is in reorganization or insolvent under and within the meaning of (S) 4241
or (S) 4245 of ERISA or is at risk of entering reorganization or becoming
insolvent, or that any Multi-Employer Plan intends to terminate or has been
terminated under (S) 4041A of ERISA.
(e) Except as set forth in Section 3.14(a) of the Disclosure Schedule,
neither the consummation or announcement of or other action relating to the
transactions contemplated by this Agreement will entitle any director, officer,
employee (current, former or retired) or consultant of NACO or its Subsidiaries
or any trustee under any "rabbi trust" or similar arrangement to any payment,
and, will not accelerate the time of payment or vesting, or increase the amount
of compensation, due to any such person, whether or not some other subsequent
action or event would be required to cause such payment, acceleration, vesting
or increase to be triggered.
16
(f) Except as set forth in Section 3.16(f) of the Disclosure Schedule,
none of the NACO Employee Benefit Plans promises or provides retiree medical or
life insurance benefits to any person, except as otherwise required by
Applicable Law.
SECTION 3.17 -- Environmental Matters. Except as set forth in Section 3.17
of the Disclosure Schedule:
(a) NACO and its Subsidiaries are in compliance with all applicable
Environmental Laws, except where failures to be in compliance would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Prior to the date of this Agreement, neither NACO nor any of
its Subsidiaries has received any unresolved written communication, whether from
a Governmental Authority, citizens' group, employee or otherwise, alleging: (i)
that NACO or any of its Subsidiaries is not in compliance with applicable
Environmental Laws; (ii) that NACO or any of its Subsidiaries is potentially
liable under applicable Environmental Laws; or (iii) requesting information,
investigation or Cleanup of any site or property under the Comprehensive
Environmental Response, Compensation and Liability Act or the Clean Water Act or
comparable state laws, except with respect to any of the foregoing which would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect;
(b) there is no Environmental Claim pending or threatened in writing
against NACO or any of its Subsidiaries or against any Person whose liability
for any Environmental Claim NACO or any of its Subsidiaries has or may have
retained or assumed either contractually or by operation of law that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect;
(c) there are no present or past actions, activities, circumstances,
conditions, events or incidents including, without limitation, the Release or
presence of any Hazardous Material from or at any real property owned, operated
or leased by NACO or any of its Subsidiaries, that could form the basis of any
Environmental Claim against NACO or any of its Subsidiaries or, to the Knowledge
of NACO, against any Person whose liability for any Environmental Claim NACO or
any of its Subsidiaries has or may have retained or assumed either contractually
or by operation of law that would, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect;
(d) NACO and each of its Subsidiaries possess or have timely applied
for all governmental authorizations and Permits required for the conduct of the
business of NACO and its Subsidiaries under applicable Environmental Laws,
except where the failure to have such authorization or Permits would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect;
(e) there are no underground storage tanks (as defined in the federal
Resource Conservation and Recovery Act and applicable state laws) located on any
real property owned, operated or leased by NACO or any of its Subsidiaries;
17
(f) neither NACO nor any of its Subsidiaries has arranged for the
disposal of any Hazardous Materials at any site which is the subject of federal,
state or local enforcement actions, or other government or private
investigations both relating to Cleanup actions that have not been resolved and
that would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and
(g) NACO has disclosed to ABC all material facts that NACO reasonably
believes are necessary for an evaluation of environmental, health or safety
matters affecting the future earnings, costs and expenses of NACO or its
Subsidiaries or affiliates including, without limitation, potential costs
associated with any material Environmental Claim and the cost of any material
pollution control equipment that is reasonably likely to be required in the next
five years.
SECTION 3.18 -- Labor Matters. Section 3.18 of the Disclosure Schedule
lists all labor and collective bargaining agreements to which NACO or any of its
Subsidiaries is a party or by which any of them are bound. During the last three
years, except as set forth in Section 3.18 of the Disclosure Schedule, no unfair
labor practice charges or complaints have been filed (or have been pending) with
the National Labor Relations Board against NACO or any of its Subsidiaries in
connection with the conduct of NACO or any of its Subsidiaries or any of their
respective assets or businesses and, except as set forth in Section 3.18 of the
Disclosure Schedule, there has been no union organizational activity in the
three years prior to the date hereof. Except as set forth in Section 3.18 of the
Disclosure Schedule, neither NACO nor any Subsidiary has (a) any Knowledge of
any event or circumstance which is reasonably likely to give rise to the filing
of any unfair labor practice charge or complaint; or (b) received any notice or
communication reflecting an intention or a threat to file any such charges or
complaint or a petition for certification of a collective bargaining
representative in connection with the conduct of the businesses of NACO or any
of its Subsidiaries. NACO and each of its Subsidiaries has complied in all
material respects with all Applicable Laws relating to the employment of labor,
including those related to wages, hours, collective bargaining, the withholding
and payment of Taxes and contributions, safety and civil rights in connection
with the conduct of the business of NACO and each of its Subsidiaries. Except as
set forth on Section 3.18 of the Disclosure Schedule, there are no material
controversies pending or, to the Knowledge of NACO, threatened between NACO or
any of its Subsidiaries and any of their employees, and there have been no work
stoppages or other such controversies during the last three years in connection
with the conduct of the businesses of NACO or any of its Subsidiaries.
SECTION 3.19 -- Certain Business Relationships. Except as disclosed in the
Draft Registration Statement, none of the respective officers, directors or
employees of NACO or any of its Subsidiaries or any of such persons' Affiliates
(a) has been involved in any business arrangement or relationship with NACO or
any of its Subsidiaries within the past 12 months or (b) owns any asset,
tangible or intangible, which is used in the business of NACO or any of its
Subsidiaries which in either circumstance, would be required to be disclosed
pursuant to Item 404 of Regulation S-K.
SECTION 3.20 -- Approval Required. The affirmative vote of the holders of a
majority of the outstanding shares of NACO Common Stock is the only vote of the
holders of any class or series
18
of NACO's capital stock necessary or required under this Agreement or under
Applicable Law to approve the Merger, this Agreement and the transactions
contemplated hereby.
SECTION 3.21 -- No Negotiations. Neither NACO nor any of its Subsidiaries
is currently engaged in negotiations or discussions with any Person regarding
any potential Acquisition Proposal.
SECTION 3.22 -- Accounting Matters. NACO has received an opinion from
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, its independent public accountants, that NACO qualifies as
an entity that may be a party to a business combination for which the "pooling
of interests" method of accounting under Opinion No. 16 of the Accounting
Principles Board ("APB 16") and applicable SEC Regulations would be available,
------
and a signed copy of such opinion has been delivered to ABC. Neither NACO nor
any of its Subsidiaries has taken or agreed to take any action that would
prevent the Merger from qualifying as a "pooling of interests" under APB 16 and
applicable SEC Regulations.
SECTION 3.23 -- Opinion of Financial Advisor. NACO has received the written
opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated, dated the date of the approval of
this Agreement by NACO's Board of Directors, to the effect that, as of such
date, the Exchange Ratio is fair from a financial point of view to the holders
of shares of NACO Common Stock. A signed copy of such opinion has been delivered
to ABC.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ABC
AND MERGER SUBSIDIARY
ABC and Merger Subsidiary represent and warrant to NACO that the
statements contained in this Article IV are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article IV), except as set forth in the
specifically referenced sections of the Disclosure Schedule.
SECTION 4.1 -- Organization, Qualification, and Corporate Power. Each of
ABC and its Subsidiaries and Affiliated Entities is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each of ABC and its Subsidiaries and
Affiliated Entities is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification would not have a Material
Adverse Effect. Each of ABC and its Subsidiaries and Affiliated Entities has all
Governmental Licenses required to carry on the business in which it is engaged,
except for failures to have any such Governmental License which would not,
individually or in the aggregate, have a Material Adverse Effect. ABC has
heretofore delivered to NACO complete and correct
19
copies of the certificate of incorporation and the by-laws of ABC and each of
its Subsidiaries as currently in effect.
SECTION 4.2 -- Authorization of Transaction; Required Filings and Consents.
ABC and Merger Subsidiary each has full power and authority (including full
corporate power and authority) to enter into, execute and deliv er this
Agreement and to perform their respective obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the performance of ABC's and Merger Subsidiary's respective
obligations hereunder have been duly and validly authorized by the Board of
Directors of ABC and Merger Subsidiary, respectively, and by ABC as to the sole
stockholder of Merger Subsidiary, and, except for the approval and adoption of
this Agreement and the transactions contemplated thereby, including the
amendment to the restated certificate of incorporation of ABC, by ABC's
stockholders, no other corporate proceedings on the part of ABC or Merger
Subsidiary are necessary to authorize the execution, delivery and performance of
this Agreement and to consummate the transactions contemplated hereby. The Board
of Directors of ABC has taken or will take all necessary and appropriate action
so that the Rights Agreement, dated as of September 29, 1995, between ABC
and LaSalle National Trust N.A., as amended (the "Rights Agreement"), and
----------------
Section 203 of the Delaware Law, will be inapplicable to this Agreement and the
transactions contemplated hereby. The Board of Directors of ABC has determined
that the transactions contemplated by this Agreement are in the best interest of
ABC and its stockholders and to recommend to such stockholders that they approve
and adopt this Agreement and the transactions contemplated hereby. Subject to
the approval and adoption of this Agreement by ABC's stockholders, this
Agreement has been duly executed and delivered by ABC and Merger Subsidiary and
constitutes, assuming due authorization, execution and delivery of this
Agreement by NACO, the valid and binding obligation of ABC and Merger
Subsidiary, enforceable against ABC and Merger Subsidiary in accordance with its
terms. Neither ABC nor Merger Subsidiary need give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
Governmental Authority in connection with the execution and delivery of this
Agreement in order for the Parties to consummate the transactions contemplated
by this Agreement, except for (a) the filing of the Certificate of Merger with
the Delaware Secretary of State; (b) the filing of a pre-merger notification and
report form by ABC under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act; (c) the filing with the SEC
of a registration statement on Form S-4 or any other form for which ABC then
qualifies and which counsel for ABC shall deem appropriate for the registration
and issuance of ABC Common Stock to be issued in the Merger (the "Registration
------------
Statement"); (d) compliance with any applicable requirements of the Securities
---------
Exchange Act of 1934, as amended (the "Exchange Act"), and the General Rules and
------------
Regulations promulgated under the Securities Act and the Exchange Act (the "SEC
---
Regulations"); (e) such filings with and approvals of Nasdaq to permit the
-----------
shares of ABC Common Stock to be issued in the Merger to be listed on the Nasdaq
NMS; (f) compliance with any applicable requirements of state blue sky or
takeover laws; (g) such other notices, filings, authorizations, consents or
approvals (i) the failure of which to be given, made or obtained individually or
in the aggregate would not reasonably be expected to have a Material Adverse
Effect or (ii) that become applicable as a result of the business or activities
in which NACO or any of its respective Affiliates is or proposes to be engaged
or any acts or omissions by, or facts pertaining to, NACO.
20
SECTION 4.3 -- Capitalization; Subsidiaries; Affiliated Entities.
(a) The authorized capital stock of ABC consists of 25,000,000 shares
of ABC Common Stock and 1,000,000 shares of preferred stock, par value $1.00 per
share (the "ABC Preferred Stock"), of which 100,000 shares have been designated
-------------------
as Series A Junior Participating. As of September 15, 1998, 8,976,304 shares of
ABC Common Stock were outstanding, no shares of ABC Common stock were held in
ABC's treasury and no shares of ABC Preferred Stock were issued or outstanding
or held in ABC's treasury. All of the issued and outstanding shares of ABC
Common Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof arising from ABC. All prior sales of ABC's
securities have been made in compliance with or under an exemption from the
registration requirements of the Securities Act and applicable state securities
laws, and no shareholders of ABC have any rescission rights with respect to any
ABC Common Stock or other ABC securities.
(b) An aggregate of 847,250 shares of ABC Common Stock are reserved
and authorized for issuance pursuant to ABC's stock option plans, of which
options ("ABC Stock Options") to purchase a total of 709,000 shares of ABC
-----------------
Common Stock were outstanding as of September 15, 1998. Since September 1,
1998, ABC has not granted any ABC Stock Options. The names of the optionees
holding ABC Stock Options, the date of grant of each ABC Stock Option
outstanding as of September 15, 1998, the number of shares of ABC Common Stock
subject to each such ABC Stock Option, the expiration date of each such ABC
Stock Option, and the price at which each such ABC Stock Option may be exercised
are set forth in Section 4.3(b) of the Disclosure Schedule. Except as set forth
on Schedule 4.3(b) of the Disclosure Schedule, no vesting restrictions of any
ABC Stock Options will, as a consequence of the Merger, lapse so as to
accelerate the vesting of any such ABC Stock Options. Except for ABC Stock
Options and rights to acquire shares of ABC's Series A Junior Participating
Preferred Stock pursuant to the Rights Agreement, ABC does not have and is not
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character to or by which ABC is a party or is bound which,
directly or indirectly, obligate ABC to issue, deliver, sell, redeem, repurchase
or otherwise acquire any shares of ABC Common Stock or ABC Preferred Stock or
any other equity security of ABC or any securities representing the right to
purchase or otherwise receive any shares of ABC Common Stock or any other equity
security of ABC. Except as set forth in Schedule 4.3(b) of the Disclosure
Schedule, all existing option agreements subject to ABC stock option plans are
in form and substance substantially the same as the form of option agreement
filed as Exhibit 10.14 to ABC's Annual Report on Form 10-K for the year ended
July 31, 1997, and each conforms to the expressly enumerated provisions of the
ABC stock option plan under which each was issued, including, without
limitation, as to exercise and vesting.
(c) Section 4.3(c) of the Disclosure Schedule sets forth the name,
jurisdiction of incorporation or organization, and capitalization of each of
ABC's Subsidiaries and Affiliated Entities. ABC owns, directly or indirectly,
all of the outstanding capital stock of its Subsidiaries.
21
Except as set forth on Section 4.3(c) of the Disclosure Schedule, each share of
each Subsidiary and Affiliated Entity owned directly or indirectly by ABC is
duly authorized and validly issued and is fully paid, nonassessable and free of
preemptive rights and is free and clear of all Liens, rights of first refusal
and limitations on ABC's voting rights. Except as set forth on Section 4.3(c)
of the Disclosure Schedule, none of ABC's Subsidiaries or Affiliated Entities
has or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the sale or issuance by
such Subsidiary or Affiliated Entity, or by ABC or any other Subsidiary of ABC,
of any shares of capital stock or any other equity security of such Subsidiary
or Affiliated Entity or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity security of
such Subsidiary or Affiliated Entity.
SECTION 4.4 -- Noncontravention. Neither the execution and delivery of this
Agreement by ABC and Merger Subsidiary, nor the performance by ABC and Merger
Subsidiary of their respective obligations hereunder, will, assuming the receipt
of the consents listed in Section 6.2(d) of the Disclosure Schedule, (a)
conflict with or result in a breach of any provision of the certificate of
incorporation, by-laws or equivalent organizational instrument of ABC or any of
its Subsidiaries or Affiliated Entities, (b) violate any Applicable Law,
injunction, judgment, order, decree, ruling, charge, or other restriction of any
Governmental Authority applicable to ABC or any of its Subsidiaries or
Affiliated Entities or by which ABC or any of its Subsidiaries or Affiliated
Entities is bound or to which any of their assets is subject or (c) except as
set forth on Section 4.4 of the Disclosure Schedule conflict with, result in a
violation or breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, indenture, lease, Governmental
License, instrument, or other arrangement to which ABC or any of its
Subsidiaries or Affiliated Entities is a party or by which ABC or any of its
Subsidiaries or Affiliated Entities is bound or to which any of their assets is
subject (or result in the imposition of any Lien upon any of their assets),
except, with respect to clauses (b) and (c) above, where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Lien would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.5 -- Brokers' Fees. Except as set forth in Section 4.5 of the
Disclosure Schedule, there is no investment banker, broker, finder or other
intermediary which has been retained by, or is authorized to act on behalf of,
ABC or any of its Subsidiaries or, to ABC's Knowledge, its Affiliated Entities,
that would be entitled to any fee or commission from ABC or any of its
Subsidiaries or Affiliated Entities, the Surviving Corporation, NACO or any of
NACO's Affiliates, in connection with, or as a result of the consummation of,
the transactions contemplated by this Agreement.
SECTION 4.6 -- SEC Documents. ABC has timely filed all required
reports, proxy statements, forms, registration statements and other documents
with the SEC since July 31, 1995 (the "ABC SEC Documents"). As of their
-----------------
respective dates, and giving effect to any amendments thereto filed prior to the
date of this Agreement, (a) the ABC SEC Documents complied or, in the case of
any reports, proxy statements, registration statements, forms or other documents
filed by ABC with
22
the SEC after the date of this Agreement, will comply, in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and the applicable SEC Regulations and (b) none of the ABC SEC Documents
contained or, in the case of any reports, proxy statements, registration
statements, forms or other documents filed by ABC with the SEC after the date of
this Agreement, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. Notwithstanding the foregoing, no representation is made
by ABC with respect to statements made therein based on information supplied by
NACO in writing for inclusion or incorporation by reference therein or with
respect to omitted information regarding NACO so required to be included
therein. None of ABC's Subsidiaries or Affiliated Entities is required to file
any reports, proxy statements, forms, registration statements or other documents
with the SEC.
SECTION 4.7 -- Financial Statements.
(a) The audited consolidated balance sheets, statements of income,
statements of stockholders' equity and statements of cash flows of ABC and its
consolidated Subsidiaries as of and for each of the fiscal years ended July 31,
1995, 1996 and 1997, and the unaudited condensed consolidated balance sheets,
statements of income and statements of cash flows of ABC and its consolidated
Subsidiaries as of and for each of the three month periods in the Quarterly
Reports on Form 10-Q since July 31, 1997 (collectively, the "ABC Financial
-------------
Statements") (including, in each case, any notes and schedules thereto), (a)
----------
comply as to form in all material respects with applicable accounting
requirements and SEC Regulations, (b) have been prepared in accordance with GAAP
consistently applied during the periods involved (except as may be indicated in
the related notes and schedules thereto) and (c) fairly present in all material
respects the consolidated financial condition of ABC and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
the unaudited ABC Financial Statements for periods beginning after July 31,
1997, to normal year-end adjustments which are not expected to be, individually
or in the aggregate, material in amount).
(b) ABC has provided to NACO complete and correct copies of all
financial statements of each of ABC's Affiliated Entities as of and for each
most recent fiscal year.
SECTION 4.8 -- Absence of Undisclosed Liabilities.
(a) Except as set forth in the ABC SEC Documents filed prior to the
date hereof, and except for liabilities and obligations incurred in the ordinary
course of business since the date of the most recent consolidated balance sheet
included in the ABC SEC Documents, neither ABC nor any of its Subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of ABC and its consolidated Subsidiaries or in the notes thereto
except for those that would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
23
(b) Except for liabilities and obligations incurred in the ordinary
course of business since the date of the most recent balance sheet included in
the financial statements of any of ABC's Affiliated Entities, none of such
Affiliated Entities, to ABC's Knowledge, has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) required to be
included by applicable accounting requirements except for those that would not,
in the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.9 -- Events Subsequent to Fiscal Year End. Except as disclosed in
the ABC SEC Documents filed prior to the date hereof, since the date of the ABC
Balance Sheet, ABC and its Subsidiaries and, to ABC's Knowledge, its Affiliated
Entities have conducted their businesses in the ordinary course of business, and
neither ABC nor any of its Subsidiaries or, to ABC's Knowledge, any of its
Affiliated Entities has experienced any change in its financial condition,
business, assets, properties or prospects, which, individually or in the
aggregate, has had, or could reasonably be expected to have, a Material Adverse
Effect. Except as set forth in Section 4.9 of the Disclosure Schedule, since the
date of the ABC Balance Sheet neither ABC nor any of its Subsidiaries or, to
ABC's Knowledge, any of its Affiliated Entities has taken any of the actions or
permitted to occur any of the events specified in Section 5.1(a) through (o).
SECTION 4.10 -- Legal Compliance. ABC and its Subsidiaries and, to ABC's
Knowledge, its Affiliated Entities are in compliance with all Applicable Laws,
ordinances, judgments, decrees, rules and regulations of any Governmental
Authority applicable to their business and operations, except for such
violations, if any, which, individually or in the aggregate, has not had or
could not reasonably be expected to have, a Material Adverse Effect. All Permits
required to conduct the business of ABC and its Subsidiaries and, to ABC's
Knowledge, its Affiliated Entities have been obtained, are in full force and
effect and are being complied with, except for failures to obtain such Permits,
to have such Permits in full force and effect or to be in compliance with such
Permits, if any, which, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
SECTION 4.11 -- Tax Matters.
(a) Complete and correct copies of all material Tax Returns and all
amendments or modifications thereto filed or caused to be filed by ABC and its
Subsidiaries and, to ABC's Knowledge, its Affiliated Entities, for the last five
full fiscal years have been delivered to NACO. Each such Tax Return reflects
accurately all liability for Taxes of ABC and its Subsidiaries and, to ABC's
Knowledge, its Affiliated Entities, for the periods covered thereby and is
complete and correct in all material respects. Except for Taxes the non-filing
or non-payment of which would not have a Material Adverse Effect, ABC and its
Subsidiaries and, to ABC's Knowledge, its Affiliated Entities, have filed all
material Tax Returns for Taxes required to be filed and have paid all Taxes due
with respect to such Tax Returns.
(b) ABC has established adequate reserves on the Financial Statements
for payment for Taxes by ABC and its Subsidiaries and, to ABC's Knowledge, its
Affiliated Entities,
24
relating to periods (or portions thereof) for which a Tax Return was required to
be filed, for Taxes that are not then due or payable and have or will establish
adequate reserves for Taxes relating to subsequent periods through the Closing.
(c) Except as set forth in Section 4.11 of the Disclosure Schedule,
neither ABC nor any of its Subsidiaries, or to ABC's Knowledge, any of its
Affiliated Entities is currently under examination by the IRS or any other
Governmental Authority with respect to Taxes; and neither ABC nor any of its
Subsidiaries, or to ABC's knowledge, any of its Affiliated Entities has been
contacted by or is currently corresponding with any state or local government
with respect to the requirement to file Tax Returns and/or pay any Taxes. No
waivers of statute of limitations have been given to or requested by any
Governmental Authority.
SECTION 4.12 -- Real Property. Section 4.12 of the Disclosure Schedule sets
forth (a) a correct and complete list of all leases of real property to which
ABC or any of its Subsidiaries or Affiliated Entities is a party as lessee as of
the date hereof involving an annual lease payment of more than $100,000,
including an identification of the parties, the property, the term of the lease
and the rent or lease payments thereunder, and (b) a correct and complete list
of all real property owned by ABC or any of its Subsidiaries or Affiliated
Entities as of the date hereof, including an identification of the property, the
record owner and the principal structures thereon.
SECTION 4.13 -- Intellectual Property.
(a) Section 4.13(a) of the Disclosure Schedule sets forth a correct
and complete list (the "ABC Intellectual Property") of (i) all letters patent
-------------------------
and patent applications, and (ii) all registered and other material utility
models, utility model applications, trade names, brand names, trademarks,
service marks, trademark and service ▇▇▇▇ registrations and applications,
copyright registrations and applications; with respect to both clauses (i) and
(ii), both domestic and foreign, presently owned, possessed, used or held by ABC
and its Subsidiaries. Section 4.13(a) of the Disclosure Schedule also
identifies each license, agreement, or other permission which ABC or its
Subsidiaries has granted to or received from any third party with respect to any
ABC Intellectual Property.
(b) ABC and its Subsidiaries own or have a binding, enforceable right
to use the ABC Intellectual Property, are the owner of record of any
application, registration or grant for each item of ABC Intellectual Property,
and have properly executed and recorded all documents necessary to perfect their
title to such ABC Intellectual Property. Neither the conduct of ABC's or any of
its Subsidiaries' business nor any of the products sold or services provided by
ABC or its Subsidiaries in connection therewith (except for such infringements
or violation of rights which, in the aggregate, would not be reasonably expected
to have a Material Adverse Effect) infringes upon or is inconsistent with the
intellectual property rights of any other Person. To the Knowledge of ABC,
neither the conduct of any other Person's business, nor the nature of any of the
products it sells or
25
services it provides, infringes upon or is inconsistent with any ABC
Intellectual Property. Neither ABC nor any of its Subsidiaries has any liability
for, or has given any indemnification for, patent, trademark or copyright
infringement with respect to any products manufactured, used, distributed or
sold by ABC or its Subsidiaries. ABC and its Subsidiaries have filed all
documents and paid all taxes, fees, and other financial obligations required to
maintain in force and effect all ABC Intellectual Property until Closing.
(c) Section 4.13(c) of the Disclosure Schedule sets forth a correct
and complete list of all ABC Intellectual Property with respect to which ABC has
granted any rights to any of its Affiliated Entities, specifying (i) the nature
of the ABC Intellectual Property, (ii) the Affiliated Entity to whom ABC has
granted such rights and (iii) the location of such ABC Intellectual Property.
SECTION 4.14 -- Contracts and Commitments.
(a) Except as set forth in Section 4.14(a) of the Disclosure Schedule,
in the exhibit index to ABC's Annual Report on Form 10-K for the fiscal year
ended July 31, 1997 or in the exhibit index of any Quarterly Report on Form 10-Q
or Current Report on Form 8-K filed with the SEC since July 31, 1997, neither
ABC nor any of its Subsidiaries or, to ABC's knowledge, any of its Affiliated
Entities is a party to or is bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) with respect to the employment of
any director, officer, employee or consultant which, solely in the case of
employees or consultants, provide for payments in excess of $125,000 per annum
or cannot be terminated upon 30 days' or less notice without penalty or premium,
(ii) which, upon consummation of the transactions contemplated by this Agreement
will (either alone or upon the occurrence of any additional acts or events)
result in any payment (including, without limitation, severance payments, golden
parachute payments, change in control payments, unemployment compensation
payments or otherwise) becoming due from ABC or any of its Affiliated Entities,
NACO, the Surviving Corporation, or any of their respective Subsidiaries, to any
director, officer or employee (current, former or retired) thereof, (iii) which
is a material contract (as defined in Item 601(b)(10) of Regulation S-K of the
SEC) to be performed after the date of this Agreement, (iv) which is a contract
or agreement not otherwise described by clause (iii) hereof involving the
payment of more than $125,000 per annum, (v) which materially restricts the
conduct of any line of business by ABC or any of its Subsidiaries or, to ABC's
Knowledge, any of its Affiliated Entities or, (vi) under which any of the
benefits will be increased, or the vesting of the benefits will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement, or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement. Each contract, arrangement,
commitment or understanding of the type described in this Section 4.14(a),
whether or not set forth in Section 4.14(a) of the Disclosure Schedule or in the
exhibit index to ABC's Form 10-K for the fiscal year ended July 31, 1997, is
referred to herein as an "ABC Contract." ABC has previously delivered to NACO
------------
true and correct copies of each ABC Contract.
(b) Except as set forth in Section 4.14(b) of the Disclosure Schedule,
(i) each ABC Contract is valid and binding and in full force and effect, (ii)
ABC and each of its Subsidiaries
26
and Affiliated Entities have performed all obligations required to be performed
by it to date under each ABC Contract, except where such noncompliance,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect, (iii) no event or condition exists
which constitutes or, after notice or lapse of time or both, would constitute, a
material default on the part of ABC or any of its Subsidiaries or, to ABC's
Knowledge, any of its Affiliated Entities under any such ABC Contract, except
where such default, individually or in the aggregate, has not had and would not
reasonably be expected to have a Material Adverse Effect and (iv) no other party
to such ABC Contract is, to the Knowledge of ABC, in default in any respect
thereunder, except where such default, individually or in the aggregate, has not
had and would not reasonably be expected to have a Material Adverse Effect.
SECTION 4.15 -- Litigation. Except as set forth in the ABC SEC Documents,
neither ABC nor any of its Subsidiaries or, to ABC's Knowledge, any of its
Affiliated Entities, or any of their respective directors, officers, agents or
employees (in their respective capacities as such) (a) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (b) is a
party to, or to the Knowledge of ABC, threatened to be made a party to, any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction, except where the injunction, judgment, order, decree,
ruling, charge, action, suit, proceeding, hearing, or investigation could not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
SECTION 4.16 -- Employee Benefits.
(a) Section 4.16(a) of the Disclosure Schedule contains a complete
list of each employee benefit plan or arrangement sponsored, maintained or
contributed to by ABC or any other member of a Control Group of ABC for the
benefit of any current or former employee, officer or director, or their
dependents or beneficiaries, or providing benefits to such persons in respect of
services provided to any such entity, including, but not limited to, employee
benefit plans subject to the ERISA, deferred compensation plans, bonus plans,
stock option plans, employment agreements, change in control agreements,
hospitalization, disability and other insurance plans, severance or termination
pay plans and policies ("ABC Employee Benefit Plans") (true and accurate copies
--------------------------
of which, together with, where applicable, the most recent annual reports on
Form 5500, summary plan descriptions with respect thereto and actuarial or
valuation reports, were furnished to NACO).
(b) With respect to each ABC Employee Benefit Plan which is not a
Multi-Employer Plan: (i) each has been operated and administered in all material
respects in compliance with its terms and with all applicable laws, including,
but not limited to, ERISA and the Code; (ii) no actions, suits, claims or
disputes are pending or, to the Knowledge of ABC, threatened or anticipated
(other than routine claims for benefits); (iii) no audits, inquiries, reviews,
proceedings, claims, or demands are pending with any Governmental Authority;
(iv) to the Knowledge of ABC there are no facts which exist which could give
rise to any material liability to ABC or any of its Subsidiaries in the event of
any such investigation, claim, action, suit, audit, review, or other
27
proceeding (other than for routine claims for benefits, funding obligations in
the ordinary course and liability due to the Pension Benefit Guaranty
Corporation for premiums in the ordinary course); (v) all reports, returns, and
similar documents required to be filed with any Governmental Authority or
distributed to any plan participant have been duly or timely filed or
distributed; and (vi) no non-exempt "prohibited transaction" has occurred within
the meaning of the applicable provisions of ERISA or the Code.
(c) Except as set forth in Section 4.16(c) of the Disclosure Schedule,
with respect to each ABC Employee Benefit Plan which is not a Multi-Employer
Plan: (i) the IRS has issued a favorable determination letter, true and correct
copies of which have been furnished to NACO with respect to each such plan
intended to qualify under Code Section 401(a), that such plans are qualified and
exempt from federal income taxes; (ii) no reportable event (within the meaning
of Section 4043 of ERISA) has occurred with respect to any such plan subject to
Title IV of ERISA, other than one for which the 30-day notice requirement has
been waived; (iii) the greatest of the projected benefit obligations or the
accumulated benefit obligations (under Financial Accounting Standard 87) and the
current liability within the meaning of Section 412(l)(7) of the Code with
respect to any such plan subject to Title IV of ERISA (as of the most recent
actuarial valuation for such plan) did not exceed the then current fair market
value of the assets of such plan (determined using the actuarial assumptions
used for the most recent actuarial valuation for such plan); (iv) all
contributions or other payments to, and payments from and with respect to, such
plans, including to any Governmental Authority, which may have been required to
be made in accordance with such plans and ERISA or the Code or other Applicable
Law, have been timely made; (v) all such contributions or other payments to the
plans, and all payments under the plans (except those to be made from a trust
qualified under Section 401(a) or exempt from tax by reason of Section 501(c)(9)
of the Code) and all payments with respect to the plans (including, without
limitation, to the Pension Benefit Guaranty Corporation or any Governmental
Authority and insurance premiums) for any period ending before the Closing Date
that are not yet, but will be, required to be made are properly accrued and
reflected on the ABC Balance Sheet.
(d) Except as set forth in Section 4.16(d) of the Disclosure Schedule,
neither ABC nor any other member of a Control Group of ABC contributes to, or
within the past ten years has contributed to, a Multi-Employer Plan. To the
extent that either ABC or any other member of a Control Group of ABC has so
contributed to any such plan, (i) all contributions required to be made to such
Multi-Employer Plans by ABC and such Control Group members have been timely
made, (ii) neither ABC nor any other member of a Control Group of ABC has
incurred any material liability (including secondary liability) to any Multi-
Employer Plan which has not been satisfied as a result of a complete or partial
withdrawal from such Multi-Employer Plan under (S) 4201 of ERISA or as a result
of a sale of assets described in (S) 4204 of ERISA, and (iii) neither ABC or
any member of a Control Group of ABC has been notified that any Multi-Employer
Plan is in reorganization or insolvent under and within the meaning of (S) 4241
or (S) 4245 of ERISA or is at risk of entering reorganization or becoming
insolvent, or that any Multi-Employer Plan intends to terminate or has been
terminated under (S) 4041A of ERISA.
28
(e) Except as set forth in Section 4.14(a) of the Disclosure Schedule,
neither the consummation or announcement of or other action relating to the
transactions contemplated by this Agreement will entitle any director, officer,
employee (current, former or retired) or consultant of ABC or its Subsidiaries
or any trustee under any "rabbi trust" or similar arrangement to any payment,
and, will not accelerate the time of payment or vesting, or increase the amount
of compensation, due to any such person, whether or not some other subsequent
action or event would be required to cause such payment, acceleration, vesting
or increase to be triggered.
(f) Except as set forth in Section 4.14(f) of the Disclosure Schedule,
none of the ABC Employee Benefit Plans promises or provides retiree medical or
life insurance benefits to any person, except as otherwise required by
Applicable Law.
SECTION 4.17 -- Environmental Matters. Except as set forth in Section 4.17
of the Disclosure Schedule:
(a) ABC and its Subsidiaries and Affiliated Entities are in compliance
with all applicable Environmental Laws, except where failures to be in
compliance would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Prior to the date of this Agreement, neither
ABC nor any of its Subsidiaries or Affiliated Entities, has received any
unresolved written communication, whether from a Governmental Authority,
citizens' group, employee or otherwise, alleging: (i) that ABC or any of its
Subsidiaries or Affiliated Entities is not in compliance with applicable
Environmental Laws; (ii) that ABC or any of its Subsidiaries or Affiliated
Entities is potentially liable under applicable Environmental Laws; or (iii)
requesting information, investigation or Cleanup of any site or property under
the Comprehensive Environmental Response, Compensation and Liability Act, the
Clean Water Act or comparable state laws, except with respect to any of the
foregoing which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect;
(b) there is no Environmental Claim pending or threatened in writing
against ABC or any of its Subsidiaries or Affiliated Entities or against any
Person whose liability for any Environmental Claim ABC or any of its
Subsidiaries or Affiliated Entities has or may have retained or assumed either
contractually or by operation of law that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;
(c) there are no present or past actions, activities, circumstances,
conditions, events or incidents including, without limitation, the Release or
presence of any Hazardous Material from or at any real property owned, operated
or leased by ABC or any of its Subsidiaries or, to ABC's Knowledge, any of its
Affiliated Entities that could form the basis of any Environmental Claim against
ABC or any of its Subsidiaries or, to ABC's Knowledge, against any of its
Affiliated Entities or any Person whose liability for any Environmental Claim
ABC or any of its Subsidiaries or Affiliated Entities has or may have retained
or assumed either contractually or by operation of law that would, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect;
29
(d) ABC and its Subsidiaries and, to ABC's Knowledge, its Affiliated
Entities, possess or have timely applied for all governmental authorizations and
Permits required for the conduct of the business of ABC and its Subsidiaries and
Affiliated Entities under applicable Environmental Laws, except where the
failure to have such authorizations or Permits would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;
(e) there are no underground storage tanks (as defined in the federal
Resource Conservation and Recovery Act and applicable state laws) located on any
real property owned, operated or leased by ABC or any of its Subsidiaries or, to
ABC's Knowledge, any of its Affiliated Entities;
(f) neither ABC nor any of its Subsidiaries or, to ABC's Knowledge,
its Affiliated Entities has arranged for the disposal of any Hazardous Materials
at any site which is the subject of federal, state or local enforcement actions,
or other government or private investigations both relating to Cleanup actions
that have not been resolved and that would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and
(g) ABC has disclosed to NACO all material facts that NACO reasonably
believes are necessary for an evaluation of environmental, health or safety
matters affecting the future earnings, costs and expenses of ABC or its
Subsidiaries or, to ABC's Knowledge, its Affiliated Entities including, without
limitation, potential costs associated with any material Environmental Claim
and the cost of any material pollution control equipment that is reasonably
likely to be required in the next five years.
SECTION 4.18 -- Labor Matters. Section 4.18 of the Disclosure Schedule
lists all labor and collective bargaining agreements to which ABC or any of its
Subsidiaries or, to ABC's Knowledge, any of its Affiliated Entities is a party
or by which any of them are bound. During the last three years, except as set
forth in Section 4.18 of the Disclosure Schedule, no unfair labor practice
charges or complaints have been filed (or have been pending) with the National
Labor Relations Board against ABC or any of its Subsidiaries or, to ABC's
Knowledge, any of its Affiliated Entities in connection with the conduct of ABC
or any of its Subsidiaries or Affiliated Entities or any of their respective
assets or businesses and, except as set forth in Section 4.18 of the Disclosure
Schedule, there has been no union organizational activity in the three years
prior to the date hereof. Except as set forth in Section 4.18 of the Disclosure
Schedule, neither ABC nor any Subsidiary or, to ABC's Knowledge, any Affiliated
Entity has (a) any Knowledge of any event or circumstance which is reasonably
likely to give rise to the filing of any unfair labor practice charge or
complaint; or (b) received any notice or communication reflecting an intention
or a threat to file any such charges or complaint or a petition for
certification of a collective bargaining representative in connection with the
conduct of the businesses of ABC or any of its Subsidiaries or, to ABC's
Knowledge, any of its Affiliated Entities. ABC and each of its Subsidiaries and,
to ABC's Knowledge, each of its Affiliated Entities has complied in all material
respects with all Applicable Laws relating to the employment of labor, including
those related to wages, hours, collective bargaining, the withholding and
payment of Taxes and contributions, safety and civil rights in connection with
the conduct of
30
the business of ABC and each of its Subsidiaries and Affiliated Entities.
Except as set forth in Section 4.18 of the Disclosure Schedule, there are no
material controversies pending or, to ABC's Knowledge, threatened between ABC or
any of its Subsidiaries or Affiliated Entities and any of their employees, and
there have been no work stoppages or other such controversies during the last
three years in connection with the conduct of the businesses of ABC or any of
its Subsidiaries or, to ABC's Knowledge, any of its Affiliated Entities.
SECTION 4.19 -- Certain Business Relationships. None of the respective
officers, directors or employees of ABC or any of its Subsidiaries or, to ABC's
Knowledge, any of its Affiliated Entities, (a) has been involved in any business
arrangement or relationship with ABC or any of its Subsidiaries or, to ABC's
Knowledge, any of its Affiliated Entities within the past 12 months or (b) owns
any asset, tangible or intangible, which is used in the business of ABC or any
of its Subsidiaries or, to ABC's Knowledge, any of its Affiliated Entities,
which, in either circumstance, would be required to be disclosed pursuant to
Item 404 of Regulation S-K.
SECTION 4.20 -- Approval Required. The affirmative vote of the holders of a
majority of the outstanding shares of ABC Common Stock is the only vote of the
holders of any class or series of ABC's capital stock necessary or required
under this Agreement or under Applicable Law to approve the Merger, this
Agreement and the transactions contemplated hereby, including the amendments to
the restated certificate of incorporation of ABC contemplated by Section 1.5(e).
SECTION 4.21 -- No Negotiations. Neither ABC nor any of its Subsidiaries
or, to ABC's Knowledge, any of its Affiliated Entities, is currently engaged in
negotiations or discussions with any Person regarding any potential Acquisition
Proposal.
SECTION 4.22 -- Tax Treatment. Neither ABC nor any of its Subsidiaries or,
to ABC's Knowledge, any of its Affiliated Entities, nor any of their affiliates,
has taken any action or knows of any fact, agreement, plan or other circumstance
that is reasonably likely to prevent the Merger from qualifying as a
reorganization under the provision of Section 368(a) of the Code.
SECTION 4.23 -- Merger Subsidiary. Merger Subsidiary has not conducted any
business and does not have any liabilities other than those hereunder nor does
it have any operating assets except as contemplated hereby.
SECTION 4.24 -- The Rights Agreement. The Board of Directors of ABC has
adopted a resolution (a true and correct copy of which has been furnished to
NACO) authorizing the Rights Agreement to be duly amended to provide that the
rights provided thereunder will be inapplicable to this Agreement, the
consummation of the Merger and the other transactions contemplated by this
Agreement. Any such amendment to the Rights Agreement shall be reasonably
satisfactory in form and substance to NACO.
SECTION 4.25 -- Accounting Matters. ABC has received an opinion from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, its independent public accountants, that ABC qualifies as an
entity that may be a party to a
31
business combination for which the "pooling of interests" method of accounting
under ABP 16 and applicable SEC Regulations would be available, and a signed
copy of such opinion has been delivered to NACO. Neither ABC nor any of its
Subsidiaries or, to ABC's Knowledge, any of its Affiliated Entities, has taken
or agreed to take any action that would prevent the Merger from qualifying as a
"pooling of interests" under APB 16 and applicable SEC Regulations.
SECTION 4.26 -- Opinion of Financial Advisor. ABC has received the written
opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc., dated the date of the approval of this
Agreement by ABC's Board of Directors, to the effect that, as of such date, the
Exchange Ratio is fair from a financial point of view to the holders of shares
of ABC Common Stock. A signed copy of such opinion has been delivered to NACO.
SECTION 4.27 -- Affiliated Entities. Except as set forth in Section 4.27 of
the Disclosure Schedule:
(a) Neither of ABC nor any of its Subsidiaries or Affiliated Entities
is required to, or is a party to any agreement pursuant to which ABC or any of
its Subsidiaries or Affiliated Entities could be required to, make any capital
contribution, capital call or other similar payment or investment in or with
respect to any Affiliated Entity.
(b) ABC has terminated, without penalty or premium, the Commercial
Representation Agreement entered into in February 1992 between ABC and Cogifer
Industries, and neither ABC nor any of its Subsidiaries or Affiliated Entities
has any liability or continuing obligation under such agreement.
(c) The Joint Venture Agreement, dated March 14, 1997, between ABC and
Damy Cambios de Via, S.A. de C.V. has been amended to, among other things,
exclude from the terms of such agreement and from ABC's "Product Line" (as such
term is defined in such agreement) (i) all present and future services and
products offered or manufactured by or through NACO, the Surviving Corporation
or any of its Subsidiaries, (ii) ABC's wheel mounting services and (iii) all
wheels manufactured or sold by or through ABC or any of its Subsidiaries, or the
Surviving Corporation.
ARTICLE V
COVENANTS AND AGREEMENTS
SECTION 5.1 -- Conduct of NACO and ABC. From the date hereof until
the Effective Time, NACO and ABC and their respective Subsidiaries shall, and
ABC shall use its reasonable efforts to cause its Affiliated Entities to,
conduct their businesses in the ordinary course and to use their reasonable best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees. Without
32
limiting the generality of the foregoing, other than as specifically
contemplated by this Agreement or with the written consent of ABC, in the case
of NACO, or NACO, in the case of ABC (which consent shall not be unreasonably
withheld or delayed), from the date hereof until the Effective Time, neither
NACO nor ABC shall (and neither shall permit any of its respective Subsidiaries
to, and ABC shall use its reasonable efforts to not permit its Affiliated
Entities to):
(a) declare, set aside or pay any dividend or other distribution with
respect to any shares of capital stock (other than dividends and distributions
by a direct or indirect wholly owned Subsidiary of NACO or ABC to its parent) or
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
or other equity securities of, or other ownership interests in, NACO or any of
its Subsidiaries, or ABC or any of its Subsidiaries or Affiliated Entities, as
the case may be, except in connection with (i) the issuance of shares of ABC
Common Stock upon the exercise of ABC Stock Options outstanding as of September
15, 1998 or (ii) the repurchase of shares of NACO Common Stock pursuant to stock
repurchase agreements entered into with NACO prior to September 15, 1998;
(b) issue, deliver, pledge or sell shares of capital stock or any
securities convertible into or exchangeable or exercisable for, or any rights,
warrants or options to acquire, any such shares, except for (i) the issuance of
ABC Common Stock upon the exercise of ABC Stock Options outstanding as of
September 15, 1998 or (ii) the issuance of NACO Common Stock upon the exercise
of NACO Rights outstanding as of September 15, 1998;
(c) amend any material term of any outstanding security issued by NACO
or ABC or any of their Subsidiaries or by any of ABC's Affiliated Entities or,
solely with respect to ABC, take any action that would cause the ABC Common
Stock not to remain publicly traded and listed on the Nasdaq NMS;
(d) except in the ordinary course of business, (i) incur any
indebtedness for borrowed money, (ii) issue any debt securities, or (iii)
assume, guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any Person other than NACO or any of its Subsidiaries or
ABC or any of its Subsidiaries;
(e) create or assume any Lien on any of its assets, other than
Permitted Liens or Liens which, in the aggregate, do not have and could not
reasonably be expected to have a Material Adverse Effect;
(f) change any method of accounting or accounting practice, except for
any such change required by reason of a change in GAAP;
(g) except as set forth in Section 5.1(g) of the Disclosure Schedule,
and with respect to clause (iv) below except as may be required to facilitate or
obtain a determination letter from the IRS that a plan is "qualified" within the
meaning of Code Section 401(a), (i) grant any severance or termination pay to
any directors, officers or employees (current, former or retired), (ii)
33
enter into any employment, deferred compensation or other similar agreement (or
any amendment to any such existing agreement) with any directors or executive,
officers or employees, (iii) increase the benefits payable under any existing
severance or termination pay policies or employment agreements or (iv) increase
the compensation, bonus or other benefits payable to any directors, officers or
employees other than normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense;
(h) consummate (or enter into any agreement or agreement in principle
with respect to or take any steps to facilitate) any merger, business
combination, sale of stock or sale of material assets or any acquisition of
stock or assets or operations of another entity, or, other than in accordance
with past practice, write off as uncollectible any notes or accounts receivable
or write down the value of any inventory;
(i) dispose of or permit to lapse any rights in any NACO Intellectual
Property or ABC Intellectual Property or disclose to any Person not an employee
or otherwise dispose of any trade secret, process or know-how not heretofore a
matter of public knowledge, except pursuant to judicial order or process;
(j) amend the certificate of incorporation or by-laws or comparable
organizational documents of NACO or any of its Subsidiaries or ABC or any of its
Subsidiaries or Affiliated Entities;
(k) alter (through merger, liquidation, reorganization, restructuring
or any other fashion) the corporate structure or ownership of NACO or any of its
Subsidiaries or ABC or any of its Subsidiaries or Affiliated Entities, except
for the issuance or repurchase of capital stock pursuant to Section 5.1(a) or
(b);
(l) make any material tax election or settle or compromise any
material federal, state, local or foreign Tax liability;
(m) sell, lease, license, close or otherwise dispose of any of assets
of NACO or any of its Subsidiaries or ABC or any of its Subsidiaries or
Affiliated Entities, except in the ordinary course of business;
(n) incur any material obligation or liability, including without
limitation any liability for non-performance or termination of any contract or
agreement, except liabilities or obligations incurred in the ordinary course of
business; or
(o) authorize any of, or commit or agree to take any of, the foregoing
actions except as otherwise permitted by this Agreement.
34
SECTION 5.2 -- Stockholders' Meetings; Proxy Materials.
(a) NACO and ABC will (i) as promptly as practicable following the
date of this Agreement, prepare letters to stockholders, notices of meetings, a
joint proxy statement and forms of proxies to be distributed to stockholders in
connection with the Merger (such materials are collectively referred to herein
as the "Joint Proxy Statement"), and mail the Joint Proxy Statement to their
---------------------
respective stockholders as promptly as practicable after the Registration
Statement is declared effective under the Securities Act, (ii) use their
reasonable best efforts to obtain the necessary approvals by their respective
stockholders of this Agreement and the transactions contemplated hereby and
(iii) otherwise comply in all material respects with all legal requirements
applicable to the NACO Special Meeting and the ABC Special Meeting,
respectively.
(b) NACO shall, in accordance with Applicable Law and NACO's restated
certificate of incorporation and amended and restated by-laws, duly call, give
notice of, convene and hold a special meeting of its stockholders (the "NACO
----
Special Meeting") as promptly as practicable after the Registration Statement is
---------------
declared effective under the Securities Act for the purpose of considering and
taking action upon this Agreement and the Merger. The Board of Directors of
NACO shall recommend approval and adoption by NACO's stockholders of this
Agreement, the Merger and the other transactions contemplated hereby. Without
limiting the generality of the foregoing but subject to its rights to terminate
this Agreement pursuant to Section 7.1 hereof, NACO agrees that its obligations
pursuant to the first sentence of this Section 5.2(b) shall not be affected by
the commencement, public proposal, public disclosure or communication to NACO of
any NACO Acquisition Proposal.
(c) ABC shall, in accordance with Applicable Law and ABC's restated
certificate of incorporation and by-laws, duly call, give notice of, convene and
hold a special meeting of its stockholders (the "ABC Special Meeting," and
-------------------
together with the NACO Special Meeting, the "Special Meetings") as promptly as
----------------
practicable after the Registration Statement has been declared effective under
the Securities Act for the purpose of considering and taking action upon this
Agreement and the Merger. The Board of Directors of ABC shall recommend
approval and adoption by ABC's stockholders of this Agreement, the Merger and
the other transactions contemplated hereby. Without limiting the generality of
the foregoing but subject to its rights to terminate this Agreement pursuant to
Section 7.1 hereof, ABC agrees that its obligations pursuant to the first
sentence of this Section 5.2(c) shall not be affected by the commencement,
public proposal, public disclosure or communication to ABC of any ABC
Acquisition Proposal.
(d) NACO and ABC shall use their reasonable best efforts to hold the
Special Meetings on the same date.
SECTION 5.3 -- Registration Statement; Joint Proxy Statement; Other
Actions.
(a) ABC Common Stock to be issued in the Merger shall be registered
with the SEC under the Securities Act on the Registration Statement. As
promptly as practicable after the
35
date of this Agreement, ABC shall prepare, with the assistance of NACO, as
appropriate (including, but not limited to, preparation by NACO and its counsel
of applicable disclosure in the Joint Proxy Statement and the Registration
Statement relating to tax consequences of the Merger on holders of NACO Shares
and submission of any required tax opinions), and file with the SEC the
Registration Statement, together with the Joint Proxy Statement to be included
therein and any other documents required by the Securities Act or the Exchange
Act in connection with the Merger. Each of ABC and NACO shall use its
reasonable best efforts to respond promptly to any comments of the SEC and to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. ABC shall also take any action
required to be taken under any applicable state securities or "blue sky" laws in
connection with the issuance of the ABC Common Stock in connection with the
Merger. NACO shall promptly furnish to ABC all information concerning NACO and
NACO's stockholders as may be reasonably required in connection with any action
contemplated by this Section 5.3. ABC shall notify NACO promptly of the receipt
of any comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Registration Statement and the Joint
Proxy Statement or for additional information and will supply NACO with copies
of all correspondence with the SEC or its staff with respect to the Registration
Statement and the Joint Proxy Statement. Whenever any event occurs which should
be set forth in an amendment or supplement to the Registration Statement or the
Joint Proxy Statement, ABC or NACO, as the case may be, shall promptly inform
the other of such occurrence and cooperate in filing with the SEC or its staff,
and/or mailing to stockholders of NACO and ABC, such amendment or supplement.
(b) NACO covenants that none of the information supplied in writing by
NACO for inclusion or incorporation by reference in the Registration Statement
will, at the time the Registration Statement is filed with the SEC and at the
time it becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Registration
Statement, together with the Joint Proxy Statement included therein, will comply
in all material respects with the provisions of the Securities Act and the
Exchange Act, as the case may be, and the rules and regulations thereunder,
except that no representation is made by NACO with respect to statements made
therein based on information supplied by ABC in writing for inclusion or
incorporation by reference therein or with respect to omitted information
regarding ABC so required to be included therein.
(c) ABC covenants that none of the information supplied in writing by
ABC for inclusion or incorporation by reference in the Registration Statement
will, at the time the Registration Statement is filed with the SEC and at the
time it becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. ABC covenants that the
Registration Statement and the Joint Proxy Statement will comply in all material
respects with the provisions of the Securities Act and the Exchange Act, as the
case may be, and the rules and regulations thereunder, except that no
representation is made by ABC with respect to statements made therein based on
information
36
supplied by NACO in writing for inclusion or incorporation by reference therein
or with respect to omitted information regarding NACO so required to be included
therein.
(d) ABC shall promptly prepare following the date of this Agreement
and file with Nasdaq a listing application covering the shares of ABC Common
Stock issuable in the Merger and shall use its reasonable best efforts to
obtain, prior to the Effective Time, approval for the listing on the Nasdaq NMS
of such shares of ABC Common Stock.
(e) As promptly as practicable after the date of this Agreement, each
of NACO and ABC shall use its respective best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other party in doing, all things necessary, proper or advisable to
consummate and make effective the Merger and to identify and address issues
(including but not limited to issues arising in connection with change in
control covenants under existing financing agreements ) relating to the
operation of the respective companies following the Merger.
SECTION 5.4 -- No Solicitation.
(a) From the date hereof until the termination of this Agreement, NACO
and its Subsidiaries shall not (whether directly or indirectly through advisors,
agents or other intermediaries), and NACO shall use its reasonable best efforts
to ensure that the respective officers, directors, advisors, representatives or
other agents of NACO and its Subsidiaries will not, directly or indirectly, (i)
solicit, initiate or encourage any NACO Acquisition Proposal or (ii) engage in
discussions or negotiations with, or disclose any non-public information
relating to NACO or any of its Subsidiaries or afford access to the properties,
books or records of NACO or any of its Subsidiaries to, any Person that has
made, or has indicated its interest in making, a NACO Acquisition Proposal;
provided, however, that if there has been no breach of the foregoing provisions
of this Section 5.4(a) and if NACO's Board of Directors determines in good
faith, after it has received a NACO Acquisition Proposal and after consultation
with outside counsel and an independent financial advisor, that it is necessary
to do so in order to comply with its fiduciary duties under Applicable Law, NACO
may furnish information with respect to NACO and its Subsidiaries and
participate in negotiations and enter into agreements regarding such NACO
Acquisition Proposal; provided, however, that NACO's Board of Directors shall
not take any of the foregoing action until after notice to ABC with respect to
such action and unless, prior to furnishing information to, or entering into
negotiations with, such Person, NACO shall have received a confidentiality
agreement in customary form from such Person and thereafter shall promptly
advise ABC orally and in writing of the receipt by it (or by any of the other
entities or persons referred to above) after the date hereof of any NACO
Acquisition Proposal, or any request to discuss a transaction which is
reasonably likely to lead to a NACO Acquisition Proposal, the material terms and
condition of such NACO Acquisition Proposal or request, the identity of the
person or entity making such NACO Acquisition Proposal or request, and any
material modifications to any of the foregoing. For purposes of this Agreement,
"NACO Acquisition Proposal" means any offer or proposal for, or public
-------------------------
announcement of an intention (whether or not conditional) to propose, a
37
merger, consolidation, recapitalization, liquidation or other business
combination involving NACO or any of its Subsidiaries or the acquisition or
purchase of 15% or more of any class of equity securities of NACO or any of its
Subsidiaries, or any tender offer (including self-tenders) or exchange offer
that if consummated would result in any Person beneficially owning 15% or more
of any class of equity securities of NACO or any of its Subsidiaries, or a
substantial portion of the assets of, NACO or any of its Subsidiaries, other
than the transactions contemplated by this Agreement. Nothing contained in this
Section 5.4(a) shall prohibit NACO or NACO's Board of Directors from taking and
disclosing to NACO's stockholders a position with respect to a tender or
exchange offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act or from making any disclosure required by Applicable Law.
(b) From the date hereof until the termination of this Agreement, ABC
and its Subsidiaries shall not (whether directly or indirectly through advisors,
agents or other intermediaries), and ABC shall use its reasonable best efforts
to ensure that the respective officers, directors, advisors, representatives or
other agents of ABC and its Subsidiaries will not, directly or indirectly, (i)
solicit, initiate or encourage any ABC Acquisition Proposal or (ii) engage in
discussions or negotiations with, or disclose any non-public information
relating to ABC or any of its Subsidiaries or afford access to the properties,
books or records of ABC or any of its Subsidiaries to, any Person that has made,
or has indicated its interest in making, an ABC Acquisition Proposal; provided,
however, that if there has been no breach of the foregoing provisions of this
Section 5.4(b) and if ABC's Board of Directors determines in good faith, after
it has received an ABC Acquisition Proposal and after consultation with outside
counsel and an independent financial advisor, that it is necessary to do so in
order to comply with its fiduciary duties under Applicable Law, ABC may furnish
information with respect to ABC and its Subsidiaries and participate in
negotiations and enter into agreements regarding such ABC Acquisition Proposal;
provided, however, that ABC's Board of Directors shall not take any of the
foregoing action until after notice to NACO with respect to such action and
unless, prior to furnishing information to, or entering into negotiations with,
such Person, ABC shall have received a confidentiality agreement in customary
form from such Person and thereafter shall promptly advise NACO orally and in
writing of the receipt by it (or by any of the other entities or persons
referred to above) after the date hereof of any ABC Acquisition Proposal, or any
request to discuss a transaction which is reasonably likely to lead to an ABC
Acquisition Proposal, the material terms and conditions of such ABC Acquisition
Proposal or request, the identity of the person or entity making such ABC
Acquisition Proposal or request, and any material modifications to any of the
foregoing. For purposes of this Agreement, "ABC Acquisition Proposal" means any
------------------------
offer or proposal for, or public announcement of an intention (whether or not
conditional) to propose, a merger, consolidation, recapitalization, liquidation
or other business combination involving ABC or any of its Subsidiaries or the
acquisition or purchase of 15% or more of any class of equity securities of ABC
or any of its Subsidiaries, or any tender offer (including self-tenders) or
exchange offer that if consummated would result in any Person beneficially
owning 15% or more of any class of equity securities of ABC or any of its
Subsidiaries, or a substantial portion of the assets of, ABC or any of its
Subsidiaries, other than the transactions contemplated by this Agreement.
Furthermore, nothing contained in this Section 5.4(b) shall prohibit ABC or
ABC's Board of Directors from taking and disclosing to ABC's stockholders a
position with respect to a
38
tender or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act or from making any disclosure required by
Applicable Law.
SECTION 5.5 -- Takeover Statute. If any "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute or regulation,
including, without limitation, the provisions of Section 203 of the Delaware
Law, shall become applicable to the transactions contemplated hereby, NACO, ABC
and each of their Board of Directors shall grant such approvals and take such
actions as are necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or regulation
on the transactions contemplated hereby.
SECTION 5.6 -- Tax Treatment. ABC and NACO shall take all actions necessary
to cause the Merger to qualify as a reorganization under the provisions of
Section 368(a) of the Code, and neither ABC nor NACO will take any action
inconsistent therewith.
SECTION 5.7 -- Conveyance Taxes. ABC and NACO shall cooperate in the
preparation, execution and filing of all Tax Returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp Taxes, any transfer,
recording, registration and other fees, and any similar Taxes that become
payable in connection with the transactions contemplated hereunder that are
required or permitted to be filed on or before the Effective Time.
SECTION 5.8 -- Access to Information; Confidentiality Agreement.
(a) Upon reasonable advance notice, between the date hereof and the
Effective Time, ABC and NACO shall (i) give to one another and to one another's
counsel, financial advisors, auditors and other authorized representatives
(collectively, "Representatives") reasonable access during normal business hours
---------------
to its and its Subsidiaries books and records, (ii) furnish to one another and
to one another's Representatives such financial and operating data and other
information as such Persons may reasonably request and (iii) instruct their
respective key management employees, counsel and financial advisors to cooperate
with one another in their respective investigations of the business of NACO and
ABC; provided that all requests for information or to interview ABC's or NACO's
key management employees should be directed to and coordinated with the chief
legal officer of ABC and the chief legal officer of NACO, respectively, or such
person or persons as each such officer shall designate; and provided further
that any information and documents received by NACO, ABC and their respective
Representatives (whether furnished before or after the date of this Agreement)
shall be held in strict confidence in accordance with the Confidentiality
Agreement in effect as of the date hereof between ABC and NACO (the
"Confidentiality Agreement"), which shall remain in full force and effect
--------------------------
pursuant to the terms thereof, notwithstanding the execution and delivery of
this Agreement, the termination hereof or the Closing. Notwithstanding anything
to the contrary in this Agreement, neither NACO nor ABC shall be required to
disclose any information
39
to the other or the other's Representatives if doing so would violate any
agreement, law, rule or regulation to which NACO or ABC or any of their
respective Subsidiaries is a party or is subject.
(b) NACO and ABC hereby agree that the Confidentiality Agreement and
the Mutual Exclusivity Agreement dated August 6, 1998 between ABC and NACO are
each hereby amended to provide that any provision therein which in any manner
would be inconsistent with this Agreement or the transactions contemplated
hereby shall terminate as of the date hereof; provided, however, that such
provisions of the Confidentiality Agreement and such Mutual Exclusivity
Agreement will be reinstated in the event that this Agreement is terminated.
SECTION 5.9 -- Affiliate Agreements.
(a) As soon as practicable after the date hereof, NACO shall deliver
to ABC a letter identifying all Persons who are reasonably expected to be, at
the time of the NACO Special Meeting, "affiliates" of NACO, as such term is used
in Rule 145 under the Securities Act or for purposes of qualifying the Merger as
a "pooling of interests" for accounting purposes in accordance with APB 16 and
applicable SEC Regulations. NACO shall use its reasonable best efforts to cause
each such Person to deliver to NACO and to ABC on or prior to the date of the
mailing of the Joint Proxy Statement a written agreement substantially in the
form attached as Exhibit D hereto.
(b) As soon as practicable after the date hereof, ABC shall deliver to
NACO a letter identifying all Persons who are reasonably expected to be, at the
time of the ABC Special Meeting, "affiliates" of ABC, as such term is used in
Rule 145 under the Securities Act or for purposes of qualifying the Merger as a
"pooling of interests" for accounting purposes in accordance with APB 16 and
applicable SEC Regulations. ABC shall use its reasonable best efforts to cause
each such Person to deliver to ABC and to NACO on or prior to the date of the
mailing of the Joint Proxy Statement a written agreement substantially in the
form attached as Exhibit E hereto.
SECTION 5.10 -- Obligations of Merger Subsidiary. Merger Subsidiary will,
and ABC will take all action necessary to cause Merger Subsidiary to, perform
its obligations under this Agreement and to consummate the Merger on the terms
and subject to the conditions set forth in this Agreement.
SECTION 5.11 -- Director and Officer Liability. All rights to
indemnification and all limitations on liability existing in favor of each
person who at or prior to the Effective Time was an officer or director of NACO
or any of its Subsidiaries, as provided in the applicable certificate of
incorporation and by-laws of NACO and its Subsidiaries, or in an agreement
between any of such persons and NACO or any of its Subsidiaries as in effect as
of the date hereof, shall survive the Merger and continue in full force and
effect.
SECTION 5.12 -- Notices and Consents. NACO and ABC shall cooperate with one
another (a) in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
contracts in connection with the consummation of the transactions contemplated
by
40
this Agreement and (b) in seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers. Without limiting the generality of the foregoing, each of
ABC and NACO will file any notification and report forms and related materials
that it may be required to file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the ▇▇▇▇-
▇▇▇▇▇-▇▇▇▇▇▇ Act within ten days of the date of this Agreement, will use its
reasonable best efforts to obtain termination of the applicable waiting period,
and will make any further filings pursuant thereto that may be necessary,
proper, or advisable in connection therewith.
SECTION 5.13 -- Notice; Supplements to Disclosure Schedule.
(a) NACO will promptly give notice to ABC of, upon receipt of notice
or Knowledge of, any fact or the occurrence of any event or the failure of any
event to occur which would or could reasonably be expected to make any
representation or warranty by NACO contained herein untrue or result in the
failure to satisfy any of the conditions specified in Section 6.1 or 6.3 hereof,
and NACO will keep ABC informed on a regular basis as to the status of such
events. From time to time prior to the Effective Time, NACO will promptly
supplement or amend the Disclosure Schedule with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth in the Disclosure Schedule. However, no such
supplement or amendment of the Disclosure Schedule shall be deemed to cure any
breach of any representation, warranty or agreement made in this Agreement
unless ABC specifically agrees thereto in writing.
(b) ABC will promptly give notice to NACO of, upon receipt of notice
or Knowledge of, any fact or the occurrence of any event or the failure of any
event to occur which would or could reasonably be expected to make any
representation or warranty by ABC contained herein untrue or result in the
failure to satisfy any of the conditions specified in Section 6.1 or 6.2 hereof,
and ABC will keep NACO informed on a regular basis as to the status of such
events. From time to time prior to the Effective Time, ABC will promptly
supplement or amend the Disclosure Schedule with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement, would
have been required to be set forth in the Disclosure Schedule. However, no such
supplement or amendment of the Disclosure Schedule shall be deemed to cure any
breach of any representation, warranty or agreement made in this Agreement
unless NACO specifically agrees thereto in writing.
SECTION 5.14 -- Tax Certificates. ABC and NACO shall cause certificates
containing the representations substantially in the form of Exhibit F and
Exhibit G hereto, respectively, to be executed by an executive officer of ABC
and NACO, respectively, and to be delivered to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to
NACO, and to ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to ABC, on the date immediately
prior to the mailing of the Joint Proxy Statement and on the Closing Date, in
each case dated as of such respective dates.
41
SECTION 5.15 -- Pooling of Interests. Each of NACO and ABC shall use
reasonable best efforts to cause the transactions contemplated by this
Agreement, including the Merger, to be accounted for as a "pooling of interests"
under APB 16 and applicable SEC Regulations, and such accounting treatment to be
accepted by ABC's independent public accountants, and by the SEC, and each of
NACO and ABC agrees that it shall take no action that would cause such
accounting treatment not to be obtained. NACO and ABC shall have each received
a letter from the independent public accountants for ABC, dated as of the
Closing Date and addressed to both NACO and ABC, stating that the Merger will
qualify as a "pooling of interests" transaction under APB 16 and applicable SEC
Regulations.
SECTION 5.16 -- Further Assurances. At and after the Effective Time,
the officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of NACO and Merger Subsidiary,
any deeds, bills of sale, assignments or assurances and to take and do, in the
name and on behalf of NACO and Merger Subsidiary, any other actions to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of NACO acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.1 -- Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each Party to effect the Merger shall be
subject to the following conditions:
(a) Stockholder Approval. The Merger and this Agreement shall have
been approved and adopted by the requisite vote of the stockholders of ABC in
accordance with Delaware Law and the rules of Nasdaq and by the requisite vote
of the stockholders of NACO in accordance with Delaware Law;
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order, judgment, decree, statute,
law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or
issued by any Governmental Authority of competent jurisdiction or other legal
restraint or prohibition (collectively, "Restraints") shall be in effect (i)
----------
preventing the consummation of the Merger, or (ii) which otherwise is reasonably
likely to have a Material Adverse Effect on ABC or NACO, as applicable;
provided, however, that each of the Parties shall have used its reasonable best
efforts to prevent the entry of any such Restraints and to appeal as promptly as
possible any such Restraints that may be entered;
(c) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. The waiting period (including any extension
thereof) applicable to the consummation of the Merger under the ▇▇▇▇-▇▇▇▇▇-
▇▇▇▇▇▇ Act shall have expired or been terminated;
42
(d) Governmental and Regulatory Approvals. All consents, approvals
and actions of, filings with and notices to any Governmental Authority required
of NACO, ABC or any of their Subsidiaries to consummate the Merger and the other
transactions contemplated hereby shall have been obtained (other than the filing
of the Certificate of Merger provided for under Section 1.3), all in form and
substance reasonably satisfactory to ABC and NACO;
(e) Registration Statement Effective. The Registration Statement shall
have become effective, no stop order suspending the effectiveness of the
Registration Statement shall then be in effect, and no proceedings for that
purpose shall then be threatened by the SEC or shall have been initiated by the
SEC and not concluded or withdrawn;
(f) Blue Sky. Any state securities or blue sky permits or approvals
required to carry out the transactions contemplated hereby shall have been
received;
(g) Stock Exchange Listing. The shares of ABC Common Stock into which
NACO Shares will be converted pursuant to Article II hereof shall have been duly
approved for listing on the Nasdaq NMS; and
(h) FIRPTA. NACO and ABC shall have each received from the other an
affidavit meeting the requirements of Section 1445(b)(3) of the Code and the
Treasury Regulations promulgated thereunder.
SECTION 6.2 -- Additional Conditions to Obligations of NACO. The
obligations of NACO to effect the Merger are also subject to the fulfillment of
the following conditions:
(a) Representations and Warranties. The representations and
warranties of ABC and Merger Subsidiary contained in this Agreement shall be
true and correct in all respects when made and at and as of the Closing Date, as
if made at and as of such time (except to the extent expressly made as of an
earlier date, in which case as of such date), except where the failure of such
representations and warranties to be so true and correct (without giving effect
to any limitation as to "materiality" or "Material Adverse Effect" set forth
therein) does not have, and is not likely to have, individually or in the
aggregate, a Material Adverse Effect on ABC;
(b) Agreements, Conditions and Covenants. ABC and Merger Subsidiary
shall have performed or complied in all material respects with all agreements,
conditions and covenants required by this Agreement to be performed or complied
with by them on or before the Closing Date;
(c) Certificates. NACO shall have received a certificate of an
executive officer of ABC to the effect set forth in paragraphs (a) and (b)
above; and
(d) Required Consents. ABC shall have obtained, and provided copies
to NACO of, all of the consents, waivers and approvals required by Section
6.2(d) of the Disclosure Schedule,
43
unless the failure to obtain such consent, waiver or approval is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
(e) Tax Opinions. NACO shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇, counsel to NACO, on a date immediately prior to the mailing of the Joint
Proxy Statement and on the Closing Date, opinions, in each case dated as of such
respective dates and stating that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code and that ABC, Merger Subsidiary and NACO will each be a party to that
reorganization within the meaning of Section 368(b) of the Code and that no gain
or loss will be recognized by the stockholders of NACO upon their exchange of
NACO Common Stock for ABC Common Stock under Section 354 of the Code (except to
the extent such a stockholder receives cash in lieu of fractional shares and to
the extent of a payment of transfer taxes made on behalf of such stockholder, if
any). In rendering such opinions, counsel for NACO shall be entitled to rely
upon representations of officers of ABC and NACO substantially in the form of
Exhibits F and G hereto;
(f) Registration Rights Agreement. ABC shall have entered into a
registration rights agreement, in substantially the form attached as Exhibit H
hereto, with the persons identified in said form of registration rights
agreement;
(g) Opinion of Counsel to ABC and Merger Sub. NACO shall have
received the legal opinion of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ dated the Closing Date,
covering the items specified in Exhibit I hereto;
(h) Change-of-Control Agreements. ABC shall have entered into an
agreement with each of the persons listed on Section 6.2(h) of the Disclosure
Schedule reasonably satisfactory to NACO pursuant to which ABC will be bound by
and made a party to the change-of-control agreements between NACO and each of
the persons listed on Section 6.2(h) of the Disclosure Schedule; and
(i) Unqualified Audit Opinion. ABC shall have received an unqualified
opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, its independent public accountants, with
respect to the consolidated financial statements of ABC included in ABC's Annual
Report on Form 10-K for the fiscal year ended July 31, 1998.
SECTION 6.3 -- Additional Conditions to Obligations of ABC. The obligations
of ABC to effect the Merger are also subject to the fulfillment of the following
conditions:
(a) Representations and Warranties. The representations and warranties
of NACO contained in this Agreement shall be true and correct in all respects
when made and at and as of the Closing Date, as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as of
such date), except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality" or "Material
44
Adverse Effect" set forth therein) does not have, and is not likely to have,
individually or in the aggregate, a Material Adverse Effect on NACO;
(b) Agreements, Conditions and Covenants. NACO shall have performed
or complied in all material respects with all agreements, conditions and
covenants required by this Agreement to be performed or complied with by it on
or before the Closing Date;
(c) Certificates. ABC shall have received a certificate of an
executive officer of NACO to the effect set forth in paragraphs (a) and (b)
above;
(d) Required Consents. NACO shall have obtained, and provided copies
to ABC of, all of the consents, waivers and approvals required by Section 6.3(d)
of the Disclosure Schedule, unless the failure to obtain such consent, waiver or
approval is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
(e) Tax Opinions. ABC shall have received from ▇▇▇▇▇, Day, ▇▇▇▇▇▇ &
▇▇▇▇▇, counsel to ABC, on a date immediately prior to the mailing of the Joint
Proxy Statement and on the Closing Date, opinions, in each case dated as of such
respective dates and stating that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code, and that NACO, Merger Sub and ABC will each be a party to that
reorganization. In rendering such opinions, counsel for ABC shall be entitled
to rely upon representations of officers of ABC and NACO substantially in the
form of Exhibits F and G hereto; and
(f) Opinion of Counsel to NACO. ABC shall have received the opinion
of counsel to NACO dated as of the Closing Date, covering the items specified in
Exhibit J hereto.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 -- Termination. This Agreement may be terminated at any
time before the Effective Time, in each case as authorized by the respective
Board of Directors of NACO or ABC:
(a) by mutual written consent of each of NACO and ABC;
(b) by either NACO or ABC if the Merger shall not have been
consummated on or before February 28, 1999 (the "Termination Date"); provided,
----------------
however, that the right to terminate this Agreement under this Section 7.1(b)
shall not be available to any Party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date;
45
(c) by either NACO or ABC if (i) a statute, rule, regulation or
executive order shall have been enacted, entered or promulgated prohibiting the
consummation of the Merger substantially on the terms contemplated hereby or
(ii) an order, decree, ruling or injunction shall have been entered permanently
restraining, enjoining or otherwise prohibiting the consummation of the Merger
substantially on the terms contemplated hereby and such order, decree, ruling or
injunction shall have become final and non-appealable and the party seeking to
terminate this Agreement pursuant to this clause 7.1(c)(ii) shall have used its
reasonable best efforts to remove such order, decree, ruling or injunction;
(d) by either NACO or ABC if (i) the other shall have breached, or
failed to comply with, in any material respect any of its obligations under this
Agreement or any representation or warranty made by such other Party shall have
been incorrect in any material respect when made or shall have since ceased to
be true and correct in any material respect, and (ii) such breach, failure or
misrepresentation is not cured within 30 days after notice thereof and (iii)
such breach, failure or misrepresentation would cause the condition set forth in
Sections 6.2(a) and 6.2(b) or Sections 6.3(a) or 6.3(b), as the case may be, not
to be satisfied;
(e) by either NACO or ABC if the approval of the stockholders of NACO
contemplated by this Agreement shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of stockholders or of
any adjournment thereof;
(f) by either NACO or ABC if the approval of the stockholders of ABC
contemplated by this Agreement shall not have been obtained by reason of the
failure to obtain the required vote at a duly held meeting of stockholders or of
any adjournment thereof;
(g) by either NACO or ABC if the Board of Directors of NACO determines
that a bona fide NACO Acquisition Proposal made by a third party on terms that a
majority of the members of the Board of Directors of NACO determines in good
faith (based on the advice of an independent financial advisor) is more
favorable to NACO and to its stockholders than the transactions contemplated
hereby (such a NACO Acquisition Proposal is referred to herein as a "NACO
----
Superior Proposal"), except that NACO may not terminate this Agreement pursuant
-----------------
to this clause 7.1(g) unless and until (i) three Business Days have elapsed
following delivery to ABC of a written notice of such determination by the Board
of Directors of NACO and during such three Business Day period NACO (A) promptly
informs ABC of the terms and conditions of the NACO Acquisition Proposal and the
identity of the Person making the NACO Acquisition Proposal and (B) otherwise
cooperates with ABC with respect thereto (subject, in the case of this clause
(B), to the condition that the Board of Directors of NACO shall not be required
to take any action that it believes, after consultation with outside legal
counsel, would violate its obligations to NACO or NACO's stockholders under
Applicable Law) with the intent of enabling ABC to engage in good faith
negotiations so that the transactions contemplated hereby may be effected, (ii)
at the end of such three Business Day period the Board of Directors of NACO
continues reasonably to believe that the NACO Acquisition Proposal constitutes a
NACO Superior Proposal, (iii) simultaneously with such termination NACO enters
into a definitive acquisition, merger or similar agreement to effect the NACO
Superior Proposal and (iv) NACO pays to ABC the amount specified and within the
time period specified in Section 7.2(b);
46
(h) by either ABC or NACO if the Board of Directors of ABC determines
that a bona fide ABC Acquisition Proposal made by a third party on terms that a
majority of the members of the Board of Directors of ABC determines in good
faith (based on the advice of an independent financial advisor) is more
favorable to ABC and to its stockholders than the transactions contemplated
hereby (such an ABC Acquisition Proposal is referred to herein as an "ABC
---
Superior Proposal"), except that ABC may not terminate this Agreement pursuant
-----------------
to this clause 7.1(h) unless and until (i) three Business Days have elapsed
following delivery to NACO of a written notice of such determination by the
Board of Directors of ABC and during such three Business Day period ABC (A)
promptly informs NACO of the terms and conditions of the ABC Acquisition
Proposal and the identity of the Person making the ABC Acquisition Proposal and
(B) otherwise cooperates with NACO with respect thereto (subject, in the case of
this clause (B), to the condition that the Board of Directors of ABC shall not
be required to take any action that it believes, after consultation with outside
legal counsel, would violate its obligations to ABC or ABC's stockholders under
Applicable Law) with the intent of enabling NACO to engage in good faith
negotiations so that the transactions contemplated hereby may be effected, (ii)
at the end of such three Business Day period the Board of Directors of ABC
continues reasonably to believe that the ABC Acquisition Proposal constitutes an
ABC Superior Proposal, (iii) simultaneously with such termination ABC enters
into a definitive acquisition, merger or similar agreement to effect the ABC
Superior Proposal and (iv) ABC pays to NACO the amount specified and within the
time period specified in Section 7.2(c);
(i) by ABC if the Board of Directors of NACO shall have (i) withdrawn
or modified in a manner adverse to ABC its approval or recommendation of this
Agreement and the transactions contemplated hereby or (ii) approved or
recommended, or proposed publicly to approve or recommend, any NACO Acquisition
Proposal;
(j) by NACO if the Board of Directors of ABC shall have (i) withdrawn
or modified in a manner adverse to NACO its approval or recommendation of this
Agreement and the transactions contemplated hereby or (ii) approved or
recommended, or proposed publicly to approve or recommend, any ABC Acquisition
Proposal;
(k) by ABC if a tender offer or exchange offer for 20% or more of the
outstanding shares of capital stock of NACO is commenced prior to the Effective
Time, and the Board of Directors of NACO fails to recommend against acceptance
of such tender offer or exchange offer by its stockholders (including such a
failure by taking no position with respect to the acceptance of such tender
offer or exchange offer by its stockholders) within the time period specified by
Rule 14e-2;
(l) by NACO if a tender offer or exchange offer for 20% or more of the
outstanding shares of capital stock of ABC is commenced prior to the Effective
Time, and the Board of Directors of ABC fails to recommend against acceptance of
such tender offer or exchange offer by its stockholders (including such a
failure by taking no position with respect to the acceptance of such tender
offer or exchange offer by its stockholders) within the time period specified by
Rule 14e-2; or
(m) by either NACO or ABC if the Average ABC Trading Price is less
than $13.00 and NACO or ABC, as the case may be, notifies the other in writing
of its intent to terminate
47
this Agreement at least 48 hours prior to the later of the date of the ABC
Special Meeting and the date of the NACO Special Meeting as specified in the
Joint Proxy Statement (as used herein, "Average ABC Trading Price" means the
-------------------------
average of the per share closing sale prices of ABC Common Stock on the Nasdaq
NMS (as reported in the Wall Street Journal) for the sixty (60) Business Days
immediately preceding the fourth Business Day prior to the later of the date of
the ABC Special Meeting and the date of the NACO Special Meeting as specified in
the Joint Proxy Statement).
SECTION 7.2 -- Effect of Termination. (a) In the event of
termination of this Agreement as provided in Section 7.1 hereof, and subject to
the provisions of Section 8.1 hereof, this Agreement shall forthwith become void
and there shall be no liability on the part of any of the Parties, except (i) as
set forth in this Section 7.2 and in Section 8.3 hereof; and (ii) nothing herein
shall relieve any Party from liability for any wilful breach hereof.
(b) Notwithstanding any provision in this Agreement to the contrary,
if (i) this Agreement is terminated by NACO or ABC pursuant to Section 7.1(g),
(ii) this Agreement is terminated by ABC pursuant to Section 7.1(i) or 7.1(k),
or (iii) (A) this Agreement is terminated by NACO pursuant to Section 7.1(b) or
by ABC or NACO pursuant to Section 7.1(e) and (B) concurrently with or within
---
twelve months after such termination a NACO Acquisition Proposal other than an
initial public offering of NACO Common Stock shall have been consummated, then,
in any case, NACO shall: (x) pay to ABC a fee of $5,000,000 in cash as
liquidated damages and not as a penalty, such payment to be made simultaneously
with such termination in the case of a termination by NACO pursuant to Section
7.1(g) and promptly, but in no event later than the second Business Day
following a termination by ABC pursuant to Section 7.1(g), 7.1(i) or 7.1(k)
and, in the case of clause (iii) of this Section 7.2(b), upon the consummation
of such NACO Acquisition Proposal; and (y) reimburse ABC for all fees, costs and
expenses incurred by ABC in connection with this Agreement and the transactions
contemplated hereby, including but not limited to fees and expenses of
investment bankers, accountants and attorneys, in the amount of $2,000,000
(collectively, the "ABC Covered Expenses") (less the amount, if any, of ABC
Covered Expenses paid under Section 7.2(d)), such reimbursement to be paid in
cash no later than the second Business Day following ABC's delivery to NACO of a
written notice setting forth the amount to be reimbursed to ABC.
(c) Notwithstanding any provision in this Agreement to the contrary,
if (i) this Agreement is terminated by ABC or NACO pursuant to Section 7.1(h),
(ii) this Agreement is terminated by NACO pursuant to Section 7.1(j) or 7.1(l),
or (iii) (A) this Agreement is terminated by ABC pursuant to Section 7.1(b) or
by NACO or ABC pursuant to Section 7.1(f) and (B) concurrently with or within
---
twelve months after such termination an ABC Acquisition Proposal shall have been
consummated, then, in any case, ABC shall: (x) pay to NACO a fee of $5,000,000
in cash as liquidated damages and not as a penalty, such payment to be made
simultaneously with such termination in the case of a termination by ABC
pursuant to Section 7.1(h) and promptly, but in no event later than the second
Business Day following a termination by NACO pursuant to Section 7.1(h), 7.1(j)
or 7.1(l) and, in the case of clause (iii) of this Section 7.2(c), upon the
consummation of such ABC Acquisition Proposal; and (y) reimburse NACO for all
fees, costs and expenses incurred by NACO in connection with this Agreement and
the transactions contemplated hereby, including but not limited to fees and
expenses of investment bankers, accountants and attorneys, in
48
the amount of $2,000,000 (collectively, the "NACO Covered Expenses") (less the
amount, if any, of NACO Covered Expenses paid under Section 7.2(e)), such
reimbursement to be paid in cash no later than the second Business Day following
NACO's delivery to ABC of a written notice setting forth the amount to be
reimbursed to NACO.
(d) If this Agreement is terminated by NACO or ABC pursuant to Section
7.1(e), then NACO shall, without prejudice and in addition to any other rights
of ABC against NACO, reimburse ABC for ABC Covered Expenses. Payment for such
reimbursement shall be made to ABC in cash no later than the second Business Day
following ABC's delivery to NACO of a written notice setting forth the amount to
be reimbursed to ABC.
(e) If this Agreement is terminated by ABC or NACO pursuant to Section
7.1(f), then ABC shall, without prejudice and in addition to any other rights of
NACO against ABC, reimburse NACO for all NACO Covered Expenses. Payment for
such reimbursement shall be made to NACO in cash no later than the second
Business Day following NACO's delivery to ABC of a written notice setting forth
the amount to be reimbursed to NACO.
SECTION 7.3 -- Amendment. This Agreement may be amended by the Parties
pursuant to an instrument in writing adopted by action taken by each of NACO and
ABC at any time before the Effective Time; provided, however, that, after
approval of the Merger Agreement by the stockholders of NACO and ABC, no
amendment may be made which by law would require further approval by such
stockholders without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed by the Parties.
SECTION 7.4 -- Waiver. At any time before the Effective Time, a Party
may (a) extend the time for the performance of any of the obligations or other
acts of the other Parties, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and (c)
subject to the proviso of Section 7.3, waive compliance by the other Parties
with any of the agreements or conditions contained herein. Any agreement on the
part of a Party to any such extension or waiver shall be valid only as against
such Party and only if set forth in an instrument in writing signed by such
Party.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 -- Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time, except that the agreements set forth in
Article I and Sections 2.4, 2.5, 2.6, 2.7, 2.8 and 5.11 hereof shall survive the
Effective Time indefinitely. The representations, warranties and agreements in
this agreement shall terminate upon the termination of this Agreement pursuant
to Section 7.1 hereof, except that the agreements set forth in Sections 5.3(b)
and (c), 7.2, 8.3, 8.9, 8.10, 8.11 and 8.12 hereof shall survive termination
indefinitely. Nothing contained herein shall limit any covenant or agreement of
the Parties which by its terms contemplates performance after the Effective
Time.
49
SECTION 8.2 -- Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date of receipt and shall be delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested), sent by overnight courier or sent by telecopy, to the Parties at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a Party as shall be specified by like notice):
(a) if to NACO:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman and Chief Executive Officer
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to ABC or Merger Subsidiary:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 8.3 -- Expenses. Except as otherwise provided herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such costs
and expenses, except that those expenses incurred in connection with the
printing of the Joint Proxy Statement and the Registration Statement, as well as
the filing fees related thereto and any filing fee required in connection with
the filing of premerger notifications under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, shall be
shared equally by NACO and ABC. Section
50
8.3(i) of the Disclosure Schedule sets forth an itemized statement of the fees
and expenses that ABC reasonably and in good faith estimates that it will incur
in connection with this Agreement and the Merger. Section 8.3(ii) of the
Disclosure Schedule sets forth an itemized statement of the fees and expenses
that NACO reasonably and in good faith estimates that it will incur in
connection with this Agreement and the Merger.
SECTION 8.4 -- Certain Definitions. For purposes of this Agreement,
the following terms shall have the following meanings:
(a) "Affiliated Entity" means each Person (other than any Subsidiary
-----------------
of ABC) in which ABC has an equity interest in excess of 25%.
(b) "Business Day" means any day other than a Saturday, a Sunday or a
------------
day on which commercial banks located in the State of Illinois are authorized or
required by law or other governmental action to be closed.
(c) "Cleanup" means all actions required by applicable Environmental
-------
Laws to (i) cleanup, remove, treat, manage or remediate Hazardous Materials in
the indoor or outdoor environment; (ii) prevent the Release of Hazardous
Materials so that they do not migrate, endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; (iii) perform pre-
remedial studies and investigations and post-remedial monitoring and care; or
(iv) respond to any government requests for information or documents in any way
relating to cleanup, removal, treatment or remediation or potential cleanup,
removal, treatment or remediation of Hazardous Materials in the indoor or
outdoor environment.
(d) "Control Group" means a controlled group of corporations of which
-------------
ABC or NACO, as the case may be, is a member within the meaning of Code
(S)414(b), any group of corporations or entities under common control with ABC
or NACO, as the case may be, within the meaning of Code (S)414(c) or any
affiliated service group of which ABC or NACO, as the case may be, is a member
within the meaning of Code (S)414(m).
(e) "Environmental Claim" means any judicial or administrative claim,
-------------------
action, cause of action, investigation or written notice by any Person alleging
potential liability or responsibility (including, without limitation, potential
liability for investigatory costs, Cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries, fines or
penalties) arising out of, based on or resulting from (i) the presence or
Release of any Hazardous Materials at any location, whether or not owned or
operated by NACO or any of its Subsidiaries or ABC or any of its Subsidiaries or
Affiliated Entities, as the case may be, or (ii) circumstances forming the basis
of any violation of any Environmental Law.
(f) "Environmental Laws" means all federal, state, local and foreign
------------------
laws and regulations relating to pollution or protection of the environment,
including, without limitation, laws relating to Releases or threatened Releases
of Hazardous Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials.
51
(g) "Hazardous Materials" means all substances defined as Hazardous
-------------------
Substances, Toxic Substances, Hazardous Waste, Pollutants or Contaminants, or
regulated as such under, any Environmental Law, including all matters affecting
air, ground, ground water, surface water and/or environmental quality or safety,
including, without limitation, petroleum, petroleum-derived products,
underground storage tanks, polychlorinated biphenyls and asbestos.
(h) "Knowledge" means, with respect to ABC, the knowledge ABC's
---------
executive officers listed in Section 8.4(h)(i) of the Disclosure Schedule, and
with respect to NACO, the knowledge of NACO's executive officers listed in
Section 8.4(h)(ii) of the Disclosure Schedule, in each case, after reasonable
inquiry.
(i) "NACO Balance Sheet" means the audited consolidated balance sheets
------------------
of NACO and its consolidated Subsidiaries for the fiscal year ended March 29,
1998.
(j) "Material Adverse Effect" means a material adverse effect (i) on
-----------------------
the condition (financial or otherwise), business, assets, liabilities,
properties or results of operations of NACO and its Subsidiaries taken as a
whole, or ABC and its Subsidiaries taken as a whole, as the case may be, or (ii)
on the ability of NACO, or ABC, as the case may be, to perform any material
obligations hereunder or under the transactions contemplated hereby; provided,
however, that Material Adverse Effect shall not be deemed to include the impact
of (A) actions or omissions of NACO or ABC taken with the prior written consent
of NACO or ABC, as applicable, in contemplation of the transactions contemplated
hereby or (B) changes in GAAP.
(k) "Permitted Liens" means Liens (a) for any current Taxes or
---------------
assessments (including but not limited to assessments for maintenance and
repair) not yet delinquent, (b) reflected on the NACO Balance Sheet or the ABC
Balance Sheet, (c) which do not materially detract from the value, or interfere
with the present use of, such assets or (d) created by statute of carriers,
warehousemen, mechanics, laborers and materialmen incurred in the ordinary
course of business for sums not yet due.
(l) "Person" means an individual, a partnership, a corporation, an
------
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
(m) "Release" means any release, spill, emission, discharge, leaking,
-------
pumping, injection, deposit, disposal, dispersal, leaching or migration into the
environment (including, without limitation, ambient air, surface water,
groundwater and surface or subsurface strata) or into or out of any vessel
(including the abatement or discarding of barrels or other containers containing
Hazardous Materials), including the movement of Hazardous Materials through, on
or in the air, soil, surface water or ground water.
(n) "Subsidiary" means any Person with respect to which NACO or ABC,
----------
as the case may be, directly or indirectly owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors or others performing similar functions with respect
to such Person.
52
(o) "Tax" or "Taxes" means all taxes, charges, fees, levies or other
--- -----
assessments, including, without limitation, all net income, gross income,
alternative or add-on minimum, environmental, gross receipts, sales, use, goods
and services, ad valorem, transfer, capital stock, franchise, profits, license,
withholding, payroll, single business, employment, excise, severance, stamp,
occupation, property, unemployment or other taxes, customs, duties, fees,
assessments or charges of any kind whatsoever, and any installments with respect
thereto, together with any interest, penalties, additions to tax or additional
amounts imposed by any taxing authority (domestic or foreign) upon NACO or any
of its Subsidiaries, or ABC or any of its Subsidiaries, as the case may be.
(p) "Tax Return" means any reports, return, statement or other written
----------
information required to be supplied to a taxing authority in connection with
Taxes.
(q) "ABC Balance Sheet" means the audited consolidated balance sheet
-----------------
of ABC and its consolidated Subsidiaries for the fiscal year ended July 31,
1997.
SECTION 8.5 -- Headings. The headings contained in this Agreement
(including in the Table of Contents, the Index of Exhibits and the Index of
Disclosure Schedules) and the defined terms contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.6 -- Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any Party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the maximum extent possible.
SECTION 8.7 -- Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Confidentiality Agreement, the Disclosure Schedule and any
documents delivered by the Parties in connection herewith constitute the entire
agreement and, except as expressly set forth herein and therein, supersede any
and all other prior agreements and undertakings, both written and oral, among
the Parties, or any of them, with respect to the subject matter hereof and,
except for the provisions of Article II and Section 5.12, are not intended to
confer upon any Person other than NACO, ABC, and Merger Subsidiary and, after
the Effective Time, their respective stockholders and the Surviving Corporation,
any rights or remedies hereunder.
SECTION 8.8 -- Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 8.9 -- Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed entirely within that State, without
regard to the conflicts of laws provisions thereof.
53
SECTION 8.10 -- Consent to Jurisdiction. Each of the Parties hereto
(a) consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (c) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than a
Federal court sitting in the State of Delaware or a Delaware state court.
Notwithstanding the foregoing, such consent to jurisdiction is solely for the
purpose referred to in this Section 8.10 and shall not be deemed to be a general
submission other than for such purpose.
SECTION 8.11 -- Costs of Enforcement. Except as otherwise set forth herein,
the prevailing Party in any proceeding brought to enforce any provision of the
Agreement shall be entitled to recover the reasonable fees and costs of its
counsel, plus all other costs of such proceeding.
SECTION 8.12 -- Publicity. NACO and ABC will consult with and provide each
other the opportunity to review and comment upon any press release or other
public statement or comment prior to the issuance of such press release or other
public statement or comment relating to this Agreement or the transactions
contemplated herein and shall not issue any such press release or other public
statement or comment prior to such consultation except as may be required by law
or by obligations pursuant to any listing agreement with any national securities
exchange.
SECTION 8.13 -- Incorporation of Exhibits and Disclosure Schedule. The
Exhibits and the Disclosure Schedule identified in this Agreement are
incorporated by reference and made a part hereof.
SECTION 8.14 -- Counterparts. This Agreement may be executed in one or more
counterparts, and by the different Parties in separate counterparts, each of
which when executed shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
54
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
NACO, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and Chief Executive Officer
ABC RAIL PRODUCTS CORPORATION
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
ABCR ACQUISITION SUB, INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
55
EXHIBIT A
VOTING AGREEMENT
----------------
AGREEMENT, dated as of September 17, 1998, by and among ABC Rail
Products Corporation, a Delaware corporation (the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
("Stockholder");
WHEREAS, concurrently herewith, the Company, ABCR Acquisition Sub,
Inc., a Delaware corporation and a wholly-owned subsidiary of the Company
("Merger Sub") and NACO, Inc., a Delaware corporation ("NACO"), are entering
into an Agreement and Plan of Merger (the "Merger Agreement");
WHEREAS, the Stockholder is the record and beneficial owner of the
number of shares of NACO Common Stock set forth opposite his name on Schedule I
hereto (the "Subject Shares");
WHEREAS, approval of the Merger Agreement by the stockholders of NACO
is a condition to the consummation of the Merger; and
WHEREAS, as an inducement to its entering into the Merger Agreement,
the Company has required that the Stockholder agree to enter into this
Agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows
(capitalized terms used herein, but not otherwise defined herein, shall have the
meaning ascribed to such terms in the Merger Agreement):
Section 1. Agreement to Vote.
-----------------
(a) Stockholder hereby agrees to attend the NACO Special Meeting, in
person or by proxy, and to vote (or cause to be voted) all Subject Shares, and
any other voting securities of NACO, whether issued heretofore or hereafter,
that such Stockholder owns or has the right to vote, for approval and adoption
of the Merger Agreement and the Merger. Such agreement to vote shall apply also
to any adjournment or adjournments of the NACO Special Meeting, and to any other
meeting of stockholders at which any item of business referred to in the
preceding sentence is presented for approval.
(b) To the extent inconsistent with the foregoing provisions of this
Section 1, Stockholder hereby revokes any and all previous proxies with respect
to Stockholder's Subject Shares or any other voting securities of NACO.
Section 2. Securities Act Covenants and Representations.
--------------------------------------------
Stockholder hereby agrees and represents to the Company as follows:
(a) Stockholder has been advised that the offering, sale and delivery
of the ABC Common Stock pursuant to the Merger will be registered under the
Securities Act on a Registration Statement on Form S-4. Stockholder has also
been advised, however, that to the extent such Stockholder is considered an
"affiliate" of NACO at the time the Merger Agreement is submitted to a vote of
the stockholders of NACO, any public offering or sale by Stockholder of any
shares of the ABC Common Stock received by Stockholder in the Merger will, under
current law, require either (i) the further registration under the Securities
Act of any shares of the ABC Common Stock to be sold by Stockholder, (ii)
compliance with Rule 145 promulgated by the SEC under the Securities Act or
(iii) the availability of another exemption from such registration under the
Securities Act.
(b) Stockholder has read this Agreement and the Merger Agreement and
has discussed their requirements and other applicable limitations upon
Stockholder's ability to sell, transfer or otherwise dispose of shares of the
ABC Common Stock with Stockholder's counsel or counsel for NACO, to the extent
Stockholder believed necessary.
(c) Stockholder also understands that stop transfer instructions will
be given to the Company's transfer agent with respect to the ABC Common Stock
and that a legend will be placed on the certificates for the ABC Common Stock
issued to Stockholder, or any substitutions therefor, to the extent Stockholder
is considered an "Affiliate" of NACO at the time the Merger Agreement is
submitted to a vote of the stockholders of NACO.
Section 3. Further Assurances. Each of the Company and the
------------------
Stockholder shall execute and deliver such additional instruments and other
documents and shall take such further actions as may be necessary or appropriate
to effectuate, carry out and comply with all of its obligations under this
Agreement. Without limiting the generality of the foregoing, neither the Company
nor Stockholder shall enter into any agreement or arrangement (or alter, amend
or terminate any existing agreement or arrangement) if such action would
materially impair the ability of any party to effectuate, carry out or comply
with all the terms of this Agreement.
Section 4. Representations and Warranties of the Company. The
---------------------------------------------
Company represents and warrants to Stockholder that this Agreement (i) has been
approved by the Board of Directors of the Company; (ii) has been duly executed
and delivered by a duly authorized officer of the Company; and (iii) constitutes
a valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
application which may affect the enforcement of creditors' rights generally and
by general equitable principles.
2
Section 5. Representations and Warranties of Stockholder.
-------------------------------------------
Stockholder represents and warrants to the Company that this Agreement (i) has
been duly authorized, executed and delivered by Stockholder, and (ii)
constitutes the valid and binding agreement of Stockholder, enforceable against
Stockholder in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application which may affect the enforcement of creditors' rights
generally and by general equitable principles. Stockholder is the record and
beneficial owner of the number of Subject Shares set forth his name on Schedule
I. The Subject Shares listed next to the name of Stockholder on Schedule I
hereto are the only voting securities of NACO owned (beneficially or of record)
by Stockholder. Neither the execution or delivery of this Agreement nor the
consummation by Stockholder of the transactions contemplated hereby will violate
or conflict with any provisions of any law, rule or regulation applicable to
Stockholder or any contract, agreement or understanding to which Stockholder is
a party, other than such violations as would not prevent or materially delay the
performance by Stockholder of his obligations hereunder or impose any liability
or obligation on the Company.
Section 6. Effectiveness and Termination. It is a condition
-----------------------------
precedent to the effectiveness of this Agreement that the Merger Agreement shall
have been executed and delivered and be in full force and effect. In the event
the Merger Agreement is terminated in accordance with its terms, this Agreement
shall automatically terminate and be of no further force or effect. Upon such
termination, except for any rights any party may have in respect of any breach
by any other party of its or his obligations hereunder, neither of the parties
hereto shall have any further obligation or liability hereunder.
Section 7. Miscellaneous.
-------------
(a) Notices, Etc. All notices, requests, demands or other
-------------
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), when delivered by
telecopy and confirmed by return telecopy, or seven days after being mailed by
first-class mail, postage prepaid in each case to the applicable addresses set
forth below:
If to the Company or Merger Sub:
ABC Rail Products Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
3
with a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Stockholder or NACO:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman and Chief Executive Officer
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as such party shall have designated by notice so given
to each other party.
(b) Amendments, Waivers, Etc. This Agreement may not be amended,
-------------------------
changed, supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by the Company, the Stockholder and NACO.
(c) Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of and be enforceable by the parties and their
respective successors and assigns, including without limitation in the case of
any corporate party hereto any corporate successor by merger or otherwise, and
in the case of any individual party hereto any trustee, executor, heir, legatee
or personal representative succeeding to the ownership of such party's Subject
Shares or other securities subject to this Agreement. Notwithstanding any
transfer of Subject Shares, the transferor shall remain liable for the
performance of all obligations under this Agreement of the transferor.
(d) Entire Agreement. This Agreement embodies the entire agreement
----------------
and understanding among the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter.
(e) Severability. If any term of this Agreement or the application
------------
thereof to any party or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this
4
Agreement and the application of such term to the other parties or circumstances
shall not be affected thereby and shall be enforced to the greatest extent
permitted by applicable law, provided that in such event the parties shall
--------
negotiate in good faith in an attempt to agree to another provision (in lieu of
the term or application held to be invalid or unenforceable) that will be valid
and enforceable and will carry out the parties' intentions hereunder.
(f) Specific Performance. The parties acknowledge that money damages
--------------------
are not an adequate remedy for violations of this Agreement and that any party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief.
(g) Remedies Cumulative. All rights, powers and remedies provided
-------------------
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning of
the exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
(h) No Waiver. The failure of any party hereto to exercise any
---------
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(i) No Third-Party Beneficiaries. This Agreement is not intended to
----------------------------
be for the benefit of and shall not be enforceable by any person or entity who
or which is not a party hereto.
(j) Consent to Jurisdiction. Each of the parties hereto (a) consents
-----------------------
to submit itself to the personal jurisdiction of any Federal court located in
the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, and (c) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a Federal court located in the State of Delaware or a Delaware state court.
Notwithstanding the foregoing, such consent to jurisdiction is solely for the
purpose referred to in this Section 7(j) and shall not be deemed to be a general
submission other than for such purpose.
(k) Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, without regard
to its conflicts of laws doctrine.
(l) Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
5
(m) Expenses. The parties hereto shall each bear its own expenses
--------
incurred in connection with this Agreement and the transactions contemplated
hereby, except that in the event of a dispute concerning the terms or
enforcement of this Agreement, the prevailing party in any such dispute shall be
entitled to reimbursement of reasonable legal fees and disbursements from the
other party or parties to such dispute.
6
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
ABC RAIL PRODUCTS CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
7
Schedule I
----------
Beneficial NACO Share Ownership
Stockholder Shares Owned
----------- ------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 569,179
8
EXHIBIT B
FORM OF RESTATED CERTIFICATE OF INCORPORATION OF SURVIVING
CORPORATION
RESTATED CERTIFICATE OF INCORPORATION
OF
SURVIVING CORPORATION
A STOCK CORPORATION
I, the undersigned, for the purpose of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
hereby certify as follows:
FIRST: The name of the corporation (the "Corporation") is ______________.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, County of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
The name of the Corporation's registered agent at such address is The
Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares which the Corporation shall have
authority to issue is 1,000 shares of Common Stock, $0.01 par value.
FIFTH: Elections of directors need not be by written ballot except and to
the extent provided in the by-laws of the Corporation.
SIXTH: To the full extent permitted by the General Corporation Law of the
State of Delaware or any other applicable laws presently or hereafter in effect,
no director of the Corporation shall be personally liable to the Corporation or
its stockholders for or with respect to any acts or omissions in the performance
of his or her duties as a director of the Corporation. Any repeal or
modification of this Article Sixth shall not adversely affect any right or
protection of a director of the Corporation existing immediately prior to such
repeal or modification.
SEVENTH: Each person who is or was or had agreed to become a director or
officer of the Corporation, or each such person who is or was serving or who had
agreed to serve at the request of the Board of Directors or an officer of the
Corporation as an employee or agent of the Corporation or as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (including
-2-
the heirs, executors, administrators or estate of such person), shall be
indemnified by the Corporation to the full extent permitted by the General
Corporation Law of the State of Delaware or any other applicable laws as
presently or hereafter in effect. Without limiting the generality or the effect
of the foregoing, the Corporation may enter into one or more agreements with any
person which provide for indemnification greater or different than that provided
in this Article. Any repeal or modification of this Article Seventh shall not
adversely affect any right or protection existing hereunder immediately prior to
such repeal or modification.
EIGHTH: In furtherance and not in limitation of the rights, powers,
privileges, and discretionary authority granted or conferred by the General
Corporation Law of the State of Delaware or other statutes or laws of the State
of Delaware, the Board of Directors is expressly authorized to make, alter,
amend or repeal the by-laws of the Corporation, without any action on the part
of the stockholders, but the stockholders may make additional by-laws and may
alter, amend or repeal any by-law whether adopted by them or otherwise. The
Corporation may in its by-laws confer powers upon its Board of Directors in
addition to the foregoing and in addition to the powers and authorities
-3-
expressly conferred upon the Board of Directors by applicable law.
NINTH: The Corporation reserves the right at any time and from time to
time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws of the
State of Delaware at the time in force may be added or inserted, in the manner
now or hereafter prescribed herein or by applicable law; and all rights,
preferences and privileges of whatsoever nature conferred upon stockholders,
directors or any other persons whomsoever by and pursuant to this Certificate of
Incorporation in its present form or as hereafter amended are granted subject to
this reservation.
TENTH: The name and mailing address of the incorporator is
_______________.
ELEVENTH: The names and mailing addresses of the persons who are to serve
as the directors of the Corporation until the first annual meeting of
stockholders or until their successors are elected and qualified are as follows:
NAME MAILING ADDRESS
---------------------------------------
-4-
IN WITNESS WHEREOF, I the undersigned, being the incorporator hereinabove
named, do hereby execute this Certificate of Incorporation this ____ day of
September.
___________________________
-5-
EXHIBIT C
FORM OF AMENDED AND RESTATED BY-LAWS OF THE SURVIVING CORPORATION
SURVIVING CORPORATION
BYLAWS
ARTICLE I
CORPORATE OFFICES
Section 1. Delaware Registered Office. The registered office of the
--------- --------------------------
corporation in the State of Delaware shall be in the City of Wilmington.
Section 2. Other Offices. The corporation may also have offices at such other
--------- -------------
places, both within and outside the State of Delaware, as the board of directors
may from time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place. A meeting of stockholders for any purpose may
--------- --------------
be held at such time and place, within or outside the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2. Annual Meetings. Annual meetings of stockholders, commencing
--------- ---------------
with the year 1999, shall be held on the first Monday of February if not a legal
holiday, or if a legal holiday, then on the following business day, at 10:00
a.m. local time, or at such other date and time as shall be designated from time
to time by the board of directors and stated in the notice of the meeting, at
which the stockholders shall elect a board of directors and transact such other
business as may properly come before the meeting.
Section 3. Special Meetings. Special meetings of stockholders, for any
--------- ----------------
purpose or purposes, unless otherwise prescribed by law or by the Certificate of
Incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the whole
board of directors, or at the request in writing of stockholders owning a
majority of the capital stock of the corporation outstanding and entitled to
vote. Such request shall state the purpose or purposes of the proposed meeting.
Business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice.
Section 4. Notice. Written notice of a meeting, annual or special,
--------- ------
stating the place, date and hour of the meeting, and in the case of a special
meeting stating the purpose or purposes for which the meeting is called, shall
be given to each stockholder entitled to vote at such meeting, not less than ten
nor more than sixty days, or if a vote of stockholders on a merger or
consolidation is one of the stated purposes of the meeting, not less than twenty
nor more than sixty days before the date of the meeting.
Section 5. Stockholder List. The officer who has charge of the stock
--------- ----------------
ledger of the corporation shall prepare or cause to be prepared and make, at
least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical order and
showing the address of each stockholder and the number of shares registered in
the name of each stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof and may be inspected by any
stockholder who is present.
Section 6. Quorum. The holders of a majority of the stock outstanding and
--------- ------
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at any meeting of stockholders for the transaction of
business, except as otherwise required by law or by the Certificate of
Incorporation. If, however, such quorum shall not be present or represented at
a meeting of stockholders, the stockholders entitled to vote thereat, present in
person or represented by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting of the
place, date and hour of the adjourned meeting, until a quorum shall be present
or represented by proxy. At such adjourned meeting at which a quorum shall be
present or represented by proxy, any business may be transacted which might have
been transacted at the meeting as originally notified. If the adjournment is
for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 7. Required Vote. Each election of directors or others shall be
--------- -------------
determined by a plurality vote, and, except as otherwise required by law or by
the Certificate of Incorporation, each other matter shall be determined by the
affirmative vote of a majority of the shares present in person or represented by
proxy.
Section 8. Voting. Unless otherwise required by law or by the Certificate
--------- ------
of Incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by
2
such stockholder, but no proxy shall be voted on after three years from its
date, unless the proxy provides for a longer period.
Section 9. Action by Written Consent. Unless otherwise provided in the
--------- -------------------------
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action that may be taken at any annual
or special meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing setting forth the
action so taken shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. Number and Term. The number of directors that shall constitute
--------- ---------------
the whole board shall not be less than one nor more than five. The first board
shall consist of three directors. Thereafter, within the limits above
specified, the number of directors shall be determined by resolution of the
board of directors or by the stockholders at the annual meeting. Directors
shall be elected at annual meetings of stockholders, except as provided in
section 2 of this article, and each director shall hold office until a successor
is elected and qualified or until that director's earlier resignation or
removal. Directors need not be stockholders.
Section 2. Vacancies. Except as otherwise required by law or by the
--------- ---------
Certificate of Incorporation, any vacancy on the board of directors, including a
newly created directorship, may be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining director. If there
are no directors in office, then an election of directors may be held in the
manner provided by law.
Section 3. Powers. The business and affairs of the corporation shall be
--------- ------
managed by or under the direction or the board of directors, which may exercise
all such powers of the corporation and do all such lawful acts and things as are
not by law or by the Certificate of Incorporation or by these bylaws directed or
required to be exercised or done by the stockholders.
Section 4. Place of Meetings. The board of directors of the corporation
--------- -----------------
may hold meetings, both regular and special, either within or outside the state
of Delaware.
Section 5. Regular Meetings. A regular meeting of the board of directors
--------- ----------------
shall be held without other notice than this bylaw immediately following and at
the same place as
3
the annual meeting of stockholders. In the event such meeting is not held at
the time and place specified in the preceding sentence, the meeting may be held
at such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the board or as shall be specified in written
waivers signed by all of the directors. Other regular meetings of the board may
be held without notice at such time and at such place as shall from time to time
be determined by the board.
Section 6. Special Meetings. Special meetings of the board of directors
--------- ----------------
may be called by the president and shall be called by the president or secretary
on the written request of two directors, on not less then two days' notice to
each director, either personally or by mail, by telegram or by facsimile.
Section 7. Quorum. At any meeting of the board of directors a majority
--------- ------
of the whole board of directors shall constitute a quorum for the transaction of
business, and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
otherwise required by law or by the Certificate of Incorporation. If there is
not a quorum at a meeting of the board, a majority of the directors present may
adjourn the meeting from time to time without further notice.
Section 8. Action by Written Consent. Unless otherwise restricted by the
--------- -------------------------
Certificate of Incorporation or these bylaws, any action required or permitted
to be taken at a meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing and the writing or writings are filed
with the minutes of proceedings of the board or committee.
Section 9. Participation with Communications Equipment. Unless otherwise
---------- -------------------------------------------
restricted by law or by the Certificate of Incorporation or these bylaws,
members of the board of directors, or of any committee designated by the board
of directors, may participate in a meeting of the board of directors, or of any
committee, by conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other and
participation in a meeting by such means shall constitute presence at the
meeting.
Section 10. Committees of Directors. The board of directors may, by
---------- -----------------------
resolution passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the board of directors.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the board of directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided in the resolution of the board of directors, shall have and may
exercise all of the powers and authority of the board of directors
4
in the management of the business and affairs of the corporation, and may
authorize the seal of the corporation to be affixed to all papers which may
require the seal; but no such committee shall have the power or authority in
reference to amending the Certificate of Incorporation, adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation; and,
unless the resolution or the Certificate of Incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
Each committee shall keep regular minutes of its meetings and shall furnish
them to the board of directors when required.
Section 11. Compensation of Directors. Unless otherwise restricted by the
---------- -------------------------
Certificate of Incorporation, the board of directors shall have the authority to
fix the compensation of directors. The receipt of such compensation shall not
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees may
be allowed like compensation for attending committee meetings. The directors
may be reimbursed for any expenses of attending meetings of the board of
directors and of committees of the board.
ARTICLE IV
NOTICES
Section 1. Method of Giving Notice. Whenever, under any provision of the
--------- -----------------------
statutes or of the Certificate of Incorporation or of these bylaws, notice is
required to be given to any director or stockholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, by mail,
addressed to such director or stockholder, at that person's address as it
appears on the records of the corporation, with postage thereon prepaid, and
such notice shall be deemed to be given at the time the same is deposited in the
United States mail. Notice to directors may also be given by telegram or by
facsimile and such notice shall be deemed to be given at the time that such
notice is sent.
Section 2. Waiver of Notice. Whenever notice is required to be given
--------- ----------------
under any provision of law or of the Certificate of Incorporation or of these
bylaws, a written waiver of such notice, signed by the person or persons
entitled to notice, whether before or after the time stated therein, shall be
deemed equivalent to such notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends
the meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.
5
ARTICLE V
OFFICERS
Section 1. Offices. The officers of the corporation, shall be
--------- -------
elected by the board of directors and shall be a president, a vice-president, a
secretary and a treasurer. In addition, the board of directors may elect
additional vice-presidents, and one or more assistant secretaries, assistant
treasurers and other subordinate officers. Any number of offices may be held by
the same person, unless the Certificate of Incorporation or these bylaws
otherwise provide.
Section 2. Annual Election. The board of directors at its first
--------- ---------------
meeting after each annual meeting of stockholders shall elect a president, one
or more vice-presidents, a secretary and a treasurer. If the election of
officers shall not be held at such meeting, such election shall be held as soon
thereafter as conveniently may be.
Section 3. Additional Officers. The board of directors may appoint
--------- -------------------
such other officers and agents as it shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
Section 4. Compensation of Officers. The compensation of all
--------- ------------------------
officers and agents of the corporation shall be fixed by or under the direction
of the board of directors.
Section 5. Term of Office and Vacancy. Each officer shall hold
--------- --------------------------
office until a successor is chosen and qualifies or until the officer's earlier
resignation or removal. Any officer elected or appointed by the board of
directors may be removed at any time by the board of directors. Any vacancy
occurring in any office of the corporation shall be filled by the board of
directors.
Section 6. President. The president (a) shall be the chief executive
--------- ---------
officer of the corporation, (b) shall preside at all meetings of the
stockholders and the board of directors, (c) shall have general and active
management of the business and affairs of the corporation, (d) shall see that
all orders and resolutions of the board of directors are carried into effect and
(e) shall have the power to execute bonds, mortgages and other contracts,
agreements and instruments, except where required or permitted by law to be
otherwise signed and executed or where the signing and execution thereof shall
be expressly delegated by the board of directors to some other officer or agent
of the corporation.
Section 7. Vice-Presidents. In the absence of the president or in
--------- ---------------
the event of the disability of the president, the vice-president (or if there be
more than one, the vice-presidents in the order designated, or in the absence of
any designation, then in the order of their most recent election) shall perform
the duties of the president and when so acting shall have all the powers of and
be subject to all the restrictions upon the president. The vice-
6
presidents shall perform such other duties and have such other powers as the
board of directors or the president may from time to time prescribe.
Section 8. Secretary. The secretary shall (a) attend all meetings
--------- ---------
of the board of directors and all meetings of the stockholders and record all of
the proceedings of the meetings of the board of directors and of the
stockholders in a book to be kept for that purpose and perform like duties for
the standing committees when required, (b) give, or cause to be given, notice of
all special meetings of the board of directors and all meetings of the
stockholders and (c) perform such other duties as may be prescribed by the board
of directors or the president, under whose supervision the secretary shall be.
The secretary shall have custody of the corporate seal of the corporation and
shall have authority to affix it to any instrument requiring the seal, and when
so affixed, the seal may be attested by the signature of such officer. The board
of directors may give general authority to any other officer to affix the seal
of the corporation and to attest the affixing by signature.
Section 9. Assistant Secretaries. The assistant secretary (or if
--------- ---------------------
there be more than one, the assistant secretaries in the order determined by the
board of directors, or if there be no such determination, then in the order of
their most recent election or appointment) shall, in the absence of the
secretary or in the event of the disability of the secretary, perform the duties
and exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors or the president may from time
to time prescribe.
Section 10. Treasurer. The treasurer shall (a) have custody of the
---------- ---------
corporate funds and securities, (b) keep full and accurate accounts of receipts
and disbursements in books belonging to the corporation, (c) deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositaries as may be designated by the board of directors, (d) disburse
the funds of the corporation as may be ordered by the board of directors, taking
proper vouchers for such disbursements, (e) render to the president and the
board of directors, at its regular meetings, or when the board of directors so
requests, an account of all the transactions of the treasurer and of the
financial condition of the corporation, and (f) perform such other duties and
have such other powers as the board of directors or the president may from time
to time prescribe.
Section 11. Assistant Treasurers. The assistant treasurer (or if
---------- --------------------
there shall be more than one, the assistant treasurers in the order determined
by the board of directors, or if there be no such determination, then in the
order of their most recent election or appointment) shall, in the absence of the
treasurer or in the event of the disability of the treasurer, perform the duties
and exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors or the president may from time
to time prescribe.
7
ARTICLE VI
STOCK CERTIFICATES
Section 1. Right of Holder to Certificate. Every holder of stock in
--------- ------------------------------
the corporation shall be entitled to have a certificate signed by, or in the
name of the corporation by, the president or a vice-president and the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by the holder in the
corporation. If the corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate a statement that the corporation will furnish, without charge
to each stockholder who so requests, the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences or rights.
Section 2. Facsimile Signatures. Any or all of the signatures on the
--------- --------------------
certificate may be facsimile. In the event any officer who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer before such certificate is issued, the certificate may be issued by
the corporation with the same effect as if he were such officer at the date of
issue.
Section 3. Lost Certificates. The board of directors may direct a
--------- -----------------
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issuance of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or the legal representative of the owner, to advertise the same in
such manner as it shall require or to give the corporation a bond in such sum as
it may direct as indemnity against any claim that may be made against the
corporation in connection with the certificate alleged to have been lost, stolen
or destroyed, or both.
Section 4. Registration of Transfers. Upon surrender to the
--------- -------------------------
corporation or the transfer agent of the corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession, assignation or
authority to transfer, the corporation or its transfer agent shall issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its stock records.
8
Section 5. Record Date. In order that the corporation may determine
--------- -----------
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
Section 6. Registered Stockholders. The corporation shall be
--------- -----------------------
entitled to recognize the exclusive right of a person registered in its stock
records as the owner of shares to receive dividends, and to vote as such owner,
and to hold liable for calls and assessments a person registered on its books as
the owner of shares, and shall not be bound to recognize any equitable or other
claim to or interest in such shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise required
by law.
ARTICLE VII
OTHER PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
--------- ---------
corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation and requirements of law.
Section 2. Signatures on Checks and Notes. All checks or demands for
--------- ------------------------------
money and notes of the corporation shall be signed by such officer or officers
or such other person or persons as the board of directors may from time to time
designate.
Section 3. Fiscal Year. The fiscal year of the corporation shall end
--------- -----------
on ____.
Section 4. Seal. The corporation shall have no seal.
---------- ----
Section 5. Indemnification of Directors, Officers and Others. Each
---------- -------------------------------------------------
person who is or was a director or officer of the corporation or a subsidiary of
the corporation and each person who serves or served at the request of the
corporation as a director or officer (or equivalent) of another corporation,
partnership, joint venture, trust or other enterprise (and the heirs, executors,
administrators and estates of any such persons), shall be indemnified by the
corporation in accordance with, and to the fullest extent authorized by, the
provisions of the General Corporation Law of the State of Delaware as it may
from time to time be amended,
9
except as to any action, suit or proceeding brought by or on behalf of the
director or officer of the corporation without prior approval of the board of
directors. Each person who is or was an employee or agent of this corporation,
and each person who serves or has served as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, may be
similarly indemnified at the discretion of the board of directors. The
indemnification provided by this section 5 shall not be deemed exclusive of any
other rights to which a person seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office.
ARTICLE VIII
AMENDMENTS
These bylaws may be altered, amended or repealed or new bylaws may be
adopted by the stockholders or by the board of directors, when such power is
conferred upon the board of directors by the Certificate of Incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new bylaws was contained in
the notice of such special meeting.
10
EXHIBIT D
FORM OF NACO AFFILIATE LETTER
-----------------------------
ABC Rail Products Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NACO, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger, dated as of
September 17, 1998 (the "Merger Agreement"), between NACO, Inc., a Delaware
corporation ("NACO"), ABC Rail Products Corporation, a Delaware corporation
("ABC"), and ABCR Acquisition Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of ABC ("Merger Subsidiary"), the Merger Subsidiary will merge
with and into NACO and NACO will become a wholly owned subsidiary of ABC (the
"Merger"). As a result of the Merger, the undersigned will be entitled to
receive shares of common stock, par value $0.01 per share, of ABC (the "ABC
Common Stock") in exchange for shares owned by the undersigned of common stock,
par value $0.01 per share, of NACO (the "NACO Common Stock").
The undersigned represents to ABC that the undersigned owns ________ shares
(the "NACO Affiliate Shares") of NACO Common Stock. The undersigned hereby
irrevocably agrees to attend, in person or by proxy, the meeting of NACO's
stockholders relating to the vote on the Merger Agreement and the transactions
contemplated thereby and any and all adjournments thereof, and hereby
irrevocably agrees to vote (or cause to be voted) all of the NACO Affiliate
Shares and any other voting securities of NACO, whether issued heretofore or
hereafter, that the undersigned owns or has the right to vote, for the approval
and adoption of the Merger Agreement and the transactions contemplated thereby.
The undersigned confirms that such agreement to attend and vote is coupled with
an interest. The undersigned revokes any and all previous proxies with respect
to the NACO Affiliate Shares and/or any other voting securities of NACO owned by
the undersigned.
D-1
The undersigned acknowledges that the undersigned may be deemed an
"affiliate" of NACO within the meaning of Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), by the
Securities and Exchange Commission (the "SEC"), and may be deemed an "affiliate"
of NACO for purposes of qualifying the Merger for pooling of interests
accounting treatment under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations, although nothing contained herein should
be construed as an admission of either such fact.
If in fact the undersigned were an affiliate of NACO under the Securities
Act, the undersigned's ability to sell, assign or transfer the ABC Common Stock
received by the undersigned in exchange for any shares of NACO Common Stock in
connection with the Merger may be restricted unless such transaction is
registered under the Securities Act or an exemption from such registration is
available. The undersigned understands that such exemptions are limited and the
undersigned has obtained or will obtain advice of counsel as to the nature and
conditions of such exemptions, including information with respect to the
applicability to the sale of such securities of Rules 144 and 145(d) promulgated
under the Securities Act.
The undersigned hereby represents to and covenants with ABC that the
undersigned will not sell, assign, transfer or otherwise dispose of any of the
ABC Common Stock received by the undersigned in exchange for shares of NACO
Common Stock in connection with the Merger except (i) pursuant to an effective
registration statement under the Securities Act, (ii) in conformity with the
volume and other limitations of Rule 145 promulgated under the Securities Act or
(iii) in a transaction which, in the opinion of counsel of ABC or as described
in a "no-action" or interpretive letter from the Staff of the SEC specifically
issued with respect to a transaction to be engaged in by the undersigned, is not
required to be registered under the Securities Act.
The undersigned understands that, except as provided in the Registration
Rights Agreement to be entered into by ABC and, among others, the undersigned,
ABC is under no obligation to register the sale, assignment, transfer or other
disposition of the ABC Common Stock to be received by the undersigned in the
Merger or to take any other action necessary in order to make compliance with an
exemption from such registration available.
The undersigned hereby further represents to and covenants with NACO and
ABC that the undersigned has not, within the preceding 30 days, sold, assigned,
transferred or otherwise disposed of any shares of NACO Common Stock held by the
undersigned and that the undersigned will not sell, assign, transfer or
otherwise dispose of any ABC Common Stock held by the undersigned, received by
the undersigned in connection with the Merger, or otherwise acquired by the
undersigned after the date hereof, until after such time as results covering at
least 30 days of post-Merger combined operations of NACO and ABC have been
published by ABC in the form of a quarterly earnings report, an effective
registration statement filed with the SEC, a report to the SEC on Form 10-K, 10-
Q or 8-K, or any other public filing or announcement which includes such
combined results of operations, except as would not otherwise reasonably be
expected to adversely affect the qualification of the Merger as a pooling-of-
interests.
D-2
ABC covenants that it will take all such actions as may be reasonably
available to it to permit the sale, assignment, transfer or other disposition of
ABC Common Stock by the undersigned under Rule 145 in accordance with the terms
thereof.
The undersigned acknowledges and agrees that the legend set forth below
will be placed on certificates representing the shares of ABC Common Stock
received by the undersigned in connection with the Merger or held by a
transferee thereof, which legend will be removed by delivery of substitute
certificates upon evidence of compliance with Rule 145 under the Securities Act
and, if requested by ABC, receipt of an opinion in form and substance reasonably
satisfactory to ABC from counsel reasonably satisfactory to ABC to the effect
that such legend is no longer required for purposes of the Securities Act.
There will be placed on the certificates for ABC Common Stock issued to the
undersigned, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate are issued pursuant to a
business combination which is being accounted for as a pooling of
interests, in a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares have not been acquired by the
holder with a view to, or for resale in connection with, any distribution
thereof within the meaning of the Securities Act of 1933. The shares may
not be sold, assigned, transferred or otherwise disposed of (i) until such
time as ABC shall have published financial results covering at least 30
days of combined operations after the Effective Time and (ii) except in
accordance with an exemption from the registration requirements of the
Securities Act of 1933."
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the sale, assignment, transfer or other disposition of ABC Common Stock and
(ii) the receipt by ABC of this letter is an inducement to ABC's obligations to
consummate the Merger.
Very truly yours,
______________________________
Name:
Dated: _________, 199__
D-3
EXHIBIT E
FORM OF ABC AFFILIATE LETTER
----------------------------
ABC Rail Products Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NACO, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Pursuant to the terms of the Agreement and Plan of Merger, dated as of
September 17, 1998 (the "Merger Agreement"), between NACO, Inc., a Delaware
corporation ("NACO"), ABC Rail Products Corporation, a Delaware corporation
("ABC"), and ABCR Acquisition Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of ABC ("Merger Subsidiary"), the Merger Subsidiary will merge
with and into NACO and NACO will become a wholly owned subsidiary of ABC (the
"Merger").
The undersigned represents to NACO that the undersigned owns ________
shares (the "ABC Affiliate Shares") of common stock, par value $0.01 per share,
of ABC (the "ABC Common Stock"). The undersigned hereby irrevocably agrees to
attend, in person or by proxy, the meeting of ABC's stockholders relating to the
vote on the Merger Agreement and the transactions contemplated thereby, and any
and all adjournments thereof, and hereby irrevocably agrees to vote (or cause to
be voted) all of the ABC Affiliate Shares and any other voting securities of
ABC, whether issued heretofore or hereafter, that the undersigned owns or has
the right to vote, for the approval and adoption of the Merger Agreement and the
transactions contemplated thereby. The undersigned confirms that such agreement
to attend and vote is coupled with an interest. The undersigned revokes any and
all previous proxies with respect to the ABC Affiliate Shares and/or any other
voting securities of ABC owned by the undersigned.
The undersigned acknowledges that the undersigned may be deemed an
"affiliate" of ABC for purposes of qualifying the Merger for pooling of
interests accounting treatment under Opinion 16 of the Accounting Principles
Board and applicable rules and regulations of the Securities and
E-1
Exchange Commission, although nothing contained herein should be construed as an
admission of such fact.
The undersigned represents to and covenants with NACO and ABC that the
undersigned has not, within the preceding 30 days, sold, assigned, transferred
or otherwise disposed of any shares of ABC Common Stock held by the undersigned
and that the undersigned will not sell, assign, transfer or otherwise dispose of
any ABC Common Stock held or hereafter acquired by the undersigned until after
such time as results covering at least 30 days of post-Merger combined
operations of NACO and ABC have been published by ABC in the form of a quarterly
earnings report, an effective registration statement filed with the SEC, a
report to the SEC on Form 10-K, 10-Q or 8-K, or any other public filing or
announcement which includes such combined results of operations, except as would
not otherwise reasonably be expected to adversely affect the qualification of
the Merger as a pooling-of-interests.
The undersigned acknowledges that (i) the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the sale, assignment, transfer or other disposition of ABC Common Stock and
(ii) the receipt by NACO of this letter is an inducement to NACO's obligations
to consummate the Merger.
Very truly yours,
______________________________
Name:
Dated: _________, 199__
E-2
EXHIBIT F
FORM OF ABC TAX CERTIFICATE
---------------------------
The undersigned HEREBY CERTIFIES to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ and to ▇▇▇▇▇,
Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ that the undersigned (a) is familiar with the terms and
conditions of all of the transactions described in an opinion letter of ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ (the "▇▇▇▇▇▇ Opinion Letter") and an opinion letter of ▇▇▇▇▇,
Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ (together, the "Opinion Letters"), each dated the date
hereof, concerning the Federal income tax consequences of the proposed Merger;
and (b) is aware that (i) this Certificate will be relied on by ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇ in rendering its Opinion Letter to NACO, Inc. ("NACO") and by ▇▇▇▇▇, Day,
▇▇▇▇▇▇ & ▇▇▇▇▇ in rendering its Opinion Letter to ABC Rail Products Corporation
("ABC") concerning the Federal income tax consequences of the proposed Merger
described in the Opinion Letters, and (ii) the certifications and
representations recited herein will survive the closing of the proposed
transaction in the Opinion Letters. Except as otherwise provided herein,
capitalized terms used herein shall have the meanings ascribed to them in the
Schiff Opinion Letter.
The undersigned HEREBY FURTHER CERTIFIES to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ and to
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ as follows:
a. The fair market value of the ABC Common Stock and other consideration
received by each NACO stockholder will be approximately equal to the fair market
value of the NACO Common Stock surrendered in the exchange.
b. Following the Merger, NACO will hold at least 90% of the fair market
value of its net assets and at least 70% of the fair market value of its gross
assets and at least 90% of the fair market value of Merger Subsidiary's net
assets and at least 70% of the fair market value of Merger Subsidiary's gross
assets held immediately prior to the Merger. For purposes of this
representation, amounts paid by Merger Subsidiary or NACO to dissenters, amounts
paid by Merger Subsidiary or NACO to stockholders who receive cash or other
property, Merger Subsidiary or NACO assets used to pay its reorganization
expenses and all redemptions and distributions (except for regular, normal
dividends) made by Merger Subsidiary or NACO immediately preceding the transfer,
will be included as assets of Merger Subsidiary or NACO, respectively, held
immediately prior to the Merger.
c. Prior to the Merger, ABC will be in control of Merger Subsidiary
within the meaning of Section 368(c)(1) of the Code.
d. Following the Merger, NACO will not issue additional shares of its
stock that would result in ABC losing control of NACO within the meaning of
Section 368(c)(1) of the Code.
e. Neither ABC nor any corporation which is part of ABC's affiliated
group has a plan or intention to reacquire any of the stock issued in the
Merger.
F-1
f. ABC has no plan or intention to liquidate NACO; to merge NACO with and
into another corporation; to sell or otherwise dispose of the NACO Common Stock;
or to cause NACO to sell or otherwise dispose of any of its assets or of any of
the assets acquired from Merger Subsidiary, except for dispositions made in the
ordinary course of business or transfers described in Section 368(a)(2)(C) of
the Code or dispositions which will not violate the "Substantially All" test
described in Paragraph (b) above.
g. The liabilities of Merger Subsidiary assumed by NACO and the
liabilities to which the transferred assets of Merger Subsidiary are subject
were incurred by Merger Subsidiary in the ordinary course of business.
h. ABC and Merger Subsidiary will pay their respective expenses, if any,
incurred in connection with the Merger.
i. There is no intercorporate indebtedness existing between ABC and NACO
or between Merger Subsidiary and NACO that was issued, acquired, or will be
settled at a discount.
j. ABC is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
k. No Merger Subsidiary shares will be issued in the Merger to NACO
stockholders.
l. None of the compensation received by any stockholder-employee of NACO
will be separate consideration for, or allocable to, any of their NACO Common
Stock; none of the ABC Common Stock received by any stockholder-employee will be
separate consideration for, or allocable to, any employment agreement; and the
compensation paid to any stockholder-employee will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's-length for similar services.
m. A Certificate of Merger relating to the Merger of Merger
Subsidiary with and into NACO will be filed with the Secretary of State of the
State of Delaware.
Dated:______________ ABC RAIL PRODUCTS CORPORATION
By:___________________________________
Name:
Title:
F-2
EXHIBIT G
FORM OF NACO TAX CERTIFICATE
----------------------------
The undersigned HEREBY CERTIFIES to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ and to ▇▇▇▇▇,
Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ that the undersigned (a) is familiar with the terms and
conditions of all of the transactions described in an opinion letter of ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ (the "▇▇▇▇▇▇ Opinion Letter") and an opinion letter of ▇▇▇▇▇,
Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ (together, the "Opinion Letters"), each dated the date
hereof; and (b) is aware that (i) this Certificate will be relied on by ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ in rendering its Opinion Letter to NACO, Inc. ("NACO") and by
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ in rendering its Opinion Letter to ABC Rail Products
Corporation ("ABC") concerning the Federal income tax consequences of the
proposed Merger described in the Opinion Letters, and (ii) the certifications
and representations recited herein will survive the closing of the proposed
transaction in the Opinion Letters. Except as otherwise provided herein,
capitalized terms used herein shall have the meanings ascribed to them in the
Schiff Opinion Letter.
The undersigned HEREBY FURTHER CERTIFIES to ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ and to
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇ as follows:
a. The fair market value of the ABC Common Stock and other consideration
received by each NACO stockholder will be approximately equal to the fair market
value of the NACO Common Stock surrendered in the exchange.
b. NACO and NACO stockholders will pay their respective expenses, if any,
incurred in connection with the Merger.
c. There is no intercorporate indebtedness existing between ABC and NACO
or between Merger Subsidiary and NACO that was issued, acquired, or will be
settled at a discount.
d. NACO is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
e. NACO is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of Section 368(a)(3)(A) of the Code.
f. On the date of the Merger, the fair market value of the assets of NACO
will equal or exceed the sum of its liabilities, plus the amount of liabilities,
if any, to which the transferred assets are subject.
▇-▇
▇. ▇▇▇▇ of the compensation received by any stockholder-employee of NACO
will be separate consideration for, or allocable to, any of their NACO Common
Stock; none of the ABC Common Stock received by any stockholder-employee will be
separate consideration for, or allocable to, any employment agreement; and the
compensation paid to any stockholder-employee will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's-length for similar services.
Dated:____________________ NACO, Inc.
By:____________________________________
Name:
Title:
G-2
EXHIBIT H
FORM OF
REGISTRATION RIGHTS AGREEMENT
-----------------------------
This Registration Rights Agreement (this "Agreement") is entered into this
____ day of _______, 1998 by and among ABC Rail Products Corporation, a Delaware
corporation ("ABC") and the stockholders listed on the signature page of this
Agreement (each, a "Stockholder" and collectively, the "Stockholders").
WHEREAS, ABC is a party to an Agreement and Plan of Merger with NACO, Inc.,
a Delaware corporation ("NACO"), and ABCR Acquisition Sub, Inc., a Delaware
corporation and wholly owned subsidiary of ABC ("Merger Subsidiary") dated as of
September 17, 1998 (the "Merger Agreement");
WHEREAS, pursuant to the merger (the "Merger") contemplated by the Merger
Agreement all issued and outstanding shares of common stock, par value $.01 per
share, of NACO ("NACO Common Stock"), including shares held by the Stockholders,
will be converted at the Effective Time of the Merger into shares of common
stock, par value $0.01 per share, of ABC ("ABC Common Stock");
WHEREAS, the parties hereto desire to make provisions for the registration
of possible resales of ABC Common Stock received in the Merger by the
Stockholders who otherwise are restricted by Rule 144 under the Act in their
resales of ABC Common Stock; and
WHEREAS, the undertakings and agreements of ABC contained herein are a
material inducement to the Stockholders to consummate and effect the
transactions contemplated by the Merger Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
(a) Definitions. For purposes of this Agreement:
-----------
(i) The term "Act" means the Securities Act of 1933, as heretofore
or hereafter amended;
(ii) The terms "register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document;
(iii) The term "Registrable Securities" means the shares of ABC
Common Stock issued to the Stockholders in the Merger, and any securities
paid, issued or distributed in
H-1
respect of such shares by way of stock dividend or distribution or stock
split or in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or
otherwise.
(iv) The term "Sellers" means the Stockholders who elect to join in
a registration effected pursuant to this Agreement; and
(v) All other capitalized terms not defined herein shall have the
meanings assigned to them in the Merger Agreement.
(b) Demand Rights.
-------------
(i) If ABC shall receive at any time after 180 days after the
Effective Time of the Merger, a written request from Stockholders holding
at least two percent (2%) of the then outstanding shares of ABC Common
Stock that ABC file a registration statement under the Act for a public
offering of all or a part of the Registrable Securities (which written
request shall specify the aggregate number of shares of Registrable
Securities requested to be registered), then ABC shall effect such
registration of Registrable Securities in accordance with this Agreement;
provided, however, that ABC shall not be required to take any action
pursuant to this Paragraph (b) unless the requested registration relates to
at least 360,000 shares of Registrable Securities.
(ii) If the Sellers intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise
ABC as a part of the request made pursuant to the foregoing Subparagraph
(b)(i), in which event the managing underwriter shall be selected by ABC
with the prior written consent of the Sellers holding a majority in number
of the Registrable Securities covered by the registration request.
(iii) ABC may postpone a registration requested pursuant to
Subparagraph (b)(i) for a period not to exceed 90 days if, at the time ABC
receives a registration request pursuant to Subparagraph (b)(i), ABC is
engaged in confidential negotiations or other confidential business
activities (a "Confidential Transaction"), the disclosure of which, based
upon the written advice of outside counsel, would be required in the
registration statement, and the Board of Directors of ABC determines in
good faith that such disclosure would be materially detrimental to ABC and
its stockholders or would have a material adverse effect on the
Confidential Transaction.
(iv) (a) ABC will not include in any demand registration pursuant to
this Paragraph (b) any securities which are not Registrable Securities
without the prior written consent of the Sellers holding a majority in
number of the Registrable Securities covered by the registration request,
subject to ABC's obligations existing at the date hereof to register
additional shares of ABC Common Stock as set forth on Exhibit A hereto.
H-2
(b) If a demand registration pursuant to this Paragraph (b) is
an underwritten offering and the managing underwriter advises ABC in
writing that in its opinion the number of Registrable Securities requested
to be included in such offering and, if permitted, the number of securities
which are not Registrable Securities requested to be included in such
offering exceed the number of securities which can be sold in an orderly
manner in such offering within a price range acceptable to the Sellers
holding a majority in number of Registrable Securities covered by the
registration request, ABC will include in such registration, first, prior
-----
to the inclusion of any securities which are not Registrable Securities,
the number of Registrable Securities requested to be included which in the
opinion of such underwriter can be sold in an orderly manner within the
price range of such offering, pro rata (as nearly as practicable) among the
Sellers on the basis of the number of Registrable Securities proposed to be
sold by each such Seller; and second, the number of securities which are
------
not Registrable Securities requested to be included which in the opinion of
such underwriter can be sold in an orderly manner within the price range of
such offering, pro rata (as nearly as practicable) among the holders of
such securities on the basis of the number of securities proposed to be
sold by each such holder.
(v) Upon the closing of a demand registration pursuant to this
Paragraph (b), each Seller agrees not to effect any public sale or
distribution of equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, of ABC for a period of at
least 90 days after such closing.
(vi) ABC agrees:
(a) not to effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the 25-day period prior to and
during the 90-day period beginning on the effective date of any
underwritten registration under this Paragraph (b) (except pursuant to
(i) registrations on Form S-8 or any successor form, and (ii)
registrations on a form which does not include substantially the same
information as would be required to be included in a registration
statement covering the sale of the Registrable Securities or which
does not permit the inclusion of shares of persons other than ABC)
unless the underwriters managing the registered public offering
otherwise agree, and
(b) after the date hereof not to grant, directly or indirectly,
any other persons the right to request ABC to register any equity
securities of ABC in excess of the number of shares equal to four
percent (4%) of the then outstanding shares of ABC Common Stock;
(c) PiggyBack Rights. If ABC proposes to register shares of its Common
----------------
Stock for a public offering (including an offering by stockholders other than
the Sellers but excluding an offering to employees on Form S-8 or any other
offering on a form which does not include substantially the same information as
would be required to be included in a registration statement
H-3
covering the sale of the Registrable Securities or which does not permit the
inclusion of shares of persons other than ABC), ABC shall promptly give the
Stockholders written notice of such proposed registration. Upon the written
request of any Stockholder given within 20 days after mailing of such notice by
ABC, ABC shall, subject to the provisions of Paragraph (g) hereof, use its
reasonable best efforts to register under the Act all of the Registrable
Securities that any Stockholder has requested to have included. The Sellers'
participation in a registration pursuant to this Paragraph (c) shall be
conditioned upon the Sellers' complete and full cooperation on a timely basis
with all requirements reasonably established by ABC and/or the managing
underwriter in the course of such registration.
(d) Obligations of ABC. Whenever required under this Agreement to effect
------------------
the registration of any Registrable Securities, ABC shall, as expeditiously as
possible:
(i) Prepare and file with the Securities and Exchange Commission
(the "SEC") (or any successor agency) a registration statement with respect
to such Registrable Securities (provided that before filing a registration
statement or prospectus or any amendments or supplements thereto, ABC will
furnish on a timely basis to the counsel selected by Sellers copies of all
such documents required to be filed, which documents in the case of a
registration under Paragraph (b) will be subject to review by such
counsel), and use its reasonable best efforts to cause such registration
statement to become effective, and, upon the request of the Sellers, use
its reasonable best efforts to keep such registration statement effective
for up to 120 days;
(ii) Prepare and file with the SEC such supplements and amendments
to such registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities
covered by such registration statement during an effective period, if
requested by the Sellers, of not to exceed 120 continuous days;
(iii) Furnish to the Sellers such numbers of copies of the
prospectus, including a preliminary prospectus in conformity with the
requirements of the Act, and such other documents as the Sellers may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them;
(iv) Use its reasonable best efforts to expeditiously register or
qualify the Registrable Securities under such securities or Blue Sky laws
of such jurisdictions within the United States as shall be appropriate or
reasonably requested by the Sellers;
(v) In the case of a registration under Paragraph (b), enter into
such customary agreements (including underwriting agreements in customary
form) and take all such other actions as the holders of a majority of the
shares of Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities, including, without limitation:
H-4
(a) making such representations and warranties to the
underwriters in form, substance and scope, reasonably satisfactory to
the managing underwriter, as are customarily made by issuers to
underwriters in underwritten secondary offerings;
(b) obtaining opinions and updates thereof of counsel, which
counsel and opinions to ABC (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriter, addressed to the
managing underwriter covering the matters customarily covered in
opinions requested in underwritten secondary offerings and such other
matters as may be reasonably requested by the managing underwriter;
(c) causing the underwriting agreements to set forth in full the
indemnification provisions and procedures of Paragraph (j) below (or
such other substantially similar provisions and procedures as the
managing underwriter shall reasonably request) with respect to all
parties to be indemnified pursuant to said Paragraph (j); and
(d) delivering such documents and certificates as may be
reasonably requested by the Sellers to evidence compliance with the
provisions of this Subparagraph (d)(v) and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by ABC; and
(vi) Promptly notify each Seller at any time when a prospectus
relating thereto is required to be delivered under the Act, of the
happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or
omits any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
and, at the request of any such Seller, ABC will promptly prepare and
furnish such Seller a supplement or amendment to such prospectus so that,
as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(e) Seller Information. It shall be a condition precedent to the
------------------
obligations of ABC to take any action pursuant to this Agreement that the
Sellers shall furnish to ABC such information regarding themselves, the
Registrable Securities held by them, and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.
(f) Expenses. ABC shall pay all fees and expenses incurred in connection
--------
with any registration pursuant to this Agreement, including, without limitation,
all registration, filing and qualification fees and expenses, accounting fees,
fees and disbursements of counsel for ABC, printing fees, listing fees,
miscellaneous travel and other out-of-pocket expenditures incurred by ABC.
Sellers shall pay all fees and disbursements of counsel for Sellers and all
underwriting
H-5
discounts and all commissions or brokerage fees applicable to the Registrable
Securities sold by them and all miscellaneous travel and other out-of-pocket
expenditures incurred by them.
(g) Underwriting Requirements. In connection with any offering involving
-------------------------
an underwriting of shares, ABC shall not be required under Paragraph (c) to
include any of the Registrable Securities in such underwriting unless Sellers
accept the terms of the underwriting as agreed upon between ABC and the
underwriters selected by it, and then only in such quantity as will not, in the
opinion of the underwriters, jeopardize the success of the offering by ABC. If
the total number of Registrable Securities that Sellers request be included in
such offering exceeds (when combined with the securities being offered by ABC
and any other selling stockholders having rights to participate in such
offering) the number of securities that the underwriters reasonably believe
compatible with the success of the offering by ABC, then ABC shall be required
to include in the offering only that number of securities, including Registrable
Securities, which the underwriters believe will not jeopardize the success of
the offering by ABC, the securities so included to be allocated pro rata (as
nearly as practicable) among the Sellers and other selling stockholders on the
basis of the number of securities proposed to be sold by each.
(h) Successors and Assigns. The registration rights provided by this
----------------------
Agreement shall be binding upon and inure to the benefit of ABC (and its
successors and assigns), and the Stockholders (and any affiliates thereof to
whom the Registrable Securities are transferred, sold or disposed). Except as
expressly stated in the foregoing sentence, the registration rights provided by
this Agreement may not be assigned by the Stockholders without the prior written
consent of ABC.
(i) Limits on Rights. The right of the Stockholders to require a
----------------
registration pursuant to Paragraph (b) shall be limited to two registrations.
Participation in a registration pursuant to Paragraph (c) shall be limited, as
to any Stockholder, to a single registration and any Stockholder participating
in a registration pursuant to Paragraph (c) shall have no right to participate
in any further registration pursuant thereto unless such Stockholder was not
allowed to register at least seventy-five percent (75%) of the Registrable
Securities requested for inclusion in such registration due to the operation of
Paragraph (g) above. The failure of the Sellers to sell all of the Registrable
Securities offered in a registration effected pursuant to Paragraph (b) shall
not entitle any of the Sellers to require or participate in any further
registration under Paragraph (b) of ABC securities.
(j) Indemnification.
---------------
(i) ABC agrees to indemnify, to the extent permitted by law, each
holder of Registrable Securities, its officers, directors, stockholders,
partners and employees and each person who controls (within the meaning of
the Act) such holder against all losses, claims, damages, liabilities and
expenses whatsoever, as incurred, and reasonable fees and expenses of
counsel incurred in investigating, preparing or defending against, or
aggregate amounts paid in settlement of any litigation, action,
investigation or proceeding by any governmental agency or body, commenced
or threatened, in each case whether or not a party, or any claim whatsoever
based upon, caused by or arising out of any untrue or alleged untrue
statement of material fact contained in any registration statement,
prospectus or preliminary prospectus
H-6
or any amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to ABC by
such holder expressly for use therein or by such holder's failure to
deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after ABC has furnished such holder with
a sufficient number of copies of the same. In connection with an
underwritten offering, ABC will indemnify such underwriters, their officers
and directors and each person who controls (within the meaning of the Act)
such underwriters to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
(ii) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder will furnish
to ABC in writing such information as ABC reasonably requests for use in
connection with any such registration statement or prospectus and, to the
extent permitted by law, will indemnify ABC, its directors, stockholders,
employees and officers and each person who controls (within the meaning of
the Act) ABC against any losses, claims, damages, liabilities and expenses
whatsoever, as incurred, and reasonable fees and expenses of counsel
incurred in investigating, preparing or defending against, or aggregate
amounts paid in settlement of any litigation, action, investigation or
proceeding by any governmental agency or body, commenced or threatened, in
each case whether or not a party, or any claim whatsoever based upon,
caused by or arising out of any untrue or alleged untrue statement of
material fact contained in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in
any information so furnished in writing by such holder expressly for such
purpose and is reasonably relied upon in conformity with such written
information.
(iii) Any person entitled to indemnification hereunder will (a) give
reasonably prompt written notice to the indemnifying party of any claim
with respect to which he or it seeks indemnification and (b) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense
is assumed, the indemnifying party will not be subject to any liability for
any settlement made by the indemnified party without his or its consent
(but such consent will not be unreasonably withheld). An indemnifying party
who is not entitled to, or elects not to, assume the defense of a claim
will not be obligated to pay the fees and expenses of more than one counsel
for all parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other
of such indemnified parties with respect to such claim.
H-7
(iv) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling
person of such indemnified party and will survive the transfer of
securities. ABC also agrees to make such provisions, as are reasonably
requested by any indemnified party, for contribution to such party in the
event ABC's indemnification is unavailable for any reason. Such right to
contribution shall be in such proportion as is appropriate to reflect the
relative fault of and benefits to ABC on the one hand and the Sellers on
the other (in such proportions that the Sellers are severally, not jointly,
responsible for the balance), in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative benefits to the indemnifying party and indemnified parties shall
be determined by reference to, among other things, the total proceeds
received by the indemnifying party and the indemnified parties in
connection with the offering to which losses, claims, damages, liabilities
or expense relate. The relative fault of the indemnifying party and
indemnified parties shall be determined by reference to, among other
things, whether the action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied
by, such indemnifying party or the indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such action.
The parties hereto agree that it would not be just or equitable
if contribution pursuant hereto were determined by pro rata allocation or
by any other method of allocation which does not take account of the
equitable considerations referred to in the immediate preceding paragraph.
No person found guilty of any fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not found guilty of such fraudulent misrepresentation.
Notwithstanding the provisions of this Subparagraph (j)(iv), no Seller
shall be required to contribute any amount in excess of the net amount of
proceeds received by such Seller from the sale of Registrable Securities
pursuant to the registration statement.
(k) Entire Agreement; Modification; Amendment. This Agreement constitutes
-----------------------------------------
the entire Agreement between the parties covering the subject matter hereof and
supersedes all prior agreements or understandings whether written or oral. This
Agreement may not be modified or amended other than in a writing signed by ABC
and Stockholders holding a majority of the Registrable Securities.
(l) No Inconsistent Agreements. ABC will not hereafter enter into any
--------------------------
agreement with respect to its securities which is inconsistent with or violates
the rights granted to the holders of Registrable Securities in this Agreement.
(m) Adjustments Affecting Registrable Securities. ABC will not take any
--------------------------------------------
action, or permit any change to occur, with respect to its securities which
would materially and adversely affect the ability of the holders of Registrable
Securities to include such Registrable Securities in a
H-8
registration undertaken pursuant to this Agreement provided that this Paragraph
(m) shall not apply to actions or changes with respect to ABC's business,
earnings, revenues, financial conditions or prospects.
(n) Termination. This Agreement, other than the provisions of Paragraph
-----------
(j) above, shall terminate on the sixth anniversary of the date hereof;
provided, however, that such termination shall not be effective until completion
-------- -------
of any registration of Registrable Securities requested prior to such sixth
anniversary in accordance with this Agreement; and provided further, that with
----------------
respect to any Stockholder, this Agreement shall terminate on the date on which
such Stockholder may sell Registrable Securities in accordance with Rule
145(d)(2) or (3) under the Act.
(o) Remedies. Any person having rights under any provision of this
--------
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of the
Agreement.
(p) Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provisions will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
(q) Descriptive Headings. The descriptive headings of this Agreement are
--------------------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(r) Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of Delaware applicable to contracts
executed in and to be performed entirely within the State, without regard to the
conflicts of laws provision thereof.
(s) Notices. All notices and other communications given or made pursuant
-------
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date of receipt and shall be delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested), sent
by overnight courier or sent by telecopy, to the Parties at the following
addresses or telecopy numbers (or at such other address or telecopy number for a
Party as shall be specified by like notice):
(a) If to ABC:
ABC Rail Products Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇-▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to a Stockholder, at the address specified by such holder to
ABC.
H-10
IN WITNESS WHEREOF, this Agreement has been entered into by the parties
hereto as of the date first written above.
ABC RAIL PRODUCTS CORPORATION
By: __________________________________
Name:
Title:
STOCKHOLDERS:
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
____________________________________
▇▇▇▇ ▇. ▇▇▇▇
H-11
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________________
▇▇▇▇ ▇. ▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. Streams
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
H-12
EXHIBIT I
FORM OF OPINION OF COUNSEL TO ABC
---------------------------------
(1) Each of ABC and Merger Subsidiary is a corporation duly incorporated,
validly existing, and in good standing under the laws of the State of Delaware.
(2) Each of ABC and Merger Subsidiary has corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. Each of ABC and Merger Subsidiary has the corporate power and
authority to execute, deliver and perform its obligations under the Merger
Agreement and to consummate the transactions contemplated thereby.
(3) The Merger Agreement and the performance by ABC and Merger Subsidiary
of their respective obligations thereunder have been duly authorized by all
requisite corporate action on the part of ABC and Merger Subsidiary. The Merger
Agreement has been duly executed and delivered by, and is binding upon, ABC and
Merger Subsidiary. Upon filing of the Certificate of Merger with the Secretary
of State of Delaware, the Merger will be effective in accordance with the
General Corporation Law of the State of Delaware.
(4) Neither the execution and delivery by ABC and Merger Subsidiary of the
Merger Agreement nor the performance of their respective obligations thereunder
will (a) result in the violation of any statute or regulation (it being
understood that we are not expressing any opinion as to any Federal or state
securities laws, Federal or state antitrust laws or Federal or state
environmental laws), or any order or decree known to us of any court or
Governmental Authority binding upon ABC or Merger Subsidiary or their respective
properties, or (b) conflict with or result in a default or in the creation of a
lien under any of the provisions of ABC's Restated Certificate of Incorporation
or By-Laws or Merger Subsidiary's Certificate of Incorporation or By-Laws.
(5) The ABC Common Shares to be issued upon the Effective Time are duly
authorized and, upon filing of the Certificate of Merger with the Secretary of
State of Delaware in accordance with the General Corporation Law of the State of
Delaware, will be validly issued, fully paid and nonassessable.
EXHIBIT J
FORM OF OPINION OF COUNSEL TO NACO
----------------------------------
(1) NACO is a corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Delaware.
(2) NACO has corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted. NACO has
the corporate power and authority to execute, deliver and perform its
obligations under the Merger Agreement and to consummate the transactions
contemplated thereby.
(3) The Merger Agreement and the performance by NACO of its obligations
thereunder have been duly authorized by all requisite corporate action on the
part of NACO. The Merger Agreement has been duly executed and delivered by, and
is binding upon, NACO. Upon filing of the Certificate of Merger with the
Secretary of State of Delaware, the Merger will be effective in accordance with
the General Corporation Law of the State of Delaware.
(4) Neither the execution and delivery by NACO of the Merger Agreement nor
the performance of its obligations thereunder will (a) result in the violation
of any statute or regulation (it being understood that we are not expressing any
opinion as to any Federal or state securities laws, Federal or state antitrust
laws or Federal or state environmental laws), or any order or decree known to us
of any court or Governmental Authority binding upon NACO or their respective
properties, or (b) conflict with or result in a default or in the creation of a
lien under any of the provisions of NACO's Restated Certificate of Incorporation
or By-Laws.
(5) NACO has an authorized capitalization consisting of ______ shares of
Common Stock, ____ of which are issued and outstanding and _____ of which are
held as treasury shares. All of the issued and outstanding shares of Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable.