Exhibit 99.2
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EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
Dated as of September 10, 2003,
among
OPEN WHEEL RACING SERIES LLC,
OPEN WHEEL ACQUISITION CORPORATION
and
CHAMPIONSHIP AUTO RACING TEAMS, INC.
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TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger................................................. 1
SECTION 1.02. Closing.................................................... 2
SECTION 1.03. Effective Time............................................. 2
SECTION 1.04. Effects.................................................... 3
SECTION 1.05. Certificate of Incorporation and By-laws................... 3
SECTION 1.06. Directors.................................................. 3
SECTION 1.07. Officers................................................... 3
ARTICLE II
Effect on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
SECTION 2.01. Effect on Capital Stock.................................... 3
SECTION 2.02. Exchange of Certificates................................... 5
ARTICLE III
Representations and Warranties of the Company
SECTION 3.01. Organization, Standing and Power........................... 8
SECTION 3.02. Company Subsidiaries; Equity Interests..................... 9
SECTION 3.03. Capital Structure.......................................... 10
SECTION 3.04. Authority; Execution and Delivery; Enforceability.......... 12
SECTION 3.05. No Conflicts; Consents..................................... 13
SECTION 3.06. SEC Documents; Undisclosed Liabilities..................... 15
SECTION 3.07. Information Supplied....................................... 16
SECTION 3.08. Absence of Certain Changes or Events....................... 17
SECTION 3.09. Tax Matters................................................ 18
SECTION 3.10. Absence of Changes in Benefit Plans........................ 21
SECTION 3.11. ERISA Compliance........................................... 22
SECTION 3.12. Litigation................................................. 24
SECTION 3.13. Compliance with Applicable Laws............................ 24
SECTION 3.14. Environmental Matters...................................... 24
SECTION 3.15. Contracts.................................................. 25
SECTION 3.16. Intellectual Property Matters.............................. 28
SECTION 3.17. Brokers.................................................... 30
SECTION 3.18. Opinion of Financial Advisor............................... 30
SECTION 3.19. Insurance.................................................. 31
SECTION 3.20. Title to Property.......................................... 32
SECTION 3.21. Labor Matters.............................................. 32
ARTICLE IV
Representations and Warranties of Parent and Sub
SECTION 4.01. Organization, Standing and Power........................... 33
SECTION 4.02. Sub........................................................ 33
SECTION 4.03. Authority; Execution and Delivery; Enforceability.......... 33
SECTION 4.04. No Conflicts; Consents..................................... 34
SECTION 4.05. Information Supplied....................................... 35
SECTION 4.06. Brokers.................................................... 36
SECTION 4.07. Financing.................................................. 36
SECTION 4.08. Stock Ownership............................................ 36
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business by the Company......................... 37
SECTION 5.02. Company Takeover Proposals................................. 41
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of Proxy Statement; Stockholders Meeting....... 43
SECTION 6.02. Access to Information; Confidentiality..................... 45
SECTION 6.03. Reasonable Best Efforts; Notification...................... 46
SECTION 6.04. Stock Options.............................................. 47
SECTION 6.05. Indemnification............................................ 47
SECTION 6.06. Fees and Expenses.......................................... 48
SECTION 6.07. Public Announcements....................................... 49
SECTION 6.08. Transfer Taxes............................................. 49
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SECTION 6.09. Rights Agreements; Consequences if Rights Triggered........ 49
SECTION 6.10. No Additional Representations.............................. 50
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation To Effect The Merger. 50
SECTION 7.02. Conditions to Obligations of Parent and Sub................ 51
SECTION 7.03. Conditions to Obligation of the Company.................... 53
SECTION 7.04. Frustration of Closing Conditions.......................... 53
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination................................................ 53
SECTION 8.02. Effect of Termination...................................... 56
SECTION 8.03. Amendment.................................................. 56
SECTION 8.04. Extension; Waiver.......................................... 56
SECTION 8.05. Procedure for Termination, Amendment, Extension or Waiver.. 57
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties.............. 58
SECTION 9.02. Notices.................................................... 58
SECTION 9.03. Definitions................................................ 59
SECTION 9.04. Interpretation; Disclosure Letters......................... 60
SECTION 9.05. Severability............................................... 61
SECTION 9.06. Counterparts............................................... 62
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries............. 62
SECTION 9.08. Governing Law.............................................. 62
SECTION 9.09. Assignment................................................. 62
SECTION 9.10. Enforcement; Waiver of Jury Trial.......................... 63
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Exhibit A Amended Certificate of Incorporation 65
iv
AGREEMENT AND PLAN OF MERGER dated as of September
10, 2003 (this "Agreement"), among OPEN WHEEL RACING
SERIES LLC, a Delaware limited liability company
("Parent"), OPEN WHEEL ACQUISITION CORPORATION, a Delaware
corporation and a wholly owned subsidiary of Parent
("Sub"), and CHAMPIONSHIP AUTO RACING TEAMS, INC., a
Delaware corporation (the "Company").
WHEREAS the Boards of Directors of each of the Company and Sub has
approved and declared advisable, and the Board of Managers of Parent has
approved, this Agreement and the merger of Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par
value $0.01 per share, of the Company (the "Company Common Stock"), including
the associated Company Rights (as defined in Section 3.03(a)), not owned by
Parent, Sub or the Company, other than the Appraisal Shares (as defined in
Section 2.01(d)), will be converted into the right to receive in cash the Per
Share Merger Consideration (as defined in Section 2.01(c) below); and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company
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at the Effective Time (as defined in Section 1.03). At the Effective Time, the
separate corporate existence of Sub shall cease and the Company shall continue
as the surviving corporation (the "Surviving Corporation") and shall succeed
to and assume all the rights and obligations of Sub in accordance with the
DGCL. The Merger and the other transactions contemplated by this Agreement are
referred to in this Agreement collectively as the "Transactions".
SECTION 1.02. Closing. The closing (the "Closing") of the Merger
shall take place at the offices of Cravath, Swaine & ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., New York City time, on the
business day following the satisfaction (or, to the extent permitted by Law
(as defined in Section 3.05(a)) waiver by the applicable party or parties of
the conditions set forth in Article VII (other than those conditions that by
their terms cannot be satisfied until the time of the Closing but subject to
the satisfaction (or, to the extent permitted by Law, waiver by the applicable
party or parties) of such conditions), or at such other place, time and date
as Parent and the Company shall agree in writing; provided, however, that if
all the conditions set forth in Article VII shall not have been satisfied (or,
to the extent permitted by applicable Law, waived by the applicable party or
parties) on such business day, then the Closing shall take place on the first
business day after the date on which all such conditions shall have been
satisfied (or, to the extent permitted by applicable Law, waived by the
applicable party or parties). The date on which the Closing occurs is referred
to in this Agreement as the "Closing Date".
SECTION 1.03. Effective Time. Prior to the Closing, the Company
shall prepare, and on the Closing Date or as soon as practicable thereafter
the Company shall file with the Secretary of State of the State of Delaware, a
certificate of merger in form reasonably satisfactory to Parent (the
"Certificate of Merger") executed in accordance with the relevant provisions
of the DGCL and shall make all other filings or recordings required under the
DGCL. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with such Secretary of State, or at such other time as
Parent and the Company shall agree and specify in the Certificate of Merger
(the
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time the Merger becomes effective being the "Effective Time").
SECTION 1.04. Effects. The Merger shall have the effects set forth
in the DGCL, including in Section 259 thereof.
SECTION 1.05. Certificate of Incorporation and By-laws. (a) The
certificate of incorporation of the Surviving Corporation shall be amended at
the Effective Time to read in the form of Exhibit A (subject to Section 6.05).
(b) The by-laws of Sub as in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation until
thereafter changed or amended as provided therein (subject to Section 6.05) or
by applicable Law.
SECTION 1.06. Directors. The directors of Sub immediately prior to
the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors
are duly elected or appointed and qualified, as the case may be.
ARTICLE II
Effect on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be
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converted into and become one fully paid and nonassessable share of common
stock, par value $0.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent- Owned Stock. At the
Effective Time, each issued and outstanding share of Company Capital Stock
that is owned by the Company, Parent or Sub shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and no
cash or other consideration shall be delivered or deliverable in exchange
therefor. At the Effective Time, each issued and outstanding share of Company
Capital Stock that is owned by any subsidiary of the Company or Parent (other
than Sub) shall be converted into and become one fully paid and nonassessable
share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(c) Conversion of Company Common Stock. (i) Subject to Sections
2.01(b) and 2.01(d), each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (together with any Company Rights if
still outstanding) shall be converted into the right to receive, in exchange
for such share of Company Common Stock, the amount of cash, without interest,
equal to the quotient, rounded down to the nearest whole cent (the "Per Share
Merger Consideration"), of (A) $8,242,156 and (B) the aggregate number of
shares of Company Common Stock outstanding immediately prior to the Effective
Time, including the shares which would be cancelled at the Effective Time
pursuant to Schedule 2.01(b). Based on 14,718,134 shares of Company Common
Stock outstanding the Per Share Merger Consideration would be $0.56.
(ii) The cash payable upon conversion of shares of Company Common
Stock pursuant to this Section 2.01(c) is referred to collectively as the
"Merger Consideration". As of the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock (a
"Certificate") shall cease to have any rights with respect thereto, except the
right to receive Merger Consideration upon surrender of such certificate in
accordance with Section 2.02, without interest.
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(d) Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, shares of Company Capital Stock that are issued and outstanding
immediately prior to the Effective Time and that are held by any person who is
entitled to demand and properly demands appraisal of such shares pursuant to,
and who complies in all respects with, Section 262 of the DGCL ("Section 262")
and who, as of the Effective Time, shall not have effectively withdrawn or
otherwise forfeited appraisal rights (collectively, the "Appraisal Shares")
shall not be converted into Merger Consideration as provided in Section
2.01(c), but rather the holders of Appraisal Shares shall be entitled to
payment in accordance with Section 262; provided, however, that if any such
holder shall fail to perfect or otherwise shall waive, withdraw or lose the
right to appraisal under Section 262, then the right of such holder to be paid
in accordance with Section 262 shall cease and such Appraisal Shares shall be
deemed to have been converted as of the Effective Time into, and to have
become exchangeable solely for the right to receive, Merger Consideration
pursuant to Section 2.01(c). The Company shall give prompt notice to Parent of
any demands received by the Company for appraisal of any shares of Company
Capital Stock, and Parent shall have the right to participate in and direct
all negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any
such demands, or agree to do any of the foregoing.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent. Prior to
the Effective Time, Parent shall select a bank or trust company reasonably
acceptable to the Company to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration upon surrender of Certificates. Parent
shall directly provide to the Paying Agent immediately following the Effective
Time all the cash necessary to pay for the shares of Company Common Stock that
were converted into the right to receive Merger Consideration pursuant to
Section 2.01(c) (such cash being hereinafter referred to as the "Exchange
Fund").
(b) Exchange Procedure. As promptly as practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of
Certificates whose
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shares were converted into the right to receive Merger Consideration pursuant
to Section 2.01(c), (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Paying Agent and
shall be in such form and have such other provisions as Parent may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the amount of cash into which the shares of
Company Common Stock theretofore represented by such Certificate shall have
been converted pursuant to Section 2.01(c), and the Certificate so surrendered
shall forthwith be canceled. In the event of a transfer of ownership of
Company Common Stock that is not registered in the transfer records of the
Company, payment may be made to a person other than the person in whose name
the Certificate so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other Taxes (as defined in
Section 3.09(n)) required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the satisfaction of
Parent that such Tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the amount of cash, without interest, into which the shares of
Company Common Stock theretofore represented by such Certificate have been
converted pursuant to Section 2.01. No interest shall be paid or accrue on the
cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The Merger
Consideration paid in accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be paid in full
satisfaction of all rights pertaining to such shares of Company Common
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Stock and after the Effective Time there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of shares
of Company Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, any certificates formerly
representing shares of Company Common Stock are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
that remains undistributed to the holders of Company Common Stock for nine (9)
months after the Effective Time shall be delivered to Parent and any holder of
Company Common Stock who has not by then complied with this Article II shall
thereafter look only to Parent for payment of its claim for Merger
Consideration.
(e) No Liability. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar Law. If any Certificate has not been surrendered
prior to the date on which Merger Consideration in respect of such Certificate
would otherwise escheat to or become the property of any Governmental Entity
(as defined in Section 3.05(b)), any such Merger Consideration in respect of
such Certificate shall, to the extent permitted by applicable Law, become the
property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest any
cash included in the Exchange Fund, as directed by Parent, on a daily basis.
Pending payment of such funds to the holders of Certificates for shares of
Company Capital Stock, such funds will be held and shall be invested by the
Paying Agent as Parent directs (so long as such directions do not impair the
rights of holders of Company Capital Stock) in the direct obligations of the
United States, obligations for which the full faith and credit of the United
States is pledged to provide for the payment of principal and interest or
commercial paper rated of the highest quality by ▇▇▇▇▇'▇ Investors Services,
Inc.
8
or Standard & Poor's. Parent will promptly replace any monies lost through any
investment made pursuant to this Section 2.02(f). If for any reason (including
losses) the Exchange Fund is inadequate to pay the amounts to which holders of
the Company Common Stock shall be entitled under this Article II, Parent and
the Surviving Corporation shall in any event be liable for payment thereof.
The Exchange Fund shall not be used except as provided in this Agreement. Any
interest and other income resulting from such investments shall be paid to
Parent or the Surviving Corporation, as Parent directs.
(g) Lost, Stolen or Destroyed Certificates. If any Certificate has
been lost, stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or destroyed and,
if required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Paying Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration pursuant to this Article II.
ARTICLE III
Representations and Warranties of the Company
The Company represents and warrants to Parent and Sub that, except
as set forth in the letter dated as of the date of this Agreement and as
amended in accordance with Section 9.04, from the Company to Parent and Sub
(the "Company Disclosure Letter"):
SECTION 3.01. Organization, Standing and Power. The Company and each
of its subsidiaries (the "Company Subsidiaries") (a) is duly organized,
validly existing and in good standing (to the extent such jurisdiction
recognizes the concept of good standing) under the laws of the jurisdiction in
which it is organized, (b) has full corporate or limited liability company
power and authority, as applicable, and (c) possesses all governmental
franchises, licenses, permits, authorizations and approvals necessary to
enable it to own, lease or otherwise hold its
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properties and assets and to conduct its business as presently conducted, in
each case other than (except in the case of clauses (a) and (b) above with
respect to the Company and the Company Subsidiaries) such failures that,
individually or in the aggregate, have not had and are not reasonably likely
to have a Company Material Adverse Effect (as defined in Section 3.08(b)). The
Company and each Company Subsidiary is duly qualified to do business in each
jurisdiction where the nature of its business or the ownership or leasing of
its properties make such qualification necessary, other than failures to so
qualify that, individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect. The Company has made available to
Parent, Sub or their Representatives (as defined in Section 9.03) true and
complete copies of the certificate of incorporation of the Company, as amended
through the date of this Agreement (as so amended, the "Company Charter"), and
the by-laws of the Company, as amended through the date of this Agreement (as
so amended, the "Company By-laws"), and the comparable charter and
organizational documents of each Company Subsidiary, in each case as amended
through the date of this Agreement.
SECTION 3.02. Company Subsidiaries; Equity Interests. (a) Section
3.02(a) of the Company Disclosure Letter sets forth, as of the date of this
Agreement, a list of each Company Subsidiary and its jurisdiction of
organization. All the outstanding shares of capital stock or limited liability
company interests, as applicable, of each Company Subsidiary (i) are duly
authorized and have been validly issued and are fully paid and nonassessable,
as applicable, and free of preemptive rights and (ii) are owned by the
Company, by another Company Subsidiary or by the Company and another Company
Subsidiary, free and clear of all pledges, liens, charges, mortgages,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"). There are no Contracts (as defined in Section
3.05(a)) or arrangements with respect to the ownership, voting or disposition
of any shares of stock of any Company Subsidiary.
(b) Except for its interests in the Company Subsidiaries, the
Company does not, as of the date of this Agreement, own, directly or
indirectly, any capital stock,
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membership interest, partnership interest, joint venture interest or other
equity interest in any person.
SECTION 3.03. Capital Structure. (a) The authorized capital stock of
the Company consists of 50,000,000 shares of Company Common Stock and
5,000,000 shares of preferred stock, par value $0.01 per share (the "Company
Preferred Stock", and together with the Company Common Stock, the "Company
Capital Stock"). At the close of business on September 8, 2003, (i) 14,718,134
shares of Company Common Stock were issued and outstanding, (ii) no shares of
Company Common Stock were held by the Company in its treasury, (iii) 1,272,850
shares of Company Common Stock were subject to outstanding Company Employee
Stock Options (as defined in Section 3.11(g)), (iv) 1,500,000 shares of
Company Common Stock were reserved for issuance pursuant to the Company Stock
Plans (as defined in Section 3.11(g)), (v) no shares of Company Common Stock
were reserved for and subject to issuance in connection with the rights (the
"Company Rights") issued pursuant to the Amended and Restated Rights Agreement
dated as of October 16, 2002 (as amended from time to time, the "Company
Rights Agreement"), between the Company and ▇▇▇▇▇ Fargo Minnesota, N.A., as
Rights Agent, and (vi) no shares of Company Preferred Stock were issued and
outstanding. Except as set forth above, at the close of business on September
8, 2003, no shares of Company Common Stock were issued, reserved for issuance
or outstanding.
(b) Section 3.03(b) of the Company Disclosure Letter sets forth a
true and complete list, as of the close of business on September 8, 2003, of
all outstanding Company Employee Stock Options and all other rights, if any,
to purchase or receive Company Common Stock or stock in any Company Subsidiary
or other rights issued or granted by the Company or any Company Subsidiary,
the number of shares subject thereto, the grant dates and exercise prices
thereof and the names of the holders thereof. The Company has made available
to Parent, Sub or their Representatives true and complete copies of all option
agreements governing Company Employee Stock Options. During the period from
September 8, 2003 to the date of this Agreement, there have been no issuances
by the Company of shares of Company Capital Stock other than issuances of
shares of Company Common Stock pursuant to the exercise of Company Employee
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Stock Options outstanding on such date as required by their terms as in effect
on the date of this Agreement.
(c) All outstanding shares of Company Capital Stock are, and all
such shares that may be issued prior to the Effective Time will be when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to or issued in violation of any purchase option, call option, right
of first refusal, preemptive right, subscription right or any similar right
under any provision of the DGCL, the Company Charter, the Company By-laws or
any Contract to which the Company or any Company Subsidiary is a party or
otherwise bound.
(d) There are no bonds, debentures, notes or other indebtedness of
the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which holders of
Company Common Stock may vote ("Voting Company Debt"). Except as set forth
above, there are no options, warrants, calls, rights, convertible or
exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, profit participation rights, rights of
repurchase, other rights (other than rights that may have arisen under a
Company Stock Plan) linked to the price of Company Capital Stock, commitments,
Contracts, arrangements or undertakings of any kind to which the Company or
any Company Subsidiary is a party or by which any of them is bound (i)
obligating the Company or any Company Subsidiary to issue, deliver, sell or
grant, or cause to be issued, delivered, sold or granted additional shares of
capital stock or other voting securities or equity interests in, or any
security convertible or exchangeable into or exercisable for any capital stock
of or other voting security or equity interest in, the Company or any Company
Subsidiary or any Voting Company Debt, or (ii) obligating the Company or any
Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right, security, unit, commitment, Contract, arrangement or
undertaking. There are not any outstanding contractual obligations of the
Company or any Company Subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any Company Subsidiary. The
Company has made available to Parent, Sub or their Representatives a true and
complete copy of the
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Company Rights Agreement, as amended to the date of this Agreement.
(e) Neither the Company nor any Company Subsidiary is a party to any
voting agreement, and, to the Company's Knowledge (as defined in Section
9.03), there are no irrevocable proxies and no other agreements with respect
to the voting of the Company Capital Stock, other than those described in the
Schedule 13D filed by Parent on August 18, 2003.
SECTION 3.04. Authority; Execution and Delivery; Enforceability. (a)
The Company has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the Transactions in accordance with
the terms of this Agreement, subject, in the case of the consummation of the
Merger to receipt of the Company Stockholder Approval (as defined in Section
3.04(c)). The execution and delivery by the Company of this Agreement and the
consummation by the Company of the Transactions in accordance with the terms
of this Agreement have been duly authorized by all necessary corporate action
on the part of the Company and no other corporate proceedings on the part of
the Company are necessary to approve this Agreement or to consummate the
Transactions, subject, in the case of the consummation of the Merger, to
receipt of the Company Stockholder Approval. The Company has duly executed and
delivered this Agreement, and, assuming due execution and delivery hereof by
Parent and Sub, this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
(b) The Board of Directors of the Company (the "Company Board"), at
a meeting duly called and held, duly adopted resolutions (with each
disinterested director voting in favor thereof)(i) approving this Agreement,
the Merger and the other Transactions, (ii) determining that the terms of the
Merger and the other Transactions are fair to and in the best interests of the
Company and its stockholders, (iii) recommending that the Company's
stockholders adopt this Agreement and (iv) declaring that this Agreement is
advisable. Assuming the accuracy of Parent's and Sub's representations and
warranties in Section 4.08, such resolutions and the previous actions taken by
the Company Board are sufficient to render
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inapplicable the provisions of Section 203 of the DGCL to (i) the formation of
Parent, (ii) this Agreement, (iii) the Merger, (iv) the other Transactions,
and (v) the acquisition of 1,172,400 shares of Company Common Stock by the
▇▇▇▇▇▇▇▇ Parties (as defined in Section 4.08 hereof) on September 12, 2002. No
other state takeover statute or similar statute or regulation applies or
purports to apply to the Company with respect to this Agreement, the Merger or
any other Transaction.
(c) Assuming the accuracy of Parent's and Sub's representations and
warranties in Section 4.08, the only vote of holders of any class or series of
Company Capital Stock necessary to approve and adopt this Agreement and the
Merger is the adoption of this Agreement by the holders of a majority of the
outstanding Company Common Stock (the "Company Stockholder Approval"). The
affirmative vote of the holders of Company Capital Stock, or any of them, is
not necessary to consummate any Transaction other than the Merger.
SECTION 3.05. No Conflicts; Consents. (a) The execution and delivery
by the Company of this Agreement do not, and the consummation of the Merger
and the other Transactions and the compliance with the terms hereof will not,
conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any Company Subsidiary under, any
provision of (i) the Company Charter, the Company By-laws or the comparable
charter or organizational documents of any Company Subsidiary, (ii) any
material contract (whether written or oral), lease, license, indenture, note,
bond, agreement, permit, concession, franchise or other instrument (other than
a Company Benefit Plan (as defined in Section 3.10)) (a "Contract") to which
the Company or any Company Subsidiary is a party or by which any of their
respective properties or assets is bound or (iii) subject to the filings and
other matters referred to in Section 3.05(b), any material judgment, order or
decree ("Judgment") or material statute, law, ordinance, rule or regulation
("Law"), in each case,
14
applicable to the Company or any Company Subsidiary or their respective
properties or assets.
(b) No material consent, approval, license, permit, order or
authorization ("Consent") of, or material registration, declaration or filing
with, or material permit from, any domestic or foreign (whether national,
federal, state, provincial, local or otherwise) government or any court of
competent jurisdiction, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (each, a
"Governmental Entity") is required to be obtained or made by the Company or
any Company Subsidiary in connection with the execution, delivery and
performance of this Agreement by the Company or the consummation of the
Transactions, other than (i) the filing with the Securities and Exchange
Commission (the "SEC") of (A) a proxy statement relating to the adoption of
this Agreement by the Company's stockholders (as amended or supplemented from
time to time, the "Proxy Statement"), (B) a Transaction Statement on Schedule
13E-3 (as amended or supplemented from time to time, the "Schedule 13E-3") and
(C) such reports under Sections 13 and 16 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as may be required in connection with
this Agreement, the Merger and the other Transactions, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of the other jurisdictions
in which the Company is qualified to do business, (iii) such filings as may be
required in connection with the Taxes described in Section 6.08, (iv) such
filings as may be required under the rules and regulations of the New York
Stock Exchange, Inc., or (v) such other items required solely by reason of the
participation of Parent (as opposed to any third party) in the Transactions.
(c) Assuming the accuracy of Parent's and Sub's representations and
warranties in Section 4.08, the Company and the Company Board have taken all
action necessary to (i) render the Company Rights inapplicable to (A) the
formation of Parent, (B) this Agreement, (C) the Merger, (D) the other
Transactions and (E) the acquisition of 1,172,400 shares of Company Common
Stock by the ▇▇▇▇▇▇▇▇ Parties on September 12, 2002, and (ii) ensure that (A)
neither Parent nor any of its affiliates or associates
15
is or will become an "Acquiring Person" (as defined in the Company Rights
Agreement) by reason of this Agreement, the Merger or any other Transaction,
(B) a "Distribution Date" (as defined in the Company Rights Agreement) or a
"Shares Acquisition Date" (as defined in the Company Rights Agreement) shall
not occur by reason of this Agreement, the Merger or any other Transaction and
(C) the Company Rights shall expire immediately prior to the Effective Time.
SECTION 3.06. SEC Documents; Undisclosed Liabilities. (a) The
Company has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company with the SEC since January 1,
2002 (the "Company SEC Documents").
(b) As of its respective date, each Company SEC Document complied in
all material respects with the requirements of the Exchange Act or the
Securities Act of 1933, as amended (the "Securities Act"), as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable to
such Company SEC Document, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The consolidated
financial statements (the "Company Financial Statements") of the Company
included in the Company SEC Documents comply in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present the consolidated financial position of the Company
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Each certification included in the Company SEC Documents
pursuant to Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 (the
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act") was accurate when made.
16
(c) Other than as disclosed in the Company Financial Statements, as
of the date of this Agreement, neither the Company nor any Company Subsidiary
has any material liabilities or material obligations of any nature (whether
accrued, absolute, contingent or otherwise) other than liabilities that,
individually or in the aggregate, have not had or are not reasonably likely to
have a Company Material Adverse Effect.
(d) None of the Company Subsidiaries is subject to the reporting
requirements of Section 13(a) or Section 15(d) of the Exchange Act.
SECTION 3.07. Information Supplied. (a) At the time the Proxy
Statement is filed with the SEC, at any time it is amended or supplemented or
at the time it is first mailed to stockholders of the Company, neither the
Proxy Statement, as amended or supplemented, if applicable, nor the Schedule
13E-3, as amended or supplemented, if applicable, 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 were made, not misleading, except that
no representation or warranty is made by the Company in this Section 3.07(a)
with respect to statements made or incorporated by reference therein based on
information supplied solely by Parent, Sub or their Representatives for
inclusion or incorporation by reference in such documents.
(b) Each document required to be filed by the Company with the SEC
or required to be distributed or otherwise disseminated to the Company's
stockholders in connection with the Merger and the other Transactions,
including the Proxy Statement and the Schedule 13E-3 (other than portions of
the Schedule 13E-3 attributable to Parent or Sub), and any amendments or
supplements thereto, when filed, distributed or disseminated, as applicable,
will comply in all material respects with the requirements of the Exchange Act
and the rules and regulations promulgated thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied solely
by Parent, Sub or their Representatives for inclusion or incorporation by
reference therein.
17
SECTION 3.08. Absence of Certain Changes or Events. (a) From
December 31, 2002 to the date of this Agreement, the Company has conducted its
business in the ordinary course.
(b) From December 31, 2002 to the date of this Agreement, there has
not been a material adverse effect on the Company or any material adverse
change in the Company's relationship with the Teams (as defined in Section
3.15(k)) taken as a whole, provided that any net decrease during such time
period in the number of teams participating or planning to participate in
races sanctioned by the Company or any Company Subsidiary (not taking into
account any decrease in participation of Teams owned or operated by any direct
or indirect owners of Parent) will be considered a material adverse change in
the Company's relationship with the Teams taken as a whole, in each case other
than any state of facts, change, development, effect, condition or occurrence
(i) disclosed on the Company Disclosure Letter or otherwise disclosed in
writing to Parent, Sub or their representatives prior to the Final Disclosure
Date (as defined in Section 9.04) or (ii) arising out of or relating to (A)
the economy, political conditions or the securities markets in general, (B)
actions taken at Parent's request or with its consent, (C) the failure to take
actions prohibited by this Agreement or with respect to which Parent refused
to provide its consent, (D) the announcement or existence of the Transactions,
(E) the industry in which the Company operates and not specifically related to
the Company, (F) sponsors, sponsorships or the venues at which the Company or
a Company Subsidiary conducts or plans to conduct its races, or (G) changes in
the market price of the Company Common Stock (a "Company Material Adverse
Effect").
(c) From December 31, 2002 to the date of this Agreement, there has
not been:
(i) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to
any Company Capital Stock or any repurchase for value by the Company of
any Company Capital Stock;
18
(ii) any split, combination or reclassification of any Company
Capital Stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares
of Company Capital Stock;
(iii) (A) any granting by the Company or any Company Subsidiary to
any director or officer of the Company or any Company Subsidiary of any
increase in cash compensation, except increases in the ordinary course of
business of not more than 2% per annum or increases required under
employment agreements disclosed in Section 3.15 of the Company Disclosure
Letter, (B) any granting by the Company or any Company Subsidiary to any
such director or officer of any increase in severance or termination pay,
except increases required under any employment, severance or termination
agreements disclosed in Section 3.15 of the Company Disclosure Letter, or
(C) any entry by the Company or any Company Subsidiary into any
employment, severance or termination agreement with any such director or
officer;
(iv) any change in accounting methods, principles or practices by
the Company or any Company Subsidiary materially affecting the reported
consolidated assets, liabilities or results of operations of the Company,
except insofar as may have been required by a change in GAAP or
applicable Law; or
(v) any material elections with respect to Taxes by the Company or
any Company Subsidiary or settlement or compromise by the Company or any
Company Subsidiary of any material Tax liability or refund.
SECTION 3.09. Tax Matters. (a) The Company and each Company
Subsidiary has timely filed, or has caused to be timely filed on its behalf,
all Tax Returns (as defined below) required to be filed by it prior to the
date of this Agreement. All such Tax Returns are true, complete and accurate
in all material respects. All Taxes shown to be due on such Tax Returns have
been timely paid.
(b) Taxes incurred by the Company and the Company Subsidiaries but
not yet due and payable do not
19
exceed the reserve for Taxes set forth on the most recent financial statements
contained in the Company SEC Documents for all Tax periods and portions
thereof through the date of such financial statements. No material Taxes will
be incurred by the Company or any Company Subsidiary for periods ending after
the date of the most recent financial statements contained in the Company SEC
Documents through the Effective Time other than in the ordinary course of
business.
(c) No audit is currently pending with respect to any Tax Return of
the Company or any Company Subsidiary nor, to the Company's Knowledge, has an
audit, examination or other similar review been threatened by any Tax
Authority (as defined below). Neither the Company nor any Company Subsidiary
has waived any statute of limitations in respect of Taxes or agreed to any
extension of time for the assessment of any Tax. There are no outstanding
rulings of, or requests for rulings by, any Tax Authority addressed to the
Company or any Company Subsidiary, that are, or if issued would be, binding on
the Company or any Company Subsidiary. No written claim has been made in the
past five years by a Tax Authority in a jurisdiction where the Company does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction.
(d) The federal income Tax Returns of the Company and each Company
Subsidiary (whether or not consolidated in the Tax Returns for the Company
Group) have been examined by and fully and finally settled with the United
States Internal Revenue Service, or have closed by virtue of the expiration of
the applicable statute of limitations, for all tax years ended on or before
December 31, 1999. Copies of all Tax Returns of the Company and the Company
Subsidiaries as filed, including any amendments thereof, relating to income
for periods ending after December 31, 1999 have been made available, and shall
be delivered on request, to Parent, Sub or their Representatives. All
assessments for Taxes due with respect to such completed and settled
examinations or any concluded litigation have been fully paid.
(e) There are no material Liens for Taxes (other than for current
Taxes not yet due and payable) on the assets of the Company or any Company
Subsidiary.
20
(f) Neither the Company nor any Company Subsidiary has been a member
of an affiliated group filing a consolidated federal income Tax Return other
than the group in which the Company is the common parent (the "Company
Group"). Neither the Company nor any Company Subsidiary is a party to any Tax
allocation or sharing agreement or any other material agreement with respect
to Taxes, in each case other than agreements between or among the Company and
the Company Subsidiaries and no other person. The Company and the Company
Subsidiaries do not have any liability for the Taxes of any person other than
the Company and the Company Subsidiaries (i) under Treasury Regulation ss.
1.1502-6 (or any similar provision of state, local, or foreign law), (ii) as a
transferee or successor, (iii) by contract, or (iv) otherwise.
(g) The Company and the Company Subsidiaries have withheld and paid
all material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party.
(h) Neither the Company nor any Company Subsidiary will be required,
as a result of a change in method of accounting for any period ending on or
before or including the Effective Time, to include any adjustment under
Section 481(c) of the Code (or any similar or corresponding provision or
requirement under any other Tax Law) in Taxable income for any period ending
on or after the Effective Time.
(i) The Company is not subject to any limitations under Code
Sections 382 or 383 on the use of its federal net operating loss or credit
carryforwards.
(j) The Company is not obligated to make any payments, and is not a
party to any agreement that under certain circumstances could obligate it to
make any payments, that will not be deductible under Code Section 162(m) or
Section 280G.
(k) The Company has not been a United States real property holding
corporation within the meaning of Code Section 897(c)(2).
21
(l) Neither the Company nor the Company Subsidiaries have a
permanent establishment in any country with which the United States of America
has a relevant Tax treaty, as defined in such relevant Tax treaty, and does
not otherwise operate or conduct business through any branch in any country
other than the United States.
(m) The Company has never been either a "distributing corporation"
or a "controlled corporation" in connection with a distribution of stock
qualifying for tax-free treatment, in whole or in part, pursuant to Section
355 of the Code.
(n) For purposes of this Agreement:
"Tax Authority" means any domestic, foreign, federal, national,
state, county, municipal, provincial or other local government, any
subdivision, agency, commission or authority thereof, or any
quasi-governmental body exercising tax regulatory authority.
"Taxes" includes all forms of taxation imposed by any domestic or
foreign (whether national, federal, state, provincial, local, or otherwise)
Governmental Entity, including income, franchise, property, sales, use,
excise, employment, unemployment, payroll, social security, estimated, value
added, ad valorem, transfer, recapture, withholding and other Taxes of any
kind, including all interest, penalties and additions thereto.
"Tax Return" means all domestic or foreign (whether national,
federal, state, provincial, local or otherwise) returns, declarations,
statements, reports, schedules, forms and information returns and any amended
Tax return relating to Taxes.
SECTION 3.10. ...Absence of Changes in Benefit Plans. Since December
31, 2002, there has not been any adoption or amendment in any material respect
by the Company or any Company Subsidiary of any collective bargaining
agreement or any bonus, employee pension benefit plans (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) ("Company Pension Plans"), "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA)
22
("Company Welfare Plans"), deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical or
other plan, arrangement or understanding providing benefits to any current or
former employee, officer or director of the Company or any Company Subsidiary
(collectively, "Company Benefit Plans"). As of the date of this Agreement
there are not any severance or termination agreements or arrangements between
the Company or any Company Subsidiary and any current or former officer or
director of the Company or any Company Subsidiary (collectively, the "Company
Benefit Agreements").
SECTION 3.11. ERISA Compliance. (a) Section 3.11 of the Company
Disclosure Letter sets forth, as of the date of this Agreement, a list and
brief description of all Company Benefit Plans maintained, or contributed to,
by the Company or any Company Subsidiary (or to which the Company or any
Company Subsidiary is obligated to make payments or otherwise may have any
liability) for the benefit of any current or former employees, consultants,
officers or directors of the Company or any Company Subsidiary. Each Company
Benefit Plan has been administered in compliance with its terms and applicable
Law, other than instances of noncompliance that, individually and in the
aggregate, are not reasonably likely to have a Company Material Adverse
Effect. The Company has made available to Parent, Sub or their Representatives
true and complete copies of (i) each Company Benefit Plan (or, in the case of
any unwritten Company Benefit Plan, a description thereof) and all amendments
thereto, (ii) the two most recent annual reports on Form 5500 filed with the
Internal Revenue Service with respect to each Company Benefit Plan (if any
such report was required), (iii) the most recent summary plan description for
each Company Benefit Plan for which such summary plan description is required
and all summaries of material modifications and (iv) each trust agreement and
group annuity contract relating to any Company Benefit Plan and all amendments
thereto.
(b) All Company Pension Plans have been the subject of determination
letters from the Internal Revenue Service to the effect that such Company
Pension Plans are
23
qualified and exempt from Federal income taxes under Sections 401(a) and
501(a), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code"), and no such determination letter has been revoked nor, to the
Company's Knowledge, has revocation been threatened, nor has any such Company
Pension Plan been amended since the date of its most recent determination
letter or application therefor in any respect that would adversely affect its
qualification or materially increase its costs.
(c) No Company Pension Plan is subject to Title IV of ERISA.
(d) Each material Company Welfare Plan (including any such plan
covering retirees or other former employees) may be amended or terminated
without material liability (other than for claims or benefits incurred prior
to such amendment or termination) to the Company or any Company Subsidiary on
or at any time after the Effective Time.
(e) The execution and delivery by the Company of this Agreement do
not, and the consummation of the Merger and the other Transactions and the
compliance with the terms hereof will not, (i) entitle any employee, officer
or director of the Company or any Company Subsidiary to severance pay, (ii)
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any Company Benefit Plan or Company Benefit Agreement or (iii) result in
any breach or violation of, or a default under, any Company Benefit Plan or
Company Benefit Agreement other than any such items that, individually or in
the aggregate, are not reasonably likely to have a Company Material Adverse
Effect.
(f) Other than routine claims for benefits, there are no actions,
audits, investigations, suits, or claims pending, or, to the Company's
Knowledge, threatened against any Company Benefit Plan, any fiduciary of any
Company Benefit Plan or against the assets of any Company Benefit Plan that,
individually or in the aggregate, are reasonably likely to have a Company
Material Adverse Effect.
24
(g) Each holder of a Company Employee Stock Option has consented or,
prior to the Closing, will consent to the termination of such Company Employee
Stock Option immediately prior to the Closing. For purposes of this Agreement:
"Company Employee Stock Option" means any option to purchase Company Common
Stock granted under any Company Stock Plan, and "Company Stock Plan" means the
Company's 1997 Director Stock Option Plan, 1997 Stock Option Plan, the
Company's 2001 Long Term Stock Incentive Plan and the American Racing Series,
Inc. & B.P. Automotive Stock Option Plan or any other stock option plan of the
Company or any Company Subsidiary which issued options to purchase shares of
the Company, in each case as amended through the date of this Agreement.
SECTION 3.12. Litigation. As of the date of this Agreement, there is
no suit, action or proceeding pending or, to the Company's Knowledge, directly
threatened against the Company, any Company Subsidiary or any current or past
director or officer, in their capacity as such, nor is there any monetary
Judgment outstanding against the Company or any Company Subsidiary in excess
of $250,000 or any Judgment providing for non-monetary relief outstanding
against the Company or any Company Subsidiary that is reasonably likely to
have a Company Material Adverse Effect.
SECTION 3.13. Compliance with Applicable Laws. Each of the Company
and the Company Subsidiaries is in compliance with all applicable Laws, except
for instances of noncompliance that, individually and in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect.
SECTION 3.14. Environmental Matters. (a) Except for such instances
as, individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect, (i) each of the Company and each Company
Subsidiary is, and since its organization has been, in compliance with all
Environmental Laws (as defined below), (ii) none of the Company or any Company
Subsidiary has any liability under any Environmental Law arising out of or
relating to the use, storage, release or disposal of Hazardous Substances,
(iii) each of the Company and each Company Subsidiary possesses, and is in
compliance with,
25
all registrations and other consents required under Environmental Laws to
conduct its business as presently conducted, (iv) as of the date of this
Agreement, there is no suit, action or proceeding pending, or, to the
Company's Knowledge, threatened in writing against, or, to the Company's
Knowledge, any pending or threatened investigation by any Governmental Entity
of, the Company or any Company Subsidiary alleging a violation of, or
liability under, any Environmental Law and (v) neither the Company nor any
Company Subsidiary has received any written notice that alleges that it is in
violation of, or subject to liability under, any Environmental Law. For
purposes of this Agreement, "Environmental Laws" means all applicable and
binding domestic and foreign (whether national, federal, state, provincial,
local or otherwise) Laws or Judgments issued by any Governmental Entity in
each case relating to pollution or protection of the environment, the
management or release of Hazardous Substances or human health and safety. For
purposes of this Agreement, "Hazardous Substances" means any hazardous
substance as defined by 42 U.S.C. 9601(14), any pollutant or contaminant as
defined by 42 U.S.C. 9601(33), any petroleum or petroleum products, and any
other material, chemical or substance regulated by any Environmental Law.
(b) Neither the Company nor any Company Subsidiary has assumed or is
responsible for, by Contract or otherwise, any liabilities or obligations
arising under any Environmental Law, or is currently performing any
investigation, response or other corrective action under any Environmental
Law.
(c) To the Company's Knowledge, (i) there are no underground storage
tanks or related piping, or impoundments, at any real property currently owned
or leased by the Company or any Company Subsidiary, and (ii) any former such
tanks, piping, or impoundments, on any such property which have been removed
or closed, have been removed or closed in accordance with applicable
Environmental Laws.
SECTION 3.15. Contracts. Except for Contracts filed as exhibits to
the Company SEC Documents, Section 3.15 of the Company Disclosure Letter sets
forth, as of the date of this Agreement, a true and complete list
26
of all of the following Contracts to which the Company or any Company
Subsidiary is a party:
(a) material Contracts not made in the ordinary course of business;
(b) license agreements or royalty agreements, whether the Company or
any Company Subsidiary is the licensor or licensee thereunder (excluding
licenses that are commonly available on standard commercial terms, such as
software "shrink-wrap" licenses);
(c) non-disclosure agreements (whether the Company or any Company
Subsidiary is the beneficiary or the obligated party thereunder);
(d) Contracts or commitments (including groups of related Contracts
or commitments) involving future expenditures or liabilities, actual or
potential, in excess of $50,000 after the date hereof or otherwise material to
the business of the Company and the Company Subsidiaries, taken as a whole;
(e) Contracts or commitments relating to commission arrangements
with others that are material to the business of the Company and the Company
Subsidiaries, taken as a whole;
(f) employment contracts, consulting contracts, severance
agreements, "stay-bonus" agreements and similar arrangements, including
Contracts (A) to employ or terminate executive officers or other personnel and
other contracts with present or former officers or directors of the Company or
any Company Subsidiary or (B) that will result in the payment by, or the
creation of any liability of the Company, any Company Subsidiary, Parent or
Sub to pay any severance, termination, "golden parachute," or other similar
payments to any present or former personnel following termination of
employment or otherwise as a result of the consummation of the Transactions;
(g) Contracts providing for indemnification by the Company or any
Company Subsidiary with respect to material liabilities of the business of the
Company and the Company Subsidiaries, taken as a whole;
27
(h) promissory notes, loans, agreements, indentures, evidences of
indebtedness, letters of credit, guarantees, or other instruments relating to
an obligation for borrowed money, whether the Company or any Company
Subsidiary shall be the borrower, lender or guarantor thereunder;
(i) Contracts containing covenants limiting in any material respect
the ability of the Company or any Company Subsidiary to engage in any line of
business or compete with any person that relates directly or indirectly to the
business of the Company and the Company Subsidiaries;
(j) any Contract with the federal, state or local government or any
agency or department thereof;
(k) any Contract with any officer, director, holder of more than 5%
of the outstanding shares of Company Common Stock or any person formed for the
purpose of racing in a series sanctioned by the Company or any Company
Subsidiary (such persons, collectively, the "Teams");
(l) leases of real or personal property (including groups of related
leases) involving annual payments of more than $50,000;
(m) Contracts or commitments regarding the promotion of racing
events for the 2003 racing season and any later seasons;
(n) Contracts or commitments concerning a partnership or joint
venture;
(o) Contracts or commitments related to sponsorships for the 2003
racing season and any later seasons; and
(p) any other Contract or series of related Contracts that are
material to the business of the Company and the Company Subsidiaries, taken as
a whole, as it is currently conducted.
True and complete copies of all of the Contracts listed in Section 3.15 of the
Company Disclosure Letter, including all amendments and supplements thereto,
have been made
28
available to Parent, Sub or their Representatives. Neither the
Company nor any Company Subsidiary has any oral Contracts. Neither the Company
nor any Company Subsidiary is in material violation of or material default under
any Contract listed in Section 3.15 of the Company Disclosure Letter.
SECTION 3.16. Intellectual Property Matters. (a) Section 3.16 of the
Company Disclosure Letter lists, as of the date of this Agreement, all Company
Registered Proprietary Rights (as defined below) (including all Proprietary
Rights (as defined below), all pending applications seeking registration of
Proprietary Rights and trademark and service marks that the Company or any
Company Subsidiary has used with the intent of creating or benefiting from any
common law rights relating to such marks) and lists any proceedings or actions
pending as of the date of this Agreement before any court, tribunal or
administrative body (including the PTO or equivalent authority anywhere in the
world) related to any of the Company Registered Proprietary Rights. Section
3.16 of the Company Disclosure Letter also lists, as of the date of this
Agreement, all Contracts (including all inbound licenses) to which the Company
or any Company Subsidiary is a party with respect to any Proprietary Rights.
(b) The Company Proprietary Rights constitute all the Proprietary
Rights necessary to the conduct of the business of the Company and the Company
Subsidiaries, taken as a whole, as it is currently conducted. The Company or a
Company Subsidiary owns exclusively all Company Proprietary Rights. Each of
the Company Proprietary Rights owned or used by the Company or any Company
Subsidiary immediately prior to the date of this Agreement will be owned or
available for use by the Company or a Company Subsidiary on identical terms
and conditions immediately subsequent to the Effective Time, subject to
termination in accordance with the terms of any Contracts governing the use of
such Company Proprietary Rights. The Company has taken all actions reasonably
necessary to maintain and protect each material item of the Company
Proprietary Rights that it or any Company Subsidiary owns or uses.
(c) The operation of the business of the Company as conducted does
not infringe or misappropriate the
29
Proprietary Rights of any person, or constitute unfair competition or an
unfair trade practice under any applicable Law, and neither the Company nor
any Company Subsidiary has received written notice from any person claiming
that such operation or any act, product, technology or service of the Company
infringes or misappropriates the Proprietary Rights of any person or
constitutes unfair competition or trade practices under any applicable Law. To
the extent that the Company has received any written notice related to the
above or is aware of any pending, anticipated, or threatened dispute or action
against the Company or any Company Subsidiary relating to infringement or
misappropriation of the Proprietary Rights of any person, there is no basis
for any action against the Company or any Company Subsidiary that is
reasonably likely to have a Company Material Adverse Effect.
(d) Each item of Company Registered Proprietary Rights is valid and
subsisting, and all necessary registration, maintenance, renewal fees, annuity
fees and Taxes due through the date of this Agreement in connection with such
Company Registered Proprietary Rights have been paid and all necessary
documents and certificates in connection with such Company Registered
Proprietary Rights have been filed with the relevant patent, copyright,
trademark or other authorities in the United States or foreign jurisdictions,
as the case may be, for the purposes of maintaining such Company Registered
Proprietary Rights including all change of name documents required to be filed
to maintain chain of title.
(e) To the Company's Knowledge, no person is infringing or
misappropriating any Company Proprietary Rights.
(f) For purposes of this Agreement, the following definitions apply:
"Company Proprietary Right" means any Proprietary Right that (i) is
owned by, (ii) is licensed to, or (iii) was developed or created by or for the
Company or any Company Subsidiary.
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"Company Registered Proprietary Rights" means all Registered
Proprietary Rights owned by, filed in the name of, assigned to or applied by
or for, the Company or any Company Subsidiary.
"Proprietary Rights" means all (i) U.S. and foreign patents, patent
applications, patent disclosures and improvements thereto, including ▇▇▇▇▇
patents and utility models and applications therefor, (ii) U.S. and foreign
trademarks, service marks, trade dress, logos, trade names and corporate names
and the goodwill associated therewith and registrations and applications for
registration thereof, (iii) U.S. and foreign copyrights and registrations and
applications for registration thereof, (iv) U.S. and foreign mask work rights
and registrations and applications for registration thereof, (v) rights in
trade secrets, (vi) domain name registrations, (vii) other proprietary rights,
and (viii) licenses granting any rights with respect to any of the foregoing.
"Registered Proprietary Rights" means all United States,
international and foreign: (i) issued patents and patent applications
(including provisional applications), (ii) registered trademarks and
servicemarks, applications to register trademarks and servicemarks,
intent-to-use applications, other registrations or applications to trademarks
or servicemarks, (iii) registered copyrights and applications for copyright
registration, (iv) any mask work registrations and applications to register
mask works, and (v) any other Proprietary Right that is the subject of an
application, certificate, filing, registration or other document issued by,
filed with, or recorded by, any state, government or other public legal
authority.
SECTION 3.17. Brokers. No broker, investment banker, financial
advisor or other person, other than Bear, ▇▇▇▇▇▇▇ & Co. Inc., the fees and
expenses of which will be paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Merger and the other Transactions based upon arrangements made by or
on behalf of the Company.
SECTION 3.18. Opinion of Financial Advisor. The Company has received
the opinion of Bear, ▇▇▇▇▇▇▇ & Co. Inc., dated the date of this Agreement, to
the effect that,
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as of such date, the consideration to be received is fair, from a financial
point of view, to the unaffiliated shareholders of the Company, other than (i)
Parent and its affiliates, (ii) individuals who own and operate teams or
entities that participate in the businesses owned or operated by the Company
or any of the Company Subsidiaries, and (iii) any shareholders who have
entered into agreements with Parent with respect to any matter related to
their shares. The Company will deliver a true and complete copy of such
opinion to Parent promptly after receipt thereof.
SECTION 3.19. Insurance. Section 3.19 of the Company Disclosure
Letter contains a list, as of the date of this Agreement, of all material
insurance policies and binders of insurance covering any of the business,
properties, assets or operations of the Company and the Company Subsidiaries
(the "Insurance Policies"), the premiums and coverage of the Insurance
Policies, and all claims in excess of $50,000 made under any of the Insurance
Policies since January 1, 2002. All of the Insurance Policies are in full
force and effect and following the Effective Time, shall continue to be legal,
valid, binding and enforceable on identical terms. The Company has completed
the application for each of the Insurance Policies accurately. The Company has
received no notice of cancelation or termination with respect to any Insurance
Policy, and no event (including signing this Agreement or consummating the
Merger) has occurred or is planned to occur which would constitute a breach or
default, or permit termination, modification or acceleration under any
Insurance Policy. To the Company's Knowledge, there are no facts upon which an
insurer might reasonably be justified in reducing or denying coverage or
materially increasing premiums on any of the Insurance Policies. There are no
outstanding unpaid claims under any of the Insurance Policies. The Insurance
Policies are sufficient for compliance with all requirements of applicable Law
and of all Contracts to which the Company and the Company Subsidiaries are
party, and in the reasonable judgment of management of the Company, are
adequate insurance coverage for the assets and operations of the Company and
the Company Subsidiaries as conducted as of the date of this Agreement. Each
party required to be listed as an additional insured on any Insurance Policy
pursuant to any Contracts entered into by the Company or any Company
32
Subsidiary has been and is listed as an additional insured as required by such
Contract.
SECTION 3.20. Title to Property. Neither the Company nor any Company
Subsidiary owns any real property. The Company or a Company Subsidiary has
good and marketable title to, or valid leasehold interests in, or other valid
rights to use, all of the material properties and assets used in its business,
free and clear of all Liens, other than those Liens that have not had and are
not reasonably likely to have a Company Material Adverse Effect.
SECTION 3.21. Labor Matters. Neither the Company nor any Company
Subsidiary is a party to any labor agreement with respect to its employees
with any labor organization, group or association. As of the date of this
Agreement, no petition for certification as the exclusive bargaining
representative for any of the employees is pending before the National Labor
Relations Board. To the Company's Knowledge, no union organizing activity has
occurred with respect to the employees in the two (2) years preceding the date
of this Agreement. There is no unfair labor practice charge or complaint
against the Company pending before the National Labor Relations Board or any
other domestic or foreign governmental agency arising out of the Company's or
any Company Subsidiary's activities, and to the Company's Knowledge, there are
no facts or information that would give rise thereto. There is no labor strike
or labor disturbance pending or, to the Company's Knowledge, threatened
against the Company or any Company Subsidiary, nor is any grievance currently
being asserted against it, and neither the Company nor any Company Subsidiary
has experienced a work stoppage or other labor difficulty in the two (2) years
preceding the date of this Agreement. There are no material controversies
pending or, to the Company's Knowledge, threatened between the Company or any
Company Subsidiary and the employees, and to the Company's Knowledge, there
are no facts that could reasonably result in such controversy.
(a) Compliance. The Company and each Company Subsidiary is in
compliance in all material respects with all applicable Laws respecting
employment practices, terms and conditions of employment, wages and hours,
equal employment opportunity, and the payment of social security
33
and similar taxes and is not engaged in any unfair labor practice that,
individually or in the aggregate, is reasonably likely to have a Company
Material Adverse Effect.
ARTICLE IV
Representations and Warranties of Parent and Sub
Parent and Sub, jointly and severally, represent and warrant to the
Company that:
SECTION 4.01. Organization, Standing and Power. Each of Parent and
Sub is duly organized, validly existing and in good standing (to the extent
such jurisdiction recognizes the concept of good standing) under the laws of
the jurisdiction in which it is organized and has full limited liability
company or corporate power and authority, as applicable, to conduct its
business as presently conducted, other than where the failure to be in good
standing, individually or in the aggregate, is not reasonably likely to have a
material adverse effect on Parent (a "Parent Material Adverse Effect"). Parent
has made available to the Company true and complete copies of the certificate
of incorporation, by-laws and other comparable charter and organizational
documents, in each case as amended to the date of this Agreement, for each of
Parent and Sub.
SECTION 4.02. Sub. (a) Since the date of its incorporation, Sub has
not carried on any business or conducted any operations other than the
execution of this Agreement, the performance of its obligations hereunder and
matters ancillary thereto.
(b) The authorized capital stock of Sub consists of 1,000 shares of
common stock, par value $0.01 per share, all of which have been validly
issued, are fully paid and nonassessable and are owned by Parent free and
clear of any Lien.
SECTION 4.03. Authority; Execution and Delivery; Enforceability.
Each of Parent and Sub has all requisite limited liability company or
corporate power and authority,
34
as applicable, to execute and deliver this Agreement and to consummate the
Transactions. The execution and delivery by each of Parent and Sub of this
Agreement and the consummation by it of the Transactions have been duly
authorized by all necessary limited liability company or corporate action, as
applicable, on the part of Parent and Sub. Each of the Board of Managers of
Parent and the Board of Directors of Sub, at a meeting duly called and held,
duly and unanimously adopted resolutions approving this Agreement, the Merger
and the other Transactions and, in the case of the Board of Directors of Sub,
declaring its advisability. Parent, as sole stockholder of Sub, has adopted
this Agreement. Each of Parent and Sub has duly executed and delivered this
Agreement, and, assuming due execution and delivery hereof by the Company,
this Agreement constitutes the legal, valid and binding obligation of each of
Parent and Sub, enforceable against it in accordance with its terms.
SECTION 4.04. No Conflicts; Consents. (a) The execution and delivery
by each of Parent and Sub of this Agreement do not, and the consummation of
the Merger and the other Transactions and the compliance with the terms hereof
will not, conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any material obligation or to
loss of a material benefit under, or result in the creation of any Lien upon
any of the properties or assets of Parent or any of its subsidiaries under,
any provision of (i) the certificate of incorporation, by-laws or other
comparable charter and organizational documents of Parent or any of its
subsidiaries, (ii) any Contract to which Parent or any of its subsidiaries is
a party or by which any of their respective properties or assets is bound or
(iii) subject to the filings and other matters referred to in Section 4.04(b),
any Judgment or Law, in each case, applicable to Parent or any of its
subsidiaries or their respective properties or assets.
(b) No Consent of, or registration, declaration or filing with, or
permit from any Governmental Entity is required to be obtained or made by or
with respect to Parent or any of its subsidiaries in connection with the
execution, delivery and performance of this Agreement by
35
Parent or any of its subsidiaries or the consummation of the Transactions,
other than (i) the filing with the SEC of (A) the Schedule 13E-3 and (B) such
reports under Sections 13 and 16 of the Exchange Act, as may be required in
connection with this Agreement, the Merger and the other Transactions, (ii)
the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware, and (iii) such filings as may be required in connection
with the Taxes described in Section 6.08.
SECTION 4.05. Information Supplied. (a) At the time the Proxy
Statement is filed with the SEC, at any time it is amended or supplemented or
at the time it is first mailed to stockholders of the Company, the Proxy
Statement, as amended or supplemented, will not 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 were made, not misleading, except that this
representation and warranty is made by Parent or Sub in this Section 4.05(a)
solely with respect to statements made or incorporated by reference therein
based on information supplied by Parent, Sub or their Representatives for
inclusion or incorporation by reference in such documents. The Schedule 13E-3,
at the time it is filed with the SEC or at any time it is amended or
supplemented, if applicable, will not 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 were made, not misleading, except that no
representation or warranty is made by Parent or Sub in this Section 4.05(a)
with respect to statements made or incorporated by reference therein based on
information supplied solely by the Company or its Representatives for
inclusion or incorporation by reference therein. None of the information
supplied or to be supplied by Parent, Sub or their Representatives for
inclusion or incorporation by reference in the Proxy Statement or Schedule
13E-3 will, at the time any such document is filed with the SEC, at any time
it is amended or supplemented or at the time it is first mailed to the
Company's stockholders, contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading.
36
(b) The Schedule 13E-3 (other than portions of the Schedule 13E-3
attributable to the Company), and any amendments or supplements thereto, when
filed, will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder, except that
no representation or warranty is made by Parent with respect to statements
made or incorporated by reference therein based on information supplied solely
by the Company or its Representatives for inclusion or incorporation by
reference therein.
SECTION 4.06. Brokers. No broker, investment banker, financial
advisor or other person, other than Ernst & Young Corporate Finance LLP, the
fees and expenses of which will be paid by Parent, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the Merger and the other Transactions based upon arrangements
made by or on behalf of Parent or Sub.
SECTION 4.07. Financing. At the Effective Time, Parent and Sub will
have available all of the funds necessary for the acquisition of the shares of
Company Common Stock pursuant to Section 2.01(c) of this Agreement.
Immediately prior to the record date for the Company Stockholders Meeting, the
▇▇▇▇▇▇▇▇ Parties (defined below) will have contributed all of their shares of
Company Capital Stock to Parent.
SECTION 4.08. Stock Ownership. None of Parent, Sub and their
respective "associates" (as such term is defined in Section 203(c)(2) of the
DGCL) or affiliates, in each case, other than ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Racing, Inc., Indeck Energy Services, Inc., and Indeck-Ilion Cogeneration
Corp. (the "▇▇▇▇▇▇▇▇ Parties"), beneficially owns, or, at any time during the
three years preceding August 11, 2003, has owned, any Company Common Stock.
None of Parent, Sub and their respective associates or affiliates (in each
case, other than the ▇▇▇▇▇▇▇▇ Parties) at any time during the three years
preceding August 11, 2003 has been an "interested stockholder" of the Company,
as such term is defined in Section 203(c)(5) of the DGCL. As of the date of
this Agreement, the ▇▇▇▇▇▇▇▇ Parties own (of record and beneficially) in the
aggregate 3,377,400 shares of Company Common Stock and do not own of
37
record or beneficially any shares of Company Common Stock other than such
shares. As of the Effective Time, Parent or Sub or both own (of record and
beneficially) in the aggregate the number of shares of Company Common Stock
set forth on Schedule 4.08 and do not own of record or beneficially any shares
of Company Common Stock other than such shares. At no time during the three
years preceding September 11, 2002, was any ▇▇▇▇▇▇▇▇ Party an interested
stockholder of the Company.
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business by the Company. (a) Except for
matters set forth in Section 5.01 of the Company Disclosure Letter or
otherwise contemplated by this Agreement, from the date of this Agreement to
the Effective Time the Company shall, and shall cause each Company Subsidiary
to, conduct its business in light of the existing circumstances in the
ordinary course, including operating in compliance with Law and making all
required filings with the SEC. In addition, and without limiting the
generality of the foregoing, except for matters set forth in the Company
Disclosure Letter or otherwise contemplated by this Agreement, from the date
of this Agreement to the Effective Time, the Company shall not, and shall not
permit any Company Subsidiary to, do any of the following without the prior
written consent of Parent (which consent shall not be unreasonably withheld,
delayed or conditioned):
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than
dividends and distributions by a direct or indirect wholly owned
subsidiary of the Company to its parent, (B) split, combine or reclassify
any of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (C) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any Company Subsidiary or any other
securities thereof or any
38
options, warrants, calls or rights to acquire any such shares or
other securities;
(ii) issue, deliver, sell or grant (A) any shares of its capital
stock or other voting securities or equity interests, (B) any Voting
Company Debt, (C) any securities convertible or exchangeable into, or
exercisable for, any such shares, voting securities, equity interests or
Voting Company Debt, or (D) any options, warrants, calls, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights or stock-based performance units, profit
participation rights, rights of repurchase, other rights linked to the
price of Company Capital Stock, commitments, Contracts, arrangements or
undertakings obligating it to issue, deliver, sell or grant any such
shares, voting securities, equity interests or Voting Company Debt, in
each case other than (1) the issuance of Company Common Stock (and
associated Company Rights) upon the exercise of Company Employee Stock
Options outstanding on the date of this Agreement and in accordance with
their present terms and (2) the issuance of Company Common Stock upon the
exercise of Company Rights if the Company is not in breach of Section
6.09;
(iii) amend its certificate of incorporation, by-laws or other
comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing any equity interest in or portion of the assets
of, or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof or (B) any assets that are material, individually or in the
aggregate, to the Company and the Company Subsidiaries, taken as a whole,
except purchases in the ordinary course of business consistent with prior
practice;
(v) make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets, liabilities or
results
39
of operations of the Company, except insofar as may have been
required by a change in GAAP or applicable Law;
(vi) sell, lease (as lessor), license or otherwise dispose of or
subject to any Lien any properties or assets that are material,
individually or in the aggregate, to the Company and the Company
Subsidiaries, taken as a whole, except sales of assets or licensing
transactions in the ordinary course of business consistent with prior
practice;
(vii) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any Company Subsidiary, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, except for
indebtedness for borrowed money so long as such indebtedness (together
with all other indebtedness for borrowed money) does not exceed an
aggregate principal amount of $2,000,000 or (B) make any loans or capital
contributions to, or investments in, any other person, other than to or
in the Company or any direct or indirect wholly owned subsidiary of the
Company;
(viii) make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $50,000 or, in the
aggregate, are in excess of $50,000;
(ix) make any election with respect to Taxes or settle or compromise
any material Tax liability or refund;
(x) (A) grant to any director or executive officer of the Company of
any Company Subsidiary any increase in cash compensation, except
increases in the ordinary course of business of not more than 2% per
annum or increases required under employment agreements in effect as of
the date of this Agreement,
40
(B) grant to any such director or executive officer any increase in
severance or termination pay, except increases required under any
employment, severance or termination agreements in effect as of the date
of this Agreement, or (C) enter into any employment, severance,
termination or other agreement with any such director or executive officer;
(xi) adopt or amend in any material respect any collective
bargaining agreement or any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan, arrangement or
understanding providing benefits to any current or former employee,
officer or director of the Company or any Company Subsidiary;
(xii) enter into, modify or terminate (i) any Contract listed on
Section 3.15 of the Company Disclosure Letter, and (ii) any Contract
entered into on or after the date of this Agreement, that if it had been
entered into prior to the date of this Agreement, would have had to be
listed on Section 3.15 of the Company Disclosure Letter;
(xiii) enter into, modify or terminate any sponsorship or promoter
Contract;
(xiv) enter into, modify or terminate any Contract with any
affiliate of the Company or any Company Subsidiary; or
(xv) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. Except as otherwise permitted by Section 5.02,
the Company and Parent shall not, and shall not permit any of their respective
subsidiaries to, take any action that would, or that is reasonably likely to,
result in (i) any of the representations and warranties of such party set
forth in this Agreement becoming untrue, other than for such failures to be
true and correct that, individually or in
41
the aggregate, have not resulted and are not reasonably likely to result in the
condition in Section 7.02(a) (in the case of the Company) or Section 7.03(a)
(in the case of Parent) not being satisfied or (ii) any condition to the Merger
set forth in Article VII not being satisfied.
(c) Designated Representative of Parent and Sub. If any consent is
required of Parent or Sub pursuant to this Agreement, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ is
hereby designated as the authorized representative of Parent or Sub for
such purposes. Parent or Sub may change its authorized representative by
giving notice to the Company pursuant to the procedures set forth in
Section 9.02.
SECTION 5.02. Company Takeover Proposals. (a) The Company shall not,
nor shall it authorize or permit any Company Subsidiary to, nor shall it
authorize or permit any of its or any Company Subsidiary's Representatives to,
(i) enter into any agreement with respect to any Company Takeover Proposal (as
defined in Section 5.02(e)), except (A) in accordance with Section 8.05(b)
(and after compliance with all the procedures set forth therein) or (B) a
confidentiality agreement in accordance with this Section 5.02(a) or (ii)
furnish to any person any information with respect to a Company Takeover
Proposal, except, prior to obtaining each of the Company Stockholder Approval
and the Unaffiliated Stockholders Approval (as defined in Section 6.01(b)),
pursuant to a confidentiality agreement and subject to compliance with Section
5.02(c).
(b) Neither the Company Board nor any committee thereof shall (i)
withdraw or modify in a manner adverse to Parent or Sub, or propose publicly
to withdraw or modify, in a manner adverse to Parent or Sub, the
recommendation by the Company Board or any such committee of this Agreement or
the Merger, in each case unless the Company Board determines in good faith,
after consultation with outside counsel, that it is necessary to do so to
comply with its fiduciary duties (any such withdrawal, modification or
proposal being referred to herein as an "Adverse Recommendation Change"), (ii)
approve any letter of intent, agreement in principle, acquisition agreement or
similar agreement relating to any Company Takeover Proposal or (iii) approve
or recommend, or propose publicly to approve or recommend, any Company
Takeover Proposal.
42
Notwithstanding the foregoing, if, prior to obtaining each of the Company
Stockholder Approval and the Unaffiliated Stockholders Approval, the Company
Board receives a Superior Company Proposal (as defined in Section 5.02(e))
then the Company Board may, in accordance with Section 8.05(b) (including the
notice provisions and the payment of the fee therein), approve and recommend
such Superior Company Proposal and cause the Company to terminate this
Agreement and concurrently enter into a definitive agreement providing for the
implementation of such Superior Company Proposal. The Company shall, after the
Due Diligence Termination Date, at any time requested by Parent, publicly
reaffirm its recommendation of this Agreement and the Merger (unless it
determines in good faith after consultation with outside counsel, that it
cannot do so consistent with its fiduciary duties), and provided that any
failure to so reaffirm (whether or not as a result of a determination
described in the preceding parenthetical) shall constitute an Adverse
Recommendation Change.
(c) The Company promptly shall advise Parent orally and in writing
of any Company Takeover Proposal or any inquiry from a third party made to a
director or officer of the Company, or to a Representative of the Company of
which a director or officer of the Company becomes aware, with respect to the
making of a Company Takeover Proposal, the identity of the person making any
such Company Takeover Proposal or inquiry and the material terms of any such
Company Takeover Proposal or inquiry. The Company shall keep Parent informed
of the status (including any change to the material terms) of any such Company
Takeover Proposal or inquiry.
(d) Nothing contained in this Section 5.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14d-9 or Rule 14e-2(a) of the SEC or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Company Board,
after consultation with outside counsel, failure to so disclose would be
inconsistent with its obligations under applicable Law, it being understood
that if any such disclosure constitutes an Adverse Recommendation Change,
Parent shall have the rights provided in the event of an Adverse
Recommendation Change.
43
(e) For purposes of this Agreement:
"Company Takeover Proposal" means (i) any proposal or offer for a
merger, consolidation, dissolution, recapitalization or other business
combination involving the Company or (ii) any proposal or offer to acquire in
any manner, directly or indirectly, over 20% of the equity securities or
consolidated total assets of the Company, in each case other than the
Transactions.
"Superior Company Proposal" means any proposal made by a third party
to acquire, directly or indirectly, including pursuant to a tender or exchange
offer, a merger, a consolidation, a liquidation or dissolution, a
recapitalization, a purchase of warrants or otherwise, more than 50% of the
Company Common Stock or all or substantially all of the assets of the Company
and the Company subsidiaries, taken as a whole, on terms which the Company
Board determines in good faith to be more favorable to the holders of Company
Common Stock than the Transactions (after consultation with a financial
advisor), taking into account all the terms and conditions of such proposal
and this Agreement (including any proposal by Parent to amend the terms of the
Transactions).
ARTICLE VI
Additional Agreements
SECTION 6.01. Preparation of Proxy Statement; Stockholders Meeting.
(a) As promptly as practicable following the date of this Agreement, (i) the
Company shall prepare and after obtaining the approval of Parent, which
approval shall not be unreasonably withheld, delayed or conditioned, file with
the SEC the Proxy Statement in preliminary form, and (ii) each of the Company,
Parent and Sub shall prepare and file with the SEC the Schedule 13E-3, and
each of the Company and Parent shall use its reasonable best efforts to
respond as promptly as practicable to any comments of the SEC with respect
thereto. Each of the Company, Parent and Sub shall notify the others promptly
of the receipt of any comments from the SEC or its staff and of any request by
the SEC or its staff for amendments or supplements to the Proxy Statement or
the Schedule 13E-3
44
or for additional information and shall supply the others with copies of all
correspondence between it or any of its Representatives, on the one hand, and
the SEC or its staff, on the other hand, with respect to the Proxy Statement
or the Schedule 13E-3, as applicable. If at any time prior to receipt of the
Company Stockholder Approval there shall occur any event that should be set
forth in an amendment or supplement to the Proxy Statement or the Company or
Parent shall otherwise determine that any amendment or supplement should be
made to the Proxy Statement in accordance with applicable Law, the Company
shall as promptly as practicable prepare and mail to its stockholders such an
amendment or supplement. The Company shall not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects. The
Company shall use its reasonable best efforts to cause the Proxy Statement to
be mailed to the Company's stockholders as promptly as practicable after
filing with the SEC.
(b) The Company shall, as promptly as practicable following the date
of this Agreement, duly call, give notice of, convene and hold a meeting of
its stockholders (the "Company Stockholders Meeting") to obtain (i) the
Company Stockholder Approval and (ii) the approval of this Agreement and the
Merger by the holders of the majority of shares of Company Common Stock
present or represented by proxy at such meeting that is not held by
Disqualified Holders (as defined below) voting "for" and "against" such
approval (treating for this purpose holders who have delivered, prior to the
Company obtaining the Company Stockholder Approval, written demands for
appraisal in accordance with Section 262(d) of the DGCL and who, as of such
time, shall not have effectively withdrawn or otherwise forfeited appraisal
rights as voting "no") (such approval, the "Unaffiliated Stockholders
Approval"). "Disqualified Holders" means Parent and its affiliates. The
Company shall, through the Company Board and in the Proxy Statement, recommend
to its stockholders that they give each of the Company Stockholder Approval
and the Unaffiliated Stockholders Approval, except to the extent that the
Company Board shall have withdrawn or modified its recommendation of this
Agreement or the Merger as permitted by Section 5.02(b). Without limiting the
generality of the foregoing, the Company agrees that its obligations pursuant
to the first sentence of this Section 6.01(b) shall not be
45
affected by (i) the commencement, public proposal, public disclosure or
communication to the Company of any Company Takeover Proposal or (ii) the
withdrawal or modification by the Company Board of its approval or
recommendation of this Agreement or the Merger.
(c) Parent shall cause all shares of Company Common Stock owned by
Parent, Sub or any other subsidiary or affiliate of Parent to be voted in
favor of the adoption of this Agreement. Notwithstanding the foregoing, if the
Company Board shall have made an Adverse Recommendation Change, then Parent
shall cause the Excluded ▇▇▇▇▇▇▇▇ Shares (as defined below) to be voted in
accordance with the recommendation of the Company Board. "Excluded ▇▇▇▇▇▇▇▇
Shares" means those shares of Company Common Stock that must be voted in
accordance with the recommendation of the Company Board pursuant to the voting
agreements between ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and the Company dated September 11,
2002 and October 16, 2002.
SECTION 6.02. Access to Information; Confidentiality. The Company
shall, and shall cause each Company Subsidiary to, afford to Parent, and to
Parent's Representatives, reasonable access during normal business hours
during the period prior to the Effective Time to all their respective
properties, books, Contracts, commitments, personnel and records and, during
such period, the Company shall, and shall cause each Company Subsidiary to,
furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of Federal or state securities laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request; provided, however, that the Company or any Company Subsidiary may
withhold any document or information that is subject to the terms of a
confidentiality agreement with a third party. Without limiting the generality
of the foregoing, the Company shall, within two business days of request
therefor, provide to Parent the information described in Rule 14a-7(a)(2)(ii)
of the SEC and any information to which a holder of Company Common Stock would
be entitled under Section 220 of the DGCL (assuming such holder met the
requirements of such section). All information exchanged pursuant to this
Section 6.02 shall be subject to the
46
confidentiality agreements set forth on Schedule 6.02 (the "Confidentiality
Agreements").
SECTION 6.03. Reasonable Best Efforts; Notification. (a) Upon the
terms and subject to the conditions set forth in this Agreement, unless, to
the extent permitted by Section 5.02(b), the Company Board approves or
recommends a Superior Company Proposal, each of the parties hereto shall use
its reasonable 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 parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the
other Transactions, including (i) the obtaining of all necessary actions or
nonactions, Consents and waivers from Governmental Entities and the making of
all necessary registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may be necessary
to obtain a Consent or waiver from, or to avoid an action or proceeding by,
any Governmental Entity, (ii) in the case of the Company, the obtaining of all
necessary Consents or waivers from third parties, (iii) in the case of the
Company, the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
any of the Transactions, including seeking to have any stay, order or
injunction entered by any court or other Governmental Entity vacated or
reversed and (iv) the execution and delivery of any additional instruments
necessary to consummate the Transactions and to fully carry out the purposes
of this Agreement. In connection with and without limiting the foregoing, the
Company and the Company Board shall (i) take all action necessary to ensure
that no state takeover statute or similar statute or regulation is or becomes
applicable to any Transaction or this Agreement and (ii) if any state takeover
statute or similar statute or regulation becomes applicable to any Transaction
or this Agreement, take all action necessary to ensure that the Merger and the
other Transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger and the other Transactions.
Notwithstanding the foregoing, the Company and its Representatives shall not
be
47
prohibited under this Section 6.03 from taking any action permitted by
Sections 5.02(b) or (d). Parent and Sub will use reasonable efforts to
cooperate with the Company, at the Company's request, in the performance of
the Company's obligations in clauses (ii) and (iii) above.
SECTION 6.04. Stock Options. Prior to the Effective Time, the
Company Board shall adopt resolutions to terminate effective as of the
Effective Time each Company Employee Stock Option.
SECTION 6.05. Indemnification. (a) To the fullest extent permitted
by Law, the Surviving Corporation (or any successor entity) shall honor all
the Company's obligations to indemnify (including any obligations to advance
funds for expenses) the current or former directors or officers of the Company
for acts or omissions by such directors and officers occurring prior to the
Effective Time to the extent that such obligations of the Company exist on the
date of this Agreement, whether pursuant to the Company Charter, the Company
By-laws, the individual indemnity agreements set forth in Section 6.05 of the
Company Disclosure Letter or otherwise, and such obligations shall survive the
Merger and shall continue in full force and effect in accordance with the
terms of the Company Charter, the Company By-laws and such individual
indemnity agreements from the Effective Time until the expiration of the
applicable statute of limitations with respect to any claims against such
directors or officers arising out of such acts or omissions.
(b) From the Effective Time until May 15, 2004, the Surviving
Corporation shall maintain or cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company with respect to claims arising from or related to facts or events
which occurred at or before the Effective Time. Prior to the Effective Time,
the Company may obtain tail coverage with respect to such policies, provided
that the Company shall not pay more than $500,000 with respect to premiums for
such coverage. In the event that the Company does not obtain such tail prior
to the Effective Time, Parent or the Surviving Corporation shall be required
to obtain such tail, subject to the limitations set forth above.
48
(c) Prior to entering into any agreement or arrangement with respect
to, or effecting, any proposed merger into or consolidation with any other
person or sale, exchange, dividend or other distribution or liquidation of all
or a significant portion of the Surviving Corporation's assets in one or a
series of transactions or any significant recapitalization or reclassification
of the Surviving Corporation's outstanding securities that does not directly
or indirectly provide for the assumption of the obligations of the Surviving
Corporation set forth in this Section 6.05 by the purchaser or successor
entity in such transaction, the Surviving Corporation shall arrange in
connection therewith alternative means of providing for the obligations of the
Surviving Corporation set forth in this Section 6.05, including the assumption
of such obligations by another party, insurance, surety bonds or the creation
of an escrow, in each case in an amount, upon terms and conditions and, if
applicable, from a nationally recognized or other creditworthy entity so that,
thereafter, the current or former directors and officers of the Company are in
substantially the same position as they were in immediately prior to the
applicable transaction.
SECTION 6.06. Fees and Expenses. (a) Except as provided below, all
fees and expenses incurred in connection with the Merger and the other
Transactions shall be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated.
(b) The Company shall pay to Parent a fee of $350,000 if: (i) the
Company terminates this Agreement pursuant to Section 8.01(d)(ii); (ii) Parent
terminates this Agreement pursuant to Section 8.01(c)(ii); or (iii) (A) after
the date of this Agreement, any person makes a Company Takeover Proposal, (B)
the Merger shall not have occurred on or before the Outside Date (as defined
in Section 8.01(b)(i)), (C) this Agreement is thereafter terminated by Parent
or the Company pursuant to Section 8.01(b)(i) (but only if the Company
Stockholders Meeting has not been held by the date that is two days prior to
the date of such termination), and (D) within 12 months of such termination,
the Company consummates the transactions contemplated by a Company Takeover
Proposal (solely for the purposes of this Section 6.06(b)(iii)(D) and the next
sentence of this Section 6.06(b), the term
49
Company Takeover Proposal shall have the meaning set forth in the definition
of Company Takeover Proposal contained in Section 5.02(e) except that all
references therein to "20%" shall be deemed references to "40%"). Any fee due
under this Section 6.06(b) shall be paid by wire transfer of same-day funds,
in the case of clauses (i) and (ii) of the previous sentence, on the date of
termination of this Agreement or the next business day if the date of
termination of this Agreement is not a business day, or in the case of clause
(iii) of the previous sentence, on the date on which the Company consummates
the transactions contemplated by such Company Takeover Proposal.
SECTION 6.07. Public Announcements. Parent and Sub, on the one hand,
and the Company, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon,
any press release or other public statements with respect to the Merger and
the other Transactions and shall not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
applicable Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange.
SECTION 6.08. Transfer Taxes. All stock transfer, real estate
transfer, documentary, stamp, recording and other similar Taxes (including
interest, penalties and additions to any such Taxes) ("Transfer Taxes")
incurred in connection with the Transactions shall be paid by the Surviving
Corporation, and the Company shall cooperate with Parent and Sub in preparing,
executing and filing any Tax Returns with respect to such Transfer Taxes.
SECTION 6.09. Rights Agreements; Consequences if Rights Triggered.
Except as approved in writing by Parent or contemplated by this Agreement, the
Company Board shall not (i) amend the Company Rights Agreement, (ii) redeem
the Company Rights or (iii) take any action with respect to, or make any
determination under, the Company Rights Agreement, in each case, unless the
Company Board determines in good faith, after compliance with applicable
provisions of this Agreement and after consultation with outside counsel, that
such action is necessary to do so to comply with its fiduciary duties.
50
SECTION 6.10. No Additional Representations.
(a) Parent acknowledges and agrees that (i) it is entering into this
Agreement and the Transactions without any representation or warranty, express
or implied, by the Company or any of its Representatives except as expressly
set forth in this Agreement and (ii) the accuracy, completeness or
reasonableness of any projection or forecast delivered by or on behalf of the
Company to Parent, Sub or any of their Representatives shall not be considered
in determining whether any condition to Parent's or Sub's obligations with
respect to the Merger has been satisfied.
(b) The Company acknowledges and agrees that (i) it is entering into
this Agreement and the Transactions without any representation or warranty,
express or implied, by Parent, Sub or any of their Representatives except as
expressly set forth in this Agreement and (ii) the accuracy, completeness or
reasonableness of any projection or forecast delivered by or on behalf of
Parent, Sub or any of their Representatives to the Company shall not be
considered in determining whether any condition to the Company's obligations
with respect to the Merger has been satisfied.
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation To Effect The
Merger. The respective obligation of each party hereto to effect the Merger is
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Company shall have obtained the
Company Stockholder Approval and the Unaffiliated Stockholders Approval.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or Law preventing the consummation of the Merger, or
51
preventing Parent from owning the shares of the Surviving Corporation or from
operating any material part of the business of the Surviving Corporation and
its subsidiaries, taken as a whole, shall be in effect; provided, however,
that prior to asserting this condition the applicable party shall have used
its reasonable efforts to prevent the entry of any such injunction or other
order and to appeal as promptly as possible any such injunction or other order
that may be entered.
SECTION 7.02. Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company in this Agreement shall be true and correct in all
material respects, as of the date of this Agreement and as of the Closing
Date, except to the extent that such representations and warranties expressly
relate to an earlier date (in which case on and as of such earlier date).
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects any material obligation and complied
in all material respects with any material agreement or covenant of the
Company to be performed or complied with by it under this Agreement prior to
or at the time of the Closing.
(c) Company Certificate. The Company shall have furnished a
certificate, signed by its Chief Executive Officer, certifying compliance with
the conditions set forth in Sections 7.02(a) and (b).
(d) Dissenting Shareholders. No more than 16% of the shares of
Company Common Stock outstanding immediately prior to the Effective Time shall
be Appraisal Shares.
(e) Litigation. Other than pending suits, actions or proceedings as
disclosed on the Company Disclosure Letter, any pending or threatened suits,
actions
52
or proceedings by Parent, Sub or any of their affiliates, or any derivative
suit, action or proceeding pending in Delaware that under applicable and
controlling law would expire, or with respect to which all plaintiffs would
lose standing, at the Effective Time, there shall be no pending or threatened
suit, action or proceeding that advances non-frivolous claims against Parent,
Sub, the Company or any Company Subsidiary (i) that Parent reasonably believes
would not be covered by the Insurance Policies, unless the damages sought that
would not be covered by the Insurance Policies, would not, in Parent's
reasonable judgment, exceed a total of $250,000 for such suits, actions or
proceedings, or (ii) that seeks any equitable relief, which, if successful,
would prevent (A) the consummation of the Merger, provided that such action,
suit or proceeding seeking to prevent the consummation of the Merger is
pending, (B) Parent from owning the shares of the Surviving Corporation or (C)
Parent from operating any material part of the business of the Surviving
Corporation and its subsidiaries, taken as a whole.
(f) Management of CART, Inc. The by-laws of CART, Inc., a Michigan
corporation ("CART"), shall have been amended to disband the Franchise Board,
and to provide for the management of CART by a board of directors to be
elected by the Company, as sole stockholder of CART.
(g) No Bankruptcy. The Company shall generally be able to pay its
debts as and when such debts become due, shall not have admitted in writing
its inability to pay its debts generally, and shall not have made a general
assignment for the benefit of creditors. No petition shall have been filed by
or against the Company seeking liquidation, winding up, reorganization,
relief, appointment of a receiver, trustee or similar official for it or for
any substantial part of its property or assets, or to commence a case as to
the Company pursuant to 11 U.S.C. ss. 301 or 303 or any similar state law (a
"Bankruptcy Petition"), unless such Bankruptcy Petition is dismissed prior to
the Effective Time and in no event later than sixty (60) days of its filing.
No such Bankruptcy Petition shall be pending as of the Closing.
53
(h) Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred and be continuing a Company Material Adverse Effect.
SECTION 7.03. Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub in this Agreement shall be true and correct in
all material respects, in each case as of the date of this Agreement and as of
the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case on and as of such earlier
date).
(b) Performance of Obligations of Parent and Sub. Parent and Sub
shall have performed in all material respects any material obligation of
Parent or Sub, as the case may be, and complied in all material respects with
any material agreement or covenant of Parent or Sub, as the case may be, to be
performed or complied with by it under this Agreement prior to or at the time
of the Closing.
SECTION 7.04. Frustration of Closing Conditions. None of the
Company, on the one hand, or Parent or Sub, on the other hand, may rely on the
failure of any condition set forth in Article VII to be satisfied if such
failure was caused primarily by the failure of the Company, on the one hand,
or Parent or Sub, on the other hand, to use reasonable best efforts to
consummate the Merger and the other Transactions, as required by and subject
to Section 6.03.
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.01. Termination. This Agreement may be terminated at any
time:
54
(a) prior to the Effective Time, whether before or after receipt of
the Company Stockholder Approval or the Unaffiliated Stockholders Approval, by
mutual written consent of the Parent, Sub and the Company;
(b) prior to the Effective Time, whether before or after receipt of
the Company Stockholder Approval or the Unaffiliated Stockholders Approval, by
either Parent or the Company:
(i) if the Merger does not occur on or before the later of
February 15, 2004 and the date that is 61 days from the date of any
filing of an involuntary Bankruptcy Petition that (A) the Company
reasonably expects will be dismissed, (B) the Company is using its
reasonable best efforts to have dismissed and (C) is filed prior to
February 15, 2004 (the "Outside Date"), unless the failure to
consummate the Merger is the result of a material breach of this
Agreement by the party seeking to terminate this Agreement;
(ii) if any Governmental Entity issues an order or injunction
or takes any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, injunction or other
action shall have become final and nonappealable, unless such order,
injunction or other action is the result of a material breach of
this Agreement by the party seeking to terminate this Agreement;
provided, however, that prior to seeking to terminate, such party
shall have used its reasonable best effects to prevent such order,
injunction or other action and to appeal as promptly as practicable
any such orders, injunctions or other actions; or
(iii) if, upon a vote at a duly held meeting to obtain the
Company Stockholder Approval or the Unaffiliated Stockholders
Approval, as the case may be, the Company Stockholder Approval or
the Unaffiliated Stockholders Approval, as the case may be, is not
obtained; provided, however, that this Agreement may not be
terminated by a party
55
pursuant to this Section 8.01(b)(iii) if such party is then in
breach of Section 6.01(c);
(c) (i)prior to the Effective Time, whether before or after receipt
of the Company Stockholder Approval or the Unaffiliated Stockholders Approval,
by Parent if the Company breaches or fails to perform in any material respect
any of its representations, warranties or covenants contained in this
Agreement, which breach or failure to perform (A) would give rise to the
failure of a condition set forth in Section 7.01 or Section 7.02, and (B)
cannot be or has not been cured within 30 days after the giving of written
notice to the Company of such breach; or
(ii) prior to obtaining each of the Company Stockholder
Approval and the Unaffiliated Stockholders Approval, by Parent (A)
in the event an Adverse Recommendation Change has occurred, (B) if,
pursuant to Section 6.09 and without the approval in writing of
Parent, the Company Board amends the Company Rights Agreement,
redeems the Company Rights or takes any action with respect to, or
makes any determination under, the Company Rights Agreement to
comply with its fiduciary duties and, as a result of such amendment,
redemption, action or determination, any person other than Parent or
any of its affiliates is permitted to become an Acquiring Person (as
currently defined in the Company Rights Agreement) or (C) the
Company enters into any definitive agreement to implement a Company
Takeover Proposal;
(d) (i)prior to the Effective Time, whether before or after receipt
of the Company Stockholder Approval or the Unaffiliated Stockholders Approval,
by the Company if Parent or Sub breaches or fails to perform in any material
respect any of its representations, warranties or covenants contained in this
Agreement, which breach or failure to perform cannot be or has not been cured
within 30 days after the giving of written notice to Parent of such breach; or
(ii) prior to obtaining each of the Company Stockholder
Approval and the Unaffiliated
56
Stockholders Approval by the Company in accordance with
Section 8.05(b); provided, however, that the Company shall have
complied with all provisions thereof, including the notice provisions
therein; or
(e) at any time during the period from the date of this Agreement
until 5:00 p.m., New York City time, on September 18, 2003 or any earlier time
that Parent identifies in writing to the Company (the "Due Diligence
Termination Date"), by Parent if Parent in its discretion determines that it
is inadvisable to proceed with the Transactions for any reason whatsoever.
SECTION 8.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.01,
this Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other than
Section 3.17, Section 4.06, Section 4.07, the last sentence of Section 6.02,
Section 6.06, this Section 8.02 and Article IX, which provisions shall survive
such termination, and except to the extent that such termination results from
the willful and material breach by a party of any representation, warranty or
covenant set forth in this Agreement. The Confidentiality Agreements shall
survive termination of this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto at any time before or after receipt of the Company Stockholder
Approval or the Unaffiliated Stockholders Approval, as the case may be;
provided, however, that after receipt of the Company Stockholder Approval,
there shall be made no amendment or waiver that by applicable Law requires
further approval by the stockholders of the Company without the further
approval of such stockholders. Subject to Section 9.04, this Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 8.04. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive
57
any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 8.03, waive compliance with any of the
agreements or conditions contained in this Agreement. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. Any failure
or delay by any party hereto to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of such rights.
SECTION 8.05. Procedure for Termination, Amendment, Extension or
Waiver. (a) A termination of this Agreement pursuant to Section 8.01, an
amendment of this Agreement pursuant to Section 8.03 or an extension or waiver
pursuant to Section 8.04 shall, in order to be effective, require in the case
of Parent, Sub or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors.
(b) The Company may terminate this Agreement pursuant to Section
8.01(d)(ii) only if (i) the Company Board has received a Company Takeover
Proposal, (ii) the Company Board shall have determined in good faith that such
Company Takeover Proposal constitutes a Superior Company Proposal, (iii) the
Company has notified Parent in writing of the determination described in
clause (ii) above, which notice shall describe all material terms of such
Company Takeover Proposal; (iv) at least three business days following receipt
by Parent of the notice referred to in clause (iii) above, and taking into
account any revised proposal made by Parent since receipt of the notice
referred to in clause (iii) above, such Superior Company Proposal remains a
Superior Company Proposal and the Company Board has again made the
determination referred to in clause (ii) above (although no additional time
period shall be required following such determination), (v) the Company is in
compliance with Section 5.02, (vi) the Company Board concurrently approves,
and the Company concurrently enters into, a definitive agreement providing for
the implementation of such Superior Company Proposal and (vii) the Company has
paid Parent the fee pursuant to Section 6.06(b).
58
ARTICLE IX
General Provisions
SECTION 9.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.01 shall not limit any covenant or agreement of the parties hereto
which by its terms contemplates performance after the Effective Time.
SECTION 9.02. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties hereto at the following addresses (or
at such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
Open Wheel Racing Series LLC
c/o 21st Century Racing Holdings LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Open Wheel Racing Series LLC
c/▇ ▇▇▇▇▇▇ Capital, L.L.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Open Wheel Racing Series LLC
c/o Big Bang Racing LLC
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
59
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ Racing, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company, to
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Carlisle Peet, Esq.
General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cravath, Swaine & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 9.03. Definitions. For purposes of this Agreement:
An "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person. For the purposes
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of this Agreement, (a) none of Parent, Sub and any Disqualified Holder is an
affiliate of the Company and (b) the Company is not an affiliate of Parent,
Sub or any Disqualified Holder.
The "Company's Knowledge" means matters of which the officers and
directors of the Company or any of the Company's Subsidiaries know or should
have known after reasonable inquiry.
A "material adverse effect" on a party means any state of facts,
change, development, effect, condition or occurrence that is material and
adverse to the business, financial condition or results of operations of such
party and its subsidiaries, taken as a whole, or that materially impairs the
ability of such party to perform its obligations under this Agreement or
consummate the Merger.
A "person" means any individual, firm, corporation, partnership,
company, limited liability company, trust, joint venture, association,
Governmental Entity or other entity.
A "Representative" of any person means any officer, director or
employee of, or any investment banker, attorney or other advisor or
representative of, such person.
A "subsidiary" of any person means another person, an amount of the
voting securities or other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such
first person.
SECTION 9.04. Interpretation; Disclosure Letters. (a) When a
reference is made in this Agreement to a Section, Exhibit or Schedule, such
reference shall be to a Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the
61
words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The words
"hereof", "herein", "hereby" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The words "date hereof" shall refer to
the date of this Agreement. The term "or" is not exclusive. The word "extent"
in the phrase "to the extent" shall mean the degree to which a subject or
other thing extends, and such phrase shall not mean simply "if". The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms. Any agreement or instrument defined or
referred to herein or in any agreement or instrument that is referred to
herein means such agreement or instrument as from time to time amended,
modified or supplemented. References to a person are also to its permitted
successors and assigns.
(b) Any matter disclosed in any section of the Company Disclosure
Letter shall be deemed disclosed for all purposes and all sections of the
Company Disclosure Letter if the reference to such matter in the Company
Disclosure Letter makes apparent the relationship between the matter disclosed
and the other representation that the disclosure qualifies.
(c) The Company will deliver the Company Disclosure Letter to Parent
no later than 5:00 p.m. New York City time on September 15, 2003 or such
earlier time and date as the parties agree to in writing (the "Final
Disclosure Date") and will ▇▇▇▇ such document as "final" (the "Final Company
Disclosure Letter"). The Company acknowledges that Parent has not consented or
agreed to the Company Disclosure Letter, or any part thereof, and that the
Company Disclosure Letter will have no force or effect until Parent has
approved in writing the Final Company Disclosure Letter. If Parent has not
approved in writing the Final Company Disclosure Letter, or any amendment
thereto, prior to the Due Diligence Termination Date, Parent shall be deemed
to have terminated this Agreement pursuant to Section 8.01(e).
SECTION 9.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or
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incapable of being enforced as a result of any applicable Law, or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 9.06. Counterparts. This Agreement may be executed in one or
more counterparts (including via telecopy or facsimile), all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties hereto and delivered
to the other parties. Each party hereto need not sign the same counterpart.
SECTION 9.07. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, taken together with the Company Disclosure Letter and the
Confidentiality Agreements, (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties hereto with respect to the Transactions and (b) except for the
provisions of Article II Section 6.05, are not intended to confer upon any
person other than the parties hereto any rights or remedies.
SECTION 9.08. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 9.09. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties
hereto without the prior written consent of the other parties. Any purported
assignment without such
63
consent shall be void. Subject to the preceding sentences, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties
hereto and their respective successors and assigns.
SECTION 9.10. Enforcement; Waiver of Jury Trial. (a) The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any Delaware state court or any Federal court
located in the State of Delaware, this being in addition to any other remedy
to which they are entitled at law or in equity. In addition, each of the
parties hereto irrevocably and unconditionally submits to the exclusive
jurisdiction of any Delaware state court or any Federal court located in the
State of Delaware for the purposes of any suit, action or other proceedings
arising out of this Agreement or any Transaction (and each party agrees that
no such suit, action or proceeding arising out of to this Agreement or any
Transaction shall be brought by it or any of its affiliates except in such
courts). Each party hereto further agrees that, to the fullest extent
permitted by applicable Law, service of any process, summons, notice or
document by U.S. registered mail to such party's respective address set forth
above shall be effective service of process for any suit, action or proceeding
in Delaware with respect to any matters to which it has submitted to
jurisdiction in this Section 9.10. Each of the parties hereto irrevocably and
unconditionally waives (and agrees not to plead or claim) any objection to the
laying of venue of any suit, action or proceeding arising out of this
Agreement or any Transaction in any Delaware State court or any Federal court
located in the State of Delaware, or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
(b) Each party hereto hereby waives, to the fullest extent permitted
by applicable Law, any right it may have to a trial by jury in respect of any
suit, action or proceeding directly or indirectly arising out of, under
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or in connection with this Agreement or any Transaction. Each party hereto,
(i) certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such party would not, in the event
of any suit, action or proceeding, seek to enforce the foregoing waiver and
(ii) acknowledges that it and the other parties hereto have been induced to
enter into this Agreement by, among other things the mutual waivers and
certifications in this Section 9.10(b).
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IN WITNESS WHEREOF, Parent, Sub and the Company have duly executed
this Agreement, all as of the date first written above.
OPEN WHEEL RACING SERIES LLC,
by /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Manager
OPEN WHEEL ACQUISITION CORPORATION,
by /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
CHAMPIONSHIP AUTO RACING TEAMS, INC.,
by /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President