EXHIBIT (d)(1)
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of
November 12, 2000
among
AMERICAN FREIGHTWAYS CORPORATION,
FEDEX CORPORATION
and
FDX, INC.
TABLE OF CONTENTS
Page
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ARTICLE 1
Definitions
Section 1.01. Definitions................................... 1
ARTICLE 2
The Offer
Section 2.01. The Offer..................................... 6
Section 2.02. Company Action................................ 7
Section 2.03. Directors..................................... 8
ARTICLE 3 The Merger
Section 3.01. The Merger.................................... 10
Section 3.02. Conversion of Shares.......................... 10
Section 3.03. Surrender and Payment......................... 11
Section 3.04. Dissenting Shares............................. 12
Section 3.05. Stock Options................................. 13
Section 3.06. Adjustments................................... 14
Section 3.07. Fractional Shares............................. 14
Section 3.08. Withholding Rights............................ 15
Section 3.09. Lost Certificates............................. 15
ARTICLE 4
The Surviving Corporation, Certain Governance
Matters
Section 4.01. Certificate of Incorporation.................. 15
Section 4.02. Bylaws........................................ 15
Section 4.03. Directors and Officers........................ 15
Section 4.04. Parent Board of Directors..................... 16
Section 4.05. Company Headquarters.......................... 16
ARTICLE 5
Representations and Warranties of the Company
Section 5.01. Corporate Existence and Power................. 16
Section 5.02. Corporate Authorization....................... 16
Section 5.03. Governmental Authorization.................... 17
Section 5.04. Non-contravention............................. 17
Section 5.05. Capitalization................................ 18
Section 5.06. Subsidiaries.................................. 18
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Section 5.07. SEC Filings.................................. 19
Section 5.08. Company Financial Statements................. 20
Section 5.09. Disclosure Documents ........................ 20
Section 5.10. Absence of Certain Changes................... 21
Section 5.11. No Undisclosed Material Liabilities.......... 23
Section 5.12. Compliance with Laws and Court Orders........ 23
Section 5.13. Litigation................................... 24
Section 5.14. Finders' Fees................................ 24
Section 5.15. Taxes........................................ 24
Section 5.16. Employee Benefit Plans....................... 26
Section 5.17. Environmental Matters........................ 28
Section 5.18. Antitakeover Statutes and Rights Agreement... 28
Section 5.19. Opinion of Financial Advisor................. 29
Section 5.20. Real Property................................ 29
Section 5.21. Insurance Coverage........................... 30
Section 5.22. Intellectual Property Rights................. 30
ARTICLE 6
Representations and Warranties of Parent
Section 6.01. Corporate Existence and Power................ 31
Section 6.02. Corporate Authorization...................... 31
Section 6.03. Governmental Authorization................... 32
Section 6.04. Non-contravention............................ 32
Section 6.05. Capitalization............................... 33
Section 6.06. SEC Filings.................................. 33
Section 6.07. Parent Financial Statements.................. 34
Section 6.08. Disclosure Documents......................... 34
Section 6.09. Absence of Certain Changes................... 35
Section 6.10. No Undisclosed Material Liabilities.......... 36
Section 6.11. Compliance with Laws and Court Orders........ 36
Section 6.12. Litigation................................... 36
Section 6.13. Finders' Fees................................ 36
ARTICLE 7
Covenants of the Company
Section 7.01. Conduct of the Company....................... 37
Section 7.02. Shareholder Meeting; Proxy Material.......... 39
Section 7.03. No Solicitation; Other Offers................ 40
Section 7.04. Tax Matters.................................. 41
Section 7.05. Affiliates................................... 42
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ARTICLE 8
Covenants of Parent
Section 8.01. Conduct of Parent........................... 42
Section 8.02. Obligations of Merger Subsidiary............ 43
Section 8.03. Voting of Shares............................ 43
Section 8.04. Director and Officer Liability.............. 43
Section 8.05. Form S-4.................................... 44
Section 8.06. Stock Exchange Listing...................... 44
Section 8.07. Employee Matters............................ 44
Section 8.08. Reorganization Matters...................... 45
Section 8.09. Information Relating to the Offer........... 46
ARTICLE 9
Covenants of Parent and the Company
Section 9.01. Reasonable Best Efforts..................... 46
Section 9.02. Certain Filings............................. 46
Section 9.03. Public Announcements........................ 47
Section 9.04. Confidentiality............................. 47
Section 9.05. Notices of Certain Events................... 47
Section 9.06. Access to Information....................... 48
Section 9.07. Further Assurances.......................... 48
ARTICLE 10
Conditions to the Merger
Section 10.01. Conditions to Obligations of Each Party.... 48
Section 10.02. Conditions to the Obligations of the
Company.................................... 49
ARTICLE 11
Termination
Section 11.01. Termination................................ 50
Section 11.02. Effect of Termination...................... 51
ARTICLE 12
Miscellaneous
Section 12.01. Notices.................................... 51
Section 12.02. Survival of Representations and Warranties. 52
Section 12.03. Amendments; No Waivers..................... 53
Section 12.04. Expenses................................... 53
Section 12.05. Successors and Assigns..................... 54
Section 12.06. Governing Law.............................. 54
Section 12.07. Jurisdiction............................... 54
Section 12.08. WAIVER OF JURY TRIAL....................... 55
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Section 12.09. Counterparts; Effectiveness; Benefit....... 55
Section 12.10. Entire Agreement........................... 55
Section 12.11. Captions................................... 55
Section 12.12. Severability............................... 55
Section 12.13. Specific Performance....................... 55
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 12, 2000, among AMERICAN
FREIGHTWAYS CORPORATION, an Arkansas corporation (the "Company"), FEDEX
CORPORATION, a Delaware corporation ("Parent"), and FDX, INC., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Merger Subsidiary").
WHEREAS, the respective Boards of Directors of the Company, Parent and
Merger Subsidiary have unanimously approved this Agreement and deem it advisable
and in the best interest of their respective shareholder or shareholders to
consummate the Offer and the Merger (each as defined below) on the terms and
conditions set forth herein; and
WHEREAS, as a condition and inducement to Parent's willingness to enter
into this Agreement, concurrently with the execution and delivery of this
Agreement, Parent and certain shareholders of the Company are entering into a
Voting Agreement dated as of the date hereof in the form attached as Exhibit A
hereto (as amended, the "Voting Agreement").
NOW, THEREFORE, in consideration of the promises and the respective
representations and warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1. Definitions. (a) The following terms, as used herein, have the
following meanings:
"Acquisition Proposal" means, other than the transactions contemplated by
this Agreement, any Third Party offer, proposal or inquiry relating to, or any
Third Party indication of interest in, (i) any acquisition or purchase, direct
or indirect, of 20% or more of the consolidated assets of the Company and its
Subsidiaries or over 20% of any class of equity or voting securities of the
Company or any of its Subsidiaries whose assets, individually or in the
aggregate, constitute more than 20% of the consolidated
assets of the Company, (ii) any tender offer (including a self-tender offer) or
exchange offer that, if consummated, would result in any Third Party
beneficially owning 20% or more of any class of equity or voting securities of
the Company or any of its Subsidiaries whose assets, individually or in the
aggregate, constitute more than 20% of the consolidated assets of the Company,
(iii) a merger, consolidation, share exchange, business combination, sale of
substantially all the assets, reorganization, recapitalization, liquidation,
dissolution or other similar transaction involving the Company or any of its
Subsidiaries whose assets, individually or in the aggregate, constitute more
than 20% of the consolidated assets of the Company or (iv) for purposes of
Section 7.03 only, any other transaction the consummation of which would
reasonably be likely to impede, interfere with, prevent or materially delay the
Offer or Merger or that would reasonably be likely to dilute materially the
benefits to Parent of the transactions contemplated hereby.
"Affiliate" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
"Arkansas Law" means the Business Corporation Act of the State of Arkansas.
"Business Day" means a day other than Saturday, Sunday or other day on which
commercial banks in New York, New York or Memphis, Tennessee are authorized or
required by law to close.
"Code" means the Internal Revenue Code of 1986.
"Company Balance Sheet" means the consolidated balance sheet of the Company
as of December 31, 1999 and the notes thereto set forth in the Company 10-K.
"Company Balance Sheet Date" means December 31, 1999.
"Company Disclosure Schedule" means the Company Disclosure Schedule attached
hereto and identified as such.
"Company 10-K" means the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999.
"Company Plans" means (i) the Amended and Restated 1993 Stock Option Plan,
as amended January 23, 1996, January 20, 1999, April 15, 1999 and January 19,
2000, and (ii) the 1989 Stock Option Plan.
"Delaware Law" means the General Corporation Law of the State of Delaware.
"Director Plans" means (i) the Company's Amended and Restated Elected Non-
Employee Director Stock Option Plan, as amended January 19, 2000, (ii) the
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Amended and Restated Appointed Non-Employee Director Stock Option Plan, as
amended on January 19, 2000, (iii) the 1999 Chairman Stock Option Plan, (iv) the
Amended and Restated 1993 Chairman Stock Option Plan, and (v) the 1993 Non-
Employee Director Stock Option Plan.
"Environmental Laws" means any federal, state, local or foreign law
(including common law), treaty, judicial decision, regulation, rule, judgment,
order, decree, injunction, permit or governmental restriction or requirement or
any agreement with any governmental authority or other third party, relating to
human health and safety, the environment or to pollutants, contaminants, wastes
or chemicals or any toxic, radioactive, ignitable, corrosive, reactive or
otherwise hazardous substances, wastes or materials.
"Environmental Permits" means all permits, licenses, franchises,
certificates, approvals and other similar authorizations of governmental
authorities relating to or required by Environmental Laws and affecting, or
relating in any way to, the business of the Company or any of its Subsidiaries
as currently conducted.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" of any entity means any other entity that, together with
such entity, would be treated as a single employer under Section 414 of the
Code.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976.
"Lien" means, with respect to any property or asset, any mortgage, lien,
pledge, charge, security interest, encumbrance or other adverse claim of any
kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"Material Adverse Effect" means, with respect to any Person, a material
adverse effect on the financial condition, business, assets or results of
operations of such Person and its Subsidiaries, taken as a whole.
"1933 Act" means the Securities Act of 1933.
"1934 Act" means the Securities Exchange Act of 1934.
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"Parent Balance Sheet" means the consolidated balance sheet of Parent as
of May 31, 2000 and the notes thereto set forth in the Parent 10-K.
"Parent Balance Sheet Date" means May 31, 2000.
"Parent Stock" means the common stock, $0.10 par value, of Parent.
"Parent 10-K" means Parent's Annual Report on Form 10-K for the fiscal
year ended May 31, 2000.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Real Property" means all real property that the Company or any of its
Subsidiaries owns, leases, operates or subleases.
"Rights" means, with respect to each Share, the rights to purchase
additional Shares pursuant to the Rights Plan.
"Rights Plan" means the Company's First Amended and Restated Rights
Agreement dated as of October 20, 1999 between the Company and Equiserve Trust
Company, N.A., as amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Shares" means the shares of common stock, $0.01 par value, of the
Company.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such Person.
"Third Party" means any Person as defined in Section 13(d) of the 1934 Act,
other than Parent or any of its Affiliates.
Any reference in this Agreement to a statute shall be to such statute, as
amended from time to time, and to the rules and regulations promulgated
thereunder.
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(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Certificates...................... 3.03
Company Board Designee............ 4.04
Company Disclosure Documents...... 5.09
Company Option.................... 3.05
Company Proxy Statement........... 5.09
Company SEC Documents............. 5.07
Company Securities................ 5.05
Company Software.................. 5.22
Company Subsidiary Securities..... 5.06
Company Shareholder Meeting....... 7.02
Confidentiality Agreements........ 9.04
Consideration..................... 3.02
CSFB.............................. 2.02
Effective Time.................... 3.01
Employer Plans.................... 5.16
ESPP.............................. 3.05
Exchange Agent.................... 3.03
Exchange Ratio.................... 3.02
Form S-4.......................... 6.06
GAAP.............................. 5.08
HIPAA............................. 8.07
Indemnified Person................ 8.04
IRS............................... 5.15
Market Price...................... 3.02
Maximum Amount.................... 2.01
Merger............................ 3.01
Merger Consideration.............. 3.02
Merger Date....................... 7.05
Minimum Condition................. 2.01
Multiemployer Plan................ 5.16
NYSE.............................. 3.02
Offer............................. 2.01
Offer Consideration............... 2.01
Offer Documents................... 2.01
Parent Disclosure Documents....... 6.06
Parent Option..................... 3.05
Parent Preferred Stock............ 6.05
Payment Event..................... 12.04
Random Trading Days............... 3.02
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Term Section
---- -------
SAR............................... 3.05
Schedule 14D-9.................... 2.02
Section 16........................ 8.07
Superior Proposal................. 7.04
Surviving Corporation............. 3.01
Tax Return........................ 5.15
Tax............................... 5.15
Taxing Authority.................. 5.15
368(a) Reorganization............. 7.04
ARTICLE 2
The Offer
Section 2.01. The Offer. (a) Provided that nothing shall have occurred
that, had the Offer referred to below been commenced, would give rise to a right
to terminate the Offer pursuant to any of the conditions set forth in Annex I
hereto, as promptly as practicable after the date hereof, but in no event later
than 7 Business Days following the public announcement of the terms of this
Agreement, Parent, acting through Merger Subsidiary, shall commence an offer
(the "Offer") to purchase up to 50.1% of the Shares (the "Maximum Amount"),
together with the associated Rights, outstanding at a price of $28.13 per Share
and associated Right (the "Offer Consideration"), net to the seller in cash. The
Offer shall remain open for a minimum of 22 Business Days, and shall be subject
to (i) the condition that there shall be validly tendered in accordance with the
terms of the Offer, prior to the expiration date of the Offer and not withdrawn,
a number of Shares that, together with the Shares then owned by Parent and/or
Merger Subsidiary, represents 50.1% of the Shares outstanding (the "Minimum
Condition") and (ii) the other conditions set forth in Annex I hereto. Merger
Subsidiary expressly reserves the right to waive any of the conditions to the
Offer and to make any change in the terms of or conditions to the Offer,
provided that without the prior written consent of the Company no change may be
made that changes the form of consideration to be paid in the Offer or the
Merger, decreases the price per Share and associated Right, increases the
Minimum Condition or the Maximum Amount, imposes conditions to the Offer in
addition to those set forth in Annex I or amends any term or any condition set
forth in Annex I in a manner materially adverse to the holders of the Shares.
Notwithstanding the foregoing, without the consent of the Company, Merger
Subsidiary shall have the right to (i) waive the Minimum Condition and (ii)
extend the Offer (x) from time to time if, at the scheduled or extended
expiration date of the Offer, any of the conditions to the Offer shall not have
been satisfied or waived (until such conditions are satisfied or
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waived) for a number of days not to exceed 60 in the aggregate and (y) for any
period required by any rule, regulation, interpretation or position of the SEC
or the staff thereof applicable to the Offer or any period required by
applicable law. If at the expiration date of the Offer a number of Shares has
been validly tendered and not withdrawn that, together with the Shares then
owned by Parent and/or Merger Subsidiary, exceeds the Maximum Amount, the number
of Shares to be purchased by Merger Subsidiary pursuant to the Offer shall be
prorated in accordance with Rule 14d-8 promulgated under the 1934 Act, so that
the number of Shares purchased by Merger Subsidiary pursuant to the Offer,
together with the Shares then owned by Parent and Merger Subsidiary, will
represent 50.1% of the Shares outstanding. Upon the terms and subject to the
conditions of the Offer and this Agreement, Parent acting through Merger
Subsidiary will accept for payment and purchase, within the time period required
under applicable law, all Shares validly tendered and not withdrawn prior to the
expiration of the Offer (subject to the pro ration described in the immediately
preceding sentence). Parent shall provide or cause to be provided to Merger
Subsidiary on a timely basis funds necessary to purchase all Shares that Merger
Subsidiary becomes obligated to purchase pursuant to the Offer.
(b) On the date of commencement of the Offer, Parent and Merger
Subsidiary shall file with the SEC a Tender Offer Statement on Schedule TO (the
"Schedule TO") with respect to the Offer (such Schedule TO and such documents
included therein pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the "Offer Documents"). Parent, Merger
Subsidiary and the Company each agrees promptly to correct any information
provided by it for use in the Offer Documents if and to the extent that such
information shall have become false or misleading in any material respect and to
supplement the Offer Documents to include any information that shall become
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Parent and Merger Subsidiary agree
to take all steps necessary to cause the Schedule TO as so corrected to be filed
with the SEC and the other Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given an
opportunity to review and comment on the Offer Documents prior to the filing
thereof with the SEC or the dissemination thereof to the Company's shareholders.
Section 2.02. Company Action. (a) The Company hereby consents to the
Offer and represents that its Board of Directors, at a meeting duly called and
held has (i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to and in the
best interests of the Company's shareholders, (ii) unanimously approved and
adopted this Agreement and the transactions contemplated hereby, including the
Offer and the
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Merger, in accordance with the requirements of Arkansas Law, and (iii) subject
to Section 703(b), unanimously resolved to (x) recommend acceptance of the Offer
to those shareholders of the Company who desire to receive cash for their Shares
and (y) following the acceptance for payment of the Shares pursuant to the
Offer, recommend the approval and adoption of this Agreement and the Merger by
its shareholders. The Company further represents that Credit Suisse First Boston
(formerly ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation) ("CSFB") has
delivered to the Company's Board of Directors its written opinion that the
Consideration to be received by the holders of Shares is fair to the holders of
Shares from a financial point of view. The Company has been advised that all of
its directors who own Shares intend either to tender their Shares pursuant to
the Offer or to vote in favor of the Merger. The Company will promptly furnish
Parent with a list of its record shareholders, mailing labels and any available
listing or computer file containing the names and addresses of all record
holders of Shares and lists of securities positions of Shares held in stock
depositories, in each case true and correct as of the most recent practicable
date, and will provide to Parent such additional information (including updated
lists of record shareholders, mailing labels and lists of securities positions)
and such other assistance as Parent may reasonably request in connection with
the Offer.
(b) As soon as practicable on the day that the Offer is commenced, the
Company shall file with the SEC and disseminate to holders of Shares, in each
case as and to the extent required by applicable federal securities laws, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") that, subject to
Section 703(b), shall reflect the recommendations of the Company's Board of
Directors referred to above. The Company, Parent and Merger Subsidiary each
agree promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in any
material respect and to supplement the Schedule 14D-9 to include any information
that shall become necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The Company
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and to be disseminated to holders of Shares, in each
case as and to the extent required by applicable federal securities laws. Parent
and its counsel shall be given an opportunity to review and comment on the
Schedule 14D-9 prior to the filing thereof with the SEC or the dissemination
thereof to the Company's shareholders.
Section 2.03. Directors. (a) Effective upon the acceptance for payment
of any Shares pursuant to the Offer, Parent shall be entitled to designate the
number of directors, rounded up to the next whole number, on the Company's Board
of Directors that equals the product of (i) the total number of directors on the
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Company's Board of Directors (giving effect to the election of any additional
directors pursuant to this Section) and (ii) the percentage that the number of
Shares beneficially owned by Parent and/or Merger Subsidiary (including Shares
accepted for payment) bears to the total number of Shares outstanding (such
directors to be allocated as evenly as possible among each of the classes of
directors of the Company) and the Company shall take all action necessary to
cause Parent's designees to be elected or appointed to the Company's Board of
Directors, including increasing the number of directors or seeking and accepting
resignations of incumbent directors. Parent's designees shall serve as evenly as
possible among the classes of the Company's Board of Directors. At such time,
the Company will also use its reasonable best efforts to cause individuals
designated by Parent to constitute the number of members, rounded up to the next
whole number, on (i) each committee of the Board and (ii) each board of
directors of each Subsidiary of the Company (and each committee thereof) that
represents the same percentage as such individuals represent on the Board of
Directors of the Company.
(b) The Company's obligations to appoint Parent's designees to the
Board of Directors shall be subject to Section 14(f) of the 1934 Act and Rule
14f-1 promulgated thereunder. The Company shall promptly take all actions, and
shall include in the Schedule 14D-9 such information with respect to the Company
and its officers and directors, as Section 14(f) and Rule 14f-1 require in order
to fulfill its obligations under this Section. Parent shall supply to the
Company in writing and be solely responsible for any information with respect to
itself and its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees
pursuant to Section 2.03(a) and until the Effective Time, the approval of a
majority of the directors of the Company then in office who were not designated
by Parent shall be required to (i) authorize (and such authorization shall
constitute the authorization of the Board of Directors and no other action on
the part of the Company, including any action by any other director of the
Company, shall be required to authorize) any amendment or termination of this
Agreement by the Company, any extension of time for performance of any
obligation or action hereunder by Parent or Merger Subsidiary, any exercise of
rights or waiver of compliance with any of the agreements or conditions
contained herein for the benefit of the Company, and (ii) take any other action
by the Company in connection with this Agreement or the transactions
contemplated hereby.
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ARTICLE 3
The Merger
Section 3.01. The Merger. (a) At the Effective Time, the Company shall be
merged (the "Merger") with and into Merger Subsidiary in accordance with
Delaware Law and Arkansas Law, whereupon the separate existence of the Company
shall cease, and Merger Subsidiary shall be the surviving corporation (the
"Surviving Corporation").
(b) Subject only to Delaware Law and Arkansas Law, as soon as
practicable (but in no event later than two Business Days) after satisfaction
or, to the extent permitted hereunder, waiver of all conditions to the Merger,
(i) the closing of the Merger will take place at the offices of Parent in
Memphis, Tennessee and (ii) the Company and Merger Subsidiary will file a
certificate of merger with the Delaware Secretary of State and articles of
merger with the Arkansas Secretary of State and make all other filings or
recordings required by Delaware Law and Arkansas Law in connection with the
Merger. The Merger shall become effective at such time (the "Effective Time") as
the certificate of merger is duly filed with the Delaware Secretary of State and
the articles of merger are duly filed with the Arkansas Secretary of State or at
such later time as is specified in the certificate of merger and the articles of
merger.
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Subsidiary, all as provided under Delaware Law.
Section 3.02. Conversion of Shares. At the Effective Time:
(a) except as otherwise provided in Section 3.02(b) or Section 3.04,
each Share outstanding immediately prior to the Effective Time shall be
converted into the right to receive that number of shares of Parent Stock
(rounded to the nearest ten-thousandth of a share) (such number, the "Exchange
Ratio") determined by dividing $28.13 by the Market Price per share of Parent
Stock. The "Market Price " per share of Parent Stock shall be the average
closing price per share of Parent Stock on the New York Stock Exchange, Inc.
(the "NYSE") at the end of the regular session as reported on the Consolidated
Tape, Network A for the ten trading days selected by Parent and the Company by
lot out of the 20 trading days ending on and including the fifth trading day
prior to the Effective Time (the "Random Trading Days"). Parent and the Company
shall select the Random Trading Days at 5:00 p.m. New York time on such fifth
trading day. The shares of Parent Stock to be received as consideration pursuant
to the Merger (together with the cash in lieu of fractional shares of Parent
Stock as specified in
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Section 3.07) are the "Merger Consideration", and the Merger Consideration,
together with the Offer Consideration, is the "Consideration";
(b) each Share held by the Company as treasury stock (other than Shares
in an Employee Plan of the Company) or owned by Parent or any of its
Subsidiaries immediately prior to the Effective Time shall be canceled, and no
payment shall be made with respect thereto; and
(c) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights, powers
and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
Section 3.03. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint an agent reasonably acceptable to the Company (the
"Exchange Agent") for the purpose of exchanging certificates representing Shares
(the "Certificates") for the Merger Consideration. Parent will make available to
the Exchange Agent, as needed, the Merger Consideration to be paid in respect of
the Shares. Promptly after the Effective Time, Parent will send, or will cause
the Exchange Agent to send, to each holder of Shares at the Effective Time a
letter of transmittal and instructions (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) for use in such exchange.
(b) Each holder of Shares that have been converted into the right to
receive the Merger Consideration will be entitled to receive, upon surrender to
the Exchange Agent of a Certificate, together with a properly completed letter
of transmittal, the Merger Consideration in respect of the Shares represented by
such Certificate. Until so surrendered, each such Certificate shall represent
after the Effective Time for all purposes only the right to receive such Merger
Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the Person in whose name the Certificate is registered, it shall be a
condition to such payment that the Certificate so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Exchange Agent any transfer or other
taxes required as a result of such payment to a Person other than the registered
holder of such Certificate or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
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(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be canceled and exchanged for the Merger
Consideration provided for, and in accordance with the procedures set forth, in
this Article.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 3.03(a) (and any interest or other income
earned thereon) that remains unclaimed by the holders of Shares six months after
the Effective Time shall be returned to Surviving Corporation, upon demand, and
any such holder who has not exchanged them for the Merger Consideration in
accordance with this Section prior to that time shall thereafter look only to
the Parent for payment of the Merger Consideration in respect of such Shares
without any interest thereon. Notwithstanding the foregoing, Parent shall not be
liable to any holder of Shares for any amount paid to a public official pursuant
to applicable abandoned property, escheat or similar laws. Any amounts remaining
unclaimed by holders of Shares two years after the Effective Time (or such
earlier date immediately prior to such time when the amounts would otherwise
escheat to or become property of any governmental authority) shall become, to
the extent permitted by applicable law, the property of Surviving Corporation
free and clear of any claims or interest of any Person previously entitled
thereto.
(f) No dividends or other distributions with respect to Parent Stock
constituting part of the Merger Consideration, and no cash payment in lieu of
fractional shares as provided in Section 3.07, shall be paid to the holder of
any unsurrendered Certificates until such Certificates are surrendered as
provided in this Section. Following such surrender, there shall be paid, without
interest, to the Person in whose name the securities of Parent have been
registered, (i) at the time of such surrender, the amount of any cash payable in
lieu of fractional shares to which such Person is entitled pursuant to Section
3.07 and the amount of all dividends or other distributions with a record date
after the Effective Time previously paid or payable on the date of such
surrender with respect to such securities, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time and prior to surrender and with a payment date subsequent to
surrender payable with respect to such securities.
Section 3.04. Dissenting Shares. Notwithstanding Section 3.02, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
delivered to the Company, prior to the shareholder vote approving the Merger,
written notice of such holder's intent to demand payment for such holder's
Shares in accordance with Arkansas Law shall not be converted into a right to
receive the
12
Merger Consideration, unless such holder fails to perfect, withdraws or
otherwise loses its right to assert dissenters' rights. If, after the Effective
Time, such holder fails to perfect, withdraws or loses its right to assert
dissenters' rights, such Shares shall be treated as if they had been converted
as of the Effective Time into a right to receive the Merger Consideration. The
Company shall give Parent prompt notice of any demands received by the Company
for the payment of Shares under dissenters' rights statutes, and Parent shall
have the right to participate in all negotiations and proceedings with respect
to such demands. Except with the prior written consent of Parent, the Company
shall not make any payment with respect to, or settle or offer to settle, any
such demands.
Section 3.05. Stock Options. (a) At or immediately prior to the Effective
Time, (1) each employee stock option or director stock option to purchase Shares
outstanding under any Company Plan or Director Plan, whether or not vested or
exercisable (each, a "Company Option") shall, by virtue of the Merger and
without any further action on the part of any holder thereof, be assumed by
Parent and deemed to constitute an option (each, a "Parent Option") to acquire,
on the same terms and conditions as were applicable under such Company Option
(subject to Section 3.05(b)), the same number of shares of Parent Stock as the
holder of such Company Option would have been entitled to receive pursuant to
Section 3.02(a) of this Agreement had such holder exercised such Company Option
in full immediately prior to the Effective Time (rounded to the nearest whole
number), at a price per share (rounded down to the nearest whole cent) equal to
(x) the aggregate exercise price for the Shares otherwise purchasable pursuant
to such Company Option divided by (y) the number of whole shares of Parent Stock
purchasable pursuant to the Parent Option in accordance with the foregoing, (2)
each share appreciation right issued under any Company Plan or Director Plan
(each, an "SAR") shall be terminated and payment therefor shall be made in
accordance with the terms of such Plan and (3) Parent shall assume the
obligations of the Company under the Company Plans and the Director Plans, each
of which shall continue in effect after the Effective Time, and all references
to the Company in such plans, and any option granted thereunder, shall be deemed
to refer to Parent, where appropriate. The other terms of each such Company
Option, and the plans under which they were issued, shall continue to apply in
accordance with their terms.
(b) Prior to the Effective Time, the Company shall (i) obtain any
consents from holders of Company Options and (ii) make any amendments to the
terms of such Company Options or Company Plans that, in the case of either
clauses (i) or (ii), are necessary or appropriate to give effect to the
transactions contemplated by Section 3.05(a); provided, however, that lack of
consent of any holder of a Company Option shall in no way affect the obligations
of the parties to consummate the Merger. Prior to the Effective Time, the
Company shall take such
13
actions and make any amendments to the Director Plans necessary or appropriate
to cause the Company Options outstanding thereunder to (x) not terminate at the
Effective Time, (y) continue to remain outstanding and vest in accordance with
their terms and (z) in the case any holder of such Company Options ceases to be
a director for any reason, expire in accordance with their respective terms
without regard to any provisions in the Director Plans which provide for an
earlier expiration date.
(c) At or prior to the Effective Time, Parent shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of Parent
Stock for delivery upon exercise of the Parent Options. At or prior to the
Effective Time, Parent shall file a registration statement on Form S-8, with
respect to the shares of Parent Stock subject to such Parent Options.
(d) Neither the Parent nor the Surviving Corporation shall assume or
substitute equivalent options under the Company's 1999 Employee Stock Purchase
Plan (the "ESPP"). Accordingly, pursuant to Section 19(c) of the ESPP, as of the
15/th/ day prior to the Effective Time, the Offering Period (as defined in the
ESPP) then in progress under the ESPP shall terminate. The Company shall notify
each participant in the ESPP in writing of the New Exercise Date (as defined in
the ESPP) for such Offering Period. All shares purchased under the ESPP and
outstanding as of the Effective Time shall be treated under this Article 3 in
the same manner as other Shares outstanding as of the Effective Time. The
Offering Period ending as of the 15th day prior to the Effective Time shall be
the final Offering Period under the ESPP and the ESPP shall be terminated as of
the Effective Time.
Section 3.06. Adjustments. If, during the period between the date of this
Agreement and the Effective Time, any change in the outstanding shares of
capital stock of Company or Parent shall occur, including by reason of any
reclassification, recapitalization, stock split (including a reverse split) or
combination, exchange or readjustment of shares, or any stock dividend or
distribution thereon with a record date during such period, the Merger
Consideration and any other amounts payable pursuant to this Agreement shall be
appropriately adjusted.
Section 3.07. Fractional Shares. Notwithstanding any other provision of
this Agreement, no fractional shares of Parent Stock will be issued and any
holder of Shares entitled to receive a fractional share of Parent Stock but for
this Section shall be entitled to receive a cash payment in lieu thereof, which
payment shall represent such holder's proportionate interest in the net proceeds
from the sale by the Exchange Agent on behalf of such holder of the aggregate
fractional shares of Parent Stock that such holder otherwise would be entitled
to receive. Any such
14
sale shall be made by the Exchange Agent within five Business Days after the
date upon which the Certificate (or affidavit(s) of loss in lieu thereof) that
would otherwise result in the issuance of such fractional shares of Parent Stock
have been received by the Exchange Agent.
Section 3.08. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable to any Person pursuant to this Article such amounts as it is required to
deduct and withhold with respect to the making of such payment under any
provision of federal, state, local or foreign tax law. If the Surviving
Corporation or Parent, as the case may be, so withholds amounts, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which the Surviving Corporation or Parent, as
the case may be, made such deduction and withholding.
Section 3.09. Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond, in such
reasonable amount as is customarily required by Parent and the Exchange Agent as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will pay, in exchange for such lost, stolen or
destroyed Certificate, the Merger Consideration to be paid in respect of the
Shares represented by such Certificate, as contemplated by this Article.
ARTICLE 4
The Surviving Corporation, Certain Governance Matters
Section 4.01. Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law; provided that, at the Effective Time, Article 1
of such certificate of incorporation shall be amended to read as follows: "The
name of the corporation is American Freightways Corporation".
Section 4.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
Section 4.03. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
15
applicable law, (i) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation and (ii) the officers of the
Company at the Effective Time shall be the officers of the Surviving
Corporation.
Section 4.04. Parent Board of Directors. At the Effective Time, the board
of directors of Parent shall consist of 13 directors, of whom one shall be ▇▇.
▇.▇. ▇▇▇▇▇▇▇▇ (the "Company Board Designee") and the remainder of whom shall be
directors of Parent prior to the Effective Time. Prior to the Effective Time,
the Board of Directors of Parent shall take all action necessary to increase the
size of the Board of Directors of Parent as necessary and to elect the Company
Board Designee to the Board of Directors of Parent as a class II director, in
each case as of the Effective Time.
Section 4.05. Company Headquarters. It is the intention of Parent to
cause the Surviving Corporation to maintain a significant presence in Harrison,
Arkansas and to continue to employ approximately the same number of employees of
the Company as are employed at the Effective Time, subject to the Surviving
Corporation's right to make continuing personnel decisions in the ordinary
course of business.
ARTICLE 5
Representations and Warranties of the Company
The Company represents and warrants to Parent that, except as set forth in
the Company Disclosure Schedule:
Section 5.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Arkansas and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not have, individually or in
the aggregate, a Material Adverse Effect on the Company. The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified would not have, individually or
in the aggregate, a Material Adverse Effect on the Company. The Company has
heretofore delivered to Parent true and complete copies of the articles of
incorporation and bylaws of the Company as currently in effect.
16
Section 5.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby are within the Company's corporate powers and,
except for the affirmative vote of the holders of a majority of the outstanding
Shares for the approval and adoption of the Merger Agreement, have been duly
authorized by all necessary corporate action on the part of the Company. The
affirmative vote of the holders of a majority of the outstanding Shares for the
approval and adoption of the Merger Agreement is the only vote of the holders of
any of the Company's capital stock necessary in connection with the consummation
of the Merger and the other transactions contemplated by this Agreement. This
Agreement constitutes a valid and binding agreement of the Company, enforceable
in accordance with its terms.
Section 5.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official or authority, domestic,
foreign or supranational, other than (i) the filing of a certificate of merger
with respect to the Merger with the Delaware Secretary of State, of articles of
merger with the Arkansas Secretary of State and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business, (ii) compliance with any applicable requirements of the Arkansas State
Securities Department, (iii) compliance with any applicable requirements of the
HSR Act and laws, rules and regulations in foreign jurisdictions governing
antitrust or merger control matters, (iv) compliance with any applicable
requirements of the 1933 Act, the 1934 Act and any other applicable securities
or takeover laws, whether state or foreign, (v) any applicable requirements of
the Department of Transportation or of any state with respect to the licensing
or registration of motor carriers and (vi) any actions or filings (including
without limitation any actions or filings that may be required to be taken with
respect to the maintenance or transfer of Environmental Permits) the absence of
which would not be reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on the Company or materially to impair the ability of
the Company to consummate the transactions contemplated by this Agreement.
Section 5.04. Non-contravention. The execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene, conflict with, or result
in any violation or breach of any provision of the articles of incorporation or
bylaws of the Company, (ii) assuming compliance with the matters referred to in
Section 5.03, contravene, conflict with, or result in a violation or breach of
any provision of any applicable law, statute, ordinance, rule, regulation,
judgment, injunction, order or decree, (iii) require any consent or other action
by any Person under,
17
constitute a default, or an event that, with or without notice or lapse of time
or both, would become a default, under, or cause or permit the termination,
cancellation, acceleration or other change of any right or obligation or the
loss of any benefit to which the Company or any of its Subsidiaries is entitled
under any provision of any agreement or other instrument binding upon the
Company or any of its Subsidiaries or any license, franchise, permit,
certificate, approval or other similar authorization affecting, or relating in
any way to, the assets or business of the Company and its Subsidiaries or (iv)
result in the creation or imposition of any Lien on any asset of the Company or
any of its Subsidiaries, except for such contraventions, conflicts and
violations referred to in clause (ii) and for such failures to obtain any such
consent or other action, defaults, terminations, cancellations, accelerations,
changes, losses or Liens referred to in clause (iii) and for the creation or
imposition of such Liens referred to in clause (iv) that would not be reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
the Company or materially to impair the ability of the Company to consummate the
transactions contemplated by this Agreement.
Section 5.05. Capitalization. (a) The authorized capital stock of the
Company consists of 250,000,000 Shares. As of November 10, 2000, there were
outstanding 32,521,705 Shares and employee or director stock options to purchase
an aggregate of 2,717,510 Shares (including SAR's) (of which options to purchase
an aggregate of 1,229,885 Shares (including SAR's) were exercisable). All
outstanding Shares have been, and all Shares that may be issued pursuant to the
Company Plans, the Director Plans and the ESPP will be, when issued in
accordance with the respective terms thereof, duly authorized and validly issued
and are fully paid and nonassessable.
(b) Except as set forth in Section 505 and for changes after November 10,
2000 resulting from the exercise of employee or director stock options issued
pursuant to Company Plans or Director Plans in existence on such date and the
purchase of Shares pursuant to the ESPP, there are no outstanding (i) shares of
capital stock or voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) options or other rights to acquire from the
Company or other obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "Company Securities"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Securities.
Section 5.06. Subsidiaries. (a) Each Subsidiary of the Company is a
corporation duly incorporated, validly existing and in good standing under the
laws
18
of its jurisdiction of incorporation, has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a Material Adverse Effect on the
Company. Each such Subsidiary is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. All Subsidiaries of the Company and their
respective jurisdictions of incorporation are identified in Section 5.06(a) of
the Company Disclosure Schedule.
(b) All of the outstanding capital stock of, or other voting securities
or ownership interests in, each Subsidiary of the Company, are owned by the
Company, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other voting securities or
ownership interests). There are no outstanding (i) securities of the Company or
any of its Subsidiaries convertible into or exchangeable for shares of capital
stock or other voting securities or ownership interests in any Subsidiary of the
Company or (ii) options or other rights to acquire from the Company or any of
its Subsidiaries, or other obligation of the Company or any of its Subsidiaries
to issue, any capital stock or other voting securities or ownership interests
in, or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any Subsidiary of the Company
(the items in clauses (i) and (ii) being referred to collectively as the
"Company Subsidiary Securities"). There are no outstanding obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any of the Company Subsidiary Securities.
Section 5.07. SEC Filings. (a) The Company has delivered to Parent (i)
the Company's Annual Reports on Form 10-K for its fiscal years ended December
31, 1998 and 1999, (ii) its quarterly reports on Form 10-Q for its fiscal
quarters ended March 31, 2000 and June 30, 2000, (iii) its proxy or information
statements relating to meetings of, or actions taken without a meeting by, the
shareholders of the Company held since December 31, 1999, and (iv) all of its
other reports, statements, schedules and registration statements filed with the
SEC since December 31, 1999 (the documents referred to in this Section 5.07(a),
collectively, the "Company SEC Documents").
(b) As of the filing date (or, if amended, as of the date of the last
such amendment) each Company SEC Document complied as to form in all material
19
respects with the applicable requirements of the 1933 Act and the 1934 Act, as
applicable.
(c) As of its filing date (or, if amended, as of the date of the last
such amendment), each Company SEC Document filed pursuant to the 1934 Act did
not, and each such Company SEC Document filed subsequent to the date hereof will
not, contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(d) Each Company SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
Section 5.08. Company Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company included in the Company SEC Documents fairly present, in all
material respects, in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and their consolidated
statements of income, stockholders' equity and cash flows for the periods then
ended (subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
Section 5.09. Disclosure Documents. (a) Each document required to be
filed by the Company with the SEC or required to be distributed or otherwise
disseminated to the Company's shareholders in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"), including
the Schedule 14D-9, the proxy or information statement of the Company (the
"Company Proxy Statement") to be filed with the SEC in connection with the
Merger, and any amendments or supplements thereto, when filed, distributed or
disseminated, as applicable, will comply as to form in all material respects
with the applicable requirements of the 1934 Act.
(b) (i) The Company Proxy Statement, as supplemented or amended, if
applicable, at the time such Company Proxy Statement or any amendment or
supplement thereto is first mailed to shareholders of the Company and at the
time such shareholders vote on adoption of this Agreement and at the Effective
Time and (ii) any Company Disclosure Document (other than the Company Proxy
Statement), at the time of the filing of such Company Disclosure Document or any
20
supplement or amendment thereto and at the time of any distribution or
dissemination thereof, will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this Section 5.09(b)
will not apply to statements included in or omissions from the Company
Disclosure Documents based upon information furnished to the Company in writing
by Parent specifically for use therein.
(c) The information with respect to the Company or any of its
Subsidiaries or Affiliates that the Company furnishes to Parent in writing
specifically for use in the Offer Documents, at the time of the filing thereof,
at the time of any distribution or dissemination thereof and at the time of the
consummation of the Offer, or for use in the Form S-4 or any amendment or
supplement thereto, at the time the Form S-4 or any amendment or supplement
becomes effective and at the Effective Time, will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading.
Section 5.10. Absence of Certain Changes. Since the Company Balance Sheet
Date, except as disclosed in the Company SEC Documents, the business of the
Company and its Subsidiaries has been conducted in the ordinary course
consistent with past practices and there has not been:
(a) any event, occurrence, development or state of circumstances or
facts that has had or would reasonably be likely to have, individually or in the
aggregate, a Material Adverse Effect on the Company, except for events,
occurrences, or developments (i) relating to, arising from or caused by (x) the
economy or securities markets in general, or (y) the LTL segment of the
transportation industry in general or (ii) arising from or caused by the
announcement or pendency of this Agreement or the transactions contemplated
hereby;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any of its
Subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, the Company or any of its Subsidiaries;
(c) any amendment of any term of any outstanding security of the
Company or any of its Subsidiaries (but excluding in any event any amendment to
the Rights Plan contemplated by Section 5.18);
21
(d) any incurrence, assumption or guarantee by the Company or any of
its Subsidiaries of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices;
(e) any creation or other incurrence by the Company or any of its
Subsidiaries of any Lien on any asset other than in the ordinary course of
business consistent with past practices;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in its wholly-owned Subsidiaries made in the ordinary course of
business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or any of
its Subsidiaries that has had or would reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect on the Company;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its Subsidiaries relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its Subsidiaries of any contract or
other right, in either case, material to the Company and its Subsidiaries, taken
as a whole, other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by this
Agreement;
(i) any change in any method of accounting, method of tax accounting or
accounting principles or practice by the Company or any of its Subsidiaries,
except for any such change required by reason of a concurrent change in GAAP or
Regulation S-X under the 1934 Act;
(j) any (i) grant of any severance or termination pay to (or amendment
to any existing arrangement with) any director, officer or employee of the
Company or any of its Subsidiaries (except for any such grant prior to the date
hereof in the ordinary course of business consistent with past practice and
after the date hereof permitted to be made pursuant to Section 7.01(j)(i)), (ii)
increase in benefits payable under any existing severance or termination pay
policies or employment agreements, (iii) any entering into any employment,
deferred compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the Company or any
of its Subsidiaries, (iv) establishment, adoption or amendment (except as
required by applicable law) of any collective bargaining, bonus, profit-sharing,
thrift, pension, retirement, deferred compensation, compensation, stock option,
restricted stock or
22
other benefit plan or arrangement covering any director, officer or employee of
the Company or any of its Subsidiaries, or (v) increase in compensation, bonus
or other benefits payable to any director, officer or employee of the Company or
any of its Subsidiaries, other than, in the case of this clause (v), in the
ordinary course of business consistent with past practice;
(k) any labor dispute, other than routine individual grievances, or, to
the Company's knowledge, any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of its
Subsidiaries, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to such employees; or
(l) any Tax election made or changed, any annual tax accounting period
changed, any method of tax accounting adopted or changed, any amended Tax
Returns or claims for Tax refunds filed, any closing agreement entered into, any
Tax claim, audit or assessment settled, or any right to claim a Tax refund,
offset or other reduction in Tax liability surrendered.
Section 5.11. No Undisclosed Material Liabilities. There are no
liabilities, commitments or obligations of the Company or any of its
Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances that would reasonably be likely to result in
such a liability, commitment or obligation, other than:
(a) liabilities, commitments or obligations disclosed and provided for
in the Company Balance Sheet or in the Company SEC Documents, and
(b) liabilities, commitments or obligations incurred in the ordinary
course of business consistent with past practices since the Company Balance
Sheet Date;
(c) liabilities, commitments or obligations under this Agreement; and
(d) liabilities, commitments or obligations that individually or in the
aggregate have not had and are not reasonably likely to have a Material Adverse
Effect.
Section 5.12. Compliance with Laws and Court Orders. The Company and
each of its Subsidiaries is and since January 1, 1996 has been in compliance
with, and to the knowledge of the Company is not under investigation with
respect to and has not been threatened to be charged with or given notice of any
violation of, any applicable law, statute, ordinance, rule, regulation,
judgment, injunction, order or decree, except for failures to comply or
violations that have not had and would
23
not reasonably be likely to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
Section 5.13. Litigation. Except as set forth in the Company SEC
Documents filed prior to the date hereof, there is no action, suit,
investigation or proceeding (or any basis therefor) pending against, or, to the
knowledge of the Company, threatened against or affecting, the Company, any of
its Subsidiaries, any present or former officer, director or employee of the
Company or any of its Subsidiaries or any other Person for whom the Company or
any of such Subsidiary may be liable or any of their respective properties
before any court or arbitrator or before or by any governmental body, agency or
official, domestic, foreign or supranational, that would reasonably be likely to
have, individually or in the aggregate, a Material Adverse Effect on the Company
or that in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the Offer or the Merger or any of the other transactions
contemplated hereby.
Section 5.14. Finders' Fees. Except for CSFB, a copy of whose engagement
agreement has been provided to Parent, there is no investment banker, broker,
finder or other intermediary that has been retained by or is authorized to act
on behalf of the Company or any of its Subsidiaries who might be entitled to any
fee or commission from the Company or any of its Affiliates in connection with
the transactions contemplated by this Agreement.
Section 5.15. Taxes. (a) All Tax Returns required by applicable law to be
filed with any Taxing Authority by, or on behalf of, the Company or any of its
Subsidiaries have been filed when due in accordance with all applicable laws,
and all such Tax Returns are, or will be at the time of filing, true and
complete in all material respects.
(b) In all material respects, the Company and each of its Subsidiaries
has paid (or has had paid on its behalf) or has withheld and remitted to the
appropriate Taxing Authority, or, where payment is not yet due, has established
(or has had established on its behalf and for its sole benefit and recourse) in
accordance with GAAP an adequate accrual for, all Taxes through the end of the
last period for which the Company and its Subsidiaries ordinarily record items
on their respective books.
(c) To the knowledge of the Company, the income and franchise Tax
Returns of Company and its Subsidiaries through the Tax year ended December 31,
1996 have been examined and closed or are Tax Returns with respect to which the
applicable period for assessment under applicable law, after giving effect to
extensions or waivers, has expired.
24
(d) There is no claim, audit, action, suit, proceeding or investigation
now pending or threatened against or with respect to Company or its Subsidiaries
in respect of any Tax or Tax asset.
(e) During the five-year period ending on the date hereof, neither the
Company nor any of its Subsidiaries was a distributing corporation or a
controlled corporation in a transaction intended to be governed by Section 355
of the Code.
(f) Neither the Company nor any of its Subsidiaries has been a member
of an affiliated, consolidated, combined or unitary group other than one of
which the Company was the common parent.
(g) At no time during the two years preceding the date hereof has there
been pending any request for a ruling or determination between the Company or
any Subsidiary and any Taxing Authority in respect of any Tax, net operating
loss, net capital loss, investment tax credit, foreign tax credit, charitable
deduction, depreciation, or amortization deduction or other tax deduction or
credit.
(h) Neither the Company nor any of its Subsidiaries has any contractual
obligations under any tax sharing agreement or similar agreement or tax
indemnity agreement with any Person which is not a member of the affiliated
group of corporations of which the Company is the common parent; and
(i) Section 5.15(i) of the Company Disclosure Schedule contains a list
of all jurisdictions (whether foreign or domestic) in which the Company or any
of its Subsidiaries currently files Tax Returns.
(j) "Tax" means (i) any tax, governmental fee or other like assessment
or charge of any kind whatsoever (including, but not limited to, withholding on
amounts paid to or by any Person), together with any interest, penalty, addition
to tax or additional amount imposed by any governmental authority (a "Taxing
Authority") responsible for the imposition of any such tax (domestic or
foreign), and any liability for any of the foregoing as transferee, (ii) in the
case of the Company or any of its Subsidiaries, liability for the payment of any
amount of the type described in clause (i) as a result of being or having been
before the Closing Date a member of an affiliated, consolidated, combined or
unitary group, or a party to any agreement or arrangement, as a result of which
liability of the Company or any of its Subsidiaries to a Taxing Authority is
determined or taken into account with reference to the activities of any other
Person, and (iii) liability of the Company or any of its Subsidiaries for the
payment of any amount as a result of being party to any Tax Sharing Agreement or
with respect to the payment of any amount imposed on any person of the type
described in (i) or (ii) as a result of any existing express or implied
agreement or arrangement (including, but not
25
limited to, an indemnification agreement or arrangement). "Tax Return" shall
mean any report, return, document, declaration or other information or filing
required to be supplied to any Taxing Authority with respect to Taxes, including
information returns, any documents with respect to or accompanying payments of
estimated Taxes, or with respect to or accompanying requests for the extension
of time in which to file any such report, return, document, declaration or other
information.
Section 5.16. Employee Benefit Plans. (a) Section 5.16 of the Company
Disclosure Schedule contains a correct and complete list identifying each
material "employee benefit plan", as defined in Section 3(3) of ERISA, each
employment, severance or similar contract, plan, arrangement or policy and each
other plan or arrangement (written or oral) providing for compensation, bonuses,
profit-sharing, stock option or other stock related rights or other forms of
incentive or deferred compensation, vacation benefits, insurance (including any
self-insured arrangements), health or medical benefits, employee assistance
program, disability or sick leave benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or life insurance
benefits) which is maintained, administered or contributed to by the Company or
any ERISA Affiliate and covers any employee or former employee of the Company or
any of its Subsidiaries, or with respect to which the Company or any of its
Subsidiaries has any liability. Copies of such plans (and, if applicable,
related trust or funding agreements or insurance policies) and all amendments
thereto and written interpretations thereof have been furnished to Parent
together with the most recent annual report (Form 5500 including, if applicable,
Schedule B thereto) and tax return (Form 990) prepared in connection with any
such plan or trust. Such plans are referred to collectively herein as the
"Employee Plans".
(b) Neither the Company nor any ERISA Affiliate nor any predecessor
thereof sponsors, maintains or contributes to, or has in the past sponsored,
maintained or contributed to, any Employee Plan subject to Title IV of ERISA.
(c) Neither the Company nor any ERISA Affiliate nor any predecessor
thereof contributes to, or has in the past contributed to, any multiemployer
plan, as defined in Section 3(37) of ERISA (a "Multiemployer Plan").
(d) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter, or has pending
or has time remaining in which to file, an application for such determination
from the Internal Revenue Service, and the Company is not aware of any reason
why any such determination letter should be revoked. The Company has made
available to Parent copies of the most recent Internal Revenue Service
26
determination letters with respect to each such Employee Plan. Each Employee
Plan has been maintained in material compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to such
Employee Plan. No material events have occurred with respect to any Employee
Plan that would result in payment or assessment by or against the Company of any
material excise taxes under Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D,
4980E or 5000 of the Code.
(e) The consummation of the transactions contemplated by this Agreement
will not (either alone or together with any other event) entitle any employee or
independent contractor of the Company or any of its Subsidiaries to severance
pay or accelerate the time of payment or vesting or trigger any payment of
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 Employee Plan. There is no contract, plan or arrangement
(written or otherwise) covering any employee or former employee of the Company
or any of its Subsidiaries that, individually or collectively, would entitle any
employee or former employee to any severance or other payment solely as a result
of the transactions contemplated hereby, or would give rise to the payment of
any amount that would not be deductible pursuant to the terms of Section 280G or
162(m) of the Code.
(f) Neither the Company nor any of its Subsidiaries has any liability
in respect of post-retirement health, medical or life insurance benefits for
retired, former or current employees of the Company or its Subsidiaries except
as required to avoid excise tax under Section 4980B of the Code.
(g) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its Affiliates
relating to, or change in employee participation or coverage under, an Employee
Plan which would increase materially the expense of maintaining such Employee
Plan above the level of the expense incurred in respect thereof for the fiscal
year ended December 31, 1999.
(h) Neither the Company nor any of its Subsidiaries is a party to or
subject to, or is currently negotiating in connection with entering into, any
collective bargaining agreement or other contract or understanding with a labor
union or organization.
(i) There is no action, suit, investigation, audit or proceeding
pending against or involving or, to the knowledge of the Company, threatened
against or
27
involving, any Employee Plan before any court or arbitrator or any state,
federal or local governmental body, agency or official.
Section 5.17. Environmental Matters. (a)
(i) no notice, notification, demand, request for information, citation,
summons or order has been received, no complaint has been filed, no penalty has
been assessed, and no investigation, action, claim, suit, proceeding or review
(or any basis therefor) is pending or, to the knowledge of the Company, is
threatened by any governmental entity or other Person relating to or arising out
of any Environmental Law;
(ii) the Company is in compliance with all Environmental Laws and all
Environmental Permits, except where any noncompliance or failure to receive
Environmental Permits has not had and is not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect on the Company; and
(iii) there are no liabilities of or relating to the Company or any of its
Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise arising under or relating to any
Environmental Law which individually or in the aggregate has had or is
reasonably likely to have a Material Adverse Effect, and, to the knowledge of
the Company, there are no facts, conditions, situations or set of circumstances
that would reasonably be likely to result in or be the basis for any such
liability.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any of its
Subsidiaries or any property or facility now or previously owned or leased by
the Company or any of its Subsidiaries that has not been delivered to Parent at
least five days prior to the date hereof.
(c) Neither the Company nor any of its Subsidiaries owns, leases or
operates or has owned, leased or operated any real property, or conducts or has
conducted any operations, in New Jersey or Connecticut.
(d) For purposes of this Section 5.17, the terms "Company" and
"Subsidiaries" shall include any entity that is, in whole or in part, a
predecessor of the Company or any of its Subsidiaries.
28
Section 5.18. Antitakeover Statutes and Rights Agreement. (a) Except for
the provisions of Section ▇▇-▇▇-▇▇▇, et. seq. of Arkansas Law, no other "control
share acquisition," "fair price," "moratorium" or other antitakeover laws or
regulations enacted under U.S. state or federal laws apply to this Agreement or
any of the transactions contemplated hereby.
(b) The Board of Directors of the Company has taken or has resolved to
take, promptly after the date hereof, all action necessary to render the rights
issued pursuant to the terms of the Rights Plan inapplicable to the Offer, the
Merger, this Agreement and the transactions contemplated hereby.
Section 5.19. Opinion of Financial Advisor. The Company has received the
opinion of CSFB to the effect that, as of the date of such opinion, the
Consideration to be received by the holders of Shares is fair to the holders of
Shares from a financial point of view, and as of the date hereof such opinion
has not been withdrawn.
Section 5.20. Real Property. (a) The Company and its Subsidiaries have
good and marketable, indefeasible, fee simple title to, or in the case of leased
Real Property has valid leasehold interests in, all the Real Property reflected
on the Company Balance Sheet or acquired after the Company Balance Sheet Date.
No Real Property is subject to any Lien, except:
(i) Liens disclosed in the Company SEC Reports;
(ii) (A) Liens for taxes not yet due or being contested in good faith (and
for which adequate accruals or reserves have been established); (B) carriers',
warehousemen's, mechanics, landlords', materialmen's, repairmen's, or other like
Liens arising in the ordinary course of business in respect of obligations that
are not yet due or that are bonded or that are being contested in good faith and
by appropriate proceedings if adequate accruals or reserves have been
established; (C) Liens incurred in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security benefits, or (D) Liens to secure the performance of bids, leases,
contracts, statutory obligations or similar obligations; provided that the
existence of such Liens described in this clause (D), individually or in the
aggregate, has not had and would not reasonably be likely to have a Material
Adverse Effect on the Company; or
(iii) Liens which do not materially detract from the value of such Real
Property, or materially interfere with any present or intended use of such Real
Property or Liens, the existence of which, individually or in the
29
aggregate, has not had and would not reasonably be likely to have a Material
Adverse Effect on the Company.
(b) All leases of Real Property are in good standing and are valid,
binding and enforceable in accordance with their respective terms and there does
not exist under any such lease any default or any event which with notice or
lapse of time or both would constitute a default, except where such failure to
be valid, binding or enforceable or such default, individually or in the
aggregate, has not had and would not reasonably be likely to have a Material
Adverse Effect on the Company.
Section 5.21. Insurance Coverage. The Company has furnished to Parent a
list of, and true and complete copies of, all insurance policies and fidelity
bonds relating to the Company and its Subsidiaries and the conduct of its
business. There is no material claim by the Company or any of its Subsidiaries
pending under any of such policies or bonds for which adequate reserves have not
been established and as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds or in respect of which
such underwriters have reserved their rights. All premiums payable under all
such policies and bonds have been timely paid and the Company and its
Subsidiaries have otherwise complied fully with the terms and conditions of all
such policies and bonds. Such policies of insurance and bonds (or other policies
and bonds providing substantially similar insurance coverage) remain in full
force and effect. Such policies and bonds are of the type and in amounts
customarily carried by Persons conducting businesses similar to the business
conducted by the Company and its Subsidiaries. The Company does not know of any
threatened termination of, premium increase with respect to, or material
alteration of coverage under, any of such policies or bonds. After the
consummation of the Offer the Company and its Subsidiaries shall continue to
have coverage under such policies and bonds with respect to events occurring
prior to the consummation of the Offer.
Section 5.22. Intellectual Property Rights. (a) The Company and its
Subsidiaries own or have rights to use, free and clear of all Liens, and have
not assigned, hypothecated or otherwise encumbered, all trademarks, trade names,
service marks or logos except for such trademarks, trade names, service marks or
logos the failure of which to own or have rights to use individually or in the
aggregate would not reasonably be likely to have a Material Adverse Effect on
the Company.
(b) Each of the Company and its Subsidiaries owns outright or holds
valid and enforceable licenses to all copies of the operating and applications
computer software programs and databases material to the conduct by the Company
and its Subsidiaries of their respective businesses (other than programs and
databases that are generally commercially available) as of the date hereof
30
(collectively, the "Company Software") except for such Company Software the
failure of which to own or validly license individually or in the aggregate
would not reasonably be likely to have a Material Adverse Effect on the Company.
To the Company's knowledge, none of the Company Software used by the Company and
its Subsidiaries, and no use thereof, infringes upon or violates any patent,
copyright, trade secret or other proprietary right of any other Person and, to
the Company's knowledge, no claim with respect to any such infringement or
violation is pending or threatened, except for any such infringement or
violation which, individually or in the aggregate, has not had and would not
reasonably be likely to have a Material Adverse Effect on the Company. Upon
consummation of the transactions contemplated by this Agreement, except for
Company Software sold or otherwise disposed of in the ordinary course of
business after the date hereof, each of the Company and its Subsidiaries (i)
will continue to own or hold all the Company Software free and clear of all
claims, Liens, obligations and liabilities and (ii) with respect to all
agreements for the lease or license of Company Software which require consents
or other actions as a result of the consummation of the transactions
contemplated by this Agreement in order for the Company and its Subsidiaries to
continue to use and operate such Company Software after the consummation of the
transactions contemplated by this Agreement, shall have obtained such consents
or taken such other actions so required prior to the date of consummation of the
Offer, except for such claims, Liens, obligations and liabilities which, and
consents or actions that if not obtained or taken, individually or in the
aggregate, would not be reasonably be likely to have a Material Adverse Effect
on the Company.
ARTICLE 6
Representations and Warranties of Parent
Parent represents and warrants to the Company that:
Section 6.01. Corporate Existence and Power. Each of Parent and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all governmental licenses, authorizations, permits,
consents and approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and approvals the
absence of which would not have, individually or in the aggregate, a Material
Adverse Effect on Parent. Since the date of its incorporation, Merger
Subsidiary has not engaged in any activities other than in connection with or as
contemplated by this Agreement.
31
Section 6.02. Corporate Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Parent and Merger Subsidiary and have
been duly authorized by all necessary corporate action on the part of Parent and
Merger Subsidiary, as applicable. This Agreement constitutes a valid and
binding agreement of each of Parent and Merger Subsidiary, enforceable in
accordance with its terms.
Section 6.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any governmental
body, agency, official or authority, domestic, foreign or supranational, other
than (i) the filing of a certificate of merger with respect to the Merger with
the Delaware Secretary of State, of articles of merger with the Arkansas
Secretary of State and appropriate documents with the relevant authorities of
other states in which Parent is qualified to do business, (ii) compliance with
any applicable requirements of the Arkansas State Securities Department, (iii)
compliance with any applicable requirements of the HSR Act and laws, rules and
regulations in foreign jurisdictions governing antitrust or merger control
matters, (iv) compliance with any applicable requirements of the 1933 Act, the
1934 Act and any other applicable securities or takeover laws, whether state or
foreign, (v) any applicable requirements of the Department of Transportation or
of any state with respect to the licensing or registration of motor carriers and
(vi) any actions or filings (including without limitation any actions or filings
that may be required to be taken with respect to the maintenance or transfer of
Environmental Permits) the absence of which would not be reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Parent or
materially to impair the ability of Parent and Merger Subsidiary to consummate
the transactions contemplated by this Agreement.
Section 6.04. Non-contravention. The execution, delivery and performance
by Parent and Merger Subsidiary of this Agreement and the consummation by Parent
and Merger Subsidiary of the transactions contemplated hereby do not and will
not (i) contravene, conflict with, or result in any violation or breach of any
provision of the certificate of incorporation or bylaws of Parent or Merger
Subsidiary, (ii) assuming compliance with the matters referred to in Section
6.03, contravene, conflict with, or result in any violation or breach of any
provision of any law, statute, ordinance, rule, regulation, judgment,
injunction, order or decree or (iii) require any consent or other action by any
Person under, constitute a default or an event that, with or without the giving
of notice or lapse of time or both, could become a default under, or cause or
permit the termination, cancellation,
32
acceleration or other change of any right or obligation or the loss of any
benefit to which Parent or Merger Subsidiary is entitled under any provision of
any agreement or other instrument binding upon Parent or Merger Subsidiary or
any license, franchise, permit, certificate, approval or similar authorization
affecting, or relating in any way to, the assets or business of the Company and
its Subsidiaries, except for such contraventions, conflicts and violations
referred to in clause (ii) and for such failures to obtain consent or other
action, defaults, terminations, cancellations, accelerations, changes or losses
referred to in clause (iii) that would not be reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Parent or
materially to impair the ability of Parent and Merger Subsidiary to consummate
the transactions contemplated by this Agreement.
Section 6.05. Capitalization. As of November 10, 2000, the authorized
capital stock of (a) Parent consisted of 800,000,000 shares of Parent Stock and
4,000,000 shares of Series Preferred Stock ("Parent Preferred Stock") and (b)
Merger Subsidiary consisted of 1,000 shares of common stock, par value $0.01 per
share. As of November 8, 2000, there were outstanding 285,108,726 shares of
Parent Common Stock, employee stock options to purchase an aggregate of
17,057,980 shares of Parent Common Stock (of which options to purchase an
aggregate of 8,724,226 shares of Parent Common Stock were exercisable) and no
shares of Parent Preferred Stock. All outstanding shares of Parent Stock and of
common stock of Merger Subsidiary have been duly authorized and validly issued
and are fully paid and non-assessable. All shares of Parent Stock, when issued
in the Merger, will be duly authorized and validly issued and will be fully paid
and non-assessable.
Section 6.06. SEC Filings. (a) Parent has furnished to the Company (i)
Parent's Annual Reports on Form 10-K for its fiscal years ended May 31, 2000,
1999 and 1998, (ii) its Quarterly Report on Form 10-Q for its fiscal quarter
ended August 31, 2000, (iii) its proxy or information statements relating to
meetings of, or actions taken without a meeting by, Parent's shareholders held
since May 31, 2000, and (iv) all of its other reports, statements, schedules and
registration statements filed with the SEC since May 31, 2000 and through the
date of this Agreement. Parent has filed all required reports, schedules, forms,
statements and other documents with the SEC since June 1, 1998 (collectively,
the "Parent SEC Documents").
(b) As of the filing date (or, if amended, as of the date of the last
such amendment) each Parent SEC Document complied as to form in all material
respects with the applicable requirements of the 1933 Act and the 1934 Act, as
applicable.
33
(c) As of its filing date (or, if amended, as of the date of the last
such amendment), each Parent SEC Document filed pursuant to the 1934 Act did
not, and each such Parent SEC Document filed subsequent to the date hereof will
not, contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(d) Each Parent SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of
the date such statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
Section 6.07. Parent Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial statements of
Parent included in the Parent SEC Documents fairly present, in all material
respects, in conformity with GAAP applied on a consistent basis (except as may
be indicated in the notes thereto), the consolidated financial position of
Parent and its consolidated Subsidiaries as of the dates thereof and their
consolidated statements of income, stockholders' equity and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements).
Section 6.08. Disclosure Documents. (a) Each document required to be
filed by Merger Subsidiary and Parent with the SEC in connection with the
transactions contemplated by this Agreement (the "Parent Disclosure Documents"),
including, without limitation, the Offer Documents and the registration
statement of Parent (the "Form S-4") to be filed with the SEC in connection with
the issuance of Parent Stock pursuant to this Agreement, and any amendments or
supplements thereto, will, when filed, comply as to form in all material
respects with the applicable requirements of the 1933 Act and the 1934 Act.
(b) Each Parent Disclosure Document, at the time of the filing thereof
and at the time of any distribution or dissemination thereof (or any supplement
or amendment thereto) and, in the case of the Offer Documents, at the time of
consummation of the Offer and, in the case of the Form S-4, at the Effective
Time, will not contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 6.08(b) will not apply
to statements included in or omissions from the Parent Disclosure Documents
based upon
34
information furnished to Parent in writing by the Company specifically for use
therein.
(c) The information with respect to Parent or any of its Subsidiaries
or Affiliates that Parent furnishes to the Company in writing specifically for
use in any Company Disclosure Document will not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading (i) in the case of the Company Proxy Statement, as
supplemented or amended, if applicable, at the time such Company Proxy Statement
or any amendment or supplement thereto is first mailed to shareholders of the
Company and at the time such shareholders vote on adoption of this Agreement and
at the Effective Time, and (ii) in the case of any Company Disclosure Document
other than the Company Proxy Statement, at the time of the filing of such
Company Disclosure Document or any supplement or amendment thereto and at the
time of any distribution or dissemination thereof.
Section 6.09. Absence of Certain Changes. Since the Parent Balance
Sheet Date, except as disclosed in the Parent SEC Documents, the business of the
Parent and its Subsidiaries has been conducted in the ordinary course consistent
with past practice and there has not been:
(a) any event, occurrence, development or state of circumstances or
facts that has had or would reasonably be likely to have, individually or in the
aggregate, a Material Adverse Effect on Parent, except for events, occurrences,
or developments (i) relating to, arising from or caused by (x) the economy or
securities markets in general, or (y) the transportation industry in general or
(ii) arising from or caused by the announcement or pendency of this Agreement or
the transactions contemplated hereby;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Parent, or any
repurchase, redemption or other acquisition by Parent or any Subsidiary of
Parent of any amount of outstanding shares of capital stock or other securities
of, or other ownership interests in, Parent or any of its Subsidiaries;
(c) any amendment of any material term of any outstanding security of
Parent; or
(d) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of Parent or any of its
Subsidiaries that has had or would reasonably be likely to have, individually or
in the aggregate, a Material Adverse Effect on Parent.
35
Section 6.10. No Undisclosed Material Liabilities. There are no
liabilities, commitments or obligations of the Parent or any of its Subsidiaries
of any kind whatsoever whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or set
of circumstances that would reasonably be likely to result in such a liability
commitment or obligation, other than:
(a) liabilities, commitments or obligations disclosed or provided for
in the Parent Balance Sheet or in the Parent SEC Documents;
(b) liabilities, commitments or obligations incurred in the ordinary
course of business consistent with past practice since the Parent Balance Sheet
Date;
(c) liabilities, commitments or obligations under this Agreement; and
(d) liabilities, commitments or obligations that individually or in the
aggregate have not had and are not reasonably likely to have a Material Adverse
Effect.
Section 6.11. Compliance with Laws and Court Orders. Parent and each of
its Subsidiaries is and since January 1, 1996 has been in compliance with, and
to the knowledge of Parent is not under investigation with respect to and has
not been threatened to be charged with or given notice of any violation of, any
applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order or decree, except for failures to comply or violations that have not had
and would not reasonably be likely to have, individually or in the aggregate, a
Material Adverse Effect on Parent.
Section 6.12. Litigation. Except as set forth in the Parent SEC Documents
filed prior to the date hereof, there is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or, to the knowledge of the
Parent, threatened against or affecting, the Parent, any of its Subsidiaries or
any of their respective properties before any court or arbitrator or before or
by any governmental body, agency or official, domestic, foreign or
supranational, that would reasonably be likely to have, individually or in the
aggregate, a Material Adverse Effect on the Parent.
Section 6.13. Finders' Fees. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., whose fees
will be paid by Parent, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Parent or any of its Subsidiaries who might be entitled to any fee or commission
from the
36
Company or any of its Affiliates upon consummation of the transactions
contemplated by this Agreement.
ARTICLE 7
Covenants of the Company
The Company agrees that:
Section 7.01. Conduct of the Company. Except as set forth on Section 7.01
of the Company Disclosure Schedule, from the date hereof until the Effective
Time, the Company and its Subsidiaries shall conduct their business in the
ordinary course consistent with past practice and shall use their reasonable
best efforts to preserve intact their business organizations and relationships
with third parties and to keep available the services of their present officers
and employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time:
(a) the Company will not adopt or propose any change to its articles of
incorporation or bylaws;
(b) the Company will not, and will not permit any of its Subsidiaries
to, merge or consolidate with, or transfer any material amount of assets to, any
other Person, including any other Subsidiary, or acquire a material amount of
stock or assets of any other Person;
(c) the Company will not, and will not permit any of its Subsidiaries
to, sell, lease, license or otherwise dispose of any Subsidiary or any material
amount of assets, securities or property except pursuant to existing contracts
or commitments;
(d) the Company will not declare, set aside or pay any dividend or
other distribution with respect to any shares of capital stock of the Company
and the Company will not, and will not permit any of its Subsidiaries to, effect
any repurchase, redemption or other acquisition of any amount of outstanding
shares of capital stock or other securities of, or other ownership interests in,
the Company or any of its Subsidiaries or issue any capital stock or other
securities or ownership interests;
(e) the Company will not, and will not permit any of its Subsidiaries
to, incur, assume or guarantee any indebtedness for borrowed money other than in
the ordinary course of business, on terms consistent with past practices and so
long as
37
the aggregate principal amount of all such indebtedness does not exceed
$15,000,000;
(f) the Company will not, and will not permit any of its Subsidiaries
to, enter into any lease (whether for real or personal property, including
without limitation any fixed assets), purchase agreement, sale or distribution
agreement or other contract other than in the ordinary course of business and on
terms consistent with past practices and so long as the amount of payments to be
made by the Company and its Subsidiaries under any such lease, agreement or
other contract does not exceed $700,000 in any single fiscal year and
$10,000,000 in the aggregate during the term of such lease, agreement or other
contract;
(g) the Company will not, and will not permit any of its Subsidiaries
to, make any capital expenditures other than: (i) with respect to the period
ending December 31, 2000, capital expenditures contemplated by, and in amounts
not in excess of the amounts set forth in, the Company's capital expenditures
budget for the 2000 fiscal year, a true and complete copy of which has been
delivered by the Company to Parent prior to the date hereof and (ii) with
respect to any period ended after December 31, 2000, capital expenditures in the
amounts and at times consistent with the Company's capital expenditures budget
for the 2000 fiscal year;
(h) the Company will not, and will not permit any of its Subsidiaries
to, create or otherwise incur any Lien on any asset other than in the ordinary
course of business consistent with past practices;
(i) the Company will not, and will not permit any of its Subsidiaries
to, make any loan, advance or capital contributions to or investment in any
Person other than loans, advances or capital contributions to or investments in
wholly-owned Subsidiaries of the Company made in the ordinary course of business
consistent with past practices;
(j) the Company will not, and will not permit any of its Subsidiaries
to, (i) grant any severance or termination pay to (or amend any existing
arrangement with) any director, officer or employee of the Company or any of its
Subsidiaries, except for routine severance payments granted to employees (other
than officers and directors) in the ordinary course of business consistent with
past practice and not exceeding (x) $75,000 in the aggregate with respect to any
single employee and (y) $300,000 in the aggregate with respect to all employees,
(ii) increase benefits payable under any existing severance or termination pay
policies or employment agreements, (iii) enter into any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of the Company or any of its
Subsidiaries, (iv) establish, adopt or amend (except as required by applicable
law) any collective
38
bargaining, bonus, profit-sharing, thrift, pension, retirement, deferred
compensation, compensation, stock option, restricted stock or other benefit plan
or arrangement covering any director, officer or employee of the Company or any
of its Subsidiaries, or (v) increase any compensation, bonus or other benefits
payable to any director, officer or employee of the Company or any of its
Subsidiaries, other than, in the case of this clause (v), in the ordinary course
of business consistent with past practice;
(k) the Company will not, and will not permit any of its Subsidiaries
to, take any action to consummate the royalty/financing company restructuring
described by the Company to Parent prior to the date hereof, including without
limitation create any new Subsidiaries for such purpose;
(l) subject to Section 3.05(b), the Company will not, and will not
permit any of its Subsidiaries to, (i) grant any option pursuant to any director
or employee stock option plan or (ii) accelerate the vesting of any options
under such plans;
(m) the Company will not, and will not permit any of its Subsidiaries
to, (i) take any action that would make any representation and warranty of the
Company hereunder inaccurate in any respect at, or as of any time prior to, the
Effective Time or (ii) omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect at any such
time; and
(n) the Company will not, and will not permit any of its Subsidiaries
to, agree or commit to do any of the foregoing.
Section 7.02. Shareholder Meeting; Proxy Material. The Company shall
cause a meeting of its shareholders (the "Company Shareholder Meeting") to be
duly called and held as soon as reasonably practicable after consummation of the
Offer for the purpose of voting on the approval and adoption of this Agreement
and the Merger. Subject to Section 7.03(b), the Board of Directors of the
Company shall recommend approval and adoption of this Agreement and the Merger
by the Company's shareholders. In connection with such meeting, the Company will
(i) promptly prepare and file with the SEC, will use its reasonable best efforts
to have cleared by the SEC and will thereafter mail to its shareholders as
promptly as practicable after consummation of the Offer the Company Proxy
Statement and all other proxy materials for such meeting, (ii) use its
reasonable best efforts to obtain the necessary approvals by its shareholders of
this Agreement and the transactions contemplated hereby and (iii) otherwise
comply with all legal requirements applicable to such meeting.
39
Section 7.03. No Solicitation; Other Offers. (a) Neither the Company nor
any of its Subsidiaries shall, nor shall the Company or any of its Subsidiaries
authorize or permit any of its or their officers, directors, employees,
investment bankers, attorneys, accountants, consultants or other agents or
advisors to, directly or indirectly, (i) solicit, initiate or knowingly take any
action to facilitate or encourage the submission of any Acquisition Proposal,
(ii) enter into or participate in any discussions or negotiations with, furnish
any information relating to the Company or any of its Subsidiaries or afford
access to the business, properties, assets, books or records of the Company or
any of its Subsidiaries to, otherwise cooperate in any way with, or knowingly
assist, participate in, facilitate or encourage any effort by any Third Party
that is seeking to make, or has made, an Acquisition Proposal, or (iii) grant
any waiver or release under any standstill or similar agreement with respect to
any class of equity securities of the Company or any of its Subsidiaries.
(b) Notwithstanding the foregoing, the Board of Directors of the
Company, directly or indirectly through advisors, agents or other
intermediaries, may, prior to the approval and adoption of this Agreement by the
shareholders of the Company, (i) engage in negotiations or discussions with any
Third Party that, subject to the Company's compliance with Section 7.03(a), has
made a Superior Proposal, (ii) furnish to such Third Party nonpublic information
relating to the Company or any of its Subsidiaries pursuant to a confidentiality
agreement with terms no less favorable to the Company than those contained in
the Confidentiality Agreement (a copy of which shall be provided for
informational purposes only to Parent), (iii) following receipt of such Superior
Proposal, take and disclose to its shareholders a position contemplated by Rule
14e-2(a) under the 1934 Act or otherwise make disclosure to them, (iv) following
receipt of such Superior Proposal, fail to make, withdraw, or modify in a manner
adverse to Parent its recommendation to its shareholders referred to in Sections
2.02 and/or 7.02 hereof and/or (v) take any non-appealable, final action ordered
to be taken by the Company by any court of competent jurisdiction, but in each
case referred to in the foregoing clauses (i) through (iv) only if the Board of
Directors of the Company determines in good faith by a majority vote, on the
basis of advice from ▇▇▇▇▇ ▇▇▇▇ LLP, outside legal counsel to the Company, that
its failure to take such action would be reasonably likely to be inconsistent
with fulfilling its fiduciary duties under applicable law and complies with
Section 7.03(c).
(c) The Board of Directors of the Company shall not take any of the
actions referred to in clauses (i) through (iv) of the preceding subsection
unless the Company shall have delivered to Parent a prior written notice
advising Parent that it intends to take such action, and the Company shall
continue to advise Parent after taking such action. In addition, the Company
shall notify Parent promptly (but in no event later than 36 hours) after receipt
by the Company (or any of its advisors) of any Acquisition Proposal, any
indication that any Third Party is
40
considering making an Acquisition Proposal or any request for information
relating to the Company or any of its Subsidiaries or for access to the
business, properties, assets, books or records of the Company or any of its
Subsidiaries by any Third Party that may be considering making, or has made, an
Acquisition Proposal. The Company shall provide such notice in writing and shall
identify the Third Party making, and the material terms and conditions of, any
such Acquisition Proposal, indication or request. The Company shall keep Parent
fully informed, on a current basis, of any material developments with respect to
any such Acquisition Proposal, indication or request. The Company shall, and
shall cause its Subsidiaries and the advisors, employees and other agents of the
Company and any of its Subsidiaries to, cease immediately and cause to be
terminated any and all existing activities, discussions and negotiations, if
any, with any Third Party conducted prior to the date hereof with respect to any
Acquisition Proposal and shall use its reasonable best efforts to cause any such
Party (or its agents or advisors) in possession of confidential information
about the Company that was furnished by or on behalf of the Company to return or
destroy all such information.
"Superior Proposal" means any bona fide, unsolicited written Acquisition
Proposal for at least a majority of the outstanding Shares on terms that the
Board of Directors of the Company determines in good faith by a majority vote,
on the basis of the advice of a financial advisor of nationally recognized
reputation and taking into account all the terms and conditions of the
Acquisition Proposal, including any break-up fees, expense reimbursement
provisions and conditions to consummation, are more favorable to the Company and
all the Company's shareholders than as provided hereunder and is reasonably
likely to be completed, taking into account all legal, financial, regulatory and
other aspects of the proposal and the third party making the proposal available
to the Board of Directors of the Company.
Section 7.04. Tax Matters. (a) Without the prior written consent of
Parent (such consent not to be unreasonably withheld), neither the Company nor
any of its Subsidiaries shall make or change any Tax election, change any annual
tax accounting period, adopt or change any method of tax accounting, file any
amended Tax Returns or claims for Tax refunds, enter into any closing agreement,
surrender any Tax claim, audit or assessment, surrender any right to claim a Tax
refund, offset or other reduction in Tax liability surrendered, consent to any
extension or waiver of the limitations period applicable to any Tax claim or
assessment or take or omit to take any other action, if any such election,
action or omission would have the effect of increasing the Tax liability or
reducing any Tax asset of the Company or any of its Subsidiaries.
(b) The Company and each of its Subsidiaries will establish or cause to
be established in accordance with GAAP on or before the Effective Time an
41
adequate accrual for all Taxes due with respect to any period ending prior to or
as of the Effective Time.
(c) Neither the Company nor any of its Subsidiaries shall take any
action that would reasonably be likely to prevent the Merger from qualifying as
a reorganization within the meaning of Section 368(a) of the Code ("368(a)
Reorganization") and prior to the Effective Time, the Company and its
Subsidiaries shall use their best efforts to cause the Merger to qualify as a
368(a) Reorganization. The Company shall use its reasonable best efforts to
obtain the opinions referred to in Section 10.02.
Section 7.05. Affiliates. At least 40 days prior to the date of
consummation of the Merger (the "Merger Date"), the Company shall deliver to
Parent a letter identifying all known Persons who may be deemed affiliates of
the Company for the purposes of Rule 145 of the 1933 Act. The Company shall use
its reasonable best efforts to obtain a written agreement from each Person who
may be so deemed as soon as practicable and, in any event, at least 30 days
prior to the Merger Date, substantially in the form of Exhibit B hereto.
ARTICLE 8
Covenants of Parent
Parent agrees that:
Section 8.01. Conduct of Parent. Parent agrees that, from the date hereof
until the Effective Time, Parent and its Subsidiaries shall conduct their
business in the ordinary course consistent with past practice and shall use
their reasonable best efforts to preserve intact their business organizations
and relationships with third parties and to keep available the services of their
present officers and employees. Without limiting the generality of the
foregoing, from the date hereof until the Effective Time:
(a) Parent will not adopt or propose any change in its certificate of
incorporation or bylaws; and
(b) Parent will not, and will not permit any of its Subsidiaries to,
take any action that would make any representation and warranty of Parent
hereunder inaccurate in any respect at, or as of any time prior to, the
Effective Time;
(c) Parent will not, and will not permit any of its Subsidiaries to (i)
take any action that would make any representation and warranty of the Parent
42
hereunder inaccurate in any respect at, or as of any time prior to, the
Effective Time, or (ii) omit to take any action necessary to prevent any such
representation or warranty from being accurate in any respect at any such time;
and
(d) Parent will not, and will not permit any of its Subsidiaries to,
agree or commit to do any of the foregoing.
Section 8.02. Obligations of Merger Subsidiary. Parent will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
Section 8.03. Voting of Shares. Parent agrees to vote all Shares
beneficially owned by it or any of its Subsidiaries in favor of approval and
adoption of this Agreement, the Merger and any actions related thereto at the
Company Shareholder Meeting, and at any adjournment thereof.
Section 8.04. Director and Officer Liability. Parent shall cause the
Surviving Corporation, and the Surviving Corporation hereby agrees, to do the
following:
(a) Parent and the Surviving Corporation shall indemnify and hold
harmless the present and former officers and directors of the Company (each an
"Indemnified Person") in respect of acts or omissions occurring at or prior to
the Effective Time to the fullest extent provided under the Company's articles
of incorporation and bylaws in effect on the date hereof, provided that such
indemnification shall be subject to any limitation imposed from time to time
under applicable law.
(b) For six years after the Effective Time, the Surviving Corporation
shall provide officers' and directors' liability insurance in respect of acts or
omissions occurring prior to the Effective Time covering each such Indemnified
Person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date hereof, provided that, in
satisfying its obligation under this Section 8.04(b), the Surviving Corporation
shall not be obligated to pay premiums in any one year in excess of 200% of the
amount per annum the Company paid in its last full fiscal year, which amount
Company has disclosed to Parent prior to the date hereof.
(c) If Parent, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any
43
Person, then, and in each such case, to the extent necessary, proper provision
shall be made so that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, shall assume the obligations set forth in this
Section 8.04.
(d) The rights of each Indemnified Person under this Section 8.04 shall
be in addition to any rights such Person may have under the articles of
incorporation or bylaws of the Company or any of its Subsidiaries, under
Arkansas Law or any other applicable laws or under any agreement of any
Indemnified Person with the Company or any of its Subsidiaries. These rights
shall survive consummation of the Merger and are intended to benefit, and shall
be enforceable by, each Indemnified Person.
Section 8.05. Form S-4. Parent shall promptly prepare and file with the
SEC under the 1933 Act the Form S-4 and shall use its reasonable best efforts to
cause the Form S-4 to be declared effective by the SEC as promptly as
practicable. Parent shall promptly take any action required to be taken under
foreign or state securities or Blue Sky laws in connection with the issuance of
Parent Stock in the Merger. As promptly as practicable after the Form S-4 shall
have become effective, Parent shall fully cooperate with Company to cause the
Proxy Statement/Prospectus contained in the Form S-4 to be mailed to
stockholders of the Company. Parent will advise Company, promptly after it
receives notice thereof, of (i) the time when the Form S-4 becomes effective,
(ii) the issuance of any stop order with respect to the Form S-4, (iii) the
suspension of the qualification of Parent Stock for offering or sale in any
jurisdiction, or (iv) any request by the SEC for an amendment of the Form S-4 or
comments thereon and responses thereto or requests by the SEC for additional
information.
Section 8.06. Stock Exchange Listing. Parent shall use its reasonable
best efforts to cause the shares of Parent Stock to be issued in connection with
the Merger to be listed on the NYSE, subject to official notice of issuance.
Section 8.07. Employee Matters. (a) Parent agrees that it shall cause
the Surviving Corporation, for a period of at least two years after the
Effective Time, to provide or cause to be provided to the employees of the
Surviving Corporation and its Subsidiaries, subject to applicable law, benefits
(excluding stock or other equity-based compensation) that are no less favorable
in the aggregate than the benefits currently being provided by the Company and
its Subsidiaries to such employees. Nothing herein shall limit the right of the
Surviving Corporation to amend, modify or terminate any Employee Plan, Company
Plan or Director Plan. As of the Effective Time, the Surviving Corporation shall
assume, honor and perform in accordance with their terms any employment
agreements substantially in the form of Exhibit C with any employee of the
Company listed in item 19 of Section 5.16(a) of the Company Disclosure Schedule
(and specifying, with respect
44
to each such Person, a salary and a term of employment as set forth on such
Schedule opposite such Person's name). To the extent that Parent elects to cover
Company's employees under any employee benefit plan(s) maintained by Parent or
any of its subsidiaries, Parent shall grant each such employee full credit for
all periods of employment with Company and its subsidiaries for purposes of
eligibility, and vesting (if applicable), under such plans, except: (i) with
respect to any health plan maintained by Parent or its Subsidiaries, Parent
will, in accordance with the requirements of the Health Insurance Portability
and Accountability Act ("HIPAA"), waive any imitation on medical coverage due to
pre-existing conditions for an employee or dependent who is covered under
Company's health plan immediately prior to the date on which such employee or
dependent would be covered under a health plan maintained by Parent or
subsidiary, (ii) Parent shall not be obligated to provide credit for years of
service for benefit accrual purposes under any defined benefit pension plan
maintained by Parent or its subsidiaries prior to the date on which the employee
actually becomes a participant in such plan, and (iii) with respect to any
health plan of Parent or one of its subsidiaries which provides post-retirement
coverage, Parent will provide credit only for periods of an employee's
employment with Company or its subsidiaries for purposes of determining
eligibility. The Surviving Corporation shall assume, honor and perform the
provisions of the Company's Director Compensation Health Benefit Plan, adopted
January 21, 1998 and contained in the Company's Director Handbook dated July 6,
2000 at pages 42-43.
(b) Prior to the Effective Time, the Board of Directors of Parent, or
an appropriate committee of non-employee directors thereof, shall adopt a
resolution consistent with the rules and interpretive guidance of the SEC so
that the acquisition by an officer or director of the Company who may become a
covered person of Parent for purposes of Section 16 of the 1934 Act and the
rules and regulations thereunder ("Section 16") of Parent Stock and options to
acquire Parent Stock pursuant to the terms of this Agreement and the Merger
shall be an exempt transaction for purposes of Section 16.
Section 8.08. Reorganization Matters. Neither Parent nor any of its
Subsidiaries shall take any action that would reasonably be likely to prevent
the Merger from qualifying as a 368(a) Reorganization and prior to the Effective
Time, the Parent and its Subsidiaries shall use their reasonable best efforts to
cause the Merger to qualify as a 368(a) Reorganization. Parent shall use its
reasonable best efforts to obtain the opinions referred to in Section 10.01(f).
Section 8.09. Information Relating to the Offer. Parent shall, and shall
use its reasonable best efforts to cause any depository or agent effecting the
Offer, to provide to the Company promptly as requested from time to time by the
Company
45
current information regarding the status of the Offer and the number of shares
tendered and not validly withdrawn.
ARTICLE 9
Covenants of Parent and the Company
The parties hereto agree that:
Section 9.01. Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, Company and Parent will use their reasonable best
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement. In
furtherance and not in limitation of the foregoing, (i) each of Parent and
Company agrees to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act with respect to the transactions contemplated hereby as
promptly as practicable and in any event within ten Business Days of the date
hereof and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and to take
all other actions necessary to cause the expiration or termination of the
applicable waiting periods under the HSR Act as soon as practicable; provided
that in no event shall Parent or any of its Affiliates be required to divest or
hold separate any business or assets of the Company, Parent or any of their
respective Affiliates and (ii) the Company will use its reasonable best efforts
to obtain each of the consents set forth in Section 9.01 of the Company
Disclosure Schedule.
Section 9.02. Certain Filings. The Company and Parent shall cooperate
with one another (i) in connection with the preparation of the Company
Disclosure Documents, the Offer Documents and the Form S-4, (ii) in determining
whether any action by or in respect of, or filing with, any governmental body,
agency, official, or authority is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any material contracts,
in connection with the consummation of the transactions contemplated by this
Agreement and (iii) in taking such actions or making any such filings,
furnishing information required in connection therewith or with the Company
Disclosure Documents, the Offer Documents or the Form S-4 and seeking timely to
obtain any such actions, consents, approvals or waivers.
Section 9.03. Public Announcements. Parent and the Company will consult
with each other regarding timing and content before issuing any press release or
making any public statement with respect to this Agreement or the transactions
46
contemplated hereby and, except as may be required by applicable law or any
listing agreement with any national securities exchange, will not issue any such
press release or make any such public statement prior to such consultation. On
the date of this Agreement, the Parent and the Company shall issue a joint press
release announcing the execution and delivery of this Agreement and the
transactions contemplated hereby.
Section 9.04. Confidentiality. Prior to the Effective Time and after any
termination of this Agreement, each of the Company and Parent will hold, and
will use its reasonable best efforts to cause its officers, directors,
employees, accountants, counsel, consultants, advisors and agents to hold, in
confidence, all confidential documents and information concerning the Company or
any of its Subsidiaries or Parent or any of its Subsidiaries, as the case may
be, furnished to Parent or its Affiliates or the Company or its Affiliates, as
the case may be, in connection with the transactions contemplated by this
Agreement, including the shareholder lists furnished by the Company pursuant to
Section 2.02, in accordance with the terms of the Confidentiality Agreements
each dated September 21, 2000 between Parent and the Company (as amended,
collectively, the "Confidentiality Agreements").
Section 9.05. Notices of Certain Events. Parent and the Company shall
promptly notify each other of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced
or, to its knowledge, threatened against, relating to or involving or otherwise
affecting the Company or Parent or any of their respective Subsidiaries that, if
pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 5.10(k), 5.12, 5.13, 5.16 or 5.18 or Section 6.11
or 6.12, as the case may be, or that relate to the consummation of the
transactions contemplated by this Agreement.
Section 9.06. Access to Information. From the date hereof until the
Effective Time and subject to applicable law and the Confidentiality Agreements,
the Company and Parent shall (i) give each other, their respective counsel,
financial advisors, auditors and other authorized representatives full access to
the offices,
47
properties, books and records of the Company and the Subsidiaries or Parent and
its Subsidiaries, as the case may be, (ii) furnish to each other, their
respective counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
Persons may reasonably request and (iii) instruct the employees, counsel,
financial advisors, auditors and other authorized representatives of the Company
and its Subsidiaries or Parent and its Subsidiaries, as the case may be, to
cooperate with the party hereunder making such investigation. Any investigation
pursuant to this Section shall be conducted in such manner as not to interfere
unreasonably with the conduct of the business of the party furnishing such
information and its Subsidiaries. No information or knowledge obtained by any
party hereto in any investigation pursuant to this Section shall affect or be
deemed to modify any representation or warranty made by such party hereunder.
Section 9.07. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
ARTICLE 10
Conditions to the Merger
Section 10.01. Conditions to Obligations of Each Party. The obligations
of the Company, Parent and Merger Subsidiary to consummate the Merger are
subject to the satisfaction or, to the extent permitted by law, waiver, of the
following conditions; provided, that any condition that is not satisfied as a
result of a breach by a party hereto of any provision of this Agreement shall
cease, from and after the time of such breach, to be a condition to the
obligations of such party to consummate the Merger:
(a) this Agreement shall have been approved and adopted by the
shareholders of the Company in accordance with Arkansas Law;
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
48
(c) Merger Subsidiary shall have purchased Shares pursuant to the
Offer;
(d) the Form S-4 shall have been declared effective, no stop order
suspending the effectiveness of the Form S-4 shall be in effect and no
proceedings for such purpose shall be pending before or threatened by the SEC;
(e) the shares of Parent Stock to be issued in the Merger shall have
been approved for listing on the NYSE, subject to official notice of issuance;
and
(f) Parent shall have received an opinion of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
substantially in the form of Exhibit D hereto, on the basis of certain facts,
representations and assumptions set forth in such opinion, dated the Effective
Time, to the effect that the Merger will be treated for federal income tax
purposes as a 368(a) Reorganization and that each of Parent, Merger Subsidiary
and the Company will be a party to the reorganization within the meaning of
Section 368(b) of the Code. In rendering such opinion, such counsel shall be
entitled to rely upon representations of officers of Parent, Merger Subsidiary
and the Company substantially in the form of Exhibits F and G hereto.
Section 10.02. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further condition: that the Company shall have
received an opinion of ▇▇▇▇▇ ▇▇▇▇ LLP substantially in the form of Exhibit E
hereto, on the basis of certain facts, representations and assumptions set forth
in such opinion, dated the Effective Time, to the effect that the Merger will be
treated for federal income tax purposes as a 368(a) Reorganization and that each
of Parent, Merger Subsidiary and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code. In rendering
such opinion, such counsel shall be entitled to rely upon representations of
officers of Parent, Merger Subsidiary and the Company substantially in the form
of Exhibits F and G hereto.
ARTICLE 11
Termination
Section 11.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the shareholders of the Company):
(a) by mutual written agreement of the Company and Parent;
49
(b) by either the Company or Parent, if:
(i) the Offer has not been consummated on or before March 1, 2001;
provided that the right to terminate this Agreement pursuant to this Section
11.01(b)(i) shall not be available to any party whose breach of any provision of
this Agreement results in the failure of the Offer to be consummated by such
date;
(ii) there shall be any law or regulation that makes acceptance for
payment of, and payment for, the Shares pursuant to the Offer, or consummation
of the Merger illegal or otherwise prohibited or any judgment, injunction, order
or decree of any court or governmental body having competent jurisdiction
permanently enjoining Merger Subsidiary from accepting for payment of, and
paying for, the Shares pursuant to the Offer or Merger Subsidiary, Company or
Parent from consummating the Merger and such judgment, injunction, order or
decree shall have become final and nonappealable; or
(iii) prior to the acceptance for payment of the Shares under the
Offer, the Board of Directors of the Company shall have failed to make,
withdrawn, or modified in a manner adverse to Parent, its approval or
recommendation of this Agreement, the Offer or the Merger, as permitted by
Section 7.03(b)(iv); provided that the Company shall have paid any amounts due
pursuant to Sections 12.04(b) and (c) in accordance with the terms, and at the
times, specified therein, and provided, further, that, in the case of any
termination by the Company, (x) the Company notifies Parent promptly in writing
and at least 72 hours prior to such termination, of its intention to terminate
this Agreement and to enter into a binding written agreement concerning an
Acquisition Proposal that constitutes a Superior Proposal of the nature
described in Section 7.03(c), attaching the most current version of such
agreement (or a description of all material terms and conditions thereof), and
(y) Parent does not make, within 72 hours of receipt of such written
notification, an offer that the Board of Directors of the Company determines, in
good faith after consultation with its financial advisors, is at least as
favorable to the shareholders of the Company as such Superior Proposal, it being
understood that the Company shall not enter into any such binding agreement
during such 72-hour period; or
(c) by Parent, if prior to the acceptance for payment of the Shares
under the Offer, there has been a breach by the Company of any representation,
warranty, covenant or agreement contained in this Agreement that is not curable
and such
50
breach would give rise to a failure of the condition set forth in (c)
of Annex I hereof; or
(d) by the Company, if prior to the acceptance for payment of the
Shares under the Offer there has been a breach by Parent of any representation,
warranty, covenant or agreement contained in this Agreement that is not curable
and such breach would give rise to a failure of the condition set forth in (c)
of Annex I hereof (which, for purposes of this Section 11.01(d) only shall apply
mutatis mutandis to Parent).
The party desiring to terminate this Agreement pursuant to this Section
11.01 (other than pursuant to Section 11.01(a)) shall give notice of such
termination to the other party.
Section 11.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 11.01, this Agreement shall become void and of no effect
with no liability on the part of any party (or any shareholder, director,
officer, employee, agent, consultant or representative of such party) to the
other party hereto, provided that (x) if such termination shall result from the
willful (i) failure of either party to fulfill a condition to the performance of
the obligations of the other party or (ii) failure of either party to perform a
covenant hereof, such party shall be fully liable for any and all liabilities
and damages incurred or suffered by the other party as a result of such failure
and (y) in any event, the provisions of Sections 9.04, 12.04, 12.06, 12.07 and
12.08 shall survive any such termination.
ARTICLE 12
Miscellaneous
Section 12.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
if to Parent or Merger Subsidiary, to:
FedEx Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to:
▇▇
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
if to the Company, to:
American Freightways Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a Business Day. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding Business Day.
Section 12.02. Survival of Representations and Warranties. The
representations and warranties and agreements (other than the agreements
specified in clause (y) of Section 11.02 and, if the Effective Time occurs,
Section 8.04) contained herein and in any certificate or other writing delivered
pursuant hereto shall not survive the Effective Time or the termination of this
Agreement.
Section 12.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or, in the case of a waiver, by each
party against whom the waiver is to be effective, provided that, after the
adoption of this Agreement by the shareholders of the Company and without their
further approval,
52
no such amendment or waiver shall reduce the amount or change the kind of
consideration to be received in exchange for the Shares in the Merger.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 12.04. Expenses. (a) Except as otherwise provided in this
Section, all costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.
(b) If a Payment Event (as hereinafter defined) occurs, the Company
shall pay to Parent (by wire transfer of immediately available funds), if,
pursuant to (x) below, simultaneously with the occurrence of such Payment Event
or, if pursuant to (y) below, within two Business Days following such Payment
Event, a fee of $33,000,000.
"Payment Event" means (x) the termination of this Agreement pursuant to
Section 1101 or (y) the occurrence of any of the following events within 12
months of the termination of this Agreement pursuant to Sections 11.01(b)(i) or
11.01(c) (and prior to such termination, an Acquisition Proposal relating to the
Company has been made to the Company or to the shareholders of the Company by
any Person): (i) the Company merges with or into, or is acquired, directly or
indirectly, by merger or otherwise by, a Third Party; (ii) a Third Party,
directly or indirectly, acquires more than 50% of the total assets of the
Company and its Subsidiaries, taken as a whole; (iii) a Third Party, directly or
indirectly, acquires more than 50% of the outstanding Shares; or (iv) the
Company adopts or implements a plan of liquidation, recapitalization or share
repurchase relating to more than 50% of the outstanding Shares or an
extraordinary dividend relating to more than 50% of the outstanding Shares or
50% of the assets of the Company and its Subsidiaries, taken as a whole.
(c) Upon any termination of this Agreement by the Company pursuant to
Section 11.01(b)(iii) or by Parent pursuant to Sections 11.01(b)(iii) or
11.01(c), the Company shall reimburse Parent and its Affiliates (by wire
transfer of immediately available funds), no later than two Business Days after
such termination, for 100% of their reasonable out-of-pocket fees and expenses
(including reasonable fees and expenses of their counsel) actually incurred by
any of them in connection with this Agreement and the transactions contemplated
hereby.
53
(d) The Company acknowledges that the agreements contained in this
Section 12.04 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, Parent and Merger Subsidiary would
not enter into this Agreement. Accordingly, if the Company fails promptly to
pay any amount due to Parent pursuant to this Section 12.04, it shall also pay
any costs and expenses incurred by Parent or Merger Subsidiary in connection
with a legal action to enforce this Agreement that results in a judgment against
the Company for such amount.
Section 12.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Parent or Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of its Affiliates, the right to purchase all or a portion of the Shares
pursuant to the Offer, but no such transfer or assignment will relieve Parent or
Merger Subsidiary of its obligations under the Offer or prejudice the rights of
tendering shareholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
Section 12.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard to
the conflicts of law rules of such state.
Section 12.07. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal court located in the State of Delaware or any Delaware state court,
and each of the parties hereby consents to the jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any
party anywhere in the world, whether within or without the jurisdiction of any
such court. Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 12.01 shall be deemed effective
service of process on such party.
Section 12.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR
54
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 12.09. Counterparts; Effectiveness; Benefit. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
Except as provided in Section 8.04, no provision of this Agreement is intended
to confer any rights, benefits, remedies, obligations, or liabilities hereunder
upon any Person other than the parties hereto and their respective successors
and assigns.
Section 12.10. Entire Agreement. This Agreement and the Confidentiality
Agreements constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter of this Agreement.
Section 12.11. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
Section 12.12. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated 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 a
determination, the parties shall modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
Section 12.13. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
55
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
AMERICAN FREIGHTWAYS
CORPORATION
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
-----------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
Title: Chairman
FEDEX CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President,
General Counsel and Secretary
FDX, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
56
ANNEX I
Notwithstanding any other provision of the Offer, Merger Subsidiary shall
not be required to accept for payment or pay for any Shares, and may terminate
the Offer, if:
(i) prior to the expiration date of the Offer, (A) the Minimum
Condition shall not have been satisfied, or (B) the waiting period applicable to
the Offer under the HSR Act or any other laws, rules and regulations in foreign
jurisdictions governing antitrust or merger control matters (if any) shall not
have expired or been terminated; and
(ii) at any time on or after November 12, 2000 and prior to the
expiration date of the Offer, any of the following conditions exists:
(a) (x) there shall be instituted or pending any action or proceeding
by any government or governmental authority or agency, domestic, foreign or
supranational, before any court or governmental authority or agency, domestic,
foreign or supranational, (1) challenging or seeking to make illegal, delay
materially or otherwise directly or indirectly restrain or prohibit the making
of the Offer, the acceptance for payment of or payment for some or all of the
Shares by Parent or Merger Subsidiary or the consummation of the Merger, (2)
seeking to restrain or prohibit Parent's ownership or operation (or that of its
Affiliates) of all or any material portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole, or to compel Parent or any of its Affiliates to
dispose of or hold separate all or any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of Parent and
its Subsidiaries, taken as a whole, (3) seeking to impose or confirm material
limitations on the ability of Parent, Merger Subsidiary or any of Parent's other
Affiliates effectively to exercise full rights of ownership of the Shares,
including the right to vote any Shares acquired or owned by Parent, Merger
Subsidiary or any of Parent's other Affiliates on all matters properly presented
to the Company's shareholders, (4) seeking to require divestiture by Parent,
Merger Subsidiary or any of Parent's other Affiliates of any Shares or (5) that
otherwise is reasonably likely to have a Material Adverse Effect on the Company
or Parent or (y) there shall have been any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Offer or the Merger, by any
court, government or governmental authority or agency, domestic, foreign or
supranational, other than the application of the waiting period provisions of
the HSR Act to the Offer or the Merger that is reasonably likely, directly or
indirectly, to result in any of the consequences referred to in clause (x); or
(b) any change shall have occurred (or any development shall have
occurred involving a prospective change) in the business, assets, liabilities,
financial condition, capitalization, operations or results of operations of the
Company or any of its Subsidiaries that has had or is reasonably likely to have
a Material Adverse Effect on the Company, except for events, occurrences, or
developments (i) relating to, arising from or caused by (x) the economy or
securities markets in general or (y) the LTL segment of the transportation
industry in general or (ii) arising from or caused by the announcement or
pendency of this Agreement or the transactions contemplated hereby; or
(c) (i) the Company shall have breached or failed to perform in all
material respects any of its obligations under the Merger Agreement, or (ii) any
of the representations and warranties of the Company contained in the Merger
Agreement and qualified by materiality or "Material Adverse Effect" shall not be
true or any of the representations and warranties not so qualified shall not be
true in all material respects, in each case when made or at any time prior to
the consummation of the Offer as if made at and as of such time (except to the
extent that any such representation or warranty is made as of a specific date,
in which case such representation or warranty (x) if qualified by materiality or
"Material Adverse Effect," shall be true as of such specific date and (y) if not
so qualified, shall be true in all material respects as of such specific date)
and in each case such breach shall not be subject to cure; or
(d) the Merger Agreement shall have been terminated in accordance with
its terms; or
(e) there shall have occurred any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange or in the
over-the-counter market in the United States, any declaration of a banking
moratorium by Federal or New York authorities or general suspension of payments
in respect of banks in the United States that regularly participate in the U.S.
market in loans to large corporations, any material limitation by any Federal,
state or local government in the United States or any court, administrative or
regulatory agency or commission or other governmental authority or agency in the
United States that materially affects the extension of credit generally by banks
in the United States that regularly participate in the U.S. market in loans to
large corporations, any commencement of a war involving the United States or any
commencement of armed hostilities or other national or international calamity
involving the United States that has a material adverse effect on bank
syndication or financial markets in the United States or, in the case of any of
the foregoing occurrences existing on or at the time of the commencement of the
Offer, a material acceleration or worsening thereof;
2
which, in the reasonable judgment of Parent in any such case, and
regardless of the circumstances (including any action or omission by Parent but
excluding any willful action or omission by Parent not permitted or contemplated
by the Merger Agreement) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.
3