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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF APRIL 6, 2000
BY AND AMONG
MERITOR AUTOMOTIVE, INC.,
MU SUB, INC.
AND
▇▇▇▇▇ INDUSTRIES, INC.
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w TABLE OF CONTENTS
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ARTICLE I THE FIRST STEP MERGER.......................................................................2
SECTION 1.1 The First Step Merger..................................................................2
SECTION 1.2 First Effective Time...................................................................2
SECTION 1.3 Effects of the First Step Merger.......................................................2
SECTION 1.4 Conversion of Meritor Common Stock.....................................................3
SECTION 1.5 Newco Common Stock.....................................................................4
SECTION 1.6 Options ...............................................................................4
SECTION 1.7 Articles of Incorporation..............................................................5
SECTION 1.8 By-Laws ...............................................................................5
SECTION 1.9 Board of Directors; Management.........................................................5
ARTICLE II THE SECOND STEP MERGER.....................................................................5
SECTION 2.1 The Second Step Merger.................................................................5
SECTION 2.2 Closing ...............................................................................6
SECTION 2.3 Effective Time.........................................................................6
SECTION 2.4 Effects of the Second Step Merger......................................................6
SECTION 2.5 Conversion of ▇▇▇▇▇ Common Stock.......................................................6
SECTION 2.6 Newco Common Stock.....................................................................7
SECTION 2.7 Options ...............................................................................7
SECTION 2.8 Articles of Incorporation..............................................................8
SECTION 2.9 By-Laws ...............................................................................8
SECTION 2.10 Rights Agreement......................................................................8
SECTION 2.11 Tax Consequences......................................................................8
SECTION 2.12 Officers .............................................................................8
SECTION 2.13 Board of Directors....................................................................9
SECTION 2.14 Name; Corporate Offices..............................................................10
SECTION 2.15 Dividends ...........................................................................10
SECTION 2.16 Fiscal Year..........................................................................10
ARTICLE III EXCHANGE OF SHARES.......................................................................10
SECTION 3.1 Newco to Make Shares and Cash Available...............................................10
SECTION 3.2 Exchange of Shares....................................................................11
SECTION 3.3 Affiliates ...........................................................................15
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................................16
SECTION 4.1 Representations and Warranties of ▇▇▇▇▇...............................................16
SECTION 4.2 Representations and Warranties of Meritor.............................................30
SECTION 4.3 Representations and Warranties of Newco...............................................43
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ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS..................................................44
SECTION 5.1 Covenants of ▇▇▇▇▇....................................................................44
SECTION 5.2 Covenants of Meritor and Newco........................................................49
SECTION 5.3 Governmental Filings..................................................................54
SECTION 5.4 Control of Other Party's Business.....................................................55
ARTICLE VI ADDITIONAL AGREEMENTS.....................................................................55
SECTION 6.1 Preparation of Proxy Statement; Stockholders Meetings.................................55
SECTION 6.2 Newco Board of Directors and Management...............................................58
SECTION 6.3 Access to Information.................................................................58
SECTION 6.4 Reasonable Best Efforts...............................................................59
SECTION 6.5 Acquisition Proposals.................................................................61
SECTION 6.6 Employee Benefits Matters.............................................................63
SECTION 6.7 Fees and Expenses.....................................................................65
SECTION 6.8 Directors' and Officers' Indemnification and Insurance................................66
SECTION 6.9 Public Announcements..................................................................67
SECTION 6.10 Accounting Matters...................................................................67
SECTION 6.11 Listing of Shares of Newco Common Stock..............................................68
SECTION 6.12 Dividends ...........................................................................68
SECTION 6.13 Affiliates...........................................................................68
SECTION 6.14 Section 16 Matters...................................................................69
SECTION 6.15 Takeover Statutes....................................................................69
SECTION 6.16 Advice of Changes....................................................................69
ARTICLE VII CONDITIONS PRECEDENT.....................................................................70
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger............................70
SECTION 7.2 Additional Conditions to Obligations of ▇▇▇▇▇.........................................71
SECTION 7.3 Additional Conditions to Obligations of Meritor and Newco.............................72
ARTICLE VIII TERMINATION AND AMENDMENT...............................................................74
SECTION 8.1 Termination...........................................................................74
SECTION 8.2 Effect of Termination.................................................................76
SECTION 8.3 Amendment ............................................................................78
SECTION 8.4 Extension; Waiver.....................................................................78
ARTICLE IX GENERAL PROVISIONS........................................................................79
SECTION 9.1 Non-Survival of Representations, Warranties and Agreements............................79
SECTION 9.2 Notices ..............................................................................79
SECTION 9.3 Interpretation........................................................................80
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SECTION 9.4 Counterparts..........................................................................80
SECTION 9.5 Entire Agreement; No Third Party Beneficiaries........................................80
SECTION 9.6 Governing Law.........................................................................81
SECTION 9.7 Severability..........................................................................81
SECTION 9.8 Assignment ...........................................................................81
SECTION 9.9 Submission to Jurisdiction; Waivers...................................................81
SECTION 9.10 Enforcement..........................................................................82
SECTION 9.11 Definitions..........................................................................82
SECTION 9.12 Disclosure Schedule..................................................................87
EXHIBITS
Exhibit A - Form of Newco Articles
Exhibit B - Form of Newco By-Laws
Exhibit C - Form of Newco Rights Agreement
Exhibit D - Officers
Exhibit E - Terms of Offer Letter to Officers
Exhibit F - Form of ▇▇▇▇▇ Affiliate Agreement
Exhibit G - Form of Meritor Affiliate Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of April 6,
2000 (this "Agreement"), by and among MERITOR AUTOMOTIVE, INC., a Delaware
corporation ("Meritor"), MU SUB, INC., an Indiana corporation and a wholly-owned
subsidiary of Meritor ("Newco"), and ▇▇▇▇▇ INDUSTRIES, INC., an Indiana
corporation ("▇▇▇▇▇").
W I T N E S S E T H :
WHEREAS, the Boards of Directors of Meritor and ▇▇▇▇▇ ▇▇▇▇ it
advisable and in the best interests of each corporation and its respective
stockholders that Meritor and ▇▇▇▇▇ enter into a "merger of equals" in order to
advance the long-term strategic business interests of Meritor and ▇▇▇▇▇;
WHEREAS, the Boards of Directors of Meritor, ▇▇▇▇▇ and Newco
have determined to consummate such "merger of equals" by means of the business
combination transaction provided for herein in which (a) Meritor will, subject
to the terms and conditions set forth herein, merge with and into Newco (the
"First Step Merger") with Newco being the surviving corporation in the First
Step Merger, and (b) immediately thereafter, ▇▇▇▇▇ will, subject to the terms
and conditions set forth herein, merge with and into Newco (the "Second Step
Merger" and, together with the First Step Merger, the "Merger"), with Newco
being the surviving corporation (hereinafter sometimes referred to in such
capacity as the "Combined Company") in the Second Step Merger;
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, (a) as a condition and inducement to Meritor's willingness to
enter into this Agreement and the Meritor Stock Option Agreement referred to
below, Meritor and ▇▇▇▇▇ are entering into a Stock Option Agreement dated as of
the date hereof (the "▇▇▇▇▇ Stock Option Agreement") pursuant to which ▇▇▇▇▇ is
granting to Meritor an option to purchase shares of ▇▇▇▇▇ Common Stock (as
defined in Section 2.5(a)) and (b) as a condition and inducement to Arvin's
willingness to enter into this Agreement and the ▇▇▇▇▇ Stock Option Agreement,
▇▇▇▇▇ and Meritor are entering into a Stock Option Agreement dated as of the
date hereof (the "Meritor Stock Option Agreement", and together with the ▇▇▇▇▇
Stock Option Agreement, the
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"Stock Option Agreements"), pursuant to which Meritor is granting to ▇▇▇▇▇ an
option to purchase shares of Meritor Common Stock (as defined in Section
1.4(a)); and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement and in the Stock Option Agreements, and intending to be legally
bound hereby and thereby, the parties hereto agree as follows:
ARTICLE I
THE FIRST STEP MERGER
SECTION 1.1 The First Step Merger. Upon the terms and
conditions of this Agreement, and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL") and the Business Corporation Law of the
State of Indiana (the "IBCL"), at the First Effective Time (as defined in
Section 1.2), Meritor shall merge with and into Newco. Newco shall be the
surviving corporation in the First Step Merger and shall continue its corporate
existence under the laws of the State of Indiana. Upon consummation of the First
Step Merger, the separate corporate existence of Meritor shall terminate.
SECTION 1.2 First Effective Time. The First Step Merger shall
become effective as set forth in the certificate of merger that shall be filed
with the Secretary of State of the State of Delaware (the "Delaware Secretary")
and the articles of merger that shall be filed with the Secretary of State of
the State of Indiana (the "Indiana Secretary") on the Closing Date (as defined
in Section 2.2). The term "First Effective Time" shall be the date and time when
the First Step Merger becomes effective, as set forth in the certificate of
merger and articles of merger referred to in this Section 1.2.
SECTION 1.3 Effects of the First Step Merger. At and after the
First Effective Time, the First Step Merger shall have the effects set forth in
the DGCL and the IBCL.
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SECTION 1.4 Conversion of Meritor Common Stock. At the First
Effective Time, by virtue of the First Step Merger and without any action on the
part of Meritor, Newco or the holders of any capital stock of Meritor or Newco:
(a) Subject to Section 3.2(e), each share of common stock, par
value $1 per share, including the associated Meritor Right (as defined
in Section 4.2(b)(i)), of Meritor ("Meritor Common Stock") issued and
outstanding immediately prior to the First Effective Time, other than
shares of Meritor Common Stock held in Meritor's treasury or owned by
any wholly-owned Subsidiary of Meritor, shall be converted into the
right to receive .75 shares (the "Meritor Exchange Ratio") of common
stock, par value $1 per share, of Newco ("Newco Common Stock").
(b) All shares of Meritor Common Stock converted into the
right to receive Newco Common Stock pursuant to this Article I shall no
longer be outstanding and shall automatically be canceled and shall
cease to exist, and each certificate previously representing any such
shares of Meritor Common Stock (a "Meritor Certificate") shall
thereafter represent only the right to receive (i) a certificate
representing the number of whole shares of Newco Common Stock and (ii)
cash in lieu of fractional shares into which the shares of Meritor
Common Stock formerly represented by such Meritor Certificate have been
converted pursuant to this Section 1.4 and Section 3.2(e). Meritor
Certificates shall be exchanged for certificates representing whole
shares of Newco Common Stock and cash in lieu of fractional shares
issued in consideration therefor upon the surrender of such Meritor
Certificates in accordance with Section 3.2, without any interest
thereon. If, between the date hereof and the Effective Time, the
outstanding shares of ▇▇▇▇▇ Common Stock (as defined in Section 2.5(a))
or Meritor Common Stock (or, following the consummation of the First
Step Merger, the outstanding shares of Newco Common Stock) shall have
been increased, decreased, changed into or exchanged for a different
number or kind of shares or securities as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar change in capitalization (other
than solely as a result of the First Step Merger), an
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appropriate and proportionate adjustment shall be made to the Meritor
Exchange Ratio.
(c) All shares of Meritor Common Stock held in Meritor's
treasury or owned by any wholly-owned Subsidiary of Meritor shall be
canceled and shall cease to exist and no shares of Newco Common Stock
or other consideration shall be delivered in exchange therefor.
SECTION 1.5 Newco Common Stock. At and after the First
Effective Time, each share of Newco Common Stock issued and outstanding
immediately prior to the First Effective Time shall be canceled and retired and
shall resume the status of authorized and unissued shares of Newco Common Stock,
and no shares of Newco Common Stock or other consideration shall be issued in
respect thereof.
SECTION 1.6 Options. (a) At or prior to the First Effective
Time, Meritor will take all action necessary such that each Meritor Stock Option
(as defined in Section 4.2(b)(i)) that is outstanding and unexercised
immediately prior thereto shall cease to represent a right to acquire shares of
Meritor Common Stock and shall be converted into an option to purchase shares of
Newco Common Stock in an amount and at an exercise price determined as provided
below (and otherwise subject to the terms of the appropriate Meritor Stock Plan
(as defined in Section 4.2(b)(i)) pursuant to which such option has been issued
and the agreements evidencing grants thereunder):
(i) The number of shares of Newco Common Stock to be subject
to the new option shall be equal to the product of the number of shares
of Meritor Common Stock subject to the original option multiplied by
the Meritor Exchange Ratio, provided that any fractional shares of
Newco Common Stock resulting from such multiplication shall be rounded
to the nearest whole share; and
(ii) The exercise price per share of Newco Common Stock under
the new option shall be equal to the exercise price per share of
Meritor Common Stock under the original option divided by the Meritor
Exchange Ratio, provided that such exercise price shall be rounded up
to the nearest whole cent.
(b) The adjustment provided herein with respect to any options
that are "incentive stock options" (as
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defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code")) shall be and is intended to be effected in a manner that is consistent
with Section 424(a) of the Code. The duration and other terms of the new option
shall be the same as the original option, except that all references to Meritor
shall be deemed to be references to Newco (but taking into account any changes
thereto, including acceleration thereof, provided for in the Meritor Stock Plans
by reason of this Agreement or the transactions contemplated hereby).
SECTION 1.7 Articles of Incorporation. Subject to the terms
and conditions of this Agreement, at the First Effective Time, the articles of
incorporation of the surviving corporation in the First Step Merger shall be
substantially in the form attached hereto as Exhibit A, with such changes
thereto as shall be mutually agreed upon by Meritor and ▇▇▇▇▇ (the "Newco
Articles"), until thereafter amended in accordance with the terms thereof and
Applicable Laws.
SECTION 1.8 By-Laws. Subject to the terms and conditions of
this Agreement, at the First Effective Time, the by-laws of the surviving
corporation in the First Step Merger shall be in substantially the form attached
hereto as Exhibit B, with such changes as may be mutually agreed upon by Meritor
and ▇▇▇▇▇ (the "Newco By-Laws"), until thereafter amended in accordance with the
terms thereof, the Newco Articles and Applicable Laws.
SECTION 1.9 Board of Directors; Management. From and after the
First Effective Time, until duly changed pursuant hereto or in accordance with
the Newco Articles, the Newco By-Laws or Applicable Laws, the directors of
Meritor shall be the directors of Newco, and the officers of Meritor shall be
the officers of Newco. At the Effective Time (as defined in Section 2.3), the
directors and officers of Newco shall be as set forth in Section 2.13 and
Section 2.12, respectively.
ARTICLE II
THE SECOND STEP MERGER
SECTION 2.1 The Second Step Merger. Upon the terms and
conditions of this Agreement, and in accordance with the IBCL, at the Effective
Time, ▇▇▇▇▇ shall merge with
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and into Newco. Newco shall be the surviving corporation in the Second Step
Merger and shall continue its corporate existence under the laws of the State of
Indiana. Upon consummation of the Second Step Merger, the separate corporate
existence of ▇▇▇▇▇ shall terminate.
SECTION 2.2 Closing. The closing of the Second Step Merger
(the "Closing") will take place as soon as practicable, but in any event within
three Business Days after the satisfaction or waiver (subject to Applicable
Laws) of the conditions (excluding conditions that, by their nature, cannot be
satisfied until the Closing Date (as defined below)) set forth in Article VII,
unless this Agreement has been theretofore terminated pursuant to its terms or
unless another time or date is agreed to in writing by the parties hereto (the
actual time and date of the Closing being referred to herein as the "Closing
Date"). The Closing shall be held at the offices of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, ▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another place is agreed to
in writing by the parties hereto.
SECTION 2.3 Effective Time. The Second Step Merger shall
become effective as set forth in the articles of merger (the "Articles of
Merger") that shall be filed with the Indiana Secretary on the Closing Date. The
term "Effective Time" shall be the date and time when the Second Step Merger
becomes effective, as set forth in the Articles of Merger. The Effective Time
shall occur immediately after the First Effective Time has occurred.
SECTION 2.4 Effects of the Second Step Merger. At and after
the Effective Time, the Second Step Merger shall have the effects set forth in
the IBCL.
SECTION 2.5 Conversion of ▇▇▇▇▇ Common Stock. At the Effective
Time, by virtue of the Second Step Merger and without any action on the part of
Meritor, Newco, ▇▇▇▇▇ or the holders of any capital stock of Meritor, Newco or
▇▇▇▇▇:
(a) Each common share, par value $2.50 per share, including
the associated Alpha Right (as defined in Section 4.1(b)(i)), of ▇▇▇▇▇ ("▇▇▇▇▇
Common Stock") issued and outstanding immediately prior to the Effective Time,
other than shares of ▇▇▇▇▇ Common Stock held in Arvin's treasury, owned by the
▇▇▇▇▇ SECT (as defined in Section 4.1(f)) or owned by Newco or any wholly-owned
Subsidiary of ▇▇▇▇▇ or Newco, shall be converted into the right to receive
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(i) one share of Newco Common Stock (the "▇▇▇▇▇ Stock Consideration") and (ii)
$2.00 in cash, without interest (the "▇▇▇▇▇ ▇▇▇▇ Consideration" and, together
with the ▇▇▇▇▇ Stock Consideration, the "▇▇▇▇▇ Merger Consideration").
(b) All shares of ▇▇▇▇▇ Common Stock converted into the right
to receive the ▇▇▇▇▇ Merger Consideration pursuant to this Article II shall no
longer be outstanding and shall automatically be canceled and shall cease to
exist, and each certificate previously representing any such shares of ▇▇▇▇▇
Common Stock (an "▇▇▇▇▇ Certificate") shall thereafter represent only the right
to receive (i) a certificate representing the ▇▇▇▇▇ Stock Consideration and (ii)
the ▇▇▇▇▇ ▇▇▇▇ Consideration into which the shares of ▇▇▇▇▇ Common Stock
formerly represented by such ▇▇▇▇▇ Certificate have been converted pursuant to
this Section 2.5. ▇▇▇▇▇ Certificates shall be exchanged for the ▇▇▇▇▇ Merger
Consideration upon the surrender of such ▇▇▇▇▇ Certificates in accordance with
Section 3.2, without any interest thereon.
(c) All shares of ▇▇▇▇▇ Common Stock held in Arvin's treasury,
owned by the ▇▇▇▇▇ SECT or owned by Newco or any wholly-owned Subsidiary of
▇▇▇▇▇ or Newco shall be canceled and shall cease to exist, and no shares of
Newco Common Stock or other consideration shall be delivered in exchange
therefor.
SECTION 2.6 Newco Common Stock. At and after the Effective
Time, each share of Newco Common Stock issued and outstanding immediately prior
to the Effective Time shall remain an issued and outstanding share of common
stock of the Combined Company and shall not be affected by the Second Step
Merger, provided that all shares of Newco Common Stock that are owned by ▇▇▇▇▇
shall become treasury stock of Newco.
SECTION 2.7 Options. (a) At or prior to the Effective Time,
▇▇▇▇▇ will take all action necessary such that each ▇▇▇▇▇ Stock Option (as
defined in Section 4.1(b)(i)) that is outstanding and unexercised immediately
prior thereto shall cease to represent a right to acquire shares of ▇▇▇▇▇ Common
Stock and shall be converted into an option to purchase a number of shares of
Newco Common Stock equal to the number of shares of ▇▇▇▇▇ Common Stock subject
to such option immediately prior to the Effective Time, plus $1 for each share,
at an exercise price per share of Newco Common Stock equal to the exercise price
per share of ▇▇▇▇▇
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Common Stock in effect immediately prior to the Effective Time (and otherwise
subject to the terms of the appropriate ▇▇▇▇▇ Stock Plan (as defined in Section
4.1(b)(i)) pursuant to which such options have been issued and the agreements
evidencing grants thereunder).
(b) The adjustment provided herein with respect to any options
that are "incentive stock options" (as defined in Section 422 of the Code) shall
be and is intended to be effected in a manner that is consistent with Section
424(a) of the Code. The duration and other terms of the new option shall be the
same as the original option, except that all references to ▇▇▇▇▇ shall be deemed
to be references to Newco (but taking into account any changes thereto,
including acceleration thereof, provided for in the ▇▇▇▇▇ Stock Plans by reason
of this Agreement or the transactions contemplated hereby).
SECTION 2.8 Articles of Incorporation. Subject to the terms
and conditions of this Agreement, at the Effective Time, the Newco Articles
shall be the articles of incorporation of the Combined Company, until thereafter
amended in accordance with the terms thereof and Applicable Laws.
SECTION 2.9 By-Laws. Subject to the terms and conditions of
this Agreement, at the Effective Time, the Newco By-Laws shall be the by-laws of
the Combined Company until thereafter amended in accordance with the terms
thereof, the Newco Articles and Applicable Laws.
SECTION 2.10 Rights Agreement. Subject to the terms and
conditions of this Agreement, as of or prior to the First Effective Time, Newco
will enter into a Rights Agreement substantially in the form attached hereto as
Exhibit C, with such changes as may be mutually agreed upon by Meritor and
▇▇▇▇▇.
SECTION 2.11 Tax Consequences. It is intended that each of the
First Step Merger and the Second Step Merger shall constitute a "reorganization"
within the meaning of Section 368(a) of the Code and that this Agreement shall
constitute a "plan of reorganization" for the purposes of Sections 354 and 361
of the Code.
SECTION 2.12 Officers. At the Effective Time, ▇▇▇▇▇ ▇. ▇▇▇▇
shall be Chairman of the Board and Chief Executive Officer of the Combined
Company and ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ shall be Vice Chairman and President of the Combined Company and otherwise
the initial officers of the Combined Company shall be those individuals set
forth in Exhibit D or as Meritor and ▇▇▇▇▇ shall otherwise agree prior to the
Effective Time, and such officers shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal. Contemporaneously with the execution and delivery of this Agreement,
▇▇▇▇▇, Newco and ▇▇. ▇▇▇▇ are entering into an employment agreement dated as of
the date hereof, to be effective and binding on the Combined Company as of the
Effective Time. On or before the Effective Time, it is intended that offer
letters on substantially the terms set forth in Exhibit E will be extended by
Newco to each of the officers as set forth in the Schedule to such Exhibit E
(which Schedule lists each officer's name and position), each such offer letter
to be effective and binding on the Combined Company as of the Effective Time.
SECTION 2.13 Board of Directors. From and after the Effective
Time, until duly changed in compliance with Applicable Laws, the Newco Articles
and the Newco By-Laws:
(a) The Board of Directors of the Combined Company (the
"Board") shall consist of 19 persons, including (i) 9 persons (including ▇▇.
▇▇▇▇) to be named by the Board of Directors of Meritor, (ii) 9 persons
(including ▇▇. ▇▇▇▇) to be named by the Board of Directors of ▇▇▇▇▇ and (iii)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (or, if ▇▇. ▇▇▇▇▇▇ is unavailable, another person to be
selected prior to the Effective Time by the Chairman and Chief Executive Officer
of Meritor and the Chairman and Chief Executive Officer of ▇▇▇▇▇). The directors
named by Meritor and ▇▇▇▇▇ shall be allocated among the classes of the Board as
shall be agreed between Meritor and ▇▇▇▇▇ prior to the Effective Time. It is the
current intention of Meritor and ▇▇▇▇▇ that the Board shall be reduced to
approximately 12 directors within a reasonable period following the Effective
Time in such manner as the Board shall determine.
(b) The Audit Committee of the Board shall be comprised of
three members of the Board selected prior to the Effective Time by the Board of
Directors of Meritor and three members of the Board (one of whom shall be
chairman) selected prior to the Effective Time by the Board of Directors of
▇▇▇▇▇. The Board Composition Committee of the Board shall be comprised of three
members of the Board (one of whom shall be chairman), selected prior to the
Effective
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Time by the Board of Directors of Meritor, three members of the Board selected
prior to the Effective Time by the Board of Directors of ▇▇▇▇▇, and ▇▇. ▇▇▇▇▇▇
(or if ▇▇. ▇▇▇▇▇▇ is unavailable, another director to be selected prior to the
Effective Time by the Chairman of the Board and Chief Executive Officer of
Meritor and the Chairman and Chief Executive Officer of ▇▇▇▇▇). The Compensation
& Management Development Committee of the Board shall be comprised of three
members of the Board (one of whom shall be chairman) selected prior to the
Effective Time by the Board of Directors of Meritor and three members of the
Board selected prior to the Effective Time by the Board of Directors of ▇▇▇▇▇.
The Environmental & Social Responsibility Committee of the Board shall be
comprised of three members of the Board selected prior to the Effective Time by
the Board of Directors of Meritor and three members of the Board (one of whom
shall be chairman) selected prior to the Effective Time by the Board of
Directors of ▇▇▇▇▇.
SECTION 2.14 Name; Corporate Offices. (a) At the Effective
Time, the name of the Combined Company shall be "ArvinMeritor, Inc."
(b) At the Effective Time, the location of the headquarters
and principal executive offices of the Combined Company shall be that of the
headquarters and principal executive offices of Meritor as the date of this
Agreement.
SECTION 2.15 Dividends. It is the intention of Meritor and
▇▇▇▇▇ that the Combined Company will, subject to the determination of the Board,
declare and pay regular quarterly dividends in respect of outstanding shares of
Newco Common Stock at a level approximately equivalent to Arvin's current
regular quarterly dividend.
SECTION 2.16 Fiscal Year. It is the intention of Meritor and
▇▇▇▇▇ that the fiscal year of the Combined Company will end on September 30 of
each year.
ARTICLE III
EXCHANGE OF SHARES
SECTION 3.1 Newco to Make Shares and Cash Available. From time
to time at, prior to or after the Effective Time, Newco shall deposit, or shall
cause to be
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deposited, with a bank or trust company reasonably acceptable to each of Meritor
and ▇▇▇▇▇ (the "Exchange Agent"), for the benefit of the holders of the Meritor
Certificates and ▇▇▇▇▇ Certificates (collectively, "Certificates"), for exchange
in accordance with this Article III (and at the times necessary to make payments
in respect of exchanges in accordance with this Article III), certificates
representing the shares of Newco Common Stock to be issued pursuant to Section
1.4 and Section 2.5 and cash representing the ▇▇▇▇▇ ▇▇▇▇ Consideration to be
paid pursuant to Section 2.5, in each case to be paid pursuant to Section 3.2(a)
in exchange for Certificates (such certificates for shares of Newco Common
Stock, together with any dividends or distributions with respect thereto, and
cash representing the ▇▇▇▇▇ ▇▇▇▇ Consideration to be paid pursuant to Section
2.5, the "Exchange Fund").
SECTION 3.2 Exchange of Shares. (a) As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall mail to each
holder of record of one or more Certificates a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, and which shall be in customary form and have such other provisions as
Newco may reasonably request) and instructions for use in effecting the
surrender of Certificates in exchange for certificates representing the shares
of Newco Common Stock (and, (i) in the case of Meritor Certificates, any cash in
lieu of fractional shares and (ii) in the case of ▇▇▇▇▇ Certificates, the ▇▇▇▇▇
▇▇▇▇ Consideration) into which the shares of Meritor Common Stock or ▇▇▇▇▇
Common Stock, as applicable, formerly represented by such Certificate or
Certificates shall have been converted pursuant to this Agreement. Upon proper
surrender of a Certificate for exchange and cancellation to the Exchange Agent,
together with such properly completed letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor, as
applicable, (i) the number of shares of Newco Common Stock (which shall be in
uncertificated book-entry form unless a physical certificate is requested)
representing that number of whole shares of Newco Common Stock to which such
holder shall have become entitled pursuant to the provisions of Article II and
(ii)(x) in the case of Meritor Certificates, a check representing the amount of
any cash in lieu of fractional shares that such
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holder has the right to receive in respect of the Meritor Certificate
surrendered pursuant to the provisions of this Article III and (y) in the case
of ▇▇▇▇▇ Certificates, a check representing the amount of ▇▇▇▇▇ ▇▇▇▇
Consideration to which such holder shall have become entitled pursuant to the
provisions of Article II, and the Certificate so surrendered shall forthwith be
canceled. No interest will be paid or accrued on any cash in lieu of fractional
shares, ▇▇▇▇▇ ▇▇▇▇ Consideration or on any unpaid dividends and distributions
payable to holders of Certificates.
(b) No dividends or other distributions declared or made with
respect to Newco Common Stock shall be paid to the holder of any unsurrendered
Certificate (and, (i) in the case of Meritor Certificates, no cash payment in
lieu of fractional shares of Newco Common Stock shall be paid to any such holder
pursuant to Section 3.2(e) and, (ii) in the case of ▇▇▇▇▇ Certificates, no ▇▇▇▇▇
▇▇▇▇ Consideration shall be paid to any such holder) until the holder thereof
shall surrender such Certificate in accordance with this Article III. Subject to
the effect of Applicable Laws, following surrender of any Certificate, there
shall be paid to the holder of shares of Newco Common Stock issuable in exchange
therefor, without interest, (a) promptly after the time of such surrender, the
amount of any cash payable in lieu of fractional shares of Newco Common Stock to
which such holder is entitled pursuant to Section 3.2(e), the amount of ▇▇▇▇▇
▇▇▇▇ Consideration to which such holder is entitled pursuant to Article II and
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Newco
Common Stock and (b) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such shares of Newco Common Stock.
(c) If any certificate representing shares of Newco Common
Stock is to be issued in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it shall be a condition of the
issuance thereof (and to the payment of any cash required to be paid in exchange
for such Certificate pursuant to Section 3.2(a)) that the Certificate so
surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for transfer, and that the
person requesting such exchange shall pay to the Exchange Agent in advance any
transfer or other taxes
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required by reason of the issuance of a certificate representing shares of Newco
Common Stock in any name other than that of the registered holder of the
Certificate surrendered (or by reason of payment of cash required to be paid in
exchange for such Certificate pursuant to Section 3.2(a) other than to the
registered holder of the Certificate surrendered), or required for any other
reason, or shall establish to the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
(d) After the First Effective Time, there shall be no
transfers on the stock transfer books of Meritor of the shares of Meritor Common
Stock that were issued and outstanding immediately prior to the First Effective
Time. After the Effective Time, there shall be no transfers on the stock
transfer books of ▇▇▇▇▇ of the shares of ▇▇▇▇▇ Common Stock that were issued and
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented for transfer to the Exchange Agent, they shall
be canceled and exchanged for certificates representing shares of Newco Common
Stock (and (i) in case of Meritor Certificates, any cash in lieu of fractional
shares and (ii) in the case of ▇▇▇▇▇ Certificates, the applicable ▇▇▇▇▇ ▇▇▇▇
Consideration) as provided in this Article III.
(e) (i) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of Newco Common
Stock or book-entry credit of the same shall be issued upon the surrender for
exchange of Meritor Certificates, no dividend or distribution with respect to
Newco Common Stock shall be payable on or with respect to any fractional share,
and such fractional share interests shall not entitle the owner thereof to vote
or to any other rights of a stockholder of Newco. In lieu of the issuance of any
such fractional share, Newco shall pay to each holder of Meritor Certificates
who otherwise would be entitled to receive such fractional share an amount in
cash determined in the manner provided in clauses (ii) and (iii) of this Section
3.2(e).
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (x) the number of full shares
of Newco Common Stock delivered to the Exchange Agent by Newco pursuant to
Section 3.1 for issuance to holders of Meritor Certificates pursuant to Section
1.4 over (y) the aggregate number of full shares of Newco Common Stock to be
distributed to
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holders of Meritor Certificates pursuant to this Section 3.2 (such excess being
herein referred to as the "Excess Meritor Shares"). As soon after the Effective
Time as practicable, the Exchange Agent, as agent for such holders of Meritor
Certificates, shall sell the Excess Meritor Shares at then prevailing prices on
the NYSE, all in the manner provided in clause (iii) of this Section 3.2(e).
(iii) The sale of the Excess Meritor Shares by the Exchange
Agent shall be executed on the NYSE through one or more member firms of the NYSE
and shall be executed in round lots to the extent practicable. Until the net
proceeds of any such sale or sales have been distributed to the holders of
Meritor Certificates, the Exchange Agent will hold such proceeds in trust for
such holders as part of the Exchange Fund. Newco shall pay all commissions,
transfer taxes and other out-of-pocket transaction costs of the Exchange Agent
incurred in connection with such sale or sales of Excess Meritor Shares. In
addition, Newco shall pay the Exchange Agent's compensation and expenses in
connection with such sale or sales. The Exchange Agent shall determine the
portion of such net proceeds to which each holder of Meritor Certificates shall
be entitled, if any, by multiplying the amount of the aggregate net proceeds by
a fraction, the numerator of which is the amount of the fractional share
interest to which such holder of Meritor Certificates is entitled (after taking
into account all Meritor Certificates then held by such holder) and the
denominator of which is the aggregate amount of fractional share interests to
which all holders of Meritor Certificates are entitled. As soon as practicable
after the determination of the amount of cash, if any, to be paid to holders of
Meritor Certificates with respect to any fractional share interests, the
Exchange Agent shall promptly pay such amounts to such holders of Meritor
Certificates subject to and in accordance with this Section 3.2.
(f) Any portion of the Exchange Fund that remains unclaimed by
holders of Certificates for twelve months after the Effective Time shall be paid
to the Combined Company, and any holders of Certificates who have not
theretofore complied with this Article III shall thereafter look only to Newco
for payment of the shares of Newco Common Stock, cash in lieu of any fractional
shares (in the case of Meritor Certificates), the ▇▇▇▇▇ ▇▇▇▇ Consideration (in
the case of ▇▇▇▇▇ Certificates), and any unpaid dividends and distributions on
the Newco Common Stock deliverable in respect of each share of Meritor Common
Stock or ▇▇▇▇▇
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Common Stock formerly represented by such Certificate as determined pursuant to
this Agreement, without any interest thereon. Any such portion of the Exchange
Fund remaining unclaimed by holders of Certificates five years after the
Effective Time (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to or become property of any Governmental Entity
(as defined in Section 4.1(c)(iii)) shall, to the extent permitted by Applicable
Laws, become the property of Newco free and clear of any claims or interest of
any Person previously entitled thereto.
(g) None of Newco, Meritor, ▇▇▇▇▇, the Exchange Agent or any
other Person shall be liable to any holder of Certificates for any amount
delivered in good faith to a public official pursuant to applicable abandoned
property, escheat or similar Applicable Laws.
(h) The Exchange Agent shall invest any cash included in the
Exchange Fund, as directed by Newco, on a daily basis. Any interest and other
income resulting from such investments shall be paid to the Combined Company
promptly upon request by the Combined Company.
(i) In the event 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, the posting by such
Person of a bond in such amount as Newco may determine is reasonably necessary
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the shares of Newco Common Stock (and (i) in the case of
Meritor Certificates, any cash in lieu of fractional shares and (ii) in the case
of ▇▇▇▇▇ Certificates, the ▇▇▇▇▇ ▇▇▇▇ Consideration) deliverable in respect
thereof pursuant to this Agreement.
SECTION 3.3 Affiliates. Notwithstanding anything to the
contrary herein, to the fullest extent permitted by law, no certificates
representing shares of Newco Common Stock or cash shall be delivered to a Person
who may be deemed an "affiliate" of ▇▇▇▇▇ in accordance with Section 6.13(a)
hereof or Meritor in accordance with Section 6.13(b) hereof, as the case may be,
for purposes of Rule 145 under the Securities Act of 1933, as amended (the
"Securities Act"), until such Person has executed and delivered an ▇▇▇▇▇
Affiliate Agreement (as defined in
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Section 6.13(a)) pursuant to Section 6.13(a) or a Meritor Affiliate Agreement
(as defined in Section 6.13(b)) pursuant to Section 6.13(b), as the case may be.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties of ▇▇▇▇▇. Except as
set forth in the ▇▇▇▇▇ Disclosure Schedule delivered by ▇▇▇▇▇ to Meritor prior
to the execution of this Agreement (the "▇▇▇▇▇ Disclosure Schedule") (each
section of which qualifies the correspondingly numbered representation and
warranty or covenant of ▇▇▇▇▇ to the extent specified therein), ▇▇▇▇▇ represents
and warrants to Meritor and Newco as follows:
(a) Organization, Standing and Power; Subsidiaries. (i) Each
of ▇▇▇▇▇ and each of its Subsidiaries is a corporation or other organization
duly organized, validly existing and in good standing (where applicable) under
the laws of its jurisdiction of incorporation or organization, has the requisite
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted and as it will be conducted through the
Effective Time, except where the failure to be so organized, existing and in
good standing or to have such power and authority, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
▇▇▇▇▇, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify or to be in good standing,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on ▇▇▇▇▇. The copies of the articles of incorporation
and bylaws of ▇▇▇▇▇ which were previously furnished or made available to Meritor
are true, complete and correct copies of such documents as in effect on the date
of this Agreement.
(ii) Exhibit 21 to Arvin's Annual Report on Form 10-K for the
year ended January 2, 2000 includes all the Subsidiaries of ▇▇▇▇▇ which as of
the date of this Agreement are Significant Subsidiaries (as defined in Rule 1-02
of Regulation S-X of the Securities and Exchange
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Commission (the "SEC")). All the outstanding shares of capital stock of, or
other equity interests in, each such Significant Subsidiary have been validly
issued and are fully paid and nonassessable and are owned directly or indirectly
by ▇▇▇▇▇, free and clear of all material pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively "Liens") and free of any other material restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other equity interests). None of ▇▇▇▇▇ or any of its Subsidiaries
directly or indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity (other than
Subsidiaries), that is or would reasonably be expected to be material to ▇▇▇▇▇
and its Subsidiaries taken as a whole.
(b) Capital Structure. (i) The authorized capital stock of
▇▇▇▇▇ consists of 50,000,000 shares of ▇▇▇▇▇ Common Stock and 8,978,058 shares
of preferred stock, no par value, 250,000 of which are designated as "Series C
Junior Participating Preferred Shares" and 2,300,000 of which are designated as
"$3.75 Convertible Exchangeable Preferred Shares" (collectively, the "▇▇▇▇▇
Preferred Stock"). As of March 31, 2000, (i) 25,645,326 shares of ▇▇▇▇▇ Common
Stock and (ii) no shares of ▇▇▇▇▇ Preferred Stock were issued and outstanding.
As of March 31, 2000, 2,148,287 shares of ▇▇▇▇▇ Common Stock were reserved for
issuance upon exercise of options outstanding under ▇▇▇▇▇ Stock Plans. As of
March 31, 2000, 1,879,621 shares of ▇▇▇▇▇ Common Stock were held as treasury
shares. Since March 31, 2000 to the date of this Agreement, no shares of the
capital stock of ▇▇▇▇▇ or any other securities of ▇▇▇▇▇ have been issued other
than shares of ▇▇▇▇▇ Common Stock (and accompanying ▇▇▇▇▇ Rights (as defined
below)) issued pursuant to options or rights outstanding as of March 31, 2000
under the ▇▇▇▇▇ Stock Plans. All issued and outstanding shares of the capital
stock of ▇▇▇▇▇ are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock is entitled to preemptive rights.
There are outstanding as of the date hereof no options, warrants or other rights
to acquire capital stock from ▇▇▇▇▇ other than (x) rights (the "▇▇▇▇▇ Rights")
distributed to the holders of ▇▇▇▇▇ Common Stock pursuant to the ▇▇▇▇▇ Rights
Agreement (as defined in Section 4.1(l)), (y) options and other rights to
acquire ▇▇▇▇▇ Common Stock from ▇▇▇▇▇ ("▇▇▇▇▇ Stock Options") representing in
the
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aggregate the right to purchase 2,148,287 shares of ▇▇▇▇▇ Common Stock granted
under the ▇▇▇▇▇ Industries, Inc. 1988 Stock Benefit Plan; the ▇▇▇▇▇ Industries,
Inc. 1998 Stock Benefit Plan; and the ▇▇▇▇▇ Industries, Inc. Employee Stock
Benefit Plan (collectively, the "▇▇▇▇▇ Stock Plans") and (z) the rights set
forth in the ▇▇▇▇▇ Stock Option Agreement. Section 4.1(b) of the ▇▇▇▇▇
Disclosure Schedule sets forth a complete and correct list as of the date hereof
of all outstanding ▇▇▇▇▇ Stock Options and the exercise price thereof.
(ii) No bonds, debentures, notes or other indebtedness of
▇▇▇▇▇ having the right to vote on any matters on which stockholders of ▇▇▇▇▇ may
vote ("▇▇▇▇▇ Voting Debt") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 4.1(b), as
of the date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which ▇▇▇▇▇ or any of its Subsidiaries is a party or by which any of them is
bound obligating ▇▇▇▇▇ or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of ▇▇▇▇▇ or any of its Subsidiaries or obligating ▇▇▇▇▇
or any of its Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no outstanding
obligations of ▇▇▇▇▇ or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of ▇▇▇▇▇ or any of its
Subsidiaries.
(c) Authority; No Conflicts. (i) ▇▇▇▇▇ has all requisite
corporate power and authority to enter into this Agreement and the Stock Option
Agreements and to consummate the transactions contemplated hereby and thereby,
subject, in the case of the consummation of the Merger, to the approval of this
Agreement by the Required ▇▇▇▇▇ Vote (as defined in Section 4.1(g)). The
execution and delivery of this Agreement and the Stock Option Agreements by
▇▇▇▇▇ and the consummation by ▇▇▇▇▇ of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the part
of ▇▇▇▇▇, subject in the case of the consummation of the Merger, to the approval
of this Agreement by the Required ▇▇▇▇▇ Vote. This Agreement and the Stock
Option Agreements have been duly
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executed and delivered by ▇▇▇▇▇ and, assuming the due authorization and valid
execution and delivery by each of Meritor and (if applicable) Newco, constitute
valid and binding agreements of ▇▇▇▇▇, enforceable against ▇▇▇▇▇ in accordance
with their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar Applicable Laws
relating to or affecting creditors generally or by general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(ii) The execution and delivery of this Agreement and the
Stock Option Agreements by ▇▇▇▇▇ do not, and the consummation by ▇▇▇▇▇ of the
Merger and the other transactions contemplated hereby and thereby will not,
conflict with, or result in any breach or violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise to a
right of, or result by its terms in the termination, amendment, cancellation or
acceleration of any obligation or the loss of a material benefit under, or the
creation of a Lien, charge, "put" or "call" right or other encumbrance on, or
the loss of, any assets (any such conflict, breach, violation, default, right of
termination, amendment, cancellation or acceleration, loss or creation, a
"Violation") pursuant to: (A) any provision of the articles of incorporation or
bylaws or similar organizational document of ▇▇▇▇▇ or any Significant Subsidiary
of ▇▇▇▇▇ or (B) except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on ▇▇▇▇▇ or, to the
Knowledge of ▇▇▇▇▇, Newco following the Merger, subject to obtaining or making
the ▇▇▇▇▇ Necessary Consents (as defined in paragraph (iii) below), any loan or
credit agreement, note, instrument, mortgage, bond, indenture, lease, benefit
plan or other contract, agreement or obligation (a "Contract") to which ▇▇▇▇▇ or
any of its Subsidiaries is a party or by which any of them or any of their
respective properties or assets is bound, or any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to ▇▇▇▇▇ or any Subsidiary of ▇▇▇▇▇ or their respective properties or
assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any supranational, national, state,
municipal, local or foreign government, any instrumentality, subdivision, court,
administrative agency or commission or other authority
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thereof, or any quasi-governmental or private body exercising any regulatory,
taxing, importing or other governmental or quasi-governmental authority (a
"Governmental Entity") or any other Person, is required by or with respect to
▇▇▇▇▇ or any Subsidiary of ▇▇▇▇▇ in connection with the execution and delivery
of this Agreement and the Stock Option Agreements by ▇▇▇▇▇ or the consummation
by ▇▇▇▇▇ of the Merger and the other transactions contemplated hereby and
thereby, except for those required under or in relation to (A) the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (B) state securities or "blue sky" laws, (C) the Securities Act, (D) the
Exchange Act, (E) the IBCL with respect to the filing of the applicable articles
of merger with the Indiana Secretary, (F) the rules and regulations of the NYSE,
(G) antitrust or other competition laws of other jurisdictions, and (H) such
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to make or obtain, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
▇▇▇▇▇. Consents, approvals, orders, authorizations, registrations, declarations
and filings required under or in relation to any of the foregoing clauses (A)
through (G) are hereinafter referred to as "▇▇▇▇▇ Necessary Consents".
(d) Reports and Financial Statements. (i) Each of ▇▇▇▇▇ and
its Subsidiaries has filed all registration statements, prospectuses, reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC since January 1, 1998 (collectively, including all exhibits thereto, the
"▇▇▇▇▇ SEC Reports"). No Subsidiary of ▇▇▇▇▇ is required to file any form,
report, registration statement, prospectus or other document with the SEC. None
of the ▇▇▇▇▇ SEC Reports, as of their respective dates (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the financial statements (including the related notes)
included in the ▇▇▇▇▇ SEC Reports fairly presents, in all material respects, the
consolidated financial position and consolidated results of operations and cash
flows of ▇▇▇▇▇ and its consolidated Subsidiaries as of the respective dates or
for the respective periods set forth therein, all in conformity with generally
accepted
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accounting principles ("GAAP") consistently applied during the periods involved
except as otherwise noted therein, and subject, in the case of unaudited interim
financial statements, to normal and recurring year-end adjustments that have not
been and are not expected to be material in amount. All ▇▇▇▇▇ SEC Reports, as of
their respective dates (and as of the date of any amendment to the respective
▇▇▇▇▇ SEC Report), complied as to form in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and the rules
and regulations promulgated thereunder.
(ii) Except as disclosed in the ▇▇▇▇▇ SEC Reports filed and
publicly available prior to the date hereof (the "▇▇▇▇▇ Filed SEC Reports"),
since January 2, 2000, ▇▇▇▇▇ and its Subsidiaries have not incurred any
liabilities that are of a nature that would be required to be disclosed on a
balance sheet of ▇▇▇▇▇ and its Subsidiaries or the footnotes thereto prepared in
conformity with GAAP, other than (A) liabilities incurred in the ordinary course
of business or (B) liabilities that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on ▇▇▇▇▇.
(e) Information Supplied. (i) None of the information supplied
or to be supplied by ▇▇▇▇▇ for inclusion or incorporation by reference in (A)
the Form S-4 (as defined in Section 6.1(a)) will, at the time the Form S-4 is
filed with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and (B) the Joint Proxy
Statement/Prospectus (as defined in Section 6.1(a)) will, on the date it is
first mailed to Meritor stockholders or ▇▇▇▇▇ stockholders or at the time of the
Meritor Stockholders Meeting or the ▇▇▇▇▇ Stockholders Meeting (each as defined
in Section 6.1), contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Form S-4 and the Joint Proxy Statement/Prospectus will
comply as to form in all material respects with the requirements of the Exchange
Act and the Securities Act and the rules and regulations of the SEC thereunder.
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(ii) Notwithstanding the foregoing provisions of this Section
4.1(e), no representation or warranty is made by ▇▇▇▇▇ with respect to
statements made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by Meritor or Newco for
inclusion or incorporation by reference therein.
(f) Board Approval. The Board of Directors of ▇▇▇▇▇, by
resolutions duly adopted by unanimous vote of those present at a meeting duly
called and held and, other than as provided for in Section 6.5, not subsequently
rescinded or modified in any way, has duly (i) determined that this Agreement
and the Merger are advisable and in the best interests of ▇▇▇▇▇ and its
stockholders, (ii) approved this Agreement, the Stock Option Agreements and the
Merger, (iii) resolved to recommend that the stockholders of ▇▇▇▇▇ adopt this
Agreement and approve the Merger and directed that the Merger and this Agreement
be submitted for consideration by Arvin's stockholders at the ▇▇▇▇▇ Stockholders
Meeting, (iv) taken all other action necessary to render (A) the limitations on
business combinations contained in Chapter 42 and Chapter 43 of the IBCL (or any
similar provision), (B) the supermajority stockholder voting requirements of
Article 11 of the articles of incorporation of ▇▇▇▇▇ and (C) the provisions of
Section 6.13(a) through (c) of the Restated ▇▇▇▇▇ Retirement Plan for Salaried
Employees inapplicable to the transactions contemplated hereby and (v) taken all
action necessary to terminate the Employee Stock Benefit Trust dated as of
December 20, 1996, as amended and restated on February 18, 1999 (the "▇▇▇▇▇
SECT"), between ▇▇▇▇▇ and The Northern Trust Company, as trustee, effective
immediately prior to the Effective Time, and to cause all shares of ▇▇▇▇▇ Common
Stock in the ▇▇▇▇▇ SECT to be surrendered to ▇▇▇▇▇ (solely in consideration for
repayment of amounts due under a promissory note in favor of ▇▇▇▇▇) and canceled
so that none of such shares is issued and outstanding as of the Effective Time.
To the Knowledge of ▇▇▇▇▇, except for the limitations on business combinations
contained in Chapter 42 and Chapter 43 of the IBCL (which have been rendered
inapplicable) and Section 203 of the DGCL, no state takeover statute is
applicable or purports to be applicable to the Merger, the ▇▇▇▇▇ Stock Option
Agreement or the other transactions contemplated hereby or thereby.
(g) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of ▇▇▇▇▇
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27
Common Stock (the "Required ▇▇▇▇▇ Vote") to approve this Agreement and the
Merger is the only vote of the holders of any class or series of ▇▇▇▇▇ capital
stock necessary to approve or adopt this Agreement and the Merger and the other
transactions contemplated hereby.
(h) Litigation; Compliance with Laws. (i) Except as set forth
in the ▇▇▇▇▇ Filed SEC Reports, there is no suit, action, proceeding or
regulatory investigation pending or, to the Knowledge of ▇▇▇▇▇, threatened,
against or affecting ▇▇▇▇▇ or any Subsidiary of ▇▇▇▇▇ or any property or asset
of ▇▇▇▇▇ or any Subsidiary of ▇▇▇▇▇ which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on ▇▇▇▇▇, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against ▇▇▇▇▇ or any Subsidiary of ▇▇▇▇▇ which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on ▇▇▇▇▇.
(ii) Except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on ▇▇▇▇▇, ▇▇▇▇▇ and its
Subsidiaries hold all permits, licenses, franchises, variances, exemptions,
orders and approvals of all Governmental Entities which are necessary for the
operation of the businesses of ▇▇▇▇▇ and its Subsidiaries, taken as a whole (the
"▇▇▇▇▇ Permits"), and no suspension or cancellation of any of the ▇▇▇▇▇ Permits
is pending or, to the Knowledge of ▇▇▇▇▇, threatened, except for suspensions or
cancellations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on ▇▇▇▇▇. ▇▇▇▇▇ and its Subsidiaries
are in compliance with the terms of the ▇▇▇▇▇ Permits, except where the failure
so to comply, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect on ▇▇▇▇▇. None of ▇▇▇▇▇ or any of its
Subsidiaries is in violation of, and ▇▇▇▇▇ and its Subsidiaries have not
received any notices of violations with respect to, any Applicable Laws, except
for violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on ▇▇▇▇▇.
(i) Absence of Certain Changes or Events. Except as set forth
in the ▇▇▇▇▇ Filed SEC Reports, since January 2, 2000, ▇▇▇▇▇ and its
Subsidiaries have conducted their business only in the ordinary course,
consistent with past practice, and there has not been any change, circumstance,
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event or development which, individually or in the aggregate, has had, or would
reasonably be expected to have, a Material Adverse Effect on ▇▇▇▇▇. Since
January 2, 2000 through the date of this Agreement, none of ▇▇▇▇▇ or any of its
Subsidiaries has taken any action that, if taken during the period from the date
of this Agreement through the Effective Time, would constitute a breach of
Section 5.1.
(j) Environmental Matters. Except as set forth in the ▇▇▇▇▇
Filed SEC Reports and except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on ▇▇▇▇▇, (i) the
operations of ▇▇▇▇▇ and its Subsidiaries have been and are in compliance with
all Environmental Laws (as defined below) and with all ▇▇▇▇▇ Permits required by
Environmental Laws, (ii) there are no pending or, to the Knowledge of ▇▇▇▇▇,
threatened, actions, suits, claims, investigations or other proceedings
(collectively, "Actions") under or pursuant to Environmental Laws against ▇▇▇▇▇
or its Subsidiaries or involving any real property currently or, to the
Knowledge of ▇▇▇▇▇, formerly owned, operated or leased by ▇▇▇▇▇ or its
Subsidiaries and (iii) ▇▇▇▇▇ and its Subsidiaries are not subject to any
Environmental Liabilities (as defined below), and, to the Knowledge of ▇▇▇▇▇, no
facts, circumstances or conditions relating to, arising from, associated with or
attributable to any real property currently or, to the Knowledge of ▇▇▇▇▇,
formerly owned, operated or leased by ▇▇▇▇▇ or its Subsidiaries or operations
thereon would reasonably be expected to result in Environmental Liabilities.
As used in this Agreement, "Environmental Laws" means any and
all foreign, federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decisions, injunctions, orders,
decrees, requirements of any Governmental Entity, any and all common law
requirements, rules and bases of liability regulating, relating to or imposing
liability or standards of conduct concerning pollution, Hazardous Materials (as
defined below) or protection of human health, safety or the environment, as in
effect on or prior to the Closing Date and includes the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601
et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 33
U.S.C. Section 2601 et seq., the Toxic Substances Control Act,
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15 U.S.C. Section 2601 et seq., Occupational Safety and Health Act 29 U.S.C.
Section 651 et seq. and the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et
seq., as such laws have been amended or supplemented, and the regulations
promulgated pursuant thereto, and all analogous state or local statutes. As used
in this Agreement, "Environmental Liabilities" with respect to any Person means
any and all liabilities of or relating to such Person or any of its Subsidiaries
(including any entity which is, in whole or in part, a predecessor of such
Person or any of such Subsidiaries), whether vested or unvested, contingent or
fixed, actual or potential, known or unknown, which (i) arise under or relate to
matters covered or regulated by, or for which liability is imposed under,
Environmental Laws and (ii) relate to actions occurring or conditions existing
on or prior to the Closing Date. As used in this Agreement, "Hazardous
Materials" means any hazardous or toxic substances, materials or wastes,
defined, listed, classified or regulated as such in or under any Environmental
Laws and which includes petroleum, petroleum products, friable asbestos, urea
formaldehyde and polychlorinated biphenyls.
(k) Intellectual Property. Except as set forth in the ▇▇▇▇▇
Filed SEC Reports and except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on ▇▇▇▇▇: (i) ▇▇▇▇▇ and
each of its Subsidiaries owns, or is licensed to use (in each case, free and
clear of any Liens), all Intellectual Property (as defined below) used in or
necessary for the conduct of its business as currently conducted; (ii) to the
Knowledge of ▇▇▇▇▇, the use of any Intellectual Property by ▇▇▇▇▇ and its
Subsidiaries does not infringe on or otherwise violate the rights of any Person;
(iii) the use of the Intellectual Property is in accordance with any applicable
license pursuant to which ▇▇▇▇▇ or any Subsidiary acquired the right to use any
Intellectual Property; (iv) to the Knowledge of ▇▇▇▇▇, no Person is challenging,
infringing on or otherwise violating any right of ▇▇▇▇▇ or any of its
Subsidiaries with respect to any Intellectual Property owned by and/or licensed
to ▇▇▇▇▇ or its Subsidiaries; and (v) neither ▇▇▇▇▇ nor any of its Subsidiaries
has any Knowledge of any pending claim, order or proceeding with respect to any
Intellectual Property used by ▇▇▇▇▇ and its Subsidiaries and, to the Knowledge
of ▇▇▇▇▇, no Intellectual Property owned and/or licensed by ▇▇▇▇▇ or its
Subsidiaries is being used or enforced in a manner that would reasonably be
expected to result in the abandonment, cancellation or
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30
unenforceability of such Intellectual Property. For purposes of this Agreement,
"Intellectual Property" shall mean trademarks, service marks, brand names,
certification marks, trade dress and other indications of origin, the goodwill
associated with the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including, without limitation,
divisions, continuations, continuations in part and renewal applications), and
any renewals, extensions or reissues thereof, in any jurisdiction; nonpublic
information, trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any Person; writings and
other works, whether copyrightable or not, in any jurisdiction; and
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights.
(l) ▇▇▇▇▇ Rights Agreement. ▇▇▇▇▇ has taken all action
necessary or appropriate so that the execution of this Agreement and the ▇▇▇▇▇
Option Agreement and consummation of the transactions contemplated hereby and
thereby do not and will not result in the ability of any Person to exercise any
▇▇▇▇▇ Rights under the Rights Agreement dated as of May 29, 1986, as amended,
between ▇▇▇▇▇ and ▇▇▇▇▇▇ Trust & Savings Bank, as Rights Agent (the "▇▇▇▇▇
Rights Agreement"), or enable or require such ▇▇▇▇▇ Rights to separate from the
shares of ▇▇▇▇▇ Common Stock to which they are attached or to be triggered or
become exercisable. Copies of the ▇▇▇▇▇ Rights Agreement, and all amendments
thereto, have previously been provided to Meritor.
(m) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of ▇▇▇▇▇, except ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. (the "▇▇▇▇▇ Financial
Advisor") and ▇▇▇▇▇▇ Brothers, whose fees and expenses will be paid by ▇▇▇▇▇ in
accordance with Arvin's agreements with such firms.
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31
(n) Opinion of ▇▇▇▇▇ Financial Advisor. ▇▇▇▇▇ has received the
opinion of the ▇▇▇▇▇ Financial Advisor, dated the date of this Agreement, to the
effect that, as of such date, the ▇▇▇▇▇ Merger Consideration is fair, from a
financial point of view, to Arvin's stockholders.
(o) Taxes. (i) Each of ▇▇▇▇▇ and its Subsidiaries has timely
filed or has caused to be timely filed all material Tax returns or reports
required to be filed by it and all such returns and reports are complete and
correct in all material respects, or requests for extensions to file such
returns or reports have been timely filed, granted and have not expired, except
to the extent that such failures to file, to be complete or correct or to have
extensions granted that remain in effect, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on ▇▇▇▇▇.
▇▇▇▇▇ and each of its Subsidiaries have paid or caused to be paid all Taxes
shown as due on such returns and the most recent financial statements contained
in the ▇▇▇▇▇ Filed SEC Reports reflect an adequate reserve in accordance with
GAAP for all Taxes payable by ▇▇▇▇▇ and its Subsidiaries for all taxable periods
and portions thereof accrued through the date of such financial statements.
(ii) No deficiencies for any Taxes have been proposed,
asserted or assessed in writing against ▇▇▇▇▇ or any of its Subsidiaries that
are not adequately reserved for, except for deficiencies that, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on ▇▇▇▇▇. The federal income tax returns of ▇▇▇▇▇ and each of its
Subsidiaries consolidated in such returns for tax years through 1994 have closed
by virtue of the applicable statute of limitations.
(iii) None of ▇▇▇▇▇ or any of its Subsidiaries has taken any
action, and ▇▇▇▇▇ has no Knowledge of any fact, agreement, plan or other
circumstance, that is reasonably likely to prevent either the First Step Merger
or the Second Step Merger from qualifying as a reorganization within the meaning
of Section 368(a) of the Code.
(iv) ▇▇▇▇▇ and its Subsidiaries are not a party to any Tax
sharing or Tax indemnity agreements (other than agreements between or among
▇▇▇▇▇ and its Subsidiaries).
(v) Within the past five years, none of ▇▇▇▇▇ or any of its
Subsidiaries has been a "distributing
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32
corporation" or a "controlled corporation" in a distribution intended to qualify
under Section 355(a) of the Code.
(vi) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on ▇▇▇▇▇, none of ▇▇▇▇▇
or any of its Subsidiaries is obligated to make any payments, or is a party to
any contract that could obligate it to make any payments, that would not be
deductible by reason of Section 162(m) or 280G of the Code.
(vii) None of ▇▇▇▇▇ or any of its Subsidiaries has agreed to
make, nor is required to make, any material adjustment under Section 481(a) of
the Code or any similar provision of state, local or foreign law by reason of a
change in accounting methods or otherwise.
(p) Certain Contracts. As of the date hereof, none of ▇▇▇▇▇ or
any of its Subsidiaries is a party to or bound by (i) any "material contract"
(as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii)
any non-competition agreement or any other agreement or arrangement that limits
or otherwise restricts ▇▇▇▇▇ or any of its Subsidiaries or any of their
respective affiliates or any successor thereto, or that would, after the
Effective Time, to the Knowledge of ▇▇▇▇▇, limit or restrict Newco or any of its
affiliates or any successor thereto, from engaging or competing in any line of
business or in any geographic area, which agreement or arrangement would
reasonably be expected to have a Material Adverse Effect on Newco and its
Subsidiaries, taken together, after giving effect to the Merger, (iii) any
employee benefit plan, employee contract with a senior executive or any other
material contract, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement or (iv) any Contract which would prohibit or
materially delay the consummation of the Merger or any of the transactions
contemplated by this Agreement. All "material contracts" (as defined in clause
(i) above) set forth in Section 4.1(p) of the ▇▇▇▇▇ Disclosure Schedule are
valid and binding on ▇▇▇▇▇ and any of its Subsidiaries, as applicable, and in
full force and effect except to the extent they have previously expired in
accordance with their terms or if the failure to be in full force and effect,
individually or in
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33
the aggregate, would not reasonably be expected to have a Material Adverse
Effect on ▇▇▇▇▇. None of ▇▇▇▇▇ or any of its Subsidiaries (or, to the Knowledge
of ▇▇▇▇▇, any other party thereto) has violated any provision of, or committed
or failed to perform any act which with or without notice, lapse of time or both
would constitute a default under the provisions of, any "material contract" (as
defined in clause (i) above) set forth in Section 4.1(p) of the ▇▇▇▇▇ Disclosure
Schedule, except in each case for those violations and defaults which,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect on ▇▇▇▇▇.
(q) Employee Benefits. (i) With respect to each ▇▇▇▇▇ Plan,
except for ▇▇▇▇▇ Plans the liabilities under which, individually or in the
aggregate, would not have a Material Adverse Effect on ▇▇▇▇▇, ▇▇▇▇▇ has made
available to Meritor a true, correct and complete copy of: (A) all plan
documents, trust agreements, and insurance contracts and other funding vehicles;
(B) the three most recent Annual Reports (Form 5500 Series) and accompanying
schedules and exhibits, if any; (C) the current summary plan description and any
material modifications thereto, if any (in each case, whether or not required to
be furnished under ERISA); (D) the three most recent annual financial reports,
if any; (E) the three most recent actuarial reports, if any; (F) the most recent
determination letter from the IRS, if any; and (G) the annual compliance testing
under Sections 401(a) through 416 of the Code for the three most recently
completed plan years.
(ii) With respect to each ▇▇▇▇▇ Employee Benefit Plan, ▇▇▇▇▇
and its Subsidiaries have complied with, and are now in compliance with, all
provisions of ERISA, the Code and all other Applicable Laws and regulations
applicable to such ▇▇▇▇▇ Employee Benefit Plans and each ▇▇▇▇▇ Employee Benefit
Plan has been administered in accordance with its terms, in each case except as
would not have a Material Adverse Effect on ▇▇▇▇▇. Each ▇▇▇▇▇ Employee Benefit
Plan that is required by ERISA to be funded is fully funded in accordance with
reasonable actuarial assumptions except as would not have a Material Adverse
Effect on ▇▇▇▇▇.
(iii) All ▇▇▇▇▇ Employee Benefit Plans subject to the
Applicable Laws of any jurisdiction outside of the United States (A) have been
maintained in accordance with all applicable requirements, (B) if they are
intended to qualify for special tax treatment meet all requirements for
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34
such treatment, and (C) if they are intended to be funded and/or book-reserved
are fully funded and/or book-reserved, as appropriate, based upon reasonable
actuarial assumptions, in each case except as would not have a Material Adverse
Effect on ▇▇▇▇▇.
(r) Labor Relations. As of the date of this Agreement, (i)
none of ▇▇▇▇▇ or any of its Subsidiaries is a party to any collective bargaining
agreement affecting a material number of employees, (ii) except as would not
have a Material Adverse Effect on ▇▇▇▇▇, no labor organization or group of
employees of ▇▇▇▇▇ or any of its Subsidiaries has made a pending demand for
recognition or certification, and there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending
or, to the Knowledge of ▇▇▇▇▇, threatened to be brought or filed, with the
National Labor Relations Board or any other domestic or foreign labor relations
tribunal or authority and (iii) except as would not have a Material Adverse
Effect on ▇▇▇▇▇, there are no organizing activities, strikes, work stoppages,
slowdowns, lockouts, arbitrations or grievances, or other labor disputes pending
or, to the Knowledge of ▇▇▇▇▇, threatened against or involving ▇▇▇▇▇ or any of
its Subsidiaries.
(s) Insurance. ▇▇▇▇▇ maintains insurance coverage with
reputable insurers in such amounts and covering such risks as are in accordance
with normal industry practice for companies engaged in businesses similar to
that of ▇▇▇▇▇ (taking into account the cost and availability of such insurance).
(t) Liens. No Liens exist on any assets of ▇▇▇▇▇ or any of its
Subsidiaries, except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on ▇▇▇▇▇.
SECTION 4.2 Representations and Warranties of Meritor. Except
as set forth in the Meritor Disclosure Schedule delivered by Meritor to ▇▇▇▇▇
prior to the execution of this Agreement (the "Meritor Disclosure Schedule")
(each section of which qualifies the correspondingly numbered representation and
warranty or covenant of Meritor to the extent specified therein), Meritor
represents and warrants to ▇▇▇▇▇ as follows:
(a) Organization, Standing and Power; Subsidiaries. (i) Each
of Meritor and each of its
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35
Subsidiaries is a corporation or other organization duly organized, validly
existing and in good standing (where applicable) under the laws of its
jurisdiction of incorporation or organization, has the requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted and as it will be conducted through the Effective Time,
except where the failure to be so organized, existing and in good standing or to
have such power and authority, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Meritor, and is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify or to be in good standing, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect on Meritor. The
copies of the certificate of incorporation and by-laws of Meritor which were
previously furnished or made available to ▇▇▇▇▇ are true, complete and correct
copies of such documents as in effect on the date of this Agreement.
(ii) Exhibit 21 to Meritor's Annual Report on Form 10-K for
the year ended September 30, 1999 includes all the Subsidiaries of Meritor which
as of the date of this Agreement are Significant Subsidiaries (as defined in
Rule 1-02 of Regulation S-X of the SEC). All the outstanding shares of capital
stock of, or other equity interests in, each such Significant Subsidiary have
been validly issued and are fully paid and nonassessable and are owned directly
or indirectly by Meritor, free and clear of all material Liens and free of any
other material restriction (including any restriction on the right to vote, sell
or otherwise dispose of such capital stock or other equity interests). None of
Meritor or any of its Subsidiaries directly or indirectly owns any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other business
association or entity (other than Subsidiaries), that is or would reasonably be
expected to be material to Meritor and its Subsidiaries taken as a whole.
(b) Capital Structure. (i) The authorized capital stock of
Meritor consists of 350,000,000 shares of Meritor Common Stock and 25,000,000
shares of preferred stock, without par value (the "Meritor Preferred Stock"),
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36
1,000,000 of which are designated as "Series A Junior Participating Preferred
Stock". As of March 31, 2000, (i) 62,300,673 shares of Meritor Common Stock and
(ii) no shares of Meritor Preferred Stock were issued and outstanding. As of
March 31, 2000, 4,477,438 shares of Meritor Common Stock were reserved for
issuance upon exercise of options outstanding under Meritor Stock Plans (as
defined below). As of March 31, 2000, 6,818,264 shares of Meritor Common Stock
were held as treasury shares. Since March 31, 2000 to the date of this
Agreement, no shares of the capital stock of Meritor or any other securities of
Meritor have been issued other than shares of Meritor Common Stock (and
accompanying Meritor Rights (as defined below)) issued pursuant to options or
rights outstanding as of March 31, 2000 under Meritor Stock Plans. All issued
and outstanding shares of the capital stock of Meritor are duly authorized,
validly issued, fully paid and nonassessable, and no class of capital stock is
entitled to preemptive rights. There are outstanding as of the date hereof no
options, warrants or other rights to acquire capital stock from Meritor other
than (x) rights (the "Meritor Rights") distributed to the holders of Meritor
Common Stock pursuant to the Meritor Rights Agreement (as defined in Section
4.2(l)), (y) options and other rights to acquire Meritor Common Stock from
Meritor ("Meritor Stock Options") representing in the aggregate the right to
purchase 4,477,438 shares of Meritor Common Stock under the Meritor Automotive,
Inc. 1997 Long-Term Incentives Plan and the Directors Stock Plan of Meritor
Automotive, Inc., as each such plan has been amended (collectively, the "Meritor
Stock Plans") and (z) the rights set forth in the Meritor Stock Option
Agreement. Section 4.2(b) of the Meritor Disclosure Schedule sets forth a
complete and correct list as of the date hereof of all outstanding Meritor Stock
Options and the exercise price thereof.
(ii) No bonds, debentures, notes or other indebtedness of
Meritor having the right to vote on any matters on which stockholders of Meritor
may vote ("Meritor Voting Debt") are issued or outstanding.
(iii) Except as otherwise set forth in this Section 4.2(b), as
of the date of this Agreement, there are no securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which Meritor or any of its Subsidiaries is a party or by which any of them
is bound obligating Meritor or any of its Subsidiaries to issue, deliver or
sell, or cause to
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37
be issued, delivered or sold, additional shares of capital stock or other voting
securities of Meritor or any of its Subsidiaries or obligating Meritor or any of
its Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
As of the date of this Agreement, there are no outstanding obligations of
Meritor or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of Meritor or any of its Subsidiaries.
(c) Authority; No Conflicts. (i) Meritor has all requisite
corporate power and authority to enter into this Agreement and the Stock Option
Agreements and to consummate the transactions contemplated hereby and thereby,
subject, in the case of the consummation of the Merger, to the approval of this
Agreement by the Required Meritor Vote (as defined in Section 4.2(g)). The
execution and delivery of this Agreement and the Stock Option Agreements by
Meritor and the consummation by Meritor of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action on the
part of Meritor, subject, in the case of the consummation of the Merger, to the
approval of this Agreement by the Required Meritor Vote. This Agreement and the
Stock Option Agreements have been duly executed and delivered by Meritor and,
assuming the due authorization and valid execution and delivery by ▇▇▇▇▇,
constitute valid and binding agreements of Meritor, enforceable against Meritor
in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and
similar Applicable Laws relating to or affecting creditors generally or by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(ii) The execution and delivery of this Agreement and the
Stock Option Agreements by Meritor do not, and the consummation by Meritor of
the Merger and the other transactions contemplated hereby and thereby will not
result in a Violation pursuant to: (A) any provision of the certificate of
incorporation or by-laws or similar organizational document of Meritor or any
Significant Subsidiary of Meritor or (B) except as, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
Meritor or, to the Knowledge of Meritor, Newco following the Merger, subject to
obtaining or making the Meritor Necessary Consents (as defined in
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38
paragraph (iii) below), any Contract to which Meritor or any of its Subsidiaries
is a party or by which any of them or any of their respective properties or
assets is bound, or any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Meritor or any
Subsidiary of Meritor or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any other
Person, is required by or with respect to Meritor or any Subsidiary of Meritor
in connection with the execution and delivery of this Agreement and the Stock
Option Agreements by Meritor or the consummation by Meritor of the Merger and
the other transactions contemplated hereby and thereby, except for those
required under or in relation to (A) the HSR Act, (B) state securities or "blue
sky" laws, (C) the Securities Act, (D) the Exchange Act, (E) the DGCL and the
IBCL with respect to the filing of the applicable articles or certificate of
merger with the Delaware Secretary or the Indiana Secretary, (F) the rules and
regulations of the NYSE, including with respect to authorization for inclusion
of the shares of Newco Common Stock to be issued in the Merger and the
transaction contemplated hereby on the NYSE, subject to official notice of
issuance, (G) antitrust or other competition laws of other jurisdictions, and
(H) such consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on Meritor. Consents, approvals, orders, authorizations, registrations,
declarations and filings required under or in relation to any of the foregoing
clauses (A) through (G) are hereinafter referred to as the "Meritor Necessary
Consents".
(d) Reports and Financial Statements. (i) Each of Meritor and
its Subsidiaries has filed all registration statements, prospectuses, reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC since December 19, 1997 (collectively, including all exhibits thereto,
the "Meritor SEC Reports"). No Subsidiary of Meritor is required to file any
form, report, registration statement, prospectus or other document with the SEC.
None of the Meritor SEC Reports, as of their respective dates (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contained any untrue statement of a material
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fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of the financial statements
(including the related notes) included in the Meritor SEC Reports fairly
presents, in all material respects, the consolidated financial position and
consolidated results of operations and cash flows of Meritor and its
consolidated Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with GAAP consistently applied
during the periods involved except as otherwise noted therein, and subject, in
the case of unaudited interim financial statements, to normal and recurring
year-end adjustments that have not been and are not expected to be material in
amount. All Meritor SEC Reports, as of their respective dates (and as of the
date of any amendment to the respective Meritor SEC Report), complied as to form
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act and the rules and regulations promulgated thereunder.
(ii) Except as disclosed in the Meritor SEC Reports filed and
publicly available prior to the date hereof (the "Meritor Filed SEC Reports"),
since December 31, 1999, Meritor and its Subsidiaries have not incurred any
liabilities that are of a nature that would be required to be disclosed on a
balance sheet of Meritor and its Subsidiaries or the footnotes thereto prepared
in conformity with GAAP, other than (A) liabilities incurred in the ordinary
course of business or (B) liabilities that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on Meritor.
(e) Information Supplied. (i) None of the information supplied
or to be supplied by Meritor or Newco for inclusion or incorporation by
reference in (A) the Form S-4 will, at the time the Form S-4 is filed with the
SEC, at any time it is amended or supplemented or at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (B) the Joint Proxy
Statement/Prospectus will, on the date it is first mailed to Meritor
stockholders or ▇▇▇▇▇ stockholders or at the time of the Meritor Stockholders
Meeting or the ▇▇▇▇▇ Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required
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to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The Form
S-4 and the Joint Proxy Statement/Prospectus will comply as to form in all
material respects with the requirements of the Exchange Act and the Securities
Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this Section
4.2(e), no representation or warranty is made by Meritor with respect to
statements made or incorporated by reference in the Form S-4 or the Joint Proxy
Statement/Prospectus based on information supplied by ▇▇▇▇▇ for inclusion or
incorporation by reference therein.
(f) Board Approval. The Board of Directors of Meritor, by
resolutions duly adopted by unanimous vote of those present at a meeting duly
called and held and, other than as set forth in Section 6.5, not subsequently
rescinded or modified in any way, has duly (i) determined that this Agreement
and the Merger are advisable and in the best interests of Meritor and its
stockholders, (ii) approved this Agreement, the Stock Option Agreements and the
Merger, (iii) resolved to recommend that the stockholders of Meritor adopt this
Agreement and approve the Merger and directed that the Merger and this Agreement
be submitted for consideration by Meritor's stockholders at the Meritor
Stockholders Meeting and (iv) taken all other action necessary to render (A) the
limitations on business combinations contained in Section 203 of the DGCL (or
any similar provision) and (B) the supermajority stockholder voting requirements
of Article Eleventh of the certificate of incorporation of Meritor inapplicable
to the transactions contemplated hereby. To the Knowledge of Meritor, except for
the limitations on business combinations contained in Section 203 of the DGCL
(which have been rendered inapplicable) and Chapter 42 and Chapter 43 of the
IBCL, no state takeover statute is applicable or purports to be applicable to
the Merger, the Meritor Stock Option Agreement or the other transactions
contemplated hereby or thereby.
(g) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Meritor Common Stock (the "Required
Meritor Vote") to approve this Agreement and the Merger is the only vote of the
holders of any class or series of Meritor capital stock necessary to approve or
adopt this Agreement and the Merger and the other transactions contemplated
hereby.
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(h) Litigation; Compliance with Laws. (i) Except as set forth in the
Meritor Filed SEC Reports, there is no suit, action, proceeding or regulatory
investigation pending or, to the Knowledge of Meritor, threatened, against or
affecting Meritor or any Subsidiary of Meritor or any property or asset of
Meritor or any Subsidiary of Meritor which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on Meritor, nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Meritor or any Subsidiary of Meritor
which, individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Meritor.
(ii) Except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Meritor, Meritor and
its Subsidiaries hold all permits, licenses, franchises, variances, exemptions,
orders and approvals of all Governmental Entities which are necessary for the
operation of the businesses of Meritor and its Subsidiaries, taken as a whole
(the "Meritor Permits"), and no suspension or cancellation of any of the Meritor
Permits is pending or, to the Knowledge of Meritor, threatened, except for
suspensions or cancellations which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Meritor. Meritor and
its Subsidiaries are in compliance with the terms of the Meritor Permits, except
where the failure so to comply, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Meritor. None of
Meritor or any of its Subsidiaries is in violation of, and Meritor and its
Subsidiaries have not received any notices of violations with respect to, any
Applicable Laws, except for violations which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on Meritor.
(i) Absence of Certain Changes or Events. Except as set forth in the
Meritor Filed SEC Reports, since December 31, 1999, Meritor and its Subsidiaries
have conducted their business only in the ordinary course, consistent with past
practice, and there has not been any change, circumstance, event or development
which, individually or in the aggregate, has had, or would reasonably be
expected to have, a Material Adverse Effect on Meritor. Since December 31, 1999
through the date of this Agreement, none of Meritor or any of its Subsidiaries
has
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taken any action that, if taken during the period from the date of this
Agreement through the Effective Time, would constitute a breach of Section 5.2.
(j) Environmental Matters. Except as set forth in the Meritor Filed
SEC Reports and except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Meritor, (i) the
operations of Meritor and its Subsidiaries have been and are in compliance with
all Environmental Laws and with all Meritor Permits required by Environmental
Laws, (ii) there are no pending or, to the Knowledge of Meritor, threatened,
Actions under or pursuant to Environmental Laws against Meritor or its
Subsidiaries or involving any real property currently or, to the Knowledge of
Meritor, formerly owned, operated or leased by Meritor or its Subsidiaries and
(iii) Meritor and its Subsidiaries are not subject to any Environmental
Liabilities and, to the Knowledge of Meritor, no facts, circumstances or
conditions relating to, arising from, associated with or attributable to any
real property currently or, to the Knowledge of Meritor, formerly owned,
operated or leased by Meritor or its Subsidiaries or operations thereon would
reasonably be expected to result in Environmental Liabilities.
(k) Intellectual Property. Except as set forth in the Meritor Filed
SEC Reports and except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Meritor: (i) Meritor
and each of its Subsidiaries owns, or is licensed to use (in each case, free and
clear of any Liens), all Intellectual Property used in or necessary for the
conduct of its business as currently conducted; (ii) to the Knowledge of
Meritor, the use of any Intellectual Property by Meritor and its Subsidiaries
does not infringe on or otherwise violate the rights of any Person; (iii) the
use of the Intellectual Property is in accordance with any applicable license
pursuant to which Meritor or any Subsidiary acquired the right to use any
Intellectual Property; (iv) to the Knowledge of Meritor, no Person is
challenging, infringing on or otherwise violating any right of Meritor or any of
its Subsidiaries with respect to any Intellectual Property owned by and/or
licensed to Meritor or its Subsidiaries; and (v) neither Meritor nor any of its
Subsidiaries has any Knowledge of any pending claim, order or proceeding with
respect to any Intellectual Property used by Meritor and its Subsidiaries and,
to the Knowledge of Meritor, no Intellectual Property owned and/or licensed by
Meritor or
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its Subsidiaries is being used or enforced in a manner that would reasonably be
expected to result in the abandonment, cancellation or unenforceability of such
Intellectual Property.
(l) Meritor Rights Agreement. Meritor has taken all action necessary
or appropriate so that the execution of this Agreement and the Meritor Option
Agreement and consummation of the transactions contemplated hereby and thereby
do not and will not result in the ability of any Person to exercise any Meritor
Rights under the Rights Agreement dated as of September 8, 1997 between Meritor
and First Chicago Trust Company of New York, as Rights Agent (the "Meritor
Rights Agreement"), or enable or require such Meritor Rights to separate from
the shares of Meritor Common Stock to which they are attached or to be triggered
or become exercisable. Copies of the Meritor Rights Agreement, and all
amendments thereto, have previously been provided to ▇▇▇▇▇.
(m) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Meritor, except Warburg Dillon Read LLC (the "Meritor Financial
Advisor") and Bear, ▇▇▇▇▇▇▇ & Co. Inc., whose fees and expenses will be paid by
Meritor in accordance with Meritor's agreements with such firms.
(n) Opinion of Meritor Financial Advisor. Meritor has received the
opinion of the Meritor Financial Advisor, dated the date of this Agreement, to
the effect that, as of such date, the Meritor Exchange Ratio and the ▇▇▇▇▇
Merger Consideration taken together are fair, from a financial point of view, to
Meritor's
stockholders.
(o) Taxes. (i) Each of Meritor and its Subsidiaries has timely filed
or has caused to be timely filed all material Tax returns or reports required to
be filed by it and all such returns and reports are complete and correct in all
material respects, or requests for extensions to file such returns or reports
have been timely filed, granted and have not expired, except to the extent that
such failures to file, to be complete or correct or to have extensions granted
that remain in effect, individually or in the aggregate, would not reasonably be
expected to
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have a Material Adverse Effect on Meritor. Meritor and each of its Subsidiaries
have paid or caused to be paid all Taxes shown as due on such returns and the
most recent financial statements contained in the Meritor Filed SEC Reports
reflect an adequate reserve in accordance with GAAP for all Taxes payable by
Meritor and its Subsidiaries for all taxable periods and portions thereof
accrued through the date of such financial statements.
(ii) No deficiencies for any Taxes have been proposed, asserted or
assessed in writing against Meritor or any of its Subsidiaries that are not
adequately reserved for, except for deficiencies that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
Meritor. No federal income tax returns of Meritor and each of its Subsidiaries
consolidated in such returns have closed by virtue of the applicable statute of
limitations.
(iii) None of Meritor or any of its Subsidiaries has taken any action,
and Meritor has no Knowledge of any fact, agreement, plan or other circumstance,
that is reasonably likely to prevent either the First Step Merger or the Second
Step Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(iv) Meritor and its Subsidiaries are not a party to any Tax sharing
or Tax indemnity agreements (other than agreements between or among Meritor and
its Subsidiaries).
(v) Within the past five years, none of Meritor or any of its
Subsidiaries has been a "distributing corporation" or a "controlled corporation"
in a distribution intended to qualify under Section 355(a) of the Code.
(vi) Except as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Meritor, none of
Meritor or any of its Subsidiaries is obligated to make any payments, or is a
party to any contract that could obligate it to make any payments, that would
not be deductible by reason of Section 162(m) or 280G of the Code.
(vii) None of Meritor or any of its Subsidiaries has agreed to make,
nor is required to make, any material adjustment under Section 481(a) of the
Code or any similar provision of state, local or foreign law by reason of a
change in accounting methods or otherwise.
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(p) Certain Contracts. As of the date hereof, none of Meritor or any
of its Subsidiaries is a party to or bound by (i) any "material contract" (as
such term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii) any
non-competition agreement or any other agreement or arrangement that limits or
otherwise restricts Meritor or any of its Subsidiaries or any of their
respective affiliates or any successor thereto, or that would, after the
Effective Time, to the Knowledge of Meritor, limit or restrict Newco or any of
its affiliates or any successor thereto, from engaging or competing in any line
of business or in any geographic area, which agreement or arrangement would
reasonably be expected to have a Material Adverse Effect on Newco and its
Subsidiaries, taken together, after giving effect to the Merger, (iii) any
employee benefit plan, employee contract with a senior executive or any other
material contract, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement or (iv) any Contract which would prohibit or
materially delay the consummation of the Merger or any of the transactions
contemplated by this Agreement. All "material contracts" (as defined in clause
(i) above) set forth in Section 4.2(p) of the Meritor Disclosure Schedule are
valid and binding on Meritor and any of its Subsidiaries, as applicable, and in
full force and effect except to the extent they have previously expired in
accordance with their terms or if the failure to be in full force and effect,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Meritor. None of Meritor or any of its Subsidiaries
(or, to the Knowledge of Meritor, any other party thereto) has violated any
provision of, or committed or failed to perform any act which with or without
notice, lapse of time or both would constitute a default under the provisions
of, any "material contract" (as defined in clause (i) above) set forth in
Section 4.2(p) of the Meritor Disclosure Schedule, except in each case for those
violations and defaults which, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect on Meritor.
(q) Employee Benefits. (i) With respect to each Meritor Plan, except
for Meritor Plans the liabilities under which, individually or in the aggregate,
would not have a Material Adverse Effect on Meritor, Meritor has made
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available to ▇▇▇▇▇ a true, correct and complete copy of: (A) all plan documents,
trust agreements, and insurance contracts and other funding vehicles; (B) the
three most recent Annual Reports (Form 5500 Series) and accompanying schedules
and exhibits, if any; (C) the current summary plan description and any material
modifications thereto, if any (in each case, whether or not required to be
furnished under ERISA); (D) the three most recent annual financial reports, if
any; (E) the three most recent actuarial reports, if any; (F) the most recent
determination letter from the IRS, if any; and (G) the annual compliance testing
under Sections 401(a) through 416 of the Code for the three most recently
completed plan years.
(ii) With respect to each Meritor Employee Benefit Plan, Meritor and
its Subsidiaries have complied with, and are now in compliance with, all
provisions of ERISA, the Code and all other Applicable Laws and regulations
applicable to such Meritor Employee Benefit Plans and each Meritor Employee
Benefit Plan has been administered in accordance with its terms, in each case
except as would not have a Material Adverse Effect on Meritor. Each Meritor
Employee Benefit Plan that is required by ERISA to be funded is fully funded in
accordance with reasonable actuarial assumptions, except as would not have a
Material Adverse Effect on Meritor.
(iii) All Meritor Employee Benefit Plans subject to the Applicable
Laws of any jurisdiction outside of the United States (A) have been maintained
in accordance with all applicable requirements, (B) if they are intended to
qualify for special tax treatment meet all requirements for such treatment, and
(C) if they are intended to be funded and/or book-reserved are fully funded
and/or book-reserved, as appropriate, based upon reasonable actuarial
assumptions, in each case except as would not have a Material Adverse Effect on
Meritor.
(r) Labor Relations. As of the date of this Agreement, (i) none of
Meritor or any of its Subsidiaries is a party to any collective bargaining
agreement affecting a material number of employees, (ii) except as would not
have a Material Adverse Effect on Meritor, no labor organization or group of
employees of Meritor or any of its Subsidiaries has made a pending demand for
recognition or certification, and there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending
or, to the Knowledge of Meritor, threatened to be
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brought or filed, with the National Labor Relations Board or any other domestic
or foreign labor relations tribunal or authority and (iii) except as would not
have a Material Adverse Effect on Meritor, there are no organizing activities,
strikes, work stoppages, slowdowns, lockouts, arbitrations or grievances, or
other labor disputes pending or, to the Knowledge of Meritor, threatened against
or involving Meritor or any of its Subsidiaries.
(s) Insurance. Meritor maintains insurance coverage with reputable
insurers in such amounts and covering such risks as are in accordance with
normal industry practice for companies engaged in businesses similar to that of
Meritor (taking into account the cost and availability of such insurance).
(t) Liens. No Liens exist on any assets of Meritor or any of its
Subsidiaries, except as would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on Meritor.
SECTION 4.3 Representations and Warranties of Newco. Newco
represents and warrants to Meritor and ▇▇▇▇▇ as follows:
(a) Organization. Newco is a corporation duly incorporated, validly
existing and in good standing under the laws of Indiana. Newco is a direct
wholly-owned subsidiary of Meritor. Meritor, as the sole stockholder of Newco,
has duly approved this Agreement and the transactions contemplated hereby.
(b) Capital Structure. On the date hereof, the authorized capital
stock of Newco consists of 1,000 shares of Newco Common Stock. All shares of
Newco Common Stock to be issued in connection with the Merger will be duly
authorized, validly issued, fully paid and nonassessable, and free of preemptive
rights.
(c) Corporate Authorization. Newco has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Newco and
the consummation by Newco of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Newco. This
Agreement has been duly executed and delivered by Newco and constitutes a valid
and binding agreement of Newco,
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enforceable against Newco in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and
similar Applicable Laws relating to or affecting creditors generally and by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(d) Non-Contravention. The execution, delivery and performance by
Newco of this Agreement and the consummation by Newco of the transactions
contemplated hereby will not contravene or conflict with the Newco Articles or
the Newco By-Laws.
(e) No Business Activities. Newco has not conducted any activities
other than in connection with the organization of Newco, the negotiation,
execution and performance of this Agreement and the consummation of the
transactions contemplated hereby. As of the date hereof, Newco has no
Subsidiaries.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1 Covenants of ▇▇▇▇▇. During the period from the date of
this Agreement and continuing until the Effective Time, ▇▇▇▇▇ agrees as to
itself and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement, the Stock Option Agreements or Section 5.1 (including its
subsections) of the ▇▇▇▇▇ Disclosure Schedule or as required by a Governmental
Entity or to the extent that Meritor and Newco shall otherwise consent in
writing, which consent shall not be unreasonably withheld or delayed):
(a) Ordinary Course. (i) Other than as set forth in Section 5.1(a)
of the ▇▇▇▇▇ Disclosure Schedule, ▇▇▇▇▇ and its Subsidiaries shall carry on
their respective businesses in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted, and shall use all
reasonable efforts to preserve intact their present business organizations, keep
available the services of their current officers and other key employees and
preserve their relationships with customers, suppliers and others having
business dealings with them to the end that their ongoing businesses shall not
be impaired at the
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Effective Time; provided, however, that no action by ▇▇▇▇▇ or its Subsidiaries
with respect to matters specifically addressed by any other provision of this
Section 5.1 shall be deemed a breach of this Section 5.1(a)(i) unless such
action would constitute a breach of one or more of such other provisions.
(ii) Other than as set forth in Section 5.1(a) of the ▇▇▇▇▇
Disclosure Schedule and other than in connection with acquisitions permitted by
Section 5.1(e) or investments permitted by Section 5.1(g), ▇▇▇▇▇ shall not, and
shall not permit any of its Subsidiaries to, (A) enter into any new material
line of business or (B) incur or commit to any capital expenditures or any
obligations or liabilities in connection with any capital expenditures other
than capital expenditures and obligations or liabilities in connection therewith
incurred or committed to in the ordinary course of business consistent with past
practice.
(b) Dividends; Changes in Share Capital. ▇▇▇▇▇ shall not, and shall
not permit any of its Subsidiaries to, and shall not propose to, (i) declare or
pay any dividends on or make other distributions (whether in cash, stock or
property) in respect of any of its capital stock, except (A) the declaration and
payment of regular quarterly cash dividends not in excess of $0.22 per share of
▇▇▇▇▇ Common Stock with usual record and payment dates for such dividends in
accordance with past dividend practice and (B) for dividends by any direct or
indirect wholly-owned Subsidiaries of ▇▇▇▇▇, (ii) split, combine or reclassify
any of its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for, shares of its
capital stock, except for any such transaction by a wholly-owned Subsidiary of
▇▇▇▇▇ which remains a wholly-owned Subsidiary after consummation of such
transaction or (iii) repurchase, redeem or otherwise acquire any shares of its
capital stock or any securities convertible into or exercisable for any shares
of its capital stock.
(c) Issuance of Securities. ▇▇▇▇▇ shall not, and shall not permit
any of its Subsidiaries to, issue, deliver, sell, pledge or otherwise encumber,
or authorize or propose the issuance, delivery, sale, pledge or encumbrance of,
any shares of its capital stock of any class, any ▇▇▇▇▇ Voting Debt or any
securities convertible into or exercisable for, or any rights, warrants, calls
or options to acquire, any such shares or ▇▇▇▇▇ Voting Debt, or enter into any
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commitment, arrangement, undertaking or agreement with respect to any of the
foregoing, other than (i) the issuance of ▇▇▇▇▇ Common Stock (and the associated
▇▇▇▇▇ Rights) upon the exercise of ▇▇▇▇▇ Stock Options outstanding on the date
hereof in accordance with their present terms or pursuant to ▇▇▇▇▇ Stock Options
or other stock based awards granted pursuant to clause (ii) below, (ii) the
granting of ▇▇▇▇▇ Stock Options or other stock based awards of or to acquire not
more than 100,000 shares of ▇▇▇▇▇ Common Stock granted under ▇▇▇▇▇ Plans
outstanding on the date hereof in the ordinary course of business consistent
with past practice, (iii) issuances by a wholly-owned Subsidiary of ▇▇▇▇▇ of
capital stock of such Subsidiary to such Subsidiary's parent or another
wholly-owned Subsidiary of ▇▇▇▇▇, (iv) issuances in accordance with the ▇▇▇▇▇
Rights Agreement or (v) issuances pursuant to the ▇▇▇▇▇ Stock Option Agreement.
(d) Governing Documents. Except to the extent required to comply
with its obligations hereunder or with Applicable Laws, Arvin shall not amend or
propose to so amend its articles of incorporation, bylaws or other governing
documents.
(e) No Acquisitions. Other than (i) pursuant to the Meritor Stock
Option Agreement, (ii) acquisitions disclosed in Section 5.1(e) of the ▇▇▇▇▇
Disclosure Schedule and (iii) acquisitions for cash in existing or related lines
of business of ▇▇▇▇▇ the fair market value of the total consideration (including
the value of indebtedness acquired or assumed) for which does not exceed the
amount specified in the aggregate for all such acquisitions in Section
5.1(e)(iii) of the ▇▇▇▇▇ Disclosure Schedule and none of which acquisitions
referred to in this clause (iii) presents a material risk of making it
materially more difficult to obtain any approval or authorization required in
connection with the Merger under Applicable Laws, Arvin shall not, and shall not
permit any of its Subsidiaries to, acquire or agree to acquire by merger or
consolidation, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, limited liability entity, joint venture,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any material assets (excluding the acquisition of
assets used in the operations of the business of ▇▇▇▇▇ and its Subsidiaries in
the ordinary course consistent with past practice, which assets do not
constitute a business unit, division or all or substantially
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all of the assets of the transferor); provided, however, that the foregoing
shall not prohibit (x) internal reorganizations or consolidations involving
existing Subsidiaries of ▇▇▇▇▇ or (y) the creation of new direct or indirect
wholly-owned Subsidiaries of ▇▇▇▇▇ organized to conduct or continue activities
otherwise permitted by this Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of ▇▇▇▇▇, (ii) as may be required
by or in conformance with Applicable Laws in order to permit or facilitate the
consummation of the transactions contemplated hereby or (iii) as disclosed in
Section 5.1(f) of the ▇▇▇▇▇ Disclosure Schedule, ▇▇▇▇▇ shall not, and shall not
permit any of its Subsidiaries to, sell, lease, license or otherwise encumber or
subject to any Lien or otherwise dispose of, or agree to sell, lease, license or
otherwise encumber or subject to any Lien or otherwise dispose of, any of its
assets (including capital stock of Subsidiaries of ▇▇▇▇▇ but excluding inventory
in the ordinary course of business consistent with past practice), if the fair
market value of the total consideration (including the value of the indebtedness
acquired or assumed) therefor exceeds the amount specified in the aggregate for
all such dispositions in Section 5.1(f) of the ▇▇▇▇▇ Disclosure Schedule.
(g) Investments; Indebtedness. ▇▇▇▇▇ shall not, and shall not permit
any of its Subsidiaries to, other than in connection with the consummation of
acquisitions permitted by Section 5.1(e), (i) make any loans, advances or
capital contributions to, or investments in, any other Person, other than (A)
loans or investments by ▇▇▇▇▇ or a Subsidiary of ▇▇▇▇▇ to or in ▇▇▇▇▇ or a
Subsidiary of ▇▇▇▇▇, (B) pursuant to any contract or other legal obligation of
▇▇▇▇▇ or any of its Subsidiaries as in effect at the date of this Agreement, (C)
employee loans or advances for travel, business, relocation or other
reimbursable expenses made in the ordinary course of business, (D) loans,
advances, capital contributions or investments which in the aggregate do not
exceed the amount specified in Section 5.2(g) of the ▇▇▇▇▇ Disclosure Schedule
or (E) in the ordinary course of business which are not, individually or in the
aggregate, material to ▇▇▇▇▇ and its Subsidiaries taken as a whole or (ii)
create, incur, assume or suffer to exist any indebtedness, issuances of debt
securities, guarantees, loans or advances not in existence as of the date of
this Agreement except in the ordinary course of business which
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are not, individually or in the aggregate, material to ▇▇▇▇▇ and its
Subsidiaries taken as a whole.
(h) Tax-Free Qualification. ▇▇▇▇▇ shall use its reasonable best
efforts not to, and shall use its reasonable best efforts not to permit any of
its Subsidiaries to, take any action (including any action otherwise permitted
by this Section 5.1) that would prevent or impede the First Step Merger or the
Second Step Merger from qualifying as a "reorganization" under Section 368(a) of
the Code; provided, however, that nothing hereunder shall limit the ability of
▇▇▇▇▇ to exercise its rights and/or fulfill its obligations under the Stock
Option Agreements.
(i) Compensation. Except (x) as set forth in Section 5.1(c) or
Section 5.1(i) of the ▇▇▇▇▇ Disclosure Schedule, (y) as required by Applicable
Laws or by the terms of any collective bargaining agreement or other agreement
currently in effect between ▇▇▇▇▇ or any Subsidiary of ▇▇▇▇▇ and any executive
officer or employee thereof or (z) in the ordinary course of business, ▇▇▇▇▇
shall not increase the amount of compensation or employee benefits of any
director, officer or employee of ▇▇▇▇▇ or any Subsidiary or business unit of
▇▇▇▇▇, pay any pension, retirement, savings or profit-sharing allowance to any
employee that is not required by any existing plan or agreement, enter into any
Contract with any of its employees regarding his or her employment, compensation
or benefits, increase or commit to increase any employee benefits, issue any
additional ▇▇▇▇▇ Stock Options, adopt or amend or make any commitment to adopt
or amend any ▇▇▇▇▇ Plan or make any contribution, other than regularly scheduled
contributions, to any ▇▇▇▇▇ Plan. ▇▇▇▇▇ shall not accelerate the vesting of, or
the lapsing of restrictions with respect to, any stock options or other
stock-based compensation, except as required by Applicable Laws or in the
ordinary course of business or in accordance with this Agreement, and any option
committed to be granted or granted after the date hereof shall not accelerate as
a result of the approval or consummation of any transaction contemplated by this
Agreement. Subject to the provisions of Section 2.12, ▇▇▇▇▇ shall not enter into
any change of control employment agreements.
(j) Accounting Methods; Income Tax Elections. Except as disclosed in
▇▇▇▇▇ Filed SEC Reports, or as required by a Governmental Entity, ▇▇▇▇▇ shall
not change its methods of accounting in effect at December 31, 1999, except as
required by changes in GAAP as concurred in by
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Arvin's independent public accountants. ▇▇▇▇▇ shall not (i) change its fiscal
year or (ii) make any material Tax election or settle or compromise any material
income Tax liability, other than in the ordinary course of business consistent
with past practice.
(k) Certain Agreements and Arrangements. Except as disclosed in
Section 5.1(k) of the ▇▇▇▇▇ Disclosure Schedule, ▇▇▇▇▇ shall not, and shall not
permit any of its Subsidiaries to, enter into any Contracts that limit or
otherwise restrict ▇▇▇▇▇ or any of its Subsidiaries or any of their respective
affiliates or any successor thereto, or that would, after the Effective Time,
limit or restrict Newco or any of its affiliates or any successor thereto, from
engaging or competing in any line of business or in any geographic area which
agreements or arrangements, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect on Newco and its Subsidiaries,
taken together, after giving effect to the Merger.
(l) ▇▇▇▇▇ Rights Agreement. Other than in connection with the Merger
and the ▇▇▇▇▇ Stock Option Agreement, ▇▇▇▇▇ shall not amend, modify or waive any
provision of the ▇▇▇▇▇ Rights Agreement, and shall not take any action to redeem
the ▇▇▇▇▇ Rights or render the ▇▇▇▇▇ Rights inapplicable to any transaction.
(m) No Related Actions. ▇▇▇▇▇ will not, and will not
permit any of its Subsidiaries to, agree or commit to do any of the
foregoing.
SECTION 5.2 Covenants of Meritor and Newco. During the period from
the date of this Agreement and continuing until the Effective Time, Meritor
agrees as to itself and its Subsidiaries and Newco agrees that (except as
expressly contemplated or permitted by this Agreement, the Stock Option
Agreements or Section 5.2 (including its subsections) of the Meritor Disclosure
Schedule or as required by a Governmental Entity or to the extent that ▇▇▇▇▇
shall otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed):
(a) Ordinary Course. (i) Other than as set forth in Section 5.2(a)
of the Meritor Disclosure Schedule, Meritor and its Subsidiaries shall carry on
their respective businesses in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted, and
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shall use all reasonable efforts to preserve intact their present business
organizations, keep available the services of their current officers and other
key employees and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that their ongoing
businesses shall not be impaired at the Effective Time; provided, however, that
no action by Meritor or its Subsidiaries with respect to matters specifically
addressed by any other provision of this Section 5.2 shall be deemed a breach of
this Section 5.2(a)(i) unless such action would constitute a breach of one or
more of such other provisions.
(ii) Other than as set forth in Section 5.2(a) of the Meritor
Disclosure Schedule and other than in connection with acquisitions permitted by
Section 5.2(e) or investments permitted by Section 5.2(g), Meritor shall not,
and shall not permit any of its Subsidiaries to, (A) enter into any new material
line of business or (B) incur or commit to any capital expenditures or any
obligations or liabilities in connection with any capital expenditures other
than capital expenditures and obligations or liabilities in connection therewith
incurred or committed to in the ordinary course of business consistent with past
practice.
(b) Dividends; Changes in Share Capital. Meritor shall not, and
shall not permit any of its Subsidiaries to, and shall not propose to, (i)
declare or pay any dividends on or make other distributions (whether in cash,
stock or property) in respect of any of its capital stock, except (A) the
declaration and payment of regular quarterly cash dividends not in excess of
$.105 per share of Meritor Common Stock with usual record and payment dates for
such dividends in accordance with past dividend practice and (B) for dividends
by any direct or indirect wholly-owned Subsidiaries of Meritor, (ii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, except for any such transaction
by a wholly-owned Subsidiary of Meritor which remains a wholly-owned Subsidiary
after consummation of such transaction or (iii) repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock.
(c) Issuance of Securities. Meritor shall not, and shall not permit
any of its Subsidiaries to, issue,
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deliver, sell, pledge or otherwise encumber, or authorize or propose the
issuance, delivery, sale, pledge or encumbrance of, any shares of its capital
stock of any class, any Meritor Voting Debt or any securities convertible into
or exercisable for, or any rights, warrants, calls or options to acquire, any
such shares or Meritor Voting Debt, or enter into any commitment, arrangement,
undertaking or agreement with respect to any of the foregoing, other than (i)
the issuance of Meritor Common Stock (and the associated Meritor Rights) upon
the exercise of Meritor Stock Options outstanding on the date hereof in
accordance with their present terms or pursuant to Meritor Stock Options for or
other stock based awards granted pursuant to clause (ii) below, (ii) the
granting of Meritor Stock Options or other stock based awards of or to acquire
not more than 200,000 shares of Meritor Common Stock granted under Meritor Plans
outstanding on the date hereof in the ordinary course of business consistent
with past practice, (iii) issuances by a wholly-owned Subsidiary of Meritor of
capital stock of such Subsidiary to such Subsidiary's parent or another
wholly-owned Subsidiary of Meritor, (iv) issuances in accordance with the
Meritor Rights Agreement or (v) issuances pursuant to the Meritor Stock Option
Agreement.
(d) Governing Documents. Except to the extent required to comply
with its obligations hereunder or with Applicable Laws, Meritor shall not amend
or propose to so amend its certificate of incorporation, by-laws or other
governing documents.
(e) No Acquisitions. Other than (i) pursuant to the ▇▇▇▇▇ Stock
Option Agreement, (ii) acquisitions disclosed in Section 5.2(e) of the Meritor
Disclosure Schedule and (iii) acquisitions for cash in existing or related lines
of business of Meritor the fair market value of the total consideration
(including the value of indebtedness acquired or assumed) for which does not
exceed the amount specified in the aggregate for all such acquisitions in
Section 5.2(e)(iii) of the Meritor Disclosure Schedule and none of which
acquisitions referred to in this clause (iii) presents a material risk of making
it materially more difficult to obtain any approval or authorization required in
connection with the Merger under Applicable Laws, Meritor shall not, and shall
not permit any of its Subsidiaries to, acquire or agree to acquire by merger or
consolidation, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation,
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partnership, limited liability entity, joint venture, association or other
business organization or division thereof or otherwise acquire or agree to
acquire any material assets (excluding the acquisition of assets used in the
operations of the business of Meritor and its Subsidiaries in the ordinary
course consistent with past practice, which assets do not constitute a business
unit, division or all or substantially all of the assets of the transferor);
provided, however, that the foregoing shall not prohibit (x) internal
reorganizations or consolidations involving existing Subsidiaries of Meritor or
(y) the creation of new direct or indirect wholly-owned Subsidiaries of Meritor
organized to conduct or continue activities otherwise permitted by this
Agreement.
(f) No Dispositions. Other than (i) internal reorganizations or
consolidations involving existing Subsidiaries of Meritor, (ii) as may be
required by or in conformance with Applicable Laws in order to permit or
facilitate the consummation of the transactions contemplated hereby or (iii) as
disclosed in Section 5.2(f) of the Meritor Disclosure Schedule, Meritor shall
not, and shall not permit any of its Subsidiaries to, sell, lease, license or
otherwise encumber or subject to any Lien or otherwise dispose of, or agree to
sell, lease, license or otherwise encumber or subject to any Lien or otherwise
dispose of, any of its assets (including capital stock of Subsidiaries of
Meritor but excluding inventory in the ordinary course of business consistent
with past practice), if the fair market value of the total consideration
(including the value of the indebtedness acquired or assumed) therefor exceeds
the amount specified in the aggregate for all such dispositions in Section
5.2(f) of the Meritor Disclosure Schedule.
(g) Investments; Indebtedness. Meritor shall not, and shall not
permit any of its Subsidiaries to, other than in connection with the
consummation of acquisitions permitted by Section 5.2(e), (i) make any loans,
advances or capital contributions to, or investments in, any other Person, other
than (A) loans or investments by Meritor or a Subsidiary of Meritor to or in
Meritor or a Subsidiary of Meritor, (B) pursuant to any contract or other legal
obligation of Meritor or any of its Subsidiaries as in effect at the date of
this Agreement, (C) employee loans or advances for travel, business, relocation
or other reimbursable expenses made in the ordinary course of business, (D)
loans, advances, capital contributions or investments which in the aggregate do
not exceed the amount
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specified in Section 5.2(g) of the Meritor Disclosure Schedule or (E) in the
ordinary course of business which are not, individually or in the aggregate,
material to Meritor and its Subsidiaries taken as a whole or (ii) create, incur,
assume or suffer to exist any indebtedness, issuances of debt securities,
guarantees, loans or advances not in existence as of the date of this Agreement
except in the ordinary course of business which are not, individually or in the
aggregate, material to Meritor and its Subsidiaries taken as a whole.
(h) Tax-Free Qualification. Meritor shall use its reasonable best
efforts not to, and shall use its reasonable best efforts not to permit any of
its Subsidiaries to, take any action (including any action otherwise permitted
by this Section 5.2) that would prevent or impede the First Step Merger or the
Second Step Merger from qualifying as a "reorganization" under Section 368(a) of
the Code; provided, however, that nothing hereunder shall limit the ability of
Meritor to exercise its rights and/or fulfill its obligations under the Stock
Option Agreements.
(i) Compensation. Except (x) as set forth in Section 5.2(c) or
Section 5.2(i) of the Meritor Disclosure Schedule, (y) as required by Applicable
Laws or by the terms of any collective bargaining agreement or other agreement
currently in effect between Meritor or any Subsidiary of Meritor and any
executive officer or employee thereof or (z) in the ordinary course of business,
Meritor shall not increase the amount of compensation or employee benefits of
any director, officer or employee of Meritor or any Subsidiary or business unit
of Meritor, pay any pension, retirement, savings or profit-sharing allowance to
any employee that is not required by any existing plan or agreement, enter into
any Contract with any of its employees regarding his or her employment,
compensation or benefits, increase or commit to increase any employee benefits,
issue any additional Meritor Stock Options, adopt or amend or make any
commitment to adopt or amend any Meritor Plan or make any contribution, other
than regularly scheduled contributions, to any Meritor Plan. Meritor shall not
accelerate the vesting of, or the lapsing of restrictions with respect to, any
stock options or other stock-based compensation, except as required by
Applicable Laws or in the ordinary course of business or in accordance with this
Agreement, and any option committed to be granted or granted after the date
hereof shall not accelerate as a result of the approval or consummation of any
transaction contemplated
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by this Agreement. Meritor shall not enter into any change of control employment
agreements.
(j) Accounting Methods; Income Tax Elections. Except as disclosed in
Meritor Filed SEC Reports, or as required by a Governmental Entity, Meritor
shall not change its methods of accounting in effect at December 31, 1999,
except as required by changes in GAAP as concurred in by Meritor's independent
public accountants. Meritor shall not (i) change its fiscal year or (ii) make
any material Tax election or settle or compromise any material income Tax
liability, other than in the ordinary course of business consistent with past
practice.
(k) Certain Agreements and Arrangements. Except as disclosed in
Section 5.2(k) of the Meritor Disclosure Schedule, Meritor shall not, and shall
not permit any of its Subsidiaries to, enter into any Contracts that limit or
otherwise restrict Meritor or any of its Subsidiaries or any of their respective
affiliates or any successor thereto, or that would, after the Effective Time,
limit or restrict Newco or any of its affiliates or any successor thereto, from
engaging or competing in any line of business or in any geographic area which
agreements or arrangements, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect on Newco and its Subsidiaries,
taken together, after giving effect to the Merger.
(l) Meritor Rights Agreement. Other than in connection with the
Merger and the Meritor Stock Option Agreement, Meritor shall not amend, modify
or waive any provision of the Meritor Rights Agreement and shall not take any
action to redeem the Meritor Rights or render the Meritor Rights inapplicable to
any transaction.
(m) No Newco Business Activities. Newco will not conduct any
activities other than in connection with the organization of Newco, the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated hereby.
(n) No Related Actions. Meritor will not, and will not permit any
of its Subsidiaries to, agree or commit to do any of the foregoing.
SECTION 5.3 Governmental Filings. Each of Meritor and Newco, on the
one hand, and ▇▇▇▇▇, on the other
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hand, shall (a) confer on a regular and frequent basis with the other and (b)
report to the other (to the extent permitted by law or regulation or any
applicable confidentiality agreement) on operational matters. Each party shall
file all reports required to be filed by each of them with the SEC (and all
other Governmental Entities) between the date of this Agreement and the
Effective Time and shall (to the extent permitted by law or regulation or any
applicable confidentiality agreement) deliver to the other parties copies of all
such reports, announcements and publications promptly after the same are filed.
SECTION 5.4 Control of Other Party's Business. Nothing contained in
this Agreement shall give Meritor, directly or indirectly, the right to control
or direct Arvin's operations prior to the Effective Time. Nothing contained in
this Agreement shall give ▇▇▇▇▇, directly or indirectly, the right to control or
direct Meritor's operations prior to the Effective Time. Prior to the Effective
Time, each of Meritor and ▇▇▇▇▇ shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
respective operations.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Preparation of Proxy Statement; Stockholders Meetings.
(a) As promptly as reasonably practicable following the date hereof, ▇▇▇▇▇ and
Meritor shall prepare and file with the SEC proxy materials which shall
constitute the Joint Proxy Statement/Prospectus (such proxy
statement/prospectus, and any amendments or supplements thereto, the "Joint
Proxy Statement/Prospectus") and Newco shall prepare and file with the SEC a
registration statement on Form S-4 with respect to the issuance of Newco Common
Stock in the Merger (the "Form S-4"). The Joint Proxy Statement/Prospectus will
be included in and will constitute a part of the Form S-4 as Newco's prospectus.
Each of ▇▇▇▇▇, Meritor and Newco shall use reasonable best efforts to have the
Joint Proxy Statement/Prospectus cleared by the SEC and the Form S-4 declared
effective by the SEC as promptly as reasonably practicable after filing with the
SEC and to keep the Form S-4 effective as long as is necessary to consummate the
Merger and the transactions contemplated thereby. ▇▇▇▇▇ and
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Meritor shall, as promptly as practicable after receipt thereof, provide the
other party copies of any written comments and advise the other party of any
oral comments, with respect to the Joint Proxy Statement/Prospectus received
from the SEC. Meritor and Newco shall provide ▇▇▇▇▇ with a reasonable
opportunity to review and comment on any amendment or supplement to the Form S-4
prior to filing such with the SEC, and with a copy of all such filings made with
the SEC. Notwithstanding any other provision herein to the contrary, no
amendment or supplement (including by incorporation by reference) to the Joint
Proxy Statement/Prospectus or the Form S-4 shall be made without the approval of
both Meritor and ▇▇▇▇▇, which approval shall not be unreasonably withheld or
delayed; provided that with respect to documents filed by a party which are
incorporated by reference in the Form S-4 or Joint Proxy Statement/Prospectus,
this right of approval shall apply only with respect to information relating to
the other party or its business, financial condition or results of operations.
▇▇▇▇▇ will use reasonable best efforts to cause the Joint Proxy
Statement/Prospectus to be mailed to Arvin's stockholders, and Meritor will use
reasonable best efforts to cause the Joint Proxy Statement/Prospectus to be
mailed to Meritor's stockholders, in each case as promptly as practicable after
the Form S-4 is declared effective under the Securities Act. Newco shall also
take any action (other than qualifying to do business in any jurisdiction in
which it is not now so qualified or to file a general consent to service of
process) required to be taken under any applicable state securities laws in
connection with the issuance of Newco Common Stock in the Merger and ▇▇▇▇▇ and
Meritor shall furnish all information concerning ▇▇▇▇▇ and Meritor and the
holders of ▇▇▇▇▇ Common Stock and Meritor Common Stock as may be reasonably
requested in connection with any such action. Each of Meritor and Newco, on the
one hand, and ▇▇▇▇▇, on the other hand, will advise the other, promptly after it
receives notice thereof of the time when the Form S-4 has become effective, the
issuance of any stop order with respect to the Form S-4, the suspension of the
qualification of the Newco Common Stock issuable in connection with the Merger
for offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Joint Proxy Statement/Prospectus or the Form S-4. If at any
time prior to the Effective Time any information relating to ▇▇▇▇▇, Meritor or
Newco, or any of their respective affiliates, officers or directors, should be
discovered by ▇▇▇▇▇, Meritor or Newco which should be set forth in an amendment
or supplement to the Form S-4 or the Joint Proxy
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Statement/Prospectus so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly
notify the other parties hereto and, to the extent required by Applicable Laws,
an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and disseminated to the stockholders of ▇▇▇▇▇ and
Meritor.
(b) ▇▇▇▇▇ shall duly take all lawful action to call, give notice of,
convene and hold a meeting of its stockholders on a date determined in
accordance with the mutual agreement of ▇▇▇▇▇ and Meritor (the "▇▇▇▇▇
Stockholders Meeting") for the purpose of obtaining the Required ▇▇▇▇▇ Vote with
respect to the transactions contemplated by this Agreement and shall take all
lawful action to solicit the approval of this Agreement and the Merger by the
Required ▇▇▇▇▇ Vote; and the Board of Directors of ▇▇▇▇▇ shall recommend
approval of this Agreement and the Merger by the stockholders of ▇▇▇▇▇ to the
effect as set forth in Section 4.1(f) (the "▇▇▇▇▇ Recommendation"), and shall
not withdraw, modify or qualify (or propose to withdraw, modify or qualify) in
any manner adverse to Meritor such recommendation (a "Change in the ▇▇▇▇▇
Recommendation"); provided, however, that the Board of Directors of ▇▇▇▇▇ may
make a Change in the ▇▇▇▇▇ Recommendation pursuant to Section 6.5.
Notwithstanding any Change in the ▇▇▇▇▇ Recommendation, this Agreement shall be
submitted to the stockholders of ▇▇▇▇▇ at the ▇▇▇▇▇ Stockholders Meeting for the
purpose of approving this Agreement and nothing contained herein shall be deemed
to relieve ▇▇▇▇▇ of such obligation.
(c) Meritor shall duly take all lawful action to call, give notice
of, convene and hold a meeting of its stockholders on a date determined in
accordance with the mutual agreement of Meritor and ▇▇▇▇▇ (the "Meritor
Stockholders Meeting") for the purpose of obtaining the Required Meritor Vote
with respect to the transactions contemplated by this Agreement and shall take
all lawful action to solicit the approval of this Agreement and the Merger by
the Required Meritor Vote, and the Board of Directors of Meritor shall recommend
approval of this Agreement and the Merger by the stockholders of Meritor to the
effect as set forth in Section 4.2(f) (the "Meritor Recommendation"), and shall
not withdraw, modify or qualify
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(or propose to withdraw, modify or qualify) in any manner adverse to ▇▇▇▇▇ such
recommendation (a "Change in the Meritor Recommendation"); provided, however,
that the Board of Directors of Meritor may make a Change in the Meritor
Recommendation pursuant to Section 6.5. Notwithstanding any Change in the
Meritor Recommendation, this Agreement shall be submitted to the stockholders of
Meritor at the Meritor Stockholders Meeting for the purpose of approving this
Agreement and nothing contained herein shall be deemed to relieve Meritor of
such obligation.
SECTION 6.2 Newco Board of Directors and Management. At or prior to
the Effective Time, the parties will take all action necessary to effectuate the
provisions of Sections 2.12 and 2.13.
SECTION 6.3 Access to Information. Upon reasonable notice, each of
Meritor and ▇▇▇▇▇ shall (and shall cause its Subsidiaries to) afford to the
officers, employees, accountants, counsel, financial advisors and other
representatives of the other reasonable access during normal business hours,
during the period prior to the Effective Time, to all its books, records,
properties, plants and personnel and, during such period, such party shall (and
shall cause its Subsidiaries to) furnish promptly to the other party (a) a copy
of each report, schedule, registration statement and other document filed,
published, announced or received by it during such period pursuant to the
requirements of Federal or state securities laws, as applicable (other than
documents which such party is not permitted to disclose under Applicable Laws),
and (b) all other information concerning it and its business, properties and
personnel as such other party may reasonably request; provided, however, that
either party may restrict the foregoing access to the extent that (i) any
Applicable Laws or Contract requires such party or its Subsidiaries to restrict
or prohibit access to any such properties or information or (ii) the information
is subject to confidentiality obligations to a third party. The parties will
hold any such information obtained pursuant to this Section 6.3 in confidence in
accordance with, and will otherwise be subject to, the provisions of the
confidentiality letter dated February 24, 2000 between Meritor and ▇▇▇▇▇ (as it
may be amended or supplemented, the "Confidentiality Agreement"). Any
investigation by either ▇▇▇▇▇ or Meritor shall not affect the representations
and warranties of the other or the conditions to the respective obligations of
the parties to consummate the Merger.
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SECTION 6.4 Reasonable Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, and to
assist and cooperate with the other parties in doing or causing to be done, all
things necessary, proper or advisable under this Agreement and Applicable Laws
to consummate the Merger and the other transactions contemplated by this
Agreement as soon as practicable after the date hereof, including (i) preparing
and filing as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings and tax ruling requests and to obtain
as promptly as practicable all Necessary Consents and all other consents,
waivers, licenses, orders, registrations, approvals, permits, rulings,
authorizations and clearances necessary or advisable to be obtained from any
third party and/or any Governmental Entity in order to consummate the Merger or
any of the other transactions contemplated by this Agreement (collectively, the
"Required Approvals") and (ii) taking all reasonable steps as may be necessary
to obtain all Required Approvals. In furtherance and not in limitation of the
foregoing, each party hereto agrees to make (i) 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 after the date
hereof, (ii) appropriate filings, if any are required, with the European
Commission and/or other foreign regulatory authorities in accordance with
applicable competition, merger control, antitrust, investment or similar
Applicable Laws, and (iii) all other necessary filings with other Governmental
Entities relating to the Merger, and, in each case, to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to such Applicable Laws or by such authorities and to use
reasonable best efforts to cause the expiration or termination of the applicable
waiting periods under the HSR Act and the receipt of the Required Approvals
under such other Applicable Laws or from such authorities as soon as
practicable. Notwithstanding the foregoing, nothing in this Section 6.4 shall
require any of ▇▇▇▇▇ and its Subsidiaries, Meritor and its Subsidiaries or Newco
and its Subsidiaries to sell, hold separate or otherwise dispose of any assets
of ▇▇▇▇▇, Meritor, Newco or their respective Subsidiaries (including the capital
stock of any Subsidiary) or conduct their business in a specified manner, or
agree to do so, whether as a condition to obtaining any approval from a
Governmental Entity or any other Person or for any other
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reason, if such sale, holding separate or other disposition or the conduct of
their business in a specified manner is not conditioned on the Closing or would
reasonably be expected to have a Material Adverse Effect on Newco and its
Subsidiaries, taken together, after giving effect to the Merger.
(b) Each of ▇▇▇▇▇, on the one hand, and Meritor and Newco, on the
other hand, shall, in connection with the efforts referenced in Section 6.4(a)
to obtain all Required Approvals, use its reasonable best efforts to (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (ii) promptly inform the other
party of any communication received by such party from, or given by such party
to, the Antitrust Division of the Department of Justice (the "DOJ"), the Federal
Trade Commission (the "FTC") or any other Governmental Entity and of any
material communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other party to review any communication given by it
to, and consult with each other in advance of any meeting or conference with,
the DOJ, the FTC or any such other Governmental Entity or, in connection with
any proceeding by a private party, with any other Person, and to the extent
appropriate or permitted by the DOJ, the FTC or such other applicable
Governmental Entity or other Person, give the other party the opportunity to
attend and participate in such meetings and conferences.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Section 6.4(a) and Section 6.4(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Applicable Laws, or if any
statute, rule, regulation, executive order, decree, injunction or administrative
order is enacted, entered, promulgated or enforced by a Governmental Entity
which would make the Merger or the other transactions contemplated hereby
illegal or would otherwise prohibit or materially impair or delay the
consummation of the Merger or the other transactions contemplated hereby, each
of Meritor and ▇▇▇▇▇ shall cooperate in all respects with each other and use its
respective reasonable best efforts, including, subject to the last sentence of
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Section 6.4(a), selling, holding separate or otherwise disposing of any assets
of Meritor, ▇▇▇▇▇, or their respective Subsidiaries (including the capital stock
of any Subsidiary) or conducting their business in a specified manner, or
agreeing to do so, to contest and resist any such action or proceeding and to
have vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order, whether temporary, preliminary or permanent, that is in effect and
that prohibits, prevents or restricts consummation of the Merger or the other
transactions contemplated by this Agreement and to have such statute, rule,
regulation, executive order, decree, injunction or administrative order
repealed, rescinded or made inapplicable so as to permit consummation of the
transactions contemplated by this Agreement. Notwithstanding the foregoing or
any other provision of this Agreement, nothing in this Section 6.4 shall limit a
party's right to terminate this Agreement pursuant to Section 8.1(b) or Section
8.1(c) so long as such party has complied with its obligations under this
Section 6.4.
(d) Each of ▇▇▇▇▇ and Meritor shall cooperate with each other in
obtaining opinions of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, counsel to ▇▇▇▇▇, and
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to Meritor, to satisfy the conditions set forth
in Section 7.2(c) and Section 7.3(c). In connection therewith, each of ▇▇▇▇▇ and
Meritor shall deliver to such counsel customary representation letters in form
and substance reasonably satisfactory to such counsel.
SECTION 6.5 Acquisition Proposals. (a) Without limiting any party's
other obligations under this Agreement (including under Article V hereof), each
of ▇▇▇▇▇ and Meritor agrees that neither it nor any of its Subsidiaries nor any
of the officers and directors of it or its Subsidiaries shall, and that it shall
use its reasonable best efforts to cause its and its Subsidiaries' employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) not to, directly or
indirectly, (i) initiate, solicit, encourage or knowingly facilitate (including
by way of furnishing information) any inquiries or the making of any proposal or
offer with respect to, or a transaction to effect, a merger, reorganization,
share exchange, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving it or any of its
Significant Subsidiaries (as defined in Rule 1-02 of Regulation S-X of the SEC),
or any purchase or
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sale of 20% or more of the consolidated assets (including without limitation
stock of its Subsidiaries) of such party and its Subsidiaries, taken as a whole,
or any purchase or sale of, or tender or exchange offer for, the equity
securities of such party that, if consummated, would result in any Person (or
the stockholders of such Person) beneficially owning securities representing 20%
or more of the total voting power of such party (or of the surviving parent
entity in such transaction) or any of its Significant Subsidiaries (any such
proposal, offer or transaction, including any single or multi-step transaction
or series of related transactions (other than a proposal or offer made by the
other party or an Affiliate thereof) being hereinafter referred to as an
"Acquisition Proposal"), (ii) have any discussion with or provide any
confidential information or data to any Person relating to an Acquisition
Proposal, or engage in any negotiations concerning an Acquisition Proposal, or
knowingly facilitate any effort or attempt to make or implement an Acquisition
Proposal, (iii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal or (iv) approve or recommend, or propose to
approve or recommend, or execute or enter into, any letter of intent, agreement
in principle, merger agreement, acquisition agreement, option agreement or other
similar agreement or propose publicly or agree to do any of the foregoing
related to any Acquisition Proposal.
(b) Notwithstanding anything in this Agreement to the contrary, each
of ▇▇▇▇▇ and Meritor or its respective Board of Directors shall be permitted to
(A) to the extent applicable, comply with Rule 14d-9 and Rule 14e-2 promulgated
under the Exchange Act with regard to an Acquisition Proposal, (B) effect a
Change in the ▇▇▇▇▇ Recommendation or a Change in the Meritor Recommendation, as
the case may be, or (C) engage in any discussions with, or provide any
information to, any Person in response to an unsolicited bona fide written
Acquisition Proposal by any such Person in order to be informed with respect
thereto in order to make any determination permitted in clause (B), if and only
to the extent that, in any such case referred to in clause (B) or (C), (i) its
Stockholders Meeting shall not have occurred, (ii) it has received an
unsolicited bona fide written Acquisition Proposal (for purposes of this clause
(ii), references to 20% in the definition of "Acquisition Proposal" shall be
deemed to be references to 50%) from a third party and its Board of Directors
concludes in good faith that such action is required by the Board of Directors'
fiduciary duties to stockholders as a result of
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such Acquisition Proposal, (iii) prior to providing any information or data to
any Person in connection with an Acquisition Proposal by any such Person, its
Board of Directors receives from such Person an executed customary
confidentiality agreement containing terms at least as stringent as those
contained in the Confidentiality Agreement (but which need not contain
standstill provisions) and (iv) prior to providing any information or data to
any Person or entering into discussions with any Person, such party notifies the
other parties promptly of such inquiries, proposals or offers received by, any
such information requested from, or any such discussions sought to be initiated
or continued with, such party or any of its representatives indicating, in
connection with such notice, the name of such Person and the material terms and
conditions of any inquiries, proposals or offers, and furnishes to the other
parties a copy of any such written inquiry, proposal or offer. Each of ▇▇▇▇▇ and
Meritor agrees that it will promptly keep the other parties informed of the
status and terms of any such proposals or offers and the status and terms of any
such discussions. Each of ▇▇▇▇▇ and Meritor agrees that it will, and will cause
its officers, directors and representatives to, immediately cease and cause to
be terminated any activities, discussions or negotiations existing as of the
date of this Agreement with any Persons conducted heretofore with respect to any
Acquisition Proposal, and request the return or destruction of all non-public
information furnished in connection therewith. Each of ▇▇▇▇▇ and Meritor agrees
that it will use reasonable best efforts to promptly inform its directors,
officers, key employees, agents and representatives of the obligations
undertaken in this Section 6.5. Nothing in this Section 6.5 shall (x) permit
▇▇▇▇▇ or Meritor to terminate this Agreement (except as specifically provided in
Article VIII) or (y) affect any other obligation of ▇▇▇▇▇ or Meritor under this
Agreement. Neither ▇▇▇▇▇ nor Meritor shall submit to the vote of its
stockholders any Acquisition Proposal other than the Merger.
SECTION 6.6 Employee Benefits Matters. (a) Continuation and
Comparability of Benefits. From and after the Effective Time, the Meritor Plans
and the ▇▇▇▇▇ Plans in effect as of the date of this Agreement and at the
Effective Time shall remain in effect with respect to employees and former
employees of Meritor or ▇▇▇▇▇ and their Subsidiaries (the "Newco Employees"),
respectively, covered by such plans at the Effective Time, until such time as
the Combined Company shall otherwise determine, subject to
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Applicable Laws and the terms of such plans. Prior to the Closing Date, Meritor
and ▇▇▇▇▇ shall cooperate in reviewing, evaluating and analyzing the Meritor
Plans and the ▇▇▇▇▇ Plans with a view towards developing appropriate new benefit
plans for Newco Employees. It is the intention of Meritor and ▇▇▇▇▇, to the
extent permitted by Applicable Laws, to develop new benefit plans, as soon as
reasonably practicable after the Effective Time, which, among other things, (i)
treat similarly situated employees on a substantially equivalent basis, taking
into account all relevant factors, including duties, geographic location,
tenure, qualifications and abilities and (ii) do not discriminate between Newco
Employees who were covered by Meritor Benefit Plans, on the one hand, and those
covered by ▇▇▇▇▇ Benefit Plans, on the other, at the Effective Time. It is the
current intention of Meritor and ▇▇▇▇▇ that, for one year following the
Effective Time, the Combined Company shall provide employee benefits under
employee benefit plans to Newco Employees that are substantially comparable in
the aggregate to those provided to such persons pursuant to the employee benefit
plans of Meritor or ▇▇▇▇▇ (or their Subsidiaries), respectively, in effect on
the date hereof and at the Effective Time. Nothing herein shall prohibit any
changes to the Meritor Employee Benefit Plans or ▇▇▇▇▇ Employee Benefit Plans
that may be (i) required by Applicable Laws (including any applicable
qualification requirements of Section 401(a) of the Code), (ii) necessary as a
technical matter to reflect the transactions contemplated hereby or (iii)
required for the Combined Company to provide for or permit investment in its
securities. Nothing in this Section 6.6 shall be interpreted as preventing the
Combined Company from amending, modifying or terminating any Meritor Plan or
▇▇▇▇▇ Plan or other contract, arrangement, commitment or understanding, in
accordance with its terms and Applicable Laws.
(b) Pre-Existing Limitations; Deductibles; Service Credit. With
respect to any employee benefit plans in which any Newco Employees who were
employees of Meritor or ▇▇▇▇▇ (or their Subsidiaries) prior to the Effective
Time first become eligible to participate on or after the Effective Time, and in
which the Newco Employees did not participate prior to the Effective Time (the
"New Newco Plans"), the Combined Company shall: (A) waive all pre-existing
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Newco Employees and their eligible
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dependents under any New Newco Plans in which such employees may be eligible to
participate after the Effective Time, except to the extent such pre-existing
conditions, exclusions or waiting periods would apply under the analogous
Meritor Employee Benefit Plan or ▇▇▇▇▇ Employee Benefit Plan, as the case may
be; (B) provide each Newco Employee and their eligible dependents with credit
for any co-payments and deductibles paid prior to the Effective Time under a
Meritor Plan or an ▇▇▇▇▇ Plan (to the same extent such credit was given under
the analogous employee benefit plan prior to the Effective Time) in satisfying
any applicable deductible or out-of-pocket requirements under any New Newco
Plans in which such employees may be eligible to participate after the Effective
Time; and (C) recognize all service of the Newco Employees with Meritor and
▇▇▇▇▇, and their respective Affiliates, for all purposes (including, without
limitation, purposes of eligibility to participate, vesting credit, entitlement
to benefits, and, except with respect to defined benefit pension plans, benefit
accrual) in any New Newco Plan in which such employees may be eligible to
participate after the Effective Time, to the extent such service is taken into
account under the applicable New Newco Plan; provided that the foregoing shall
not apply to the extent it would result in duplication of benefits.
SECTION 6.7 Fees and Expenses. Subject to Section 8.2(d), whether or
not the Merger is consummated, all Expenses (as defined below) incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such Expenses, except Expenses incurred in
connection with the filing, printing and mailing of the Form S-4 and the Joint
Proxy Statement/Prospectus, which shall be shared equally by ▇▇▇▇▇ and Meritor.
As used in this Agreement, "Expenses" means all out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the Stock
Option Agreements and the transactions contemplated hereby and thereby,
including the preparation, printing, filing and mailing of the Form S-4 and the
Joint Proxy Statement/Prospectus and the solicitation of stockholder approvals
and all other matters related to the transactions contemplated hereby and
thereby.
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SECTION 6.8 Directors' and Officers' Indemnification and Insurance.
(a) Newco shall (i) for a period of six years from the Effective Time, indemnify
and hold harmless, and provide advancement of expenses to, all past and present
directors, officers and employees of ▇▇▇▇▇ and its Subsidiaries (in all of their
capacities as such), to the same extent such persons are indemnified or have the
right to advancement of expenses as of the date of this Agreement by ▇▇▇▇▇
pursuant to Arvin's articles of incorporation, bylaws and indemnification
agreements, if any, in existence on the date hereof with any such directors,
officers and employees of ▇▇▇▇▇ and its Subsidiaries for acts or omissions
occurring at or prior to the Effective Time (including for acts or omissions
occurring in connection with the approval of this Agreement and the consummation
of the transactions contemplated hereby), provided that in the event any claim
is asserted or made within such six year period, all rights hereunder in respect
of such claim shall continue until disposition thereof, and (ii) cause to be
maintained for a period of six years after the Effective Time the current
policies of directors' and officers' liability insurance and fiduciary liability
insurance maintained by ▇▇▇▇▇ (provided that Newco may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the insured)
with respect to claims arising from facts or events that occurred on or before
the Effective Time; provided, however, that in no event shall Newco be required
to expend in any one year an amount in excess of 200% of the annual premiums
currently paid by ▇▇▇▇▇ for such insurance; and, provided, further, that if the
annual premiums of such insurance coverage exceed such amount, Newco shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
(b) Newco shall (i) for a period of six years from the Effective
Time, indemnify and hold harmless, and provide advancement of expenses to, all
past and present directors, officers and employees of Meritor and its
Subsidiaries (in all of their capacities as such), to the same extent such
persons are indemnified or have the right to advancement of expenses as of the
date of this Agreement by Meritor pursuant to Meritor's certificate of
incorporation, by-laws and indemnification agreements, if any, in existence on
the date hereof with any such directors, officers and employees of Meritor and
its Subsidiaries for acts or omissions occurring at or prior to
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the Effective Time (including for acts or omissions occurring in connection with
the approval of this Agreement and the consummation of the transactions
contemplated hereby), provided that in the event any claim is asserted or made
within such six year period, all rights hereunder in respect of such claim shall
continue until disposition thereof, and (ii) cause to be maintained for a period
of six years after the Effective Time the current policies of directors' and
officers' liability insurance and fiduciary liability insurance maintained by
Meritor (provided that Newco may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured) with respect to claims arising
from facts or events that occurred on or before the Effective Time; provided,
however, that in no event shall Newco be required to expend in any one year an
amount in excess of 200% of the annual premiums currently paid by Meritor for
such insurance; and, provided, further, that if the annual premiums of such
insurance coverage exceed such amount, Newco shall be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.
SECTION 6.9 Public Announcements. ▇▇▇▇▇ and Meritor each shall use
reasonable best efforts to develop a joint communications plan and each party
shall use reasonable best efforts (i) to ensure that all press releases and
other public statements with respect to the transactions contemplated hereby
shall be consistent with such joint communications plan, and (ii) unless
otherwise required by Applicable Laws or by obligations pursuant to any listing
agreement with or rules of any securities exchange, to consult with each other
before issuing any press release or, to the extent practicable, otherwise making
any public statement with respect to this Agreement or the transactions
contemplated hereby.
SECTION 6.10 Accounting Matters. (a) ▇▇▇▇▇ shall use reasonable best
efforts to cause to be delivered to Meritor and Newco two letters from Arvin's
independent public accountants, one dated approximately the date on which the
Form S-4 shall become effective and one dated the Closing Date, each addressed
to ▇▇▇▇▇, Meritor and Newco, in form and substance reasonably satisfactory to
Meritor and Newco and reasonably customary in scope and substance for comfort
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
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(b) Meritor shall use reasonable best efforts to cause to be
delivered to ▇▇▇▇▇ two letters from Meritor's independent public accountants,
one dated approximately the date on which the Form S-4 shall become effective
and one dated the Closing Date, each addressed to Meritor, Newco and ▇▇▇▇▇, in
form and substance reasonably satisfactory to ▇▇▇▇▇ and reasonably customary in
scope and substance for comfort letters delivered by independent public
accountants in connection with registration statements similar to the Form S-4.
SECTION 6.11 Listing of Shares of Newco Common Stock. Newco shall
use reasonable best efforts to cause the shares of Newco Common Stock to be
issued in the Merger and the shares of Newco Common Stock to be reserved for
issuance upon exercise of the Meritor Stock Options and the ▇▇▇▇▇ Stock Options
to be approved for listing on the NYSE, subject to official notice of issuance,
prior to the Closing Date.
SECTION 6.12 Dividends. After the date of this Agreement, each of
▇▇▇▇▇ and Meritor shall coordinate with the other the payment of dividends with
respect to the ▇▇▇▇▇ Common Stock and Meritor Common Stock and the record dates
and payment dates relating thereto, it being the intention of the parties hereto
that holders of ▇▇▇▇▇ Common Stock and Meritor Common Stock shall not receive
two dividends, or fail to receive one dividend, for any single calendar quarter
with respect to their shares of ▇▇▇▇▇ Common Stock and/or Meritor Common Stock
and any shares of Newco Common Stock that any such holder receives in exchange
for such shares of ▇▇▇▇▇ Common Stock and/or Meritor Common Stock in the Merger.
SECTION 6.13 Affiliates. (a) ▇▇▇▇▇ Affiliate Agreements. Not less
than 45 days prior to the Effective Time, ▇▇▇▇▇ shall deliver to Meritor and
Newco a letter identifying all persons who, in the judgment of ▇▇▇▇▇, may be
deemed at the time this Agreement is submitted for approval by the stockholders
of ▇▇▇▇▇, "affiliates" of ▇▇▇▇▇ for purposes of Rule 145 under the Securities
Act and applicable SEC rules and regulations, and such list shall be updated as
necessary to reflect changes from the date hereof. ▇▇▇▇▇ shall use reasonable
best efforts to cause each person identified on such list to deliver to Meritor
and Newco not less than 30 days prior to the Effective Time, a written agreement
substantially in the form attached as Exhibit F hereto (an "▇▇▇▇▇ Affiliate
Agreement").
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(b) Meritor Affiliate Agreements. Not less than 45 days prior to the
Effective Time, Meritor shall deliver to ▇▇▇▇▇ and Newco a letter identifying
all persons who, in the judgment of Meritor, may be deemed at the time this
Agreement is submitted for approval by the stockholders of Meritor, "affiliates"
of Meritor for purposes of Rule 145 under the Securities Act and applicable SEC
rules and regulations, and such list shall be updated as necessary to reflect
changes from the date hereof. Meritor shall use reasonable best efforts to cause
each person identified on such list to deliver to ▇▇▇▇▇ and Newco not less than
30 days prior to the Effective Time, a written agreement substantially in the
form attached as Exhibit G hereto (an "Meritor Affiliate Agreement").
SECTION 6.14 Section 16 Matters. Prior to the Effective Time, ▇▇▇▇▇
and Meritor shall take all such steps as may be required to cause any
dispositions of Meritor Common Stock or ▇▇▇▇▇ Common Stock (including derivative
securities with respect to Meritor Common Stock or ▇▇▇▇▇ Common Stock) or
acquisitions of Newco Common Stock (including derivative securities with respect
to Newco Common Stock) resulting from the transactions contemplated by this
Agreement by each individual who is subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to ▇▇▇▇▇, Meritor or Newco to be
exempt under Rule 16b-3 promulgated under the Exchange Act.
SECTION 6.15 Takeover Statutes. If any "fair price", "moratorium",
"control share acquisition" or other form of antitakeover statute or regulation
shall become applicable to the transactions contemplated hereby, each of
Meritor, ▇▇▇▇▇ and Newco and their respective Boards of Directors shall use all
reasonable efforts to grant such approvals and take such actions as are
reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or regulation
on the transactions contemplated hereby.
SECTION 6.16 Advice of Changes. Each of Meritor, Newco and ▇▇▇▇▇
shall as promptly as reasonably practicable after becoming aware thereof advise
the other parties of (a) any representation or warranty made by it contained in
this Agreement that is qualified as to materiality becoming untrue or inaccurate
in any respect or any such representation or warranty that is not so qualified
becoming
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untrue or inaccurate in any material respect, (b) the failure by it to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement or (c) any change or
event (i) having, or which, insofar as can reasonably be foreseen, would have,
in the case of ▇▇▇▇▇, a Material Adverse Effect on ▇▇▇▇▇, and, in the case of
Meritor or Newco, a Material Adverse Effect on Meritor, or (ii) which has
resulted, or which, insofar as can reasonably be foreseen, would result, in any
of the conditions set forth in Article VII not being satisfied; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Second Step
Merger, and of Meritor and Newco to effect the First Step Merger, are subject to
the satisfaction or waiver prior to the Effective Time (and the First Effective
Time, in the case of consummation of the First Step Merger) of the following
conditions:
(a) Stockholder Approval. (i) Meritor shall have obtained the
Required Meritor Vote in connection with the approval of this Agreement by the
stockholders of Meritor and (ii) ▇▇▇▇▇ shall have obtained the Required ▇▇▇▇▇
Vote in connection with the approval of this Agreement by the stockholders of
▇▇▇▇▇.
(b) No Injunctions or Restraints, Illegality. No Applicable Laws
shall have been adopted, promulgated or enforced by any Governmental Entity, and
no temporary restraining order, preliminary or permanent injunction or other
order issued by a court or other Governmental Entity of competent jurisdiction
(an "Injunction") shall be in effect, having the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger.
(c) No Pending Governmental Actions. No proceeding initiated by any
Governmental Entity seeking, and
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which is reasonably likely to result in the granting of, an Injunction shall be
pending.
(d) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(e) EU Antitrust. ▇▇▇▇▇ and Meritor shall have received in respect
of the Merger and any matters arising therefrom confirmation by way of a
determination from the European Commission under Regulation 4064/89 (with or
without the initiation of proceedings under Article 6(1)(c) thereof) that the
Merger and any matters arising therefrom are compatible with the common market.
(f) Governmental and Regulatory Approvals. Other than the filings
provided for under Section 1.2 and Section 2.3 and filings pursuant to the HSR
Act and the EC Merger Regulation (which are addressed in Section 7.1(d) and
Section 7.1(e)), all consents, approvals, orders or authorizations of, actions
of, filings and registrations with and notices to any Governmental Entity (i)
set forth in Section 7.1(f) of the ▇▇▇▇▇ Disclosure Schedule or Section 7.1(f)
of the Meritor Disclosure Schedule or (ii) required of ▇▇▇▇▇, Meritor, Newco or
any of their Subsidiaries to consummate the Merger and the other transactions
contemplated hereby, the failure of which to be obtained or taken would
reasonably be expected to have a Material Adverse Effect on Newco and its
Subsidiaries, taken together after giving effect to the Merger, shall have been
obtained and shall be in full force and effect.
(g) NYSE Listing. The shares of Newco Common Stock to be issued in
the Merger and to be reserved for issuance in connection with the Merger shall
have been approved for listing on the NYSE, subject to official notice of
issuance.
(h) Effectiveness of the Form S-4. The Form S-4 shall have been
declared effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Form S-4 shall then be in effect and no
proceedings for that purpose shall be pending before or threatened by the SEC.
SECTION 7.2 Additional Conditions to Obligations of ▇▇▇▇▇. The
obligation of ▇▇▇▇▇ to effect the Second Step Merger is subject to the
satisfaction or waiver by ▇▇▇▇▇
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prior to the Effective Time of the following additional conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Meritor and Newco set forth in this Agreement that is qualified as
to materiality or Material Adverse Effect shall be true and correct in all
respects, and each of the representations and warranties of Meritor and Newco
set forth in this Agreement that is not so qualified shall be true and correct
in all material respects, in each case as of the date of this Agreement and
(except to the extent that such representations and warranties speak as of
another date) as of the Closing Date as though made on and as of the Closing
Date, and ▇▇▇▇▇ shall have received a certificate of Meritor executed by an
executive officer of Meritor to such effect.
(b) Performance of Obligations of Meritor and Newco. Each of Meritor
and Newco shall have performed or complied with all agreements and covenants
required to be performed by it under this Agreement at or prior to the Closing
Date that are qualified as to materiality or Material Adverse Effect and shall
have performed or complied in all material respects with all other agreements
and covenants required to be performed by it under this Agreement at or prior to
the Closing Date that are not so qualified, and ▇▇▇▇▇ shall have received a
certificate of Meritor executed by an executive officer of Meritor to such
effect.
(c) Tax Opinion. ▇▇▇▇▇ shall have received an opinion from Wachtell,
Lipton, ▇▇▇▇▇ & ▇▇▇▇, dated the Closing Date, to the effect that, on the basis
of facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the First Effective Time and the
Effective Time, each of the First Step Merger and the Second Step Merger will
constitute a reorganization under Section 368(a) of the Code.
(d) Meritor Rights Agreement. (i) No Distribution Date shall have
occurred pursuant to the Meritor Rights Agreement unless all Meritor Rights have
thereafter been redeemed and (ii) no Shares Acquisition Date shall have occurred
pursuant to the Meritor Rights Agreement.
SECTION 7.3 Additional Conditions to Obligations of Meritor and
Newco. The obligations of Meritor and Newco
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to effect the First Step Merger, and the obligation of Newco to effect the
Second Step Merger, are subject to the satisfaction or waiver by Meritor and
Newco prior to the Effective Time of the following additional conditions:
(a) Representations and Warranties. Each of the representations and
warranties of ▇▇▇▇▇ set forth in this Agreement that is qualified as to
materiality or Material Adverse Effect shall be true and correct in all
respects, and each of the representations and warranties of ▇▇▇▇▇ set forth in
this Agreement that is not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and (except to
the extent that such representations and warranties speak as of another date) as
of the Closing Date as though made on and as of the Closing Date, and Meritor
shall have received a certificate of ▇▇▇▇▇ executed by an executive officer of
▇▇▇▇▇ to such effect.
(b) Performance of Obligations of ▇▇▇▇▇. ▇▇▇▇▇ shall have performed
or complied with all agreements and covenants required to be performed by it
under this Agreement at or prior to the Closing Date that are qualified as to
materiality or Material Adverse Effect and shall have performed or complied in
all material respects with all other agreements and covenants required to be
performed by it under this Agreement at or prior to the Closing Date that are
not so qualified, and Meritor shall have received a certificate of ▇▇▇▇▇
executed by an executive officer of ▇▇▇▇▇ to such effect.
(c) Tax Opinion. Meritor shall have received an opinion from
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, dated the Closing Date, to the effect that, on the basis
of facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the First Effective Time and the
Effective Time, each of the First Step Merger and the Second Step Merger will
constitute a reorganization under Section 368(a) of the Code.
(d) ▇▇▇▇▇ Rights Agreement. (i) No Distribution Date shall have
occurred pursuant to the ▇▇▇▇▇ Rights Agreement unless all ▇▇▇▇▇ Rights have
thereafter been redeemed and (ii) no Shares Acquisition Date shall have occurred
pursuant to the ▇▇▇▇▇ Rights Agreement.
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ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, and except as provided below,
whether before or after approval of the matters presented in connection with the
Merger by the stockholders of Meritor or ▇▇▇▇▇:
(a) by mutual written consent of Meritor and ▇▇▇▇▇;
(b) by either Meritor or ▇▇▇▇▇ if the Effective Time shall not have
occurred on or before October 31, 2000 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section 8.1(b)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement (including such party's obligations set forth in Section
6.4) has been the cause of, or resulted in, the failure of the Effective Time to
occur on or before the Termination Date;
(c) by either Meritor or ▇▇▇▇▇ if any Governmental Entity (i) shall
have issued an order, decree or ruling or taken any other action (which such
party shall have used its reasonable best efforts to resist, resolve or lift, as
applicable, in accordance with Section 6.4) permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement, and
such order, decree, ruling or other action shall have become final and
nonappealable or (ii) shall have failed to issue an order, decree or ruling, or
to take any other action, necessary to fulfill any conditions set forth in
subsections 7.1(d), (e) and (f), and the failure to issue such order, decree,
ruling or take such action shall have become final and nonappealable; provided,
however, that the right to terminate this Agreement under this Section 8.1(c)
shall not be available to any party whose failure to comply with Section 6.4 has
been the cause of, or resulted in, such action or inaction;
(d) by either Meritor or ▇▇▇▇▇ if (i) the approval by the
stockholders of Meritor required for the consummation of the Merger shall not
have been obtained by
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reason of the failure to obtain the Required Meritor Vote or (ii) the approval
by the stockholders of ▇▇▇▇▇ required for the consummation of the Merger shall
not have been obtained by reason of the failure to obtain the Required ▇▇▇▇▇
Vote, in each case upon the taking of such vote at a duly held meeting of
stockholders of Meritor or ▇▇▇▇▇, as the case may be, or at any adjournment
thereof;
(e) by Meritor, if (i) Arvin's Board of Directors shall have (A)
failed to make the ▇▇▇▇▇ Recommendation, (B) withdrawn the ▇▇▇▇▇ Recommendation
or (C) modified or qualified, in any manner adverse to Meritor, the ▇▇▇▇▇
Recommendation without also simultaneously reaffirming the ▇▇▇▇▇ Recommendation
(or resolved or proposed to take any such action referred to in clause (A), (B)
or (C)), in each case whether or not permitted by the terms hereof, or (ii)
▇▇▇▇▇ shall have breached its obligations under this Agreement by reason of a
failure to call the ▇▇▇▇▇ Stockholders Meeting in accordance with Section 6.1(b)
or a failure to prepare and mail to its stockholders the Joint Proxy
Statement/Prospectus in accordance with Section 6.1(a);
(f) by ▇▇▇▇▇, if (i) Meritor's Board of Directors shall have (A)
failed to make the Meritor Recommendation, (B) withdrawn the Meritor
Recommendation or (C) modified or qualified, in any manner adverse to ▇▇▇▇▇, the
Meritor Recommendation without also simultaneously reaffirming the Meritor
Recommendation (or resolved or proposed to take any such action referred to in
clause (A), (B) or (C)), in each case whether or not permitted by the terms
hereof or (ii) Meritor shall have breached its obligations under this Agreement
by reason of a failure to call the Meritor Stockholders Meeting in accordance
with Section 6.1(c) or a failure to prepare and mail to its stockholders the
Joint Proxy Statement/Prospectus in accordance with Section 6.1(a);
(g) by Meritor, if ▇▇▇▇▇ shall have breached or failed to perform
any of its representations, warranties, covenants or other agreements contained
in this Agreement, such that the conditions set forth in Section 7.3(a) or
Section 7.3(b) are not capable of being satisfied on or before the Termination
Date;
(h) by ▇▇▇▇▇, if either Meritor or Newco shall have breached or
failed to perform any of its representations, warranties, covenants or other
agreements
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contained in this Agreement, such that the conditions set forth in Section
7.2(a) or Section 7.2(b) are not capable of being satisfied on or before the
Termination Date;
(i) by Meritor, if a Shares Acquisition Date shall have occurred
pursuant to the ▇▇▇▇▇ Rights Agreement; or
(j) by ▇▇▇▇▇, if a Shares Acquisition Date shall have occurred
pursuant to the Meritor Rights Agreement.
SECTION 8.2 Effect of Termination. (a) In the event of termination
of this Agreement by either Meritor or Arvin as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Arvin, Meritor or Newco or their respective officers
or directors under this Agreement, except that the provisions of Section 4.1(m),
Section 4.2(m), the second sentence of Section 6.3, Section 6.7, this Section
8.2 and Article IX which provisions shall survive such termination, and except
that, notwithstanding anything to the contrary contained in this Agreement, none
of Arvin, Meritor or Newco shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement.
(b) If (A) (I) either Meritor or Arvin shall terminate this
Agreement pursuant to Section 8.1(d) (provided that the basis for such
termination is the failure of Arvin's stockholders to approve the transactions
contemplated hereby) or pursuant to Section 8.1(b) without the Arvin Stockholder
Meeting having occurred or Meritor shall terminate this Agreement pursuant to
Section 8.1(g) as a result of any intentional breach or failure to perform by
Arvin (unless covered by clause (B) below) or pursuant to Section 8.1(e)(i),
(II) at any time after the date of this Agreement and before such termination an
Acquisition Proposal with respect to Arvin shall have been publicly announced or
otherwise communicated to the senior management, Board of Directors or
stockholders of Arvin and (III) within twelve months of such termination Arvin
or any of its Subsidiaries enters into any definitive agreement with respect to,
or consummates, any Acquisition Proposal or (B) Meritor shall terminate this
Agreement pursuant to Section 8.1(e)(ii) or Section 8.1(i); then Arvin shall
promptly, but in no event later than the date of such termination (or in the
case of clause (A), if later, the date Arvin or its Subsidiary enters into such
agreement with
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respect to or consummates such Acquisition Proposal), pay Meritor an amount
equal to $20,000,000, by wire transfer of immediately available funds.
(c) If (A) (I) either Meritor or Arvin shall terminate this
Agreement pursuant to Section 8.1(d) (provided that the basis for such
termination is the failure of Meritor's stockholders to approve the transactions
contemplated hereby) or pursuant to Section 8.1(b) without the Meritor
Stockholders Meeting having occurred or Arvin shall terminate this Agreement
pursuant to Section 8.1(h) as a result of any intentional breach or failure to
perform by Meritor or Newco (unless covered by clause (B) below) or pursuant to
Section 8.1(f)(i), (II) at any time after the date of this Agreement and before
such termination an Acquisition Proposal with respect to Meritor shall have been
publicly announced or otherwise communicated to the senior management, Board of
Directors or stockholders of Meritor and (III) within twelve months of such
termination Meritor or any of its Subsidiaries enters into any definitive
agreement with respect to, or consummates, any Acquisition Proposal or (B) Arvin
shall terminate this Agreement pursuant to Section 8.1(f)(ii) or Section 8.1(j);
then Meritor shall promptly, but in no event later than the date of such
termination (or in the case of clause (A), if later, the date Meritor or its
Subsidiary enters into such agreement with respect to or consummates such
Acquisition Proposal), pay Arvin an amount equal to $20,000,000, by wire
transfer of immediately available funds.
(d) The parties acknowledge that the agreements contained in this
Section 8.2 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, neither party would enter into
this Agreement; accordingly, if either party fails promptly to pay any amount
due pursuant to this Section 8.2, and, in order to obtain such payment, the
other party commences a suit which results in a judgment against such party for
the fee set forth in this Section 8.2, such party shall pay to the other party
its costs and expenses (including attorneys' fees and expenses) in connection
with such suit, together with interest on the amount of the fee from the date
such payment is required to be made until the date such payment is actually made
at the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made. The parties agree that any remedy or amount payable
pursuant to this Section 8.2 shall not preclude any other remedy or amount
payable hereunder, and shall not be an exclusive
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remedy, for any willful breach of any provision of this Agreement.
(e) (i) Nothing in this Section 8.2 shall limit or affect Meritor's
rights under the Arvin Stock Option Agreement; provided that Meritor's Total
Profit (as defined in the Arvin Stock Option Agreement) shall not exceed
$25,000,000.
(ii) Nothing in this Section 8.2 shall limit or affect Arvin's rights
under the Meritor Stock Option Agreement; provided that Arvin's Total Profit (as
defined in the Meritor Stock Option Agreement) shall not exceed $25,000,000.
SECTION 8.3 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of Meritor and Arvin, but, after any such
approval, no amendment shall be made which by law or in accordance with the
rules of any relevant stock exchange requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION 8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
The failure of any party to this Agreement to assert any of its rights under
this Agreement or otherwise shall not constitute a waiver of those rights.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and other
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement, including any rights arising out of any breach of such
representations, warranties, covenants and other agreements, shall survive the
Effective Time, except for those covenants and agreements contained herein and
therein that by their terms apply or are to be performed in whole or in part
after the Effective Time.
SECTION 9.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery
if delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first Business Day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the fifth Business
Day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if to Meritor or Newco to
Meritor Automotive, Inc.
2135 West Maple Road
Troy, Michigan 48084-7186
Fax: (248) 435-2184
Attention: Vernon G. Baker, II, Esq.
with a copy to
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, New York 10112
Fax: (212) 541-5369
Attention: Peter R. Kolyer, Esq.
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(b) if to Arvin to
Arvin Industries, Inc.
One Noblitt Plaza
Columbus, Indiana 47202-3000
Fax: (812) 379-3688
Attention: Ronald R. Snyder, Esq.
with a copy to
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Fax: (212) 403-2000
Attention: Andrew R. Brownstein, Esq.
SECTION 9.3 Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 9.4 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
the parties need not sign the same counterpart.
SECTION 9.5 Entire Agreement; No Third Party Beneficiaries. (a) This
Agreement, the Stock Option Agreements, the Confidentiality Agreement and the
exhibits and schedules hereto and the other agreements and instruments of the
parties delivered in connection herewith constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit
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or remedy of any nature whatsoever under or by reason of this Agreement, other
than Section 6.8 (which is intended to be for the benefit of the Persons covered
thereby).
SECTION 9.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (without giving
effect to choice of law principles thereof); provided that the First Step Merger
shall be governed by the laws of the State of Delaware and the State of Indiana
and the Second Step Merger shall be governed by the laws of the State of Indiana
(in each case, without giving effect to choice of law principles thereof); and
provided further that the fiduciary duties of the Boards of Directors of the
parties shall be governed by the laws of their respective states of
incorporation.
SECTION 9.7 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby, 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 any such determination, the parties shall
negotiate in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the parties.
SECTION 9.8 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, in whole or in part (whether by operation of law or otherwise),
without the prior written consent of the other parties, and any attempt to make
any such assignment without such consent shall be null and void. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
SECTION 9.9 Submission to Jurisdiction; Waivers. Each of Arvin,
Meritor and Newco irrevocably agrees that any legal action or proceeding with
respect to this Agreement or for recognition and enforcement of any judgment in
respect hereof brought by another party hereto or its successors or
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permitted assigns may be brought and determined in any federal or state court
located in the State of Delaware or the State of Indiana, and each of Arvin,
Meritor and Newco hereby irrevocably submits with regard to any such action or
proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Arvin, Meritor and Newco hereby irrevocably waives, and agrees not to assert,
by way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), and (c) to the fullest extent permitted by Applicable Laws, that (i)
the suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
SECTION 9.10 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to specific performance of the terms hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 9.11 Definitions. As used in this Agreement:
(a) "affiliate" means (except as specifically otherwise defined), as
to any person, any other person which, directly or indirectly, controls, or is
controlled by, or is under common control with, such person. As used in this
definition, "control" (including, with its correlative meanings, "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of management or policies of a
person, whether through the ownership of securities or partnership or other
ownership interests, by contract or otherwise.
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(b) "Applicable Laws" means all applicable laws, statutes, orders,
rules, regulations, policies or guidelines promulgated, or judgments, decisions
or orders entered, by any Governmental Entity.
(c) An "Arvin Employee Benefit Plan" means any employee benefit
plan, program, policy, practice, or other arrangement providing benefits to any
current or former employee, officer or director of Arvin or any of its
Subsidiaries or any beneficiary or dependent thereof that is sponsored or
maintained by Arvin or any of its Subsidiaries or to which Arvin or any of its
Subsidiaries contributes or is obligated to contribute, whether or not written,
including any employee benefit plan within the meaning of Section 3(3) of ERISA
(whether or not such plan is subject to ERISA) and any bonus, incentive,
deferred compensation, vacation, stock purchase, stock option, severance,
employment, change of control or fringe benefit plan, program or agreement.
(d) An "Arvin Plan" means any Arvin Employee Benefit Plan other than
a Multiemployer Plan.
(e) "beneficial ownership" or "beneficially own" shall have the
meaning under Section 13(d) of the Exchange Act and the rules and regulations
thereunder.
(f) "Board of Directors" means the Board of Directors of any
specified Person and any committees thereof.
(g) "Business Day" means any day on which banks are not required or
authorized to close in the City of New York.
(h) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(i) "Known" or "Knowledge" means, with respect to any party, the
knowledge of such party's executive officers after reasonable inquiry.
(j) "Material Adverse Effect" means, with respect to any entity, any
event, change, circumstance or effect that is or is reasonably likely to be
materially adverse to (i) the business, financial condition or results of
operations of such entity and its Subsidiaries taken as a whole, other than any
event, change, circumstance or effect
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relating (x) to the economy or financial markets in general, (y) in general to
the industries in which such entity operates and not specifically relating to
such entity or (z) to any action or omission of Meritor, Arvin or Newco or any
Subsidiary of either of any of them taken with the express prior written consent
of the other parties hereto or (ii) the ability of such entity to consummate the
transactions contemplated by this Agreement.
(k) A "Meritor Employee Benefit Plan" means any employee benefit
plan, program, policy, practice, or other arrangement providing benefits to any
current or former employee, officer or director of Meritor or any of its
Subsidiaries or any beneficiary or dependent thereof that is sponsored or
maintained by Meritor or any of its Subsidiaries or to which Meritor or any of
its Subsidiaries contributes or is obligated to contribute, whether or not
written, including any employee benefit plan within the meaning of Section 3(3)
of ERISA (whether or not such plan is subject to ERISA) and any bonus,
incentive, deferred compensation, vacation, stock purchase, stock option,
severance, employment, change of control or fringe benefit plan, program or
agreement.
(l) A "Meritor Plan" means any Meritor Employee Benefit Plan other
than a Multiemployer Plan.
(m) A "Multiemployer Plan" means any "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA.
(n) "NYSE" means the New York Stock Exchange, Inc.
(o) "Person" means an individual, corporation, limited liability
entity, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act), including any Governmental
Entity.
(p) "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, at
least a majority of the securities or other interests of which having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or
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by any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries.
(q) "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
shall mean (i) any federal, state, local or foreign net income, gross income,
receipts, windfall profit, severance, property, production, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or add-on
minimum, ad valorem, transfer, stamp, or environmental tax, or any other tax,
customs, duty or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any governmental authority; (ii) any liability for payments of a type
described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group; and (iii) any liability for the payment
of any amounts as a result of being party to a tax sharing arrangement or as a
result of any express or implied obligation to indemnify any Person with respect
to the payment of amounts of the type described in clause (i) or clause (ii).
Each of the following terms is defined in the Section of this
Agreement set forth opposite such term:
Term Section
---- -------
Acquisition Proposal 6.5(a)
Actions 4.1(j)
Agreement Preamble
Articles of Merger 2.3
Arvin Preamble
Arvin Affiliate Agreement 6.13(a)
Arvin Cash Consideration 2.5(a)
Arvin Certificate 2.5(b)
Arvin Common Stock 2.5(a)
Arvin Disclosure Schedule 4.1
Arvin Filed SEC Reports 4.1(d)(ii)
Arvin Financial Advisor 4.1(m)
Arvin Merger Consideration 2.5(a)
Arvin Necessary Consents 4.1(c)(iii)
Arvin Permits 4.1(h)(ii)
Arvin Preferred Stock 4.1(b)(i)
Arvin Recommendation 6.1(b)
Arvin Rights 4.1(b)(i)
Arvin Rights Agreement 4.1(l)
Arvin SEC Reports 4.1(d)(i)
Arvin SECT 4.1(f)
Arvin Stock Consideration 2.5(a)
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Arvin Stock Option Agreement Recitals
Arvin Stock Options 4.1(b)(i)
Arvin Stock Plans 4.1(b)(i)
Arvin Stockholders Meeting 6.1(b)
Arvin Voting Debt 4.1(b)(ii)
Board 2.13(a)
Certificates 3.1
Change in the Arvin Recommendation 6.1(b)
Change in the Meritor Recommendation 6.1(c)
Closing 2.2
Closing Date 2.2
Code 1.6
Combined Company Recitals
Confidentiality Agreement 6.3
Contract 4.1(c)(ii)
Delaware Secretary 1.2
DGCL 1.1
DOJ 6.4(b)
Effective Time 2.3
Environmental Laws 4.1(j)
Environmental Liabilities 4.1(j)
Excess Meritor Shares 3.2(e)(ii)
Exchange Agent 3.1
Exchange Fund 3.1
Expenses 6.7
First Effective Time 1.2
First Step Merger Recitals
Form S-4 6.1(a)
FTC 6.4(b)
GAAP 4.1(d)(i)
Governmental Entity 4.1(c)(iii)
Hazardous Materials 4.1(j)
HSR Act 4.1(c)(iii)
IBCL 1.1
Indiana Secretary 1.2
Injunction 7.1(b)
Intellectual Property 4.1(k)
Joint Proxy Statement/Prospectus 6.1(a)
Liens 4.1(a)(ii)
Merger Recitals
Meritor Preamble
Meritor Affiliate Agreement 6.13(b)
Meritor Certificate 1.4(b)
Meritor Common Stock 1.4(a)
Meritor Disclosure Schedule 4.2
Meritor Exchange Ratio 1.4(a)
Meritor Filed SEC Reports 4.2(d)(ii)
Meritor Financial Advisor 4.2(m)
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Meritor Necessary Consents 4.2(c)(iii)
Meritor Permits 4.2(h)(ii)
Meritor Preferred Stock 4.2(b)(i)
Meritor Recommendation 6.1(c)
Meritor Rights 4.2(b)(i)
Meritor Rights Agreement 4.2(l)
Meritor SEC Reports 4.2(d)(i)
Meritor Stock Option Agreement Recitals
Meritor Stock Options 4.2(b)(i)
Meritor Stock Plans 4.2(b)(i)
Meritor Stockholders Meeting 6.1(c)
Meritor Voting Debt 4.2(b)(ii)
Newco Preamble
Newco Articles 1.7
Newco By-Laws 1.8
Newco Common Stock 1.4(a)
Newco Employees 6.6(a)
New Newco Plans 6.6(b)
Required Arvin Vote 4.1(g)
Required Approvals 6.4(a)
Required Meritor Vote 4.2(g)
SEC 4.1(a)(ii)
Second Step Merger Recitals
Securities Act 3.3
Stock Option Agreements Recitals
Termination Date 8.1(b)
Violation 4.1(c)(ii)
SECTION 9.12 Disclosure Schedule. The mere inclusion of an item in
the relevant Disclosure Schedule as an exception to a representation, warranty
or covenant shall not be deemed an admission by a party that such item
represents a material exception or material fact, event or circumstance or that
such item has had or would have a Material Adverse Effect with respect to
Meritor, Arvin or Newco, as applicable.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereunto duly authorized, all as of the
date first written above.
MERITOR AUTOMOTIVE, INC.
By: /s/ Larry D. Yost
------------------------------------
Name: Larry D. Yost
Title: Chairman of the Board and
Chief Executive Officer
MU SUB, INC.
By: /s/ Larry D. Yost
------------------------------------
Name: Larry D. Yost
Title: Chairman of the Board and
Chief Executive Officer
ARVIN INDUSTRIES, INC.
By: /s/ V. William Hunt
------------------------------------
Name: V. William Hunt
Title: Chairman, President and
Chief Executive Officer
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