Proposal 3Adjournment to Solicit Additional Proxies, if Necessary or Appropriate
The MPG special meeting may be adjourned to another time and place, if necessary or appropriate, to permit further solicitation of proxies if
there are not sufficient votes at the time of the MPG special meeting to adopt the merger agreement and approve the transactions contemplated by the merger agreement.
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Accordingly,
we are asking MPG stockholders to vote to approve any adjournment of the MPG special meeting, if necessary or appropriate, to permit further solicitation of proxies if there
are not sufficient votes at the time of the MPG special meeting to adopt the merger agreement and approve the transactions contemplated by the merger agreement, either by attending the special meeting
and voting in person or by submitting a proxy.
For
the MPG adjournment proposal, you may vote "FOR" or "AGAINST" or "ABSTAIN." Abstentions and shares not present at the MPG special meeting will have no effect on the outcome of the
vote on the MPG adjournment proposal.
The MPG board of directors unanimously recommends that you vote "
FOR
" the MPG adjournment
proposal.
Record Date; Shares Entitled to Vote; Quorum
Only holders of record of shares of MPG common stock at the close of business on Friday, February 24, 2017, the MPG record date, are entitled to
notice of the MPG special meeting. Only holders of record of shares of MPG common stock on the MPG record date are entitled to vote at the MPG special meeting or any adjournment or postponement
thereof. Holders of record of shares of MPG common stock are entitled to one vote in person or by proxy for each share of MPG common stock outstanding in such holder's name on the books of MPG on the
MPG record date on each matter submitted to a vote at the MPG special meeting. On the MPG record date, 67,917,752 shares of MPG common stock were issued and outstanding and such shares were held by
approximately 23 holders of record.
If
your shares of MPG common stock are held in your name, you have the right to vote in person at the meeting or to appoint a proxy to vote on your behalf. If your shares of MPG common
stock are held in "street name", that is, in an account with a bank, broker or other nominee, you are considered the beneficial owner of such shares held in street name. As a beneficial owner, you may
also attend the meeting. You may not, however, vote such shares held in street name at the MPG special meeting unless you obtain a "proxy" from your bank, broker or other nominee that is the record
holder of the shares, which proxy gives you the right to vote the shares at the meeting.
Stockholders
of record who hold shares representing a majority in voting power of the shares of MPG common stock entitled to vote at the MPG special meeting must be present in person or
represented by proxy to constitute a quorum for voting on the proposal to adopt the merger agreement and approve the transactions contemplated by the merger agreement, the MPG merger-related
compensation proposal and the MPG adjournment proposal at the MPG special meeting. Once a share is represented for any purpose at the MPG special meeting, it will be deemed present for quorum purposes
for the remainder of the MPG special meeting and for any adjournment of the MPG special meeting, unless a new voting record date is set for the adjourned MPG special meeting. Abstentions will be
treated as present at the MPG special meeting for purposes of determining the presence or absence of a quorum for the transaction of all business.
Under
NYSE rules, banks, brokers and other nominees may use their discretion to vote "uninstructed" shares (i.e., shares held of record by banks, brokerage firms or other nominees
but with respect to which the beneficial owner of such shares has not provided instructions on how to vote on a particular proposal) with respect to matters that are considered to be "routine," but
not with respect to "non-routine" matters. "Non-routine" matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections
of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation) and certain corporate governance proposals, even if
management-supported. A "broker
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non-vote"
occurs on an item when (i) a broker, nominee or intermediary has discretionary authority to vote on one or more proposals to be voted on at a meeting of stockholders, but is not
permitted to vote on other proposals without instructions from the beneficial owner of the shares and (ii) the beneficial owner fails to provide the broker, nominee or intermediary with such
instructions. Because none of the proposals to be voted on at the MPG special meeting are routine matters for which brokers may have discretionary authority to vote, there can be no broker non-votes
at the MPG special meeting. Consequently, failure to provide instructions to your bank, broker or other nominee on how to vote will result in your shares not being counted as present at the meeting.
Vote Required
Adoption of the merger agreement and approval of the transactions contemplated thereby requires the affirmative vote of the majority of the
shares of MPG common stock that are outstanding as of the MPG record date and entitled to vote thereon. Abstentions and shares not present at the MPG special meeting will have the same effect as votes
"AGAINST" the adoption of the merger agreement and the approval of the transactions contemplated by the merger agreement.
Approval
of the MPG merger-related compensation proposal requires the affirmative vote of the majority of the shares of MPG common stock present in person or represented by proxy and
voting on such proposal at the MPG special meeting. Abstentions and shares not present at the MPG special meeting will have no effect on the outcome of the vote on the MPG merger-related compensation
proposal.
Approval
of the MPG adjournment proposal requires the affirmative vote of the majority of the shares of MPG common stock present in person or represented by proxy and voting on such
proposal at the MPG special meeting. Abstentions and shares not present at the MPG special meeting will have no effect on the outcome of the vote on the MPG adjournment proposal.
Shares Owned by MPG Directors and Executive Officers
On the MPG record date, directors and executive officers of MPG owned and were entitled to vote 2,185,575 shares of MPG common stock, which
represented approximately 3.2% of the outstanding shares of MPG common stock entitled to vote at the MPG special meeting on such
date. Each of the directors and executive officers of MPG has advised MPG that, as of the date hereof, he or she currently expects to vote his or her shares, or cause his or her shares to be voted,
"
FOR
" the adoption of the merger agreement and the approval of the transactions contemplated by the merger agreement,
"
FOR
" the MPG merger-related compensation proposal and "
FOR
" the MPG adjournment proposal.
How to Vote
MPG stockholders may vote using any of the following methods:
If you were a record holder of MPG common stock on the record date, you may vote by proxy by calling the toll-free telephone number on your
proxy card from a touchtone telephone or by accessing the website indicated on your proxy card. Please have your proxy card available when you call or go online.
If
your shares are held in street name through a broker, bank or other nominee, you must either direct your nominee on how to vote your shares or obtain a proxy from such nominee to vote
in person at the MPG special meeting. The availability of telephone and Internet proxies for beneficial owners will depend on the voting processes of your bank, broker or other nominee. Therefore, MPG
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recommends
that you follow the voting instructions in the materials you receive from your bank, broker or other nominee.
If you were a record holder of MPG common stock on the record date and received your MPG special meeting materials by mail, you may vote by
marking, signing and dating the enclosed proxy card and returning it in the prepaid envelope provided. If you are a MPG stockholder of record and you return your signed proxy card but do not indicate
your voting preferences, the persons named in the proxy card will vote the shares represented by that proxy "
FOR
" each of the proposals to be voted on
at the MPG special meeting described in this joint proxy statement/prospectus, as recommended by the MPG board of directors.
If
your shares are held in street name, MPG recommends that you mark, date, sign and promptly mail the voting instruction form provided by your bank, broker or other nominee in
accordance with the instructions provided by such nominee.
All MPG stockholders of record as of the MPG record date may vote in person by completing a ballot at the MPG special meeting. Such stockholders
may also be represented by another person at the MPG special meeting by executing a proper proxy designating that person.
If
your shares are held in street name, you may only vote in person at the MPG special meeting if you have proof of ownership of your shares of MPG common stock as of the MPG record date
and obtain a valid legal proxy from your bank, broker or other nominee that is the record holder of such shares and present such items at the MPG special meeting.
You may vote by granting a proxy to someone else or, for shares held in "street name," by submitting voting instructions to your bank, broker or
other nominee.
Please note that if you hold your shares in street name, you must provide voting instructions to your bank, broker or other nominee in order for your shares to
be represented at the MPG special meeting
.
Voting of Proxies
All shares of MPG common stock properly voted by proxy via the Internet or by telephone at or prior to 11:59 p.m. Eastern Time on Tuesday,
April 4, 2017 and all shares of MPG common stock represented by properly executed proxies submitted by mail and received at or prior to the MPG special meeting and, in each case, not revoked,
will be voted in accordance with the instructions so provided. If no specific instructions are given with respect to the proposals to be acted upon at the MPG special meeting, the persons named in the
proxy card will vote the shares represented by that proxy "
FOR
" each of the proposals to be voted on at the MPG special meeting described in this joint
proxy statement/prospectus, as recommended by the MPG board of directors and will vote the shares in accordance with their best judgment on any other matter that is properly presented and voted on at
the MPG special meeting. As of the date hereof, the proposals described in this joint proxy statement/prospectus are the only items the MPG board of directors expects to be acted upon at the MPG
special meeting.
A
properly submitted proxy marked "ABSTAIN" is counted for purposes of determining whether there is a quorum and for purposes of determining the number of shares represented and entitled
to vote at the MPG special meeting. Therefore, with respect to the proposal to adopt the merger agreement and approve the transactions contemplated by the merger agreement, an abstention will
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have
the same effect as a vote "AGAINST" such proposal. For the merger-related compensation proposal and the adjournment proposal, an abstention will have no effect on the outcome of the vote.
Because
there can be no broker non-votes at the MPG special meeting, the failure to provide instructions to your bank, broker or other nominee on how to vote your shares will result in
your shares not being counted as present at the meeting and will count as a vote "AGAINST" the merger proposal. For the merger-related compensation proposal and the adjournment proposal, the failure
to provide instructions to your bank, broker or other nominee on how to vote your shares will have no effect on the outcome of the vote. If you hold your shares in street name, MPG therefore
recommends that you follow the voting instructions provided by your bank, broker or other nominee in order to properly vote your shares or to obtain a proxy to vote your shares at the MPG special
meeting.
Revocability of Proxies
You may revoke your proxy prior to its use by delivering a signed notice of revocation or a later dated signed proxy or by attending the meeting
and voting in person. Attendance at the MPG special meeting will not in itself constitute the revocation of a proxy. If you are an MPG stockholder of record and you choose to send a written notice of
revocation or to mail a new proxy, you must submit your notice of revocation or your new proxy to Metaldyne Performance Group Inc., Attention: Secretary, One Towne Square, Suite 550,
Southfield, Michigan 48076, and it must be received at any time before the start of the MPG special meeting. Any proxy that you submitted via the Internet or by telephone may be revoked by submitting
a new proxy via the Internet or by telephone, not later than 11:59 p.m. Eastern Time on Tuesday, April 4, 2017, or by voting in person at the meeting. If your shares are held in the name of a
bank, broker or other nominee, you should contact them to change your vote.
Solicitation of Proxies
MPG is soliciting proxies for the MPG special meeting from MPG stockholders of record as of the MPG record date. MPG will bear all of the costs
of soliciting proxies from MPG stockholders, other than certain costs related to the production and distribution of this joint proxy statement/prospectus, which will be shared equally with AAM
pursuant to the terms of the merger agreement. MPG has retained MacKenzie Partners, Inc. to assist in the solicitation of proxies for the special meeting for a fee of approximately $15,000 plus
reimbursement of reasonable out-of-pocket expenses. MPG's directors, officers and other employees may also solicit proxies, without additional compensation, personally and by mail, e-mail, telephone,
and other means of communication. MPG will also reimburse brokers and other persons holding MPG common stock in their names or in the names of their nominees for their reasonable out-of-pocket
expenses incurred in distributing the proxy materials to MPG stockholders.
Householding
The SEC's proxy rules permit companies and intermediaries, such as brokers and banks, to satisfy proxy statement delivery requirements for two
or more stockholders sharing an address by delivering one proxy statement to those stockholders. This procedure, known as "householding," reduces the amount of duplicate information that stockholders
receive and lowers printing and mailing costs.
Some
banks, brokers and other intermediaries or nominee record holders may use householding for the MPG special meeting notice or this joint proxy statement/prospectus. This means that
only one copy each of the notice, or this joint proxy statement/prospectus, as the case may be, may have been sent to your address if multiple stockholders share your address. MPG will promptly send a
separate copy of these documents to you if you send a request to Metaldyne Performance Group Inc., One Towne Square, Suite 550, Southfield, Michigan 48076, Attention: Investor Relations,
or if you contact MPG's Investor Relations department by telephone at 248-727-1829.
If
you prefer to opt out of the householding procedure and receive separate copies of such documents in the future, or if you are receiving multiple copies and would like to receive only
one copy for your household, you should contact your bank, broker or other nominee, or you may contact us at the above address or phone number.
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THE COMPANIES
AAM
AAM is a leader in the manufacturing, engineering, design and validation of driveline and drivetrain systems and related components and modules,
chassis systems, electric drive systems and metal-formed products for light trucks, sport utility vehicles, passenger cars, crossover vehicles and commercial vehicles. In addition to locations in the
United States (Michigan, Ohio, and Indiana), AAM has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico,
Poland, Scotland, South Korea, Sweden and Thailand. AAM has approximately 13,000 employees globally.
AAM
common stock is publicly traded on the NYSE under the symbol "AXL."
AAM
was incorporated in Delaware on May 15, 1998. AAM's principal executive offices are located at One Dauch Drive, Detroit, Michigan 48211, and its telephone number at that
address is 313-758-2000. AAM's website is
www.aam.com
.
MPG
MPG is a leading provider of highly-engineered lightweight components for use in powertrain and suspension applications for light, commercial
and industrial vehicles around the world. MPG produces these components and modules using proprietary metal-forming manufacturing technologies and processes for a global customer base of vehicle
OEMs and Tier I suppliers. MPG has a global footprint spanning more than 60 locations in 13 countries across North America, South America, Europe and Asia with approximately 12,000
employees.
MPG
common stock is publicly traded on the NYSE under the symbol "MPG."
MPG
was incorporated in Delaware on June 9, 2014 following the combination of three metal-forming technology manufacturing companies. MPG's principal executive offices are located
at One Towne Square, Suite 550, Southfield, Michigan 48076, and its telephone number at that address is 248-727-1800. MPG's website is
www.mpgdriven.com
.
Merger Sub
Merger Sub, a Delaware corporation and a wholly-owned subsidiary of AAM, was formed on November 2, 2016, solely for the purpose of
effecting the merger. To date, Merger Sub has not conducted any activities other than those in connection with its formation and in connection with the transactions contemplated by the merger
agreement. Merger Sub's principal executive offices are located at One Dauch Drive, Detroit, Michigan 48211, and its telephone number at that address is 313-758-2000.
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THE MERGER
General
On the terms and conditions set out in the merger agreement, Merger Sub, a wholly-owned subsidiary of AAM, will merge with and into MPG, with
MPG as the surviving corporation in the merger. Following the completion of the merger, MPG will be a wholly-owned subsidiary of AAM and shares of MPG common stock will no longer be publicly traded.
At
the effective time of the merger, each share of MPG common stock (other than MPG excluded shares) will be converted into the right to receive (i) $13.50 in cash, without
interest, and (ii) 0.5 of a share of AAM common stock.
Background to the Merger
Each of the AAM board of directors and the MPG board of directors and their respective managements regularly review and evaluate potential
strategic alternatives relating to their respective companies and businesses, including possible acquisitions, divestitures and business combination transactions, with the goal of maximizing
stockholder value. Those discussions regularly analyze market conditions and the companies' respective balance sheet profiles, operating forecasts and constraints associated with operating on a
standalone basis. In addition, because AAM is a customer of MPG, representatives of MPG and AAM are in frequent contact, and members of management of MPG and AAM engage in periodic discussions about
their respective businesses and commercial relationship.
As
part of AAM's regular review and evaluation of strategic alternatives, AAM has consulted with Greenhill and other advisors. During the summer of 2015, the potential acquisition
candidates considered by AAM included MPG.
In
August 2015, AAM contacted Greenhill to begin the process of exploring a potential acquisition of MPG. Thereafter, beginning in September 2015, Greenhill had several meetings and
other discussions with David C. Dauch, the Chairman of the AAM board of directors and Chief Executive Officer of AAM, Michael K. Simonte, the President of AAM, and other members of AAM's management
specifically to evaluate a potential acquisition of MPG, including the potential synergies that could be achieved from such a business combination, the potential price payable in the transaction and
the implications of the additional debt required by AAM to finance any such acquisition.
On
October 28, 2015, at a meeting of AAM's Strategy and Technology Committee, members of AAM management provided a presentation to the committee regarding various strategic
initiatives, which included several potential acquisition candidates, of which MPG was one. The members of the committee expressed support for further investigation by AAM management of a possible
transaction with MPG.
In
late November 2015, at the direction of AAM's management, a representative of Greenhill contacted Kevin Penn, the Chairman of the MPG board of directors and a Managing Director of
American Securities, an affiliate of MPG's largest stockholder, to express AAM's interest in a potential business combination transaction with MPG. Following that conversation, AAM and MPG agreed to
arrange a meeting to discuss further a potential transaction involving AAM and MPG.
In
the middle of November 2015, AAM engaged Shearman & Sterling LLP (which we refer to in this joint proxy statement/prospectus as Shearman) to begin evaluating the legal
considerations involved in a potential acquisition of MPG.
On
December 18, 2015, Messrs. Dauch and Simonte, Norman Willemse, PresidentMetal Formed Products of AAM, and a representative of Greenhill met with
Mr. Penn and Loren Easton, a member of the MPG board of directors and a Managing Director of American Securities, at American Securities' office in New York, New York to discuss a potential
transaction involving MPG and AAM.
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Following
that meeting, Messrs. Penn and Easton updated certain members of the MPG board of directors regarding the meeting, including George Thanopoulos, Chief Executive Officer of MPG.
On
January 12 and January 13, 2016, respectively, MPG and AAM gave presentations at the Deutsche Bank Global Auto Industry Conference in Detroit, Michigan regarding their
respective businesses and outlook for the future. During that conference on January 12, Mr. Dauch reiterated to Mr. Thanopoulos that AAM would be interested in exploring a
potential transaction involving AAM and MPG. In addition, on January 13, 2016, Messrs. Penn and Easton met with Messrs. Dauch, Simonte and Willemse to begin exploring in more
detail a potential transaction involving AAM and MPG.
On
February 1, 2016, Mr. Thanopoulos and Douglas Grimm, Chief Operating Officer of MPG, met with Messrs. Dauch, Simonte and Willemse in Birmingham, Michigan to
further discuss a potential transaction involving the two companies. Three days later, on February 4, 2016, during a phone call between Messrs. Dauch and Thanopoulos,
Mr. Thanopoulos expressed support for exploring the combination of AAM's and MPG's businesses.
During
meetings of the AAM Strategy and Technology Committee and AAM board of directors held on February 3, 2016 and February 4, 2016, respectively, Mr. Dauch
provided updates to both the committee and the board with respect to the status of discussions with MPG regarding a potential business combination between the two companies.
On
February 22, 2016, Mr. Dauch spoke telephonically with Mr. Penn to discuss in more detail a potential transaction involving AAM and MPG. During this phone call,
Mr. Penn stated to Mr. Dauch that Mr. Penn would not be inclined to recommend to the MPG board of directors an acquisition of MPG below a range of $20 to $22 per share. However,
as a result of general market conditions in the automotive industry that negatively affected the stock prices of many companies in the industry, including AAM and MPG, both companies reconsidered the
timing and value of a potential transaction and whether it would be more appropriate to explore the merits and specific terms of a potential transaction when the market had stabilized.
During
this time, AAM and MPG were also engaged in ongoing negotiations regarding the terms of the supplier agreement between AAM and MPG that would be expiring by its terms at the end
of 2016.
In
late March 2016, Mr. Thanopoulos traveled to China to visit MPG's Chinese operations. During this visit to China, Mr. Thanopoulos was invited by the Chairman of a
China-based automotive conglomerate (which we refer to in this joint proxy statement/prospectus as Company A), with whom Mr. Thanopoulos had been previously familiar, to tour the facilities of
Company A. Following such tour, Mr. Thanopoulos invited representatives of Company A to conduct a reciprocal visit to MPG's facilities in Michigan.
On
May 5, 2016, at a meeting of the AAM board of directors, members of AAM management and representatives of Greenhill made presentations to the AAM board regarding the potential
acquisition of MPG, noting that, after the changes to market conditions in the automotive industry earlier that
year, trading prices of the two companies' stock had stabilized and recovered to the point that a resumption of discussions regarding a potential transaction might be appropriate. The participants in
the meeting discussed, among other things, an updated financial analysis prepared by Greenhill regarding an acquisition of MPG under alternative price and leverage scenarios and with various synergy
assumptions, and the potential implications of MPG's largest stockholder holding a significant ownership interest in AAM in the event any such an acquisition included AAM common stock as part of the
consideration paid to MPG stockholders. The AAM board of directors authorized AAM management to move forward in discussions regarding a potential transaction with MPG and concluded that an offer to
acquire all of the outstanding equity of MPG at a price of up to $21 per share of MPG
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common
stock was appropriate given the potential synergies that could be achieved by the combined company.
On
May 15, 2016, Messrs. Dauch and Penn discussed telephonically resuming the discussions with respect to a potential transaction involving AAM and MPG. Mr. Dauch
indicated to Mr. Penn that AAM might be willing to pay up to $21 per share of MPG common stock for such an acquisition. In response, Mr. Penn noted that MPG's stock price had previously
traded as high as $24.50 per share.
Between
December 2015 and June 2016, Messrs. Thanopoulos, Penn and Easton periodically provided updates to the MPG board of directors with respect to their discussions with AAM.
In addition, Messrs. Penn and Easton periodically provided updates to the MPG board of directors with respect to several unsolicited approaches that had been made to them in their capacities as
directors of MPG in early 2016 by representatives of private equity sponsors and operating companies other than AAM to gauge MPG's interest in engaging in a transaction of some nature. Given the
amount of such interest from potential transaction counterparties and concerns about operating as a standalone company, in late May 2016, the MPG board of directors determined to engage a financial
advisor to better understand and evaluate the potential strategic options available to MPG.
On
June 1, 2016, with the approval of the MPG board of directors, MPG engaged BofA Merrill Lynch as its financial advisor to assist MPG in its evaluation and consideration of a
potential transaction.
On
June 7, 2016, Messrs. Penn and Easton, together with a representative of American Securities, met with representatives of BofA Merrill Lynch to discuss potential strategic
alternatives available to MPG, based on consideration by the MPG board of directors of the prospects for MPG to continue as a standalone company and the potential for a strategic transaction involving
MPG. Messrs. Penn and Easton, the representative of American Securities and representatives of BofA Merrill Lynch discussed the fact that potential counterparties in a strategic transaction could
include parties with whom MPG had existing business relationships, companies which had previously approached MPG in the past to
gauge interest in a potential transaction, or other companies which may have a strong strategic fit with MPG. On June 13, 2016, members of MPG management met with representatives of BofA
Merrill Lynch, during which meeting the representatives of BofA Merrill Lynch provided an overview of a proposed timeline for a strategic process and discussed with MPG management certain
considerations if MPG were to undertake such a process.
On
June 14, 2016, Messrs. Penn and Dauch further discussed telephonically a potential transaction between AAM and MPG, including the potential synergies that could be
achieved by a combined company.
On
June 27, 2016, Messrs. Dauch and Thanopoulos met in Bloomfield Hills, Michigan to again discuss a potential transaction involving AAM and MPG and the potential synergies
that could be achieved by a combined company.
On
July 7, 2016, representatives of BofA Merrill Lynch met with members of MPG management to discuss AAM's verbal expression of interest in a potential transaction between the two
companies and MPG's proposed response, as well as to consider identifying and evaluating other potential counterparties for MPG who could be contacted in connection with BofA Merrill Lynch's market
check process were such process to be undertaken. The next day, on July 8, 2016, Mr. Dauch contacted Mr. Thanopoulos to discuss the potential transaction and indicated to
Mr. Thanopoulos that AAM would be submitting to MPG a formal indication of interest.
On
July 13, 2016, Messrs. Thanopoulos and Penn conducted a tour of MPG's Royal Oak and Fraser, Michigan facilities with the Chairman and other representatives of Company A.
Following the tour, a representative of Company A orally expressed to Messrs. Thanopoulos and Penn an interest in exploring a potential investment or other strategic transaction with MPG.
Messrs. Thanopoulos and Penn informed the representative of Company A that MPG would be open to discussions regarding a
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potential
transaction and encouraged the representative to engage with representatives of BofA Merrill Lynch with respect thereto.
During
June and July 2016, Mr. Thanopoulos also held periodic meetings with a significant customer of MPG (which we refer to in this joint proxy statement/prospectus as Company
B) as part of MPG's customary practice to engage in discussions with customers of MPG. During some of those meetings, representatives of Company B expressed interest in potentially exploring a
transaction involving MPG and Company B, but also expressed reservations about the timing for such a transaction, the amount of
indebtedness Company B would be required to incur in order to finance such a transaction and the amount of equity Company B would need to issue in order to consummate any potential transaction.
Mr. Thanopoulos encouraged the representatives of Company B to engage with representatives of BofA Merrill Lynch regarding any potential transaction Company B might be contemplating.
On
July 14, 2016, the AAM board of directors met telephonically to discuss with representatives of Greenhill and AAM management the recent conversations between Mr. Dauch
and Messrs. Penn and Thanopoulos regarding a potential transaction involving AAM and MPG. At the board meeting, representatives of Greenhill made a presentation to the AAM board of directors
evaluating the potential acquisition of MPG, including the potential synergies that could be achieved from such a combination, various considerations related to the potential purchase price that AAM
would be required to pay in connection with a transaction and the implications of the additional debt required by AAM to finance the acquisition. At the meeting, the AAM board of directors authorized
AAM management to deliver an initial written offer to acquire all of the outstanding equity of MPG for between $19 and $21 per share of MPG common stock, with the merger consideration to be comprised
of approximately 55% cash and 45% shares of AAM common stock (which we refer to in this joint proxy statement/prospectus as AAM's initial offer).
On
July 15, 2016, Mr. Dauch delivered to Mr. Thanopoulos AAM's initial offer. AAM's initial offer also stated that AAM would provide American Securities, as MPG's
largest stockholder, with customary registration rights and the right to nominate one member to the AAM board of directors for so long as American Securities maintained a meaningful equity position in
the combined company. AAM's initial offer further proposed that the parties enter into a confidentiality agreement to permit them to commence their respective due diligence reviews.
In
mid-July, MPG engaged Weil, Gotshal & Manges LLP (which we refer to in this joint proxy statement/prospectus as Weil) as its legal counsel in connection with any
potential transaction involving MPG.
On
July 19, 2016, the MPG board of directors met telephonically to review with representatives of BofA Merrill Lynch and Weil and MPG management AAM's initial offer, including the
strategic rationale for the potential transaction, potential synergy opportunities, due diligence review that would be undertaken, regulatory considerations and the ability of AAM to finance the
potential transaction, and to discuss MPG's proposed response to the offer. A representative of Weil also reviewed and discussed with the MPG board of directors the directors' fiduciary duties.
Following such meeting, at the direction of the MPG board of directors and with advice from BofA Merrill Lynch, Mr. Thanopoulos contacted Mr. Dauch and indicated that AAM's initial offer
undervalued MPG and was inadequate and that AAM would need to revise and clarify the terms of its offer, including by providing a single purchase price, rather than a range, and additional details
regarding the pro forma ownership structure of the combined company and assumed synergies, before the MPG board of directors would take any formal action with respect thereto.
On
July 20, 2016, AAM delivered to MPG a revised written offer (which we refer to in this joint proxy statement/prospectus as AAM's July 20 offer) to acquire all of the
outstanding equity of MPG at a price of $20 per share of MPG common stock, with the merger consideration proposed to be
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comprised
of approximately 60% cash and 40% shares of AAM common stock. The remaining terms of AAM's July 20 offer were consistent with those proposed in AAM's initial offer.
On
July 26, 2016, with advice from BofA Merrill Lynch and after discussion with certain members of the MPG board of directors, Mr. Thanopoulos contacted Mr. Dauch
and indicated that AAM's July 20 offer continued to undervalue MPG and was inadequate, and that AAM would need to revise and clarify the terms of its offer, including the valuation of MPG, pro
forma ownership structure of the combined company and assumed synergies before the MPG board of directors would take any formal action with respect thereto.
On
July 27, 2016, at a meeting of AAM's Strategy and Technology Committee, Mr. Dauch informed the members of the committee about the points raised by Mr. Thanopoulos
in their phone call the night before and also briefly reviewed the history of communications between the two companies regarding the proposed transaction involving AAM and MPG. The members of the
committee and representatives of Greenhill, who were also in attendance, discussed certain risks and certain of the expected benefits of a proposed acquisition of MPG. The committee then concluded
that AAM should continue to pursue a potential acquisition of MPG and determined how to respond to the points raised by Mr. Thanopoulos in AAM's next offer.
On
July 29, 2016, AAM delivered a third written offer (which we refer to in this joint proxy statement/prospectus as AAM's July 29 offer) to acquire all of the outstanding
equity of MPG at a price in the range of $20 to $21 per share of MPG common stock, which was proposed to be comprised of approximately 60% cash and 40% shares of AAM common stock. The remaining terms
of the offer were again consistent with those proposed in AAM's initial offer.
On
August 3, 2016, the MPG board of directors met to consider and review with representatives of BofA Merrill Lynch and MPG management AAM's July 29 offer. Following
discussions among the members of the MPG board of directors, MPG management and representatives of BofA Merrill Lynch, the MPG board of directors determined that, given the value of AAM's
July 29 offer relative to AAM's two preceding written offers, MPG should seek to negotiate and enter into a nondisclosure agreement with AAM and then commence mutual due diligence in an effort
to solicit a further improved offer from AAM. The MPG board of directors further instructed BofA Merrill Lynch to contact other potential counterparties.
Between
the end of July and late August, representatives of BofA Merrill Lynch contacted sixteen other potential counterparties regarding a potential strategic transaction with MPG. The
sixteen other potential counterparties included Company A, Company B and other companies and financial sponsors that had previously indicated interest in a potential transaction involving MPG, as well
as other companies and financial sponsors that BofA Merrill Lynch, MPG management and certain members of the MPG board of directors believed could have a strong strategic fit with MPG or that
otherwise may be capable or interested in a potential transaction with MPG. Other than Company A, none of the potential counterparties contacted by BofA Merrill Lynch expressed any interest in a
potential transaction with MPG, and none engaged in any meetings with MPG management or otherwise were provided any non-public information about MPG despite BofA Merrill Lynch contacting certain of
such potential counterparties on multiple occasions.
On
August 4, 2016, Company A delivered an all cash written offer to acquire all of the outstanding equity of MPG that valued MPG at 5.5-6.0 times MPG's last twelve month EBITDA,
but without specifying any purchase price. Later that day, following discussions with members of the MPG board of directors and MPG management, representatives of BofA Merrill Lynch, on behalf of MPG,
communicated to representatives of Company A that Company A would need to provide a single purchase price in its offer, and that Company A's offer undervalued MPG and was therefore inadequate, but
that Company A should consider delivering a revised offer.
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On
August 5, 2016, Mr. Thanopoulos met with Mr. Dauch in Bloomfield Hills, Michigan, and informed Mr. Dauch that AAM's July 29 offer continued to
undervalue MPG and was therefore inadequate but indicated that MPG would be willing to negotiate and enter into a nondisclosure agreement with AAM and commence preliminary mutual due diligence.
On
August 18, 2016, Mr. Thanopoulos met with Messrs. Dauch and Simonte to discuss the potential terms of the proposed transaction, to review and discuss a proposed
timeline for the potential transaction and to discuss the proposed scope of the due diligence review with respect to the two companies.
On
August 23, 2016, AAM and MPG entered into a mutual confidentiality agreement containing a two-year standstill restricting each of AAM's and MPG's ability to, among other
things, acquire securities in the other and seek to control or influence the other's management or the voting of any securities of the other party. American Securities also agreed to a one-year
standstill with respect to AAM.
On
August 30, 2016, Company A delivered a revised, all cash written offer to acquire all of the outstanding equity of MPG at a price in the range of $16.36 to $20 per share of MPG
common stock, subject to the completion of Company A's due diligence review of MPG, or, in the alternative, to acquire a majority interest in MPG with the expectation of subsequently consummating a
series of follow-on transactions. Following discussion with members of the MPG board of directors and MPG management, including with respect to the fact that Company A's offer continued to be less
than the latest offer from AAM, on the same day, representatives of BofA Merrill Lynch communicated to representatives of Company A, on behalf of MPG, that Company A's offer continued to undervalue
MPG and was inadequate, and that Company A would need to provide a single purchase price (rather than a range) in its offer, but that Company A should consider delivering a revised offer.
On
August 31, 2016, Mr. Thanopoulos met with Messrs. Dauch and Simonte in Bloomfield Hills, Michigan, to further discuss the potential terms of the proposed
transaction involving AAM and MPG.
On
September 7, 2016, members of management of MPG, including Mr. Thanopoulos, Mr. Grimm and MPG Chief Financial Officer Mark Blaufuss and Messrs. Penn and
Easton met in Bloomfield Hills, Michigan, with members of AAM management, including Messrs. Dauch, Simonte and Willemse, and AAM Chief Financial Officer Christopher May, and representatives of
a consulting firm engaged by AAM, and conducted management presentations for each other regarding their respective businesses as well as MPG's bases for its belief that AAM's July 29 offer
undervalued MPG and was deemed inadequate. Representatives of BofA Merrill Lynch and Greenhill also participated. Following the meeting, representatives of BofA Merrill Lynch requested that AAM submit
an updated proposal with a single purchase price, rather than a range.
On
September 8 and 9, 2016, AAM and MPG exchanged initial requests for due diligence information via their respective financial advisors.
On
September 9, 2016, at a telephonic meeting of the AAM board of directors, members of AAM management and representatives of Greenhill provided the AAM board with an update on
the status of discussions with MPG. At the conclusion of the meeting, the AAM board of directors directed AAM management to continue discussions regarding a potential acquisition of MPG and authorized
Mr. Dauch to increase AAM's offer price to up to $21.25 per share, comprised of approximately 60% cash and 40% shares of AAM common stock. To address discussions between Messrs. Penn and
Dauch regarding American Securities' representation rights on the AAM board of directors, the AAM board of directors further authorized Mr. Dauch to offer American Securities the right to
nominate two directors to the AAM board following any potential transaction for so long as American Securities maintained a meaningful equity position in the combined company.
On
September 12, 2016, BofA Merrill Lynch delivered a presentation to Greenhill (based on information provided by MPG) that highlighted the potential value creation that, in their
view, could
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result
from an acquisition of MPG by AAM due to a number of factors, including the reduction of AAM's customer concentration, improved financial metrics, an enhanced public market profile and
potential cost synergies. The presentation included preliminary financial analyses performed by BofA Merrill Lynch on the basis of information provided by MPG and based on an illustrative offer price
of $24.00 per share of MPG common stock and BofA Merrill Lynch's views regarding the extent of AAM's capacity to finance the cash portion of the consideration to be paid to MPG stockholders.
On
September 16, 2016, AAM delivered to MPG a revised written offer (which we refer to in this joint proxy statement/prospectus as AAM's September 16 offer) to acquire all
of the outstanding equity of MPG at an increased stock price of $21.25 per share of MPG common stock, comprised of $12.63 to $13.34 per share of cash (representing aggregate cash consideration of
$900 million to $950 million) and the remainder in shares of AAM common stock. This represented merger consideration of approximately 59% in cash and 41% in shares assuming
$900 million of aggregate cash consideration and 63% in cash and 37% in shares assuming $950 million of aggregate cash consideration. AAM's September 16 offer maintained that AAM
was willing to give American Securities the right to nominate one director to the AAM board of directors following any potential transaction for so long as American Securities maintained a meaningful
equity position in the combined company. AAM's September 16 offer also indicated that AAM expected to complete its due diligence review and finalize documentation in connection with the
potential transaction by early November 2016.
On
September 19, 2016, following discussions between representatives of BofA Merrill Lynch, members of the MPG board of directors and MPG management, those members of the MPG
board of directors indicated that $22.00 per share of MPG common stock may be acceptable to the MPG board of directors. Mr. Thanopoulos then communicated to Mr. Dauch that AAM's
September 16 offer was still inadequate and would need to be increased for MPG to consider continuing with a potential transaction.
On
September 19, 2016, Messrs. Dauch and Penn had a telephone conversation during which Mr. Penn, at the direction of the MPG board of directors, proposed a purchase
price of $24.00 per share of MPG common stock, consisting of $12.00 per share in cash and $12.00 per share in AAM common stock. During this conversation, Mr. Dauch informed Mr. Penn that
AAM would not agree to pay $24.00 and reiterated AAM's current offer of $21.25 per share of MPG common stock.
From
September 21 through September 23, 2016, Messrs. Dauch and Penn held a series of telephone conversations during which Mr. Penn indicated that MPG may be
willing to proceed on the basis of an offer at $22.00 per share of MPG common stock, consisting of $13.50 per share in cash and the remainder in shares of AAM common stock. Mr. Penn also
insisted that American Securities have the right to designate a number of the members of the AAM board of directors following any potential transaction that would be proportionate to American
Securities' equity position in AAM immediately following the consummation of the transaction and for so long as American Securities and its affiliates owned at least a certain ownership percentage of
AAM's outstanding common stock. Mr. Penn proposed
that American Securities be entitled to designate three directors on an enlarged ten-member AAM board of directors or four directors on a twelve-member AAM board of directors, and during the course of
multiple exchanges, proposed, among other things, that such number of designees would not change for so long as American Securities and its affiliates owned at least 5% of the outstanding shares of
AAM common stock. Mr. Dauch did not commit to any particular initial number of designees, but suggested, among other things, that AAM might be willing to consider permitting American Securities to
maintain such initial number of designees for so long as American Securities and its affiliates owned at least 10% of the outstanding shares of AAM common stock.
On
September 23, 2016, the AAM board of directors met telephonically. AAM management provided an update on the status of discussions with MPG and American Securities since
September 9, 2016 and the proposed terms of the potential transaction. Representatives of Greenhill also provided the AAM board of directors with a summary of certain preliminary financial
analyses regarding the
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potential
transaction. At the meeting, the AAM board of directors authorized AAM management to deliver a revised offer to acquire all of the outstanding equity of MPG at a price of up to $22 per share
of MPG common stock, with the merger consideration proposed to be comprised of approximately 61% cash and 39% shares of AAM common stock, and to offer American Securities the right to nominate up to
four directors on an enlarged twelve-member AAM board of directors following such acquisition.
Later
on September 23, 2016, Mr. Dauch spoke with Mr. Penn telephonically to deliver a revised offer (which we refer to in this joint proxy statement/prospectus as
AAM's September 23 offer) to acquire all of the outstanding equity of MPG at a price of $22 per share of MPG common stock, with the merger consideration comprised of approximately 61% cash and
39% shares of AAM common stock. Mr. Dauch stated that as part of AAM's September 23 offer, AAM was willing to give American Securities the right to nominate three members of an enlarged
eleven-member AAM board of directors following such acquisition and for so long as American Securities and its affiliates owned at least 7.5% of the shares of AAM common stock outstanding.
Mr. Dauch indicated to Mr. Penn that AAM's September 23 offer was AAM's best and final offer.
Between
September 24, 2016 and September 26, 2016, Mr. Dauch had a series of separate telephone conversations with each of Messrs. Penn and Thanopoulos to
discuss the terms of AAM's September 23 offer, ongoing due diligence, the proposed timing of the transaction and certain of the other terms and conditions of the proposed transaction.
During
September and October 2016, AAM and MPG, with the assistance of their respective financial, legal and other advisors, continued to conduct legal, financial, operational and other
due diligence on
each other, including visits to each other's key production facilities, and held regular telephonic discussions regarding due diligence matters.
On
September 26, 2016, a representative of Company A contacted Mr. Thanopoulos to discuss certain considerations relating to a potential transaction between MPG and Company
A, including, among other things, potential synergies and valuation matters.
On
September 27, 2016, the MPG board of directors met to review and discuss with representatives of Weil and representatives of BofA Merrill Lynch AAM's September 23 offer
as well as the results and current status of BofA Merrill Lynch's outreach to certain other parties identified as potentially being interested in a strategic transaction with MPG and the potential
timeline for the proposed transaction with AAM. A representative of Weil also reviewed and discussed with the members of the MPG board of directors the directors' fiduciary duties and potential key
terms that may be negotiated in connection with the potential transaction with AAM. Following discussions among the members of the MPG board of directors and their advisors with respect to, among
other things, the premium represented by AAM's September 23 offer over the share price of MPG common stock, the implied adjusted enterprise value for MPG represented by such proposed offer
price and the strategic rationale for the potential transaction and potential synergies, the MPG board of directors determined to proceed with mutual due diligence based on AAM's September 23
offer and authorized MPG management and MPG's legal and financial advisors to continue negotiations regarding the potential terms of a transaction and to continue due diligence with respect thereto.
On
September 30, 2016, David Barnes, General Counsel, Secretary and Chief Compliance Officer of AAM, met with Thomas M. Dono, Jr, Executive Vice President, General Counsel and
Secretary of MPG, to discuss legal due diligence and other legal matters in connection with the proposed transaction.
On
October 3, 2016, each of AAM and MPG opened to representatives of the other company and their advisors access to an electronic data room for the purposes of permitting further
due diligence on their respective companies.
On
October 5, 2016, Messrs. Dauch and Willemse met with Mr. Thanopoulos to discuss potential synergy opportunities from a combination of AAM and MPG. Also on
October 5, 2016, Messrs. Dauch
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and
Penn spoke telephonically to discuss a number of matters related to American Securities' and its affiliates' ownership stake in AAM following the proposed transaction, including director
designation
rights and registration rights as well as voting and standstill obligations that AAM proposed would apply to American Securities and its affiliates.
On
October 6, 2016, Shearman sent to Weil a term sheet reflecting the proposed terms of a stockholders' agreement that would be entered into between AAM and American Securities in
connection with the consummation of the proposed transaction. The term sheet included, among other things, proposed terms with respect to certain governance rights, including American Securities'
right to designate a number of directors to the AAM board of directors, and registration rights that American Securities and its affiliates would have with respect to shares of AAM common stock
received in the proposed transaction, as well as proposed voting and standstill obligations that would apply to American Securities and its affiliates with respect to shares of AAM common stock owned
by them following the proposed transaction.
On
October 10, 2016, Shearman sent Weil initial drafts of a merger agreement and a voting agreement that AAM proposed be entered into between AAM and an affiliate of American
Securities, in each case, in connection with the proposed transaction.
On
October 13, 2016, following discussions among representatives of MPG, American Securities, Weil and BofA Merrill Lynch, BofA Merrill Lynch communicated to Greenhill certain key
transaction concerns identified by MPG with respect to the drafts of the merger agreement and voting agreement and the stockholders' agreement term sheet as previously provided to MPG, including,
among other things, with respect to the treatment of outstanding MPG equity awards, the ability of MPG to solicit or consider alternative transactions following the execution of definitive
documentation in connection with the proposed transaction, the measurement period for determining the exchange ratio, the inclusion of a provision in the merger agreement that would require MPG to
submit the potential transaction to a vote of its stockholders even if the MPG board of directors had changed its recommendation with respect thereto, the inability of MPG to terminate the merger
agreement in order to accept a superior proposal, the termination fees that could become payable under the merger agreement, and the scope of the proposed standstill applicable to American Securities
and its affiliates and its board designation rights under the stockholders' agreement.
On
the same day, Company A delivered to BofA Merrill Lynch a revised, written all cash offer to acquire all of the outstanding equity of MPG for a stock price in the range of $21 to $22
per share of MPG common stock. Company A's offer was contingent on MPG granting Company A exclusivity through the end of 2016 with respect to the negotiation of a potential transaction and indicated
that Company A expected that it would be able to complete its due diligence review of MPG, finalize its financing and negotiate definitive documentation by the end of 2016. In addition, Company A
reiterated its expectation that key members of MPG management and other employees would remain with MPG and acquire an equity interest in the combined company following the consummation of any
transaction. However, Company A did not specify what information it would need to complete its due diligence review with respect to MPG. Following discussions with members of the MPG board of
directors and MPG management, later that same day, representatives of BofA Merrill Lynch communicated to Company A that Company A would need to provide a single purchase price, rather than a range, in
its offer, that MPG would not grant Company A exclusivity and that Company A should state the information it would require in due diligence in order to increase any offer for MPG.
On
October 16, 2016, following discussions between representatives of Weil and Shearman with respect to certain of the key transaction issues identified by BofA Merrill Lynch to
Greenhill, Weil sent Shearman a material issues list relating to the draft transaction documents and stockholders' agreement term sheet.
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From
October 17 to October 23, 2016, the parties, assisted by their respective legal and financial advisors, negotiated certain of the critical terms of the proposed
transaction included in the material issues list sent by Weil to Shearman.
On
October 20, 2016, Company A delivered to representatives of BofA Merrill Lynch a further revised, written all cash offer that would result in MPG stockholders receiving a stock
price in the range of $21 to $22.50 per share of MPG common stock. Company A indicated that it would be prepared to consider such transaction on a non-exclusive basis with the intention of entering
into definitive documentation with respect to such a transaction prior to the end of 2016, but that it would require several weeks to complete its due diligence review in connection with a potential
transaction in order to be able to deliver a final offer. Company A also provided a support letter from its proposed financing source. Following discussions with members of the MPG board of directors
and MPG management, representatives of BofA Merrill Lynch again communicated to Company A that Company A would need to submit an offer at a single purchase price per share, rather than a range. In
addition, on several occasions representatives of BofA Merrill Lynch requested that Company A indicate what information would be required in connection with its due diligence review, but Company A
never provided any specific requests.
On
October 23, 2016, Weil sent Shearman revised drafts of the merger agreement and voting agreement following a series of telephonic negotiations among the parties and their
advisors and reflecting MPG's positions with respect to the terms and conditions of these agreements. On October 25, 2016, Weil also sent Shearman an initial draft of the stockholders'
agreement reflecting the terms discussed among the parties and their advisors during such negotiations and MPG's position with respect to the other terms and conditions of such agreement. During this
period, the parties also continued their ongoing respective due diligence reviews, including legal, financial, operational and other due diligence.
On
October 27, 2016, senior management of AAM and MPG as well as representatives of American Securities and their respective legal and financial advisors met, at the offices of
Shearman in New York, to discuss certain open issues with respect to the proposed transaction, including, among other things, the treatment of outstanding MPG equity awards, the regulatory risk
associated with the transaction and actions AAM and/or MPG may be required to take to obtain certain required regulatory approvals, certain conditions to the consummation of the proposed transaction,
the commitment of the affiliate of American Securities to vote in favor of the transaction, the fees payable by the respective parties in the
event the merger agreement were terminated in certain circumstances, the exchange ratio to be used in connection with the proposed transaction in order to reflect the agreed merger consideration of
$22.00 per share for each share of MPG common stock, the restrictions on the conduct of each party's business prior to the consummation of the transaction, and American Securities' board designation
rights, voting obligations and transfer restrictions under the stockholders' agreement. During the meeting, AAM and MPG agreed, among other things, to base the exchange ratio to be used in connection
with the potential transaction on an agreed $17.00 per share price of AAM common stock, resulting in an exchange ratio of $13.50 in cash and 0.5 shares of AAM common stock for each share of MPG common
stock payable in connection with the proposed merger.
Later
on October 27, 2016, the MPG board of directors held a telephonic meeting, in which members of MPG management and representatives of Weil and BofA Merrill Lynch
participated, to discuss and summarize the negotiations with respect to the proposed transaction with AAM that had occurred that day and to engage in a discussion of the terms of the revised offer
from Company A. The MPG board of directors, following discussions with its legal and financial advisors, determined that due to, among other things, the purchase price range included in Company A's
offer, the significant amount of time it would take Company A to finalize its due diligence review and negotiate a definitive transaction agreement, Company A's failure to identify the information it
would require to complete its due diligence review and concerns with regulatory approval requirements of a potential transaction with Company A, that MPG should proceed with negotiating the terms of
the potential transaction with
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AAM.
At the meeting, the participants also discussed the proposed timeline to finalize definitive documentation in connection with the proposed transaction with AAM and the potential timeline with
respect to a transaction with Company A, and the ability of MPG to respond to unsolicited offers under the proposed terms of the merger agreement with AAM, including from Company A.
On
October 28, 2016, Weil sent a revised draft of the voting agreement to Shearman reflecting the discussions among the parties at the October 27 meeting.
Also
on October 28, 2016, at a meeting of the AAM board of directors, AAM management and representatives of Shearman, Greenhill and a consulting firm engaged by AAM made
presentations regarding the proposed transaction, including, among others, a presentation by AAM management regarding the results of its due diligence review and the status of financing discussions
with JPMorgan Chase Bank, N.A. (which we refer to in this joint proxy statement/prospectus as JPMorgan), a presentation by Greenhill regarding the financial aspects of the proposed transaction and the
pro forma financial profile of the combined company, a presentation by the consulting firm regarding the potential synergy opportunities of the combined company, and a presentation by Shearman
regarding the AAM board of directors' fiduciary duties in connection with the proposed transaction, terms of the transaction documents and open issues remaining in the negotiation thereof. Following
these presentations and further discussion among the participants at the meeting, the AAM board of
directors authorized AAM management to complete the negotiation of the transaction documents, subject to final approval of the terms and conditions by the AAM board of directors.
On
October 29, 2016, MPG delivered to AAM and Weil provided to Shearman an initial draft of the MPG disclosure schedule to be delivered in connection with the merger agreement.
Later that same day, Shearman sent Weil revised drafts of the merger agreement and voting agreement reflecting discussions among the parties at and since the October 27 meeting as well as an
initial draft of the AAM disclosure schedule to be delivered in connection with the merger agreement.
On
the morning of October 30, 2016, the MPG board of directors met telephonically to review and discuss with members of MPG senior management and representatives of Weil and BofA
Merrill Lynch the status of discussions with AAM and the proposed terms of the transaction. The MPG board of directors discussed with BofA Merrill Lynch the process conducted to consider various
strategic alternatives, including the review of MPG's continued operation on a standalone basis given its financial profile and potential constraints associated with such operation, the other
potential counterparties contacted by representatives of BofA Merrill Lynch regarding a potential strategic transaction with MPG, none of which, other than Company A, had expressed any definitive
interest in pursuing a potential transaction with MPG, and the consideration of whether there were any other potential counterparties that may be interested in a potential transaction with MPG that
would provide for greater value than the potential transaction involving AAM. A representative of BofA Merrill Lynch then discussed with the MPG board of directors the status of negotiations with AAM,
and the terms and status of the offer received from Company A, including that representatives of BofA Merrill Lynch had requested that Company A increase its proposed purchase price but that Company A
had indicated it would require additional time and information about MPG, which information still had not been specified by Company A, in order to provide a revised offer and that the upper end of its
proposed purchase price range was the maximum purchase price Company A would be willing to offer, subject to due diligence. A representative of BofA Merrill Lynch also reviewed with the MPG board of
directors the status of the ongoing mutual due diligence review with AAM, the strategic rationale for the proposed transaction with AAM and the preliminary results of BofA Merrill Lynch's valuation
analysis of the proposed transaction with AAM and the potential pro forma position of the combined company. Next, a representative of Weil reviewed with the MPG board of directors the proposed terms
of the transaction, including with respect to the proposed merger consideration, treatment of outstanding MPG equity awards, the ability of MPG to consider alternative transactions (including an
unsolicited offer from Company A if Company A were to make such an offer), the ability of the MPG board of directors to change its recommendation, the obligation of AAM to agree to certain
divestitures if
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required
in order to obtain required regulatory approvals, the parties' respective termination rights and the relative termination fees the parties' must pay if the merger agreement were terminated in
certain circumstances. A representative of Weil also provided an overview of the current terms of the voting agreement and stockholders' agreement proposed to be entered into between the affiliate of
American Securities and AAM in connection with the transaction. Following discussion among members of the MPG board of directors and its legal and financial advisors, the MPG board of directors
determined
that, given the uncertainty with respect to the value of the offer from Company A, as well as the anticipated time required to finalize a potential transaction with Company A,
Company A's failure to specify its due diligence requirements, the additional regulatory requirements and uncertainties with respect to consummating any potential transaction with
Company A, and the ability of Company A to make a subsequent unsolicited offer to acquire MPG under the proposed terms of the merger agreement with AAM, MPG should continue to negotiate
and seek to finalize the terms of the proposed transaction with AAM.
Later
on October 30, 2016, AAM delivered to MPG and American Securities a draft of the commitment papers in connection with AAM's debt financing for the proposed transaction.
From
October 30, 2016 through the early morning of November 3, 2016, the parties, assisted by their respective legal and financial advisors, continued to negotiate the
terms of, and the legal advisors continued to exchange drafts of, the transaction agreements and the respective disclosure schedules to be delivered in connection with the merger agreement, and the
parties and their respective advisors completed their respective due diligence reviews. These negotiations covered various aspects of the transaction, including, among other things, the
representations and warranties made by the parties, the restrictions on the conduct of each party's business, the scope of the non-solicitation restrictions contained in the merger and voting
agreements, the parties' respective matching rights with respect to competing proposals, MPG's obligations to assist AAM in obtaining its debt financing for the transaction, certain termination
provisions and the triggers of each party's termination rights, the ability to receive a termination fee and expense reimbursement, the outside date for the proposed transaction and the divestiture
obligations of AAM, and the disclosures made by each of AAM and MPG in their respective disclosure schedules.
On
the afternoon of November 1, 2016, the MPG board of directors held a telephonic meeting to resume their discussion and consideration of the proposed transaction. Members of
senior management and representatives of Weil and BofA Merrill Lynch also participated in the meeting. The MPG board of directors again discussed with BofA Merrill Lynch the process conducted to
consider various strategic alternatives, including the review of MPG's continued operation on a standalone basis given its financial profile and potential constraints associated with such operation,
the other potential counterparties contacted by representatives of BofA Merrill Lynch regarding a potential strategic transaction with MPG, none of which, other than Company A, had expressed any
definitive interest in pursuing a potential transaction with MPG, and the consideration of whether there were any other potential counterparties that may be interested in a potential transaction with
MPG that would provide for greater value than the potential transaction involving AAM. The MPG board of directors next discussed with BofA Merrill Lynch the due diligence review of AAM by MPG
management and MPG's advisors, including the various AAM facilities that had been toured and the discussions that had taken place in connection with MPG's due diligence review. BofA Merrill Lynch then
reviewed with the MPG board of directors its preliminary financial analysis of the merger consideration to be received by MPG stockholders in connection with the transaction. The MPG board of
directors discussed with representatives of BofA Merrill Lynch the procedures used by BofA Merrill Lynch to perform their preliminary financial analyses, the results of the efforts of BofA Merrill
Lynch to solicit counterparty interest in a potential transaction involving MPG, and BofA Merrill Lynch's view, based on such results, that receipt in the near term of an alternative proposal
providing for greater value than AAM's offer was unlikely. Next, a representative of Weil reviewed and discussed with the MPG board of directors the directors' fiduciary duties, a summary of the terms
of the proposed transaction and the
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principal
terms of the various agreements to be entered into in connection with the proposed transaction, including a description of the transaction structure, exchange ratio, representations and
warranties, interim operating covenants, termination rights and fees and expense reimbursement obligations, the closing conditions, the voting agreement to be entered into by the affiliate of American
Securities, and the stockholders' agreement granting American Securities certain governance and registration rights with respect to AAM common stock to be received in the merger following the
consummation of the merger. A representative of Weil also identified and discussed with the members of the MPG board of directors the remaining open issues in the various transaction agreements.
Following discussion among the directors, members of MPG management and MPG's advisors, the MPG board of directors instructed MPG management (with the assistance of MPG's advisors) to complete
negotiation of the remaining issues and to finalize the terms of the various transaction agreements.
In
the evening of November 2, 2016, the MPG board of directors held a telephonic meeting to review and discuss the final terms of and to consider and vote upon the proposed
transaction. A representative of Weil provided the MPG board of directors with an update on the status of the various transaction documents and the parties' negotiations and reviewed with the MPG
board of directors the material changes to the terms of such documents since the MPG board of directors' meeting the previous day, including, among other things, the agreement that the outside date
for the transaction would be 9 months following the execution of the merger agreement, subject to a three-month extension if certain required regulatory approvals had not been received, the
parties' discussions regarding a potential exception to the material adverse effect standard related to MPG's due diligence review of AAM, and certain developments related to a procedural failure by
MPG to make a historical tax election and the parties' agreement that AAM would not be required to pay a termination fee if the transaction fails to be consummated due to AAM's failure to obtain its
required financing if the cause of such failure related to such tax election failure. Next, representatives of BofA Merrill Lynch presented their financial analysis of the merger consideration and
confirmed to the MPG board of directors that there had been no material changes to such analyses from the presentation made by BofA Merrill Lynch to the MPG board of directors the previous day.
Representatives of BofA Merrill Lynch then delivered orally to the MPG board of directors BofA Merrill Lynch's opinion, later confirmed by delivery of a written opinion dated November 2, 2016,
to the effect that, as of the date of, and subject to the various assumptions and limitations described in its opinion, the merger consideration to be received by holders of MPG common stock in the
merger was fair, from a financial point of view, to such holders. The opinion of BofA Merrill Lynch is more fully described in the section titled "
The
MergerOpinion of MPG's Financial Advisor
" beginning on page 85. Following discussion, the MPG board of directors unanimously approved the merger agreement
and the transactions contemplated thereby on the terms described therein and recommended that the MPG stockholders vote for the adoption of the merger agreement and the approval of the transactions
contemplated thereby at the special meeting of MPG stockholders to be held to consider and vote on the merger agreement and the transactions contemplated thereby, subject to the MPG board of
directors' right to change its recommendation in the event of a superior proposal or intervening event on the terms set forth in the merger agreement. For further information concerning the factors
considered by the MPG board of directors in reaching its decision that the merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of the MPG
stockholders, its decision to approve the merger agreement and its decision to recommend that MPG stockholders vote
to adopt the merger agreement and approve the transactions contemplated thereby, see "
MPG's Reasons for the Merger and Recommendation of the MPG Board of
Directors
" beginning on page 74.
Also
in the evening of November 2, 2016, the AAM board of directors held a telephonic meeting to review and discuss the final terms of and to consider and vote upon the proposed
transaction. Representatives of Shearman reviewed for the board of directors their fiduciary duties in considering the proposed transaction before providing an update on the status of the various
transaction documents
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and
identifying the few remaining significant issues outstanding in the negotiations and MPG's most recent proposals for the resolution thereof. The AAM board of directors discussed these remaining
issues and the relative risks of the parties' positions with respect thereto and provided Shearman with its preferred resolution of each such issue. Next, representatives of Greenhill presented their
financial analysis of the merger consideration and confirmed to the AAM board of directors that there had been no material changes to such analyses from the presentation made by Greenhill during the
October 28 meeting of the AAM board of directors. Representatives of Greenhill then delivered orally to the AAM board of directors Greenhill's opinion, which was subsequently confirmed in
writing, that, as of the date of the opinion and based on and subject to the assumptions made, procedures followed, matters and factors considered and limitations and qualifications on the review
undertaken set forth therein, the merger consideration to be paid by AAM to the holders of the shares of MPG common stock pursuant to the merger agreement was fair, from a financial point of view, to
AAM. Following further discussion, the AAM board of directors unanimously approved the merger agreement and the transactions contemplated thereby on the terms described therein and recommended that
the AAM stockholders vote for the AAM share issuance. For further information concerning the factors considered by the AAM board of directors in reaching its decision that the merger agreement and the
transactions contemplated thereby, including the merger, are in the best interests of the AAM stockholders, its decision to approve the merger agreement and its decision to recommend that AAM
stockholders vote to approve the AAM share issuance, see "
AAM's Reasons for the Merger and Recommendation of the AAM Board of Directors
"
beginning on page 70.
Following
MPG's and AAM's respective board meetings on November 2, 2016, and through the morning of November 3, 2016, the parties finalized and entered into the merger
agreement and voting agreement and finalized the terms of the disclosure schedules delivered by each party and the form of stockholders' agreement. Before the opening of trading on the NYSE on
November 3, 2016, AAM and MPG issued a joint press release announcing their entry into definitive agreements with respect to the transaction.
AAM's Reasons for the Merger and Recommendation of the AAM Board of Directors
At a special meeting of the AAM board of directors held on November 2, 2016, the AAM board of directors unanimously determined that the
merger agreement and the transactions contemplated by the merger agreement are advisable, fair to, and in the best interests of, AAM and AAM stockholders and unanimously approved the merger agreement
and the transactions contemplated by the merger agreement. The AAM board of directors unanimously recommends that AAM stockholders vote "
FOR
" the AAM
share issuance proposal and "
FOR
" the AAM adjournment proposal.
In
reaching its decision that the merger agreement and the transactions contemplated by the merger agreement are advisable, fair to, and in the best interests of, AAM and AAM
stockholders, and to recommend that AAM stockholders vote to approve the AAM share issuance, the AAM board of directors consulted with AAM management and AAM's financial, legal and other advisors and,
at its November 2, 2016 meeting and at other meetings at which it considered the proposed merger, the AAM board of directors considered a number of factors, including, but not limited to, those
listed below:
-
-
the complementary businesses of AAM and MPG, and the view that the combined company will form a premier, global Tier 1 supplier;
-
-
the view that the combined company will be a global leader in powertrain, drivetrain and driveline solutions and will have the ability to
deliver a wide range of high quality, highly engineered components, modules and sub-systems across multiple engine, transmission and driveline applications;
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-
-
the view that the combined company will have a more diversified global customer base and end markets that will accelerate AAM's diversification
objectives, significantly reducing product, customer and end-market concentrations;
-
-
AAM and MPG have expertise in complementary product, process and systems technologies which will strongly position the combined company to
address global automotive trends, including technologies focused on light-weighting, fuel efficiency, vehicle safety and driving performance solutions;
-
-
the view of AAM management that the combined company will have a stronger financial profile through greater size, scale and enhanced cash flow
generation;
-
-
the expectation of AAM management that the combined company will derive significant benefits, including an estimated annual run rate of
targeted cost reduction synergies estimated to be between $100 and $120 million by 2018;
-
-
MPG has a strong free cash flow profile, market leading products and profitability metrics, and attractive growth characteristics;
-
-
the expectation of AAM management that the merger will be accretive to cash flow and earnings per share in the first full year following the
merger;
-
-
the view that MPG and AAM share a similar culture and value system, with a focus on quality, operational excellence and technology leadership,
creating a natural fit as a combined company and a clear path to value creation for stakeholders of both companies;
-
-
the view that the combined company will be better able to withstand the cyclical nature of the automotive industry;
-
-
the belief of the AAM board of directors of the likelihood of satisfying the conditions to the parties' obligations to complete the merger
under the merger agreement;
-
-
the view of the AAM board of directors, after consultation with counsel, that the transaction is not expected to present material regulatory
issues;
-
-
the belief of the AAM board of directors, after its review and discussion of various factors, including the terms of the proposed financing for
the merger (including fees and interest), and following consultation with its advisors, that it was likely that AAM would be able to obtain the necessary financing to pay the aggregate cash portion of
the merger consideration and that the combined company would be able to repay, service or refinance any indebtedness incurred in connection with the merger and, to the extent such indebtedness remains
outstanding, to comply with the financial covenants applicable to such indebtedness;
-
-
the belief of the AAM board of directors, following consultation with its advisors, that the financing commitments it had obtained to pay the
aggregate cash portion of the merger consideration were on reasonable terms for AAM;
-
-
the right of the AAM board of directors under the merger agreement to, in response to unsolicited offers and competing acquisition proposals,
provide information to, and discuss or negotiate alternative transactions with, third parties in certain circumstances, as more fully described under "
The Merger
AgreementNo Solicitation
" beginning on page 129;
-
-
the right of the AAM board of directors under the merger agreement to change its recommendation to the AAM stockholders that they approve the
AAM share issuance in certain circumstances, as more fully described under "
The Merger AgreementNo SolicitationBoard Recommendation
Change
" beginning on page 132;
-
-
the right of the AAM board of directors under the merger agreement to terminate the merger agreement to enter into a superior acquisition
proposal, subject to the payment of a termination
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The
AAM board of directors also considered the following potentially negative factors associated with the merger:
-
-
the right of the MPG board of directors under the merger agreement to change its recommendation to the MPG stockholders that they adopt the
merger agreement and approve the transactions contemplated by the merger agreement in certain circumstances, as more fully described under "
The Merger AgreementNo
SolicitationBoard Recommendation Change
" beginning on page 132, and the fact that the AS stockholder is not required to vote its shares of MPG common stock
in favor of the adoption of the merger agreement and approval of the transactions contemplated thereby in the event of any such change in recommendation, as more fully described under
"
The Voting Agreement
" beginning on page 155;
-
-
the right of the MPG board of directors to terminate the merger agreement in certain circumstances, as more fully described under
"
The Merger AgreementTermination of the Merger AgreementTermination
" beginning on page 134;
-
-
the fact that AAM will incur substantial indebtedness in connection with financing the merger that will, at least in the short term, among
other things, reduce funds available for potential acquisitions and general corporate purposes and potentially increase the cost of capital;
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-
-
the fact that future global and/or North American light vehicle production volumes may be lower than those assumed by AAM, which could
negatively impact the combined company's profitability, cash flow and ability to reduce indebtedness;
-
-
the fact that the exchange ratio for shares of MPG common stock is fixed and will not adjust for any increase in the trading price of shares of
AAM common stock prior to completion of the merger;
-
-
the fact that AAM stockholders will have a reduced ownership and voting interest in AAM after the merger and will exercise less influence over
the board of directors, management and policies of AAM;
-
-
the fact that AAM is obligated to pay MPG a termination fee ranging from $50,897,000 to $101,794,000 depending on the circumstances giving rise
to the termination of the merger agreement, as more fully described under "
The Merger AgreementPayment of Certain Fees and ExpensesPayment of
Termination Fees
" beginning on page 138;
-
-
the fact that AAM is obligated to reimburse MPG for up to $15 million of its documented and reasonable out-of-pocket fees and expenses
under certain circumstances, as more fully described under "
The Merger AgreementPayment of Certain Fees and ExpensesPayment of Certain
Expenses
" beginning on page 140;
-
-
the potential diversion of management resources from operational matters and the opportunity costs associated with the merger prior to the
completion or abandonment of the merger;
-
-
the fact that the transaction requires adoption of the merger agreement and approval of the transactions contemplated by the merger agreement
by MPG stockholders, which may not be obtained;
-
-
the fact that the merger agreement contains certain customary restrictions on the ability of AAM to conduct its business in the period between
signing and closing, in that MPG's consent is required in respect of the issuance of shares of AAM capital stock other than for limited purposes, certain acquisitions that would be material to AAM,
and other matters commonly subject to pre-closing restrictions, as more fully described under "
The Merger AgreementConduct of Business Pending the
MergerConduct of Business by AAM
" beginning on page 143;
-
-
the risk that the potential benefits of the merger may not be realized or that AAM will not be successful in implementing its business plan for
the combined company;
-
-
the risks arising from the challenges of integrating the businesses, management teams, strategies, cultures and organizations of the two
companies, including the possibility that the merger and the resulting integration process could result in the loss of key employees, the disruption of on-going business and the loss of customers;
-
-
the risk that the pendency of the merger or announcement of its completion could adversely affect AAM's relationships with its customers,
suppliers and any other persons with whom AAM has a business relationship, or pose difficulties in attracting and retaining key employees;
-
-
the risk that the merger might not be completed on a timely basis or at all despite the parties' efforts, and, if the merger is not completed
by the outside date for completion of the merger, the fact that the merger agreement may be terminated by either party;
-
-
the risks inherent in requesting regulatory approvals from certain government agencies both in and outside of the United States, that the
required regulatory approvals will not be obtained or that obtaining the required regulatory approvals will significantly delay the completion of the merger;
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-
-
the fact that AAM is required under the merger agreement to agree to certain divestitures or dispositions of assets of MPG and its subsidiaries
if required to obtain certain required regulatory consents and approvals, as more fully described under "
The Merger AgreementAdditional
TermsReasonable Best Efforts
" beginning on page 147;
-
-
the impact of costs and expenses related to the merger, including integration expenses, on AAM's financial position; and
-
-
other applicable risks described in the section of this joint proxy statement/prospectus entitled "
Risk
Factors
" beginning on page 34.
In
the judgment of the AAM board of directors, however, these potential risks were significantly offset by the potential benefits of the merger discussed above.
The
foregoing discussion is not intended to be exhaustive, but AAM believes it addresses the material information and factors considered by the AAM board of directors in its
consideration of the merger, including factors that may support the merger, as well as factors that may weigh against it. In view of the variety of factors and the amount of information considered,
the AAM board of directors did not find it practicable to quantify or otherwise assign relative weights to and did not make specific assessments of the factors considered in reaching its
determination, and individual members of the AAM board of directors may have given different weights to different factors. The AAM board of directors did not reach any specific conclusion with respect
to any of the factors or reasons considered.
The
above factors are not listed in any particular order of priority. This explanation of the factors and reasoning set forth above contains forward-looking statements and should be read
in conjunction with the section of this joint proxy statement/prospectus entitled "
Special Note Regarding Forward-Looking Statements
" beginning on
page 42.
MPG's Reasons for the Merger and Recommendation of the MPG Board of Directors
At a special meeting of the MPG board of directors held on November 2, 2016, the MPG board of directors unanimously approved the merger
agreement, including the merger and the other transactions contemplated by the merger agreement and declared the merger agreement and the merger advisable. The MPG board of directors unanimously
recommends that MPG stockholders vote "
FOR
" each of the merger proposal, the MPG merger-related compensation proposal and the MPG adjournment proposal.
Throughout
the process of considering the proposed merger, and in reaching its decision to unanimously approve the merger agreement, including the merger and the other transactions
contemplated by the merger agreement, its decision to declare the merger agreement and the merger advisable and its decision to recommend that MPG stockholders vote to adopt the merger agreement and
approve the transactions contemplated thereby, the MPG board of directors consulted with MPG management as well as MPG's financial and legal advisors and carefully considered a variety of factors,
including, but not limited to, the following:
-
-
the value of the merger consideration to be received by MPG stockholders as determined at that date, representing a premium of 50.2% to the
closing price of MPG common stock of $14.65 on November 1, 2016, a 43.3% premium over the volume-weighted average price for shares of MPG common stock over the 90-trading-day period ended
November 1, 2016 and a 6.7x multiple of MPG's $493 million 2016 pro forma adjusted EBITDAP estimated by MPG management;
-
-
the fact that a significant portion of the merger consideration will be paid in cash, providing certainty of value with respect to the cash
portion of the merger consideration and enabling MPG stockholders to realize value for a significant portion of their investment immediately upon the completion of the merger;
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-
-
the opportunity afforded by the stock portion of the merger consideration for MPG stockholders to participate in the future earnings and growth
of the combined company and future appreciation in the value of AAM common stock following the merger;
-
-
the fact that American Securities had agreed to support the transaction and that the AS Stockholder had agreed to vote 50% of its shares of MPG
common stock in favor of the transaction, and that the remaining 50% of such shares would be voted proportionally with the other stockholders of MPG;
-
-
the fact that the adoption of the merger agreement and approval of the transactions contemplated thereby is subject to the approval of MPG
stockholders and that MPG stockholders other than American Securities have the ability to vote against the adoption of the merger agreement for any reason;
-
-
the belief that the merger is more favorable to MPG stockholders than the other strategic alternatives available, which belief was formed in
part based on the responses to outreach by BofA Merrill Lynch to parties determined by MPG's management, after discussion with BofA Merrill Lynch, to be the parties most likely to be interested in a
strategic transaction with MPG;
-
-
the expectation that the merger will create a global leader in advanced powertrain, drivetrain and driveline solutions with a more diversified
customer base and end-markets than MPG on a stand-alone basis, resulting in the ability of MPG stockholders to participate in the future earnings and growth of the combined company;
-
-
the benefits to the combined company that could result from the merger, including the increased market capitalization, improved access to the
capital markets, increased EBITDA growth potential, enhanced free cash flow generation, expanded expertise in light-weighting, fuel efficiency, vehicle safety and performance solutions technologies
providing for improved innovation and product capabilities, increased diversity in the products offered and geographic areas served and the potential to realize certain synergies;
-
-
the expectation that the combined company will have an enhanced public market profile as a result of its increased scale (including pro forma
EBITDA), expanded manufacturing footprint, including the breadth, scale and complementary technologies of MPG and AAM, and an improved credit profile with moderate leverage and strong cash flow;
-
-
the expectation that the combined company would achieve approximately $100-120 million in synergies by 2018, including from reduced
corporate overhead, elimination of redundant public company costs and elimination of SG&A, opportunities for savings from the combined company's ability to leverage its larger scale to combine global
purchasing and undertake insourcing initiatives, and avoided capital expenditures from capacity optimization;
-
-
the financial presentation by BofA Merrill Lynch and the opinion of BofA Merrill Lynch, delivered orally to the MPG board of directors on
November 2, 2016, and subsequently confirmed by delivery of a written opinion, dated November 2, 2016, to the effect that, as of such date and based on and subject to the various
assumptions and limitations described in such opinion and more fully described in the section titled "
The
Merger
Opinion of MPG's Financial Advisor
" beginning on page 85, the merger consideration to be received by
holders of MPG common stock was fair, from a financial point of view, to such holders;
-
-
the right of the MPG board of directors under the merger agreement to, in response to unsolicited offers and competing acquisition proposals,
provide information to, and discuss or negotiate alternative transactions with, third parties in certain circumstances, as more fully described under "
The Merger
AgreementNo Solicitation
" beginning on page 129;
-
-
the right of the MPG board of directors under the merger agreement to change its recommendation that MPG stockholders vote in favor of the
adoption of the merger agreement
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The
MPG board of directors also considered the following potentially negative factors associated with the merger:
-
-
the lack of opportunity for MPG stockholders to participate in MPG's potential upside as a stand-alone company, other than indirectly as a part
of the combined company through the stock portion of the merger consideration, after the completion of the merger;
-
-
the potential decrease of the implied value of the merger consideration which would result from a decrease in the trading price of AAM common
stock because the stock portion of the merger consideration is based on a fixed exchange ratio and the merger agreement does not provide MPG with a price-based termination right or adjustment for
fluctuations in the trading price of AAM common stock;
-
-
the execution risks associated with the implementation of the combined company's long term business plan and strategy, which may be different
from the execution risks related only to MPG's business;
-
-
the risk that the combined company may not be able to successfully integrate the businesses of MPG and AAM and therefore may not be able to
realize the anticipated benefits of the merger;
-
-
the fact that the transaction structure requires (i) approval of the AAM share issuance by the affirmative vote of holders of a majority
in voting power of the shares of AAM common stock present in person or represented by proxy at the AAM special meeting and entitled to vote on the AAM share issuance and (ii) adoption of the
merger agreement and approval of the transactions contemplated by the merger agreement by the affirmative vote of the majority of the shares of MPG common stock that are outstanding as of the record
date for the MPG special meeting and entitled to vote with respect thereto, either or both of which may not be obtained;
-
-
the possibility that AAM will be unable to obtain the financing required for the merger, including the debt financing proceeds contemplated by
the commitment letter it obtained;
-
-
the possibility that the indebtedness of the combined company will have a material impact on the ability of the combined company to achieve the
anticipated benefits of the merger;
-
-
the risk that the merger might not be completed on a timely basis or at all despite the parties' efforts, and, if the merger is not completed,
the materially adverse impact such event could have on MPG's financial condition, results of operations, business condition or stock price;
-
-
the possible disruption to MPG's business that may result from the pendency of the merger or announcement of its completion and the resulting
distraction of management's attention from the day-to-day operations of the business;
-
-
the risk that the pendency of the merger or announcement of its completion could adversely affect MPG's relationships with its customers,
suppliers and any other persons with whom MPG has a business relationship, or pose difficulties in attracting and retaining key employees;
-
-
the risk of incurring substantial transaction and integration costs in connection with the merger;
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-
-
the fact that the merger agreement restricts MPG's ability to conduct its business in the period prior to the completion of the merger, which
may delay or prevent MPG from undertaking business opportunities that may arise during such interim period, as more fully described under "
The Merger
AgreementConduct of Business Pending the Merger
" beginning on page 140;
-
-
the possibility that the $51 million termination fee and the expense reimbursement of up to $15 million payable by MPG in the
event of termination of the merger agreement under certain circumstances, and other provisions in the merger agreement, might discourage other bidders from making a competing offer to acquire MPG;
-
-
the fact that some of MPG's directors and executive officers have interests in the merger that are different from, or in addition to, the
interests of MPG stockholders generally, as more fully described under "
The MergerInterests of MPG Directors and Executive Officers in the
Merger
" beginning on page 100;
-
-
the expectation that the receipt of AAM common stock and cash in exchange for MPG common stock in the merger will generally be taxable to MPG
stockholders for U.S. federal income tax purposes, as more fully described under "
The MergerMaterial U.S. Federal Income Tax Consequences of the
Merger
" beginning on page 107;
-
-
the risks inherent in requesting regulatory approvals from certain government agencies both in and outside of the United States, that the
required regulatory approvals will not be obtained or that obtaining the required regulatory approvals will significantly delay the completion of the merger; and
-
-
other applicable risks described in the section of this joint proxy statement/prospectus entitled "
Risk
Factors
" beginning on page 34.
In
the judgment of the MPG board of directors, however, these potential risks were significantly offset by the potential benefits of the merger discussed above.
The
foregoing discussion is not intended to be exhaustive and is not presented in any order of priority, but MPG believes it addresses the material information and factors considered by
the MPG board of directors in its consideration of the merger, including factors that may support the merger, as well as factors that may weigh against it. In view of the variety of factors and the
amount of information considered, the MPG board of directors did not find it practicable to quantify or otherwise assign relative weights to and did not make specific assessments of the factors
considered in reaching its determination, and individual members of the MPG board of directors may have given different
weights to different factors. The MPG board of directors did not reach any specific conclusion with respect to any of the factors or reasons considered.
This
explanation of the factors and reasoning set forth above contains forward-looking statements and should be read in conjunction with the section of this joint proxy
statement/prospectus entitled "
Special Note regarding Forward-Looking Statements
" beginning on page 42.
Opinion of AAM's Financial Advisor
AAM has retained Greenhill as its financial advisor to advise the AAM board of directors in connection with the merger. At the meeting of the
AAM board of directors on November 2, 2016, Greenhill delivered its oral opinion, which was subsequently confirmed in writing, that, as of the date of the opinion and based on and subject to
the assumptions made, procedures followed, matters and factors considered and limitations and qualifications on the review undertaken set forth therein, the merger consideration to be paid by AAM to
the holders of the shares of MPG common stock pursuant to the merger agreement was fair, from a financial point of view, to AAM.
The
full text of Greenhill's written opinion dated November 2, 2016, which contains the assumptions made, procedures followed, matters considered and limitations and
qualifications on the
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review
undertaken in connection with the opinion, is attached as Annex C to this joint proxy statement/prospectus and is incorporated by reference herein in its entirety. The summary of
Greenhill's opinion that follows is qualified in its entirety by reference to the full text of the opinion. You are urged to read the opinion in its entirety.
In
arriving at its opinion, Greenhill, among other things:
-
-
reviewed the draft of the merger agreement dated as of November 2, 2016 and certain related documents;
-
-
reviewed certain publicly available financial statements of each of AAM and MPG that Greenhill deemed relevant;
-
-
reviewed certain other publicly available business, operating and financial information relating to each of AAM and MPG that Greenhill deemed
relevant;
-
-
reviewed certain information relating to MPG provided by MPG's management, including financial forecasts as adjusted by the management of AAM,
which we refer to in this joint proxy statement/prospectus as the adjusted MPG forecasts (for a further description of the adjusted MPG forecasts, see below under
"
Certain Unaudited Prospective Financial Information of AAM
" beginning on page 97);
-
-
reviewed certain information relating to AAM provided by AAM's management, including financial forecasts, which we refer to in this joint proxy
statement/prospectus as the AAM management forecasts (for a further description of the AAM management forecasts, see below under "
Certain Unaudited Prospective
Financial Information of AAM
" beginning on page 97);
-
-
discussed the past and present operations and financial condition and the prospects of MPG with senior executives of MPG;
-
-
discussed the past and present operations and financial condition and the prospects of AAM with senior executives of AAM;
-
-
reviewed certain information regarding the amount and timing of potential cost efficiencies expected to result from the merger (which we refer
to in this joint proxy statement/prospectus as the synergies) prepared by management of AAM, with input from a management consultation firm retained by AAM in connection with the merger;
-
-
reviewed the pro forma impact of the merger on certain financial metrics and ratios for AAM, including AAM's earnings, capitalization and net
leverage;
-
-
reviewed the historical market prices and trading activity for the MPG common stock and analyzed its implied valuation multiples;
-
-
compared the value of the merger consideration with the trading valuations of certain publicly traded companies that Greenhill deemed relevant;
-
-
compared the value of the merger consideration with that paid in certain publicly available transactions that Greenhill deemed relevant;
-
-
compared the value of the merger consideration to the valuation derived by discounting future cash flows and a terminal value of the business
of MPG based upon the adjusted MPG forecasts (assuming no synergies) at discount rates Greenhill deemed appropriate;
-
-
compared the value of the merger consideration to the valuation derived by discounting future cash flows and a terminal value of the business
of MPG based upon the adjusted MPG forecasts (assuming phased in synergies) at discount rates Greenhill deemed appropriate;
-
-
participated in discussions and negotiations among representatives of AAM and its legal advisors and representatives of MPG and its legal and
financial advisors; and
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-
-
performed such other analyses and considered such other factors as Greenhill deemed appropriate.
Greenhill's
written opinion was addressed to the AAM board of directors. It was not a recommendation to the AAM board of directors as to whether it should approve the merger or the
merger agreement or take any other action in connection therewith, nor does it constitute a recommendation as to whether the stockholders of MPG or AAM should approve the merger or the AAM share
issuance related thereto, as applicable, at any meeting of the stockholders of MPG or AAM, as the case may be, convened in connection with the merger. Greenhill has not expressed any opinion as to any
aspect of the merger, other than the fairness, from a financial point of view, to AAM of the merger consideration to be paid by AAM to the holders of MPG common stock pursuant to the merger agreement.
Greenhill's opinion did not address in any manner the price at which AAM shares will trade at any future time. Greenhill was not requested to opine as to, and its opinion does not in any manner
address, the relative merits of the merger in comparison to any alternative transactions or strategies that might be available to AAM or in which AAM might engage or as to the underlying business
decision of AAM to proceed with or effect the merger.
In
conducting its review and analysis and rendering its opinion, Greenhill assumed and relied upon, without independent verification, the accuracy and completeness of the information
publicly available, supplied or otherwise made available to it by representatives and management of AAM and MPG for the purposes of its opinion and further relied upon the assurances of
representatives and management of AAM and MPG, as applicable, that they were not aware of any facts or circumstances that would make such information inaccurate or misleading.
With
respect to synergies, the financial forecasts and projections and other data that have been furnished or otherwise provided to Greenhill, Greenhill has assumed that such synergies,
financial forecasts, projections and data were reasonably prepared on a basis reflecting the best currently available estimates and good faith judgments of the management of AAM and MPG, as
applicable, as to those matters, and Greenhill relied upon such forecasts and other data in arriving at its opinion.
Greenhill expressed no opinion with respect to such synergies, financial forecasts, projections and data or the assumptions upon which they are based.
Greenhill
did not make any independent valuation or appraisal of the assets or liabilities of MPG, nor was it furnished with any such appraisals. Greenhill assumed that the merger will
be consummated in accordance with the terms set forth in the final, executed merger agreement, which Greenhill further assumed would be substantially similar in all material respects to the latest
draft thereof it reviewed, and without waiver of any material terms or conditions set forth in the merger agreement. Greenhill further assumed that all material governmental, regulatory and other
consents and approvals necessary for the consummation of the merger will be obtained without any material effect on AAM, MPG, the merger or the contemplated benefits of the merger meaningful to its
analyses.
Greenhill
is not a legal, regulatory, accounting or tax expert and it has relied on the assessments made by AAM and MPG and their respective advisors with respect to such issues.
Greenhill's opinion is necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of its opinion. It should be
understood that subsequent developments may affect Greenhill's opinion, and Greenhill does not have any obligation to update, revise or reaffirm its opinion. The most recent market data used by
Greenhill was as of November 1, 2016.
The
following is a summary of the material financial and comparative analyses provided by Greenhill to the AAM board of directors in connection with rendering its opinion described
above. The summary set forth below does not purport to be a complete description of the analyses performed by Greenhill, nor does the order of analyses described represent relative importance or
weight given to those analyses by Greenhill. Some of the summaries of the financial analyses include information
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presented
in tabular format. The tables must be read together with the full text of each summary and are not alone a complete description of Greenhill's analyses.
Selected Comparable Company Analysis
Greenhill compared selected financial information, ratios and multiples for MPG to the corresponding data for the following publicly traded
companies selected by Greenhill:
-
-
American Axle & Manufacturing Holdings, Inc.;
-
-
BorgWarner Inc.;
-
-
Cooper-Standard Automotive Inc.;
-
-
Dana Incorporated;
-
-
GKN plc;
-
-
Lear Corporation;
-
-
Linamar Corporation;
-
-
Magna International Inc.;
-
-
Meritor, Inc.;
-
-
The Schaeffler Technologies AG & Co. KG; and
-
-
Tenneco Inc.
Although
none of the selected companies is directly comparable to MPG, Greenhill chose these companies because they are publicly traded companies in the automotive supplier industry with
operations that, for purposes of Greenhill's analysis, may be considered similar or reasonably comparable to the operations of MPG. However, because of the inherent differences between the business,
operations and prospects of MPG and those of the selected companies, Greenhill believed that it was inappropriate to, and therefore did not, rely solely on the numerical results of the selected
company analysis. Accordingly, Greenhill also made qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of MPG and the selected
companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily
to the differing sizes, growth prospects, revenue mix, profitability levels and degree of operational risk between MPG and the companies included in the selected company analysis. Greenhill also made
judgments as to the relative comparability of the various valuation parameters with respect to those companies.
For
each of the selected companies, Greenhill reviewed, among other information, the ratio of enterprise value (which we refer to in this section of this joint proxy statement/prospectus
as EV) which was calculated as fully diluted equity value derived by multiplying the number of fully diluted outstanding shares of that company as reported in its most recent SEC filings by the
company's common stock closing share price on November 1, 2016, plus the book value of debt, plus minority interest, less cash and cash equivalents, less investments in unconsolidated
affiliates, as a multiple of estimated earnings from operations before interest expense, income taxes and depreciation and amortization (which we refer to in this joint proxy statement/prospectus as
EBITDA) for 2016 and 2017.
For
each of the selected companies, Greenhill also reviewed, the ratio of EV as adjusted for tax-affected underfunded pension and other post-employment benefits (which we refer to in
this joint proxy statement/prospectus as OPEB) liabilities as a multiple of EBITDAP, which was calculated as EBITDA, adjusted for income or expenses associated with pension and OPEB plans (which we
refer to in this joint proxy statement/prospectus as EBITDAP), for 2016 and 2017.
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Publicly
available information for Linamar Corporation, GKN plc and The Schaeffler Technologies AG & Co. KG was adjusted to account for capitalized development cost as these
companies report under IFRS accounting standards.
Greenhill
compared financial information and calculated such ratios with respect to the selected companies and MPG based on information it obtained from public filings and from consensus
estimates as published by FactSet Research Systems Inc. The multiple ranges resulting from these analyses are summarized below:
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|
|
|
|
|
|
|
|
|
|
|
|
Average of Selected Companies
November 1, 2016 Closing Price
|
|
High
|
|
Low
|
|
EV / 2016 EBITDA
|
|
|
5.4x
|
|
|
7.4x
|
|
|
3.9x
|
|
EV / 2017 EBITDA
|
|
|
5.1x
|
|
|
6.7x
|
|
|
3.9x
|
|
Adjusted EV / 2016 EBITDAP
|
|
|
5.8x
|
|
|
8.4x
|
|
|
4.4x
|
|
Adjusted EV / 2017 EBITDAP
|
|
|
5.5x
|
|
|
7.7x
|
|
|
4.3x
|
|
The
average multiples exclude MPG and AAM. From this data, and based on its professional judgment and experience in the automotive supplier industry, Greenhill derived ranges of
multiples it deemed most meaningful for its analysis.
Greenhill
then calculated a range of implied equity values of MPG by (i) applying 2016 adjusted EV to EBITDA multiples of 4.75x to 6.25x to MPG's estimated 2016 EBITDA from the
adjusted MPG forecasts, (ii) applying 2016 adjusted EV to EBITDAP multiples of 5.00x to 6.50x to MPG's estimated 2016 EBITDAP derived from the adjusted MPG forecasts, (iii) applying 2017
adjusted EV to EBITDA multiples of 4.25x to 5.75x to MPG's estimated 2017 EBITDA derived from the adjusted MPG forecasts and (iv) applying 2017 adjusted EV to EBITDAP multiples of 4.50x-6.00x
to MPG's estimated 2017 EBITDAP from the adjusted MPG forecasts. At the direction of AAM, Greenhill calculated MPG's estimated EBITDAP by adjusting MPG's estimated EBITDA from the adjusted MPG
forecasts to exclude pension expense. This analysis indicated the following ranges of implied prices per share of MPG common stock:
|
|
|
|
|
Implied Price Per
Share of MPG
Common Stock
|
4.75x - 6.25x 2016E EBITDA (adjusted MPG forecasts)
|
|
$8.16 - $18.41
|
5.00x - 6.50x 2016E EBITDAP (adjusted MPG forecasts)
|
|
$9.51 - $19.72
|
4.25x - 5.75x 2017E EBITDA (adjusted MPG forecasts)
|
|
$5.26 - $15.74
|
4.50x - 6.00x 2017E EBITDAP (adjusted MPG forecasts)
|
|
$6.65 - $17.11
|
Greenhill
compared these ranges of implied prices per share to the implied offer price of $22.00 per share (which we refer to in this joint proxy statement/prospectus as the implied
offer price), calculated based on an agreed $17.00 per share price of AAM common stock and the implied value of the consideration payable per share of MPG common stock as of November 1, 2016 of
$22.03 (which we refer to in this joint proxy statement/prospectus as the implied value of the merger consideration).
Precedent Transaction Analysis
Greenhill performed an analysis of selected precedent transactions in the automobile supplier industry since October 2011 that in Greenhill's
judgment were relevant for its analysis. The following
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table
identifies the 17 transactions reviewed by Greenhill in this analysis (which we refer to in this section of this joint proxy statement/prospectus as the precedent transactions):
|
|
|
|
|
Target
|
|
Acquiror
|
|
Announcement
Month and Year
|
Accuride Corporation
|
|
Crestview Partners, LLC
|
|
September 2016
|
FTE Automotive GmbH
|
|
Valeo SA
|
|
June 2016
|
Hay Holding GmbH
|
|
Musashi Seimitsu Industry Co., Ltd
|
|
May 2016
|
Punch Powertrain
|
|
Yinyi Group Co. Ltd
|
|
March 2016
|
Montupet S.A.
|
|
Linamar Corporation
|
|
October 2015
|
Stackpole International
|
|
Johnson Electric Holdings Limited
|
|
August 2015
|
GETRAG Group of Companies
|
|
Magna International Inc.
|
|
July 2015
|
Remy International, Inc.
|
|
BorgWarner Inc.
|
|
July 2015
|
Dynacast International Inc.
|
|
Partners Group
|
|
December 2014
|
TRW Automotive Holdings Corp.
|
|
ZF Friedrichshafen AG
|
|
September 2014
|
Waupaca Foundry, Inc.
|
|
Hitachi Metals Automotive Components USA, LLC
|
|
August 2014
|
Hilite International, Inc.
|
|
AVIC Electromechanical Systems Co., Ltd.
|
|
May 2014
|
Gates Global Inc.
|
|
The Blackstone Group LP
|
|
April 2014
|
Grede Holdings LLC
|
|
American Securities LLC
|
|
April 2014
|
MD Investors Corporation
|
|
American Securities LLC
|
|
December 2012
|
HHI Group Holdings, LLC
|
|
American Securities LLC
|
|
October 2012
|
Iochpe Holdings, LLC
|
|
Hayes Lemmerz International Inc.
|
|
October 2011
|
The
above precedent transactions occurred in the auto parts and equipment, brakes and wheel bearings, steering and suspension system components or transmissions and power train parts
industries since 2011. Greenhill used its judgment to determine those transactions that were most relevant for its analysis based on the size, industry classification and relative performance of the
target companies involved in such transactions.
Although
Greenhill analyzed the multiples implied by the precedent transactions, none of the precedent transactions or associated companies is identical to the merger or to MPG.
Accordingly, Greenhill's analysis of the precedent transactions necessarily involved complex considerations and judgments concerning the differences in financial and operating characteristics, the
parties involved and terms of their transactions and other factors that would necessarily affect the implied value of MPG compared to the values of the companies in the precedent transactions. In
evaluating the precedent transactions, Greenhill made judgments and assumptions concerning industry performance, general business, economic, market and financial conditions and other matters.
Greenhill also made judgments as to the relative comparability of those companies to MPG and judgments as to the relative comparability of the various valuation parameters with respect to the
companies.
Using
publicly available information for the precedent transactions, Greenhill reviewed the consideration paid in each such transaction and analyzed the transaction value implied by such
consideration as a multiple of last 12 months (which we refer to in this joint proxy statement/prospectus
as LTM) EBITDA. The following table summarizes the reference range of valuation multiples for all precedent transactions Greenhill derived from the precedent transactions:
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|
|
|
|
|
|
|
|
|
|
|
Implied Mean
Multiples for
Precedent Transactions
|
|
Implied Median
Multiples for
Precedent Transactions
|
|
High
|
|
Low
|
|
Transaction Value to LTM EBITDA
|
|
|
8.0x
|
|
|
8.7x
|
|
|
11.5x
|
|
|
4.8x
|
|
From
this data, Greenhill derived a range of multiples of 5.5x to 8.5x based on its professional judgment and experience in the automotive supplier industry and applied such range of
multiples to
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MPG's
estimated 2016 EBITDA from the adjusted MPG forecasts, which indicated the range of implied prices per share of MPG common stock of $13.31-$33.12. Greenhill compared these implied share prices
to the implied offer price and the implied value of the merger consideration.
Discounted Cash Flow Analysis
Greenhill performed a discounted cash flow analysis of MPG with and without taking into account the benefit of potential phased-in synergies
resulting from the merger using the adjusted MPG forecasts for calendar years 2017 through 2020. Greenhill calculated a range of implied present values of the unlevered, after-tax free cash flows,
with and without taking into account the synergies, using discount rates ranging from 10% to 11%, reflecting Greenhill's estimate of MPG's weighted average cost of capital, derived using the capital
asset pricing model. Greenhill also calculated a range of estimated terminal values for MPG as of December 31, 2020, with and without taking into account the synergies, by applying perpetuity
growth rates of 2.25% to 2.75% which were selected based on Greenhill's professional judgment and taking into consideration, among other things, the implied exit multiples of 5.1x-6.2x (not including
synergies) and 5.6x-6.8x (including synergies) at these perpetuity growth rates. Greenhill then added the net present values of the unlevered, after-tax free cash flows, with and without taking into
account the synergies, for 2017-2020 to the present value of the estimated terminal values, in each case discounted to March 31, 2017, to derive an implied enterprise value for MPG. Greenhill
then calculated an implied share price for the shares of MPG by subtracting MPG total debt and minority interest and adding MPG's cash to the implied enterprise value that it derived for MPG, and
dividing the results by the number of fully diluted shares of MPG common stock outstanding as of October 31, 2016, calculated using the treasury stock method. This analysis resulted in a range
of implied prices per share of MPG common stock of $18.07 to $25.71 (on a standalone basis, without the benefit of the synergies) and $28.77 to $38.63 (taking into account the synergies). Greenhill
compared these implied share prices to the implied offer price and the implied value of the merger consideration.
Other Considerations
The summary set forth above does not purport to be a complete description of the analyses performed by Greenhill, but simply describes, in
summary form, the material analyses that Greenhill conducted in connection with rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to
partial analysis or summary description. In arriving at its opinion, Greenhill did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to
whether any individual analysis or factor, considered in isolation, supported or failed to support its opinion. Rather, Greenhill considered the totality of the factors and analyses performed in
determining its opinion. Accordingly, Greenhill believes that the summary set forth above and its analyses must be considered as a whole and that selecting portions thereof, without considering all of
its analyses, could create an incomplete view of the processes underlying its analyses and opinion. Greenhill based its analyses on assumptions that it deemed reasonable, including assumptions
concerning general business and economic conditions and industry-specific factors. Analyses based on forecasts or projections of future results are inherently uncertain, as they are subject to
numerous factors or events beyond the control of the parties or their advisors. Accordingly, Greenhill's analyses are not necessarily indicative of actual values or actual future results that might be
achieved, which values may be higher or lower than those indicated.
Moreover, Greenhill's analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold. In addition, no company or
transaction used in Greenhill's analysis as a comparison is directly comparable to AAM or the contemplated merger. Because these analyses are inherently subject to uncertainty, being based on numerous
factors or events beyond the control of the parties or their respective advisors, neither AAM nor any other person assumes responsibility if future results are materially different from those
forecasts or projections.
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The merger consideration was determined through arms' length negotiations between AAM and MPG and was approved by the AAM board of directors. Greenhill provided
advice to the AAM board of directors during these negotiations. Greenhill did not, however, recommend any specific amount of consideration to AAM or the AAM board of directors or that any specific
amount of consideration constituted the only appropriate consideration for the merger. Greenhill's opinion did not in any manner address the underlying business decision to proceed with or effect the
merger.
Greenhill
has acted as financial advisor to AAM in connection with the merger. During the two years ended November 2, 2016, Greenhill has not been engaged by, performed any
services for or received any compensation from AAM, MPG or any other parties to the merger agreement, other than (i) amounts that were paid to it, or were owing to it, under the letter
agreement pursuant to which Greenhill was retained as a financial advisor to AAM in connection with the merger (including the reimbursement of approximately $48,000 for out-of-pocket expenses) and
(ii) certain financial advisory services performed for AAM for which Greenhill did not receive any compensation or reimbursement of out-of-pocket expenses (Greenhill also received a $100,000
retainer in connection with such financial services, although such retainer was received more than two years prior to November 2, 2016).
In
connection with the merger, AAM has agreed to pay Greenhill a fee of $16,500,000, of which $100,000 was paid upon the execution of the engagement letter, $2,500,000 was paid in
connection with the delivery of the opinion and the remainder of which is contingent on completion of the merger. In negotiating the fee payable to Greenhill, AAM considered the fact that Greenhill
acted as primary financial advisor and, taking into account its financial analysis of the merger, the fees that it expected should be payable to its financial advisor. AAM has also agreed to reimburse
Greenhill for certain out-of-pocket expenses incurred by it in connection with its engagement and will indemnify Greenhill against certain liabilities that may arise out of its engagement.
Greenhill's
opinion was one of the many factors considered by the AAM board of directors in evaluating the merger and should not be viewed as determinative of the views of the AAM board
of directors with respect to the merger.
In
selecting Greenhill as its financial advisor in connection with the merger, AAM considered, among other things, its qualifications, capabilities and reputation for providing
high-quality financial advisory services. In addition, Greenhill has a long-standing relationship and is familiar with AAM and has substantial knowledge of and experience in the automotive supplier,
metals and industrials sectors. Greenhill is an internationally recognized investment banking firm which regularly engages in the valuation of businesses and their securities in connection with
mergers and acquisitions, underwritings, competitive bids and private placements. For the foregoing reasons, AAM selected Greenhill as its financial advisor.
Opinion of MPG's Financial Advisor
MPG has retained BofA Merrill Lynch to act as its financial advisor in connection with the merger. BofA Merrill Lynch is an internationally
recognized investment banking firm which is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. MPG selected BofA Merrill Lynch to act as MPG's financial advisor in connection
with the merger on the basis of BofA Merrill Lynch's experience in transactions similar to the merger, its reputation in the investment community and its familiarity with MPG and its business.
On
November 2, 2016, at a meeting of the MPG board of directors held to evaluate the merger, BofA Merrill Lynch delivered to the MPG board of directors an oral opinion, which was
confirmed by delivery of a written opinion dated November 2, 2016, to the effect that, as of the date of the opinion and based on and subject to various assumptions and limitations described in
its opinion, the merger
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consideration
to be received in the merger by holders of MPG common stock was fair, from a financial point of view, to such holders.
The
full text of BofA Merrill Lynch's written opinion, dated November 2, 2016, to the MPG board of directors, which describes, among other things, the assumptions made, procedures
followed, matters considered and limitations on the review undertaken, is attached as Annex D to this joint proxy statement/prospectus and is incorporated by reference herein in its entirety.
The following summary of BofA Merrill Lynch's opinion is qualified in its entirety by reference to the full text of the opinion.
BofA Merrill Lynch delivered its opinion to the
MPG board of directors for the benefit and use of the MPG board of directors (in its capacity as such) in connection with and for purposes of its evaluation of the merger. BofA Merrill Lynch's opinion
does not address any other aspect or implication of the merger, and no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that
might be available to MPG or in which MPG might engage or as to the underlying business decision of MPG to proceed with or effect the merger. BofA Merrill Lynch's opinion does not constitute a
recommendation to any stockholder as to how to vote or act in connection with the merger or any other matter.
In
connection with rendering its opinion, BofA Merrill Lynch, among other things:
-
-
reviewed certain publicly available business and financial information relating to MPG and AAM;
-
-
reviewed certain internal financial and operating information with respect to the business, operations and prospects of MPG furnished to or
discussed with BofA Merrill Lynch by the management of MPG, including certain financial forecasts relating to MPG prepared by the management of MPG (which we refer to in this section of this joint
proxy statement/prospectus as the MPG forecasts);
-
-
reviewed certain internal financial and operating information with respect to the business, operations and prospects of AAM furnished to or
discussed with BofA Merrill Lynch by the management of AAM, including certain financial forecasts relating to AAM prepared by the management of AAM and approved for BofA Merrill Lynch's use by the
management of MPG (which we refer to in this section of this joint proxy statement/prospectus as the AAM forecasts);
-
-
reviewed certain estimates as to the amount and timing of cost savings, revenue enhancements and/or operational synergies (which we refer to in
this section of this joint proxy statement/prospectus as the synergies) anticipated by the managements of MPG and AAM to result from the merger;
-
-
discussed the past and current business, operations, financial condition and prospects of MPG with members of senior managements of MPG and
AAM, and discussed the past and current business, operations, financial condition and prospects of AAM with members of senior managements of MPG and AAM;
-
-
reviewed the potential pro forma financial impact of the merger on the future financial performance of AAM, including the potential effect on
AAM's estimated earnings per share;
-
-
reviewed the trading histories for MPG common stock and AAM common stock and a comparison of such trading histories with each other and with
the trading histories of other companies BofA Merrill Lynch deemed relevant;
-
-
compared certain financial and stock market information of MPG and AAM with similar information of other companies BofA Merrill Lynch deemed
relevant;
-
-
compared certain financial terms of the merger to financial terms, to the extent publicly available, of other transactions BofA Merrill Lynch
deemed relevant;
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-
-
reviewed the relative financial contributions of MPG and AAM to the future financial performance of the combined company on a pro forma basis;
-
-
considered the results of BofA Merrill Lynch's efforts on behalf of MPG to solicit, at the direction of MPG, indications of interest from third
parties with respect to a possible acquisition of MPG;
-
-
reviewed drafts dated November 2, 2016 of the merger agreement and the stockholders' agreement, and a draft dated October 31,
2016 of the voting agreement; and
-
-
performed such other analyses and studies and considered such other information and factors as BofA Merrill Lynch deemed appropriate.
In
arriving at its opinion, BofA Merrill Lynch assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data
publicly available or provided to or otherwise reviewed by or discussed with it and relied upon the assurances of the managements of MPG and AAM that they were not aware of any facts or circumstances
that would make such information or data inaccurate or misleading in any material respect. With respect to the MPG forecasts, BofA Merrill Lynch was advised by MPG, and assumed, that they were
reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of MPG as to the future financial performance of MPG. With respect to the AAM
forecasts and synergies, BofA Merrill Lynch was advised by AAM, and assumed at the direction and
with the consent of MPG, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of AAM as to the future financial
performance of AAM and other matters covered thereby. BofA Merrill Lynch relied, at the direction of MPG, on the assessments of the managements of MPG and AAM as to AAM's ability to achieve the
synergies and was advised by MPG and AAM, and assumed, with the consent of MPG, that the synergies would be realized in the amounts and at the times projected.
BofA
Merrill Lynch did not make and was not provided with any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of MPG or AAM, nor did BofA
Merrill Lynch make any physical inspection of the properties or assets of MPG or AAM. BofA Merrill Lynch did not evaluate the solvency or fair value of MPG or AAM under any state, federal or other
laws relating to bankruptcy, insolvency or similar matters. BofA Merrill Lynch assumed, at the direction of MPG, that the merger would be consummated in accordance with its terms, without waiver,
modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers
for the merger, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on MPG, AAM or
the contemplated benefits of the merger. BofA Merrill Lynch also assumed, at the direction of MPG, that the final executed merger agreement, voting agreement and stockholders' agreement would not
differ in any material respect from the drafts thereof reviewed by BofA Merrill Lynch.
BofA
Merrill Lynch expressed no view or opinion as to any terms or other aspects or implications of the merger (other than the merger consideration to the extent expressly specified in
its opinion), including, without limitation, the form or structure of the merger, any related transactions, the voting agreement, the stockholders' agreement or any other agreement, arrangement or
understanding entered into in connection with or related to the merger or otherwise. BofA Merrill Lynch's opinion was limited to the fairness, from a financial point of view, of the merger
consideration to be received by holders of MPG common stock and no opinion or view was expressed with respect to any other consideration received in connection with the merger by the holders of any
class of securities, creditors or other constituencies of any party. In addition, no opinion or view was expressed with respect to the fairness (financial or otherwise) of the amount, nature or any
other aspect of any compensation to any of the officers, directors or employees of any party to the merger, or class of such persons, relative to
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the
merger consideration or otherwise. Furthermore, no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available
to MPG or in which MPG might engage or as to the underlying business decision of MPG to proceed with or effect the merger. BofA Merrill Lynch also did not express any view or opinion with respect to,
and relied, at the direction of MPG, upon, the assessments of representatives of MPG regarding, legal, regulatory, accounting, tax and similar matters relating to MPG or the merger, as to which
matters BofA Merrill Lynch understood that MPG obtained such advice as it deemed necessary from qualified professionals. BofA Merrill Lynch also did not express any opinion as to what the value of AAM
common stock actually would be when issued or the prices at which MPG common stock or AAM
common stock would trade at any time, including following announcement or consummation of the merger. In addition, BofA Merrill Lynch expressed no opinion or recommendation as to how any stockholder
should vote or act in connection with the merger or any other matter. Except as described above, MPG imposed no other limitations on the investigations made or procedures followed by BofA Merrill
Lynch in rendering its opinion.
BofA
Merrill Lynch's opinion was necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to
BofA Merrill Lynch as of, the date of its opinion. It should be understood that subsequent developments may affect BofA Merrill Lynch's opinion, and BofA Merrill Lynch does not have any obligation to
update, revise, or reaffirm its opinion. The issuance of BofA Merrill Lynch's opinion was approved by a fairness opinion review committee of BofA Merrill Lynch.
The
discussion set forth below in the sections entitled "
Summary of Material Financial Analyses of MPG
" and
"
Summary of Material Financial Analyses of AAM
" represents a brief summary of the material financial analyses presented by BofA Merrill Lynch to the MPG
board of directors in connection with its opinion, dated November 2, 2016.
The financial analyses summarized below include information presented in tabular format. In
order to fully understand the financial analyses performed by BofA Merrill Lynch, the tables must be read together with the text of each summary. The tables alone do not constitute a complete
description of the financial analyses performed by BofA Merrill Lynch. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses,
including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by BofA Merrill Lynch.
For
purposes of the financial analyses summarized below, the term "implied merger consideration" refers to $22.00 per share of MPG common stock, consisting of (i) the cash consideration of $13.50
per share and (ii) the implied value of the stock consideration of $8.50 per share based on an agreed AAM common stock price of $17.00 per share and the exchange ratio of 0.5. All implied per
share equity values are rounded to the nearest $0.25. The financial analyses summarized below reflect BofA Merrill Lynch's assumption, per MPG management, that MPG has total indebtedness of
$1,889 million, non-controlling interests with a value of $3 million, tax-effected unfunded pension/other postemployment benefits (which we refer to in this section of this joint proxy
statement/prospectus as OPEB) liabilities of $24 million and cash and cash equivalents of $182 million as of August 31, 2016. Further, the financial analyses were based on the
assumption that MPG's fully diluted share total is accounted for under the treasury stock method, and the financial analyses were based on 66.696 million shares of MPG common stock outstanding
as of October 31, 2016, with 0.943 million outstanding MPG restricted stock unit awards, 0.799 million outstanding shares of restricted MPG common stock and 6.430 million
outstanding MPG stock options with a weighted average strike price of $12.60. The financial analyses summarized below also reflect BofA Merrill Lynch's assumption, per AAM's management, that AAM has
total indebtedness of $1,416 million, tax-effected unfunded pension/OPEB liabilities of $312 million and cash and cash equivalents of $416 million as of August 31, 2016.
The financial analyses were also based on the assumption, per AAM's management, that AAM's fully diluted share total is accounted for under the treasury stock method, and the financial analyses were
based, per AAM's management, on 76.473 million shares of
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AAM
common stock outstanding as of September 30, 2016, with 1.797 million AAM restricted stock unit awards, 1.038 million AAM performance shares, and 0.348 million AAM
stock options with a weighted average strike price of $20.71.
Summary of Material Financial Analyses of MPG
Selected Publicly Traded Companies Analysis.
BofA Merrill Lynch reviewed publicly available financial and stock market information for
MPG and the
following eleven selected publicly traded companies in the automotive supplier industry that BofA Merrill Lynch considered to have similar or reasonably comparable operations to MPG:
American
Axle & Manufacturing Holdings, Inc.
BorgWarner Inc.
Cooper-Standard
Automotive Inc.
Dana
Incorporated
GKN plc
Lear
Corporation
Linamar
Corporation
Magna
International Inc.
Martinrea
International Inc.
Tenneco Inc.
The
Schaeffler Technologies AG & Co. KG
Publicly
available information for Linamar Corporation, GKN plc, Martinrea International Inc. and The Schaeffler Technologies AG & Co. KG was adjusted to
account for capitalized development cost as these companies report under IFRS accounting standards.
BofA
Merrill Lynch reviewed, among other things, adjusted enterprise values of the selected publicly traded companies, calculated as equity values based on closing stock prices on
November 1, 2016, plus debt, less cash, plus minority interests, less equity in unconsolidated affiliates, plus tax-effected pension and OPEB liabilities as a multiple of estimated earnings
before interest, taxes, depreciation, amortization and associated pension carrying costs calculated as the net periodic benefit costs less service costs (which we refer to in this section of this
joint proxy statement/prospectus as EBITDAP) for calendar years 2016 and 2017. The overall low, mean, median and high calendar year 2016 EBITDAP multiples observed for the selected publicly traded
companies were 4.2x, 5.4x, 5.2x and 7.3x, respectively, and the overall low, mean, median and high calendar year 2017 EBITDAP multiples observed for the selected publicly traded companies were 3.8x,
5.1x, 4.9x and 6.7x, respectively. The mean and median EBITDAP multiples exclude MPG and AAM. BofA Merrill Lynch then applied (i) calendar year 2016 EBITDAP multiples of 5.5x to 6.5x (derived
from the selected publicly traded companies, based on information BofA Merrill Lynch obtained from public filings, publicly available research analyst reports and consensus estimates as published by
FactSet Research Systems Inc.) to MPG's calendar year 2016 estimated EBITDAP, and (ii) calendar year 2017 EBITDAP multiples of 5.0x
to 6.0x (derived from the selected publicly traded companies, based on information BofA Merrill Lynch obtained from public filings, publicly available research analyst reports and consensus estimates
as published by FactSet Research Systems Inc.) to MPG's calendar year 2017 estimated EBITDAP. In both cases, at the direction of MPG, (A) BofA Merrill Lynch adjusted the estimated
EBITDAP to exclude non-recurring items, underfunded pension expense and stock-based compensation, and (B) BofA Merrill Lynch assumed MPG's ongoing underfunded pension expense to be negligible.
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Estimated
financial data of the selected publicly traded companies were based on publicly available research analysts' estimates, and estimated financial data of MPG were based on the MPG forecasts.
This analysis yielded the following approximate implied per share equity value reference ranges for MPG, as compared to the implied merger consideration:
|
|
|
|
|
|
|
Implied Per Share Equity Value Reference Ranges for MPG
|
|
|
|
|
Implied Merger Consideration
|
|
2016E
|
|
2017E
|
|
$14.00 - $20.75
|
|
$12.25 - $19.25
|
|
$
|
22.00
|
|
No
company used in this analysis is identical or directly comparable to MPG. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this
analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the
companies to which MPG was compared.
Selected Precedent Transactions Analysis.
BofA Merrill Lynch reviewed, to the extent publicly available, financial information relating
to the
following eighteen selected transactions involving companies in the automotive supplier industry since May 2012 that, in BofA Merrill Lynch's judgment, were relevant for its analysis based on the
size, industry classification and relative performance of the target companies involved in such transactions:
|
|
|
|
|
Acquiror
|
|
Target
|
|
Announcement
Month and Year
|
Valeo SA
|
|
FTE Automotive GmbH
|
|
June 2016
|
Musashi Seimitsu Industry Co., Ltd.
|
|
Hay Holding GmbH
|
|
May 2016
|
The Riberas family
|
|
Gestamp Automoción, S.A. (35.0%)
|
|
February 2016
|
Linamar Corporation
|
|
Montupet S.A.
|
|
October 2015
|
Johnson Electric Holdings Limited
|
|
Stackpole International
|
|
August 2015
|
BorgWarner Inc.
|
|
Remy International, Inc.
|
|
July 2015
|
Magna International Inc.
|
|
GETRAG Group of Companies
|
|
July 2015
|
Mahle GmbH
|
|
Delphi Automotive Plc.
|
|
February 2015
|
Bain Capital, L.P.
|
|
TI Automotive Ltd.
|
|
January 2015
|
ZF Friedrichshafen AG
|
|
TRW Automotive Holdings Corp.
|
|
September 2014
|
Clearlake Capital Group
|
|
Sage Automotive Interiors, Inc.
|
|
September 2014
|
Lear Corporation
|
|
Eagle Ottawa, LLC
|
|
August 2014
|
Hitachi Metals Automotive Components USA, LLC
|
|
Waupaca Foundry, Inc.
|
|
August 2014
|
AVIC Electromechanical Systems Co., Ltd.
|
|
Hilite International, Inc.
|
|
May 2014
|
American Securities LLC
|
|
Grede Holdings LLC
|
|
April 2014
|
American Securities LLC
|
|
MD Investors Corporation
|
|
December 2012
|
American Securities LLC
|
|
HHI Group Holdings LLC
|
|
October 2012
|
KPS Capital Partners LP
|
|
Waupaca Foundry, Inc.
|
|
May 2012
|
BofA
Merrill Lynch reviewed transaction values, calculated as the enterprise value implied for the target company based on the consideration payable in the selected transaction, as a
multiple of the target company's twelve month estimated EBITDA. The overall low, mean and high twelve month revenue multiples observed for the selected transactions were 4.8x, 7.1x and 10.6x,
respectively. BofA Merrill Lynch then applied twelve month adjusted EBITDA multiples of 5.5x to 7.0x (derived from the EBITDA multiple ranges of the selected transactions, based on BofA Merrill
Lynch's professional judgment) to MPG's calendar year 2016 estimated adjusted EBITDA. In doing so, at the direction of MPG, BofA Merrill Lynch adjusted the estimated EBITDA to exclude non-recurring
items and stock based compensation. Estimated financial data of the selected transactions were based on publicly
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available
information at the time of announcement of the relevant transaction. Estimated financial data of MPG were based on the MPG forecasts. This analysis yielded the following approximate implied
per share equity value reference range for MPG, as compared to the implied merger consideration:
|
|
|
|
|
Implied Per Share Equity Value Reference Range for MPG
|
|
Implied Merger Consideration
|
|
$14.25 - $24.25
|
|
$
|
22.00
|
|
No
company, business or transaction used in this analysis is identical or directly comparable to MPG or the merger. Accordingly, an evaluation of the results of this analysis is not
entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the
acquisition or other values of the companies, business segments or transactions to which MPG and the merger were compared.
Discounted Cash Flow Analysis.
BofA Merrill Lynch performed a discounted cash flow analysis of MPG to calculate the estimated present
value of the
standalone unlevered, after-tax free cash flows (at assumed effective tax rates, with the approval of MPG management, of 28.1% for the last four months of fiscal year 2016 and 28.5% for fiscal years
2017 through 2020) that MPG was forecasted to generate from September 1, 2016 to December 31, 2016 and during MPG's fiscal years 2017 through 2020, which unlevered, after-tax free cash
flows were derived by BofA Merrill Lynch from the MPG forecasts to be approximately $81 million for the period from September 1, 2016 to December 31, 2016 and approximately
$207 million, $241 million, $307 million and $339 million for each of the fiscal years ending December 31, 2017 through 2020. BofA Merrill Lynch calculated terminal
values for MPG by applying terminal forward multiples of 5.0x to 6.0x (which range of terminal forward multiples was selected taking into consideration, among other things, EBITDAP multiples for the
selected publicly traded companies described above under "
Summary of Material Financial Analyses of MPGSelected Publicly Traded Companies
Analysis
" and BofA Merrill Lynch's professional judgment with respect to the history of MPG's EBITDAP multiples relative to those of the selected publicly traded companies) to
MPG's fiscal year 2020 estimated adjusted EBITDAP (which BofA Merrill Lynch assumed, at the direction of MPG, to include stock-based compensation, but not other non-recurring items or pension expense,
which pension expense BofA Merrill Lynch assumed to be negligible). The cash flows and terminal values were then discounted to present value as of August 31, 2016, reflecting BofA Merrill
Lynch's assumption for purposes of this analysis that the cash flows would occur at the mid-point of a given year, and discount rates ranging from 9.0% to 11.0%, which reflect BofA Merrill Lynch's
estimate of MPG's weighted average cost of capital, derived using
the capital asset pricing model. This analysis yielded the following approximate implied per share equity value reference range for MPG, as compared to the implied merger consideration:
|
|
|
|
|
Implied Per Share Equity Value Reference Range for MPG
|
|
Implied Merger Consideration
|
|
$17.75 - $26.50
|
|
$
|
22.00
|
|
Summary of Material Financial Analyses of AAM
Selected Publicly Traded Companies Analysis.
BofA Merrill Lynch reviewed publicly available financial and stock market information for
AAM and the
following eleven selected publicly traded companies in the automotive supplier industry that BofA Merrill Lynch considered to have similar or reasonably comparable operations to AAM:
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Table of Contents
GKN plc
Lear
Corporation
Linamar
Corporation
Magna
International Inc.
Martinrea
International Inc.
Metaldyne
Performance Group Inc.
Tenneco Inc.
The
Schaeffler Technologies AG & Co. KG
Publicly
available information for Linamar Corporation, GKN plc, Martinrea International Inc. and The Schaeffler Technologies AG & Co. KG was adjusted to
account for capitalized development costs as these companies report under IFRS accounting standards.
BofA
Merrill Lynch reviewed, among other things, adjusted enterprise values of the selected publicly traded companies, calculated as equity values based on closing stock prices on
November 1, 2016, plus debt, less cash, plus minority interests, less equity in unconsolidated affiliates, plus tax-effected pension and OPEB liabilities as a multiple of estimated EBITDAP for
calendar years 2016 and 2017. The overall low, mean, median and high calendar year 2016 EBITDAP multiples observed for the selected publicly traded companies were 4.2x, 5.4x, 5.2x and 7.3x,
respectively, and the overall low, mean, median and high calendar year 2017 EBITDAP multiples observed for the selected publicly traded companies were 3.8x, 5.1x, 4.9x and 6.7x, respectively. The mean
and median EBITDAP multiples exclude MPG and AAM. BofA Merrill Lynch then applied (i) calendar year 2016 EBITDAP multiples of 4.5x to 5.5x (derived from the selected publicly traded companies,
based on information BofA Merrill Lynch obtained from public filings, publicly available research analyst reports and consensus estimates as published by FactSet Research Systems Inc.) to AAM's
calendar year 2016 estimated EBITDAP, and (ii) calendar year 2017 EBITDAP multiples of 4.0x to 5.0x (derived from the selected publicly traded companies, based on information BofA Merrill Lynch
obtained from public filings, publicly available research analyst reports and consensus estimates as published by FactSet Research Systems Inc.) to AAM's calendar year 2017 estimated EBITDAP.
In both cases, at the direction of MPG, (A) BofA Merrill Lynch adjusted the estimated EBITDAP to exclude non-recurring items, underfunded pension expense and stock-based compensation, and
(B) BofA Merrill Lynch assumed AAM's ongoing underfunded pension expense to be $6 million per annum. Estimated financial data of the selected publicly traded companies were based on
publicly available research analysts' estimates, and estimated financial data of AAM were based on the AAM forecasts. This analysis yielded the following approximate implied per share equity value
reference ranges for AAM as compared to the $17.06 per share closing price of AAM common stock on November 1, 2016:
|
|
|
|
|
|
|
Implied Per Share Equity Value Reference Ranges for AAM
|
|
|
|
|
Closing Trading Price of AAM
Common Stock on November 1, 2016
|
|
2016E
|
|
2017E
|
|
$19.25 - $27.25
|
|
$17.75 - $26.25
|
|
$
|
17.06
|
|
No
company used in this analysis is identical or directly comparable to AAM. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this
analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the
companies to which AAM was compared.
Discounted Cash Flow Analysis.
BofA Merrill Lynch performed a discounted cash flow analysis of AAM to calculate the estimated present
value of the
standalone unlevered, after-tax free cash flows (at
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Table of Contents
assumed
effective tax rates, with the approval of AAM management, of 19.5% for the last four months of fiscal year 2016, 20.3% for fiscal year 2017, 19.1% for fiscal year 2018, 19.0% for fiscal year
2019, and 19.7% for fiscal year 2020) that AAM was forecasted to generate from September 1, 2016 to December 31, 2016 and during AAM's fiscal years 2017 through 2020 based on the AAM
forecasts. BofA Merrill Lynch calculated terminal values for AAM by applying terminal forward multiples of 4.5x to 5.5x (which range of terminal forward multiples was selected taking into
consideration, among other things, EBITDAP multiples for the selected publicly traded companies described above under "
Summary of Material Financial Analyses of
AAMSelected Publicly Traded Companies Analysis
" and BofA Merrill Lynch's professional judgment with respect to the history of AAM's EBITDAP multiples relative to
those of the selected publicly traded companies) to AAM's fiscal year 2020 estimated adjusted EBITDAP (which BofA Merrill Lynch assumed, at the direction of MPG, to include stock-based compensation,
but not other non-recurring items or pension expense). The cash flows and terminal values were then discounted to present value as of August 31, 2016, reflecting BofA Merrill Lynch's assumption
for purposes of this analysis that the cash flows would occur at the mid-point of a given year, and discount rates ranging from 7.5% to 9.0%, which reflect BofA Merrill Lynch's estimate of AAM's
weighted average cost of capital, derived using the capital asset pricing model. This analysis yielded the following approximate implied per share equity value reference range for AAM, as compared to
the closing price of AAM common stock on November 1, 2016:
|
|
|
|
|
Implied Per Share Equity Value Reference Range for AAM
|
|
Closing Trading Price of AAM
Common Stock on November 1, 2016
|
|
$22.50 - $30.25
|
|
$
|
17.06
|
|
Summary of Material Merger Consequences Analyses
Pro Forma Accretion/Dilution Analysis.
BofA Merrill Lynch reviewed the potential pro forma financial effect of the merger on AAM's
calendar years
2017 and 2018 estimated earnings per share (which we refer to in this joint proxy statement/prospectus as EPS) after (i) taking into account the potential synergies anticipated by the
managements of MPG and AAM to result from the merger by comparing the relative pro forma EPS of AAM to the projected standalone EPS of AAM at synergies levels ranging from $25 million to
$100 million based on the synergies projected to result from the completion of the merger by AAM management, and (ii) assuming $100 million of run-rate synergies, of which 50%
would be realized in calendar year 2017 and 100% would be realized thereafter, with the approval of the managements of AAM and MPG. Estimated financial data of AAM and MPG were based on the AAM
forecasts and the MPG forecasts, respectively. Based on the merger consideration, this analysis indicated that the merger could be (A) accretive to AAM's estimated cash EPS for calendar years
2017 and 2018 (without burdening cash EPS for amortization expenses) by $0.37 to $0.53 (for calendar year 2017) and $0.78 to $1.11 (for calendar year 2018) and (B) dilutive to AAM's estimated
GAAP EPS for calendar year 2017 by $0.21 to $0.38 and accretive to AAM's estimated GAAP EPS for calendar year 2018 by $0.03 to $0.37. For purposes of this analysis, cash EPS was obtained by making
certain adjustments to GAAP EPS, principally adding back the amount of certain intangibles that had been amortized in calculating GAAP EPS. The actual results achieved by the combined company may vary
from projected results and the variations may be material.
Pro Forma Trading Multiples Analysis.
BofA Merrill Lynch performed an analysis that examined the indicative value of the merger
consideration if the
combined company's common stock traded at different hypothetical multiples of its estimated 2017 pro forma adjusted EBITDAP of $1,196 million, assuming (i) the pro forma adjusted EBITDAP
to exclude non-recurring items, underfunded pension expense and stock-based compensation, (ii) MPG's ongoing pension expense to be negligible, and (iii) the amount of AAM's ongoing
underfunded pension expense to be $6 million. The multiples applied by BofA Merrill Lynch included the multiples of the closing trading prices of AAM common stock and MPG common stock on
November 1, 2016 to the respective estimated 2017 adjusted
93
Table of Contents
EBITDAP
of the companies, as well as an illustrative "re-rate" multiple at which the combined company's common stock hypothetically could trade following the merger. BofA Merrill Lynch estimated that
the aggregate amount of cash comprising the merger consideration would be $984 million, including $23 million relating to cash settled options. This analysis yielded the following
implied per share equity values for MPG common stock on a pro forma basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
AAM
Current
Multiple
(3.9x)
|
|
Illustrative
Re-Rate
Multiple
(5.0x)
|
|
MPG
Current
Multiple
(5.3x)
|
|
Implied Value Per Share to MPG Stockholders
|
|
$
|
17.75
|
|
$
|
23.50
|
|
$
|
25.50
|
|
BofA
Merrill Lynch further observed that the combined company's common stock would have to trade at a "breakeven" multiple of 4.7 times its estimated 2017 adjusted EBITDAP in order for
the merger consideration to have an aggregate market value of $22.00 per share of MPG common stock, the amount of the implied merger consideration. BofA Merrill Lynch noted that an increase in trading
multiples for the combined company relative to those of AAM could be expected due to the greater diversity of the combined company's customer base, but that there could be no assurance that this would
occur.
Has/Gets Analysis.
BofA Merrill Lynch performed a has/gets analysis to calculate the theoretical change in value for MPG stockholders
resulting from
the merger based on a comparison of (i) the value of the merger consideration, including the pro forma ownership by MPG stockholders of the combined company following the merger, and
(ii) the 100% ownership by MPG stockholders of the MPG common stock on a stand-alone basis. For MPG on a stand-alone basis, BofA Merrill Lynch used the reference range obtained in its
discounted cash flow analysis described above under "
Summary of Material Financial Analyses of MPGDiscounted Cash Flow Analysis.
" BofA
Merrill Lynch then performed the same analysis with respect to the combined company on a pro forma basis, giving effect to the merger. For the pro forma analysis, BofA Merrill Lynch used the same
discount rate range of 9.0% to 11.0% for the MPG contribution as it had used for its analysis of MPG on a stand-alone basis, and 7.5% to 9.0% for the AAM contribution as it had used for its analysis
of AAM on a stand-alone basis. BofA Merrill Lynch also assumed, among other things, (i) with the approval of the managements of MPG and AAM, $100 million in annual synergies, of which
50% would be realized in calendar year 2017 and 100% would be realized thereafter, (ii) with the approval of MPG management, that $50 million of costs would be incurred in each of
calendar years 2017 and 2018 in order to achieve such synergies, and (iii) as discussed with MPG management, that the net synergies would grow perpetually at an annual rate of 0.0% to 1.0%.
BofA Merrill Lynch estimated that the aggregate amount of cash comprising the merger consideration would be $984 million, including $23 million relating to cash settled
options. This analysis yielded the following implied per share equity value reference ranges for MPG common stock on a stand-alone basis and for the merger consideration:
|
|
|
|
|
Per Share Equity Value Reference
Ranges for MPG Common Stock
|
Stand-Alone
|
|
$17.75 - $26.50
|
Pro Forma Merger Consideration
|
|
$27.75 - $29.00
|
Other Factors
BofA Merrill Lynch also noted certain additional factors that were not considered part of BofA Merrill Lynch's material financial analyses with
respect to its opinion but were referenced for informational purposes, including, among other things, the following:
-
-
historical trading prices of MPG common stock and AAM common stock during the 52-week period ended (and including) November 1, 2016,
which indicated that during such period MPG's
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Table of Contents
Miscellaneous
As noted above, the discussion set forth above in the sections entitled "
Summary of Material Financial Analyses of
MPG
" and "
Summary of Material Financial Analyses of AAM
" is a summary of the material financial analyses presented by BofA
Merrill Lynch to the MPG board of directors in connection with its opinion and is not a comprehensive description of all analyses undertaken or matters considered by BofA Merrill Lynch in connection
with its opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. BofA Merrill Lynch believes that
its analyses summarized above must be considered as a whole. BofA Merrill Lynch further believes that selecting portions of its analyses and the matters considered or focusing on information presented
in tabular format, without considering all analyses and matters or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying BofA Merrill
Lynch's analyses and opinion. The fact that any specific analysis has been referred to in the summary above, or the order in which such analysis
appears above, is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.
In
performing its analyses, BofA Merrill Lynch considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of MPG,
AAM or any other entity. The estimates of the future performance of MPG or AAM in or underlying BofA Merrill Lynch's analyses are not necessarily indicative of actual values or actual future results,
which may be significantly more or less favorable than those estimates or those suggested by BofA Merrill Lynch's analyses. These analyses were prepared solely as part of BofA Merrill Lynch's analysis
of the fairness, from a financial point of view, of the merger consideration to be received by holders of MPG common stock and were provided to the MPG board of directors in connection with the
delivery of BofA Merrill Lynch's opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or acquired or the prices at which any
securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis described above are inherently
subject to substantial uncertainty and should not be taken to be BofA Merrill Lynch's view of the actual values of MPG or AAM.
The
type and amount of consideration payable in the merger was determined through negotiations between MPG and AAM, rather than by any financial advisor, and was approved by the MPG
board of directors. The decision to enter into the merger agreement was solely that of the MPG board of directors. As described above, BofA Merrill Lynch's opinion and analyses were only one of many
matters considered by the MPG board of directors in its evaluation of the proposed merger and should not be viewed as determinative of the views of the MPG board of directors or management with
respect to the merger or the merger consideration.
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Table of Contents
MPG has agreed to pay BofA Merrill Lynch for its services in connection with the merger an aggregate fee currently estimated to be approximately $20,000,000,
$2,000,000 of which was payable upon the delivery of BofA Merrill Lynch's opinion and the remaining portion of which is contingent upon consummation of the merger. MPG also has agreed to reimburse
BofA Merrill Lynch for certain of its expenses incurred in connection with BofA Merrill Lynch's engagement and to indemnify BofA Merrill Lynch, any affiliate of BofA Merrill Lynch and each of their
respective directors, officers, employees and agents and any person controlling BofA Merrill Lynch or any of its affiliates against specified liabilities, including liabilities under the federal
securities laws.
BofA
Merrill Lynch and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other
brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other
commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of their businesses, BofA Merrill Lynch and its affiliates may invest on a principal
basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in equity, debt or other securities or
financial instruments (including derivatives, bank loans or other obligations) of MPG, AAM and certain of their respective affiliates.
BofA
Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial
services to MPG and have received or in the future may receive compensation for the rendering of these services, including (i) having acted as a joint bookrunner for MPG's initial public
offering of equity securities and as a joint bookrunner for a debt offering by a subsidiary of MPG, (ii) having acted or acting as a co-lead arranger and a joint bookrunner for, and as a lender
under, a credit facility of a subsidiary of MPG, (iii) having provided or providing certain treasury and trade management services and products to MPG, and (iv) having provided or
providing certain derivatives and foreign exchange trading services to MPG. From November 1, 2014 through October 31, 2016, BofA Merrill Lynch and its affiliates derived aggregate
revenues from MPG and its affiliates of approximately $8,500,000 for investment and corporate banking services.
In
addition, BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other
financial services to AAM and/or certain of its affiliates and have received or in the future may receive compensation for the rendering of these services, including (i) having acted or acting
as a co-lead arranger and a joint bookrunner for, and as a lender (including a swing-line lender) under, AAM's credit facility, (ii) having provided or providing certain treasury and trade
management services and products to AAM, and (iii) having provided or providing certain derivatives and foreign exchange trading services to AAM. From November 1, 2014 through
October 31, 2016, BofA Merrill Lynch and its affiliates derived aggregate revenues from AAM and its affiliates of approximately $7,000,000 for investment and corporate banking services.
BofA
Merrill Lynch and its affiliates also in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial
services to American Securities, the controlling stockholder of MPG, and certain of its affiliates and portfolio companies other than MPG and have received or in the future may receive compensation
for the rendering of these services, including having acted or acting as administrative agent, arranger, bookrunner and/or lender for American Securities and/or certain of its affiliates and portfolio
companies and having provided or providing certain treasury and trade management services and products to American Securities and/or certain of its affiliates and portfolio companies. From
November 1, 2014 through October 31, 2016, BofA Merrill Lynch and its affiliates derived aggregate revenues from American Securities and certain of its affiliates and portfolio companies
other than MPG of approximately $4,500,000 for investment and corporate banking services.
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Table of Contents
Certain Unaudited Prospective Financial Information of AAM and MPG
Certain Unaudited Prospective Financial Information of AAM
AAM does not as a matter of course make public long-term projections as to future revenue, earnings or other results due to, among other
reasons, the uncertainty of the underlying assumptions and estimates. However, AAM is including in this joint proxy statement/prospectus the AAM management forecasts, which consist of certain
unaudited prospective financial information regarding AAM's anticipated future operations that was made available to the AAM board of directors, AAM's financial advisor, the MPG board of directors and
MPG's financial advisor in connection with the merger. See also
"Opinion of AAM's Financial Advisor
" beginning on page 78 and
"
Opinion of MPG's Financial Advisor
" beginning on page 85. The AAM management forecasts included below were prepared by AAM's
management as part of AAM's long-range plan for its business for fiscal years 2016 through 2020 and treats AAM on a standalone basis, without giving effect to the merger and as if the merger had not
been contemplated by AAM. AAM uses certain non-GAAP financial measures as supplemental measures which AAM's management believes are useful to both management and its stockholders in their analysis of
AAM's business and operating performance. AAM's management also uses this information for operational planning and decision-making purposes. Non-GAAP financial measures are not and should not be
considered a substitute for any GAAP measure. Additionally, non-GAAP financial measures as presented by AAM may not be comparable to similarly titled measures reported by other companies. In the view
of AAM's management, the AAM forecasts were prepared on a reasonable basis based on the information available to AAM's management at the time of their preparation.
AAM forecasts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending December 31
|
|
|
|
2016E
|
|
2017E
|
|
2018E
|
|
2019E
|
|
2020E
|
|
|
|
(in millions)
|
|
Net sales
|
|
$
|
3,953
|
|
$
|
4,247
|
|
$
|
4,331
|
|
$
|
4,454
|
|
$
|
4,443
|
|
EBITDA(1)
|
|
|
610
|
|
|
657
|
|
|
679
|
|
|
697
|
|
|
641
|
|
EBIT(2)
|
|
|
401
|
|
|
425
|
|
|
429
|
|
|
430
|
|
|
376
|
|
Free cash flow(3)
|
|
|
150
|
|
|
160
|
|
|
175
|
|
|
245
|
|
|
258
|
|
-
(1)
-
EBITDA
is a non-GAAP financial measure defined as earnings before interest expense, income taxes, depreciation and amortization.
-
(2)
-
EBIT
is a non-GAAP financial measure defined as earnings before interest expense and income taxes.
-
(3)
-
Free
cash flow is a non-GAAP financial measure AAM defines as net cash provided by operating activities less capital expenditures net of proceeds from the sale of
property, plant and equipment and government grants.
In
addition, AAM received and reviewed certain unaudited prospective financial information regarding MPG for the fiscal years 2016 through 2020, which were prepared by MPG's management
as described below under "
Certain Unaudited Prospective Financial Information of MPG
" beginning on page 99. AAM's management
reviewed and performed due diligence regarding such financial information and made certain adjustments to such financial information, including the forecasted impact of MPG's acquisition of Brillion
Iron Works, resulting in the adjusted MPG forecasts. The adjusted MPG forecasts were also provided to Greenhill. We refer to the AAM management forecasts and the adjusted MPG forecasts, collectively,
in this joint proxy statement/prospectus as the AAM forecasts.
97
Table of Contents
Adjusted MPG forecasts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ending December 31
|
|
|
|
2016E
|
|
2017E
|
|
2018E
|
|
2019E
|
|
2020E
|
|
|
|
(in millions)
|
|
Net sales
|
|
$
|
2,691
|
|
$
|
2,695
|
|
$
|
2,869
|
|
$
|
3,177
|
|
$
|
3,321
|
|
EBITDA
|
|
|
475
|
|
|
497
|
|
|
529
|
|
|
586
|
|
|
612
|
|
EBIT
|
|
|
259
|
|
|
265
|
|
|
282
|
|
|
324
|
|
|
337
|
|
The
AAM forecasts were prepared based on information available at the time of preparation and should not be relied upon as being indicative of actual future results, and readers of this
joint proxy statement/prospectus are cautioned not to place undue, or any, reliance on this information. The inclusion of the AAM forecasts in this joint proxy statement/prospectus is not an admission
or representation by AAM that such information is material. Actual results may differ materially from those contained in the AAM forecasts. The AAM forecasts were not prepared with a view toward
compliance with the guidelines established by the SEC or the American Institute of Certified Public Accountants with respect to prospective financial information. Neither AAM's independent registered
public accounting firm, nor any other independent accountants, have compiled, examined, or performed
any procedures with respect to the prospective financial information contained in the AAM forecasts nor have they expressed any opinion or any other form of assurance with respect to such information
or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information. By including in this joint proxy statement/prospectus a summary of the
AAM forecasts, neither AAM nor any of its advisors or other representatives has made or makes any representation to any person regarding the ultimate performance of AAM compared to the information
contained in the AAM forecasts, whether in the merger agreement or otherwise.
The
summary of the AAM forecasts is not being included to influence your decision whether to vote for the AAM share issuance or the adoption of the merger agreement and the approval of
the transactions contemplated by the merger agreement (as the case may be), but is being provided because the AAM forecasts were considered in connection with the merger and were provided to AAM's
financial advisor and also to MPG and its financial advisor.
The
AAM forecasts were prepared based solely on information available at the time of preparation and are not a guarantee of actual future results, and the information contained in such
forecasts should not be relied upon as such. Financial forecasts involve risks, uncertainties and assumptions, and the estimates and assumptions underlying the AAM forecasts involve judgments with
respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to
significant uncertainties and contingencies, including, among others, risks and uncertainties described in the sections of this joint proxy statement/prospectus entitled "
Risk
Factors
" beginning on page 34 and "
Special Note Regarding Forward-Looking Statements
" beginning on page 42, all of
which are difficult to predict and many of which are beyond the control of AAM. AAM cannot assure you that the AAM forecasts will be realized or that future financial results of AAM or MPG, as
applicable, will not materially vary from the AAM forecasts. The AAM forecasts cover multiple years and such information by its nature becomes subject to greater uncertainty with each successive year.
The AAM forecasts do not take into account any circumstances or events occurring after the date they were prepared. As a result, the AAM forecasts cannot be considered predictive of actual future
operating results, and this information should not be relied on as such.
AAM AND MPG DO NOT HAVE ANY OBLIGATION TO, AND WILL NOT, UPDATE OR OTHERWISE REVISE THE FINANCIAL
FORECASTS INCLUDED IN THIS JOINT PROXY STATEMENT/PROSPECTUS TO REFLECT THE OCCURRENCE OF SUBSEQUENT EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH FINANCIAL FORECASTS ARE
NO LONGER APPROPRIATE.
98
Table of Contents
The
AAM forecasts included in this joint proxy statement/prospectus are forward-looking statements. For more information on factors which may cause AAM's future financial results to
materially vary from those projected in the AAM forecasts, see "
Risk Factors
" beginning on page 34 and "
Special Note
Regarding Forward-Looking Statements
" beginning on page 42.
Certain Unaudited Prospective Financial Information of MPG
MPG does not as a matter of course make public long-term projections as to future revenue, earnings or other results due to, among other
reasons, the uncertainty of the underlying assumptions and estimates. However, MPG is including in this joint proxy statement/prospectus certain unaudited prospective financial information regarding
MPG's anticipated future operations that was made available to the MPG board of directors, MPG's financial advisor, the AAM board of directors and AAM's financial advisor in connection with the
merger. See also "
Opinion of MPG's Financial Advisor
" beginning on page 85. The unaudited prospective financial information of MPG
included below (which we refer to in this joint proxy statement/prospectus as the MPG forecasts) was prepared by MPG's management as part of MPG's long-range plan for its business for fiscal years
2016 through 2020 and treats MPG on a standalone basis, without giving effect to the merger and as if the merger had not been contemplated by MPG. MPG uses certain non-GAAP financial measures as
supplemental measures which MPG's management believes are useful to both management and its stockholders in their analysis of MPG's business and operating performance. MPG's management also uses this
information for operational planning and decision-making purposes. Non-GAAP financial measures are not and should not be considered a substitute for any GAAP measure. Additionally, non-GAAP financial
measures as presented by MPG may not be comparable to similarly titled measures reported by other companies. In the view of MPG's management, the MPG forecasts were prepared on a reasonable basis
based on the information available to MPG's management at the time of their preparation. The MPG forecasts, however, are not facts and should not be relied upon as being indicative of actual future
results, and readers of this joint proxy statement/prospectus are cautioned not to place undue, or any, reliance on this information. The inclusion of the MPG forecasts in this joint proxy
statement/prospectus is not an admission or representation by MPG that such information is material. Actual results may differ materially from those contained in the MPG forecasts.
MPG forecasts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,(1)
|
|
|
|
2016E
|
|
2017E
|
|
2018E
|
|
2019E
|
|
2020E
|
|
|
|
(in millions)
|
|
Sales
|
|
$
|
2,691
|
|
$
|
2,637
|
|
$
|
2,796
|
|
$
|
3,101
|
|
$
|
3,242
|
|
Other expensesstock based compensation
|
|
|
18
|
|
|
20
|
|
|
20
|
|
|
20
|
|
|
20
|
|
Adjusted EBITDA(2)
|
|
|
493
|
|
|
504
|
|
|
550
|
|
|
617
|
|
|
650
|
|
Depreciation and amortization
|
|
|
216
|
|
|
232
|
|
|
247
|
|
|
262
|
|
|
275
|
|
Changes in assets and liabilities
|
|
|
13
|
|
|
11
|
|
|
(10
|
)
|
|
(20
|
)
|
|
(9
|
)
|
Capital expenditures
|
|
|
(209
|
)
|
|
(229
|
)
|
|
(217
|
)
|
|
(197
|
)
|
|
(194
|
)
|
-
(1)
-
MPG
forecasts are pro forma to reflect MPG's exit from its wheel bearing (KBI) business and do not include the impact of MPG's acquisition of Brillion Iron Works.
-
(2)
-
Adjusted
EBITDA is a non-GAAP financial measure and was calculated as net income (loss) before interest expense, provision for (benefit from) income taxes and
depreciation and amortization, with further adjustments to reflect the additions and eliminations of certain income statement items, including (i) gains and losses on foreign currency and fixed
assets and debt transaction expenses, (ii) stock-based compensation and other non-cash charges, (iii) sponsor management fees and other income and expense items that MPG considers to be
not indicative of its ongoing operations, (iv) specified non-recurring items, and (v) other adjustments.
99
Table of Contents
The
MPG forecasts were not prepared with a view toward compliance with the guidelines established by the SEC or the American Institute of Certified Public Accountants with respect to
prospective financial information. Neither MPG's independent registered public accounting firm, nor any other independent accountants, have compiled, examined, or performed any procedures with respect
to the prospective financial information contained in the MPG forecasts, nor have they expressed any opinion or any other form of assurance with respect to such information or its achievability, and
assume no responsibility for, and disclaim any association with, the prospective financial information. By including in this joint proxy statement/prospectus a summary of the MPG forecasts, neither
MPG nor any of its advisors or other representatives has made or makes any representation to any person regarding the ultimate performance of MPG compared to the information contained in the MPG
forecasts, whether in the merger agreement or otherwise.
The
summary of the MPG forecasts is not being included to influence your decision whether to vote for the AAM share issuance or the adoption of the merger agreement and the approval of
the transactions contemplated by the merger agreement (as the case may be), but is being provided
because the MPG forecasts were considered in connection with the merger and were provided to MPG's financial advisor and also to AAM and its financial advisor.
The
MPG forecasts were prepared based solely on information available at the time of preparation and are not a guarantee of actual future results, and the information contained in such
forecasts should not be relied upon as such. Financial forecasts involve risks, uncertainties and assumptions, and the estimates and assumptions underlying the MPG forecasts involve judgments with
respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to
significant uncertainties and contingencies, including, among others, risks and uncertainties described in the sections of this joint proxy statement/prospectus entitled "Risk Factors" beginning on
page 34 and "Special Note Regarding Forward-Looking Statements" beginning on page 42, all of which are difficult to predict and many of which are beyond the control of MPG. MPG cannot
assure you that the MPG forecasts will be realized or that future financial results of MPG will not materially vary from the MPG forecasts. The MPG forecasts cover multiple years and such information
by its nature becomes subject to greater uncertainty with each successive year. The MPG forecasts do not take into account any circumstances or events occurring after the dates they were prepared. As
a result, the MPG forecasts cannot be considered predictive of actual future operating results, and this information should not be relied on as such.
MPG AND AAM DO NOT HAVE
ANY OBLIGATION TO, AND WILL NOT, UPDATE OR OTHERWISE REVISE THE FINANCIAL FORECASTS INCLUDED IN THIS JOINT PROXY STATEMENT/PROSPECTUS TO REFLECT THE OCCURRENCE OF SUBSEQUENT EVENTS, EVEN IN THE EVENT
THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH FINANCIAL FORECASTS ARE NO LONGER APPROPRIATE.
The
MPG forecasts included in this joint proxy statement/prospectus are forward-looking statements. For more information on factors which may cause MPG's future financial results to
materially vary from those projected in the MPG forecasts, see "Risk Factors" beginning on page 34 and "Special Note Regarding Forward-Looking Statements" beginning on page 42.
Interests of MPG Directors and Executive Officers in the Merger
In considering the recommendation of the MPG board of directors that MPG stockholders vote to adopt the merger agreement and approve the
transactions contemplated thereby, you should be aware that certain of MPG's directors and executive officers have interests in the merger that differ from, or are in addition to, the interests of MPG
stockholders generally. The MPG board of directors was aware of, and considered the interests of, MPG's directors and executive officers in approving the merger agreement.
100
Table of Contents
Board Membership
The merger agreement provides that, prior to the effective time of the merger, AAM will (i) increase the size of the AAM board of
directors to 11 members, (ii) appoint to a different class of the AAM board of directors 3 individuals selected by American Securities and (iii) cause 1 of the AS
designees to be appointed to each of AAM's Executive Committee, Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee, in each case, effective as of the effective time
of the merger. The appointment of each AS designee to the AAM board of directors will be subject to such designee satisfying AAM's standard qualification requirements for directors and, with respect
to each committee appointment, will be subject to independence and other requirements for such committees set by the NYSE and any applicable law. Each AS designee will serve on the AAM board of
directors until the end of the term for the class of directors to which the AS designee is appointed. It is a condition to MPG's obligation to complete the merger that AAM has taken each of the
foregoing actions. In addition, as a condition to each of MPG's, AAM's and Merger Sub's obligations to complete the merger, AAM, the AS stockholder and, solely for limited purposes, American
Securities will enter into a stockholders' agreement pursuant to which, among other things,
AAM has agreed to (a) nominate the AS designees (or any replacement designees) for election to the AAM board of directors for so long as such stockholder (or any affiliate thereof) owns at
least 7.5% of the outstanding shares of AAM common stock and (b) recommend that the AAM stockholders vote in favor of the election of such designees and otherwise use commercially reasonable
efforts to cause such designees to be elected to the AAM board of directors.
The
AS designees to the AAM board of directors are current MPG directors George Thanopoulos, Kevin S. Penn and Loren S. Easton.
Treatment of Equity Awards
As of the date of this joint proxy statement/prospectus, certain of MPG's executive officers and directors hold MPG stock options, restricted
MPG common stock and MPG restricted stock unit awards. The merger agreement provides for the treatment of outstanding equity awards as described below.
Pursuant to the terms of the merger agreement, each unvested stock option outstanding under an equity plan of MPG will be accelerated in full
and become fully vested immediately prior to the effective time of the merger and, at the effective time of the merger, all MPG stock options will be cancelled and the holders thereof will receive an
amount in cash (without interest and subject to applicable withholding of taxes) equal to the product of (x) the aggregate number of shares of MPG common stock that were issuable upon exercise
of such MPG stock option immediately prior to the effective time of the merger, and (y) the cash value of the merger consideration, less the per share exercise price of each such MPG stock
option. For purposes of the cash payment with respect to the MPG stock options, the stock consideration is valued based on the closing price of a share of AAM common stock as of the trading day
immediately preceding the closing date of the merger. If the exercise price payable upon exercise of an MPG stock option equals or exceeds the value of the merger consideration, the MPG stock option
will be cancelled for no consideration.
At the effective time of the merger, pursuant to the terms of the merger agreement, all restricted MPG common stock outstanding under an equity
plan of MPG will be cancelled and terminated, and each holder thereof will receive the merger consideration for each share of restricted MPG common stock.
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Table of Contents
Pursuant to the terms of the merger agreement, each restricted stock unit award outstanding under an equity plan of MPG will become fully vested
immediately prior to the effective time and, at the effective time of the merger, will be cancelled and terminated in return for an amount equal to the merger consideration multiplied by the number of
shares of MPG common stock subject to such cancelled MPG restricted stock unit award.
Payments to Executive Officers and Directors in Respect of MPG Equity Awards
The
following table, along with its footnotes, shows the unvested MPG stock options, restricted MPG common stock and MPG restricted stock unit awards held by MPG's named executive
officers, other executive officers, and directors that will become vested and payable, as described above, at the effective time of the merger.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
MPG Stock
Options
|
|
Consideration
for MPG
Stock
Options(1)
|
|
Restricted
MPG Common
Stock
|
|
Consideration
for Restricted
MPG
Common Stock(1)
|
|
MPG
Restricted
Stock Unit
Awards
|
|
Consideration
for MPG
Restricted
Stock Unit
Awards(1)
|
|
NEOs and Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George Thanopoulos
|
|
|
401,113
|
|
$
|
4,479,496
|
|
|
103,208
|
|
$
|
2,270,576
|
|
|
127,374
|
|
$
|
2,802,228
|
|
Doug Grimm
|
|
|
592,760
|
|
|
2,217,713
|
|
|
78,232
|
|
|
1,721,104
|
|
|
91,973
|
|
|
2,023,413
|
|
Mark Blaufuss
|
|
|
146,586
|
|
|
1,367,508
|
|
|
63,248
|
|
|
1,391,456
|
|
|
91,973
|
|
|
2,023,413
|
|
Russell Bradley
|
|
|
73,178
|
|
|
749,712
|
|
|
1,168
|
|
|
25,696
|
|
|
17,384
|
|
|
382,455
|
|
Thomas Dono
|
|
|
18,519
|
|
|
114,633
|
|
|
|
|
|
|
|
|
9,488
|
|
|
208,736
|
|
Executive Officer
|
|
|
31,245
|
|
|
294,855
|
|
|
1,219
|
|
|
26,818
|
|
|
5,392
|
|
|
118,631
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nick Bhambri
|
|
|
4,409
|
|
|
64,563
|
|
|
882
|
|
|
19,404
|
|
|
3,135
|
|
|
68,970
|
|
Loren Easton(2)
|
|
|
|
|
|
|
|
|
1,763
|
|
|
38,793
|
|
|
3,135
|
|
|
68,970
|
|
Michael Fisch(2)
|
|
|
|
|
|
|
|
|
1,763
|
|
|
38,793
|
|
|
3,135
|
|
|
68,970
|
|
William Jackson
|
|
|
4,635
|
|
|
71,729
|
|
|
882
|
|
|
19,404
|
|
|
3,135
|
|
|
68,970
|
|
Kevin Penn(2)
|
|
|
|
|
|
|
|
|
1,763
|
|
|
38,793
|
|
|
3,135
|
|
|
68,970
|
|
Jack Smith
|
|
|
4,635
|
|
|
71,729
|
|
|
882
|
|
|
19,404
|
|
|
3,135
|
|
|
68,970
|
|
Jeffrey Stafeil
|
|
|
4,326
|
|
|
64,397
|
|
|
882
|
|
|
19,404
|
|
|
3,135
|
|
|
68,970
|
|
-
(1)
-
For
purposes of determining the value of the MPG stock options, restricted MPG common stock and MPG restricted stock unit awards, the agreed value of the merger
consideration of $22.00 per share of MPG common stock, assuming an agreed value of $17.00 per share of AAM common stock, was used.
-
(2)
-
Messrs. Easton,
Fisch and Penn will transfer to American Securities their restricted MPG common stock and the shares subject to MPG restricted stock unit
awards after they vest.
Employment Agreements
Messrs. Thanopoulos, Blaufuss, Grimm and Dono are party to employment agreements with MPG (which we refer to in this joint proxy
statement/prospectus as the MPG employment agreements) that provide for the following payments and benefits in the event that such executive officer's employment is terminated by MPG, without "cause"
or by such executive officer for "good reason" (each term as defined in the MPG employment agreements):
-
-
base salary continuation for 12 months (Messrs. Thanopoulos and Dono) or 18 months (for Messrs. Blaufuss and
Grimm), payable in equal monthly installments;
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Table of Contents
-
-
for Mr. Grimm only, an amount equal to 1.5 times his target annual bonus, payable in equal installments over 18 months;
-
-
payment of a pro rata portion (through the date of termination of employment) of the annual bonus that the executive officer would have
received for the year of termination, based on actual performance over the entire performance period (based on target performance for Mr. Grimm);
-
-
continuation of health care benefits under COBRA for a period of up to 12 months (for Messrs. Thanopoulos and Dono) or
18 months (for Messrs. Blaufuss and Grimm) following termination of employment; and
-
-
for Mr. Grimm only, outplacement services for up to six months, such amount not to exceed $40,000.
The
MPG employment agreements provide the same severance benefits whether or not the termination of employment occurs in connection with a change in control of MPG.
As
a condition of receipt of the above payments and benefits, the executive officer must execute a release of claims and continue to comply with the confidentiality and the non-compete
and non-solicit provisions in the MPG employment agreement for 18 months (for Messrs. Thanopoulos and Grimm) or six months (for Messrs. Blaufuss and Dono) following his
termination of employment.
Change in Control Severance Plan
Mr. Bradley and another executive officer are eligible to participate in the MPG Change in Control Severance Plan, which was adopted
pursuant to the terms of the merger agreement and provides severance to four tiers of employees of MPG and its subsidiaries who are not currently a party to an agreement providing for severance
benefits. Mr. Bradley and another executive officer are eligible to receive severance under the plan upon a termination of employment without "cause" or by the executive for "good reason"
(each, as defined in the plan) within two years following a change in control (as defined in the plan). Upon such termination of employment, Mr. Bradley and another executive officer are
eligible to receive 18 months of base salary and a pro-rata target bonus, each payable in a lump sum, and 18 months of continued participation in medical, dental and vision plans. If
payments and benefits under the plan constitute "excess parachute payments" within the meaning of Section 280G of the Internal Revenue Code and would be subject to an excise tax imposed under
Section 4999 of the Internal Revenue Code, then the payments and benefits will either be paid in full or reduced to the minimum extent necessary to ensure no portion of the payment is subject
to the excise tax, whichever provides the executive with the greatest amount of payments and benefits on an after-tax basis.
The
merger will constitute a "Change in Control" for purposes of the MPG Change in Control Severance Plan. Messrs. Thanopoulos, Blaufuss, Grimm and Dono are not eligible to
receive severance under the MPG Change in Control Severance Plan.
Benefit Arrangements with the Combined Company
The merger agreement requires AAM as the surviving corporation in the merger to provide the following with respect to any MPG employee
(including any executive officer) who remains employed following the effective time of the merger for one year following completion of the merger:
-
-
base salary or wages, incentive compensation opportunities and severance benefits, at least equal to the base salary or wages, incentive
compensation opportunities and severance benefits provided by MPG and its subsidiaries as of immediately prior to the effective time of the merger; and
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Table of Contents
-
-
employee benefits that are substantially comparable, in the aggregate, to the employee benefits provided by MPG and its subsidiaries as of
immediately prior to the effective time of the merger.
In
addition, MPG will pay fiscal 2016 year-end bonuses on or around March 2017, consistent with past practice, to executive officers and employees. Furthermore, MPG may establish
a bonus plan for 2017 in consultation with AAM, which will have substantially similar target and maximum bonus percentages as the bonus plans adopted in prior years.
Directors' and Officers' Indemnification and Insurance
The merger agreement provides that, from and after the effective time of the merger, AAM will cause MPG, as the surviving entity in the merger,
to do the following:
-
-
indemnify and hold harmless, to the fullest extent permitted by applicable law, all individuals who, as of the date of the merger agreement
were, or who, prior to the effective time of the merger, commences, serving as a director or officer of MPG or was or commences serving at the request of MPG as a director or officer of another entity
against all claims, losses, liabilities, damages, judgments, inquiries, fines, amounts paid in settlement and fees, costs and expenses (including attorneys' fees and disbursements incurred in
connection with any actual or threatened action), whether civil, criminal, administrative, regulatory or investigative (and whether existing or occurring or alleged to occur at or prior to the
effective time of the merger) that arise from the fact that such individual is or was a director or officer of MPG or is or was serving at the request of MPG as a director or officer of another
entity, whether asserted or claimed prior to, at or after the effective time of the merger;
-
-
continue in full force and effect all rights to indemnification, advancement or reimbursement of expenses and exculpation from liabilities for
acts or omissions occurring at or prior to the effective time of the merger in favor of the current or former directors, officers or employees of MPG and its subsidiaries under their respective
organizational documents and any indemnification or other similar agreements in effect as of the date of the merger agreement; and
-
-
maintain in effect provisions in the organizational documents of MPG and its subsidiaries with respect to indemnification, advancement and
reimbursement of expenses and exculpation from liabilities with respect to facts or circumstances occurring at or prior to the effective time of the merger that are no less favorable than were in
effect in the organizational documents of MPG and its subsidiaries provided to AAM as in effect on the date of the merger agreement and, for a period of 6 years after the effective time of the
merger, not amend, repeal or otherwise modify such provisions in any manner that would adversely affect the rights thereunder of individuals who at or prior to the effective time of the merger were
directors, officers, employees, fiduciaries or agents of MPG unless such modification is required by law.
In
addition, the merger agreement provides that MPG will purchase a "tail" policy providing coverage to each person covered by MPG's directors' and officers' insurance and/or fiduciary liability
insurance policy in effect on the date of the merger agreement or at the effective time of the merger for a period of 6 years from the effective time of the merger (and until such later time as
an action commenced during such 6-year period shall have been finally disposed of). The tail policy will provide coverage to such persons with respect to actions and omissions occurring prior to the
effective time of the merger in an amount not less than MPG's existing coverage and containing such other terms and conditions that are no less favorable to the persons covered by such policies than
those in MPG's policies in effect on the date of the merger agreement.
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Quantification of Payments and Benefits
The following table sets forth the information required by Item 402(t) of Regulation S-K regarding the amounts of payments and
benefits that each named executive officer of
MPG would receive in connection with the merger, based on the following assumptions: completion of the merger occurred on April 5, 2017, the employment of the executive officer was terminated
by the combined company without cause or by the executive officer for good reason on such date and the merger consideration is $22.00 per share of MPG common stock (assuming an agreed value of $17.00
per share of AAM common stock). As a result, the actual amounts, if any, to be received by named executive officers may differ from the amounts set forth below.
Golden Parachute Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Cash(1)
|
|
Equity(2)
|
|
Benefits(3)
|
|
Total
|
|
George Thanopoulos
|
|
$
|
1,291,781
|
|
$
|
9,552,300
|
|
$
|
20,880
|
|
$
|
10,864,961
|
|
Douglas Grimm
|
|
|
2,681,684
|
|
|
5,962,230
|
|
|
31,320
|
|
|
8,675,234
|
|
Mark Blaufuss
|
|
|
1,018,541
|
|
|
4,782,377
|
|
|
31,320
|
|
|
5,832,238
|
|
Russell Bradley
|
|
|
469,086
|
|
|
1,157,863
|
|
|
31,320
|
|
|
1,658,269
|
|
Thomas Dono
|
|
|
462,466
|
|
|
323,369
|
|
|
17,040
|
|
|
802,875
|
|
-
(1)
-
For
Messrs. Thanopoulos and Dono, reflects the cash severance payable upon a termination without "cause" or resignation for "good reason" at any time
following completion of the merger in accordance with his employment agreement, comprised of (i) 12 months base salary, payable in accordance with payroll practices and (ii) pro
rata portion of the target annual bonus. Amounts payable are conditioned upon the occurrence of a qualifying termination event, compliance with certain terms of the employment agreement, including
compliance with non-competition provisions and the execution and non-revocation of a release agreement.
For
Mr. Grimm, reflects cash severance payable upon a termination without "cause" or resignation for "good reason" in accordance with the terms of his employment agreement, comprised of
(i) 18 months base salary, payable in accordance with payroll practices, (ii) 1.5 times target annual bonus, payable in equal installments over 18 months, (iii) pro
rata portion of target annual bonus, and (iv) outplacement services for 6 months up to $40,000. Amounts payable are conditioned upon the occurrence of a qualifying termination event,
compliance with certain terms of the employment agreement, including compliance with non-competition provisions and the execution and non-revocation of a release agreement.
For
Mr. Blaufuss, reflects cash severance payable upon a termination without "cause" or resignation for "good reason" in accordance with the terms of his employment agreement, comprised of
(i) 18 months base salary, payable in accordance with payroll practices and (ii) pro rata portion of target annual bonus. Amounts payable are conditioned upon the occurrence of a
qualifying termination event, compliance with certain terms of the employment agreement, including compliance with non-competition provisions and the execution and non-revocation of a release
agreement.
For
Mr. Bradley, reflects the cash severance payable upon termination without "cause" or for "good reason" in accordance with the MPG Change in Control Severance Plan, comprised of
(i) 18 months base salary and (ii) pro rata target annual bonus, payable in a lump-sum payment. Amounts payable are contingent upon completion of the merger and compliance with
certain terms of the MPG Change in Control Severance Plan, including
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compliance
with non-competition provisions and the execution and non-revocation of a release agreement.
-
(2)
-
For
each executive officer, reflects the amount of merger consideration payable with respect to MPG stock options, restricted MPG common stock and MPG restricted
stock unit awards in accordance with the merger agreement, as set forth in the table below. Such amounts are conditioned on the completion of the merger.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Consideration for
MPG Stock
Options
|
|
Consideration for
Restricted MPG
Common Stock
|
|
Consideration for
MPG Restricted
Stock Unit Awards
|
|
|
George Thanopoulos
|
|
$
|
4,479,496
|
|
$
|
2,270,576
|
|
$
|
2,802,228
|
|
|
Doug Grimm
|
|
|
2,217,713
|
|
|
1,721,104
|
|
|
2,023,413
|
|
|
Mark Blaufuss
|
|
|
1,367,508
|
|
|
1,391,456
|
|
|
2,023,413
|
|
|
Russell Bradley
|
|
|
749,712
|
|
|
25,696
|
|
|
382,455
|
|
|
Thomas Dono
|
|
|
114,633
|
|
|
|
|
|
208,736
|
|
-
(3)
-
Reflects
the value of health and welfare benefit continuation for Mr. Thanopoulos (12 months); Mr. Blaufuss (18 months); Mr. Grimm
(18 months); Mr. Bradley (18 months); and Mr. Dono (12 months). The values for Messrs. Thanopoulos, Blaufuss, Grimm and Dono are conditioned upon the
occurrence of a qualifying termination event. The values for Mr. Bradley are conditioned upon the completion of the merger and a qualifying termination event.
Merger Consideration
Merger Consideration to be Received by MPG Stockholders
At the effective time of the merger, each share of MPG common stock (other than MPG excluded shares) issued and outstanding immediately prior to
the effective time of the merger will be converted into the right to receive:
-
-
$13.50 in cash, without interest; and
-
-
0.5 of a share of AAM common stock.
In
lieu of the issuance of any fractional share of AAM common stock to which an MPG stockholder would otherwise be entitled, an MPG stockholder will be entitled to receive an amount in
cash, without interest and rounded down to the nearest whole cent (and subject to applicable withholding of taxes), equal to the product obtained by multiplying (a) the fractional share of AAM
common stock to which the stockholder would otherwise be entitled (after taking into account all fractional share interests then held by the stockholder) by (b) the average of the volume
weighted averages of the trading prices of
shares of AAM common stock on the NYSE on each of the 5 consecutive trading days ending on the trading day that is 2 trading days prior to the closing date.
Potential Adjustments
The merger agreement provides that the exchange ratio will be adjusted to appropriately reflect the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities of a subsidiary of AAM or MPG or of securities convertible into shares of AAM common stock or shares of MPG common stock),
extraordinary cash dividends, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to shares of AAM common stock or shares of MPG
common stock with a record date occurring on or after the date of the merger agreement and prior to the effective time of the merger.
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Ownership of AAM Following the Merger
If the merger had been completed on December 31, 2016, and based on the assumptions set forth under "Unaudited Pro Forma Condensed
Combined Financial Statements" beginning on page 165, MPG stockholders would have owned approximately 31% and AAM stockholders would have owned approximately 69% of the pro forma outstanding
shares of AAM common stock immediately following the completion of the merger.
Conversion of Shares; Procedures for Exchange of Shares
The conversion of shares of MPG common stock (other than MPG excluded shares) into the right to receive the merger consideration will occur
automatically at the effective time of the merger. As promptly as practicable after the effective time of the merger, AAM will cause Computershare Trust Company, N.A. (which we refer to in this this
joint proxy statement/prospectus as the exchange agent) to mail a letter of transmittal to each former holder of record of shares of MPG
common stock. The letter of transmittal will specify that delivery will be effected, and risk of loss and title to shares of MPG common stock will pass, only upon proper delivery of such shares to the
exchange agent in accordance with the procedures set forth in the letter of transmittal. The letter of transmittal will be accompanied by instructions for surrendering certificates and book-entry
shares representing shares of MPG common stock in exchange for the merger consideration, including shares of AAM common stock, the cash portion of the merger consideration, any dividends or
distributions payable pursuant to the merger agreement and any cash in lieu of fractional shares. No interest will be paid or will accrue on any merger consideration, any cash in lieu of any
fractional shares of AAM common stock or any dividends or distributions payable to holders of shares of MPG common stock.
MPG stockholders should not return any stock
certificates with the enclosed proxy card.
Effective Time of the Merger
The merger will become effective at the time at which the certificate of merger has been duly filed with the Secretary of State of the State of
Delaware or at such later date or time as is agreed upon by AAM and MPG and specified in the certificate of merger.
Stock Exchange Listing of AAM Shares
It is a condition to the completion of the merger that the shares of AAM common stock to be issued to MPG stockholders in the merger be approved
for listing on the NYSE, subject to official notice of issuance.
Delisting and Deregistration of MPG Common Stock
Upon the completion of the merger, the shares of MPG common stock currently listed on the NYSE will cease to be listed on the NYSE and will
subsequently be deregistered under the Exchange Act.
Material U.S. Federal Income Tax Consequences of the Merger
The following general discussion addresses, subject to the limitations set forth below, the material U.S. federal income tax consequences to
U.S. holders and non-U.S. holders (in each case, as defined below) of shares of MPG common stock of the exchange of shares of MPG common stock for the merger consideration in the merger and the
ownership and disposition by them of shares of AAM common stock received in the merger. The following discussion does not address any aspects of U.S. taxation other than U.S. federal income taxation.
This discussion does not address any non-income or other taxes or any foreign, state or local tax consequences of the merger. The discussion below is for
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general
purposes only and is not a substitute for your own analysis of the tax consequences of the merger and the subsequent ownership and disposition of AAM common stock.
We urge you to consult your own tax advisor as to the specific tax consequences to you of the merger and the ownership of AAM common stock received in the merger,
including the applicability and effect of U.S. federal, state, local and non-U.S. income and other tax laws in light of your particular circumstances.
This
discussion is not a complete analysis or listing of all potential tax considerations relating to the merger or subsequent ownership and disposition of shares of AAM common stock,
and does not address all tax considerations that may be relevant to MPG stockholders. In particular, the discussion below addresses U.S. federal income tax consequences for persons who hold their
shares of MPG common stock, and will hold their shares of AAM common stock, solely as "capital assets" within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (which
we refer to in this joint proxy statement/prospectus as the Code) (generally, property held for investment). The discussion below does not address any tax consequences for stockholders who are subject
to special rules under U.S. federal income tax laws, such as:
-
-
banks, thrifts, mutual funds, other financial institutions or insurance companies;
-
-
tax-exempt entities and pension funds;
-
-
individual retirement and other deferred accounts;
-
-
persons who hold shares as part of a straddle, hedge, integrated transaction or conversion transaction;
-
-
persons who have been, but are no longer, citizens or residents of the United States;
-
-
"passive foreign investment companies" or "controlled foreign corporations";
-
-
a partnership or other pass-through entity for U.S. federal income tax purposes;
-
-
dealers or traders in securities, commodities or currencies;
-
-
grantor trusts;
-
-
persons subject to the alternative minimum tax;
-
-
U.S. persons whose "functional currency" is not the U.S. dollar;
-
-
regulated investment companies and real estate investment trusts; or
-
-
persons who received shares through the exercise of incentive stock options, through the issuance of restricted stock under an equity incentive
plan or through a tax qualified retirement plan or otherwise as compensation.
This
discussion is based on the Code, the Treasury regulations promulgated thereunder, and judicial and administrative interpretations thereof, in each case as in effect and available on
the date of this joint proxy statement/prospectus and does not take into account potential suggested or proposed changes in such tax laws which may impact the discussion below. Each of the foregoing
is subject to change, potentially with retroactive effect.
For
purposes of this discussion, a "U.S. holder" is a beneficial owner of shares of MPG common stock or, after the completion of the merger, AAM common stock that for U.S. federal income
tax purposes is:
-
-
an individual citizen or resident alien of the United States;
-
-
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia;
-
-
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
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-
-
a trust, if such trust validly has elected to be treated as a U.S. person for U.S. federal income tax purposes or if (i) a U.S. court
can exercise primary supervision over its administration and (ii) one or more U.S. persons have the authority to control all of the substantial decisions of such trust.
A
"non-U.S. holder" is a beneficial owner of shares of MPG common stock or, after the completion of the merger, AAM common stock, other than a U.S. holder or a partnership or an entity
or arrangement treated as a partnership for U.S. federal income tax purposes (which we refer to in this joint proxy statement/prospectus as a Partnership). If a Partnership is a beneficial owner of
shares of MPG common stock, the tax treatment of a partner in that Partnership will generally depend on the status of the partner and the activities of the Partnership. Holders of shares of MPG common
stock that are Partnerships, and partners in such Partnerships, should consult their own tax advisors regarding the U.S. federal income tax considerations for them with respect to the merger and the
subsequent ownership and disposition of shares of AAM common stock.
Tax Consequences to U.S. Holders
Exchange of Shares of MPG Common Stock for Merger Consideration
A U.S. holder's receipt of the merger consideration in exchange for its shares of MPG common stock in the merger will be a taxable transaction
for U.S. federal income tax purposes. As such, a U.S. holder generally will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference between
(1) the sum of (a) the amount of cash received by such holder in the merger including amounts, if any, withheld from the merger consideration otherwise payable to such holder and paid to
taxing authorities by AAM or other applicable withholding agents and (b) the fair market value, at the effective time of the merger, of the shares of AAM common stock received by such holder in
the merger and (2) such holder's adjusted tax basis in shares of MPG common stock owned by such holder immediately prior to the effective time of the merger. Any such gain or loss generally
will be long-term capital gain or loss if the U.S. holder's holding period in the shares of MPG common stock immediately prior to the merger is more than one year. The amount and character of gain or
loss must be calculated separately for each identifiable block of shares (generally, shares purchased at the same time in the same transaction) of MPG common stock exchanged in the merger. For
non-corporate U.S. holders, long-term capital gain generally is taxed at preferential U.S. federal rates. The deductibility of capital losses is subject to certain limitations. Each U.S. holder is
urged to consult its tax advisor regarding the manner in which gain or loss should be calculated as a result of the merger.
A
U.S. holder's aggregate tax basis in shares of AAM common stock received in the merger will equal the fair market value of such shares at the effective time of the merger, and the
holding period for such shares will begin on the date immediately following the merger.
Consequences of Holding Shares of AAM Common Stock
Distributions
Following the merger, distributions to U.S. holders on shares of AAM common stock that are paid out of AAM's current or accumulated earnings and
profits (as determined for U.S. federal income tax purposes) will be treated as dividends for U.S. federal income tax purposes. Dividends received by individual U.S. holders with respect to shares of
AAM common stock generally should qualify for preferential tax rates on "qualified dividend income" so long as certain holding period requirements are met. Dividends paid on shares of AAM common stock
will be eligible for the dividends received deduction if the U.S. holder is an otherwise qualifying corporate holder that meets the holding period and other requirements for the dividends received
deduction. Any distribution not constituting a dividend will be treated first as reducing the adjusted basis in the U.S. holder's shares of AAM
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common
stock and, to the extent it exceeds the adjusted basis in the U.S. holder's shares of AAM common stock, as gain from the sale or exchange of such stock. Each U.S. holder is urged to consult its
tax advisor regarding the U.S. federal income tax and other tax consequences of holding shares of AAM common stock.
Gain on Sale or Other Disposition of AAM Common Stock
Upon the sale or other taxable disposition of AAM common stock received in the merger, a U.S. holder generally will recognize capital gain or
loss equal to the difference between the amount realized on such sale or taxable disposition and the U.S. holder's adjusted tax basis in the shares of AAM common stock sold. Any such gain or loss
generally will be long-term capital gain or loss if the U.S. holder's holding period in the shares of AAM common stock sold is more than one year. For non-corporate U.S. holders, long-term capital
gain generally is taxed at preferential U.S. federal rates. The deductibility of capital losses is subject to certain limitations. Each U.S. holder is urged to consult its tax advisor regarding the
U.S. federal income tax and other tax consequences of a sale, redemption, or other taxable disposition of shares of AAM common stock received in the merger.
Medicare Tax
A U.S. holder that is an individual or estate, or a trust that does not qualify for exemption, will be subject to a 3.8% tax (which we refer to
in this joint proxy statement/prospectus as the Medicare Tax) on the lesser of (a) the U.S. holder's "net investment income" for the relevant taxable year and (b) the excess of the U.S.
holder's modified adjusted gross income for the taxable year over a certain threshold (which in the case of individuals will be between $125,000 and $250,000 depending on the individual's
circumstances). A U.S. holder's net investment income will generally include dividends received on shares of AAM common stock and net gains from the disposition of shares of MPG common stock or AAM
common stock unless such dividend income or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or
trading activities). A U.S. holder that is an individual, estate or trust should consult its own tax advisor regarding the applicability of the Medicare Tax to the U.S. holder's dividend income and
gains in respect of the U.S. holder's investment in AAM common stock.
Information Reporting and Backup Withholding
In general, payments received in connection with the exchange of shares of MPG common stock in the merger and payments of dividends on, and
proceeds of a disposition of, shares of AAM common stock received in the merger may be reported to the Internal Revenue Service (which we refer to in this joint proxy statement/prospectus as the IRS).
Backup withholding, currently at a rate of 28%, may apply with respect to payments received in connection with the exchange of shares of MPG common stock in the merger and to payments of dividends on,
and proceeds of a disposition of, shares of AAM common stock received in the merger unless the U.S. holder receiving such a payment (1) is an exempt holder (generally, a corporation or
nonresident alien individual who or which, when required, certifies as to his, her or its exempt status) or (2) provides a certificate (generally on IRS Form W-9) containing the holder's
name, address, correct federal taxpayer identification number and a statement that the holder is a U.S. person and is not subject to backup withholding. Backup withholding is not an additional tax.
Any amounts withheld under the backup withholding rules will be allowable as a refund or credit against a holder's U.S. federal income tax liability provided the required information is timely
furnished to the IRS.
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Tax Consequences to Non-U.S. Holders
Exchange of Shares of MPG Common Stock for Merger Consideration
In general, a non-U.S. holder will not be subject to U.S. federal income tax on any gain realized upon the exchange of shares of MPG common
stock for merger consideration in the merger unless:
-
-
the gain is effectively connected with a trade or business carried on by the non-U.S. holder within the United States (and, if required by an
applicable income tax treaty, is attributable to a U.S. permanent establishment of such non-U.S. holder);
-
-
the non-U.S. holder is an individual and is present in the United States for 183 days or more in the taxable year of disposition and
certain other conditions are met; or
-
-
MPG is or has been a "U.S. real property holding corporation" within the meaning of Section 897 of the Code for U.S. federal income tax
purposes at any time within the shorter of the five-year period preceding such disposition or such non-U.S. holder's holding period of its shares of MPG common stock and such non-U.S. holder
beneficially owned more than 5% of the total fair market value of MPG common stock at any time during such period. MPG does not believe it is or has been a U.S. real property holding corporation
during the preceding five years and, although there can be no assurance, does not anticipate becoming one prior to the merger.
Gain
that is described in the first bullet point immediately above generally will be subject to U.S. federal net income taxation at regular graduated U.S. federal income tax rates. If
the non-U.S. holder
is a foreign corporation, a branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) also may apply to its effectively connected earnings and
profits. An individual non-U.S. holder described in the second bullet point immediately above generally will be subject to U.S. federal income tax at a flat 30% rate (or such lower rate specified by
an applicable income tax treaty) on the gain derived from the exchange of shares of MPG common stock for merger consideration, which may be offset by U.S. source capital losses (even though the
individual is not considered a resident of the United States), provided that the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses. Any gain that is
described in the third bullet point immediately above if MPG was or is a "U.S. real property holding corporation" would be subject to tax at generally applicable U.S. federal income tax rates. Each
non-U.S. holder is urged to consult its tax advisor regarding the manner in which gain or loss should be calculated as a result of the merger.
Consequences of Holding Shares of AAM Common Stock
Distributions
In general, distributions to a non-U.S. holder with respect to shares of AAM common stock received in the merger that represent dividends for
U.S. federal income tax purposes will be subject to U.S. withholding tax at a rate of 30% of the gross amount of the distribution, unless the non-U.S. holder is eligible for a reduced rate of
withholding tax under an applicable income tax treaty and the non-U.S. holder provides proper certification of its eligibility for such reduced rate on IRS Form W-8BEN or W-8BEN-E. A
distribution will constitute a dividend for U.S. federal income tax purposes to the extent of AAM's current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Any
distribution not constituting a dividend will be treated first as reducing the adjusted basis in the non-U.S. holder's shares of AAM common stock and, to the extent it exceeds the adjusted basis in
the non-U.S. holder's shares of AAM common stock, as gain from the sale or exchange of such stock.
Dividends
paid to a non-U.S. holder that are effectively connected with its conduct of a trade or business within the United States (and, if an income tax treaty applies, are
attributable to a U.S.
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permanent
establishment) will not be subject to U.S. withholding tax, as described above, if the non-U.S. holder complies with applicable certification and disclosure requirements. Instead, such
dividends generally will be subject to U.S. federal income tax on a net income basis, in the same manner as if the non-U.S. holder were a resident of the United States, provided that the non-U.S.
holder timely files a U.S. federal income tax return. Dividends received by a foreign corporation that are effectively connected with its conduct of trade or business within the United States
may be subject to an additional branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty). Each non-U.S. holder is urged to consult its tax
advisor regarding the U.S. federal income tax and other tax consequences of holding shares of AAM common stock.
Gain on Sale or Other Taxable Disposition of AAM Common Stock
In general, a non-U.S. holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other taxable disposition of
the non-U.S. holder's shares of AAM common stock received in the merger unless:
-
-
the gain is effectively connected with a trade or business carried on by the non-U.S. holder within the United States (and, if required by an
applicable income tax treaty, is attributable to a U.S. permanent establishment of such non-U.S. holder);
-
-
the non-U.S. holder is an individual and is present in the United States for 183 days or more in the taxable year of disposition and
certain other conditions are met; or
-
-
AAM is or has been a "U.S. real property holding corporation" within the meaning of Section 897 of the Code for U.S. federal income tax
purposes at any time within the shorter of the five-year period preceding such disposition or such non-U.S. holder's holding period of its shares of AAM common stock and either such non-U.S. holder
beneficially owned more than 5% of the total fair market value of AAM common stock at any time during such period or AAM common stock has ceased to be publicly traded. AAM does not believe it is or
has been a U.S. real property holding corporation during the preceding five years and, although there can be no assurance, does not anticipate becoming one in the future.
Gain
that is described in the first bullet point immediately above generally will be subject to U.S. federal net income taxation at regular graduated U.S. federal income tax rates. If
the non-U.S. holder is a foreign corporation, a branch profits tax at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) also may apply to its effectively
connected earnings and profits. An individual non-U.S. holder described in the second bullet point immediately above generally will be subject to U.S. federal income tax at a flat 30% rate (or such
lower rate specified by an applicable income tax treaty) on the gain derived from such sale or other disposition, which may be offset by U.S. source capital losses (even though the individual is not
considered a resident of the United States), provided that the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses. Any gain that is described in the third
bullet point immediately above if AAM was or is a "U.S. real property holding corporation" would be subject to tax at generally applicable U.S. federal income tax rates. Each non-U.S. holder is urged
to consult its tax advisor regarding the U.S. federal income tax and other tax consequences of a sale, redemption, or other disposition of shares of AAM common stock received in the merger.
Foreign Account Tax Compliance Act (FATCA)
Legislation commonly known as FATCA generally imposes a U.S. federal withholding tax of 30% on dividends on, and the gross proceeds of a
disposition of, shares of AAM common stock in each case paid to a "foreign financial institution" (as defined in the Code), unless such institution provides sufficient documentation, typically on IRS
Form W-8BEN-E, evidencing its compliance (or deemed compliance) with FATCA (which may alternatively be compliance with an intergovernmental agreement
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the United States) or otherwise establishes an exemption. FATCA also imposes a U.S. federal withholding tax of 30% on dividends on, and the gross proceeds of a disposition of, shares of AAM
common stock paid to a "non-financial foreign entity" (as defined in the Code) unless such entity
provides sufficient documentation, typically on IRS Form W-8BEN-E, identifying certain substantial direct and indirect U.S. owners of the entity, certifies that there are no such owners, or
otherwise establishes an exemption. The withholding taxes described above currently apply to dividend payments and will apply in the future to payments of gross proceeds from dispositions occurring
after December 31, 2018. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. An intergovernmental agreement between the United States and an
applicable foreign country may modify the requirements described in this paragraph. Non-U.S. holders are urged to consult with their own tax advisors regarding the possible implications of this
legislation on their ownership and disposition of shares of AAM common stock.
Information Reporting and Backup Withholding
Information reporting and backup withholding may apply to payments made in connection with the merger and dividend payments on, and proceeds
from the disposition of, shares of AAM common stock received in the merger. Backup withholding will not apply, however, to a non-U.S. holder who provides a certification of foreign status on the
applicable IRS Form W-8 (typically IRS Form W-8BEN or W-8BEN-E) or appropriate successor form (and the payor does not have actual knowledge or reason to know that such holder is a United
States person as defined in the Code) or is otherwise exempt from backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be
allowed as a refund or a credit against a non-U.S. holder's U.S. federal income tax liability, if any, provided the required information and refund claim is timely filed with the IRS. Non-U.S. holders
should consult their tax advisors regarding the application of the information reporting and backup withholding rules to them.
The foregoing summary does not discuss all aspects of U.S. federal income taxation that may be relevant to particular holders of shares of MPG common stock. MPG
stockholders should consult their own tax advisors as to the particular tax consequences to them of the merger and the ownership and disposition of shares of AAM common stock received in the merger
under any federal, state, local, foreign or other tax laws.
Regulatory Matters
AAM, Merger Sub and MPG have agreed to use their respective reasonable best efforts to consummate and make effective the merger and the other
transactions contemplated by the merger agreement, including, among other things, using reasonable best efforts to obtain (and cooperating with the other party to obtain) all regulatory approvals that
may be or become necessary for the consummation of the transactions.
However,
in no event will AAM or Merger Sub or their subsidiaries be obligated to take any action in connection with obtaining any required regulatory approval that would require the
divestiture of any assets of AAM or MPG or any of their subsidiaries, would limit AAM's freedom of action with respect to, or its ability to retain, MPG and its subsidiaries or any portion thereof or
any of AAM's or its affiliates' other assets or businesses, or would in AAM's reasonable judgment, be expected to have a material adverse impact on any of AAM's businesses or MPG's businesses, except
that, if necessary to obtain the regulatory consents or approvals discussed below, AAM will agree to the divestiture of the assets or businesses or products or product lines of MPG and its
subsidiaries that, individually or in the aggregate, generated total worldwide revenues of up to $150,000,000 in the twelve month period ended September 30, 2016.
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Consents and Approvals
To consummate the transactions contemplated by the merger agreement, AAM and MPG must obtain approvals or consents from, or make filings with, a
number of United States and foreign antitrust regulators. We describe below the material United States and foreign antitrust approvals. If additional regulatory approvals, consents and filings are
required to complete the transactions, AAM and MPG intend to seek such consents and approvals and make such filings.
Under
the HSR Act and the rules promulgated thereunder by the FTC, the merger may not be completed until notification and report forms have been filed by AAM and MPG with the FTC and the
DOJ and the applicable waiting period has expired or been terminated. AAM and MPG filed their respective notification and report forms under the HSR Act with the FTC and the DOJ on November 18,
2016. To provide the FTC additional time to review the proposed transaction, AAM withdrew its HSR filing effective December 19, 2016 and refiled it on December 21, 2016. On
January 20, 2017, at 11:59 p.m. Eastern Standard Time, the HSR Act waiting period expired.
The
merger is also subject to antitrust review by governmental authorities in several foreign jurisdictions in which the companies have a sufficient market presence to require filings.
As of the date of this joint proxy statement/prospectus, the parties have made filings in Austria, Germany, Mexico and South Korea. On December 22, 2016, the merger was granted early clearance
in Germany. On January 10, 2017, the merger was cleared in Austria. On January 26, 2017, the merger was granted approval in South Korea. On February 16, 2017, the parties
refiled their application with respect to the merger with COFECE in Mexico to include additional information requested by COFECE. Approval by COFECE is the only remaining required governmental
approval.
Timing
AAM and MPG cannot give any assurance as to the timing of these consents and approvals or as to AAM's and MPG's ultimate ability to obtain such
consents or approvals (or any additional consents or approvals which may otherwise become necessary) or that AAM and MPG will obtain such consents or approvals on terms and subject to conditions
satisfactory to AAM and MPG.
General
It is possible that any of the governmental entities with which filings have been made or may be made may seek regulatory concessions or impose
additional conditions or that states or private parties may commence litigation to prevent the completion of the merger. There can be no assurance that:
-
-
AAM or MPG will be able to satisfy or comply with any conditions imposed;
-
-
compliance or non-compliance will not have adverse consequences on the combined company after the completion of the merger; or
-
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litigation, if any, will be resolved favorably to AAM and MPG.
Appraisal Rights
Holders of shares of MPG common stock who meet certain requirements are entitled to seek appraisal rights in connection with the merger.
This
joint proxy statement/prospectus constitutes notice of such appraisal rights as required by Section 262 of the General Corporation Law of the State of Delaware (which we
refer to in this joint proxy statement/prospectus as the DGCL). The full text of Section 262 of the DGCL (which we refer to in this joint proxy statement/prospectus as Section 262) is
attached to this proxy statement as Annex E. In connection with the merger, any holder of shares of MPG common stock who wishes to exercise appraisal rights, or who wishes to preserve such
holder's right to do so, should review the
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following
discussion and Annex E carefully because failure to timely and properly comply with the procedures specified in Section 262 may result in the loss of appraisal rights.
Because of the complexity of the procedures for
exercising appraisal rights, any holder of shares of MPG common stock who wishes to exercise such holder's appraisal rights
should consider seeking legal and financial advice.
The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is
qualified in its entirety by the full text of Section 262, which is attached to this joint proxy statement/prospectus as Annex E. The following summary does not constitute any legal or
other advice nor does it constitute a recommendation that MPG stockholders exercise their appraisal rights under Section 262.
Under
Section 262, holders of shares of MPG common stock who do not vote in favor of the adoption of the merger agreement and the approval of the transactions contemplated by the
merger agreement and who otherwise comply with the procedures set forth in Section 262 will be entitled to have their shares appraised by the Delaware Court of Chancery and receive payment in
cash of the "fair value" of the shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, determined as described below,
unless the surviving corporation of the merger earlier pays an amount in cash to MPG stockholders entitled to appraisal as described below.
Only a holder of record can exercise
appraisal rights and demand appraisal of the shares registered in that holder's name. Failure to follow precisely any of the statutory requirements may result in the loss of your appraisal
rights.
All
references in Section 262 and in this summary of appraisal rights applicable to MPG stockholders in connection with the merger are to record holders of shares of MPG common
stock immediately prior
to the effective time of the merger. If you hold your shares of MPG common stock through another person, such as a broker, fiduciary, depositary or other nominee, you must act promptly to cause the
record holder to follow the steps summarized below properly and in a timely manner to perfect appraisal rights.
Accordingly, you should consult with your bank, broker or other
nominee to determine the appropriate procedures for the making of a demand for appraisal by the bank, broker or other nominee.
All written demands for appraisal pursuant to Section 262 should be delivered to the Secretary of MPG at Metaldyne Performance Group Inc.,
Attention: Secretary, One Towne Square, Suite 550, Southfield, Michigan 48076.
Filing Written Demand
Any holder of shares of MPG common stock wishing to exercise appraisal rights must deliver to MPG, before the vote on the adoption of the merger
agreement and the approval of the transactions contemplated by the merger agreement at the MPG special meeting, a written demand for the appraisal of such stockholder's shares. The demand must
reasonably inform the surviving corporation of the merger of the identity of the holder, as well as the intention of the holder to demand an appraisal of the "fair value" of the shares of MPG common
stock held by the holder. A stockholder's failure to deliver the written demand prior to the taking of the vote on the adoption of the merger agreement and the approval of the transactions
contemplated by the merger agreement at the MPG special meeting will constitute a waiver of appraisal rights. The stockholder also must not vote in favor of the adoption of the merger agreement and
the approval of the transactions contemplated by the merger agreement at the MPG special meeting. A holder of shares of MPG common stock wishing to exercise appraisal rights must hold the shares of
record on the date the written demand for appraisal is made and must continue to hold the shares of record through the effective time of the merger.
If
shares of MPG common stock are held through a bank, broker, depository or other nominee, the bank, broker, depository or other nominee that is the record holder must demand appraisal
of such shares. A broker, bank, fiduciary, depository or other nominee who holds shares of MPG common
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stock
as a nominee for several beneficial owners may exercise appraisal rights with respect to the shares of MPG common stock held for one or more beneficial owners while not exercising such rights
with respect to the shares of MPG common stock held for other beneficial owners. In such case, the written
demand must set forth the number of shares of MPG common stock covered by the demand. Where the number of shares of MPG common stock is not expressly stated, the demand will be presumed to cover all
shares of MPG common stock held in the name of the record owner. Stockholders who hold their shares of MPG common stock in bank, brokerage accounts or other nominee forms and who wish to exercise
appraisal rights are urged to consult with their bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal by such nominee.
If
the shares of MPG common stock are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of the demand should be made in that capacity, and
if the shares of MPG common stock are owned of record by more than one person, as in a joint tenancy and tenancy in common, the demand should be executed by or on behalf of all joint owners. An
authorized agent, including an agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and
expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners.
Waiver of Appraisal Rights
A proxy that is submitted by a holder of record of MPG common stock that does not contain voting instructions will, unless revoked, be voted at
the MPG special meeting in favor of the adoption of the merger agreement and the approval of the transactions contemplated by the merger agreement. A proxy without any instructions will therefore
result in the waiver of the stockholder's right of appraisal and will nullify any previously delivered written demand for appraisal. Consequently, a stockholder who submits a proxy and who wishes to
exercise appraisal rights must submit a proxy containing instructions to vote against the adoption of the merger agreement and the approval of the transactions contemplated by the merger agreement or
abstain from voting on the adoption of the merger agreement and the approval of the transactions contemplated by the merger agreement. Voting against the adoption of the merger agreement and the
approval of the transactions contemplated by the merger agreement or abstaining from voting or failing to vote on the proposal to adopt the merger agreement will not by itself constitute a written
demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote against the adoption of the merger
agreement and the approval of the transactions contemplated by the merger agreement.
Notice by the Surviving Corporation
If the merger is completed, within 10 days after the effective time of the merger, the surviving corporation of the merger will notify each
holder of shares of MPG common stock who has made a written demand for appraisal pursuant to Section 262, and who has not voted in favor of the
adoption of the merger agreement and the approval of the transactions contemplated by the merger agreement, that the merger has become effective and the effective date thereof.
Filing a Petition for Appraisal
Within 120 days after the effective time of the merger, but not thereafter, the surviving corporation of the merger or any holder of
shares of MPG common stock who has complied with Section 262 and is entitled to appraisal rights under Section 262 may file a petition in the Delaware Court of Chancery demanding
a determination of the fair value of the shares of MPG common stock held by all holders who have properly demanded appraisal of their shares. The surviving corporation of the merger is under no
obligation to, and has no present intention to, file such a petition, and holders of shares of MPG common stock should assume that the surviving corporation of the merger will not file a
petition
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or
initiate any negotiations with respect to the fair value of shares of MPG common stock. Accordingly, any holders of shares of MPG common stock who desire to have their shares appraised should
initiate all necessary action to perfect their appraisal rights in respect of shares of MPG common stock within the time prescribed in Section 262.
Within
120 days after the effective time of the merger, any holder of shares of MPG common stock who has complied with the requirements for exercise of appraisal rights under
Section 262 will be entitled, upon written request, to receive from the surviving corporation of the merger a statement setting forth the aggregate number of shares of MPG common stock not
voted in favor of the adoption of the merger agreement and the approval of the transactions contemplated by the merger agreement and with respect to which demands for appraisal have been received and
the aggregate number of holders of such shares. The statement must be mailed to the stockholder within ten days after a written request therefor has been received by the surviving corporation of the
merger or within ten days after the expiration of the period for delivery of demands for appraisal, whichever is later. A beneficial owner of shares held either in a voting trust or by a nominee on
behalf of such person may, in such person's own name, file a petition seeking appraisal or request the foregoing statement. As noted above, however, the demand for appraisal can only be made by
a stockholder of record.
Initial Hearing
If a petition for an appraisal is timely filed by a holder of shares of MPG common stock and a copy thereof is served upon the surviving
corporation of the merger, the surviving corporation will then be obligated within 20 days to file with the Delaware Register in Chancery a duly verified list containing the names and addresses
of all stockholders who have demanded appraisal of their shares of MPG common stock and with whom agreements as to the value of their shares have not been reached. After notice to the stockholders as
required by the court, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to determine those stockholders who have complied with Section 262 and who have become
entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the stockholders who demanded appraisal of their shares of MPG common stock to submit their stock certificates to
the Delaware Register in Chancery for notation thereon of the pendency of the appraisal proceeding, and if any stockholder fails to comply with the direction, the Delaware Court of Chancery may
dismiss the appraisal proceedings as to such stockholder.
Section 262
further provides that the Delaware Chancery Court shall dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights if,
immediately prior to a transaction such as the merger, the shares of the class or series of stock of the constituent corporation as to which appraisal rights are available were listed on a national
securities exchange, unless (i) the total number of shares entitled to appraisal exceeds 1% of the outstanding shares of the class or series eligible for appraisal or (ii) the value of
the consideration provided in the merger for such total number of shares exceeds $1 million.
Judicial Determination of Fair Value
After determining the holders of shares of MPG common stock entitled to appraisal, the Delaware Court of Chancery will appraise the "fair value"
of their shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair
value. In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. The appraisal proceeding will be conducted in accordance with the rules of the Delaware
Court of Chancery, including any rules specifically governing appraisal proceedings.
In
Weinberger v. UOP, Inc.
, the Supreme Court of Delaware discussed the factors that could be considered in determining fair value
in an appraisal proceeding, stating that "proof of value by any
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techniques
or methods that are generally considered acceptable in the financial community and otherwise admissible in court" should be considered, and that "fair price obviously requires consideration
of all relevant factors involving the value of a company." The Delaware Supreme Court stated that, in making this determination of fair value, the Delaware Court of Chancery must consider market
value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future prospects of
the merged corporation. Section 262 provides that fair value is to be "exclusive of any element of value arising from the accomplishment or expectation of the merger[.]"
In
Cede & Co. v. Technicolor, Inc.
, the Delaware Supreme Court stated that such exclusion is a "narrow exclusion that does not
encompass known elements of value," but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In
Weinberger
, the Supreme Court of Delaware also
stated that "elements of future value, including the nature of the enterprise, which are known or
susceptible of proof as of the date of the merger and not the product of speculation, may be considered."
Stockholders
considering seeking appraisal should be aware that the "fair value" of their shares as so determined could be more than, the same as or less than the consideration they
would receive pursuant to the merger agreement if they did not seek appraisal of their shares.
Although the parties to the merger agreement believe that the merger
consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and MPG stockholders should recognize that such an
appraisal could result in a determination of a value higher or lower than, or the same as, the value of the merger consideration.
You should be aware that an investment banking
opinion as to the fairness, from a financial point of view, of the consideration payable in a sale transaction, such as the merger, is not an opinion as to, and does not otherwise address, fair value
under Section 262. Neither MPG nor AAM anticipate offering more than the merger consideration to any MPG stockholder exercising appraisal rights, and each of MPG and AAM reserves the right to
assert, in any appraisal proceeding, that for purposes of Section 262, the "fair value" of a share of MPG common stock is less than the value of the merger consideration, and that the methods
that are generally considered acceptable in the financial community and otherwise admissible in court should be considered in the appraisal proceedings.
Unless
the court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment shall be
compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period from the effective date of the merger
and the date of payment of the judgment. Notwithstanding the foregoing, at any time before the entry of the judgment in the appraisal proceedings, the surviving corporation of the merger may pay to
each MPG stockholder entitled to appraisal an amount in cash, in which case interest will accrue after such date only with respect to the sum of (1) the difference, if any, between the amount
paid by the surviving corporation of the merger and the fair value of the shares of MPG common stock as determined by the Delaware Court of Chancery, and (2) interest accrued until such date of
payment, unless paid at such time.
Costs and Expenses
The costs of the action (which do not include attorneys' fees or the fees and expenses of experts) may be determined by the Delaware Court of
Chancery, and the parties will be responsible for such fees and expenses as the Delaware Court of Chancery deems equitable under the circumstances. The Delaware Court of Chancery may also order that
all or a portion of the expenses incurred by a stockholder in connection with an appraisal, including, without limitation, reasonable attorneys' fees and the fees and expenses of experts utilized in
the appraisal proceeding, be charged pro rata against the value of all the shares entitled to be appraised.
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No Rights as a MPG Stockholder
From and after the effective time of the merger, no dissenting stockholder shall have any rights of a MPG stockholder with respect to that
holder's shares for any purpose, except to receive payment of fair value and to receive payment of dividends or other distributions on the holder's shares of MPG common stock, if any, payable to MPG
stockholders of record as of a time prior to the effective time of the merger; provided, however, that if a dissenting stockholder delivers to the surviving corporation of the merger a written
withdrawal of the demand for an appraisal within 60 days after the effective time of the merger and acceptance of the merger, or subsequently with the written approval of the surviving
corporation of the merger, then the right of that dissenting stockholder to an appraisal will cease and the dissenting stockholder will be entitled to receive the merger consideration in accordance
with the terms of the merger agreement.
Withdrawal
Any holder of shares of MPG common stock who has not commenced an appraisal proceeding or joined such proceeding as a named party may withdraw
his, her or its demand for appraisal and accept the consideration offered pursuant to the merger agreement by delivering to
the surviving corporation of the merger a written withdrawal of the demand for appraisal and an acceptance of the merger; however, any such attempt to withdraw the demand made more than 60 days
after the effective date of the merger will require written approval of the surviving corporation of the merger. No appraisal proceeding in the Delaware Court of Chancery will be dismissed after such
60 day period without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just; provided, that this
restriction will not affect the right of any former MPG stockholder who has not commenced an appraisal proceeding or joined such proceeding as a named party to withdraw such stockholder's demand for
appraisal and to accept the merger consideration within 60 days after the date of the merger.
If
any stockholder who demands appraisal of shares of MPG common stock under Section 262 fails to perfect, or withdraws or otherwise loses, such holder's right to appraisal, the
stockholder's shares of MPG common stock will be deemed to have been converted at the effective time of the merger into the right to receive the merger consideration applicable to such shares. A
stockholder will fail to perfect, or lose or withdraw, the holder's right to appraisal if no petition for appraisal is filed within 120 days after the effective time of the merger or if the
stockholder delivers to the surviving corporation of the merger a written withdrawal of the holder's demand for appraisal and an acceptance of the merger consideration in accordance with
Section 262.
Failure to comply strictly with all of the procedures set forth in Section 262 may result in the loss of a stockholder's statutory appraisal rights.
Consequently, any MPG stockholder wishing to exercise appraisal rights is urged to consult legal and financial advisors before attempting to exercise those rights.
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CERTAIN LITIGATION
On February 16, 2017, a purported class action complaint was filed in the United States District Court for the Eastern District of
Michigan, captioned
Stephen Bushansky v. Metaldyne Performance Group Inc., et al.
, Case No. 2:17-cv-10508-MAG-DRG. The complaint asserts claims
for alleged violations of Sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, and names MPG and the members of the MPG board of directors as defendants.
The complaint alleges, among other things, that the defendants issued materially incomplete and misleading disclosures in the preliminary registration statement on Form S-4 relating to the
merger. The complaint seeks, among other things, injunctive relief and an award of attorneys' fees. MPG and the members of the MPG board of directors believe that the claims asserted in this lawsuit
are without merit.
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FINANCING RELATING TO THE MERGER
The obligations of AAM and Merger Sub under the merger agreement are not subject to any conditions regarding their ability to finance, or obtain
financing for, the transactions contemplated by the merger agreement, and they are obligated under the merger agreement to have sufficient funds available to satisfy their obligations under the merger
agreement. AAM has obtained commitments for financing (i) to pay (A) the cash consideration payable in connection with the merger and (B) related fees and expenses, (ii) to
refinance any indebtedness outstanding under the existing AAM senior secured revolving credit facility and certain existing indebtedness of MPG and (iii) for general corporate purposes. Under
the documentation for such financing commitments, AAM has the option to reduce such commitments by up to $400 million.
Commitment Letter
On November 3, 2016, in connection with its entry into the merger agreement, AAM entered into a commitment letter (which we refer to in
this joint proxy statement/prospectus as the commitment letter) with JPMorgan (we refer to JPMorgan and the other financial institutions joining the commitment letter and providing commitments
thereunder collectively in this joint proxy statement/prospectus as the Commitment Parties), pursuant to which the Commitment Parties agreed to provide commitments for (a) a senior secured term
loan A facility (which we refer to in this joint proxy statement/prospectus as the term loan A facility) in an aggregate principal amount of up to $100 million, (b) a senior secured term
loan B facility (which we refer to in this joint proxy statement/prospectus as the term loan B facility) in an aggregate principal amount of up to $1.55 billion (we refer to the term loan A
facility and the term loan B facility collectively in this joint proxy statement/prospectus as the term loan facilities) and (c) a senior unsecured bridge facility (which we refer to in this
joint proxy statement/prospectus as the bridge facility) in an aggregate principal amount of up to $1.2 billion to be provided if and to the extent, prior to the date of the completion of the
merger, up to $1.2 billion in gross proceeds from the issuance and sale of senior unsecured notes (which we refer to in this joint proxy statement/prospectus as the senior notes) are not
received by AAM.
In
addition, pursuant to the commitment letter, JPMorgan agreed to provide a senior secured revolving credit facility in an aggregate principal amount not to exceed $800 million
(which we refer to in this joint proxy statement/prospectus as the revolving facility).
The
commitment letter sets out the principal terms of the term loan facilities, the bridge facility and the revolving facility. The funding of each of the facilities is subject to
customary conditions precedent for acquisition financings, including entry into definitive credit documentation and the completion of the merger.
Term Loan Facilities and Revolving Facility
On or prior to the date of the completion of the merger, AAM expects to enter into a senior secured credit facility agreement documenting the
term loan facilities and the revolving facility pursuant to which the lenders thereunder will provide up to $1.65 billion in term loans and up to $800 million in revolving loans to
American Axle & Manufacturing, Inc. (which we refer to in this joint proxy statement/prospectus as the Borrower), a wholly-owned subsidiary of AAM. The term loan facilities and the
revolving facility will be guaranteed by AAM and certain of AAM's direct and indirect wholly-owned domestic subsidiaries subject to customary exceptions (we refer to these subsidiaries and AAM
collectively in this joint proxy statement/prospectus as the Guarantors). The term loan facilities and the revolving facility will be secured by a first priority security interest in substantially all
assets of
the Borrower and the Guarantors, including a pledge of the stock of all restricted direct domestic subsidiaries and 66% of the stock of restricted direct, first-tier foreign subsidiaries, subject to
customary exceptions.
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Amounts
borrowed under the term loan facilities are intended to be used to fund a portion of the cash consideration payable in connection with the merger, pay related fees and expenses,
refinance any indebtedness outstanding under the existing AAM senior secured revolving credit facility and certain existing indebtedness of MPG (including, without limitation, existing credit
facilities), and for general corporate purposes. The term loan A facility is contemplated to mature on the date that is 5 years after its incurrence. The term loan B facility is contemplated to
mature on the date that is 7 years after its incurrence.
Amounts
borrowed under the revolving facility are intended to be used for working capital and for general corporate purposes (including, without limitation, funding the merger and
related costs). The revolving facility is contemplated to mature on the date that is 5 years after the closing date.
The
interest rate payable on amounts outstanding under the term loan facilities and the revolving facility will be equal to either (i) LIBOR (subject to a 0.75% floor for the term
loan B facility) or (ii) an alternate base rate (to be defined as the highest of (a) JPMorgan's prime rate, (b) the Federal Funds effective rate plus 0.50% and (c) one
month LIBOR plus 1.00%), plus, in each case, an applicable margin, which in the case of the term loan A facility and the revolving facility will be in accordance with a pricing grid to be agreed.
The
documentation for the term loan facilities and the revolving facility will contain events of default, representations and warranties and covenants reasonably consistent with the
Borrower and MPG's respective existing credit facilities. The term loan A facility and the revolving facility will also be subject to financial maintenance covenants requiring the Borrower to maintain
a leverage ratio at or below a maximum level to be agreed and a consolidated EBITDA to cash interest expense ratio at or above a minimum level to be agreed.
New Senior Notes or Bridge Facility
AAM intends to finance part of the cash portion of the merger consideration, pay related fees and expenses and refinance certain existing
indebtedness of MPG with an issuance of up to $1.2 billion in new senior unsecured notes, subject to market conditions. Any such notes may be issued into escrow or carry a mandatory redemption
provision such that, if the merger is not completed prior to the outside date, such notes would be redeemed. To the extent that, prior to the date of the completion of the merger, AAM has not received
gross proceeds of at least $1.2 billion from such issuance, AAM expects to enter into a new senior unsecured credit facility agreement for the bridge facility pursuant to which the lenders
thereunder will provide loans in place of such notes. The bridge facility would be guaranteed by each of the Guarantors.
Amounts
borrowed under the bridge facility are intended to be used to fund a portion of the cash consideration payable in connection with the merger, pay related fees and expenses and
refinance certain existing indebtedness of MPG. Proceeds of any equity issuances and debt incurred by AAM (in each case subject to certain customary exceptions, including receivables financing) will
be used to mandatorily repay the bridge facility. If the bridge facility remains outstanding on the one-year anniversary of the completion of the merger, its maturity date will automatically be
extended to the eighth anniversary of the completion of the merger.
The
interest rate payable on amounts outstanding under the bridge facility will be equal to the greater of (i) 0.75% and (ii) LIBOR, plus, in each case, 6.25%, plus an
additional 0.50% every 90 days following the completion of the merger, until the first anniversary of the completion of the merger. The bridge facility documentation would contain events of
default, representations and warranties and covenants reasonably consistent with, but not more restrictive than, those in the documentation for the term loan facilities and the revolving facility.
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THE MERGER AGREEMENT
The following is a summary of the material provisions of the merger agreement. The following summary of the merger
agreement does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. The summary of the material terms of the merger agreement
below and elsewhere in this joint proxy statement/prospectus is subject to, and qualified in its entirety by reference to the full text of, the merger agreement, which is attached as Annex A to
this joint proxy statement/prospectus and is incorporated herein by reference. You should read the entire merger agreement carefully and in its entirety because it, and not the description below or
elsewhere in this joint proxy statement/prospectus, is the legal document that governs the merger.
The merger agreement and the discussion under this heading "The Merger Agreement" have been included to provide you with information regarding its material terms.
They are not intended to provide any other financial or other information about AAM, MPG, or their respective subsidiaries and affiliates. Information
about AAM and MPG can be found elsewhere in this joint proxy statement/prospectus and in the other filings AAM and MPG make with the SEC. See "Where You Can Find More Information" on
page 196.
The Merger
The merger agreement provides for the merger of Merger Sub with and into MPG, upon the terms, and subject to the satisfaction or written waiver
(where permissible under applicable law) of the conditions to the obligations of the parties to consummate the merger. The merger will become effective as of the effective time of the merger. As the
surviving corporation, MPG will survive the merger and continue to exist as a wholly-owned subsidiary of AAM. The certificate of incorporation and bylaws of Merger Sub as in effect immediately prior
to the merger will be the certificate of incorporation and bylaws of MPG as the surviving corporation following the completion of the merger, except that the certificate of incorporation will be
amended and restated to reflect MPG as the name of the surviving corporation.
Closing of the Merger
Unless another time is agreed to by AAM and MPG or the merger agreement has been terminated in accordance with its terms, the closing of the
transactions contemplated by the merger agreement (which we refer to in this joint proxy statement/prospectus as the closing) will occur on the third business day after satisfaction or written waiver
(where permissible under applicable law) of the conditions set forth in the merger agreement (except for any conditions that by their nature can only be satisfied on the closing date, but subject to
the satisfaction or valid written waiver of such conditions) (which date we refer to in this joint proxy statement/prospectus as the closing date).
Merger Consideration Received by MPG Stockholders; No Fractional Shares
At the effective time of the merger, as a result of the merger, each share of MPG common stock (other than MPG excluded shares) issued and
outstanding immediately prior to the effective time of the merger will be converted into the right to receive:
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-
$13.50 per share in cash, without interest; and
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0.5 fully paid, non-assessable shares of AAM common stock.
In
lieu of the issuance of any fractional share of AAM common stock to which an MPG stockholder would otherwise be entitled, the stockholder will be entitled to receive an amount in
cash, without interest and rounded down to the nearest whole cent and subject to applicable withholding of taxes, equal to the product obtained by multiplying (a) the fractional share of AAM
common stock to which the stockholder would otherwise be entitled (after taking into account all fractional share
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interests
then held by the stockholder) by (b) the average of the volume weighted averages of the trading prices of shares of AAM common stock on the NYSE on each of the 5 consecutive trading
days ending on the trading day that is 2 trading days prior to the closing date.
Treatment of MPG Stock Options and Other Equity-Based Awards
Treatment of MPG Stock Options
Each unvested MPG stock option outstanding immediately prior to the effective time of the merger will be accelerated in full and become fully
vested immediately prior to the effective time of the merger and, at the effective time of the merger, all MPG stock options will be cancelled and the holders thereof will receive an amount in cash
(without interest and subject to applicable withholding of taxes) equal to the product obtained by multiplying (x) the aggregate number of shares of MPG common stock that were issuable upon
exercise of the MPG stock option immediately prior to
the effective time of the merger, and (y) the cash value of the merger consideration, less the per share exercise price of the MPG stock option. For purposes of the cash payment with respect to
the MPG stock options, the stock consideration is valued based on the closing price of a share of AAM common stock as of the trading day immediately preceding the closing date of the merger. If the
exercise price payable upon exercise of an MPG stock option equals or exceeds the value of the merger consideration, the MPG stock option will be cancelled for no consideration.
Treatment of Restricted MPG Common Stock
At the effective time of the merger, each outstanding share of restricted MPG common stock outstanding under an equity plan of MPG will be
cancelled and terminated, and each holder thereof will receive the merger consideration for each share of restricted MPG common stock (subject to applicable withholding of taxes).
Treatment of MPG Restricted Stock Unit Awards
Each MPG restricted stock unit award outstanding under an equity plan of MPG will become fully vested immediately prior to the effective time of
the merger and, at the effective time of the merger, will be cancelled and terminated, and each holder thereof will receive the merger consideration multiplied by the number of shares of MPG common
stock subject to the MPG restricted stock unit award (subject to applicable withholding of taxes).
Conversion of Shares; Exchange of Certificates
The conversion of shares of MPG common stock (other than MPG excluded shares) into the right to receive the merger consideration will occur
automatically at the effective time of the merger. In addition, at the effective time of the merger, each share of MPG common stock held in the treasury of MPG or that is owned by AAM or any direct or
indirect subsidiary of AAM (including Merger Sub) will automatically be canceled, without any payment or distribution being made with respect thereto, and each outstanding share of common stock of
Merger Sub will be converted into and become one share of common stock of MPG as the surviving corporation in the merger. Shares of MPG common stock with respect to which appraisal rights are properly
exercised and not withdrawn will not be converted into the right to receive the merger consideration but will be treated as described below under "
Appraisal
Rights
."
AAM
will deposit with the exchange agent, (i) promptly following the effective time of the merger on the closing date, cash in an amount sufficient to pay the cash portion of the
merger consideration, (ii) at or prior to the effective time of the merger, book-entry shares of AAM common stock sufficient to pay the stock portion of the merger consideration and
(iii) cash, from time to time, in an amount
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sufficient
to pay any cash required to be paid in lieu of fractional shares of AAM common stock and other amounts required to be paid under the merger agreement.
As
promptly as practicable after the effective time of the merger, AAM will cause the exchange agent to mail to each person who was, at the effective time of the merger, a holder of
record of shares of MPG common stock entitled to receive the merger consideration: (a) a letter of transmittal, which will specify that delivery of shares of MPG common stock will be effected,
and risk of loss and title to shares of MPG common stock will pass, only upon proper delivery of the shares of MPG common stock to the exchange agent) and (b) instructions for use in effecting
the surrender of shares of MPG common stock pursuant to the letter of transmittal.
Upon
(i) surrender to the exchange agent of a certificate representing shares MPG common stock for cancellation, together with a properly completed and executed letter of
transmittal, or (ii) receipt by the exchange agent of an "agent's message" in the case of book-entry shares of MPG common stock, and, in each case, all other documents as may be required
pursuant to the instructions, a holder of shares of MPG common stock will be entitled to receive (x) a check in the amount equal to the aggregate cash consideration that the holder has the
right to receive, including any cash in lieu of any fractional shares of AAM common stock and any dividends or other distributions with respect to shares of AAM common stock that the holder is
entitled to receive under the merger agreement, and (y) book-entry shares representing the aggregate stock consideration that the holder has the right to receive. Any certificates or book-entry
shares of MPG common stock that are surrendered to the exchange agent will be cancelled. No interest will be paid or accrued on any merger consideration, any cash in lieu of any fractional shares of
AAM common stock or any dividends or other distributions payable to holders of shares of MPG common stock.
MPG stockholders should not return stock certificates with the
enclosed proxy card.
Until
surrendered as contemplated in the preceding paragraph, each certificate or book-entry share representing shares of MPG common stock will be deemed at all times after the effective
time of the merger to represent only the right to receive, upon surrender, the merger consideration (without interest), cash in lieu of any fractional shares of AAM common stock and any dividends or
other distributions with respect to shares of AAM common stock such holder is entitled to receive under the merger agreement. Upon payment of the merger consideration, any cash in lieu of any
fractional shares of AAM common stock and any dividends or other distributions with respect to shares of AAM
common stock, MPG stockholders will have no further rights with respect to their shares of MPG common stock.
AAM,
Merger Sub, MPG or the exchange agent is entitled to deduct and withhold from the consideration otherwise payable pursuant to the merger agreement to any former holder of shares of
MPG common stock, MPG stock options, restricted MPG common stock or MPG restricted stock unit awards such amounts as are required to be deducted and withheld under the Code, including the rules and
regulations promulgated thereunder, or under any provision of applicable state, local or foreign law. If AAM determines that any amount is required by law to be deducted or withheld, or that any tax
forms are necessary to establish that no deduction or withholding is required, AAM will use commercially reasonable efforts to notify the holder at least 3 business days prior to the deduction or
withholding (or as soon as practicable thereafter if AAM makes such determination within the 5-day period prior to the closing date). Any amount deducted or withheld and duly paid over to the
applicable governmental authority will be treated as having been paid to such stockholder in respect of which such deduction or withholding was made.
Termination of Exchange Fund
Any portion of the amounts deposited with the exchange agent for the benefit of MPG stockholders (including proceeds of any investment thereof)
that remains undistributed to MPG
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stockholders
on the one-year anniversary of the effective time of the merger will be delivered to AAM, or its designee, and any MPG stockholders who have not yet received the merger consideration as
described above may thereafter look only to AAM for payment of their claim to the merger consideration, any cash in lieu of fractional shares of AAM common stock and any dividends or other
distributions with respect to AAM common stock to which they are entitled under the merger agreement.
Surviving Corporation Directors and Officers
Upon the effective time of the merger, the directors of Merger Sub will become the directors of MPG, as the surviving corporation in the merger,
and will hold office in accordance with the terms of the organizational documents of the surviving corporation.
Prior
to the effective time of the merger, AAM will determine, in consultation with MPG, the individuals who will become officers of MPG, as the surviving corporation, upon the effective
time of the merger. Such officers will hold office until their respective successors are duly elected and qualified or until such officer's earlier death, resignation or removal.
Appraisal Rights
Under Section 262 of the DGCL, holders of shares of MPG common stock who do not vote in favor of the adoption of the merger agreement and
approval of the transactions contemplated by the merger agreement, or consent thereto in writing, and who otherwise properly follow the procedures set forth in Section 262 of the DGCL to demand
appraisal of their shares of MPG common stock and perfect their right to appraisal thereunder will be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment
in cash of the "fair value" of the shares, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with a fair rate of interest, if any, as determined
by the court (subject to any reduction in interest if voluntary payments are made to MPG stockholders who have perfected their appraisal rights prior to the Delaware Court of Chancery granting a final
judgment regarding fair value). This value could be more than, less than or the same as the value of the merger consideration. If such procedures are properly followed and the appraisal request not
withdrawn, the holder of MPG common stock will have no right to receive the merger consideration, but rather only such "fair value" of the shares in cash. For a more complete description of the
available appraisal rights, see "
The MergerAppraisal Rights
" beginning on page 114. MPG has agreed to allow AAM and Merger Sub to
participate in and direct all proceedings with respect to appraisal demands by MPG stockholders.
Conditions to the Completion of the Merger
Conditions to Each Party's Obligations to Complete the Merger
AAM, MPG and Merger Sub are obligated to complete the merger subject to the satisfaction, or, where permissible under applicable law, written
waiver, of the following conditions:
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the effectiveness of the registration statement for the shares of AAM common stock being issued in the merger, the absence of any stop order
suspending such effectiveness and no proceeding seeking a stop order being pending before the SEC;
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the adoption of the merger agreement and the approval of the transactions contemplated by the merger agreement at the MPG special meeting;
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the approval of the AAM share issuance at the AAM special meeting;
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the absence of any restraint;
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the expiration or termination of the waiting period (and any extensions thereof) under the HSR Act applicable to the merger in the United
States and the receipt of all consents, approvals, non-disapprovals, orders and other authorizations of any governmental authority in certain other jurisdictions agreed by the parties;
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the shares of AAM common stock to be issued in the merger having been approved for listing on the NYSE, subject to official notice of issuance;
and
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entry into the stockholders' agreement, effective as of the effective time of the merger.
Conditions to the Obligations of AAM and Merger Sub to Complete the Merger
AAM's and Merger Sub's obligations to consummate the merger are further subject to satisfaction or, where permissible under applicable law,
written waiver (by AAM or Merger Sub), of the following additional conditions:
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certain representations and warranties of MPG set forth in the merger agreement with respect to (i) the capitalization of MPG being true
and correct in all respects, except for de minimis inaccuracies, and (ii) the organization and qualification of MPG, the capitalization of MPG's subsidiaries and the absence of certain
obligations and arrangements with respect to the equity interests in MPG and its subsidiaries, the authority of MPG relative to the merger agreement, the absence of restrictions under certain takeover
laws or provisions in MPG's certificate of incorporation or bylaws, and entitlement of brokers to fees, in each case, being true and correct (without giving effect to any materiality or MPG material
adverse effect qualifier in such representations and warranties) in all material respects, in each case of clauses (i) and (ii), as of the date of the merger agreement and as of the effective
time of the merger as though made on and as of such date or time (or, in the case of representations and warranties that address matters only as of a particular date, as of such date);
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all other representations and warranties of MPG set forth in the merger agreement being true and correct (without giving effect to any MPG
material adverse effect, materiality or other similar qualifiers in such representations and warranties) as of the date of the merger agreement and as of the effective time of the merger as though
made on and as of such date or time (or, in the case of representations and warranties that address matters only as of a particular date, as of such date) except where the failure of such
representations and warranties to be so true and correct does not have, and would not reasonably be expected to have, an MPG material adverse effect;
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MPG having performed or complied, in all material respects, with all obligations required to be performed or complied with by it under the
merger agreement at or prior to the effective time of the merger;
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the receipt of a certificate from an executive officer of MPG certifying that the above conditions have been satisfied; and
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the absence of an MPG material adverse effect since the date of the merger agreement.
Conditions to MPG's Obligation to Complete the Merger
MPG's obligation to consummate the merger is further subject to satisfaction or, where permissible under applicable law, written waiver (by
MPG), of the following additional conditions:
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certain representations and warranties of AAM set forth in the merger agreement with respect to (i) the capitalization of AAM being true
and correct in all respects, except for de minimis inaccuracies, and (ii) the organization and qualification of AAM, the capitalization of AAM's subsidiaries and the absence of certain
obligations and arrangements with respect to the equity
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interests
in AAM and its subsidiaries, the authority of AAM relative to the merger agreement, brokers and proposals relating to an alternative transaction with AAM, in each case, being true and
correct (without giving effect to any materiality or AAM material adverse effect qualifier in such representations and warranties) in all material respects, in each case of clauses (i) and
(ii), as of the date of the merger agreement and as of the effective time of the merger as though made on and as of such date or time (or, in the case of representations and warranties that address
matters only as of a particular date, as of such date);
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-
all other representations and warranties of AAM set forth in the merger agreement being true and correct (without giving effect to any AAM
material adverse effect, materiality or other similar qualifiers in such representations and warranties) as of the date of the merger agreement and as of the effective time of the merger as though
made on and as of such date or time (or, in the case of representations and warranties that address matters only as of a particular date, as of such date) except where the failure of such
representations and warranties to be so true and correct does not have, and would not reasonably be expected to have, an AAM material adverse effect;
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AAM having performed or complied, in all material respects, with all obligations required to be performed or complied with by it under the
merger agreement at or prior to the effective time of the merger;
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the receipt of a certificate from an executive officer of AAM certifying that the above conditions have been satisfied;
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the absence of an AAM material adverse effect since the date of the merger agreement; and
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the increase of the size of the AAM board of directors from 8 to 11, the appointment of each of the AS designees to a different class on the
AAM board of directors and the appointment of one of the AS designees to each of AAM's Executive Committee, Audit Committee, Compensation Committee, and Nominating/Corporate Governance Committee, in
each case, effective as of the effective time of the merger.
The
merger agreement provides that a "material adverse effect" means, when used in connection with AAM or MPG, any event, circumstance, change, condition, occurrence or effect that,
individually or in the aggregate with any other event, circumstance, change, condition, occurrence or effect, (a) has had, or would reasonably be expected to have, a material adverse effect on
the assets, liabilities, business, condition (financial or otherwise) or results of operations of the relevant party and its subsidiaries, taken as a whole, or (b) has, or would reasonably be
expected to have, a material adverse effect on, or prevents or materially delays, the ability of the relevant party to consummate the merger and the other transactions contemplated by the merger
agreement.
With
respect to clause (a) in the preceding paragraph, however, none of the following, alone or in combination, will be deemed to constitute, or will be taken into account in
determining whether there has been, a material adverse effect on the relevant party:
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any event, circumstance, change, condition, occurrence or effect resulting from or relating to:
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a change in general economic, political, regulatory, business, economic, financial, credit or capital market conditions, or any
changes therein, including interest or exchange rates;
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any change in accounting requirements or principles required by GAAP (or any authoritative interpretations thereof) or required by
any change in applicable laws (or any authoritative interpretations thereof) following the date of the merger agreement;
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any adoption, implementation, promulgation, repeal or modification of any law following the date of the merger agreement;
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any outbreak, escalation or acts of armed hostility or war, any acts of terrorism, or any acts of God or natural disasters;
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changes proximately caused by the announcement of the execution of the merger agreement, unless related to the relevant party's
representations and warranties with respect to the absence of conflicts or violation of laws (or the ability of the relevant party to make such representations and warranties at closing); or
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-
compliance with the express terms of, or the taking of any action expressly required by, the merger agreement (excluding the
relevant party operating in the ordinary course of business) or the taking of any action consented to or requested in writing by the other party prior to the taking of such action.
except
that the exceptions in the first four sub-bullet points above shall only apply to the extent that the event, circumstance, change or effect does not have, or would not reasonably be expected to
have, a disproportionate impact on the relevant party and its subsidiaries, taken as a whole, compared to other companies that operate in the industries in which the relevant party and its
subsidiaries operate; or
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any failure to meet internal or published projections, forecasts, performance measures, operating statistics or revenue or earnings predictions
for any period or any change in the price or trading volume of the relevant party's common stock or the credit rating of the relevant party (except that the underlying causes of such failure or change
may be considered in determining whether there is a material adverse effect).
No Solicitation
AAM and MPG have agreed to, and have agreed to cause their respective subsidiaries, and to instruct (and use their respective reasonable best
efforts to cause) their respective representatives, to:
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immediately cease, following the time of execution of the merger agreement, any ongoing solicitations, discussions, communications or
negotiations with any person with respect to an acquisition proposal (as defined below), or any inquiry, proposal or offer that would reasonably be expected to lead to an acquisition proposal; and
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request within 2 business days of the date of the merger agreement (and use reasonable best efforts to cause) the prompt return or destruction
of all confidential information previously furnished to any person in connection with any such solicitations, discussions, communications or negotiations with respect to an acquisition proposal and
immediately terminate all physical and electronic dataroom access previously granted to any such person, its affiliates or representatives.
Additionally,
AAM and MPG (a) will not, and will cause their respective subsidiaries not to, terminate, waive, amend or modify any provision of any existing standstill or
confidentiality agreement to which any of them are a party, and (b) will, and will cause their respective subsidiaries to, enforce the provisions of any such agreement, except, in each case,
the relevant party may grant a waiver of, and shall not be obligated to enforce, any such provision (i) to the extent required to permit a party thereto to submit an acquisition proposal, and
(ii) if the board of directors of the relevant party (or any committee thereof) has determined in good faith, after consultation with outside legal counsel, that the failure to grant such
waiver would be inconsistent with its fiduciary duties under applicable law.
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Prior
to the closing, neither AAM nor MPG will, and they have agreed to cause their respective subsidiaries and their and their subsidiaries' respective directors, officers and employees
not to, and to
use reasonable best efforts to cause their representatives not to, except as described below:
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solicit, initiate, facilitate or encourage any inquiries or the implementation or submission of any acquisition proposal, or any proposals or
offers that would be reasonably expected to lead to an acquisition proposal;
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engage in, continue or otherwise participate in any discussions, communications or negotiations regarding, or furnish to any person any
non-public information in connection with, or for the purpose of facilitating or encouraging, any inquiries, proposals or offers that constitute, or would be reasonably expected to lead to, an
acquisition proposal, except to notify such person of the existence of the non-solicitation provisions in the merger agreement; or
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-
execute or enter into any written letter of intent, memorandum of understanding, agreement in principle or any merger agreement, acquisition
agreement or similar contract relating to or intended to result in or that would reasonably be expected to lead to an acquisition proposal (other than a confidentiality agreement entered into in
accordance with the terms of the merger agreement).
Each
of AAM and MPG may, however, grant a waiver, amendment or release under any confidentiality or standstill agreement, solely to the extent necessary to allow a confidential
acquisition proposal to be made to it or its board of directors (or any committee thereof) so long as (x) its board of directors has determined in good faith (after consultation with outside
legal counsel) that the failure to grant the waiver would be inconsistent with its fiduciary duties under applicable law, and (y) it promptly (and, in any event, within 24 hours)
notifies the other party of the waiver, amendment or release.
Additionally,
prior to the receipt of their respective stockholder approvals, nothing in the non-solicitation provisions of the merger agreement will prevent AAM, MPG or their respective
boards of directors (or any committee thereof) from furnishing information to, or engaging in discussions, communications or negotiations with, any person that made a bona fide acquisition proposal
that did not result from a breach (or deemed breach) of the non-solicitation provisions of the merger agreement, if prior to taking action:
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-
the board of directors of the relevant party (i) determines in good faith (after consultation with its outside advisors) that the
acquisition proposal is, or would reasonably be expected to result in, a superior proposal (as defined below), and (ii) determines in good faith (after consultation with its outside legal
counsel) that its failure to take such actions would be inconsistent with its fiduciary duties under applicable law;
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the relevant party provides written notice to the other party of the determination referenced in the bullet above promptly (and, in any event,
within 24 hours of such determination); and
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-
the relevant party receives from the person that made such bona fide acquisition proposal an executed a confidentiality agreement entered into
in accordance with the terms of the merger agreement.
The
relevant party has also agreed to deliver to the other party a copy of any such executed confidentiality agreement promptly (and, in any event, within 24 hours) following its
execution, as well as any non-public information concerning the relevant party or any of its subsidiaries provided to any person entering into the confidentiality agreement that has not been
previously provided to the other party prior to or substantially concurrently with the time it is provided to such person.
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AAM and MPG have also agreed to promptly (and, in any event, within 24 hours) notify the other party of the receipt of any acquisition proposal or any
inquiries, proposals or offers received by it or any of its subsidiaries or representatives concerning an acquisition proposal, as well as the identity of the person making the acquisition proposal
and an unredacted copy of the acquisition proposal or written inquiry, offer, proposal or request. For any oral inquiry, offer, proposal or request concerning an acquisition proposal, notice is
required only if the relevant party reasonably believes that such oral acquisition proposal, inquiry, offer, proposal or request is likely to result in a written acquisition proposal, inquiry, offer,
proposal or request. In such event, the notice will include a reasonably detailed description of the oral acquisition proposal, inquiry, offer, proposal or request. The relevant party will also
promptly (and, in any event, within 24 hours) provide the other party and its outside counsel with copies of all drafts and final versions of definitive agreements, including schedules and
exhibits thereto (which may be redacted as necessary to protect confidential information of the person making the acquisition proposal), relating to the acquisition proposal that are exchanged by the
relevant party (or its representatives) and the person making the acquisition proposal (or its representatives), and will keep the other party reasonably informed (and, in any event, within
24 hours of any material development) of the status and details (including with respect to any change in price or other material amendments) of any acquisition proposal or any inquiry, offer,
proposal or request concerning an acquisition proposal. AAM and MPG will promptly (and, in any event, within 48 hours) notify the other party of any determination by its respective board of
directors (or any committee thereof) that an acquisition proposal is a superior proposal.
For
purposes of the merger agreement, the term "acquisition proposal" means, with respect to each of AAM and MPG, any proposal or offer from any person, entity or group (other than the
other party) relating to, in a single transaction or series of related transactions, any:
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-
direct or indirect acquisition of more than 20% of the consolidated assets (whether based on the fair market value, revenue generation or net
income) of such party and its subsidiaries, taken as a whole, including through the acquisition of one or more subsidiaries of such party;
-
-
direct or indirect acquisition of more than 20% of any class of equity securities, or securities convertible into or exchangeable for equity
securities, of such party or any of its subsidiaries;
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-
tender offer or exchange offer that if consummated would result, directly or indirectly, in any person, entity or group (or the stockholders
thereof) owning 20% or more of any class of equity securities, or securities convertible into or exchangeable for equity securities, of such party or any of its subsidiaries; or
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-
merger, consolidation, business combination, share exchange, recapitalization, liquidation, dissolution or other similar transaction involving
such party or any of its subsidiaries that would result in any person, entity or group (or the stockholders thereof) owning, directly or indirectly, more than 20% of any class of equity securities, or
securities convertible into or exchangeable for equity securities, of such party or any of its subsidiaries or 20% of the voting power of the surviving entity in a merger involving such party or any
of its subsidiaries or the resulting direct or indirect parent of such party, any of its subsidiaries or such surviving entity (or any securities convertible into, or exchangeable for, securities
representing such voting power).
For
purposes of the merger agreement, the term "superior proposal" means, with respect to each of AAM and MPG, a bona fide written acquisition proposal (as defined above, except
references to "20%" will be replaced with "50%") made by any person, entity or group (other than the other party or its subsidiaries) after the date of the merger agreement that (x) did not
result from a breach (or deemed breach) of the non-solicitation provisions of the merger agreement, (y) is on terms that the relevant party's board of directors determines in good faith (after
receiving the advice of its financial
advisor(s) and outside legal counsel and taking into account all the terms and conditions thereof) are more favorable to its stockholders from a financial point of view than the merger and the
transactions
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contemplated
thereby and (z) the relevant party's board of directors determines (after receiving the advice of its financial advisor(s) and outside legal counsel) is reasonably capable of being
consummated in accordance with its terms, taking into account all financial, regulatory, legal, timing and other aspects of such proposal, including certainty of closing, certainty of financing and
the identity of the person, entity or group making the acquisition proposal.
Board Recommendation Change
Each of AAM and MPG has also agreed that it and its board of directors will not, and will not publicly propose to, (i) withhold, withdraw
or modify, in a manner adverse to the other party, its recommendation to its stockholders to approve the AAM share issuance, in the case of AAM, or to adopt the merger agreement and approve the
transactions contemplated by the merger agreement, in the case of MPG, (ii) approve or recommend any acquisition proposal, (iii) enter into any agreement relating to or providing for an
acquisition proposal (other than a confidentiality agreement entered into in accordance with the terms of the merger agreement); or (iv) refrain from recommending against (and reaffirming its
recommendation to its stockholders) any acquisition proposal that is a tender offer or exchange offer within 10 business days after the commencement thereof, except that, at any time prior to the
receipt of the applicable stockholder approval, the applicable board of directors may take any of the actions in the preceding clauses (i), (ii) or (iv) (each of which actions we
refer to in this joint proxy statement/prospectus as a change in recommendation):
-
-
if the relevant party receives an unsolicited, written acquisition proposal that such party's board of directors determines in good faith
(after consultation with its outside advisors) is a superior proposal and that its failure to take such actions would be inconsistent with its fiduciary duties under applicable law; or
-
-
if an intervening event (as defined below) occurs and as a result thereof the applicable board of directors determines in good faith (after
consultation with its outside legal counsel) that the failure to make a change in recommendation would be inconsistent with its fiduciary duties under applicable law.
For
purposes of the merger agreement, the term "intervening event" means, with respect to each of AAM and MPG, any material event, circumstance, change, effect, development or condition
relating to such party and its subsidiaries (other than an acquisition proposal or any inquiry, offer or proposal that would reasonably be expected to lead to an acquisition proposal) first occurring
or arising after the date of the merger agreement that was not known or reasonably foreseeable by the relevant board of directors as of the date of the merger agreement (or, if known, the magnitude or
material consequences of which were not known or reasonably foreseeable by the board of directors as of the date of the merger agreement). No event, circumstance, change, effect, development or
condition, however, that has had or would reasonably be expected to have an adverse effect on the assets, liabilities, business, condition (financial or otherwise) or results of operations of the
other party and its subsidiaries (including, with respect to MPG, following the closing, the surviving corporation and its subsidiaries), or the market price of the securities of the other party or
any of its subsidiaries (including, with respect to MPG, following the closing, the surviving corporation and its subsidiaries), will constitute an "intervening event."
In
addition to the ability of the applicable board of directors to make a change in recommendation as described above, the board of directors of each of AAM and MPG may, at any time
prior to the receipt of its stockholder approval, terminate the merger agreement in order to concurrently enter into an acquisition agreement with respect to a superior proposal if the relevant party
receives an unsolicited, written acquisition proposal that such party's board of directors determines in good faith (after consultation with its outside advisors) is a superior proposal and that its
failure to take such actions would be inconsistent with its fiduciary duties under applicable law. Neither AAM nor MPG,
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however,
may terminate the merger agreement for this reason if it has committed (or has been deemed to have committed) an intentional breach of the non-solicitation provisions of the merger agreement
that would have an adverse impact on the ability of the other party to propose or negotiate any amendments or modifications to the merger agreement, as described below. Furthermore, if AAM or MPG
terminates the merger agreement for this reason, such party would have to pay to the other party, and such termination would be contingent upon payment of, a termination fee (as described below in
connection with the AAM superior proposal termination right and the MPG superior proposal termination right under "
Termination of the Merger
Agreement
" beginning on page 134).
Any
change in the recommendation of the board of directors with respect to a superior proposal or termination of the merger agreement under the circumstances described in the immediately
preceding paragraph may only occur after:
-
-
the relevant party has notified the other party in writing that it intends to make a change in recommendation or terminate the merger
agreement;
-
-
the relevant party has provided the other party with a summary of the material terms and conditions of the superior proposal;
-
-
if requested to do so by the other party, the relevant party has discussed and negotiated in good faith with the other party for a period of
4 days any bona fide proposed modifications to the terms and conditions of the merger agreement; and
-
-
no earlier than the end of such 4 day period, the relevant party's board of directors (after consultation with its outside legal counsel
and financial advisor(s)) has determined in good faith, after considering the terms of any proposed amendment or modification to the merger agreement proposed by the other party during the
4 day period, that the superior proposal still constitutes a superior proposal and that the failure to make a change in recommendation or terminate the merger agreement in connection therewith
would be inconsistent with its fiduciary duties under applicable law.
Any
change to the financial or other material terms of a proposal that was previously the subject of a notice as described above will require a new notice to the other party as provided above, except
that the length of the second negotiation period will be 2 days instead of 4 days.
Any
change in the recommendation of the board of directors with respect to an intervening event may only occur after:
-
-
the relevant party has notified the other party in writing that it intends to make a change in recommendation due to an intervening event,
describing in reasonable detail the reasons for such change in recommendation;
-
-
if requested to do so by the other party, the relevant party has discussed and negotiated in good faith with the other party for a period of
4 days any bona fide proposed modifications to the terms and conditions of the merger agreement; and
-
-
no earlier than the end of such 4 day period, the relevant party's board of directors has determined in good faith, after considering
the terms of any proposed amendment or modification to the merger agreement proposed by the other party during the 4 day period, that the failure to make a change in recommendation would still
be inconsistent with its fiduciary duties under applicable law.
Nothing
in the merger agreement, however, will prohibit AAM or MPG from issuing a "stop, look and listen" communication pursuant to Rule 14d-9(f) under the Exchange Act or
complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act with respect to an acquisition proposal, or from making any disclosure to its stockholders if its board of directors
determines (after consultation with its
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outside
legal counsel) that its failure to do so would be inconsistent with its fiduciary duties under applicable law. This exception does not apply, however, with respect to any change in
recommendation by the board of directors, which may only be made as described above. Furthermore, a factually accurate public statement that describes a party's receipt of an acquisition proposal and
the operation of the merger agreement with respect thereto (without including a reaffirmation) will not be deemed a change in recommendation.
For
purposes of the merger agreement, if any representative of AAM or MPG takes any action which, if taken by AAM or MPG, would constitute a breach of the non-solicitation provisions of
the merger agreement, then such action will be deemed to be a breach of the non-solicitation provisions of the merger agreement by AAM or MPG, as applicable.
Termination of the Merger Agreement
Termination
The merger agreement may be terminated and the merger and other transactions contemplated by the merger agreement may be abandoned at any time
prior to the effective time of the merger:
-
-
by the mutual written consent of AAM and MPG (if authorized by their respective boards of directors);
-
-
by either of AAM or MPG if:
-
-
the effective time of the merger has not occurred on or before August 3, 2017 (which we refer to in this joint proxy
statement/prospectus as the outside date), except that:
-
-
if on the outside date all of the conditions to the completion of the merger have been satisfied (or, for conditions that by their
terms must be satisfied at the closing, would have been satisfied if the closing would have occurred) other than the condition regarding the absence of any restraint (to the extent the restraint
arises under the HSR Act or other applicable foreign, federal or state antitrust, competition or fair trade laws in certain jurisdictions agreed by the parties) or the condition regarding the receipt
of certain governmental approvals in the United States and certain other jurisdictions agreed by the parties (as described above under "
Conditions to the
Completion of the MergerConditions to Each Party's Obligations to Complete the Merger
" beginning on page 126), then the outside date shall be automatically
extended for an additional 90 days; and
-
-
this termination right will not be available to any party whose failure to fulfill any obligation under the merger agreement is
the principal cause of, or resulted in, the failure of the effective time of the merger to occur on or before the outside date (other than, in the case of AAM, a failure to consummate the closing
solely as a result of a financing failure, as defined below under "
Governing Law; Specific Performance; Third-Party Beneficiaries
"
beginning on page 153, provided that AAM pays the termination fee in connection with a termination of the merger agreement by MPG or AAM, as described below under
"Payment of
Termination Fees"
beginning on page 138);
-
-
any restraint has become final and nonappealable, except that the party seeking to terminate the merger agreement must not have
failed to comply with its obligations under the provisions of the merger agreement relating to efforts to obtain regulatory approvals (as described below under
"
Additional TermsReasonable Best Efforts
" beginning on page 147), which failure was the principal cause of, or resulted
in, the restraint becoming final and nonappealable;
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-
-
AAM stockholders, at the AAM special meeting, do not approve the AAM share issuance; or
-
-
MPG stockholders, at the MPG special meeting, do not adopt the merger agreement and approve the transactions contemplated by the
merger agreement;
-
-
by AAM if:
-
-
MPG has breached any of its representations, warranties, covenants or agreements under the merger agreement such that the
conditions to the completion of the merger regarding the accuracy of MPG's representations and warranties or its compliance with its covenants, subject to certain materiality or material adverse
effect qualifications as described above under "
Conditions to the Completion of the MergerConditions to the Obligations of AAM and Merger Sub to
Complete the Merger
" beginning on page 127, would not be satisfied and such breach cannot be cured by the outside date or, if capable of being cured, has not been cured on or
before the earlier of the outside date or within 30 calendar days of the receipt by MPG of written notice thereof from AAM (which termination right we refer to in this joint proxy statement/prospectus
as the AAM breach termination right);
-
-
at any time prior to the receipt of MPG's stockholder approval:
-
-
the board of directors of MPG makes a change in recommendation or enters into any agreement relating to or providing for an
acquisition proposal (other than a confidentiality agreement entered into in accordance with the terms of the merger agreement);
-
-
MPG fails to include in the joint proxy statement/prospectus the recommendation of its board of directors that MPG stockholders
adopt the merger agreement and approve the transactions contemplated by the merger agreement (except to the extent MPG effects a change in recommendation in accordance with the merger agreement);
-
-
MPG or its board of directors approves, endorses, adopts, recommends or enters into any agreement relating to or providing for an
acquisition proposal (other than a confidentiality agreement entered into in accordance with the terms of the merger agreement);
-
-
subject to the provisions relating to a change in recommendation as described above under
"
Board Recommendation Change
" beginning on page 132 and to the extent permitted by applicable law, the MPG board of directors fails
to publicly recommend against (a) any acquisition proposal that is a tender offer or exchange offer under a Schedule TO within 10 business days after a written request by AAM that
it do so, or (b) any other acquisition proposal that has been publicly disclosed and that MPG reasonably believes could lead to a superior proposal, within 7 calendar days after a written
request by AAM that it do so; or
-
-
MPG has materially breached, or is deemed to have materially breached, its obligation to hold the MPG stockholder meeting or the
non-solicitation provisions of the merger agreement (in this joint proxy statement/prospectus we refer to the termination rights described in the foregoing sub-bullets, collectively, as the AAM
recommendation change termination right); or
-
-
at any time prior to the receipt of AAM's stockholder approval, after complying with the non-solicitation provisions of the merger
agreement, the board of directors of AAM (or any committee thereof) authorizes AAM to enter into an agreement concerning a superior proposal for AAM concurrently with termination of the merger
agreement, but only if AAM has not committed (or has not been deemed to have committed) an intentional breach of
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the
non-solicitation provisions of the merger agreement that would have an adverse impact on the ability of MPG to propose or negotiate any amendments or modifications to the merger agreement as more
fully described above under "
Board Recommendation Change
" beginning on page 132 and, as a condition to the effectiveness of such
termination, pays a $61,859,000 termination fee to MPG (which termination right we refer to in this joint proxy statement/prospectus as the AAM superior proposal termination right); or
-
-
by MPG if:
-
-
AAM or Merger Sub has breached any of their respective representations, warranties, covenants or agreements under the merger
agreement such that the conditions to the completion of the merger regarding the accuracy of AAM's and Merger Sub's representations and warranties or their respective compliance with their covenants,
subject to certain materiality or material adverse effect qualifications as described above under "
Conditions to the Completion of the
MergerConditions to MPG's Obligation to Complete the Merger
" beginning on page 127, would not be satisfied and such breach cannot be cured by the outside
date or, if capable of being cured, has not been cured on or before the earlier of the outside date or within 30 calendar days of the receipt by AAM of written notice thereof from MPG (which
termination right we refer to in this joint proxy statement/prospectus as the MPG breach termination right);
-
-
at any time prior to the receipt of AAM's stockholder approval:
-
-
the board of directors of AAM makes a change in recommendation or enters into any agreement relating to or providing for an
acquisition proposal (other than a confidentiality agreement entered into in accordance with the terms of the merger agreement);
-
-
AAM fails to include in the joint proxy statement/prospectus the recommendation of its board of directors that AAM stockholders
approve the AAM share issuance (except to the extent AAM effects a change in recommendation in accordance with the merger agreement);
-
-
AAM or its board of directors approves, endorses, adopts, recommends or enters into any agreement relating to or providing for an
acquisition proposal (other than a confidentiality agreement entered into in accordance with the terms of the merger agreement);
-
-
subject to the provisions relating to a change in recommendation as described above under
"
Board Recommendation Change
" beginning on page 132 and to the extent permitted by applicable law, the AAM board of directors fails
to publicly recommend against (a) any acquisition proposal that is a tender offer or exchange offer under a Schedule TO within 10 business days after a written request by MPG that
it do so, or (b) any other acquisition proposal that has been publicly disclosed and that AAM reasonably believes could lead to a superior proposal within 7 calendar days after a written
request by MPG that it do so; or
-
-
AAM has materially breached, or is deemed to have materially breached, its obligation to hold the AAM stockholder meeting or the
non-solicitation provisions of the merger agreement (in this joint proxy statement/prospectus we refer to the termination rights described in the foregoing sub-bullets, collectively, as the MPG
recommendation change termination right);
-
-
(i) all of the conditions to the closing, other than the conditions to MPG's obligation to consummate the closing, have been
satisfied (or, for conditions that by their terms must be
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satisfied
at the closing, would have been satisfied if the closing would have occurred); (ii) MPG has confirmed in an irrevocable written notice to AAM that all of the conditions to the
closing, other than the conditions to AAM's obligation to consummate the closing, have been satisfied or, to the extent allowed by applicable law, waived in writing by MPG, and that MPG is ready,
willing and able to perform its obligations to effect the closing; and (iii) AAM and Merger Sub fail to fulfill their obligation to effect the closing within 3 business days of the
written notice of MPG pursuant to the preceding sub-bullet (which termination right we refer to in this joint proxy statement/prospectus as the failure to close termination right); or
-
-
at any time prior to the receipt of MPG's stockholder approval, after complying with the non-solicitation provisions of the merger
agreement, the board of directors of MPG (or any committee thereof) authorizes MPG to enter into an agreement concerning a superior proposal for MPG concurrently with termination of the merger
agreement, but only if MPG has not committed (or has not been deemed to have committed) an intentional breach of the non-solicitation provisions of the merger agreement that would have an adverse
impact on the ability of AAM to propose or negotiate any amendments or modifications to the merger agreement as more fully described above under "
Board
Recommendation Change
" beginning on page 132 and, as a condition to the effectiveness of such termination, pays a $50,897,000 termination fee to AAM (which termination
right we refer to in this joint proxy statement/prospectus as the MPG superior proposal termination right).
Effect of Termination
If the merger agreement is terminated as described above, the merger agreement will become void and none of AAM, MPG, Merger Sub or certain of
their respective related parties (including, in part, former, current or future officers, directors, general or limited partners, members, managers, stockholders, other equityholders, controlling
persons, employees, agents, successors, assigns,
affiliates, or representatives) will have any liability under the merger agreement, except that:
-
-
the provisions relating to the effect of termination of the merger agreement, the confidentiality obligations, the provisions relating to the
payment of termination fees and reimbursement of certain expenses, as well as certain specified general provisions, will each remain in full force and effect; and
-
-
nothing will relieve AAM, MPG or Merger Sub from liability or damages for fraud committed prior to such termination or, subject to the
provisions described below, for any intentional breach (as defined below) prior to such termination of any of its representations, warranties, covenants or agreements in the merger agreement, in which
case the aggrieved party shall be entitled to all rights and remedies available at law or in equity.
For
purposes of the merger agreement, "intentional breach" means (i) with respect to any breach of a representation or warranty contained in the merger agreement, a material
breach of such representation or warranty that has been made with the knowledge of the breaching party, and (ii) with respect to any breaches or failures to perform any of the covenants or
other agreements contained in the merger agreement, a material breach, or failure to perform, that is a consequence of an act or omission undertaken by the breaching party with the knowledge that the
taking of, or failure to take, such act would, or would be reasonably expected to, cause a material breach of the merger agreement.
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Payment of Certain Fees and Expenses
General
The merger agreement states that each of AAM, Merger Sub and MPG will pay the fees and expenses that it incurs in connection with the merger
agreement and the transactions contemplated thereby whether or not the merger is consummated, except (a) AAM and MPG will each pay one-half of all expenses relating to printing, filing and
mailing the registration statement for the AAM share issuance, of which this joint proxy statement/prospectus forms a part, and this joint proxy statement/prospectus to be sent to the
stockholders of AAM and MPG relating to their respective stockholder meetings and all SEC and other regulatory filing fees incurred in connection with the registration statement, of which this joint
proxy statement/prospectus forms a part, and this joint proxy statement/prospectus, (b) AAM will be responsible for paying the filing fee for the forms filed under the HSR Act and all
other filing fees for filings under other applicable foreign, federal or state antitrust, competition or fair trade laws, and (c) as further described below.
Payment of Termination Fees
Each of AAM and MPG are required to pay the other party a termination fee under the circumstances described below. Any termination fee must be
paid promptly (in any event, within 2 business days) after the applicable termination of the merger agreement or subsequent event triggering the obligation to pay a termination fee under the
merger agreement.
MPG
is required to pay AAM a termination fee of $50,897,000 (less any expenses of AAM paid by MPG to AAM pursuant to the merger agreement as described below under
"
Payment of Certain Expenses
" on page 140) if:
-
-
AAM terminates the merger agreement pursuant to the AAM recommendation change termination right (except that, in the case of a termination
where MPG has breached its obligation to hold the MPG stockholder meeting or the non-solicitation provisions of the merger agreement, only if MPG has committed an intentional breach or deemed
intentional breach);
-
-
(i) either AAM or MPG terminates the merger agreement because the merger has not occurred on or before the outside date and the MPG stockholder
approval has not been obtained, (ii) either AAM or MPG terminates the merger agreement because MPG stockholders do not adopt the merger agreement and approve the transactions contemplated by
the merger agreement at the MPG special meeting, or (iii) AAM terminates the merger agreement pursuant to the AAM breach termination right, and, in each of the above cases:
-
-
prior to the termination of the merger agreement, an acquisition proposal involving MPG has been publicly announced or has become
publicly known and not withdrawn; and
-
-
on or prior to the date that is 12 months after the date of termination, MPG or any of its subsidiaries enters into, or
submits to the MPG stockholders for adoption, a letter of intent, memorandum of understanding, agreement in principle or contract with respect to any acquisition proposal (which acquisition proposal
is ultimately consummated) or consummates any acquisition proposal (in each case, whether or not such acquisition proposal is the same acquisition proposal described in the sub-bullet immediately
above), except that, with respect to the foregoing sub-bullets, all references to "20%" in the definition of acquisition proposal will be replaced with "50%"; or
-
-
MPG terminates the merger agreement pursuant to the MPG superior proposal termination right.
AAM
is required to pay MPG a termination fee equal to $50,897,000 (less any expenses of MPG paid by AAM to MPG pursuant to the merger agreement as described below under
"
Payment of
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Certain Expenses
" on page 140) if MPG terminates the merger agreement pursuant to the MPG recommendation change termination right (except that, in the case of a
termination where AAM has breached its obligation to hold the AAM stockholder meeting or the non-solicitation provisions of the merger agreement, only if AAM has committed an intentional breach),
other than in connection with a superior proposal involving AAM.
AAM
is required to pay MPG a termination fee equal to $61,859,000 (less any expenses of MPG paid by AAM to MPG pursuant to the merger agreement as described below under
"
Payment of Certain Expenses
" on page 140) if:
-
-
MPG terminates the merger agreement pursuant to the MPG recommendation change termination right (except that, in the case of a termination
where AAM has breached its obligation to hold the AAM stockholder meeting or the non-solicitation provisions of the merger agreement, only if AAM has committed an intentional breach or deemed
intentional breach) in connection with a superior proposal involving AAM; or
-
-
(i) either AAM or MPG terminates the merger agreement because the merger has not occurred on or before the outside date and the AAM stockholder
approval has not been obtained, or (ii) MPG terminates the merger agreement pursuant to the MPG breach termination right, and, in each of the above cases:
-
-
prior to the termination of the merger agreement, an acquisition proposal involving AAM has been publicly announced or has become
publicly known and not withdrawn; and
-
-
on or prior to the date that is 12 months after the date of termination, AAM or any of its subsidiaries enters into, or
submits to the AAM stockholders for adoption, a letter of intent, memorandum of understanding, agreement in principle or contract with respect to any acquisition proposal (which acquisition proposal
is ultimately consummated) or consummates any acquisition proposal (in each case, whether or not such acquisition proposal is the same acquisition proposal described in the sub-bullet immediately
above), except that, with respect to the foregoing sub-bullets, all references to "20%" in the definition of acquisition proposal will be replaced with "50%"; or
-
-
AAM terminates the merger agreement pursuant to the AAM superior proposal termination right.
AAM
is required to pay MPG a termination fee equal to $101,794,000 (less any expenses of MPG paid by AAM to MPG pursuant to the merger agreement as described below under
"
Payment of Certain Expenses
" on page 140) if:
-
-
either AAM or MPG terminates the merger agreement because:
-
-
the merger has not occurred on or before the outside date, as the outside date may be extended in accordance with the merger
agreement, and at such time, all of the conditions to the completion of the merger have been satisfied (or, for conditions that by their terms must be satisfied at the closing, would have been
satisfied if the closing would have occurred) other than the condition regarding the receipt of certain governmental approvals in the United States and certain other jurisdictions agreed by the
parties (as described above under "
Conditions to the Completion of the MergerConditions to Each Party's Obligations to Complete the
Merger
"); or
-
-
a restraint has become final and nonappealable (to the extent the restraint arises under the HSR Act or other applicable foreign,
federal or state antitrust, competition or fair trade laws in certain jurisdictions agreed to by the parties); or
-
-
MPG terminates the merger agreement pursuant to the failure to close termination right.
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Except
in the case of fraud or intentional breach, but subject to the succeeding paragraph, the sole and exclusive remedies of a party or any of its related parties against the other
party or any of its related parties (including, in the case of AAM, the AAM financing sources), or any of their respective related parties for any losses, damages, liabilities, costs, expenses,
claims, obligations or actions based upon, arising out of or relating to the merger agreement (or, in the case of AAM, the commitment letter), including the negotiation, execution and performance
thereof, or the transactions contemplated thereby, will be (i) payment of the applicable termination fee and reimbursement of expenses (to the extent
reimbursable) by the other party (each as described above), and (ii) subject to all of the other provisions described in this section, the right of such party to seek specific performance of
the merger agreement (as described below under "
Governing Law; Specific Performance; Third-Party BeneficiariesSpecific
Performance
" beginning on page 154).
In
addition, except in the case of fraud or intentional breach by AAM of its obligations in respect of the financing (as described below under
"
Financing
" beginning on page 150), upon payment of a termination fee equal to $101,794,000 to MPG as a result of a termination of
the merger agreement by MPG pursuant to the failure to close termination right, neither MPG nor any of MPG's related parties will have any rights or claims against AAM, Merger Sub, the AAM financing
sources, or any of their respective related parties under or in connection with the merger agreement, the commitment letter, or any of the transactions contemplated thereby, including for any damages
of any kind or nature or for any other monetary amounts.
Payment of Certain Expenses
MPG must reimburse AAM and Merger Sub for an aggregate amount of up to $15 million of their documented and reasonable out-of-pocket fees
and expenses incurred in connection with the merger agreement and the transactions contemplated by the merger agreement if (a) either AAM or MPG terminates the merger agreement as a result of
the failure of MPG stockholders to adopt the merger agreement and approve the transactions contemplated by the merger agreement at the MPG special meeting, or (b) AAM terminates the merger
agreement pursuant to the AAM breach termination right.
AAM
must reimburse MPG for an aggregate amount of up to $15 million of its documented and reasonable out-of-pocket fees and expenses incurred in connection with the merger
agreement and the transactions contemplated by the merger agreement if (a) either AAM or MPG terminates the merger agreement as a result of the failure of AAM stockholders to approve the AAM
share issuance at the AAM special meeting, or (b) MPG terminates the merger agreement pursuant to the MPG breach termination right.
Payment
of the expense reimbursements by either party does not affect the other party's right to receive any applicable termination fees, but does reduce on a dollar-for-dollar basis any
termination fee that becomes due and payable to such other party under the terms of the merger agreement.
Conduct of Business Pending the Merger
AAM and MPG have agreed in the merger agreement that, until the effective time of the merger, except for certain agreed upon exceptions, or as
consented to in writing by the other party (such consent not to be unreasonably withheld, conditioned or delayed), each party and each of its subsidiaries
will:
-
-
conduct their respective businesses in the ordinary course of business and in a manner consistent with past practice; and
-
-
use reasonable best efforts to:
-
-
preserve substantially intact their existing assets and their business organization;
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-
-
in the case of MPG and its subsidiaries, keep available the services of their current officers, employees and consultants;
-
-
in the case of AAM, keep available the services of its named executive officers;
-
-
maintain and preserve intact their current relationships with their significant customers, suppliers, distributors, creditors and
other persons with which they have significant business relations; and
-
-
comply in all material respects with applicable law.
Conduct of Business by MPG
In the merger agreement, MPG has also agreed that, until the effective time of the merger, except for certain agreed upon exceptions, or as
consented to in writing by AAM (such consent not to be unreasonably withheld, conditioned or delayed), neither it nor its subsidiaries will do, or propose to do, any of the
following:
-
-
amend or otherwise change any of their organizational documents;
-
-
issue, sell, pledge or dispose of, grant an encumbrance on or permit an encumbrance to exist on, or authorize the issuance, sale, pledge or
disposition of, or granting or placing of an encumbrance on, any shares of any class of capital stock, or other ownership interests, of MPG or any of its subsidiaries, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such capital stock, any restricted stock units or restricted stock awards, or any other ownership interest of MPG or any of
its subsidiaries, except for (a) the issuance of shares of MPG common stock required to be issued pursuant to the exercise of outstanding MPG stock options, or restricted MPG common stock or
MPG restricted stock unit awards pursuant to the terms of the applicable MPG employee benefit plans as in effect immediately prior to the date of the merger agreement, and (b) the issuance by
an MPG subsidiary of its capital stock to MPG or another MPG subsidiary;
-
-
sell, pledge or dispose of, grant an encumbrance on or permit an encumbrance to exist on, or authorize the sale, pledge or disposition of, or
granting or placing of an encumbrance on, any material assets of MPG or any of its subsidiaries, except (a) sales of inventory in the ordinary course of business, (b) pursuant to any
contracts or agreements in force on the date of the merger agreement, as may be amended from time to time in accordance with the terms of the merger agreement, or (c) such dispositions among
MPG and its subsidiaries;
-
-
declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its
capital stock, except for (a) the declaration and payment of quarterly cash dividends by MPG, declared and paid in the ordinary course of business consistent with past practice, including as to
record date, timing of payment and amount thereof, in an amount per quarter not in excess of $0.0925 per share of MPG common stock, and (b) the declaration and payment of dividends by any of
MPG's direct or indirect wholly-owned subsidiaries to MPG or any of its other wholly-owned subsidiaries;
-
-
reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock;
-
-
(a) acquire (including by merger, consolidation or acquisition of stock or assets or any other business combination) any corporation,
partnership, other business organization or any division thereof or any material amount of assets; (b) incur additional indebtedness in respect of borrowed money and the issuance of any debt
securities in an amount more than $50,000,000 in excess of the aggregate indebtedness of MPG and its subsidiaries as of the date of the merger agreement; (c) except as required by the terms of
any indebtedness outstanding as of the date of
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the
merger agreement, assume, guarantee or endorse, or otherwise become responsible for, the obligations of any person, or make any material loans or material advances or capital contribution to, or
investment in, any person; or (d) enter into or materially amend any contract, agreement, commitment or arrangement with respect to any matter set forth in clauses (a) through
(c) in this bullet;
-
-
except as otherwise required by law or an MPG employee benefit plan in existence as of the date of the merger agreement: (a) increase
the compensation payable or to become payable or the benefits provided to any officer, employee, director or independent contractor of MPG and its subsidiaries, except in the ordinary course of
business for employees who are not officers under Section 16 of the Exchange Act; (b) grant any cash incentives, retention, severance or termination pay to, or enter into any employment,
bonus, change of control or severance agreement with, any current or former officer, employee, director or independent contractor of MPG and its subsidiaries (other than annual bonuses in the ordinary
course of business consistent with past practice); (c) establish, adopt, enter into, terminate or amend any MPG employee benefit plan, or establish, adopt or enter into any plan, agreement,
program, policy, trust, fund or other arrangement that would be an MPG employee benefit plan if it were in existence as of the date of the merger agreement, for the benefit of any officer, employee,
director or independent contractor of MPG and its subsidiaries; (d) loan or advance any money or other property to any current or former officer, employee, director or independent contractor of
MPG and its subsidiaries; or (e) establish, adopt, enter into or amend any collective bargaining agreement;
-
-
except as necessary to comply with the terms of the merger agreement regarding MPG stock options, restricted MPG common stock and MPG
restricted stock unit awards: (a) exercise discretion with respect to or otherwise voluntarily accelerate the lapse of restriction or vesting of any equity or equity-based awards as a result of
the merger, any other change of control of MPG or otherwise; or (b) exercise its discretion with respect to or otherwise amend, modify or supplement any employee stock purchase plan;
-
-
terminate, discontinue, close or dispose of any plant, facility or other business operation, or lay off any employees (other than layoffs of
less than 50 employees at a single site in any six-month period in the ordinary course of business consistent with past practice) or implement any early retirement or separation program, or any
program providing early retirement window benefits or announce or plan any such action or program for the future;
-
-
materially change its financial accounting policies or procedures in effect as of the date of the merger agreement, other than as required or
permitted by law or GAAP;
-
-
(a) make any material change (or file any material change) in any material method of accounting for tax purposes; (b) make, change or
rescind any material tax election; (c) settle or compromise any proceeding with respect to any material tax claim or assessment relating to MPG or any of its subsidiaries; (d) file any
material amended tax return or any material tax return in a manner inconsistent with past practice or claim for any material refund (or surrender any right to claim a material refund of taxes);
(e) enter into any material closing agreement relating to taxes; or (f) waive or extend for a period of greater than 12 months the statute of limitations in respect of the
assessment or determination of material taxes, except in each case, (i) if required by law or (ii) in the ordinary course of business consistent with past practice;
-
-
(a) settle (or agree to settle) any litigation, suit, claim, action, proceeding, arbitration, mediation, hearing, inquiry or investigation,
other than (i) settlements involving not more than $500,000 in monetary damages in the aggregate (net of insurance proceeds) payable by MPG or any of its subsidiaries in respect of such
settlement and that do not (x) require any actions or impose any material restrictions on the business or operations of MPG and its subsidiaries (taken as a
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whole),
or after the effective time of the merger, AAM and its subsidiaries (taken as a whole) or (y) include the admission of wrongdoing by MPG or any of its subsidiaries and
(ii) stockholder litigation relating to the merger agreement or the transactions contemplated by the merger agreement; (b) settle or compromise any material investigation or inquiry by
any governmental authority, including by entering into any consent decree or other similar agreement; or (c) waive, release or assign any claims or rights of material value;
-
-
enter into, amend, waive or renew (in each case, other than in the ordinary course of business) or terminate (excluding any expiration in
accordance with its terms) any specified MPG material contract (as agreed upon among the parties), or any other contract or agreement that would have been a specified MPG material contract if it had
been entered into prior to the date of the merger agreement;
-
-
(a) abandon, disclaim, dedicate to the public, sell, assign or grant any security interest in, to or under any of its material intellectual
property, including failing to perform or cause to be performed all applicable filings, recordings and other acts, or to pay or cause to be paid all required fees and taxes, to maintain and protect
its interest in such intellectual property; or (b) grant to any third party any license, or enter into any covenant not to sue, with respect to any of its intellectual property, except in the
ordinary course of business consistent with past practice;
-
-
fail to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder;
-
-
adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of MPG or any of its
subsidiaries, other than internal reorganizations in the ordinary course of business that would not have a material and adverse impact on MPG and its subsidiaries or the transactions contemplated by
the merger agreement;
-
-
enter into, amend, waive or terminate (other than terminations in accordance with their terms) transactions, contracts, arrangements,
commitments or understandings between MPG or any of its subsidiaries, on the one hand, and any of MPG's affiliates, on the other hand, that would be required to be disclosed by MPG under
Item 404 of Regulation S-K under the Securities Act; or
-
-
agree, resolve, announce an intention, enter into any formal or informal agreement or otherwise make a commitment, to do any of the foregoing
actions.
In
addition, until the effective time of the merger, MPG and its subsidiaries will (i) prepare and timely file all material tax returns required to be filed, (ii) timely
pay all taxes shown to be due and payable on such tax returns and (iii) promptly notify AAM of any written notice received by MPG after the date of the merger agreement with respect to any
material suit, claim, action, investigation, audit or proceeding in respect of any tax matters (or any significant developments with respect to such suits, claims, actions, investigations, audits or
proceedings) that MPG reasonably believes would result in a material amount of tax liability to MPG and its subsidiaries taken as a whole.
Conduct of Business by AAM
In the merger agreement, AAM has also agreed that, until the effective time of the merger, except for certain agreed upon exceptions, or as
consented to in writing by MPG (such consent not to be unreasonably withheld, conditioned or delayed), neither it nor its subsidiaries will do or propose to do any of the
following:
-
-
amend or otherwise change any of their organizational documents;
-
-
issue, sell, pledge or dispose of, grant an encumbrance on or permit an encumbrance to exist on, or authorize the issuance, sale, pledge or
disposition of, or granting or placing of an
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encumbrance
on, any shares of any class of capital stock, or other ownership interests, of AAM or any of its subsidiaries, or any options, warrants, convertible securities or other rights of any kind
to acquire any shares of such capital stock or any other ownership interest of AAM or any of its subsidiaries, except for: (a) the issuance of shares of AAM common stock issuable pursuant to
employee stock options, performance share awards, restricted stock units or restricted stock awards outstanding on the date of the merger agreement; (b) the issuance of employee stock options,
performance share awards, restricted stock units or restricted stock awards in the ordinary course of business, in the case of each of (a) and (b), pursuant to the terms of the applicable AAM
employee benefit plans as in effect immediately prior to the date of the merger agreement; and (c) the issuance by an AAM subsidiary of its capital stock to AAM or another AAM subsidiary;
-
-
sell, pledge or dispose of, grant an encumbrance on or permit an encumbrance to exist on, or authorize the sale, pledge or disposition of, or
granting or placing of an encumbrance on, any material assets of AAM and its subsidiaries (taken as a whole), except: (a) sales of inventory in the ordinary course of business;
(b) pursuant to any contracts or agreements in force on the date of the merger agreement, as may be amended from time to time in accordance with the terms of the merger agreement;
(c) such dispositions among AAM and its subsidiaries; or (d) in connection with the financing;
-
-
declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its
capital stock, except for the declaration and payment of dividends by any of AAM's direct or indirect wholly-owned subsidiaries to AAM or any of its other wholly-owned subsidiaries;
-
-
reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock;
-
-
(a) acquire (including by merger, consolidation or acquisition of stock or assets or any other business combination) any corporation,
partnership, other business organization or any division thereof, which acquisition would be material to AAM, or any other material amount of assets that would be reasonably likely to materially
adversely affect the ability of AAM and MPG to obtain certain consents, approvals, non-disapprovals, orders and other governmental authorizations of governmental authorities in certain jurisdictions
as agreed by the parties or materially delay obtaining such consents, approvals, non-disapprovals, orders or authorizations; (b) other than in connection with the financing or in the ordinary
course of business, incur additional indebtedness in respect of borrowed money and the issuance of any debt securities in an amount more than $50,000,000 in excess of the aggregate indebtedness of AAM
and its subsidiaries as of the date of the merger agreement; (c) except as required by the terms of any indebtedness outstanding as of the date of the merger agreement, and other than in the
ordinary course of business, assume, guarantee or endorse, or otherwise become responsible for, the obligations of any person, or make any material loans or material advances or capital contribution
to, or investment in, any person; or (d) enter into or materially amend any contract, agreement, commitment or arrangement with respect to any matter set forth in clauses (a) through
(c) in this bullet;
-
-
except as otherwise required by law or an AAM employee benefit plan in existence as of the date of the merger agreement, terminate or amend any
AAM employee benefit plan if it would materially decrease the aggregate benefits provided to any officer, employee, director or independent contractor of AAM and its subsidiaries;
-
-
materially change its financial accounting policies or procedures in effect as of the date of the merger agreement, other than as required or
permitted by law or GAAP;
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-
-
(a) make any material change (or file any material change) in any material method of accounting for tax purposes; (b) make, change or
rescind any material tax election; (c) settle or compromise any proceeding with respect to any material tax claim or assessment relating to AAM or any of its subsidiaries; (d) file any
material amended tax return or any material tax return in a manner inconsistent with past practice or claim for any material refund (or surrender any right to claim a material refund of taxes);
(e) enter into any material closing agreement relating to taxes; or (f) waive or extend for a period of greater than 12 months the statute of limitations in respect of the
assessment or determination of material taxes, except in each case, (i) if required by law or (ii) in the ordinary course of business consistent with past practice;
-
-
fail to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder;
-
-
adopt a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of AAM or any of its
subsidiaries, other than internal reorganizations in the ordinary course of business that would not have a material and adverse impact on AAM and its subsidiaries or the transactions contemplated by
the merger agreement; or
-
-
agree, resolve, announce an intention, enter into any formal or informal agreement or otherwise make a commitment, to do any of the foregoing
actions.
Representations and Warranties
The merger agreement contains customary representations and warranties subject to certain qualifications and exceptions, made by AAM, Merger Sub
and MPG relating to, among other things:
-
-
corporate organization, existence, qualification and subsidiaries;
-
-
organizational documents;
-
-
corporate capital structure;
-
-
corporate power and authority to execute and deliver the merger agreement, to perform its obligations under the merger agreement and to
consummate the merger and the other transactions contemplated in the merger agreement;
-
-
authorization, execution, delivery, performance and enforceability of the merger agreement;
-
-
board of directors approval and declaration of advisability of the merger agreement and the board of directors recommendation to its
stockholders with respect to the adoption of the merger agreement and the approval of the transactions contemplated by the merger agreement, in the case of MPG, and the approval of the AAM share
issuance, in the case of AAM;
-
-
absence of conflicts with, violations of, or defaults under such party's organizational documents, contracts or applicable laws or orders;
-
-
required consents or approvals of or from or filings with governmental entities relating to the consummation of transactions contemplated by
the merger agreement;
-
-
possession of and compliance with applicable permits, and compliance with applicable laws;
-
-
documents filed with the SEC as well as the accuracy of information contained in those documents, including financial statements;
-
-
absence of undisclosed liabilities;
-
-
absence of any material adverse effect on MPG or AAM since January 1, 2016, or of any actions that would constitute a breach of any of
the conduct of business covenants if occurring after the date of the merger agreement;
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-
absence of certain litigation;
-
-
employee benefit matters, including with respect to the Employee Retirement Income Security Act of 1974, as amended;
-
-
employee and labor relations;
-
-
condition of, and title to, owned and leased real property;
-
-
intellectual property matters;
-
-
tax matters;
-
-
environmental matters;
-
-
specified material contracts;
-
-
insurance matters;
-
-
material customers and relationships therewith;
-
-
matters relating to the quality and safety of products;
-
-
compliance with the Foreign Corrupt Practices Act of 1977 and other anticorruption and economic sanctions laws;
-
-
receipt of a fairness opinion from BofA Merrill Lynch, in the case of MPG, and Greenhill, in the case of AAM; and
-
-
broker's fees.
In
addition, MPG also makes representations and warranties relating to the inapplicability of certain takeover laws and the absence of anti-takeover provisions in its organizational
documents. AAM also makes representations and warranties relating to the operations of Merger Sub and the financing, including the due execution and delivery, validity and enforceability of the
commitment letter among AAM, American Axle & Manufacturing, Inc. and JPMorgan Chase Bank, N.A., described in "
Financing
"
beginning on page 150. The receipt of financing by AAM, however, is not a condition to the completion of the merger. AAM also made representations and warranties that, as of the date of the merger
agreement, neither AAM nor any of its subsidiaries or representatives were engaged in any discussions, communications or negotiations with respect to an acquisition proposal nor had AAM received any
indication from any person that it was considering making an acquisition proposal or entered into discussions or negotiations to enter into a confidentiality or similar agreement in connection with an
acquisition proposal.
The
representations and warranties in the merger agreement were made as of specific dates and expire as of the effective time of the merger. The assertions embodied in those
representations and warranties were made solely for purposes of the contract among AAM, MPG and Merger Sub and may be subject to important qualifications and limitations agreed by the parties in
connection with negotiating the terms of the merger agreement. Additionally, subject to certain exceptions, the representations and warranties contained in the merger agreement are qualified by the
information disclosed by AAM or MPG, as applicable, in their public filings with the SEC prior to the date of the merger agreement and since January 1, 2014, excluding (i) any documents
filed as exhibits, annexes and schedules to such filings or incorporated by reference in such filing (other than in any other public filings with the SEC by such party), (ii) any risk factor
disclosures contained under the heading "Risk Factors" (other than any factual information contained therein), and (iii) any disclosure of risks included in any "forward-looking statements"
disclaimer or any other statements that are similarly non-specific or precise or forward-looking in nature. Moreover, certain representations and warranties may not be accurate or complete as of any
specified date because they are subject to a contractual
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standard
of materiality that is different than what may be material to stockholders and in some cases may be qualified by disclosures made by one party to the other in the confidential disclosure
schedule delivered by each party to the other, which are not necessarily reflected in the merger agreement or which were used for the purpose of allocating risk between AAM and MPG rather than
establishing matters as facts. Certain of the representations and warranties in the merger agreement are subject to materiality and "material adverse effect" qualifications. This means that those
representations and warranties would not be deemed untrue, inaccurate or incorrect as a consequence of matters that are not material or as a result of matters that would not, individually or in the
aggregate, reasonably be expected to have a "material adverse effect" on the party making the representations and warranties. In addition, certain of the representations and warranties in the merger
agreement are subject to knowledge qualifications, which means that those representations and warranties would not be deemed untrue, inaccurate or incorrect as a result of matters of which certain
identified employees of the party making the representation did not have actual knowledge, after reasonable inquiry. Finally, information concerning the subject matter of the representations and
warranties in the merger agreement may have changed since the date of the merger agreement (or since the specific date as of which the applicable representations and warranties were made), which may
or may not be fully reflected in AAM's and MPG's public disclosures.
AAM
and MPG will provide additional disclosure in their public reports to the extent that they are aware of the existence of any material facts that are required to be disclosed under
federal securities laws and will update such disclosure as required by federal securities laws.
Additional Terms
Reasonable Best Efforts
AAM, Merger Sub and MPG have agreed to use reasonable best efforts to consummate and make effective the merger and the other transactions
contemplated by the merger agreement, including:
-
-
using reasonable best efforts to obtain all permits, consents, approvals, authorizations, qualifications and orders of all governmental
authorities and officials that may be or become necessary for the performance of the obligations of such party pursuant to the merger agreement and the consummation of the transactions contemplated by
the merger agreement;
-
-
cooperating fully with the other parties in promptly seeking to obtain all such permits, consents, approvals, authorizations, qualifications
and orders;
-
-
providing information to any governmental authority as the governmental authority may lawfully request; and
-
-
using reasonable best efforts to obtain other consents, approvals or waivers from third parties that are (a) necessary to consummate the
transactions contemplated by the merger agreement, or (b) as otherwise reasonably determined by AAM and MPG after the date of the merger agreement, except that neither MPG nor any of its
subsidiaries will pay any consideration or make any agreements or commitments in connection with any such necessary consents, approvals or waivers without the prior written consent of AAM.
Other
than the expiration or termination of the applicable waiting period under the HSR Act and the receipt of any consents, approvals, non-disapprovals, orders and/or authorizations
required by governmental authorities in certain jurisdictions agreed to by AAM and MPG, the completion of the merger is not conditioned on the receipt of any consents, approvals, non-disapprovals,
orders or authorizations from any person.
The
merger agreement provides that in no event will AAM or Merger Sub be obligated to take any action in connection with obtaining any required regulatory approval that would require the
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divestiture
of any assets or businesses of AAM or MPG or any of their subsidiaries, would limit AAM's freedom of action with respect to, or its ability to retain, MPG and its subsidiaries or any
portion thereof or any of AAM's or its affiliates' other assets or businesses, or would in AAM's reasonable judgment be expected to have a material adverse impact on any of AAM's businesses or the MPG
businesses to be acquired under the merger agreement, except that, if necessary to obtain the regulatory clearances or approvals discussed above under "
The
MergerRegulatory MattersConsents and Approvals
" beginning on page 114, AAM will agree to the divestiture of the assets or businesses or
products or product lines of MPG and its subsidiaries that, individually or in the aggregate, generated total worldwide revenues of up to $150,000,000 in the twelve month period ended
September 30, 2016.
Subject
to the preceding paragraph, AAM, Merger Sub and MPG further agreed to cooperate and use reasonable best efforts to contest and resist any action, including any administrative or
judicial action, and to have vacated, lifted, reversed or overturned any order (whether temporary, preliminary or permanent) that is in effect and that restricts, prevents or prohibits consummation of
the transactions contemplated by the merger agreement, including by pursuing all available avenues of administrative and judicial appeal. AAM will be entitled to direct, in consultation with MPG, the
defense in any antitrust investigation or litigation by, or negotiations with, any governmental authority or other person relating to the merger or regulatory filings under applicable law.
Furthermore,
AAM, after prior consultation with MPG, will have the principal responsibility for devising and implementing the strategy for obtaining any necessary antitrust, competition
or investment review clearances, and will take the lead in all meetings and communications with any governmental authority in connection with obtaining any necessary antitrust, competition or
investment review clearances.
AAM
will use its reasonable best efforts to cause the shares of AAM common stock to be issued in the merger to be approved for listing on the NYSE, subject to official notice of
issuance.
Stockholder Meetings
The merger agreement provides that AAM and MPG will use their reasonable best efforts to hold the AAM stockholder meeting and the MPG
stockholder meeting on the same date. Each of AAM and MPG will convene its stockholder meeting as promptly as practicable following the effectiveness of the registration statement on Form S-4,
of which this joint proxy statement/prospectus forms a part. However, either MPG or AAM may postpone or adjourn its
stockholder meeting for no more than 15 days from the date for which such meeting was originally scheduled (x) to solicit additional proxies for the purpose of obtaining stockholder
approval, (y) for the absence of a quorum, and (z) to allow reasonable additional time for the filing or mailing of any supplemental or amended disclosure that it has determined after
consultation with outside legal counsel is reasonably likely to be required under applicable law and for such supplemental or amended disclosure to be disseminated and reviewed by its stockholders
prior to the stockholder meeting. Each of AAM and MPG will be required to convene and hold its stockholders' meeting unless the merger agreement has been terminated in accordance with its terms,
including in the event such party's board of directors has made a change in recommendation.
Employee Benefits and Related Matters
Following the effective time of the merger, AAM will cause the surviving corporation and its subsidiaries to honor all obligations under all
contracts, agreements and plans of MPG and its subsidiaries as in effect immediately prior to the effective time of the merger that are applicable to any current or former employees or directors of
MPG or any MPG subsidiary in accordance with their terms. For one year following the effective time of the merger, AAM will cause the surviving corporation and its subsidiaries to provide each
officer, employee, director and independent contractor
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of
MPG or any of its subsidiaries that continues to provide services to AAM, the surviving corporation or their respective subsidiaries immediately following the effective time of the merger with base
salary or wages, incentive compensation opportunities and severance benefits at least equal to the base salary or wages, incentive compensation opportunities and severance benefits provided to such
person immediately prior to the effective time of the merger, and with employee benefits that are substantially comparable in the aggregate to the employee benefits provided to such person immediately
prior to the effective time of the merger.
Employees
of MPG and its subsidiaries will receive credit for purposes of eligibility to participate and vesting (but not for benefit accruals) under any employee benefit plan, program
or arrangement established or maintained by the surviving corporation or any of its subsidiaries for service accrued prior to the effective time of the merger with MPG or any of its subsidiaries
(without duplicating any benefit or the funding of any such benefit). In addition, AAM will waive any limitations on benefits relating to any pre-existing conditions to the extent such conditions are
covered immediately prior to the effective time of the merger under the applicable MPG plans and to the same extent such limitations are waived under any comparable plan of AAM or its subsidiaries,
and will use reasonable best efforts to recognize, for purposes of annual deductible and out-of-pocket limits under its medical and dental plans, deductible and out-of-pocket expenses paid by
employees of MPG and its subsidiaries in the calendar year in which the effective time of the merger occurs.
Indemnification and Insurance
AAM has agreed that all rights to indemnification, advancement or reimbursement of expenses and exculpation from liabilities for acts or
omissions occurring at or prior to the effective time of the merger that were existing as of the date of the merger agreement in favor of the current or former directors, officers or employees of MPG
and its subsidiaries under their respective organizational documents and any indemnification or other similar agreements of MPG or any of its subsidiaries, in each case as in effect on the date of the
merger agreement and as provided to AAM on or prior to the date of the merger agreement, will continue in full force and effect in accordance with their terms.
The
organizational documents of MPG, as the surviving corporation, and its subsidiaries will contain provisions no less favorable with respect to indemnification, advancement and
reimbursement of expenses and exculpation from liabilities with respect to facts or circumstances occurring at or prior to the effective time of the merger than are set forth in the organizational
documents of MPG and its subsidiaries provided to AAM and as in effect on the date of the merger agreement. These provisions will not be amended, repealed or otherwise modified for a period of
6 years from the effective time of the merger in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the effective time of the merger, were
directors, officers, employees, fiduciaries or agents of MPG, unless such modification is required by law. From and after the effective time of the merger, to the fullest extent permitted by
applicable law, the surviving corporation will indemnify and hold harmless each individual who is, as of the date of the merger agreement, or who becomes prior to the effective time of the merger, a
director or officer of MPG or who is as of the date of the merger agreement, or who thereafter commences prior to the effective time of the merger, serving at the request of MPG as a director or
officer of another entity, against all claims, losses, liabilities, damages, judgments, inquiries, fines, amounts paid in settlement and fees, costs and expenses, including attorneys' fees and
disbursements incurred in connection with any actual or threatened action, whether civil, criminal, administrative, regulatory or investigative, arising out of or pertaining to the fact that such
individual is or was an officer or director of MPG or is or was serving at the request of MPG as a director or officer of another entity, whether asserted or claimed prior to, at or after the
effective time of the merger.
Additionally,
MPG will, in consultation with AAM, purchase a "tail" policy, which (i) has an effective term of 6 years from the effective time of the merger (and provides
coverage until such later
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date
as of which any action commenced during such 6 year period shall have been finally disposed of), (ii) covers each person covered by MPG's directors' and officers' insurance and/or
fiduciary liability
insurance policy in effect on the date of the merger agreement or at the effective time of the merger for actions and omissions occurring prior to the effective time of the merger, and
(iii) provides coverage in an amount not less than MPG's existing coverage and contains other terms and conditions that are no less favorable to the persons covered by such policies maintained
by MPG than those of MPG's directors' and officers' insurance and/or fiduciary liability insurance policy in effect on the date of the merger agreement with respect to claims arising from facts or
events that occurred on or before the effective time of the merger. The amount paid by MPG, however, in respect of any one policy year may not be in excess of 300% of the annual premiums currently
paid by MPG for such insurance. The surviving corporation will maintain such policies in full force and effect, for their full respective terms, and continue to honor its respective obligations
thereunder.
The
indemnification and insurance rights provided to the indemnified persons under the merger agreement are in addition to any other rights to indemnification or contribution that such
indemnified person may have by contract or otherwise.
Financing
AAM must use its reasonable best efforts to obtain the financing prior to the closing date on the terms and conditions described in the
commitment letter. AAM may not amend, modify, waive the terms of, or replace, the commitment letter or reduce the aggregate amount of the financing available under the commitment letter (other than
through the issuance of securities in lieu of the bridge facility contemplated by the commitment letter) without the prior written consent of MPG, unless such amendment, modification, waiver or
replacement or reduction would not:
-
-
reduce the aggregate amount of the financing below the amount required to consummate the transactions contemplated by the merger agreement
(including by changing the amount of fees to be paid or original issue discount of the financing), except to the extent:
-
-
replacement commitments for indebtedness to be incurred by AAM after the date of the merger agreement are then made available in
order to consummate the transactions contemplated by the merger agreement; or
-
-
the representations in the merger agreement regarding the financing would be true after giving effect to such reduction;
so
long as the terms and conditions of the replacement commitments (including with respect to conditionality) are no less favorable, in the aggregate, to AAM than those contained in the commitment
letter; or
-
-
impose new, additional or more expansive conditions precedent, or otherwise amend, modify or expand any conditions precedent, to the receipt of
the financing, in each case, in a manner that would reasonably be expected to:
-
-
materially delay or prevent the consummation of the transactions contemplated by the merger agreement; or
-
-
adversely impact in any material respect the ability of AAM to consummate the transactions contemplated by the merger agreement or
enforce its rights under the commitment letter.
AAM
may amend the commitment letter, however, without the prior written consent of MPG to add additional financing sources, lenders, lead arrangers, bookrunners, syndication agents or
similar entities.
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AAM
will use reasonable best efforts to (i) maintain in effect the commitment letter until the consummation of the transactions contemplated by the merger agreement, other than
any reduction in the amount of the financing available under the commitment letter through the issuance of securities in lieu of the bridge facility contemplated by the commitment letter;
(ii) satisfy all conditions within the control of AAM to obtaining the financing, and (iii) negotiate and enter into definitive agreements with respect to the financing on the terms and
conditions contained in the commitment letter (including any "market flex" provisions related thereto).
AAM
must keep MPG reasonably informed with respect to all material activity concerning the status of the financing and promptly notify MPG of any material change with respect to the
financing, including
any material breach of the commitment letter to the extent it would reasonably be expected to impair or materially delay the closing or result in insufficient financing to consummate the merger and
any termination of the commitment letter (or the definitive financing agreements).
If
all conditions in the commitment letter have been satisfied or, upon funding will be satisfied, and AAM is otherwise required to consummate the merger, AAM will use reasonable best
efforts to (a) consummate the financing and (b) enforce its rights under the commitment letter (or the definitive financing agreements). However, AAM will have no obligation to threaten
or initiate any action against any of the financing sources or any other party to the commitment letter or to the definitive financing agreements.
If
any portion of the financing becomes unavailable on the terms and conditions contemplated in the commitment letter, AAM will use reasonable best efforts to arrange and obtain
alternative debt financing from alternative sources in an amount sufficient to consummate the transactions contemplated by the merger agreement, except that the terms and conditions of such
alternative financing (including with respect to conditionality, structure, covenants and pricing) will be no less favorable, in the aggregate, to AAM than those contained in the commitment letter.
Prior
to the closing, MPG will, and will use reasonable best efforts to cause its subsidiaries and its and their respective representatives to, provide AAM with all cooperation
reasonably requested in connection with the arrangement, marketing and consummation of the financing or alternative financing (if applicable) that does not unreasonably interfere with ongoing
operations of MPG, including using reasonable best efforts to:
-
-
deliver to AAM financial and other pertinent information regarding MPG and its subsidiaries as may be reasonably requested by AAM and that is
customarily required for the financing, including (a) certain financial statements, business and other financial data, and (b) information as to enable AAM to prepare pro forma financial
statements;
-
-
to the extent customarily required, make appropriate officers available to participate upon reasonable notice in a reasonable number of
meetings, presentations, road shows, due diligence sessions and sessions with rating agencies at times and locations to be mutually agreed;
-
-
provide reasonable assistance to AAM in the preparation of customary offering documents, including confidential information memoranda,
prospectuses, private placement memoranda, offering memoranda and bank confidential information memoranda and road show materials, rating agency materials and other similar documents necessary in
connection with the financing and provide reasonable and customary authorization letters related thereto;
-
-
if requested in writing by a financing source, furnish all information regarding MPG and its subsidiaries that is required in connection with
the financing by regulatory authorities under applicable "know your customer" and anti-money laundering rules and regulations, including the Patriot Act, to the extent reasonably requested at least 10
business days prior to the closing date;
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-
-
assist AAM in obtaining corporate, corporate family, credit, facility and securities ratings from rating agencies;
-
-
assist AAM in obtaining (a) customary releases and consents, including consents with respect to inclusion of MPG's financial statements
and any audit opinions in respect thereof required to be included in any prospectus or offering memorandum or similar documents for any portion of the financing, and (b) customary comfort
letters of MPG's current and former independent accountants, including "negative assurance" comfort;
-
-
assist AAM in obtaining customary legal opinions related to MPG required to be obtained in connection with the financing; and
-
-
obtain and, if applicable, execute customary payoff letters and execute customary certificates as may be reasonably requested by AAM as
necessary in connection with the financing, except that (a) any such certificates will not be executed except in connection with the pricing or closing of any financing, and (b) no
personal liability will be imposed on the officers or employees involved with such certificates.
Notwithstanding
the foregoing, neither MPG nor any of its subsidiaries or any of their respective representatives will be required to:
-
-
take any action that would reasonably be expected to conflict with or violate the organizational documents of MPG or any MPG subsidiary or any
law or result in the breach of any contract if the consequences of the breach of such law or contract would be material to the business or operations of MPG and its subsidiaries, taken as a whole;
-
-
pay any commitment or similar fee or reimburse any expenses incurred by AAM in connection with the financing;
-
-
execute and deliver any definitive agreements with respect to the financing prior to the closing date (other than any definitive agreements
that are executed and delivered in escrow pending the occurrence of the closing or effective as of the closing) or incur any liability that is not contingent on the occurrence of the closing date; or
-
-
take any action in its capacity as a stockholder, member, partner or member of the board of directors of any of MPG or its subsidiaries to
authorize or approve the financing.
The
third and fourth bullets of this paragraph and clause (a) of the final bullet of the immediately preceding paragraph, however, will not apply to customary resolutions, representation
letters, officer's certificates, supplemental indentures (which do not result in the creation or assumption of any additional obligations by MPG or any of its subsidiaries prior to the effective time
of the merger) and similar documents required to be executed in connection with the closing of a debt financing into
escrow on customary terms so long as such documents are not released from escrow or become effective prior to the closing date.
AAM
will, promptly upon request by MPG, reimburse MPG for all documented and reasonable out-of-pocket costs (including reasonable attorneys' fees) incurred by MPG or any of its
subsidiaries (other than with respect to any costs associated with preparing regular quarterly and annual financial statements) in performing their obligations under the financing covenants of the
merger agreement, and will also indemnify MPG for any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred by MPG or any of its
subsidiaries arising therefrom, other than to the extent any of the foregoing (a) arises from the bad faith, gross negligence or intentional misconduct of, or material breach of the merger
agreement by, MPG or any of its subsidiaries, or (b) arises from or relates to information provided by or on behalf of MPG or any of its subsidiaries for use in connection with the financing.
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The
availability of the financing is not a condition to the closing of the merger.
Appointment of Additional AAM Directors
Prior to the effective time of the merger, AAM will take all actions as may be necessary (a) to cause the number of directors comprising
the AAM board of directors as of the effective time of the merger to be increased to 11, (b) subject to AAM's standard qualification requirements for directors, to cause each of the AS
designees to be appointed to a different class of the AAM board of directors as of the effective time of the merger, to serve until the end of the term for the class of directors to which the AS
designee is appointed, and (c) subject to the independence and other requirements of the NYSE and applicable law, if applicable, to cause one AS designee to be appointed to each of AAM's
Executive Committee, Audit Committee, Compensation Committee, and Nominating/Corporate Governance Committee as of the effective time of the merger.
Amendment; Extension and Waiver
Amendment
The merger agreement may be amended only in a signed writing executed by the parties to be bound and authorized by AAM, Merger Sub and MPG by
action taken by or on behalf of their respective boards of directors at any time prior to the effective time of the merger, except that, after either AAM's or MPG's stockholder approval has been
obtained, no amendment may be made that would reduce the amount or change the type of consideration into which each share of MPG common stock will be converted upon consummation of the merger or that
would otherwise require the approval of the stockholders of AAM or MPG, as applicable, under applicable law or in accordance with the rules of any relevant stock exchange, without such approval having
been obtained. Certain provisions, however, may not be amended, supplemented, waived or otherwise modified in a manner adverse to the financing sources without the prior written consent of the
adversely affected financing sources.
Extension and Waiver
At any time prior to the effective time of the merger, AAM, MPG and Merger Sub may:
-
-
extend the time for the performance of any obligation or other act of the other parties;
-
-
waive any breach or inaccuracy in the representations and warranties of the other parties contained in the merger agreement or any document
delivered pursuant to the merger agreement; and
-
-
subject to the exception described in the first sentence under "
Amendment; Extension and
WaiverAmendment
" and to the extent permitted by applicable law, waive compliance with any agreement of any of the other parties or any condition to its own
obligations contained in the merger agreement.
Any
such extension or waiver will be valid only if set forth in an instrument in writing signed by the parties.
Governing Law; Specific Performance; Third-Party Beneficiaries
Governing Law
The merger agreement is governed by Delaware law, without giving effect to any conflicts of laws principles or other principles that would cause
the law of any other jurisdiction to apply.
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Specific Performance
Each of AAM, Merger Sub and MPG is entitled to specific performance to enforce the observance and performance of any covenant or obligation
contained in the merger agreement and an injunction or injunctions to prevent breaches or threatened breaches of the merger agreement, without any requirement to obtain, furnish or post any bond or
similar instrument, in addition to any other remedy to which they are entitled at law or in equity.
MPG
will be entitled to specific performance to cause AAM or Merger Sub to cause the financing to be funded and to take all other required actions to effect the closing only
if:
-
-
all of the conditions to the closing, other than the conditions to MPG's obligation to consummate the closing, have been satisfied (other than
those conditions that by their terms must be satisfied at the closing);
-
-
MPG has confirmed in an irrevocable written notice to AAM that all of the conditions to the closing, other than the conditions to AAM's
obligation to consummate the closing, have been satisfied or, to the extent allowed by applicable law, waived by MPG, and that MPG is ready, willing and able to perform its obligations to effect the
closing;
-
-
there has not been a financing failure (as defined below); and
-
-
AAM and Merger Sub fail to fulfill their obligation to effect the closing within 3 business days of the written notice of MPG pursuant to the
second bullet above.
For
purposes of the merger agreement, a "financing failure" means (a) the financing is not available, or (b) AAM or Merger Sub has not received aggregate proceeds from the
financing sources in an amount equal to or greater than the amount of the financing.
In
no event, however, will MPG or any of its affiliates be entitled to seek specific performance of the merger agreement against the financing sources.
Third-Party Beneficiaries
The merger agreement is binding upon, inures solely to the benefit of, and is enforceable by, only AAM, Merger Sub, MPG and their respective
successors and permitted assigns, and nothing in the merger agreement, express or implied, is intended to or will confer upon any other person any right, benefit or remedy of any nature whatsoever
under or by reason of the merger agreement, with the exception of:
-
-
rights of financing sources as express third-party beneficiaries in respect of certain specified provisions of the merger agreement, including
provisions relating to:
-
-
the effect of termination of the merger agreement, as described in "
Termination of the Merger
AgreementEffect of Termination
" beginning on page 137;
-
-
certain amendments to the merger agreement, as described in "
Amendment; Extension and
WaiverAmendment
" beginning on page 153;
-
-
specific performance of the merger agreement, as described in "
Governing Law; Specific
Performance; Third-Party BeneficiariesSpecific Performance
" beginning on page 154; and
-
-
rights of MPG indemnified parties as express third-party beneficiaries, as described in "
Indemnification
and Insurance
" beginning on page 149.
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THE VOTING AGREEMENT
This is a summary of the material provisions of the voting agreement. The following summary of the voting agreement does
not purport to be complete and may not contain all of the information about the voting agreement that is important to you. The summary of the material terms of the voting agreement below and elsewhere
in this joint proxy statement/prospectus is subject to, and qualified in its entirety by reference to the full text of, the voting agreement, which is attached as Annex D to this joint proxy
statement/prospectus and is incorporated herein by reference. You should read the entire voting agreement carefully and in its entirety because it, and not the description below or elsewhere in this
joint proxy statement/prospectus, is the legal document that governs with respect to the matters described below.
Contemporaneously
with entering into the merger agreement, AAM entered into the voting agreement with the AS stockholder with respect to all MPG common stock owned by the AS stockholder,
which constituted approximately 77% of the issued and outstanding MPG common stock as of the date of the voting agreement.
Under
the terms of the voting agreement, the AS stockholder has agreed to vote (or caused to be voted):
-
-
25,344,548 shares of MPG common stock (which shares constitute approximately 37% of the issued and outstanding shares of MPG common stock on
the record date) in favor of the merger, the adoption of the merger agreement and the approval of the terms thereof and each of the other transactions contemplated by the merger agreement; and
-
-
all other shares of MPG common stock owned by the AS stockholder in a manner that is proportionate to the manner in which all shares of MPG
common stock not owned by the AS stockholder are voted.
The
foregoing voting obligations, however, do not apply to the AS stockholder in the event that the MPG board of directors makes a change in recommendation (see
"
The Merger AgreementNo SolicitationBoard Recommendation Change
" beginning on page 132). In the event the MPG board of
directors makes a change in recommendation, the AS stockholder may vote (or cause to be voted) all of its shares of MPG common stock in any manner.
The
AS stockholder has also agreed not to, directly or indirectly:
-
-
sell, transfer, pledge, assign or otherwise encumber or dispose of any of its MPG common stock to, or enter into any agreement, option or other
arrangement (including any profit sharing arrangement) or understanding with respect to any of its MPG common stock with, any person other than AAM or AAM's designee;
-
-
deposit any of its MPG common stock into a voting trust or enter into any voting arrangement, whether by proxy, voting agreement, voting trust,
power-of-attorney, attorney-in-fact, agent or otherwise, with respect to its MPG common stock, except as contemplated by the voting agreement and except for that certain Stockholders' Agreement, dated
as of August 4, 2014, by and among MPG, the AS stockholder, ASP HHI Investco LP, ASP Grede Investco LP and the minority investors made a party from time to time; or
-
-
take any other action that would in any way make any representation or warranty of the AS stockholder in the voting agreement untrue or
incorrect in any material respect or otherwise restrict, limit or interfere in any material respect with the performance of the AS stockholder's obligations under the voting agreement or the
transactions contemplated in the voting agreement.
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In
addition, the AS stockholder (solely in its capacity as a stockholder of MPG) has agreed not and to cause each of its subsidiaries not to, and to use its reasonable best efforts to
cause its officers, directors, agents and other representatives not to, directly or indirectly:
-
-
solicit, initiate, facilitate or encourage any inquiries or the implementation or submission of any acquisition proposal (which term has the
same meaning in the voting agreement as in the merger agreement (see "
The Merger AgreementNo Solicitation
" beginning on page 129))
with respect to MPG or any proposals or offers that would be reasonably expected to lead to an acquisition proposal with respect to MPG; or
-
-
engage in, continue or otherwise participate in any discussions, communications or negotiations regarding, or furnish to any person any
non-public information in connection with, or for the purpose of facilitating or encouraging, any inquiries, proposals or offers that constitute, or would be reasonably expected to lead to, an
acquisition proposal with respect to MPG, except to notify such person of the existence of the non-solicitation obligations under the voting agreement.
The
AS stockholder may, however, engage in any discussions, communications or negotiations described above to the same extent that MPG or the MPG board of directors is permitted to
engage in any such discussions, communications or negotiations under the terms of the merger agreement (see "
The Merger AgreementNo
Solicitation
" beginning on page 129).
The
AS stockholder has also agreed:
-
-
to irrevocably and unconditionally waive any rights of appraisal with respect to its shares of MPG common stock in the merger and not to
exercise any rights to dissent from the merger or any similar right (including under Section 262 of the DGCL) that the AS stockholder may have;
-
-
not to commence, institute, maintain or prosecute any claim, derivative or otherwise, prior to the effective time of the merger,
(i) against MPG, any of its representatives or any of its successors, including claims relating to the negotiation, execution or delivery of the merger agreement or the consummation of the
merger, including any claim alleging a breach of any fiduciary duty of the MPG board of directors in connection with the merger and the other transactions contemplated by the merger agreement, or
(ii) challenging the validity of or seeking to enjoin the operation of any provision of the voting agreement (other than with respect to the AS stockholder enforcing its rights under the terms
of the voting agreement); and
-
-
to attend, if applicable, the MPG special meeting or any adjournment thereof (or execute valid and effective proxies to any other attending
participant of an MPG special meeting in lieu of attending such MPG special meeting or any adjournment thereof).
The
voting agreement terminates upon the first to occur of:
-
-
the effective time of the merger;
-
-
the termination of the merger agreement in accordance with its terms;
-
-
the mutual written agreement of AAM and the AS stockholder to terminate the voting agreement; or
-
-
at the sole election of the AS stockholder following any amendment of or modification to the merger agreement with respect to any
terms of the merger consideration, the allocation of the merger consideration between cash and stock, the closing conditions, the provisions of the merger agreement relating to the appointment of the
AS designees to the AAM board of directors or any change to the merger agreement that would have a materially adverse impact on the AS stockholder.
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Each
of AAM and the AS stockholder also made certain customary representations and warranties in connection with the voting agreement.
The
AS stockholder entered into the voting agreement solely in it capacity as a record and/or beneficial owner of MPG common stock and not in any capacity as a director, officer,
employee, or other fiduciary of MPG or in its capacity as a trustee or fiduciary of any benefits plans. The voting agreement does not in any way restrict or affect any action or inaction of the AS
stockholder or any of its representatives, as applicable, to the extent the AS stockholder or any such representative is serving on the MPG board of directors or the board of directors of any
subsidiary of MPG or as an officer or fiduciary of MPG or any subsidiary of MPG, or acting in such person's capacity as a director, officer, employee or fiduciary of MPG or any subsidiary of MPG.
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STOCKHOLDERS' AGREEMENT
This is a summary of the material provisions of the stockholders' agreement. The following summary of the stockholders'
agreement does not purport to be complete and may not contain all of the information about the stockholders' agreement that is important to you. The summary of the material terms of the stockholders'
agreement below and elsewhere in this joint proxy statement/prospectus is subject to, and qualified in its entirety by reference to the full text of, the stockholders' agreement, which is attached as
an exhibit to the merger agreement which is attached as Annex A to this joint proxy statement/prospectus and is incorporated herein by reference. You should read the entire stockholders'
agreement carefully and in its entirety because it, and not the description below or elsewhere in this joint proxy statement/prospectus, is the legal document that governs with respect to the matters
described below.
In
connection with and as a condition to the consummation of the merger, AAM, the AS stockholder and, for certain limited purposes, American Securities will enter into the stockholders'
agreement effective as of the effective time of the merger.
Transfer Restrictions
Under the stockholders' agreement, the AS stockholder is generally restricted from transferring its shares of AAM common stock, other than to
controlled affiliates of American Securities (other than any of its portfolio companies) that agree to be bound by the stockholders' agreement, without the consent of AAM until the expiration of a
lock-up period of six months after the consummation of the merger. After the expiration of the lock-up period, and until the date the AS stockholder, together with any controlled affiliates of
American Securities (other than any of its portfolio companies), ceases to beneficially own at least 7.5% of the outstanding shares of AAM common stock (which date we refer to in this joint proxy
statement/prospectus as the expiration date), the AS stockholder or any controlled affiliate of American Securities (other than any of its portfolio companies) may transfer its shares of AAM common
stock only:
-
-
pursuant to its registration rights granted under the stockholders' agreement (see below);
-
-
pursuant to a transfer made in accordance with Rule 144 of the Securities Act (or any similar provisions then in force);
-
-
pursuant to a transfer to any person or group so long as such transferee, after giving effect to the transfer, would not beneficially own,
alone or together with its affiliates, in excess of 7.5% of the outstanding shares of AAM common stock and would be eligible to file a Schedule 13G pursuant to
Rule 13d-1(b)(1)(ii) of the Exchange Act;
-
-
pursuant to a distribution to all of the limited partners (on a pro rata basis in accordance with their respective ownership percentages) and
the general partner (and its representative members) of the AS stockholder or any controlled affiliate of American Securities (other than any of its portfolio companies) that beneficially owns shares
of AAM common stock in accordance with the terms of their respective organizational documents, so long as no such partner who is transferred more than 2% of the outstanding shares of AAM common stock
would, to the AS stockholder's knowledge, beneficially own, alone or together with its affiliates (other than the AS stockholder and the controlled affiliates of American Securities), more than 7.5%
of the outstanding shares of AAM common stock after giving effect to the transfer;
-
-
pursuant to a transfer to certain exempt entities agreed to by the parties of not more than 7.5% of the outstanding shares of AAM common stock;
or
-
-
with the prior written consent of AAM.
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Registration Rights
Following the expiration of a lock-up period of six months after the consummation of the merger, the AS stockholder will have certain customary
registration rights under the stockholders' agreement, as described in this section. These registration rights may be transferred to any permitted transferee of the shares owned by the AS stockholder,
provided that only the AS stockholder will have the power to exercise such registration rights on behalf of any such transferee. These registration rights will terminate when all shares of AAM common
stock owned by the AS stockholder, any other controlled affiliates of American Securities (other than its portfolio companies) and any permitted transferee of the AS stockholder are sold pursuant to a
registration statement or are sold pursuant to Rule 144 under the Securities Act (or any similar provisions then in force). In addition, with respect to shares of AAM common stock owned by the
AS stockholder and any other controlled affiliates of American Securities (other than its portfolio companies), these registration rights will terminate when the AS stockholder beneficially owns less
than 7.5% of the shares of AAM common stock then outstanding and there are no AS directors on the AAM board of directors. In the case of shares of AAM common stock transferred to other permitted
transferees of the AS stockholder, the
registration rights will also terminate when such shares may be sold without volume, manner of sale or other limitations under Rule 144 of the Securities Act (or any similar provisions then in
force).
Transaction Shelf Registration
Under the stockholders' agreement, AAM is required to file a shelf registration statement with respect to the AAM common stock received
by the AS stockholder in connection with the closing of the merger. The stockholders' agreement requires AAM to use commercially reasonable efforts to have this shelf registration statement effective
180 days from the completion of the merger and provides that the registration statement shall be on a form that is automatically effective upon filing if AAM is then eligible for automatic
effectiveness. Under the stockholders' agreement, AAM must use commercially reasonable efforts to maintain such registration statement effective until the sale of all such shares, subject to customary
suspension rights. For a period of two years following the consummation of the merger, any common stock that has been registered in such shelf registration statement may be included in any
underwritten offering of AAM upon proper exercise of demand registration rights or piggyback registration rights by the AS stockholder.
Demand Registration Rights
Under the stockholders' agreement, the AS stockholder will have registration rights that allow it at any time after 6 months following
the consummation of the merger to request that AAM register the resale under the Securities Act of all or any portion of the shares of AAM common stock owned by the AS stockholder, any controlled
affiliate of American Securities (other than its portfolio companies) or any permitted transferee of the AS stockholder, so long as the aggregate market value of such shares to be sold is not less
than $100 million as measured by the market price of AAM common stock on the date of the demand. The AS stockholder will be entitled to a total of two demand registrations in any 12-month
period. AAM will not be required to maintain the effectiveness of any resale registration statement for more than 180 days for any firm commitment public offering and 90 days for any
other offering.
Piggyback Registration Rights
The AS stockholder will also be entitled to "piggyback" registration rights exercisable at any time following the consummation of the merger
that allow it to include the shares of AAM common stock that it, any other controlled affiliate of American Securities (other than its portfolio companies) or any permitted transferee of the AS
stockholder owns in any public offering of equity securities initiated by AAM (other than those public offerings pursuant to registration statements on forms that do not
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permit
registration for resale by them). These "piggyback" registration rights are subject to customary underwriter cutbacks based on the manner of such offering and the identity of the party
initiating such offering.
General Provisions
AAM will be entitled to suspend these registration rights, as further described in the stockholders' agreement and subject to the limitations
specified therein if, in its good faith judgment, it is not feasible for AAM to proceed with the registration because of the existence of any acquisition, disposition or other material transaction or
financing activity involving AAM, or because of the unavailability of audited or pro forma financial statements, or because of AAM's possession of material information that it would not be in AAM's
best interests to disclose in a registration statement. Under the stockholders' agreement, each of AAM and the AS stockholder will agree to customary lock-up obligations in connection with any
exercise of registration rights by the other, for itself and for its affiliates and permitted transferees.
AAM
will indemnify the AS stockholder, its controlling persons and their respective officers, directors, employees, stockholders, general and limited partners, members, representatives
and affiliates against any liabilities, losses or damages arising out of or based upon any untrue statement or omission of material fact in any registration statement or prospectus pursuant to which
it sells shares of AAM common stock, unless such liability arose from the AS stockholder's misstatement or omission, and the AS stockholder will indemnify AAM, its directors, employees, stockholders,
controlling persons and the affiliates of the foregoing against all liabilities, losses or damages caused by its misstatements or
omissions in any such registration statement or prospectus. AAM will pay all registration and offering-related expenses incidental to AAM's performance under the stockholders' agreement, and the AS
stockholder will pay all underwriting fees, discounts, commissions and transfer taxes, if any, relating to the sale of its shares of AAM common stock under the stockholders' agreement. The
stockholders' agreement also includes customary contribution obligations in the event indemnification is not available.
Preemptive Rights
From the date the merger is consummated until the expiration date, if AAM issues new shares of AAM common stock or any instruments convertible
into or exchangeable or exercisable for shares of AAM common stock, the AS stockholder will have the right to purchase such new securities that are proposed to be issued in order to maintain its
equity ownership percentage in AAM. Preemptive rights do not apply to any issuance (i) to directors, officers, employees, advisors or consultants of AAM or any of its subsidiaries in connection
with their compensation or employment, (ii) in a public offering, (iii) in connection with a pro rata dividend made to all holders of shares of AAM common stock, or (iv) in
connection with the consummation of the merger.
AAM Board of Directors
Increase in the AAM Board Size
Effective as of the effective time of the merger, AAM will increase the number of members of the AAM board of directors from 8 to 11 and will
elect the AS designees to serve as new directors on the AAM board of directors.
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Right of the AS Stockholder to Nominate Directors
Until the expiration date, the AS stockholder will have the right to nominate to the AAM board of
directors:
-
-
if the total number of directors on the AAM board of directors is less than 14, 3 directors;
-
-
if the total number of directors on the AAM board of directors is 14, 4 directors; and
-
-
if the total number of directors on the AAM board of directors is greater than 14, a number of directors equal to such total number of
directors multiplied by 27%, rounding down in the case of any fractional number.
If
the number of AS directors is three, each AS director will serve in a different class of directors on the AAM board of directors. If the number of AS directors is greater than three,
no more than two AS directors will serve in any class of directors on the AAM board of directors. AS directors will have the same notice, insurance and indemnification rights as the other members of
the AAM board of directors. AS directors do not have any obligation to communicate or offer to AAM any new business opportunities similar to the business in which AAM is engaged unless the AS
directors first become aware of such business opportunities in their capacity as a member of the AAM board of directors.
If
any AS director is serving on the AAM board of directors on the expiration date, the AS stockholder must use its commercially reasonable efforts to cause such AS director to promptly
tender his or her resignation, which resignation the Nominating/Corporate Governance Committee of AAM (which we refer to in this joint proxy statement/prospectus as the Governance Committee) may
determine to accept or reject in its sole discretion.
Election of AS Directors to the AAM Board of Directors
Following the closing date, to the extent that an AS designee must stand for election or an AS director must stand for reelection, as the case
may be, to the AAM board of directors in connection with any annual or special meeting of stockholders of AAM at which directors are to be elected (which we refer to in this joint proxy
statement/prospectus as an election meeting), AAM will (a) nominate and recommend that the holders of AAM common stock who are entitled to vote at such election meeting vote in favor of the
election of such AS designee or the reelection of such AS director, as the case may be, (b) support such AS designee for election or such AS director for reelection, as the case may be, in a
manner no less rigorous and favorable than the manner in which AAM supports its other nominees and (c) otherwise use its commercially reasonable efforts to cause the election of such AS
designee or the reelection of such AS director, as the case may be, to the AAM board of directors at such election meeting.
Replacement of AS Directors
If an (a) an AS director is unable or unwilling to serve as a director for any reason, (b) an AS director is removed (upon death,
resignation or otherwise), or (c) an AS director or an AS designee fails to be reelected or elected, as the case may be, at an election meeting solely as a result of failing to receive the
required vote of the holders of AAM common stock as required by AAM's organizational documents, the AS stockholder will have the exclusive right to submit the name of a replacement candidate for such
AS director or AS designee, as the case may be (which we refer to in this joint proxy statement/prospectus as a replacement director), to the Governance Committee for its approval. If approved by the
Governance Committee, the replacement director will serve as the AS designee for election or reelection in the same class of directors on the AAM board of directors as the AS director or AS designee
for which such person serves as a replacement. For each proposed replacement director that is not approved by AAM, the AS stockholder will have the right to continue submitting the name
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of
a new proposed replacement director to the Governance Committee for its approval until the Governance Committee approves a proposed replacement director.
Board Committee Representation
So long as the AS stockholder has the right to nominate directors to the AAM board of directors in accordance with the terms of the
stockholders' agreement, the AS stockholder will have the right to require that one AS director be appointed to each of the committees of the AAM board of directors, subject to applicable requirements
or qualifications under applicable law or applicable stock exchange rules (including with respect to director independence). However, the AS stockholder will not have any right to require that any AS
director be appointed as the chair of any committee of the AAM board of directors, and the identity of the particular AS director appointed to each particular committee will be subject to the
reasonable mutual agreement of the AS stockholder and the AAM board of directors.
Voting Rights and Restrictions
Until the expiration date or for so long as at least one director designated by the AS stockholder is serving on the AAM board of directors, the
AS stockholder has agreed to vote in accordance with the recommendation of the AAM board of directors with respect to the following matters:
-
-
the election or removal of directors to or from the AAM board of directors;
-
-
the compensation of directors, officers or other employees of AAM (including say-on-pay matters and option grants); and
-
-
the engagement of accountants.
With
respect to any other matter (other than any extraordinary transaction, as defined below), the AS stockholder may vote its shares, at its discretion, either (i) as recommended
by the AAM board of directors or (ii) in the same proportion in which all shares of AAM common stock (other than shares owned by the AS Stockholder and other controlled affiliates of American
Securities (other than its portfolio companies)) that voted or submitted a written consent on such matter are actually voted or consented.
Neither
the AS stockholder nor any other controlled affiliate of American Securities will have an obligation to vote its shares in any prescribed manner in the case of any vote of the
AAM stockholders that is held to consider (i) amendments to AAM's certificate of incorporation or bylaws, (ii) any recapitalization, restructuring or similar transaction or series of
transactions involving AAM, (iii) any dissolution or complete or partial liquidation, or similar arrangement, of AAM, (iv) any merger, consolidation or other business combination of AAM,
(v) any issuance of any AAM common stock, preferred stock or other form of equity or instruments convertible into or exercisable or exchangeable for AAM common stock, preferred stock or other
form of equity (vi) any transaction with an "interested stockholder" (as such term is defined in Section 203 of the DGCL), (vii) any ratification of a "defective corporate action"
(as such term is defined in Section 205 of the DGCL) or (viii) any sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the assets of AAM to any third party (we refer to each of the foregoing transactions in this joint proxy statement/prospectus as an
extraordinary transaction).
Standstill
American Securities has agreed that, from the closing of the merger until the date that is 3 months following the expiration date,
American Securities and its controlled affiliates, including the AS stockholder and any other controlled Affiliate of American Securities (other than its portfolio companies), will be subject to
standstill provisions that prohibit American Securities and its controlled
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affiliates
(other than its portfolio companies) from taking any of the following actions unless approved in writing by the AAM board of directors:
-
-
other than in connection with the exercise of the AS stockholder's preemptive rights, acquiring additional shares of AAM common stock or any
instruments convertible into or exercisable or exchangeable for AAM common stock (including any options, swaps or other derivatives relating thereto), including any economic or voting interest in any
of the foregoing;
-
-
proposing to acquire AAM or take other actions to seek control of AAM, or to control or influence the AAM board of directors or the management
or policies of AAM, other than a private offer to the AAM board of directors to acquire control of AAM made in a manner that would not reasonably be expected to require public disclosure by AAM,
American Securities or any controlled affiliate of American Securities; provided that American Securities or any such controlled affiliate of American Securities which submits such offer is required
to immediately withdraw such offer if it is rejected by the AAM board of directors;
-
-
making any public announcement with respect to, or submitting a proposal for, any extraordinary transaction;
-
-
initiating or participating in proxy contests or other solicitations or campaigns seeking to replace, remove or oppose the election of any AAM
director or other proxy contests, solicitations or campaigns with respect to governance or the operation of the business of AAM or its subsidiaries, including any extraordinary transaction or other
proposals that do not have the support of the AAM board of directors;
-
-
soliciting, or participating in any solicitation of, proxies with respect to any AAM common stock or any instruments convertible into or
exercisable or exchangeable for AAM common stock, or becoming a "participant" in a "solicitation" (as such terms are defined in Regulation 14A of the Exchange Act) in opposition to any matter
that has been recommended by a majority of the AAM board of directors or in favor of any matter that has not been approved by a majority of the AAM board of directors;
-
-
executing, or seeking or soliciting support for (whether publicly or privately), any written consent of stockholders with respect to AAM or the
shares of AAM common stock owned by the AS stockholder and other controlled affiliates of American Securities (other than its portfolio companies);
-
-
seeking (i) to call a meeting of AAM stockholders, (ii) to obtain additional representation on the AAM board of directors (other
than as a result of an increase in the size of the AAM board of directors) or (iii) the removal or resignation of any of the AAM directors (other than any AS director);
-
-
depositing any shares of AAM common stock owned by the AS stockholder and other controlled affiliates of American Securities (other than its
portfolio companies) in any voting trust or subjecting any of such shares to any voting arrangement (other than solely among the AS stockholder and other controlled affiliates of American Securities
(other than its portfolio companies));
-
-
entering into any substantive discussions or arrangements with, or actively assisting or encouraging, any third party with respect to any of
the foregoing, or otherwise forming or joining a "group" (as defined in the Exchange Act) in connection with any of the foregoing; and
-
-
seeking an amendment of the stockholders' agreement or waiver, in each case, with respect to, or proposing to do, any of the foregoing.
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Effectiveness; Term
The stockholders' agreement will not be executed or effective until the consummation of the merger.
The
stockholders' agreement (other than the registration rights therein) will terminate upon the earlier of (a) the date that is three months following the expiration date and
(b) the mutual written agreement of the AS stockholder and AAM.
The
registration rights in the stockholders' agreement will terminate upon the earlier of (x) the time at which all shares of AAM common stock owned by the AS stockholder, any
other controlled affiliates of American Securities (other than its portfolio companies) and any permitted transferee of the AS stockholder (i) are sold pursuant to a registration statement,
(ii) are sold pursuant to Rule 144 under the Securities Act (or any similar provisions then in force), (iii) in the case of shares owned by the AS stockholder and any other
controlled affiliates of American Securities (other than its portfolio companies), such shares are less than 7.5% of the outstanding shares of AAM common stock, or (iv) in the case of shares
transferred to other permitted transferees of the AS stockholder, such shares may be sold in a single transaction or series of transactions without volume, manner of sale or other limitations under
Rule 144 of the Securities Act (or any similar provisions then in force), and (y) the mutual written agreement of the AS stockholder and AAM.
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Table of Contents
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements (which we refer to in this joint proxy statement/prospectus as the pro
forma financial statements) have been prepared to illustrate the effect of the merger. Under the terms of the merger agreement, at the effective time of the merger, each share of MPG common stock
(other than MPG excluded shares) will be converted into the right to receive (a) $13.50 in cash, without interest, and (b) 0.5 of a share of AAM common stock.
The
historical consolidated financial statements have been adjusted in the pro forma financial statements to give effect to pro forma events that are (1) directly attributable to
the merger, (2) factually supportable, and (3) with respect to the unaudited pro forma condensed combined statements of income (which we refer to in this joint proxy statement/prospectus
as the pro forma statement of income), expected to have a continuing impact on the combined results of AAM and MPG. Although AAM and MPG have entered into the merger agreement, there is no guarantee
that the merger will be completed. The unaudited pro forma condensed combined balance sheet as of December 31, 2016 (which we refer to in this joint proxy statement/prospectus as the pro forma
balance sheet) is based on
the individual historical audited consolidated balance sheets of AAM and MPG as of December 31, 2016, and has been prepared to reflect the merger as if it occurred on December 31, 2016.
The pro forma statement of income for the year ended December 31, 2016 combines the historical results of income of AAM and MPG, giving effect to the merger as if it occurred on
January 1, 2016. The pro forma balance sheet as of December 31, 2016, as well as the pro forma statement of income for the year ended December 31, 2016, also give effect to AAM's
anticipated incurrence of new indebtedness to be used, in part, to fund the cash consideration payable in connection with the merger, related fees and expenses, and refinance certain existing
indebtedness of MPG.
The
pro forma statement of income does not reflect future events that may occur after the closing of the merger, including, but not limited to, the anticipated realization of ongoing
savings from operating synergies, and certain one-time charges AAM expects to incur in connection with the transaction, including, but not limited to, costs in connection with integrating the
operations of AAM and MPG.
The
pro forma financial statements are for informational purposes only. They do not purport to indicate the results that would actually have been obtained had the merger been completed
on the assumed date or for the periods presented, or which may be realized in the future. To produce the pro forma financial statements, AAM adjusted MPG's assets and liabilities to their estimated
fair values. As of the date of this joint proxy statement/prospectus, AAM has not completed the detailed valuation work necessary to arrive at the required estimates of the fair value of the MPG
assets to be acquired and the liabilities to be assumed and the related allocation of purchase price, nor has it identified all adjustments necessary to conform MPG's accounting policies to AAM's
accounting policies. A final determination of the fair value of MPG's assets and liabilities will be based on the actual net tangible and intangible assets and liabilities of MPG that exist as of the
date of completion of the merger. Additionally, the value of the stock consideration will be determined based on the trading price of shares of AAM common stock at the time of the completion of the
merger. Accordingly, the accompanying unaudited pro forma purchase price allocation is preliminary and is subject to further adjustments as additional information becomes available and as additional
analyses are performed. The preliminary unaudited pro forma purchase price allocation has been made solely for the purpose of preparing the accompanying pro forma financial statements. The preliminary
purchase price allocation was based on reviews of publicly disclosed allocations for other acquisitions in the automotive supplier industry, AAM's historical experience, data that was available
through the public domain and AAM's due diligence review of MPG's business. Until the merger is completed, both companies are limited in their ability to share information with each other. Upon the
completion of the merger, valuation work
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will
be performed and any increases or decreases in the fair value of relevant balance sheet amounts will result in adjustments to the balance sheet and/or statement of income until the purchase price
allocation is finalized. There can be no assurance that such finalization will not result in material changes from the preliminary purchase price allocation included in the accompanying pro forma
financial statements.
The
pro forma financial statements should be read in conjunction with:
-
-
the accompanying notes beginning on page 169 of this joint proxy statement/prospectus;
-
-
AAM's audited consolidated financial statements and accompanying notes for the year ended December 31, 2016, which are incorporated by
reference in this joint proxy statement/prospectus; and
-
-
MPG's audited consolidated financial statements and accompanying notes for the year ended December 31, 2016, which are incorporated by
reference in this joint proxy statement/prospectus.
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Table of Contents
American Axle & Manufacturing Holdings, Inc.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
Reclassification
|
|
|
|
Adjusted
MPG
|
|
Acquisition
Adjustments
|
|
|
|
Pro Forma
Condensed
Combined
|
|
(in millions)
|
|
AAM
|
|
MPG
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
481.2
|
|
$
|
209.7
|
|
$
|
|
|
|
|
|
$
|
209.7
|
|
$
|
(162.7
|
)
|
|
A1
|
|
$
|
528.2
|
|
Accounts receivable, net
|
|
|
560.0
|
|
|
349.4
|
|
|
12.4
|
|
|
R1
|
|
|
361.8
|
|
|
(15.4
|
)
|
|
A2
|
|
|
906.4
|
|
Inventories, net
|
|
|
219.5
|
|
|
168.4
|
|
|
|
|
|
|
|
|
168.4
|
|
|
20.2
|
|
|
A3
|
|
|
408.1
|
|
Prepaid expenses and other
|
|
|
75.8
|
|
|
|
|
|
51.8
|
|
|
R2
|
|
|
51.8
|
|
|
|
|
|
|
|
|
127.6
|
|
Prepaid expenses
|
|
|
|
|
|
11.5
|
|
|
(11.5
|
)
|
|
R3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
|
|
|
52.7
|
|
|
(52.7
|
)
|
|
R3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,336.5
|
|
|
791.7
|
|
|
|
|
|
|
|
|
791.7
|
|
|
(157.9
|
)
|
|
|
|
|
1,970.3
|
|
Property, plant and equipment, net
|
|
|
1,093.7
|
|
|
831.6
|
|
|
|
|
|
|
|
|
831.6
|
|
|
62.4
|
|
|
A4
|
|
|
1,987.7
|
|
Deferred income taxes
|
|
|
356.4
|
|
|
7.4
|
|
|
|
|
|
|
|
|
7.4
|
|
|
25.7
|
|
|
A8
|
|
|
389.5
|
|
Goodwill
|
|
|
154.0
|
|
|
907.7
|
|
|
|
|
|
|
|
|
907.7
|
|
|
492.8
|
|
|
A5
|
|
|
1,554.5
|
|
Amortizable intangible assets
|
|
|
|
|
|
639.1
|
|
|
|
|
|
|
|
|
639.1
|
|
|
738.4
|
|
|
A6
|
|
|
1,377.5
|
|
GM postretirement cost sharing asset
|
|
|
236.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
236.1
|
|
Other assets and deferred charges
|
|
|
271.4
|
|
|
13.0
|
|
|
|
|
|
|
|
|
13.0
|
|
|
|
|
|
|
|
|
284.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,448.1
|
|
$
|
3,190.5
|
|
$
|
|
|
|
|
|
$
|
3,190.5
|
|
$
|
1,161.4
|
|
|
|
|
$
|
7,800.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long-term debt
|
|
$
|
3.3
|
|
$
|
13.2
|
|
$
|
1.0
|
|
|
R4
|
|
$
|
14.2
|
|
$
|
(14.2
|
)
|
|
A7
|
|
$
|
3.3
|
|
Short-term debt
|
|
|
|
|
|
1.0
|
|
|
(1.0
|
)
|
|
R4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
382.3
|
|
|
260.5
|
|
|
|
|
|
|
|
|
260.5
|
|
|
(15.4
|
)
|
|
A2
|
|
|
627.4
|
|
Accrued compensation and benefits
|
|
|
139.3
|
|
|
49.6
|
|
|
6.4
|
|
|
R5
|
|
|
56.0
|
|
|
|
|
|
|
|
|
195.3
|
|
Deferred revenue
|
|
|
24.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.6
|
|
Accrued expenses and other
|
|
|
102.0
|
|
|
77.1
|
|
|
(6.4
|
)
|
|
R5
|
|
|
70.7
|
|
|
(18.5
|
)
|
|
A11
|
|
|
154.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
651.5
|
|
|
401.4
|
|
|
|
|
|
|
|
|
401.4
|
|
|
(48.1
|
)
|
|
|
|
|
1,004.8
|
|
Long-term debt, net
|
|
|
1,400.9
|
|
|
1,809.2
|
|
|
22.7
|
|
|
R6
|
|
|
1,831.9
|
|
|
950.9
|
|
|
A7
|
|
|
4,183.7
|
|
Capital lease obligations, less current maturities
|
|
|
|
|
|
22.7
|
|
|
(22.7
|
)
|
|
R6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
70.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70.8
|
|
Deferred income taxes
|
|
|
15.0
|
|
|
223.7
|
|
|
|
|
|
|
|
|
223.7
|
|
|
287.4
|
|
|
A8
|
|
|
526.1
|
|
Postretirement benefits and other long-term liabilities
|
|
|
779.9
|
|
|
54.3
|
|
|
|
|
|
|
|
|
54.3
|
|
|
|
|
|
|
|
|
834.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,918.1
|
|
|
2,511.3
|
|
|
|
|
|
|
|
|
2,511.3
|
|
|
1,190.2
|
|
|
|
|
|
6,619.6
|
|
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, par value
|
|
|
0.9
|
|
|
0.1
|
|
|
|
|
|
|
|
|
0.1
|
|
|
0.2
|
|
|
A9
|
|
|
1.2
|
|
Paid-in capital
|
|
|
660.1
|
|
|
880.7
|
|
|
|
|
|
|
|
|
880.7
|
|
|
(188.2
|
)
|
|
A10
|
|
|
1,352.6
|
|
Retained earnings (deficit)
|
|
|
449.7
|
|
|
(92.0
|
)
|
|
|
|
|
|
|
|
(92.0
|
)
|
|
46.2
|
|
|
A11
|
|
|
403.9
|
|
Treasury stock at cost
|
|
|
(191.1
|
)
|
|
(29.5
|
)
|
|
|
|
|
|
|
|
(29.5
|
)
|
|
29.5
|
|
|
A12
|
|
|
(191.1
|
)
|
Accumulated other comprehensive loss
|
|
|
(389.6
|
)
|
|
(83.5
|
)
|
|
|
|
|
|
|
|
(83.5
|
)
|
|
83.5
|
|
|
A12
|
|
|
(389.6
|
)
|
Noncontrolling interest
|
|
|
|
|
|
3.4
|
|
|
|
|
|
|
|
|
3.4
|
|
|
|
|
|
|
|
|
3.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
530.0
|
|
|
679.2
|
|
|
|
|
|
|
|
|
679.2
|
|
|
(28.8
|
)
|
|
|
|
|
1,180.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
3,448.1
|
|
$
|
3,190.5
|
|
$
|
|
|
|
|
|
$
|
3,190.5
|
|
$
|
1,161.4
|
|
|
|
|
$
|
7,800.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
167
Table of Contents
American Axle & Manufacturing Holdings, Inc.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
Reclassification
|
|
|
|
Adjusted
MPG
|
|
Acquisition
Adjustments
|
|
|
|
Pro Forma
Condensed
Combined
|
|
(in millions, except per share data)
|
|
AAM
|
|
MPG
|
|
|
|
|
|
Net sales
|
|
$
|
3,948.0
|
|
$
|
2,790.7
|
|
$
|
|
|
|
|
|
$
|
2,790.7
|
|
$
|
(95.1
|
)
|
|
A13
|
|
$
|
6,643.6
|
|
Cost of goods sold
|
|
|
3,221.9
|
|
|
2,321.5
|
|
|
|
|
|
|
|
|
2,321.5
|
|
|
(79.1
|
)
|
|
A14
|
|
|
5,464.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
726.1
|
|
|
469.2
|
|
|
|
|
|
|
|
|
469.2
|
|
|
(16.0
|
)
|
|
|
|
|
1,179.3
|
|
Selling, general and administrative expense
|
|
|
319.2
|
|
|
242.3
|
|
|
(6.3
|
)
|
|
R7
|
|
|
236.0
|
|
|
36.1
|
|
|
A15
|
|
|
591.3
|
|
Restructuring and acquisition-related costs
|
|
|
26.2
|
|
|
|
|
|
6.3
|
|
|
R7
|
|
|
6.3
|
|
|
(17.2
|
)
|
|
A16
|
|
|
15.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
380.7
|
|
|
226.9
|
|
|
|
|
|
|
|
|
226.9
|
|
|
(34.9
|
)
|
|
|
|
|
572.7
|
|
Interest expense
|
|
|
(93.4
|
)
|
|
(103.5
|
)
|
|
|
|
|
|
|
|
(103.5
|
)
|
|
(59.4
|
)
|
|
A17
|
|
|
(256.3
|
)
|
Investment income
|
|
|
2.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.9
|
|
Other income, net
|
|
|
8.8
|
|
|
11.9
|
|
|
|
|
|
|
|
|
11.9
|
|
|
|
|
|
|
|
|
20.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
299.0
|
|
|
135.3
|
|
|
|
|
|
|
|
|
135.3
|
|
|
(94.3
|
)
|
|
|
|
|
340.0
|
|
Income tax expense
|
|
|
58.3
|
|
|
38.4
|
|
|
|
|
|
|
|
|
38.4
|
|
|
(33.0
|
)
|
|
A18
|
|
|
63.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
240.7
|
|
$
|
96.9
|
|
$
|
|
|
|
|
|
$
|
96.9
|
|
$
|
(61.3
|
)
|
|
|
|
$
|
276.3
|
|
Income attributable to noncontrolling interest
|
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to stockholders
|
|
$
|
240.7
|
|
$
|
96.3
|
|
$
|
|
|
|
|
|
$
|
96.3
|
|
$
|
(61.3
|
)
|
|
|
|
$
|
275.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
3.08
|
|
$
|
1.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
3.06
|
|
$
|
1.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
76.4
|
|
|
67.5
|
|
|
|
|
|
|
|
|
|
|
|
(33.0
|
)
|
|
A19
|
|
|
110.9
|
|
Diluted
|
|
|
76.9
|
|
|
69.3
|
|
|
|
|
|
|
|
|
|
|
|
(34.8
|
)
|
|
A19
|
|
|
111.4
|
|
168
Table of Contents
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
1. Basis of Pro Forma Presentation
The accompanying unaudited pro forma condensed combined financial statements are based on the historical consolidated financial statements of AAM and MPG and
reflect pro forma adjustments for (i) reclassifications resulting from differences in AAM accounting policies and MPG accounting policies, or changes to financial statement presentation to
conform the financial statements of AAM and MPG (Note 4); (ii) acquisition-related adjustments resulting from the merger; and (iii) adjustments resulting from AAM's anticipated
incurrence of new indebtedness to be used, in part, to refinance certain existing indebtedness of MPG (Note 5).
The
merger is accounted for in the pro forma financial statements under Accounting Standards Codification (ASC) 805,
Business Combinations
(which we refer to in this joint proxy statement/prospectus as ASC 805), using the acquisition method of accounting with AAM as the acquiror. The acquisition method requires the acquiror to allocate
the purchase price to the identifiable assets and liabilities of the acquired entity based on the acquisition-date fair values of the assets and liabilities.
For
purposes of preparing these pro forma financial statements, AAM has calculated the estimated purchase price (Note 2) and has allocated the estimated purchase price to the
identifiable tangible and intangible assets acquired and liabilities assumed based on preliminary estimates of their respective fair values. These estimates are based on certain assumptions related to
the merger. Due to the fact that the pro forma financial statements have been prepared based on preliminary estimates, the final amounts recorded for the merger may be materially different from the
information included herein. These estimates are subject to change as additional information becomes available, and the final amounts will be based on the fair value of the identifiable tangible and
intangible assets and liabilities of MPG as of the effective date of acquisition. Under ASC 805, transaction costs associated with the acquisition are not included as a component of the consideration
transferred but are accounted for as expenses in the period incurred.
The pro forma balance sheet has been prepared as if the merger occurred on December 31, 2016, which is AAM's most recent balance sheet
date prior to the filing of this joint proxy statement/prospectus. The pro forma balance sheet is based on the historical balance sheets of AAM and MPG, as of December 31, 2016, which have been
adjusted for certain reclassification and merger-related adjustments. The adjustments to the pro forma balance sheet give effect to events that are directly attributable to the merger and are
factually supportable, and include adjustments that will have a continuing impact after the transaction, as well as those that are non-recurring or specific to the merger.
The pro forma statement of income has been prepared as if the merger occurred on January 1, 2016. The pro forma statement of income is
based on the historical statements of income of AAM and MPG for the full year ended December 31, 2016. The pro forma statement of income has been adjusted for certain reclassification and
merger-related adjustments. These adjustments give effect
to events that are directly attributable to the merger, are factually supportable, and are expected to have a continuing impact on the results of operations of the combined entity after the closing of
the merger.
2. Preliminary Purchase Consideration
The merger is accounted for using the acquisition method under ASC 805, which requires that the AAM common stock issued to effect the merger be measured at the
market price of AAM common
169
Table of Contents
stock
on the date that the merger is completed. AAM calculated the stock portion of the preliminary purchase consideration included herein using (i) $20.05 per share of AAM common stock, which
represents the closing price of shares of AAM common stock on February 27, 2017, the last practicable date prior to filing this joint proxy statement/prospectus; and (ii) the number of
shares of MPG common stock outstanding as of December 31, 2016. The price per share of AAM common stock, as well as the number of shares of MPG common stock outstanding, could change prior to
the date that the merger is completed, which may result in material differences in the consideration to be transferred, the purchase price, and the associated purchase price allocation. For example, a
10% increase or decrease in AAM's stock price on the closing date of the merger, as compared to the closing price on February 27, 2017, as used in the calculation below, would change the value
of the consideration by approximately $72 million, which would result in a corresponding increase or decrease to Goodwill as calculated in Note 3 to these pro forma financial statements.
At
the date that the merger is completed, each outstanding share of MPG common stock will be cancelled and converted into the right to receive (i) $13.50 in cash consideration;
and (ii) 0.5 of a share of AAM common stock. Further, each unvested MPG stock option outstanding immediately prior to the effective time of the merger will be accelerated in full and become
fully vested immediately prior to the effective time of the merger and, at the effective time of the merger, all MPG stock options will be cancelled and the holders thereof will receive an amount in
cash (without interest and subject to applicable withholding of taxes) equal to the product obtained by multiplying (x) the aggregate number of shares of MPG common stock that would have been
issuable upon exercise of the MPG stock options immediately prior to the effective time of the merger, and (y) the cash value of the merger consideration, less the per share exercise price of
the MPG stock options. For purposes of the cash payment with respect to the MPG stock options, the share component of the merger consideration is valued based on the closing price of a share of AAM
common stock as of the trading day immediately preceding the closing date of the merger. If the exercise price payable upon exercise of an MPG stock option equals or exceeds the value of the merger
consideration, the MPG stock option will be cancelled for no consideration.
At
the effective time of the merger, pursuant to the terms of the merger agreement, all restricted MPG common stock outstanding under an MPG equity plan will be cancelled and terminated,
and each holder thereof will receive the merger consideration for each share of restricted MPG common stock. Pursuant to the terms of the merger agreement, each MPG restricted stock unit award
outstanding under an MPG equity plan will become fully vested immediately prior to the effective time and, at the effective time of the merger, will be cancelled and terminated in return for an amount
equal to the merger consideration multiplied by the number of shares of MPG common stock subject to the MPG restricted stock unit award.
The
preliminary purchase consideration attributable to stock-based compensation, as shown below, reflects (i) cash consideration for MPG's stock options and restricted shares that
had either vested prior to the merger or had an existing change of control provision in the award agreement to allow for automatic vesting upon a change of control and (ii) the share portion of
the merger consideration for MPG's restricted shares that had vested prior to the merger. The fair value of MPG's unvested stock options and restricted shares, less amounts previously recognized as
compensation cost for these awards has been reflected as post-merger compensation cost and has been adjusted through retained earnings in the pro forma balance sheet (see adjustment 11 in
Note 5).
170
Table of Contents
The
following is a preliminary estimate of the purchase consideration to be paid by AAM in the merger:
|
|
|
|
|
|
|
December 31, 2016
(in millions)
|
|
Cash consideration ($13.50 × 67,628,327 shares of MPG common stock outstanding)
|
|
$
|
913.0
|
|
Cash consideration attributable to accelerated vesting of stock-based compensation
|
|
|
65.7
|
|
Stock consideration attributable to accelerated vesting of stock-based compensation ($20.05 per share × 456,555 converted shares)
|
|
|
9.2
|
|
Value of AAM shares issued to stockholders of MPG (67,628,327 shares of MPG common stock converted to 33,814,164 shares of AAM common stock at a 0.5
conversion rate × $20.05 per share)
|
|
|
678.0
|
|
|
|
|
|
|
Total estimated consideration transferred
|
|
$
|
1,665.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Preliminary Purchase Price Allocation
Under the acquisition method in ASC 805, the purchase price paid in a merger is allocated to the identifiable assets and liabilities of the acquired entity based
on the fair value of those assets and liabilities, with the excess purchase price over the fair value of the identifiable assets and liabilities recorded as goodwill. The following represents the
allocation of the preliminary consideration to be paid by AAM in the merger based on estimated fair values of the assets and liabilities of MPG:
|
|
|
|
|
|
|
December 31, 2016
(in millions)
|
|
Total estimated consideration transferred
|
|
$
|
1,665.9
|
|
Estimated fair value of MPG noncontrolling interest
|
|
|
3.4
|
|
|
|
|
|
|
Estimated MPG fair value
|
|
|
1,669.3
|
|
Cash
|
|
|
209.7
|
|
Accounts receivable
|
|
|
346.4
|
|
Inventories
|
|
|
188.6
|
|
Prepaid expenses and other
|
|
|
51.8
|
|
Property, plant and equipment
|
|
|
894.0
|
|
Deferred income tax assets
|
|
|
26.9
|
|
Intangible assets
|
|
|
1,377.5
|
|
Other assets and deferred charges
|
|
|
13.0
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,107.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
245.1
|
|
Accrued compensation and benefits
|
|
|
56.0
|
|
Accrued expenses and other
|
|
|
70.7
|
|
Long-term debt
|
|
|
1,901.9
|
|
Deferred income tax liabilities
|
|
|
511.1
|
|
Postretirement benefits and other long-term liabilities
|
|
|
54.3
|
|
|
|
|
|
|
Net assets to be acquired
|
|
$
|
268.8
|
|
|
|
|
|
|
Goodwill
|
|
$
|
1,400.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
171
Table of Contents
4. Effect of Reclassification Adjustments
AAM performed certain procedures to identify pro forma accounting adjustments to be made as a result of material differences in the significant accounting
policies or financial statement presentation of AAM and MPG. These procedures included a review of MPG's significant accounting policies, including those disclosed in MPG's Current Report on
Form 8-K which was filed with the SEC on March 2, 2017 and is incorporated herein by reference, as well as discussions between AAM management and MPG management regarding their
significant accounting policies.
Based
on these procedures, AAM identified the following pro forma adjustments that are reflected in the "Effect of Reclassification" column of the pro forma financial statements:
Reclassification AdjustmentsUnaudited pro forma condensed combined balance sheet as of:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
(in millions)
|
|
R1
|
|
To reclassify receivables for rebillable customer-owned tooling from prepaid expenses and other to accounts receivable, net
|
|
$
|
27.6
|
|
|
|
To reclassify value added tax (VAT) receivable from accounts receivable to prepaid expenses and other
|
|
|
(15.2
|
)
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment to accounts receivable, net
|
|
$
|
12.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R2
|
|
To reclassify MPG's prepaid expenses and other assets line items to AAM's prepaid expenses and other to conform presentation
|
|
$
|
64.2
|
|
|
|
To reclassify receivables for rebillable customer-owned tooling from prepaid expenses and other to accounts receivable, net
|
|
|
(27.6
|
)
|
|
|
To reclassify VAT receivable from accounts receivable to prepaid expenses and other
|
|
|
15.2
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment to prepaid expenses and other
|
|
$
|
51.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R3
|
|
To reclassify MPG's prepaid expenses line item to AAM's prepaid expenses and other line item to conform presentation
|
|
$
|
(11.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To reclassify MPG's other assets line item to AAM's prepaid expenses and other line item to conform presentation
|
|
$
|
(52.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R4
|
|
To reclassify MPG's short-term debt line item to AAM's current portion of long-term debt line item to conform presentation
|
|
$
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R5
|
|
To reclassify workers' compensation liability of MPG from accrued expenses and other to accrued compensation and benefits
|
|
$
|
6.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R6
|
|
To reclassify MPG's capital lease obligations, less current maturities line item to AAM's long-term debt, net line item to conform presentation
|
|
$
|
22.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification AdjustmentsUnaudited pro forma condensed combined statement of income for
the year ended:
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
(in millions)
|
|
R7
|
|
To reclassify MPG's expenses incurred in conjunction with the merger from selling, general and administrative expense to restructuring and acquisition-related costs
|
|
$
|
6.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172
Table of Contents
5. Pro Forma Acquisition Adjustments
Pro forma adjustments related to the acquisition are reflected in the "Acquisition Adjustments" column in the pro forma financial statements and are as follows:
Acquisition AdjustmentsUnaudited pro forma condensed combined balance sheet as of:
-
A1
-
The following represents the calculation of the preliminary acquisition adjustment to cash and cash equivalents:
|
|
|
|
|
|
|
December 31, 2016
(in millions)
|
|
Cash portion of merger consideration
|
|
$
|
(913.0
|
)
|
Cash portion of merger consideration attributable to accelerated vesting of MPG stock-based compensation
|
|
|
(65.7
|
)
|
Cash payment to settle outstanding MPG stock options and restricted shares not previously vested
|
|
|
(12.1
|
)
|
Payment of transaction costs
|
|
|
(142.8
|
)
|
AAM expected borrowings under the new senior secured credit facility (Term Loans)
|
|
|
1,650.0
|
|
AAM anticipated issuance of new senior unsecured notes
|
|
|
1,200.0
|
|
MPG existing indebtedness at fair value
|
|
|
(1,879.1
|
)
|
|
|
|
|
|
Adjustment to cash and cash equivalents
|
|
$
|
(162.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
A2
-
This adjustment is to eliminate the intercompany accounts receivable and accounts payable balances between AAM and MPG
as of December 31, 2016.
-
A3
-
This represents the preliminary estimate of the step-up in inventory to fair value. Raw materials inventory was not
adjusted as the carrying value of raw materials is assumed to represent fair value. The portion of the preliminary adjustment that relates to finished goods is based on the estimated selling price of
the inventory less costs to sell the inventory and a reasonable profit margin on the sale. The portion of the preliminary adjustment associated with work-in-progress inventory includes estimated costs
to complete the inventory and also includes a reasonable profit margin. AAM has not adjusted cost of goods sold within the pro forma statement of income to reflect this preliminary estimated step-up
in inventory value as this is not expected to have a continuing impact on AAM's financial statements subsequent to the acquisition.
-
A4
-
The following represents the preliminary estimated fair value of property, plant and equipment (which we refer to in
this joint proxy statement/prospectus as PP&E), as well as the estimated remaining useful lives of the various categories of PP&E. The table also calculates the adjustment
173
Table of Contents
to
depreciation expense for the year ended December 31, 2016, based on the fair value adjustment to PP&E and the estimated remaining useful lives.
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Preliminary
Estimate of
Fair Value
|
|
Estimated
Remaining
Useful Life
in Years
|
|
Depreciation
Expense
Year Ended
December 31, 2016
|
|
Land
|
|
$
|
28.8
|
|
|
Indefinite
|
|
$
|
|
|
Buildings and building improvements
|
|
|
68.3
|
|
|
15
|
|
|
4.5
|
|
Machinery and equipment
|
|
|
796.9
|
|
|
5
|
|
|
159.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
894.0
|
|
|
|
|
$
|
163.9
|
|
Less: MPG historical property, plant and equipment, net and depreciation expense
|
|
|
(831.6
|
)
|
|
|
|
|
(151.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition adjustment
|
|
$
|
62.4
|
|
|
|
|
$
|
12.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
expense has been calculated using the straight-line method of depreciation. With other assumptions held constant, a 10% increase in the fair value adjustment to PP&E upon consummation of
the merger would increase annual pro forma depreciation expense by approximately $1.1 million.
-
A5
-
The adjustment to goodwill represents the elimination of MPG's historical goodwill amount and the preliminary estimate
of goodwill to be recognized as a result of AAM's acquisition of MPG, as calculated in Note 3 to these pro forma financial statements:
|
|
|
|
|
|
|
December 31, 2016
(in millions)
|
|
Preliminary estimate of goodwill to be recognized as a result of AAM's acquisition of MPG
|
|
$
|
1,400.5
|
|
Less: MPG's historical goodwill amount
|
|
|
(907.7
|
)
|
|
|
|
|
|
Adjustment to goodwill
|
|
$
|
492.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
A6
-
The following represents the preliminary estimated fair value of amortizable intangible assets, as well as the
estimated remaining useful lives of the various categories of intangible assets expected to be recognized as a result of the merger. The table also calculates the adjustment to amortization expense
for the year ended December 31, 2016, based on the elimination of MPG's historical intangible asset balances and associated amortization and the recognition of the intangible assets and
associated amortization expense resulting from the merger.
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Preliminary
Estimate of
Fair Value
|
|
Estimated
Remaining
Useful Life
in Years
|
|
Amortization
Expense
Year Ended
December 31, 2016
|
|
Customer platforms
|
|
$
|
700.0
|
|
|
12
|
|
$
|
58.3
|
|
Customer relationships
|
|
|
500.0
|
|
|
15
|
|
|
33.4
|
|
Patented and unpatented technology
|
|
|
175.0
|
|
|
10
|
|
|
17.5
|
|
Licensing agreements
|
|
|
2.5
|
|
|
6
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,377.5
|
|
|
|
|
$
|
109.6
|
|
Less: MPG historical amortizable intangible assets and amortization expense
|
|
|
(639.1
|
)
|
|
|
|
|
(70.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition adjustment
|
|
$
|
738.4
|
|
|
|
|
$
|
39.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174
Table of Contents
Amortization
expense has been calculated using the straight-line method of amortization. With other assumptions held constant, a 10% increase in the amount attributable to amortizable intangible
assets upon consummation of the merger would increase annual pro forma amortization expense by approximately $11.0 million.
-
A7
-
As outlined in the
"Financing Related to the Merger
" section beginning
on page 121 of this joint proxy statement/prospectus, AAM expects to enter into a senior secured credit facility agreement, which will provide up to $1.65 billion in term loans, and
further intends to issue up to $1.2 billion in new senior unsecured notes to fund the cash consideration payable in connection with the merger, related fees and expenses, and refinance certain
existing indebtedness of MPG. The merger adjustment to long-term debt, net was calculated as follows:
|
|
|
|
|
|
|
December 31, 2016
(in millions)
|
|
AAM expected borrowings under the new senior secured credit facility (Term Loans)
|
|
$
|
1,650.0
|
|
AAM anticipated issuance of new senior unsecured notes
|
|
|
1,200.0
|
|
AAM estimated debt issuance costs on new senior secured credit facility and senior unsecured notes
|
|
|
(90.0
|
)
|
Fair value adjustment to MPG's existing indebtedness
|
|
|
55.8
|
|
Long-term portion of MPG existing indebtedness at fair value
|
|
|
(1,864.9
|
)
|
|
|
|
|
|
Adjustment to Long-term debt, net
|
|
$
|
950.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of MPG existing indebtedness at fair value
|
|
$
|
(14.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refer
to adjustment A17 for discussion related to interest expense and interest rates under the new senior secured credit facility and senior unsecured notes.
-
A8
-
The following table represents the estimated impact to deferred income tax assets and liabilities as a result of the
merger and the associated acquisition accounting under ASC 805, which have been calculated using the statutory tax rate in the United States of 35%:
|
|
|
|
|
|
|
|
|
|
Fair Value
Adjustment
|
|
Impact to
Deferred
Income Taxes
|
|
|
|
(in millions)
|
|
Deferred Tax Assets
|
|
|
|
|
|
|
|
Impact of accelerating the vesting of all MPG stock options and restricted shares
|
|
$
|
|
|
$
|
6.2
|
|
Adjustment to long-term debt, net
|
|
|
55.8
|
|
|
19.5
|
|
|
|
|
|
|
|
|
|
Total impact of acquisition on deferred income tax assets
|
|
|
|
|
$
|
25.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Liabilities
|
|
|
|
|
|
|
|
Adjustment to inventories
|
|
$
|
20.2
|
|
$
|
7.1
|
|
Adjustment to PP&E
|
|
|
62.4
|
|
|
21.9
|
|
Adjustment to amortizable intangible assets
|
|
|
738.4
|
|
|
258.4
|
|
|
|
|
|
|
|
|
|
Total impact of acquisition on deferred income tax liabilities
|
|
|
|
|
$
|
287.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
A9
-
The acquisition adjustment to common stock, par value represents the impact of converting approximately
67.6 million shares of MPG common stock outstanding to approximately 33.8 million shares of AAM common stock at the exchange ratio of 0.5 of a share of AAM common stock (with each share
of AAM common stock having a par value of $0.01 per share) per
175
Table of Contents
share
of MPG common stock, as well as eliminating MPG's historical value for common stock. The adjustment was calculated as follows:
|
|
|
|
|
|
|
December 31, 2016
(in millions)
|
|
Common stock, par value from the merger
|
|
$
|
0.3
|
|
Less: MPG's historical common stock value
|
|
|
(0.1
|
)
|
|
|
|
|
|
Adjustment to common stock, par value
|
|
$
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
A10
-
The acquisition adjustment to paid-in capital represents the impact of converting the shares of MPG common stock
outstanding to shares of AAM common stock using the exchange ratio, as outlined in adjustment A9, and multiplying the converted number of shares by AAM's closing stock price on February 27,
2017, the last practicable date prior to filing this joint proxy statement/prospectus, less the $0.01 par value of the shares. The adjustment also includes the impact of accelerating the vesting of
all MPG restricted shares and the elimination of MPG's historical value for paid-in capital. The following represents the calculation:
|
|
|
|
|
|
|
December 31, 2016
(in millions)
|
|
Paid-in capital
|
|
$
|
677.7
|
|
Impact of share portion of merger consideration associated with acceleration of MPG restricted shares
|
|
|
14.8
|
|
Less: MPG's historical paid-in capital value
|
|
|
(880.7
|
)
|
|
|
|
|
|
Adjustment to paid-in capital
|
|
$
|
(188.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
A11
-
Retained earnings (deficit) has been adjusted to reflect the impact of certain one-time or non-recurring items that
are specific to the merger and cannot be reflected in the pro forma statement of income because they will not have a continuing impact on the combined entity after the acquisition is consummated.
Further, retained earnings (deficit) has been adjusted to eliminate MPG's historical accumulated deficit. The calculation of the adjustment to retained earnings (deficit) is as follows:
|
|
|
|
|
|
|
December 31, 2016
(in millions)
|
|
Impact of accelerating the vesting of MPG stock options and restricted shares
|
|
$
|
(17.7
|
)
|
Deferred tax asset associated with accelerating the vesting of MPG stock options and restricted shares (see adjustment A8)
|
|
|
6.2
|
|
Transaction costs (excluding debt issuance costs in adjustment A7)
|
|
|
(52.8
|
)
|
Tax benefit of transaction costs
|
|
|
18.5
|
|
Elimination of MPG historical accumulated deficit balance
|
|
|
92.0
|
|
|
|
|
|
|
Adjustment to retained earnings (deficit)
|
|
$
|
46.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
tax benefit of $18.5 million associated with the transaction costs is reflected in the pro forma balance sheet as a reduction of income tax payable in accrued expenses and other. These
costs are not reflected in the pro forma statement of income as they are non-recurring in nature and will not have a continuing impact on the combined entity subsequent to the closing of the merger.
-
A12
-
These adjustments represent the elimination of MPG's historical values for treasury stock, at cost and accumulated
other comprehensive loss.
176
Table of Contents
Acquisition AdjustmentsUnaudited pro forma condensed combined statement of income for the
period ended:
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2016
(in millions)
|
|
A13
|
|
Adjustment to net sales to eliminate MPG sales to AAM
|
|
$
|
95.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A14
|
|
To eliminate the cost of goods sold associated with MPG's sales to AAM
|
|
$
|
(95.1
|
)
|
|
|
To adjust depreciation expense as calculated in adjustment A4
|
|
|
12.0
|
|
|
|
To adjust amortization expense as calculated in adjustment A6
|
|
|
4.0
|
|
|
|
|
|
|
|
|
|
|
Adjustment to cost of goods sold
|
|
$
|
(79.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A15
|
|
To adjust depreciation expense as calculated in adjustment A4
|
|
$
|
0.6
|
|
|
|
To adjust amortization expense as calculated in adjustment A6
|
|
|
35.5
|
|
|
|
|
|
|
|
|
|
|
Adjustment to selling, general and administrative expense
|
|
$
|
36.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A16
|
|
To eliminate the effect of one-time merger-related charges that will not have an impact on the combined entity after the merger
|
|
$
|
(17.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
A17
-
As noted in adjustment A7, AAM expects to incur new debt as a result of the merger that will be used, in part, to
fund the cash consideration payable in connection with the merger, related fees and expenses, and refinance certain existing indebtedness of MPG. AAM is expected to incur $2.85 billion of
additional debt, with maturities ranging from five to 10 years and an expected weighted average interest rate of 5.8%, including the amortization of financing fees. The following calculation
represents the preliminary estimate of the impact on interest expense as a result of the new borrowings and refinancing of certain existing long-term indebtedness of MPG:
|
|
|
|
|
|
|
Year Ended
December 31,
2016
(in millions)
|
|
Estimated interest expense on new senior secured credit facility (Term Loans) and new senior unsecured notes
|
|
$
|
149.5
|
|
Amortization of debt issuance costs and other fees
|
|
|
13.4
|
|
Elimination of MPG historical interest expense
|
|
|
(103.5
|
)
|
|
|
|
|
|
Adjustment to Interest expense
|
|
$
|
59.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AAM
expects to incur approximately $90.0 million in debt issuance costs associated with the new borrowings, which has been recorded as a reduction of long-term debt, net on the pro forma
balance sheet and will be amortized into interest expense over the life of the borrowings. The impact of a
1
/
8
% (12.5 basis points) change in the interest rate would result in a change
of approximately $3.6 million in interest expense on an annual basis.
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2016
(in millions)
|
|
A18
|
|
To adjust income tax expense at the statutory rate of 35% in the United States
|
|
$
|
(33.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
177
Table of Contents
-
A19
-
The following table represents the estimated pro forma adjustments to shares outstanding for the purposes of
calculating basic and diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2016
|
|
|
|
Basic
|
|
Diluted
|
|
|
|
(in millions of shares)
|
|
Shares of AAM common stock to be issued to stockholders of MPG, including MPG restricted shares to be accelerated and converted
|
|
|
34.5
|
|
|
34.5
|
|
Elimination of all outstanding shares of MPG common stock
|
|
|
(67.5
|
)
|
|
(69.3
|
)
|
|
|
|
|
|
|
|
|
Pro forma adjustment to shares outstanding
|
|
|
(33.0
|
)
|
|
(34.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
178
Table of Contents
ACCOUNTING TREATMENT
AAM prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. The merger
will be accounted for using the acquisition method of accounting with AAM as the acquiror. The acquisition method requires the acquiror to allocate the purchase price to the identifiable assets and
liabilities of the acquired entity, with any excess purchase price recorded as goodwill. Under the acquisition method of accounting, goodwill is not amortized but is instead tested for impairment at
least annually.
179
Table of Contents
COMPARATIVE STOCK PRICES AND DIVIDENDS
AAM common stock is listed for trading on the NYSE under the symbol "AXL" and MPG common stock is listed for trading on the NYSE
under the symbol "MPG".
The
following tables set forth, for the periods indicated, the high and low sales prices per share of AAM common stock and MPG common stock, as reported on the NYSE, as well as the
dividends paid per share of AAM common stock and MPG common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
AAM Common Stock
|
|
|
|
High
|
|
Low
|
|
Dividend
|
|
Fiscal Year 2017
|
|
|
|
|
|
|
|
|
|
|
First Quarter(1)
|
|
$
|
21.25
|
|
$
|
18.84
|
|
|
|
|
Fiscal Year 2016
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
19.74
|
|
$
|
12.61
|
|
|
|
|
Third Quarter
|
|
$
|
18.14
|
|
$
|
14.01
|
|
|
|
|
Second Quarter
|
|
$
|
17.02
|
|
$
|
13.60
|
|
|
|
|
First Quarter
|
|
$
|
18.80
|
|
$
|
11.44
|
|
|
|
|
Fiscal Year 2015
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
23.00
|
|
$
|
18.29
|
|
|
|
|
Third Quarter
|
|
$
|
21.85
|
|
$
|
17.45
|
|
|
|
|
Second Quarter
|
|
$
|
26.21
|
|
$
|
20.71
|
|
|
|
|
First Quarter
|
|
$
|
26.16
|
|
$
|
22.00
|
|
|
|
|
Fiscal Year 2014
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
23.00
|
|
$
|
16.36
|
|
|
|
|
Third Quarter
|
|
$
|
20.08
|
|
$
|
16.56
|
|
|
|
|
Second Quarter
|
|
$
|
19.78
|
|
$
|
17.05
|
|
|
|
|
First Quarter
|
|
$
|
21.48
|
|
$
|
17.60
|
|
|
|
|
-
(1)
-
Through
March 3, 2017.
AAM
has not paid cash dividends to its stockholders since 2008. The declaration and payment of future dividends of the combined company will be at the sole discretion of the AAM board of
directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
MPG Common Stock
|
|
|
|
High
|
|
Low
|
|
Dividend
|
|
Fiscal Year 2017
|
|
|
|
|
|
|
|
|
|
|
First Quarter(1)
|
|
$
|
24.00
|
|
$
|
22.35
|
|
|
|
|
Fiscal Year 2016
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
23.00
|
|
$
|
13.90
|
|
$
|
0.0925
|
|
Third Quarter
|
|
$
|
16.52
|
|
$
|
13.12
|
|
$
|
0.0925
|
|
Second Quarter
|
|
$
|
16.91
|
|
$
|
12.55
|
|
$
|
0.0925
|
|
First Quarter
|
|
$
|
18.49
|
|
$
|
10.87
|
|
$
|
0.09
|
|
Fiscal Year 2015
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
24.62
|
|
$
|
17.64
|
|
$
|
0.09
|
|
Third Quarter
|
|
$
|
22.50
|
|
$
|
17.51
|
|
$
|
0.09
|
|
Second Quarter
|
|
$
|
20.06
|
|
$
|
17.52
|
|
$
|
0.09
|
|
First Quarter
|
|
$
|
20.72
|
|
$
|
16.02
|
|
|
|
|
Fiscal Year 2014
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter(2)
|
|
$
|
17.59
|
|
$
|
14.57
|
|
|
|
|
-
(1)
-
Through
March 3, 2017.
-
(2)
-
Beginning
December 12, 2014 (the date shares of MPG common stock were first traded on the NYSE).
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Table of Contents
MPG
has historically paid quarterly cash dividends to its stockholders. Under the merger agreement, MPG may continue to make its regular quarterly cash dividends consistent with past
practice (including as to the record date, timing of payment and amount thereof) in an aggregate amount per quarter not in excess of $0.0925 per share of MPG common stock. On February 24, 2017,
the MPG board of directors declared a dividend of $0.0925 per share of MPG common stock. The dividend is payable on March 24, 2017 to holders of record of MPG common stock as of
March 10, 2017. MPG expects to make additional public announcements from time to time prior to the completion of the merger with respect to the declaration and timing of the payment of
dividends to its stockholders.
The
following table presents the closing price per share of AAM common stock and per share of MPG common stock, as reported on the NYSE on:
-
-
November 2, 2016, the last full trading day prior to the public announcement of the merger agreement; and
-
-
March 3, 2017, the latest practicable date prior to mailing this joint proxy statement/prospectus.
The
table also presents the equivalent value of the merger consideration per share of MPG common stock on those dates:
|
|
|
|
|
|
|
|
|
|
|
|
|
AAM
Common Stock
|
|
MPG
Common Stock
|
|
Equivalent Price
Per Share of MPG
Common Stock(1)
|
|
November 2, 2016
|
|
$
|
16.61
|
|
$
|
14.30
|
|
$
|
21.81
|
|
March 3, 2017
|
|
$
|
20.44
|
|
$
|
23.70
|
|
$
|
23.72
|
|
-
(1)
-
Reflects
the market value of the merger consideration per share of MPG common stock, calculated by adding (a) the cash consideration, or $13.50 per share of
MPG common stock, plus (b) the closing price of AAM common stock as of the specified date multiplied by the exchange ratio of 0.5.
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Table of Contents
DESCRIPTION OF AAM COMMON STOCK
General
The following briefly summarizes the material terms of AAM common stock and is subject in all respects to applicable provisions of Delaware law
and the full text of AAM's certificate of incorporation and second amended and restated by-laws (which we collectively refer to in this joint proxy statement/prospectus as the AAM organizational
documents). AAM has filed with the SEC the AAM organizational documents referenced in this description of its common stock and will send copies of these documents to you, without charge, upon your
request. For more information or for how you can obtain a copy of the AAM organizational documents, see "
Comparison of Stockholders' Rights
" beginning
on page 183 and "
Where You Can Find More Information
" beginning on page 196.
Common Stock
AAM's certificate of incorporation authorizes the issuance of 150,000,000 shares of common stock, par value $0.01 per share. As of the AAM
record date, there were 76,476,788 shares of AAM common stock issued and outstanding and there were approximately 235 holders of record of shares of AAM common stock. Holders of shares of AAM common
stock are entitled to one vote per share on all matters to be voted upon by AAM stockholders. The AAM board of directors is divided into three separate classes, with directors in each class serving a
3 year term. The holders of shares of AAM common stock do not have cumulative voting rights in the election of directors. Holders of shares of AAM common stock are entitled to receive dividends
if, as and when dividends are declared from time to time by the AAM board of directors out of funds legally available therefor, after payment of dividends required to be paid on outstanding preferred
stock or series common stock (as described below), if any. In the event of liquidation, dissolution or winding up of AAM, the holders of shares of AAM common stock are entitled to share ratably in all
assets remaining after payment of liabilities and accrued but unpaid dividends and liquidation preferences on any outstanding shares of preferred stock or series common stock of AAM. Shares of AAM
common stock have no preemptive or conversion rights and are not subject to further calls or assessment by AAM. There are no redemption or sinking fund provisions applicable to shares of AAM common
stock.
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Table of Contents
COMPARISON OF STOCKHOLDERS' RIGHTS
The following is a summary comparison of the material differences between the rights of MPG stockholders under Delaware law and MPG's amended
and restated certificate of incorporation and amended and restated bylaws (which we collectively refer to in this proxy statement/prospectus as the MPG organizational documents) and the rights MPG
stockholders will have after the completion of the merger as stockholders of AAM under Delaware law and the AAM organizational documents. The discussion in this section does not include a description
of rights or obligations under the U.S. federal securities laws, any applicable state securities laws or the relevant NYSE listing requirements or standards. This summary does not cover all the
differences between the AAM organizational documents and the MPG organizational documents. The following descriptions are qualified in their entirety by reference to the complete text of the relevant
provisions of applicable Delaware law, the AAM organizational documents and the MPG organizational documents. We encourage you to read those laws and documents.
AAM
and MPG have filed with the SEC their respective organizational documents referenced in this comparison of stockholders' rights and will send copies of these documents to you,
without charge, upon your request. For more information, including how you can obtain a copy of the AAM and MPG organizational documents, see "
Where You Can Find More
Information
" beginning on page 196.
|
|
|
|
|
|
|
MPG Stockholder Rights
|
|
AAM Stockholder Rights
|
Authorized Capital Stock
|
|
400,000,000 shares of $0.001 par value per share of common stock.
10,000,000 shares of $0.001 par value per share of preferred stock.
As of the close of business on Friday, February 24, 2017, there were 67,917,752 shares of MPG common stock and no shares of MPG preferred stock outstanding.
The MPG board of directors is authorized to issue one or more series of preferred stock in series and to establish the terms of such series.
|
|
150,000,000 shares of $0.01 par value per share of common stock.
10,000,000 shares of $0.01 par value per share of preferred stock.
40,000,000 shares of $0.01 par value per share of series common stock
As of the effective time of the merger, AAM
expects to have approximately 111 million shares of AAM common stock, no shares of preferred stock, and no shares of series common stock outstanding.
The AAM board of
directors is authorized to issue one or more series of preferred stock in series and to establish the terms of such series.
|
Dividends
|
|
Under MPG's amended and restated certificate of incorporation, subject to the rights of the holders of MPG preferred stock, holders of shares
of MPG common stock shall be entitled to receive such dividends and other distributions in cash, stock or property of MPG when, as and if declared thereon by the MPG board of directors from time to time out of assets or funds of MPG legally available
therefor.
|
|
Under AAM's certificate of incorporation, subject to applicable law and the rights, if any, of the holders of any outstanding series of
preferred stock or series common stock, or other stock having preference to shares of AAM common stock with respect to the payment of dividends, dividends may be declared and paid on the shares of AAM common stock at such times and in such amounts as
the AAM board of directors in its discretion shall determine.
|
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Table of Contents
|
|
|
|
|
|
|
MPG Stockholder Rights
|
|
AAM Stockholder Rights
|
Meetings
|
|
MPG's amended and restated bylaws provide that the annual meeting of its stockholders shall be held at such date and at such time as may be fixed from time
to time by the MPG board of directors and set forth in the notice of meeting therefor; and, subject to the terms of any series or class of MPG preferred stock, special meetings of its stockholders may be called only by a majority of the directors
then in office, or by the chairperson of the MPG board of directors. American Securities and its affiliates, as long as, and only if, it owns at least a majority of the then outstanding shares of MPG common stock, also has the ability to call a
special meeting of the stockholders. Otherwise, subject to the terms of any MPG preferred stock, stockholders cannot call a special meeting.
|
|
AAM's certificate of incorporation provides that special meetings of stockholders may be called only by the chief executive officer of AAM or by the AAM board of directors.
AAM's second amended and restated by-laws provide that the annual meeting of its stockholders shall be held on such date, and at such time and place, as may be designated by the AAM board of directors; and special meetings may be called by the
secretary or any other officer, whenever directed by the AAM board of directors, or by the chief executive officer.
|
Notice of Stockholder Meetings
|
|
Under MPG's amended and restated bylaws, written notice of each meeting of MPG stockholders will be given not less than 10 nor more than
60 days before the date of the meeting.
|
|
Under AAM's second amended and restated bylaws, written notice of each meeting of AAM stockholders will be given not less than 10 nor more
than 60 days before the date of the meeting.
|
Voting
|
|
MPG's amended and restated certificate of incorporation provides that, on each matter on which MPG stockholders are entitled to vote, each MPG stockholder is entitled to one vote for each share of MPG common stock held by such stockholder. The
holders of shares of MPG common stock have no cumulative voting rights.
At any meeting of MPG stockholders where a quorum is present, and subject to Delaware law and any
provisions of MPG's amended and restated certificate of incorporation, MPG stockholders will elect directors by a plurality of the votes of the shares of MPG common stock present in person or represented by proxy at the meeting and voting for
nominees in the election of directors. In all other matters, MPG stockholders act by the affirmative vote of the majority of shares present in person or represented by proxy and voting on the subject matter at the meeting.
|
|
AAM's certificate of incorporation provides that each AAM stockholder is entitled to one vote for each share of AAM common stock held by such stockholder. The holders of shares of AAM common stock have no cumulative voting rights. Except as required
by law, holders of preferred stock or series stock have no voting rights, except as expressly set forth in AAM's certificate of incorporation.
At any meeting of AAM
stockholders where a quorum is present, and subject to Delaware law and any provisions in AAM's certificate of incorporation, AAM stockholders may act by the affirmative vote of the holders of a majority in voting power of the stock present in person
or represented by proxy and entitled to vote on the matter at such meeting.
|
Action by Written Consent
|
|
MPG's amended and restated certificate of incorporation provides that any action to be taken by the stockholders of MPG may be effected by
written consent of American Securities in lieu of a meeting of stockholders if American Securities beneficially owns at least a majority of the then outstanding shares of MPG common stock entitled to vote on the matter(s) presented at such meeting.
Otherwise, action must be effected at a duly called annual or special meeting of the MPG stockholders and may not be effected by any written consent in lieu of a meeting by the MPG stockholders unless the directors then in office unanimously
recommend that such action be permitted to be taken by written consent of the stockholders.
|
|
The AAM certificate of incorporation requires that action taken by the holders of shares of AAM common stock be effected at a duly called
annual or special meeting, and may not be effected by any consent in writing by such holders.
|
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Table of Contents
|
|
|
|
|
|
|
MPG Stockholder Rights
|
|
AAM Stockholder Rights
|
Advanced Notice for Stockholder Proposals / Nominations
|
|
MPG's amended and restated bylaws require that, for MPG stockholders to present business or nominate a director candidate at an annual meeting, a written notice must be received by the secretary of MPG at its principal executive offices not less
than 90 days nor more than 120 days before the first anniversary of the preceding year's annual meeting. If the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice is
timely if delivered not earlier than the close of business on the later of the 120th day prior to the date of such annual meeting and not later than the close of business on the 90th day prior to such meeting, or if the first public
announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by MPG.
In the event that the number of directors to be elected to the MPG board of directors is increased and there has been no public announcement naming all of the nominees for director or
indicating the increase in the size of the MPG board of directors made by MPG at least 10 days before the last day an MPG stockholder may deliver a notice of nomination in accordance with the above or below, an MPG stockholder's notice will be
considered timely, but only with respect to nominees for any new positions created by such increase, if it is received by the secretary at the principal executive offices of MPG not later than the close of business on the 10th day following the
day on which such public announcement is first made by MPG.
MPG's amended and restated bylaws also provide that, in the case of a special meeting of stockholders called for
the purpose of electing directors, notice is timely if delivered not earlier than the close of business on the 120th day prior to such special meeting and not later than the close of business on the later of 90th day prior to such special
meeting or the 10th day following the date on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs.
|
|
AAM's second amended and restated by-laws provide that for stockholders to present business or nominate a director candidate at an annual meeting, a written notice must be delivered to the secretary of AAM at the principal executive offices of AAM
not less than 70 days nor more than 90 days prior to the first anniversary of the preceding year's annual meeting. If the annual meeting is advanced by more than 20 days, or delayed by more than 70 days, from such anniversary date,
notice is timely if delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 70th day prior to such annual meeting, or the 10th day following the day on which
public announcement of the date of such meeting is first made by AAM.
In the event that the number of directors to be elected to the AAM board of directors is increased and
there is no public announcement naming all of the nominees for director or specifying the size of the increased AAM board of directors made by AAM at least 80 days prior to the first anniversary of the preceding year's annual meeting, an AAM
stockholder's notice will be considered timely, but only with respect to nominees for any new positions created by such increase, if it is received by the secretary at the principal executive offices of AAM not later than the close of business on the
10th day following the day on which such public announcement is first made by AAM.
AAM's second amended and restated by-laws also provide that for stockholders to
nominate a director candidate at a special meeting, a written notice must be delivered to the secretary of AAM at the principal executive offices of AAM not earlier than the 90th day prior to such special meeting and not later than the close of
business on the later of the 70th day prior to such special meeting, or the 10th day following the day on which public announcement of the date of such meeting and the nominees is first made by AAM.
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Table of Contents
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|
|
|
|
|
|
MPG Stockholder Rights
|
|
AAM Stockholder Rights
|
Directors
|
|
MPG's amended and restated certificate of incorporation provides that the MPG board of directors is divided into three classes of directors, with the classes to be as nearly equal in number as possible. The members of each class serve for a
three-year term. As a result, approximately one-third of the MPG board of directors will be elected each year. In the event of any increase or decrease in the size of the MPG board of directors, the directors shall be appointed among the classes as
determined by the MPG board of directors so as to maintain the number of directors in each class as nearly equal as possible. MPG's amended and restated certificate of incorporation also provides that the board shall consist of eight directors and
that the number of directors may be fixed from time to time exclusively by resolutions adopted by affirmative vote of a majority of the board of directors. The MPG board of directors currently consists of eight directors.
The MPG organizational documents provide that directors may be removed only for cause and only upon the affirmative vote of at least a majority of the voting power of all the then outstanding
shares of stock entitled to vote generally in the election of directors, voting together as a single class. In addition, the MPG organizational documents provide that, subject to the terms of any MPG preferred stock and of that certain Stockholders'
Agreement, effective as of August 4, 2014, by and among the AS stockholder, ASP HHI Investco LP, ASP Grede Investco LP and the other signatories thereto, any vacancies on the MPG board of directors, including from new positions, will
be filled only by the affirmative vote of a majority of the remaining directors, even if less than a quorum.
|
|
AAM's certificate of incorporation provides that the AAM board of directors is divided into three classes of directors, with the classes to be as nearly equal in number as possible. The members of each class serve for a three-year term. As a result,
approximately one-third of the AAM board of directors will be elected each year. AAM's certificate of incorporation also provides that the board shall consist of not less than three directors and that the exact number of directors shall be determined
by resolution adopted by affirmative vote of a majority of the AAM board of directors. The AAM board of directors currently consists of eight directors, but will be increased to 11 members as a condition to, and effective upon, the completion of the
merger.
The AAM organizational documents provide that directors may be removed only for cause and only upon the affirmative vote of at least 75% of the voting power of all
the then outstanding shares of stock entitled to vote generally in the election of directors, voting together as a single class. In addition, the AAM organizational documents provide that any vacancies on AAM's board of directors will be filled only
by the affirmative vote of a majority of the remaining directors, although less than a quorum. To the extent applicable Delaware law provides stockholders with the power to fill such vacancies, the AAM certificate of incorporation requires the
affirmative vote of at least 75% in voting power of the outstanding shares of AAM entitled to vote in the election of directors.
|
Exculpation
|
|
The DGCL provides that a corporation may limit or eliminate a director's personal liability for monetary damages to the corporation or its
stockholders for breach of fiduciary duty as a director, except for liability for: (1) any breach of the director's duty of loyalty to such corporation or its stockholders; (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (3) willful or negligent violation of provisions of the DGCL governing payment of dividends and stock purchases or redemptions; (4) any transaction from which the director derived an
improper personal benefit; or (5) any act or omission before the adoption of such a provision in the certificate of incorporation.
|
|
|
MPG's amended and restated certificate of incorporation contains a provision so eliminating a director's personal liability to the fullest
extent permitted under the DGCL as currently in effect or as may be amended to further eliminate or limit the liability of directors.
|
|
AAM's certificate of incorporation contains a provision so eliminating a director's personal liability to the fullest extent permitted under
the DGCL.
|
186
Table of Contents
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|
|
|
|
|
|
MPG Stockholder Rights
|
|
AAM Stockholder Rights
|
Indemnification
|
|
Under MPG's amended and restated certificate of incorporation, MPG must indemnify, to the fullest extent permitted by law, any current or former director, or current or former officer of MPG (the "MPG indemnitees"). This indemnification obligation
expressly includes the indemnification of any MPG indemnitee who is, or is threatened to be made, a party to or participant in any threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding or otherwise, including any appeal therefrom, other than any such proceeding brought in the right of MPG, by reason of the fact that such person is
or was a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of MPG or is or was serving in such a capacity at MPG's request at any other corporation, constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger to which MPG (or any of its wholly owned subsidiaries) is a party, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or
was serving at the request of MPG as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent, against all expenses of any type or nature whatsoever and all judgments, fines and amounts paid in settlement actually
and reasonably incurred by or on behalf of such MPG indemnitee. A person may be indemnified only if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of MPG and, with respect
to any criminal action, such person had no reasonable cause to believe his or her conduct was unlawful.
In the case of an action or suit by or in the right or MPG,
indemnification is available only for expenses actually and reasonably incurred by such person or on their behalf in connection with such proceeding, provided that no such indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been finally adjudged to be liable to MPG unless, and only to the extent, such indemnification is deemed proper by the Court of Chancery of Delaware or such other court in which the action or suit was brought.
|
|
Under AAM's certificate of incorporation, AAM must indemnify, to the fullest extent permitted by the DGCL, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding
(brought in the right of AAM or otherwise), whether civil, criminal, administrative or investigative, and whether formal or informal, including appeals, by reason of the fact that such person is or was a director or officer of AAM or, while a
director or officer of AAM, is or was serving at the request of AAM as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, limited liability company or other enterprise, for and against
all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person or such heirs, executors or administrators in connection with such action, suit or proceeding, including
appeals.
AAM must indemnify a person described above in connection with any action, suit or proceeding (or part thereof) commenced by such person only if the commencement of
such action, suit or proceeding (or part thereof) by such person was authorized by the AAM board of directors.
AAM must also promptly pay expenses incurred by any person
described above in defending any action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, including appeals, upon presentation of appropriate documentation.
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187
Table of Contents
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|
|
|
|
|
|
MPG Stockholder Rights
|
|
AAM Stockholder Rights
|
|
|
Under MPG's amended and restated certificate of incorporation, MPG is the indemnitor of first resort with respect to any rights directors of MPG who are also partners or employees of American Securities may have to indemnification and advancement of
expenses.
MPG must also advance or promptly reimburse the expenses incurred by any such person described above, if such person provides an undertaking to repay all amounts
so advanced or reimbursed in the event that it is ultimately determined that such person is not entitled to be indemnified by MPG.
|
|
|
Antitakeover Provisions
|
|
Subject to specific exceptions, Section 203 of the DGCL prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after the time of the transaction in which the person became an interested stockholder, unless:
|
|
|
the "business combination,"
or the transaction in which the stockholder became an "interested stockholder" is approved by the board of directors prior to the time the "interested stockholder" attained that status;
|
|
|
upon consummation of the
transaction that resulted in the stockholder becoming an "interested stockholder," the "interested stockholder" owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of
determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder), those shares owned by persons who are directors and also officers, and employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer); or
|
|
|
at or subsequent to the
time such person became an "interested stockholder," the "business combination" is approved by the board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding
voting stock that is not owned by the "interested stockholder."
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"Business combinations" include mergers, asset sales and other transactions resulting in a financial benefit to the "interested
stockholder."
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Subject to various exceptions, an "interested stockholder" is a person who, together with his or her affiliates and associates, owns, or within
the prior three years did own, 15% or more of the corporation's outstanding voting stock.
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MPG has opted out of Section 203 of the DGCL and accordingly is not subject to its provisions.
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AAM has not opted out of Section 203 of the DGCL (as described in MPG Stockholder Rights, Antitakeover Provisions), and accordingly is
subject to its provisions.
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Amendment to the Incorporation Document and the Bylaws
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Delaware law provides generally that the affirmative vote of a majority of the outstanding shares entitled to vote is required to amend a
corporation's certificate of incorporation, unless the certificate of incorporation requires a greater percentage.
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MPG Stockholder Rights
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AAM Stockholder Rights
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MPG's amended and restated certificate of incorporation provides that the amended and restated bylaws may be amended, altered, added to or repealed by the MPG board of directors or the stockholders, but in the case of amendment by the stockholders,
only by a vote of at least a majority of the voting power of all of the outstanding shares of MPG stock entitled to vote generally in the election of directors, voting together as a single class.
In addition to the default provisions of Delaware law, a vote of at least 66
2
/
3
% of the voting power of the outstanding shares of MPG common stock entitled to vote in
the election of directors is required to amend alter, amend, add to or repeal or to adopt provisions inconsistent with certain provisions of MPG's amended and restated certificate of incorporation relating to board composition (including MPG's
classified board), filling of board vacancies, removal of directors, forum selection, and the supermajority voting requirement for amendment of the above provisions in the certificate of incorporation.
MPG's amended and restated certificate of incorporation also provides that the provisions relating to the waiver of Delaware's antitakeover statute and of the corporate opportunities doctrine may
not be amended, altered or revised, including by merger or otherwise, without American Securities' written consent for so long as American Securities owns at least 10% of the then outstanding MPG stock entitled to vote generally in the election of
directors.
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AAM's certificate of incorporation provides that the second amended and restated bylaws may be amended by the AAM board of directors or the stockholders. However, in the case of amendment by the stockholders, the affirmative vote of at least 75% of
the voting power of all of the outstanding shares of AAM entitled to vote in the election of directors, voting together as a single class, is required to amend, alter or repeal any provision of AAM's second amended and restated by-laws which is to
the same effect as the provisions in AAM's certificate of incorporation relating to the amendment of by-laws, board composition, director removal, filling of board vacancies, stockholder action by written consent and the ability to call special
meetings of stockholders. Furthermore, AAM's second amended and restated by-laws provide that the affirmative vote of at least 75% of the voting power of all of the outstanding shares of AAM entitled to vote in the election of directors, voting
together as a single class, is required to amend, alter or repeal certain provisions of AAM's second amended and restated by-laws relating to the ability to call special meetings of stockholders, advanced notice for stockholder proposals and
nominations, board composition and director elections, filling vacancies on the board of directors, and the supermajority voting requirement for amendment of the above provisions in the by-laws.
In addition, a vote of at least 75% of the voting power of all of the outstanding shares of AAM entitled to vote in the election of directors, voting as a single class, is required to amend alter,
amend, add to or repeal or to adopt certain provisions of AAM's certificate of incorporation relating to the amendment of by-laws, board composition, director removal, filling vacancies on the board of directors, the prohibition of stockholder
action by written consent, the ability to call special meetings of stockholders and the supermajority voting requirement for amendment of the above provisions in the certificate of incorporation.
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MPG Stockholder Rights
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AAM Stockholder Rights
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Forum Selection
|
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MPG's amended and restated certificate of incorporation provides that unless MPG consents in writing to the selection of an alternative forum, the Court of
Chancery of the State of Delaware shall be the sole and exclusive forum for any derivative action brought on behalf of MPG, any action asserting breach of fiduciary duties owed by or wrongdoing by any director, officer or employee of MPG to MPG
stockholders, any action arising pursuant to the DGCL or MPG's organizational documents, or to interpret such organizational documents, or any action asserting a claim governed by the internal affairs doctrine.
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AAM's organizational documents do not include a forum selection clause.
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Waiver of Corporate Opportunities
|
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MPG's amended and restated certificate of incorporation includes a provision whereby MPG and its subsidiaries waive and renounce any interest
or expectancy they may have with respect to any business opportunities that may be presented to American Securities or any of its managers, officers, directors, agents, stockholders, members, partners, affiliates and subsidiaries, even if such
opportunity is one that MPG or its subsidiaries may reasonably be deemed to have pursued or have had the desire to pursue. None of the foregoing persons will be liable to MPG or any of its subsidiaries for breach of any fiduciary or other duty, as a
director, officer or otherwise, by reason of the fact that such business opportunity is not presented to MPG.
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No equivalent provision.
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LEGAL MATTERS
The legality of shares of AAM common stock offered by this joint proxy statement/prospectus will be passed upon for AAM by Shearman &
Sterling LLP.
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EXPERTS
The consolidated financial statements, and the related financial statement schedule, incorporated in this joint proxy statement/prospectus by
reference from the AAM Annual Report on Form 10-K for the year ended December 31, 2016, and the effectiveness of AAM's internal control over financial reporting have been audited by
Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report, which is incorporated herein by reference. Such consolidated financial statements and
financial statement schedule have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
The
consolidated financial statements, and the related financial statement schedule of MPG as of and for the year ended December 31, 2016, incorporated in this joint proxy
statement/prospectus by reference from the MPG Current Report on Form 8-K filed on March 2, 2017, and the effectiveness of MPG's internal control over financial reporting as of
December 31, 2016, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by
reference. Such consolidated financial statements and financial statement schedule have been so incorporated in reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The
consolidated balance sheet of MPG and its subsidiaries as of December 31, 2015 and the related consolidated statements of operations, comprehensive income, stockholders'
equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2015, and the related financial statement schedule for each of the years in the two-year period
ended December 31, 2015, included in the Current Report on Form 8-K filed by MPG on March 2, 2017, have been incorporated by reference in this joint proxy statement/prospectus in
reliance upon the report of KPMG LLP, an independent registered public accounting firm, incorporated by reference herein and upon the authority of said firm as experts in accounting and
auditing.
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FUTURE AAM STOCKHOLDER PROPOSALS
Under applicable regulations of the SEC, any stockholder desiring to make a proposal to be acted upon at the 2017 annual meeting of AAM
stockholders must have presented such proposal to the Secretary of AAM at One Dauch Drive, Detroit, Michigan 48211-1198, not later than November 24, 2016 (120 calendar days prior to the
anniversary of the mailing date of AAM's proxy statement for the 2016 annual meeting of stockholders), in order for the proposal to be considered for inclusion in AAM's 2017 proxy statement. Any such
proposal must also comply with SEC regulations under Rule 14a-8 with respect to the inclusion of stockholder proposals. AAM anticipates holding the 2017 Annual Meeting on May 4, 2017.
AAM's
second amended and restated by-laws provide that for a director nomination or other business to be properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to AAM's Secretary and any such proposed business other than the nominations of persons for election to the AAM board of directors must constitute a proper
matter for stockholder action.
To
be timely, a stockholder's notice must be delivered to AAM's Secretary at AAM's principal executive offices no later than the close of business on the 70th day or earlier than
the close of business on the 90th day prior to the first anniversary of the preceding year's annual meeting, which dates are February 24, 2017 and February 6, 2017, respectively;
provided
,
however
, that in the event that the date of the annual meeting is more than 20 days
before or more than 70 days after such anniversary date, notice
by such stockholder must be so delivered not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of the
70th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by AAM. The public announcement of an
adjournment or postponement of an annual meeting does not commence a new time period, or extend any time period, for the giving of a stockholder's notice as described above.
To
be in proper form, a stockholder's notice to AAM's Secretary must set forth, as to the stockholder giving the notice, the information required pursuant to AAM's second amended and
restated by-laws. AAM may also require stockholders to furnish additional information. The requirements found in AAM's second amended and restated by-laws are separate from, and in addition to, the
requirements of the SEC that a stockholder must meet to have a proposal included in the proxy statement.
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FUTURE MPG STOCKHOLDER PROPOSALS
In light of the expected timing of the completion of the merger and the other transactions contemplated by the merger agreement, MPG expects to
hold its 2017 annual meeting of MPG stockholders only if the merger is not completed.
In
the event MPG holds a 2017 annual stockholders meeting, MPG's amended and restated bylaws require all stockholders who intend to nominate persons for election to the MPG board of
directors or to bring other business before an annual meeting of stockholders to give timely notice thereof in writing to MPG's Secretary, Thomas M. Dono, Jr., at Metaldyne Performance
Group Inc., One Towne Square, Suite 550, Southfield, Michigan 48076. Such notice must include the information required by MPG's amended and restated bylaws. MPG's amended and restated
bylaws require that any such proposal or nomination be received by its Secretary at the above address not less than the close of business 90 days or more than the close of business
120 days prior to the first anniversary of the date on which MPG held the previous year's annual meeting of stockholders. Therefore, to be presented at the 2017 annual meeting of stockholders,
such a proposal must be received by MPG's Secretary on or after January 25, 2017 but no later than February 24, 2017 and must be submitted in accordance with MPG's amended and restated
bylaws. In the event that the date of the 2017 annual meeting of stockholders is to be held more than 30 days before or more than 60 days after the anniversary date of the previous
year's meeting, an MPG stockholder's notice must be delivered not earlier than the close of business 120 days prior to the 2017 annual meeting and not later than the close of business on the
later of the 90th day prior to the date of the 2017 annual meeting or, if the first public announcement of the date
of such annual meeting is less than 100 days prior to the date of such meeting, the 10th day following the day on which public announcement of the date of the 2017 annual meeting is
first made by MPG. However, notwithstanding the foregoing, if the number of directors to be elected to the MPG board of directors is increased and there is no public announcement by MPG naming all of
the nominees for director or indicating the increase in the size of the board of directors at least 10 days prior to the deadline for a stockholder to timely nominate a person for election to
the MPG board of directors or bring other business before the 2017 annual meeting of stockholders, then a stockholder notice will be considered timely, only with respect to nominees for any new
positions created by such increase in the size of the MPG board of directors, if it is received by the MPG Secretary at the foregoing address not later than the close of business on the
10th day following the date MPG first makes such a public announcement.
If
any stockholder wishes to propose a matter for consideration at MPG's 2017 annual meeting of stockholders and have such proposal included in MPG's proxy statement for the 2017 annual
meeting of stockholders, the stockholder must have given written notice of such stockholder's intent to MPG's Secretary on or before December 12, 2016 (120 calendar days prior to the
anniversary of MPG mailing its proxy statement for the 2016 annual meeting of stockholders). Any such proposal must also comply with SEC regulations under Rule 14a-8 with respect to the
inclusion of stockholder proposals.
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WHERE YOU CAN FIND MORE INFORMATION
AAM and MPG file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports,
statements or other information that AAM and MPG file with the SEC at the SEC's public reference room at the following location:
Public
Reference Room
100 F Street, N.E.
Washington, D.C. 20549
Please
call the SEC at 1-800-SEC-0330 for further information on the public reference room. These SEC filings are also available to the public from commercial document retrieval services
and at the
website maintained by the SEC at
www.sec.gov
. You may also access the SEC filings and obtain other information about AAM and MPG through the websites
maintained by AAM and MPG, which are
www.aam.com
and
www.mpgdriven.com
, respectively. The information
contained in those websites is expressly not incorporated by reference in this joint proxy statement/prospectus.
The
SEC allows AAM and MPG to "incorporate by reference" information into this joint proxy statement/prospectus, which means that the companies can disclose important information to you
by referring you to other documents filed separately with the SEC. The information incorporated by reference into this joint proxy statement/prospectus is considered part of this joint proxy
statement/prospectus, except for any information superseded by information contained directly in this joint proxy statement/prospectus or in later filed documents incorporated by reference in this
joint proxy statement/prospectus.
This
joint proxy statement/prospectus, and the registration statement of which this joint proxy statement/prospectus forms a part, incorporates by reference the documents set
forth below that AAM and MPG have previously filed with the SEC (other than information furnished pursuant to Item 2.02 or Item 7.01 of a Current Report on Form 8-K). These
documents contain important business and financial information about AAM (Commission file number 001-14303) and MPG (Commission file number 001-36774) that is not included in or
delivered with this joint proxy statement/prospectus.
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AAM Filing
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Period/Filing Date
|
Annual Report on Form 10-K
|
|
For the fiscal year ended December 31, 2016, filed on February 10, 2017 and amended by a Form 10-K/A filed on March 6, 2017
|
Proxy Statement on Schedule 14A
|
|
Filed on March 24, 2016
|
Current Reports on Form 8-K
|
|
Filed on January 11, 2017 (solely with respect to Item 8.01) and filed on February 23, 2017 (solely with
respect to Item 8.01)
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MPG Filing
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Period/Filing Date
|
Annual Report on Form 10-K
|
|
For the fiscal year ended December 31, 2015, filed on February 29, 2016
|
Proxy Statement on Schedule 14A
|
|
Filed on April 11, 2016
|
Quarterly Reports on Form 10-Q
|
|
For the quarters ended April 3, 2016, July 3, 2016, and October 2, 2016, filed on May 5, 2016,
August 4, 2016, and November 3, 2016 respectively
|
Current Reports on Form 8-K
|
|
Filed on February 25, 2016 (solely with respect to Item 8.01), filed on April 8, 2016, filed on May 5,
2016 (solely with respect to Item 8.01), filed on May 25, 2016, filed on June 20, 2016, filed on July 21, 2016, filed on August 4, 2016 (solely with respect to Item 8.01), filed on September 2, 2016, filed on
September 13, 2016, filed on November 3, 2016 (solely with respect to Item 8.01), filed on November 3, 2016 (with respect to Items 1.01 and 8.01), filed on February 24, 2017 (solely with respect to Item 8.01) and
filed on March 2, 2017 (including items 2.02, 8.01 and 9.01)
|
AAM
and MPG also incorporate by reference additional documents that may be filed with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this
joint proxy statement/prospectus and, in the case of AAM, the date of the AAM special meeting, and, in the case of MPG, the date of the MPG special meeting. These include periodic reports, such as
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
Stockholders
and investors will be able to obtain a free copy of the registration statement and joint proxy statement/prospectus, as well as other filings containing information about
AAM and MPG, without charge, at the SEC's website (
www.sec.gov
). Copies of the registration statement and joint proxy statement/prospectus and the
filings with the SEC that will be incorporated by reference therein can also be obtained, without charge, by directing a request to either American Axle & Manufacturing Holdings, Inc. or
Metaldyne Performance Group Inc. at the following addresses:
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|
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American Axle & Manufacturing Holdings, Inc.
|
|
Metaldyne Performance Group Inc.
|
One Dauch Drive
|
|
One Towne Square, Suite 550
|
Detroit, Michigan 48211
|
|
Southfield, Michigan 48076
|
Attention: Investor Relations
|
|
Attn: Investor Relations
|
Telephone: 313-758-2404
|
|
Telephone: 248-727-1829
|
Email: investorrelations@aam.com
|
|
|
You
should rely only on the information contained or incorporated by reference in this joint proxy statement/prospectus. We have not authorized anyone to provide you with information
that is different from what is contained in this joint proxy statement/prospectus. You should assume that the information in this joint proxy statement/prospectus is accurate only as of
March 6, 2017. You should also assume that the information contained in any document incorporated by reference herein is accurate only as of the date of such document. Neither the mailing of
this joint proxy statement/prospectus to stockholders nor the issuance of shares of AAM common stock in the merger creates any implication to the contrary.
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Annex A
EXECUTION VERSION
AGREEMENT
AND PLAN OF MERGER
by and among
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.,
ALPHA SPV I, INC.
and
METALDYNE PERFORMANCE GROUP INC.
Dated as of November 3, 2016
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AGREEMENT AND PLAN OF MERGER, dated as of November 3, 2016 (this "
Agreement
"), by and among American
Axle & Manufacturing Holdings, Inc., a Delaware corporation ("
Parent
"), Alpha SPV I, Inc., a Delaware corporation and wholly-owned
subsidiary of Parent ("
Merger Sub
"), and Metaldyne Performance Group Inc., a Delaware corporation (the
"
Company
").
WHEREAS,
upon the terms and subject to the conditions of this Agreement and in accordance with the DGCL (as defined below), Parent, Merger Sub and the Company have agreed to enter into a
business combination transaction pursuant to which Merger Sub will merge with and into the Company (the "
Merger
"), with the Company continuing as the
Surviving Corporation (as defined below) and a wholly-owned subsidiary of Parent;
WHEREAS,
the Company Board (as defined below) has (i) determined that the Merger is fair to, and in the best interests of, the Company and its stockholders,
(ii) unanimously approved this Agreement and declared its advisability and (iii) unanimously resolved to recommend the adoption of this Agreement and directed that this Agreement be
submitted for consideration by the stockholders of the Company at the Company Stockholders' Meeting (as defined below);
WHEREAS,
(i) the Parent Board (as defined below) has unanimously approved and declared advisable this Agreement and the Parent Share Issuance (as defined below),
(ii) immediately following the execution of this Agreement, Parent, as the sole stockholder of Merger Sub, shall adopt this Agreement, and (iii) the Parent Board has unanimously resolved
to recommend to the stockholders of Parent the approval of the Parent Share Issuance at the Parent Stockholders' Meeting (as defined below);
WHEREAS,
the Board of Directors of Merger Sub has (i) unanimously approved this Agreement and declared its advisability and (ii) unanimously resolved to recommend the
adoption of this Agreement by Parent as the sole stockholder of Merger Sub;
WHEREAS,
concurrently with the execution of this Agreement, Parent and ASP MD Investco LP, a stockholder of the Company, have entered into the Voting Agreement (as defined below);
WHEREAS,
at the Closing, Parent and a stockholder of the Company will enter into a stockholders' agreement, in the form attached hereto as
Exhibit A
(the "
Stockholders'
Agreement
"), which will address certain matters relating to the
corporate governance of Parent and will provide for certain registration rights with respect to the Parent Common Stock; and
WHEREAS,
for United States federal income Tax purposes, it is intended that the Merger will be treated as a taxable purchase by Parent of the Company Common Stock in a transaction that
is taxable to the Company stockholders as a sale of their Company Common Stock in exchange for the Merger Consideration;
NOW,
THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.01
Certain Defined Terms.
For purposes of this Agreement:
"
Acceptable Confidentiality Agreement
" means an executed confidentiality agreement with terms no less favorable, in the aggregate, to the
Company or Parent, as applicable, than those contained in the Confidentiality Agreement;
provided
,
however
, that such confidentiality agreement
(a) shall include a "standstill" restriction that is similar in scope to the "standstill"
restrictions in the Confidentiality Agreement, but such restrictions need not prohibit the making of any confidential Company Acquisition
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Proposal
to the Company or the Company Board (or any committee thereof) or any confidential Parent Acquisition Proposal to Parent or the Parent Board (or any committee thereof), as applicable, and
(b) shall not prohibit the Company from providing to Parent any of the information required to be provided to Parent under
Section 7.03
or
Parent from providing to the Company any of the information required to be provided to the Company under
Section 7.04
, as applicable.
"
Acquisition Agreement
" means any written letter of intent, memorandum of understanding, agreement in principle, acquisition agreement,
merger agreement, option or other similar agreement (other than an Acceptable Confidentiality Agreement entered into in accordance with this Agreement) regarding, or that is intended to result in, or
would reasonably be expected to lead to, any Company Acquisition Proposal or Parent Acquisition Proposal, as applicable.
"
Action
" means any litigation, suit, claim, action, proceeding, arbitration, mediation, hearing, inquiry or investigation (in each case,
whether civil, criminal or investigative).
"
Affiliate
" of a Person means a Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such Person.
"
Anti-Corruption Laws
" means Laws relating to bribery, corruption or money laundering.
"
AS
" means American Securities LLC and its Affiliates.
"
Blue Sky Laws
" means state securities or "blue sky" Laws.
"
Business Day
" means any day other than a Saturday or Sunday or other day on which banks are required or authorized to close in the City
of New York.
"
Code
" means the United States Internal Revenue Code of 1986, as amended.
"
Company Board
" means the Board of Directors of the Company.
"
Company Common Stock
" means common stock, par value $0.001 per share, of the Company.
"
Company Designated Directors
" means George Thanopoulos (or another individual identified by AS should Mr. Thanopoulos be unable to
serve on the Parent Board at the Closing) and two (2) additional individuals who will be selected by AS and may be any Managing Director and/or executive officer of AS, which individuals will
be identified to Parent prior to the date that the Registration Statement is declared effective.
"
Company Disclosure Schedule
" means the disclosure schedule dated as of the date of this Agreement and delivered by the Company to Parent
and Merger Sub simultaneously with the signing of this Agreement.
"
Company Intellectual Property
" means the Owned Company Intellectual Property and the Licensed Company Intellectual Property.
"
Company Intervening Event
" means any material event, circumstance, change, effect, development or condition relating to the Company and
its Subsidiaries (other than a Company Acquisition Proposal or any inquiry, offer or proposal that would reasonably be expected to lead to a Company Acquisition Proposal) first occurring or arising
after the date of this Agreement that was not known or reasonably foreseeable by the Company Board as of the date of this Agreement (or if known, the magnitude or material consequences of which were
not known or reasonably foreseeable by the Company Board as of the date of this Agreement);
provided
that no event, circumstance, change, effect,
development or condition that has had or would reasonably be expected to have an adverse effect on the assets, liabilities, business, condition (financial or otherwise) or results of operations of
Parent and its Subsidiaries (including, following the Closing, the Surviving Corporation and its Subsidiaries), or the market price of the securities (including the Parent Common Stock) of Parent or
any of its Subsidiaries
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(including,
following the Closing, the Surviving Corporation and its Subsidiaries), shall constitute a "Company Intervening Event".
"
Company IP Agreements
" means all (a) contracts concerning Intellectual Property to or under which the Company or any of its
Subsidiaries is a party or beneficiary, or by which the Company or any of its Subsidiaries, or any of its or their properties or assets, is bound, including all (i) licenses of Intellectual
Property by the Company or any of its Subsidiaries to any Person, (ii) licenses of Intellectual Property by any Person to the Company or any of its Subsidiaries, and (iii) contracts
between any Person and the Company or any of its Subsidiaries relating to the transfer, development, maintenance or use of Intellectual Property or the development or transmission of data and
(b) consents, settlements, decrees, orders, injunctions, judgments or rulings governing the use, validity or enforceability of Intellectual Property to or under which the Company or any of its
Subsidiaries is a party or beneficiary, or by which the Company or any of its Subsidiaries, or any of its or their properties or assets, is bound.
"
Company Material Adverse Effect
" means any event, circumstance, change, condition, occurrence or effect that, individually or in the
aggregate with any other event,circumstance, change, condition, occurrence or effect, (a) has had, or would reasonably be expected to have, a material adverse effect on the assets, liabilities,
business, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole, or (b) has, or would reasonably be expected to have, a material
adverse effect on, or prevents or materially delays, the ability of the Company to consummate the Transactions;
provided
,
however
, that, in the case of
clause (a), in no event shall any of the following, alone or in combination, be deemed to constitute, nor shall any
of the following be taken into account in determining whether there has been, a Company Material Adverse Effect: (i) any event, circumstance, change, condition, occurrence or effect resulting
from or relating to (A) a change in general economic, political, regulatory, business, economic, financial, credit or capital market conditions, or any changes therein, including interest or
exchange rates, (B) any change in accounting requirements or principles required by GAAP (or any authoritative interpretations thereof) or required by any change in applicable Laws (or any
authoritative interpretations thereof) after the date hereof, (C) any adoption, implementation, promulgation, repeal or modification of any Law after the date hereof, (D) any outbreak,
escalation or acts of armed hostility or war, any acts of terrorism, or any acts of God or natural disasters, (E) changes proximately caused by the announcement of the execution of this
Agreement, provided that the exceptions in this clause (E) shall not apply to any representations or warranties contained in
Section 4.05
(or the condition in
Section 8.02(a)
as it relates to the representations or warranties contained in
Section 4.05
), or (F) compliance with
the express terms of, or the taking of any action expressly required by, this Agreement (excluding
the Company operating in the ordinary course of business) or the taking of any action consented to or requested in writing by Parent prior to the taking of such action;
provided further
that the
exceptions set forth in (A), (B), (C) and (D) of this clause (i) shall only apply to the extent that such
event, circumstance, change or effect does not have, or would not reasonably be expected to have, a disproportionate impact on the Company and its Subsidiaries, taken as a whole, compared to other
companies that operate in the industries in which the Company and its Subsidiaries operate or (ii) any failure to meet internal or published projections, forecasts, performance measures,
operating statistics or revenue or earnings predictions for any period or any change in the price or trading volume of the Shares or the credit rating of the Company
(
provided
that, except as otherwise provided in this definition, the underlying causes of such failure or change may be considered in determining
whether there is a Company Material Adverse Effect).
"
Company Permits
" means franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, concessions,
registrations, clearances, exemptions, certificates, approvals and orders of any Governmental Authority necessary for each of the Company and its Subsidiaries to own,
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lease
and operate their respective properties and assets or to carry on their respective businesses as they are now being conducted.
"
Company Preferred Stock
" means preferred stock, par value $0.001 per share, of the Company.
"
Company Real Property
" means the Leased Company Real Property and the Owned Company Real Property.
"
Company Recommendation
" means the recommendation of the Company Board that the Company stockholders adopt this Agreement and approve the
Transactions.
"
Company Stock Awards
" means Company Stock Options, Company Restricted Stock and other purchase rights granted pursuant to the Company
Stock Plans.
"
Company Stockholder Approval
" means the adoption of this Agreement and the approval of the Transactions at the Company Stockholders'
Meeting by the affirmative vote of a majority of the outstanding Shares (present in person or represented by proxy) and voting in accordance with the DGCL and the Company's certificate of
incorporation and bylaws.
"
Company Stockholders' Meeting
" means the meeting of the Company's stockholders (including any adjournments or postponements thereof) to
be held to consider adoption of this Agreement and the approval of the Transactions.
"
Confidentiality Agreement
" means the confidentiality agreement, dated August 23, 2016, between Parent and the Company.
"
control
" (including the terms "
controlled by
" and "
under common
control with
") means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise.
"
DGCL
" means the General Corporation Law of the State of Delaware, as amended.
"
Encumbrances
" means mortgages, pledges, liens, security interests, conditional and installment sale agreements, encumbrances, charges or
other claims of third parties or restrictions of any kind, including any easement, right of way or other encumbrance to title.
"
Enhanced Termination Fee
" means $101,794,000.
"
Environmental Laws
" means any Law relating to (a) releases or threatened releases of Hazardous Substances or materials containing
Hazardous Substances; (b) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances or materials containing Hazardous Substances; (c) exposure to
Hazardous Substances; (d) climate change or global warming; or (e) pollution or protection of the environment, health, safety or natural resources, including natural resource damages.
"
Environmental Permits
" means all permits, licenses and other authorizations by or from a Governmental Authority required under any
Environmental Law.
"
ERISA
" means the Employee Retirement Income Security Act of 1974, as amended.
"
ERISA Affiliate
" means, with respect to any entity, trade or business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity, trade or business, or that is a member of the same
"controlled group" as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
"
Exchange Act
" means the Securities Exchange Act of 1934, as amended.
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"
Expenses
" means all documented reasonable out-of-pocket fees and expenses (including all documented fees and expenses of counsel,
accountants, investment banking firms, financing sources and other financial institutions, experts and consultants to a party hereto) actually incurred or accrued by a party hereto or on its or their
behalf or for which it or they are liable in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement and the Transactions, the
preparation, printing, filing and mailing of the Registration Statement and the Joint Proxy Statement, the solicitation of stockholder approvals, the filing of any required notices under the HSR Act
or other applicable antitrust, competition or fair trade laws and all other matters related to the closing of the Merger and the other Transactions.
"
FCPA
" means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.
"
Financing Failure
" means (a) the Financing is not available or (b) Parent or Merger Sub has not received aggregate proceeds
from the Financing Sources in an amount equal to or greater than the amount of the Financing.
"
Financing Sources
" means the Persons (including lenders, agents and arrangers) that have committed to provide or otherwise entered into
agreements in connection with the Financing or, if applicable, the Alternative Financing arranged in compliance with
Section 7.19
in connection
with the transactions contemplated by this Agreement, and any commitment letters, joinder agreements, indentures or credit agreements entered into pursuant thereto or relating thereto, together with
their Affiliates, officers, directors, employees and representatives involved in the Financing or, if applicable, the Alternative Financing, and their respective successors and assigns;
provided
that
for the purposes of
Section 10.11
, "Financing Sources" shall include all of such
Persons' Affiliates, officers, directors, employees and representatives.
"
GAAP
" means United States generally accepted accounting principles.
"
Governmental Authority
" means any federal, national, foreign, supranational, state, provincial, county, local or other government,
governmental, regulatory or administrative authority, agency, instrumentality or commission or any court, tribunal, or judicial or arbitral body of competent jurisdiction.
"
Hazardous Substances
" means (a) those substances, materials or wastes defined as "hazardous," "toxic," a "pollutant," a
"contaminant" or words of similar meaning and regulatory effect under applicable Environmental Laws, including in the following United States federal statutes and their state counterparts, as each may
be amended from time to time, and all regulations thereunder: the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act;
(b) petroleum and petroleum products, including crude oil and any fractions thereof; (c) natural gas, synthetic gas, and any mixtures thereof; (d) polychlorinated biphenyls and
asbestos; and (e) any regulated radioactive substances, materials or wastes.
"
HSR Act
" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"
Indebtedness
" means, with respect to any Person, without duplication: (a) all indebtedness of such Person, whether or not
contingent, for borrowed money, including all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments; (b) all obligations of such Person for the deferred
purchase of property or services; (c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if
the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (d) all obligations of such Person as lessee
under
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Leases
that have been or should be, in accordance with GAAP, recorded as capital leases; (e) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or
similar facilities; (f) all liabilities or obligations with respect to interest rate swaps, caps, collars and similar hedging obligations, (g) all Indebtedness of others referred to in
clauses (a) through (f) above guaranteed (or in effect guaranteed) directly or indirectly in any manner by such Person, and (h) all Indebtedness of others referred to in
clauses (a) through (g) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Encumbrance on property
(including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, but excluding, in the case of
(a) through (h), trade payables incurred by any Person in the ordinary course of business.
"
Intellectual Property
" means, in any jurisdiction worldwide, all (a) patents, statutory invention registrations, mask works,
industrial designs and community designs; (b) Trademarks; (c) copyrights (including copyrights in software), and moral rights, design rights and database rights therein and thereto;
(d) confidential and proprietary information, including trade secrets and know-how; (e) rights of privacy and publicity; and (f) registrations, applications, renewals and
extensions for any of the foregoing in clauses (a) through (e).
"
IRS
" means the Internal Revenue Service.
"
knowledge of Parent
" means the actual knowledge, after reasonable inquiry, of David C. Dauch, Michael K. Simonte, Christopher J. May and
David E. Barnes.
"
knowledge of the Company
" means the actual knowledge, after reasonable inquiry, of George Thanopoulos, Mark Blaufuss and Thomas Dono.
"
Law
" means any U.S. or non-U.S. federal, state, local, national, supranational, foreign or administrative law (including common law),
statute, ordinance, regulation, requirement, regulatory interpretation, rule, code or Order.
"
Lease
" means any and all leases, subleases, licenses or other occupancy agreements, sale/leaseback arrangements or similar arrangements.
"
Leased Company Real Property
" means the real property leased, subleased, licensed or otherwise occupied by the Company or any of its
Subsidiaries as tenant, sublessee, licensee or occupier, together with, to the extent leased by the Company or any of its Subsidiaries, all buildings and other structures, facilities or improvements
currently or hereafter located thereon, all fixtures, systems and equipment affixed thereto and all easements, licenses, rights, hereditaments and appurtenances relating to the foregoing.
"
Leased Parent Real Property
" means the real property leased, subleased, licensed or otherwise occupied by Parent or any of its
Subsidiaries as tenant, sublessee, licensee or occupier, together with, to the extent leased by Parent or any of its Subsidiaries, all buildings and other structures, facilities or improvements
currently or hereafter located thereon, all fixtures, systems and equipment affixed thereto and all easements, licenses, rights, hereditaments and appurtenances relating to the foregoing.
"
Licensed Company Intellectual Property
" means all Intellectual Property that the Company or any of its Subsidiaries is licensed or
otherwise permitted by other Persons to use pursuant to the Company IP Agreements.
"
Licensed Parent Intellectual Property
" means all Intellectual Property that Parent or any of its Subsidiaries is licensed or otherwise
permitted by other Persons to use pursuant to the Parent IP Agreements.
"
NYSE
" means the New York Stock Exchange.
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Table of Contents
"
Non-U.S. Company Benefit Plan
" means a Company Plan that is not subject exclusively to United States Law.
"
Non-U.S. Parent Benefit Plan
" means a Parent Plan that is not subject exclusively to United States Law.
"
Order
" means any order (temporary or otherwise), judgment, injunction, award, decision, determination, stipulation, ruling, subpoena,
writ, decree or verdict entered by or with any Governmental Authority.
"
Outside Date
" means August 3, 2017.
"
Owned Company Intellectual Property
" means all Intellectual Property owned by, or under obligation of assignment to, the Company or any
of its Subsidiaries.
"
Owned Company Real Property
" means the real property in which the Company or any of its Subsidiaries has fee title (or equivalent)
interest, together with, to the extent owned by the Company or any of its Subsidiaries, all buildings and other structures, facilities or improvements currently or hereafter located thereon, all
fixtures, systems and equipment affixed thereto and all easements, licenses, rights, hereditaments and appurtenances relating to the foregoing.
"
Owned Parent Intellectual Property
" means all Intellectual Property owned by, or under obligation of assignment to, Parent or any of its
Subsidiaries.
"
Owned Parent Real Property
" means the real property in which Parent or any of its Subsidiaries has fee title (or equivalent) interest,
together with, to the extent owned by Parent or any of its Subsidiaries, all buildings and other structures, facilities or improvements currently or hereafter located thereon, all fixtures, systems
and equipment affixed thereto and all easements, licenses, rights, hereditaments and appurtenances relating to the foregoing.
"
Parent Board
" means the Board of Directors of Parent.
"
Parent Common Stock
" means the common stock, par value $0.01 per share, of Parent.
"
Parent Disclosure Schedule
" means the disclosure schedule dated as of the date of this Agreement and delivered by Parent to the Company
simultaneously with the signing of this Agreement.
"
Parent Intellectual Property
" means the Owned Parent Intellectual Property and the Licensed Parent Intellectual Property.
"
Parent Intervening Event
" means any material event, circumstance, change, effect, development or condition relating to Parent and its
Subsidiaries (other than a Parent Acquisition Proposal or any inquiry, offer or proposal that would reasonably be expected to lead to a Parent Acquisition Proposal) first occurring or arising after
the date of this Agreement that was not known or reasonably foreseeable by the Parent Board as of the date of this Agreement (or if known, the magnitude or material consequences of which were not
known or reasonably foreseeable by the Parent Board as of the date of this Agreement);
provided
that no event, circumstance, change, effect, development
or condition that has had or would reasonably be expected to have an adverse effect on the assets, liabilities, business, condition (financial or otherwise) or results of operations of the Company and
its Subsidiaries, or the market price of the securities (including the Company Common Stock) of the Company or any of its Subsidiaries, shall constitute a "Parent Intervening Event".
"
Parent IP Agreements
" means all (a) contracts concerning Intellectual Property to or under which Parent or any of its Subsidiaries
is a party or beneficiary, or by which Parent or any of its Subsidiaries, or any of its or their properties or assets, is bound, including all (i) licenses of Intellectual Property by Parent or
any of its Subsidiaries to any Person, (ii) licenses of Intellectual Property by any Person to Parent or any of its Subsidiaries, and (iii) contracts between any Person and Parent or any
of its
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Subsidiaries
relating to the transfer, development, maintenance or use of Intellectual Property or the development or transmission of data and (b) consents, settlements, decrees, orders,
injunctions, judgments or rulings governing the use, validity or enforceability of Intellectual Property to or under which Parent or any of its Subsidiaries is a party or beneficiary, or by which
Parent or any of its Subsidiaries, or any of its or their properties or assets, is bound.
"
Parent Material Adverse Effect
" means any event, circumstance, change, condition, occurrence or effect that, individually or in the
aggregate with any other event, circumstance, change, condition, occurrence or effect, (a) has had, or would reasonably be expected to have, a material adverse effect on the assets,
liabilities, business, condition (financial or otherwise) or results of operations of Parent and its Subsidiaries, taken as a whole, or (b) has, or would reasonably be expected to have, a
material adverse effect on, or prevents or materially delays, the ability of Parent to consummate the Transactions;
provided
,
however
, that, in the case of
clause (a), in no event shall any of the following, alone or in combination, be deemed to constitute, nor shall any
of the following be taken into account in determining whether there has been, a Parent Material Adverse Effect: (i) any event, circumstance, change, condition, occurrence or effect resulting
from or relating to (A) a change in general economic, political, regulatory, business, economic, financial, credit or capital market conditions, or any changes therein, including interest or
exchange rates, (B) any change in accounting requirements or principles required by GAAP (or any authoritative interpretations thereof) or required by any change in applicable Laws (or any
authoritative interpretations thereof) after the date hereof, (C) any adoption, implementation, promulgation, repeal or modification of any Law after the date hereof, (D) any outbreak,
escalation or acts of armed hostility or war, any acts of terrorism, or any acts of God or natural disasters, (E) changes proximately caused by the announcement of the execution of this
Agreement, provided that the exceptions in this clause (E) shall not apply to any representations or warranties contained in
Section 5.05
(or the condition in
Section 8.03(a)
as it relates to the representations or warranties contained in
Section 5.05
), or (F) compliance with
the express terms of, or the taking of any action expressly required by, this Agreement (excluding
Parent operating in the ordinary course of business) or the taking of any action consented to or requested in writing by Parent prior to the taking of such action;
provided
further
that the exceptions set forth in (A), (B), (C) and (D) of this clause (i) shall only apply to the extent that such event, circumstance, change or
effect does not have, or would not reasonably be expected to have, a disproportionate impact on Parent and its Subsidiaries, taken as a whole, compared to other companies that operate in the
industries in which Parent and its Subsidiaries operate or (ii) any failure to meet internal or published projections, forecasts, performance measures, operating statistics or revenue or
earnings predictions for any period or any change in the price or trading volume of the Parent Common Stock or the credit rating of Parent (
provided
that, except as otherwise provided in this definition, the underlying causes of such failure or change may be considered in determining whether there is a Parent Material Adverse Effect).
"
Parent Performance Award
" means performance shares awards with respect to shares of Parent Common Stock granted under the Parent Stock
Plan.
"
Parent Permits
" means franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, concessions,
registrations, clearances, exemptions, certificates, approvals and orders of any Governmental Authority necessary for Parent and each of its Subsidiaries to own, lease and operate their respective
properties and assets or to carry on their respective businesses as they are now being conducted.
"
Parent Preferred Stock
" means preferred stock, par value $0.01 per share, of Parent.
"
Parent Real Property
" means the Leased Parent Real Property and the Owned Parent Real Property.
"
Parent Recommendation
" means the recommendation of the Parent Board that the Parent stockholders approve the Parent Share Issuance.
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Table of Contents
"
Parent Restricted Stock Unit Awards
" means restricted stock units with respect to shares of Parent Common Stock
granted under the Parent Stock Plan.
"
Parent Series Common Stock
" means the series common stock, par value $0.01 per share, of Parent.
"
Parent Share Issuance
" means the issuance of shares of Parent Common Stock to the stockholders of the Company in connection with the
Merger.
"
Parent Stock Awards
" means Parent Performance Awards, Parent Restricted Stock Unit Awards and Parent Stock Options.
"
Parent Stockholder Approval
" means the approval of the Parent Share Issuance by affirmative vote (in person or by proxy) of the holders
of a majority in voting power present or represented by proxy at the
Parent Stockholders' Meeting and entitled to vote thereon in accordance with the DGCL and Parent's certificate of incorporation and bylaws.
"
Parent Stockholders' Meeting
" means the meeting of Parent's stockholders (including any adjournments or postponements thereof) to be held
to consider approval of the Parent Share Issuance.
"
Parent Stock Options
" means options to purchase shares of Parent Common Stock granted under the Parent Stock Plan.
"
Parent Stock Plan
" means the Amended and Restated 2012 Omnibus Incentive Plan.
"
Parent Stock Price
" means the average of the volume weighted averages of the trading prices of Parent Common Stock on the NYSE on each of
the five (5) consecutive trading days ending on the trading day that is two (2) trading days prior to the Closing Date.
"
Parent Termination Fee
" means $61,859,000.
"
PBGC
" means the Pension Benefit Guaranty Corporation.
"
Permitted Encumbrances
" means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced and as to which none of the Company or any of its Subsidiaries or Parent or any of its Subsidiaries, as applicable, is otherwise subject to criminal liability due to its
existence: (a) liens for Taxes not yet due and payable or the validity or amount of which is being contested in good faith by appropriate proceedings; (b) materialmen's, mechanics',
carriers', workmen's and repairmen's liens and other similar liens arising in the ordinary course of business securing obligations (i) as to which there is no default on the part of the Company
or any of its Subsidiaries or Parent or any of its Subsidiaries, as applicable, or the validity or amount of which is being contested in good faith by appropriate proceedings directly conducted by the
Company or Parent, as applicable, and for which adequate reserves are maintained on the books of the Company or Parent, as applicable, (ii) which are not overdue for a period of more than
30 days, and (iii) which do not, individually or in the aggregate, materially adversely affect the use or occupancy of such property for its current purposes; (c) pledges or
deposits to secure obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations; (d) survey exceptions, customary utility easements and other
customary encumbrances on title to real property that (i) were not incurred in connection with any Indebtedness, and (ii) do not, individually or in the aggregate, have a material
adverse effect on the Company or Parent, as applicable; (e) Encumbrances of landlord or sublandlord where the Company or any of its Subsidiaries or Parent or any of its Subsidiaries, as
applicable, is the tenant or subtenant relating to amounts not yet due and payable; (f) Encumbrances under the Company's or any of its Subsidiaries' or Parent's or any of its Subsidiaries', as
applicable, current credit facilities relating to obligations not yet due and payable; and (g) zoning,
building codes, and other land use laws regulating the use or occupancy of leased real property or the activities conducted thereon, imposed by a Governmental Authority having jurisdiction over such
real
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property,
except where the violation thereof would be material to the Company and its Subsidiaries, taken as a whole, or to Parent and its Subsidiaries, taken as a whole, as applicable.
"
Person
" means any individual, corporation, partnership, limited partnership, limited liability company, joint venture, syndicate, person
(as defined in Section 13(d)(3) of the Exchange Act), trust, association, entity, Governmental Authority or other organization of any kind.
"
Representatives
" means a Person's officers, directors, employees, accountants, consultants, legal counsel, investment bankers, other
advisors, authorized agents and other representatives.
"
SEC
" means the Securities and Exchange Commission.
"
Securities Act
" means the Securities Act of 1933, as amended.
"
Service Provider
" means each of the officers, employees, directors and independent contractors of the Company or Parent, as applicable,
and each of their respective Subsidiaries.
"
Subsidiary
" or "
Subsidiaries
" of any specified Person means an Affiliate controlled by
such Person, directly or indirectly, through one or more intermediaries.
"
Taxes
" means (a) any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority, including taxes or other charges on or with respect to income,
franchise, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation or net worth;
(b) taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes; and (c) customs duties, tariffs and similar charges.
"
Tax Return
" shall mean any return, declaration, report, election, claim for refund or information return or other statement or form filed
or required to be filed with any Governmental Authority relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
"
Termination Fee
" means $50,897,000.
"
Trademarks
" means trademarks, service marks, domain names, uniform resource locators, trade dress, trade names, geographical indications
and other identifiers of source or goodwill, including the goodwill symbolized thereby or associated therewith.
"
Transactions
" means the Merger and the other transactions contemplated by this Agreement.
"
Transfer Taxes
" means real property transfer or gains, sales, use, transfer, value added, stock transfer, stamp, transfer, recording,
registration and other similar Taxes which may become payable by the Company, Parent or Merger Sub in connection with the transactions contemplated by this Agreement.
"
Voting Agreement
" means the Voting Agreement, dated as of the date hereof, between Parent and ASP MD Investco LP, pursuant to
which, among other things, subject to the terms and conditions thereof, such stockholders have agreed to vote certain of their shares of Company Common Stock in favor of the adoption of this Agreement
and the approval of the Transactions.
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Section 1.02
Other Defined Terms
.
The following terms have the meanings set forth in the Sections set forth below:
|
|
|
Defined Term
|
|
Location of Definition
|
Agreement
|
|
Preamble
|
Alternative Financing
|
|
§ 7.19(b)
|
Book-Entry Shares
|
|
§ 2.04(a)
|
Cash Consideration
|
|
§ 2.04(a)
|
Certificate of Merger
|
|
§ 2.02
|
Certificates
|
|
§ 2.04(a)
|
Change in the Company Recommendation
|
|
§ 7.03(d)
|
Change in the Parent Recommendation
|
|
§ 7.04(d)
|
Closing
|
|
§ 2.02
|
Closing Date
|
|
§ 2.02
|
Commitment Letter
|
|
§ 5.24(a)
|
Company
|
|
Preamble
|
Company Acquisition Proposal
|
|
§ 7.03(g)(i)
|
Company Material Contracts
|
|
§ 4.16(a)
|
Company Plans
|
|
§ 4.10(a)
|
Company Related Parties
|
|
§ 9.02(b)
|
Company Restricted Stock
|
|
§ 3.04
|
Company RSU
|
|
§ 3.05
|
Company SEC Reports
|
|
§4.07(a)
|
Company Stock Options
|
|
§ 3.03
|
Company Stock Plans
|
|
§ 3.03
|
Company Superior Proposal
|
|
§ 7.03(g)(ii)
|
Continuing Service Providers
|
|
§ 7.06
|
Dissenting Shares
|
|
§ 3.06
|
Dissenting Stockholder
|
|
§ 3.06
|
Effective Time
|
|
§ 2.02
|
Exchange Agent
|
|
§ 3.01(a)
|
Exchange Agreement
|
|
§ 3.01(a)
|
Exchange Fund
|
|
§ 3.01(a)
|
Exchange Ratio
|
|
§ 2.04(a)
|
Financing
|
|
§ 5.24(a)
|
Financing Agreements
|
|
§ 7.19(b)
|
Joint Proxy Statement
|
|
§ 7.01(a)
|
Merger
|
|
Recitals
|
Merger Consideration
|
|
§ 2.04(a)
|
Merger Sub
|
|
Preamble
|
Parent
|
|
Preamble
|
Parent Acquisition Proposal
|
|
§ 7.04(g)(i)
|
Parent Material Contracts
|
|
§ 5.16(a)
|
Parent Plans
|
|
§ 5.10(a)
|
Parent Related Parties
|
|
§ 9.02(b)
|
Parent SEC Reports
|
|
§ 5.07(a)
|
Parent Superior Proposal
|
|
§ 7.04(g)(ii)
|
Pension Plan
|
|
§ 4.10(e)
|
Registration Statement
|
|
§ 7.01(a)
|
Restraint
|
|
§ 8.01(c)
|
Sarbanes Oxley Act
|
|
§ 4.07(a)
|
Share Consideration
|
|
§ 2.04(a)
|
Shares
|
|
§ 2.04(a)
|
Stockholders' Agreement
|
|
Recitals
|
Surviving Corporation
|
|
§ 2.01
|
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Section 1.03
Interpretation; Headings.
When a reference is made in this Agreement to an Exhibit,
an Article or a Section, such reference shall be to an Exhibit, an Article or a Section of this
Agreement unless otherwise indicated. The table of contents, index of defined terms 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." The
words "hereof", "hereto", "hereby", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Documents, materials and information are deemed to have been "made available" or "furnished" to a party hereto, if such documents, materials or information were available for review by
such Person and its Representatives through the electronic data room entitled "Project Big Ten", which is hosted by SmartRoom (http://www.smartroom.com), or the electronic data room entitled "Project
Major", which is hosted by Merrill Corporation (https://global.merrillcorp.com/), as applicable, in connection with the transactions contemplated hereby or disclosed in a Company SEC Report or Parent
SEC Report, as applicable, filed and publicly available, in each case, at least three (3) Business Days prior to the date of this Agreement. The term "or" is not exclusive. The word "extent" in
the phrase "to the extent" shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply "if". The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms. Any agreement, instrument or Law defined or referred to herein means such agreement, instrument or Law as from time to time amended, modified or
supplemented, unless otherwise specifically indicated. References to a Person are also to its successors and permitted assigns. When calculating the period of time before which, within which or
following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded, and if the last day of such period is
not a Business Day, the period shall end on the immediately following Business Day. Unless otherwise specifically indicated, all references to "dollars" and "$" will be deemed references to the lawful
money of the United States of America. Each of the parties hereto has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if it is drafted by all the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of
the provisions of this Agreement. References to "days" shall mean "calendar days" unless expressly stated otherwise. No specific provision, representation or warranty shall limit the applicability of
a more general provision, representation or warranty. It is the intent of the parties hereto that each representation, warranty, covenant, condition and agreement contained in this Agreement shall be
given full, separate, and independent effect and that such provisions are cumulative. The phrase "ordinary course of business" shall be deemed to be followed by the words "consistent with past
practice" whether or not such words actually follow such phrase. Any reference in this Agreement to a date or time shall be deemed to be such date or time in the City of New York, New York, U.S.A.,
unless otherwise specified.
ARTICLE II
THE MERGER
Section 2.01
The Merger.
Upon the terms and subject to the satisfaction or written waiver (where
permissible) of the conditions set forth in
Article VIII
, and in accordance with the applicable provisions of the DGCL, at the Effective Time, Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the
"
Surviving Corporation
") and shall succeed to and assume all the rights, powers and privileges and be subject to all of the obligations of Merger Sub in
accordance with the DGCL.
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Section 2.02
Closing; Effective Time.
Unless this Agreement shall have been terminated in
accordance with
Section 9.01
, the closing of the Merger
(the "
Closing
") will take place at 10:00 a.m., New York time, on the third (3rd) Business Day after the satisfaction or written waiver (where
permissible) of the conditions set forth in
Article VIII
(other than those that by their terms are to be satisfied at the Closing (subject to
their satisfaction or written waiver (where permissible))), at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York 10022, unless another time, date or place
is agreed to in writing by Parent and the Company. The date on which the Closing occurs is referred to in this Agreement as the "
Closing Date
". On the
Closing Date, or on such other date as Parent and the Company may agree to in writing, Parent, Merger Sub and the Company shall cause an appropriate certificate of merger (the
"
Certificate of Merger
") to be executed and filed with the Secretary of State of the State of Delaware in accordance with Section 251 of the
DGCL. The Merger shall become effective at the time the Certificate of Merger shall have been duly filed with the Secretary of State of the State of Delaware or such other date and time as is agreed
upon by Parent and the Company and specified in the Certificate of Merger in accordance with the DGCL, such date and time hereinafter referred to as the "
Effective
Time
".
Section 2.03
Effect of the Merger.
At the Effective Time, the effect of the Merger shall be as
provided in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL.
Section 2.04
Conversion of Securities.
(a)
Conversion of Company Common Stock
. At the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Merger Sub, the Company or the holders of the Company Common Stock, each share of Company Common Stock (all shares of Company Common Stock being collectively, the
"
Shares
") issued and outstanding immediately prior to the Effective Time (other than any Shares to be cancelled or converted pursuant to
Section 2.04(b)
and Dissenting Shares) shall be converted automatically into the right to receive (i) $13.50 per Share in cash without
interest thereon (the "
Cash Consideration
"), and (ii) 0.5 (the "
Exchange Ratio
") fully paid and
non-assessable shares of Parent Common Stock (the "
Share Consideration
" and, together with the Cash Consideration, the "
Merger
Consideration
"). Each holder of a certificate or certificates which immediately prior to the Effective Time represented any Shares
("
Certificates
") or book-entry shares which immediately prior to the Effective Time represented any Shares ("
Book-Entry
Shares
") shall thereafter cease to have any rights with respect thereto except (A) the right to receive the Merger Consideration, any dividends or other distributions
with respect to the Parent Common Stock pursuant to
Section 3.01(c)
and cash in lieu of any fractional shares payable pursuant to
Section 3.01(e)
,
in each case to be issued or paid, without interest, in consideration therefor upon surrender of such Certificate or transfer of
the Book-Entry Shares in accordance with
Section 3.01(b)
(or in the case of a lost, stolen or destroyed Certificate,
Section 3.01(j)
) or
(B) as provided by Law.
(b)
Cancellation of Certain Shares.
At the Effective Time, by virtue of the Merger and without any action on the
part of Parent, Merger Sub or the Company, each Share held in the treasury of the Company and each Share owned by Parent or any direct or indirect Subsidiary of Parent (including Merger Sub)
immediately prior to the Effective Time shall automatically be cancelled without any conversion thereof and no payment or distribution shall be made with respect thereto.
(c)
Capital Stock of Merger Sub.
At the Effective Time, by virtue of the Merger and without any action on the
part of Parent, Merger Sub, the Company or the holder thereof, each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into and become one validly issued, fully paid and non-assessable share of common stock, par value $0.001 per share, of the Surviving Corporation.
Section 2.05
Certificate of Incorporation; Bylaws.
(a) At the Effective
Time, the certificate of incorporation of the Surviving Corporation shall be amended and restated in its entirety to read the
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same
as the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time until such certificate of incorporation, as so amended and restated, is thereafter amended
as
provided by Law and such certificate of incorporation;
provided
,
however
, that Article I thereof
shall be amended to read as follows: "The name of this Corporation is Metaldyne Performance Group Inc.".
(b) Subject
to Parent's obligations pursuant to
Section 7.07
, unless otherwise determined by Parent prior to the
Effective Time, at the Effective Time, the bylaws of the Surviving Corporation shall be amended and restated in their entirety to read the same as the bylaws of Merger Sub as in effect immediately
prior to the Effective Time, until such bylaws are thereafter amended as provided by Law, the certificate of incorporation of the Surviving Corporation and such bylaws.
Section 2.06
Directors and Officers.
The directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance
with the certificate of incorporation and bylaws of the Surviving Corporation, and the individuals specified by Parent, after consultation with the Company, immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected and qualified or until such officer's earlier death, resignation or removal.
ARTICLE III
DELIVERY OF MERGER CONSIDERATION
Section 3.01
Exchange of Certificates.
(a)
Exchange Agent
. Prior to the Effective Time, Parent shall enter into a customary exchange
agent agreement, which agreement shall be on such terms and conditions as are reasonably acceptable to the Company (the
"Exchange Agreement"
), with a
nationally recognized commercial bank or trust company reasonably acceptable to the Company to act as agent (the "
Exchange Agent
") for the benefit of
the holders of Shares who exchange their Shares in accordance with this
Article III
. Parent shall deposit, or shall cause to be deposited, with
the Exchange Agent, for the benefit of the holders of Shares, for exchange in accordance with this
Article III
(i) (A) promptly after the
Effective Time on the Closing Date, cash in an amount sufficient to pay the aggregate Cash Consideration pursuant to
Section 2.04(a)(i)
, and
(B) at or prior to the Effective Time, book-entry shares representing the Share Consideration issuable to holders of Shares as of the Effective Time pursuant to
Section 2.04(a)(ii)
, and
(ii) cash, from time to time as required to make payments in lieu of any fractional shares of Parent Common Stock
pursuant to
Section 3.01(e)
(such cash and book-entry shares for shares of Parent Common Stock, together with any dividends or distributions with
respect thereto pursuant to
Section 3.01(c)
, the "
Exchange Fund
"). The Exchange Agent shall,
pursuant to irrevocable instructions, promptly deliver the Merger Consideration out of the Exchange Fund. The cash portion of the Exchange Fund shall be invested by the Exchange Agent as set forth in
the Exchange Agreement. Any interest or other income from such investments shall be paid to and become income of Parent. Except as contemplated by
Section 3.01(g)
, the Exchange Fund shall not be
used for any purpose other than as specified in this
Section 3.01(a)
.
(b)
Exchange Procedures.
(i) As promptly as practicable after the Effective
Time, Parent shall cause the Exchange Agent to mail to each Person who was, at the Effective Time,
a holder of record of Shares entitled to receive the Merger Consideration pursuant to
Section 2.04(a)
: (A) a letter of transmittal (which
shall be in customary form and shall specify that delivery shall be effected, and risk of loss and title to the Shares shall pass, only upon proper delivery of the Shares to the Exchange Agent) and
(B) instructions for use in effecting the surrender of the Shares pursuant to such letter of transmittal.
(ii) Upon
(A) surrender to the Exchange Agent of a Certificate for cancellation, together with such letter of transmittal, properly completed and validly executed in
accordance with the instructions thereto, or (B) receipt by the Exchange Agent of an "agent's message" in the case of Book-Entry Shares, and, in each case, such other documents as may be
required pursuant
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to
such instructions, the holder of such Shares shall be entitled to receive in exchange therefor (x) a check in the amount equal to the cash portion of the Merger Consideration that such
holder has the right to receive pursuant to
Section 2.04(a)
and this
Article III
,
including any cash in lieu of any fractional shares of Parent Common Stock such holder is entitled to receive pursuant to
Section 3.01(e)
and any
dividends or other distributions with respect to the Parent Common Stock such holder is entitled to receive pursuant to
Section 3.01(c)
, and
(y) book-entry shares representing the aggregate Share Consideration which such holder has the right to receive pursuant to
Section 2.04(a)(ii)
in respect of the Shares formerly represented by
such holder's Certificates or Book-Entry Shares, and the Certificates or
Book-Entry Shares so surrendered shall forthwith be cancelled. No interest shall be paid or accrued on any Merger Consideration, any cash in lieu of any fractional shares of Parent Common Stock or any
dividends or other distributions, in each case, payable to holders of Certificates or Book-Entry Shares. In the event of a transfer of ownership of Shares which is not registered in the transfer
records of the Company, the applicable Merger Consideration, cash in lieu of any fractional shares of Parent Common Stock such holder is entitled to receive pursuant to
Section 3.01(e)
and any
dividends or other distributions with respect to the Parent Common Stock such holder is entitled to receive pursuant to
Section 3.01(c)
may be issued to a transferee if the Certificate or
Book-Entry Shares representing such Shares are presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such transfer and by evidence that any applicable stock transfer Taxes have been paid. Until surrendered as contemplated by
Section 2.04(a)
and this
Section 3.01
, each Certificate or Book-Entry Share shall be
deemed at all times after the Effective Time to represent only the right to receive upon such surrender, without interest, the Merger Consideration, cash in lieu of any fractional shares of Parent
Common Stock the holder of such Certificate or Book-Entry Share is entitled to receive pursuant to
Section 3.01(e)
and any dividends or other
distributions with respect to the Parent Common Stock such holder is entitled to receive pursuant to
Section 3.01(c)
.
(c)
Distributions with Respect to Unexchanged Shares of Parent Common Stock.
No dividends or other distributions
declared or made with a record date after the Effective Time with respect to the Parent Common Stock shall be paid to the holder of any unsurrendered Certificate or Book-Entry Share until the holder
of such Certificate or Book-Entry Share shall surrender such Certificate or Book-Entry Share in accordance with
Section 3.01(b)
. Subject to the
effect of escheat, Tax or other applicable Laws, following surrender of any such Certificate or Book-Entry Share in accordance with
Section 3.01(b)
, there shall be paid to the record holder of
shares of Parent Common Stock issued in exchange therefor, without interest, at the
appropriate payment date (or, if previously paid, promptly), the amount of any dividends or other distributions with a record date after the Effective Time but prior to surrender payable with respect
to such shares of Parent Common Stock.
(d)
No Further Rights in Company Common Stock.
The Merger Consideration paid in accordance with the terms of
this
Article III
(including any cash paid pursuant to
Section 3.01(c)
or
Section 3.01(e)
)
upon conversion of any Shares shall be deemed to have been paid in full satisfaction of all rights pertaining to such Shares.
(e)
No Fractional Shares.
No fractional shares of Parent Common Stock or book-entry credit of the same shall be
issued upon the surrender for exchange of Certificates or Book-Entry Shares, and such fractional share interests will not entitle the owner thereof to vote or to any other rights of a stockholder of
Parent. Each holder of a fractional share interest (after taking into account all fractional share interests held by such holder) shall receive, in lieu thereof, an amount in cash (without interest,
rounded down to the nearest whole cent and subject to the amount of any withholding Taxes as contemplated in
Section 3.01(i)
) equal to the
product obtained by
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multiplying
(i) such fractional share interest to which such holder (after taking into account all fractional share interests then held by such holder) would otherwise be entitled by
(ii) the Parent Stock Price.
(f)
Adjustments to Exchange Ratio.
The Exchange Ratio shall be adjusted to reflect appropriately the effect of
any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities of a Subsidiary of Parent or the Company or of securities convertible into Parent Common
Stock or Company Common Stock), extraordinary cash dividends, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Parent Common
Stock or Company Common Stock with a record date occurring on or after the date hereof and prior to the Effective Time.
(g)
Termination of Exchange Fund.
Any portion of the Exchange Fund (including proceeds of any investment
thereof) that remains undistributed to the holders of Shares on the date that is one (1) year after the Effective Time shall be delivered to Parent or its designee, upon demand, and any holders
of Shares who have not theretofore complied with this
Article III
shall thereafter look only to Parent as a general creditor for the Merger
Consideration to which they are entitled pursuant to
Section 2.04(a)
, any cash in lieu of fractional shares of Parent Common Stock to which they
are entitled pursuant to
Section 3.01(e)
and any dividends or other distributions with respect to the Parent Common Stock to which they are
entitled pursuant to
Section 3.01(c)
.
(h)
No Liability.
None of the Exchange Agent, Parent or the Surviving Corporation shall be liable to any holder
of Shares for any Merger Consideration from the Exchange Fund (or dividends or distributions with respect to Parent Common Stock) or other cash delivered to a public official pursuant to any abandoned
property, escheat or similar Law. Any portion of the Exchange Fund remaining unclaimed by holders of Shares as of a date which is immediately prior to such time as such amounts would otherwise escheat
to or become property of any Governmental Authority shall, to the extent permitted
by applicable Law, become the property of Parent free and clear of any claims or interest of any Person previously entitled thereto.
(i)
Withholding Rights.
Each of the Surviving Corporation, the Exchange Agent, Parent and Merger Sub shall be
entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement in respect of Shares such amount as it is required to deduct and withhold with respect to the making of
such payment under the Code, the rules or regulations promulgated thereunder, any provision of applicable state, local or foreign Tax Law or any other Law;
provided
,
however
, that if Parent determines that any amount is required by Law to be deducted or
withheld with respect to the making of such payment, or that any Tax forms are necessary to establish that no such deduction or withholding is required, Parent shall use commercially reasonable
efforts to notify the holder of any Shares subject to deduction or withholding at least three (3) Business Days prior to any such deduction or withholding (or as soon as practicable thereafter
if Parent makes such determination within the 5-day period prior to the Closing Date). To the extent that amounts are so withheld and paid over to the applicable Governmental Authority, such withheld
amounts shall be treated for purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made.
(j)
Lost Certificates.
If any Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond, in such reasonable amount as Parent may
direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration with respect to the Shares formerly represented by such Certificate to which the holder thereof is entitled pursuant to
Section 2.04(a)
, any cash in lieu of fractional shares of Parent
Common Stock to which the holder thereof is entitled pursuant to
Section 3.01(e)
and any dividends or other distributions with respect to the Parent Common Stock to which the holder thereof is
entitled pursuant
to
Section 3.01(c)
.
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Section 3.02
Stock Transfer Books.
At the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further registration of transfers of Shares thereafter on the
records of the Company. On or after the Effective Time, any Certificates or Book-Entry Shares presented to the Exchange Agent or Parent for any reason shall be cancelled and exchanged solely for the
Merger Consideration with respect to the Shares formerly represented by such Certificates or Book-Entry Shares to which the holders thereof are entitled pursuant to
Section 2.04(a)
, any cash in
lieu of fractional shares of Parent Common Stock to which the holders of such Certificates or Book-Entry Shares are
entitled pursuant to
Section 3.01(e)
and any dividends or other distributions with respect to the Parent Common Stock to which the holders of
such Certificates or Book-Entry Shares are entitled pursuant to
Section 3.01(c)
.
Section 3.03
Company Stock Options.
Upon the terms and subject to the conditions set forth in
this Agreement and without any action on the part of Parent, Merger Sub, the Company or any holder of an
option to acquire Company Common Stock (
"Company Stock Options"
) outstanding under the 2014 Equity Incentive Plan, the ASP Grede Intermediate
Holdings LLC 2014 Unit Option Plan, the ASP HHI Holding Inc. Stock Option Plan, or the ASP MD Holdings, Inc. Stock Option Plan (collectively, the "
Company
Stock Plans
"), (i) the vesting of each Company Stock Option that remains outstanding as of immediately prior to the Effective Time shall be accelerated in full
immediately prior to the Effective Time, (ii) each Company Stock Option that remains outstanding as of immediately prior to the Effective Time shall be cancelled and terminated as of the
Effective Time, and (iii) each holder of each such Company Stock Option shall cease to have any rights with respect thereto, except the right to be paid at or promptly after the Effective Time,
an amount in cash (without interest), if any, subject to applicable withholding of Taxes, equal to the product obtained by multiplying (x) the aggregate number of shares of Company Common Stock
that were issuable upon exercise of such Company Stock Option immediately prior to the Effective Time, by (y) the value of the Merger Consideration (with the Share Consideration valued based on
the closing price of a share of Parent Common Stock as of the trading day immediately preceding the Closing Date) less the per share exercise price of such Company Stock Option (it being understood
and agreed that such exercise price shall not actually be paid to the Company by the holder of a Company Stock Option). For the avoidance of doubt, if the exercise price payable upon exercise of a
Company Stock Option equals or exceeds the value of the Merger Consideration (with the Share Consideration valued based on the closing price of a share of Parent Common Stock as of the trading day
immediately preceding the Closing Date), such Company Stock Option shall be cancelled for no consideration.
Section 3.04
Company Restricted Stock.
Upon the terms and subject to the conditions set forth in
this Agreement and without any action on the part of Parent, Merger Sub, the Company or any holder of
Shares that are unvested or are subject to a repurchase option, risk of forfeiture or other condition under the Company Stock Plans (a
"Company Restricted
Stock"
), each share of Company Restricted Stock that remains outstanding immediately prior to the Effective Time shall be cancelled and terminated as of the Effective Time, and
for each share of Company Restricted Stock, a holder thereof shall be entitled to receive the Merger Consideration in accordance with
Section 2.04(a)
of this Agreement, subject to applicable
withholding of Taxes (which shall be deducted ratably from the Cash Consideration and
the Share Consideration).
Section 3.05
Company Restricted Stock Unit Awards.
Any restricted stock unit awards under the
Company Stock Plans (
"Company RSUs"
) that remain outstanding
immediately prior to the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Merger Sub, the Company or the holder thereof, (i) shall become fully
vested immediately prior to the Effective Time and (ii) shall be cancelled and terminated as of the Effective Time and each holder of a Company RSU shall be paid at or promptly after the
Effective Time, the Merger Consideration multiplied by the number of shares of Company Common Stock subject to such cancelled Company RSU, subject to applicable withholding of Taxes (which shall be
deducted ratably from the Cash Consideration and the
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Share
Consideration);
provided
, that, with respect to any Company RSU that constitutes nonqualified deferred compensation subject to Section 409A
of the Code and that is not permitted to be paid at or promptly after the Effective Time without triggering a Tax or penalty under Section 409A of the Code, such payment shall be made at the
earliest time permitted that will not trigger a Tax or penalty under Section 409A of the Code.
Section 3.06
Dissenting Shares.
Notwithstanding anything in this Agreement to the contrary and to
the extent available under the DGCL, any Shares outstanding immediately prior to the Effective
Time that are held by a holder (a "
Dissenting Stockholder
") who has neither voted in favor of the adoption of this Agreement nor consented thereto in
writing and who has demanded properly in writing appraisal for such Shares and otherwise properly perfected and not withdrawn or lost his, her or its rights (the "
Dissenting
Shares
") in accordance with Section 262 of the DGCL shall not be converted into, or represent the right to receive, the Merger Consideration. Such Dissenting
Stockholders shall be entitled to receive payment of the appraised value of Dissenting Shares held by them in accordance with the provisions of Section 262 of the DGCL, except that all
Dissenting Shares held by stockholders who have failed to perfect or who effectively have withdrawn or lost their rights to appraisal of such Dissenting Shares pursuant to Section 262 of the
DGCL shall thereupon be deemed to have been converted into, and represent only the right to receive, the Merger Consideration in the manner provided in
Section 2.04
and this
Article III
and shall no longer be Dissenting Shares.
Notwithstanding anything to the contrary contained in this
Section 3.06
, if the Merger is rescinded or abandoned, then the right of any
stockholder to be paid the fair value of such stockholder's Dissenting Shares pursuant to Section 262 of the DGCL shall cease. The Company shall give Parent and Merger Sub prompt notice of any
written demands for appraisal, attempted withdrawals of such demands, and any other instruments served pursuant to applicable Law received by the Company relating to stockholders' rights of appraisal.
The Company shall give Parent and Merger Sub the opportunity to participate in and direct all negotiations and proceedings with respect to demands for appraisal. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands for appraisals of Dissenting Shares, offer to settle or settle any such demands or approve any withdrawal or other
treatment of any such demands.
Section 3.07
FIRPTA Certificate.
On or within five (5) days of the Closing Date, the
Company shall deliver to any stockholder of the Company that has requested in writing such
certification by the Closing Date, a certification, under penalties of perjury, stating that interests in the Company are not and have not been during the relevant period United States real property
interests, as defined in Section 897(c)(1) of the Code and proof of delivery to the Internal Revenue Service of the required notice, as described in Treasury Regulations
Section 1.897-2(h)(2).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (a) as set forth in the corresponding section of the Company Disclosure Schedule (with specific reference to the particular
section or subsection of this Agreement to which the information in the Company Disclosure Schedule relates);
provided
that any disclosure shall be
deemed to qualify that particular section or subsection and such other sections or subsections of this Agreement to the extent that it is reasonably apparent from the face of such disclosure that such
disclosure also qualifies or applies to such other sections or subsections), or (b) other than with respect to
Section 4.07(a)
and
Section 4.07(b)
, as disclosed in the Company SEC Reports filed or furnished during the period from January 1, 2014 through the date that
is two (2) Business Days prior to the date of this Agreement, to the extent reasonably apparent in such Company SEC Reports that such disclosed item relates to the applicable representation or
warranty set forth in this
Article IV
, but excluding (i) any documents filed as exhibits, annexes and schedules thereto or incorporated by
reference therein (other than any other Company SEC Reports), (ii) any risk factor disclosures contained under the heading "Risk Factors"
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(other
than any factual information contained therein), and (iii) any disclosure of risks included in any "forward-looking statements" disclaimer or any other statements that are similarly
non-specific or precise or forward-looking in nature, the Company hereby represents and warrants to Parent and Merger Sub as follows:
Section 4.01
Organization and Qualification; Subsidiaries.
(a) The
Company and each of its Subsidiaries is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of
its organization and has the requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have such power and authority would not have a Company Material Adverse Effect. The Company and each of its Subsidiaries is
duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties or assets owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not have a Company Material Adverse Effect.
(b) A
true and complete list of all the Subsidiaries of the Company, identifying the jurisdiction of incorporation or organization of each such Subsidiary and, with respect
to each Subsidiary that is not directly or indirectly wholly owned by the Company and/or one of its other Subsidiaries, the percentage of the outstanding capital stock or other equity or similar
interests of each such Subsidiary owned by the Company and each of its other Subsidiaries, is set forth in Section 4.01(b) of the Company Disclosure Schedule. Except as set forth in
Section 4.01(b) of the Company Disclosure Schedule, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity.
Section 4.02
Certificate of Incorporation and Bylaws.
The Company has heretofore furnished to
Parent a complete and correct copy of the certificate of incorporation and bylaws and other equivalent organizational
documents, each as amended to date, of the Company and each Subsidiary that is not directly or indirectly wholly owned by the Company and/or one of its other Subsidiaries, in each case, to the extent
not filed as of the date of this Agreement with the Company SEC Reports. Such certificates of incorporation, bylaws and equivalent organizational documents are in full force and effect. Neither the
Company nor any of its Subsidiaries is in violation of any of the provisions of its certificate of incorporation, bylaws or equivalent organizational documents.
Section 4.03
Capitalization.
(a) The authorized capital stock of the
Company consists of 400,000,000 Shares and 10,000,000 shares of Company Preferred Stock. As of the close of
business on October 31, 2016, (i) 66,696,179 Shares were issued and outstanding, all of which are duly authorized, validly issued, fully paid and non-assessable, (ii) 1,868,261
Shares were held in the treasury of the Company, (iii) no Shares were held by the Subsidiaries of the Company, and (iv) 8,171,674 Shares were reserved for future issuance pursuant to
outstanding Company Stock Awards (including 6,429,946 Shares subject to outstanding Company Stock Options, 798,542 Shares subject to outstanding Company Restricted Stock and 943,186 Shares subject to
outstanding Company RSUs). As of the date of this Agreement, no shares of Company Preferred Stock are issued and outstanding. Except as set forth in this
Section 4.03
or the Voting Agreement, there
are no options, warrants, convertible debt, other convertible instruments or other rights,
agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries
to issue or sell any shares of capital stock of, or other equity interests in, the Company or any of its Subsidiaries. All Shares subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable and free of preemptive (or similar)
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rights.
Except as contemplated in the Company Stock Plans or as set forth on Section 4.03 of the Company Disclosure Schedule, there are no outstanding contractual obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any Shares or any capital stock of, or other equity interests in, the Company or any Subsidiary of the Company, or granting any
preemptive rights, subscription rights, anti-dilutive rights, rights of first refusal or similar rights with respect to any Shares or any capital stock of, or other equity interests in, the Company or
any Subsidiary of the Company, or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any third party by the Company or any Subsidiary of the
Company. All outstanding Shares, all outstanding Company Stock Awards, and all outstanding shares of capital stock of each Subsidiary of the Company have been issued in compliance with all applicable
securities Laws and other applicable Laws.
(b) Each
outstanding share of capital stock of, or other equity interests in, each Subsidiary of the Company is (i) duly authorized, validly issued, fully paid and
non-assessable and free of preemptive (or similar) rights, and (ii) owned by the Company or another of its wholly-owned Subsidiaries free and clear of all Encumbrances (other than those set
forth in the organizational documents of such Subsidiary (to the extent such organizational documents have been furnished to Parent prior to the date of this Agreement), under applicable securities
Laws or created by this Agreement).
(c) As
of the date of this Agreement, no bonds, debentures, notes or other Indebtedness of the Company having the right to vote (or convertible into or exercisable for
securities having the right to vote) on any matters on which stockholders of the Company may vote are issued or outstanding.
(d) Except
as created by this Agreement, there are no outstanding obligations of the Company or any of its Subsidiaries (i) restricting the transfer of,
(ii) relating to the voting of, or (iii) requiring the registration under any securities Law for sale of, any Shares, shares of Company Preferred Stock or any other capital stock of, or
other equity interests in, the Company or any of its Subsidiaries. Except as set forth on Section 4.03(d) of the Company Disclosure Schedule, none of the Company or any of its Subsidiaries is a
party to any stockholders' agreement, voting trust agreement or registration rights agreement relating to any capital stock of, or other equity interests in, the Company or any of its Subsidiaries or
any other contract or arrangement relating to disposition, voting or dividends with respect to any capital stock of, or other equity interests in, the Company or any of its Subsidiaries.
Section 4.04
Authority Relative to this Agreement; Vote Required.
(a) The
Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by the Company and the consummation by the Company of the Transactions have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the Transactions (other than, with respect to the Merger,
obtaining the Company Stockholder Approval and the filing and recordation of the Certificate of Merger as required by the DGCL). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency (including all Laws relating to fraudulent transfers), reorganization, moratorium or similar Laws affecting
creditors' rights generally and subject to the effect of general principles of equity (regardless of whether considered in a proceeding at law or in equity).
(b) The
Company Board, by resolutions duly adopted by unanimous vote of those voting at a meeting duly called and held and not subsequently rescinded or modified in any way,
has
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(i) determined
that the Merger is fair to, and in the best interests of, the Company and its stockholders, (ii) approved this Agreement and declared its advisability, and
(iii) resolved to recommend the adoption of this Agreement and directed that this Agreement be submitted for consideration by the stockholders of the Company at the Company Stockholders'
Meeting.
(c) The
Company Stockholder Approval is the only vote or consent of the holders of any class or series of the Company's capital stock or other securities necessary to
approve this Agreement and consummate the Transactions.
Section 4.05
No Conflict; Required Filings and Consents.
(a) The
execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company, and the consummation
of the Merger, will not, (i) conflict with or violate the certificate of incorporation, bylaws or other equivalent organizational documents of the Company or any of its Subsidiaries,
(ii) assuming all consents, approvals, authorizations and other actions described in
Section 4.05(b)
have been obtained or taken and all
filings and obligations described in
Section 4.05(b)
have been made or satisfied, conflict with or violate any Law applicable to the Company or
any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, or (iii) violate, conflict with, require consent under, result in any
breach of, result in loss of any benefit under, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the creation of an Encumbrance on any property or asset of the Company or any of its Subsidiaries pursuant to, any note, bond,
mortgage, indenture, deed of trust, contract, agreement, Lease, Company Permit or other instrument or obligation to which the Company of any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries or any of their respective assets or properties is bound or affected, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which would not have a Company Material Adverse Effect.
(b) The
execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company, and the consummation of the Merger, will not,
require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, Blue Sky Laws and state takeover Laws, (ii) the filing with the SEC of the Joint Proxy Statement and the Registration Statement, (iii) any filings required under the
rules and regulations of the NYSE, (iv) the pre-merger notification requirements of the HSR Act or other applicable foreign, federal or state antitrust or competition Laws specified in
Section 8.01(d) of the Company Disclosure Schedule or Section 8.01(d) of the Parent Disclosure Schedule, (v) the filing and recordation of the Certificate of Merger with the
Secretary of State of the State of Delaware pursuant to the DGCL, and (vi) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not have a Company Material Adverse Effect.
Section 4.06
Permits; Compliance.
The Company and each of its Subsidiaries is in possession of
all Company Permits, except where the failure to possess, or the suspension or cancellation of, any
of the Company Permits would not have a Company Material Adverse Effect. No suspension or cancellation of any of the Company Permits is pending or, to the knowledge of the Company, threatened, except
where the failure to possess, or the suspension or cancellation of, any of the Company Permits would not have a Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries is or,
since January 1, 2014, has been, in conflict with, or in default, breach or violation of, any Law or Company Permit applicable to the Company or any of its Subsidiaries or by which any property
or asset of the Company or any of its Subsidiaries is bound or affected, except for any such conflicts, defaults, breaches or violations that would not have a Company Material Adverse Effect.
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Section 4.07
SEC Filings; Financial Statements.
(a) The Company has filed
all forms, reports, statements, schedules and other documents required to be filed by it with the SEC since
December 12, 2014 (the "
Company SEC Reports
"). The Company SEC Reports (i) at the time they were filed and, if amended, as of the date of
such amendment, complied in all material respects with all applicable requirements of the Securities Act, the Exchange Act and the Sarbanes Oxley Act of 2002 (the "
Sarbanes
Oxley Act
"), as the case may be, and the rules and regulations promulgated thereunder, and (ii) did not, at the time they were filed, and, if amended, as of the date of
such amendment, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. No Subsidiary of the Company is required to file any form, report, statement, schedule or other document with the SEC.
(b) Each
of the consolidated financial statements (including, in each case, any notes thereto) contained (or incorporated by reference) in the Company SEC Reports was
prepared (i) from, and in accordance with, the books and records of the Company and its Subsidiaries in all material respects and (ii) in all material respects in accordance with GAAP
applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by the SEC) and each fairly
presents, in all material respects, the consolidated financial position, results of operations and cash flows of the Company and its consolidated Subsidiaries as at the respective dates thereof and
for the respective periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments).
(c) Neither
the Company nor any of its Subsidiaries has any liability or obligation of any nature (whether accrued, absolute, contingent, determined, determinable or
otherwise and whether due or to become due), except for liabilities and obligations (i) reflected or reserved against on the consolidated balance sheet of the Company and its consolidated
Subsidiaries as at December 31, 2015, including the
notes thereto, or (ii) incurred in the ordinary course of business consistent with past practice since December 31, 2015, which would not have a Company Material Adverse Effect.
(d) As
of the date of this Agreement, there are no material outstanding or unresolved comments in comment letters received from the SEC with respect to the Company SEC
Reports. To the knowledge of the Company, (i) none of the Company SEC Reports is the subject of ongoing SEC review and (ii) there are no inquiries or investigations by the SEC or any
Governmental Authority or any internal investigations pending or threatened in writing, in each case regarding any accounting practices of the Company or any of its Subsidiaries.
(e) The
management of the Company has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) reasonably
designed to ensure that material information relating to the Company, including its consolidated Subsidiaries, is in all material respects made known to the principal executive officer and the
principal financial and accounting officer of the Company by others within those entities. Based on the Company's management's most recently completed evaluation of the Company's internal control over
financial reporting, (i) the Company had no significant deficiencies or material weaknesses in the design or operation of its internal control over financial reporting that would reasonably be
expected to adversely affect the Company's ability to record, process, summarize and report financial information and (ii) to the knowledge of the Company, the Company does not have any fraud
that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
(f) Since
December 12, 2014, subject to any applicable grace periods, the Company has been in and is in material compliance with the applicable provisions of the
Sarbanes Oxley Act and the applicable rules and regulations of the NYSE.
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(g) Neither
the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any
similar contract, agreement or arrangement (including any contract, agreement or arrangement relating to any transaction or relationship between or among the Company and any of its Subsidiaries, on
the one hand, and any unconsolidated affiliate, on the other hand), including any structured finance, special purpose or limited purpose entity or Person, or any "off-balance sheet arrangements" (as
defined in Item 303(a) of Regulation S-K under the Securities Act), where the result, purpose or effect of such contract, agreement or arrangement is to avoid disclosure of any material
transaction involving, or material liabilities of, the Company or any of its Subsidiaries in the Company SEC Reports (including any audited financial statements and unaudited interim financial
statements of the Company included therein).
Section 4.08
Absence of Certain Changes or Events.
From January 1, 2016 through the date of
this Agreement, (a) the Company and its Subsidiaries have conducted their businesses in the ordinary course
and in a manner consistent with past practice, (b) there has not been any Company Material Adverse Effect, and (c) since June 30, 2016, neither the Company nor any of its
Subsidiaries has taken any action that, if taken after the date of this Agreement, would constitute a breach of any of the covenants set forth in
Section 6.01
were such provision then in effect.
Section 4.09
Absence of Litigation.
As of the date of this Agreement, there is no Action pending
or, to the knowledge of the Company, threatened in writing against the Company or any of its
Subsidiaries, or any property or asset of the Company or any of its Subsidiaries (or, to the knowledge of the Company, any director or officer of the Company in such capacity as director or officer),
before any Governmental Authority that, if adversely determined against the Company or its applicable Subsidiary, would be, or would reasonably be expected to be, material to the Company and its
Subsidiaries, taken as a whole. As of the date of this Agreement, neither the Company nor any of its Subsidiaries nor any property or asset of the Company or any of its Subsidiaries is subject to any
continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of the Company, any continuing investigation by, any Governmental Authority or
any Order of any Governmental Authority that is, or would reasonably be expected to be, material to the Company and its Subsidiaries, taken as a whole.
Section 4.10
Employee Benefit Plans.
(a) Section 4.10(a) of the
Company Disclosure Schedule lists (i) all material compensation, benefit, fringe benefit and other plans,
programs, arrangements or agreements (A) to which the Company or any of its Subsidiaries is a party, (B) with respect to which the Company or any of its Subsidiaries has any obligation
or (C) that are maintained, contributed to or sponsored by the Company or any of its Subsidiaries for the benefit of any current or former Service Provider, and (ii) all material
contracts, arrangements or understandings between the Company or any of its Subsidiaries and any current or former Service Provider that provide for compensation or benefits, or the acceleration of
the vesting or payment of compensation or benefits, to any current or former Service Provider arising from or related to the Transactions, in whole or in part (collectively, the
"
Company Plans
"). Section 4.10(a) of the Company Disclosure Schedule also separately lists all employee benefit plans for which the Company or
any of its Subsidiaries could incur liability under Section 4069 or 4212(c) of ERISA.
(b) None
of the Company Plans provides for or promises medical, dental, disability, hospitalization, life or similar benefits (whether insured or self-insured) to any
current or former Service Provider following termination of employment or service with the Company and its Subsidiaries (other than coverage mandated by applicable Law) that would result in a material
liability to the Company and its Subsidiaries taken as a whole.
(c) Except
as would not have a Company Material Adverse Effect, (i) each document prepared in connection with a Company Plan complies with applicable Law and each
Company
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Plan
has been operated in accordance with its terms and applicable Law, (ii) the Company and its Subsidiaries have performed all obligations required to be performed by them under, are not in
any respect in default under or in violation of, and have no knowledge of any default or violation by any party to, any Company Plan and (iii) no Action is pending or, to the knowledge of the
Company, threatened with respect to any Company Plan (other than claims for benefits in the ordinary course).
(d) For
each Company Plan that is intended to be qualified under Section 401(a) of the Code, the Company has timely received a favorable determination letter from the
IRS relating to the most recently completed IRS qualification cycle applicable to such Company Plan and, to the knowledge of the Company, nothing has occurred since the date of such letter that would
reasonably be expected to cause the loss of the qualified status of such Company Plan.
(e) Neither
the Company, its Subsidiaries nor any member of their ERISA Affiliates sponsors maintains, contributes to or is required to contribute to or within the past six
(6) years has sponsored, maintained, contributed to or been required to contribute to: (i) a "multiemployer plan" (within the meaning of ERISA section 3(37)), (ii) an
"employee pension benefit plan," within the meaning of Section 3(2) of ERISA ("
Pension Plan
") that is subject to Title IV of ERISA or
Section 412 of the Code, or (iii) a Pension Plan which is a "multiple employer plan" as defined in Section 413 of the Code. With respect to each Company Plan that is subject to
Title IV of ERISA, (A) there does not exist any accumulated funding deficiency within the meaning of Section 412 of the Code or Section 302 of ERISA, whether or not waived,
(B) no such Company Plan is currently in "at risk" status within the meaning of Section 430 of the Code or Section 303(i) of ERISA, (C) no reportable event within the
meaning of Section 4043(c) of ERISA for which the 30-day notice requirement has not been waived has occurred, (D) neither the Company, its Subsidiaries nor any of their respective ERISA
Affiliates has engaged in any transaction described in Section 4069, 4204(a) or 4212(c) of ERISA, (E) all premiums to the PBGC have been timely paid in full, (F) no liability
(other than for premiums to the PBGC) has been or, to the knowledge of the Company, is expected to be incurred by the Company or any of its Subsidiaries and (G) the PBGC has not instituted
proceedings to terminate any such Company Plan. Neither the Company nor any of its Subsidiaries has incurred any liability under, arising out of or by operation of Title IV of ERISA (other than
liability for premiums to the PBGC arising in the ordinary course), except as would not have a Company Material Adverse Effect.
(f) Neither
the execution of this Agreement nor the consummation of the Transactions shall (either alone or in connection with the termination of employment or service of
any Service Provider following, or in connection with, the Transactions): (i) entitle any current or former Service Provider to severance pay or benefits or any increase in severance pay or
benefits upon any termination of employment or service with the Company or any of its Subsidiaries; (ii) accelerate the time of payment or vesting or trigger any payment or funding (through a
grantor trust or otherwise) of compensation or benefits under, or increase the amount payable or trigger any other obligation pursuant to, any of the Company Plans to any current or former Service
Provider or (iii) limit or restrict the right of the Company any of its Subsidiaries or, after the consummation of the Transactions, Parent, to merge, amend or terminate any of the Company
Plans. None of the Company Plans in effect immediately prior to the Closing would result separately or in the aggregate (including as a result of this Agreement or the transactions contemplated
hereby) in the payment of any "excess parachute payment" within the meaning of Section 280G of the Code.
(g) Except
as would not have a Company Material Adverse Effect, each Company Plan that is or forms part of a "nonqualified deferred compensation plan" within the meaning of
Section 409A of the Code has been timely amended to comply and has been operated in compliance with, and the Company and its Subsidiaries have complied in practice and operation with, all
applicable requirements of Section 409A of the Code.
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(h) In
addition to the foregoing, with respect to each Non-U.S. Company Benefit Plan:
(i) all
employer and employee contributions to each Non-U.S. Company Benefit Plan required by Law or by the terms of such Non-U.S. Company Benefit Plan or pursuant to any
contractual obligation (including contributions to all mandatory provident fund schemes) have been made or, if applicable, accrued in accordance with generally accepted accounting practices in the
applicable jurisdiction applied to such matter, except as would not have a Company Material Adverse Effect; and
(ii) each
Non-U.S. Company Benefit Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities, except
as would not have a Company Material Adverse Effect.
Section 4.11
Labor and Employment Matters.
(a) Except as set forth on
Section 4.11(a) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to
any collective bargaining, trade union or works council agreement or other labor union contract applicable to persons employed by the Company or any of its Subsidiaries, and, as of the date of this
Agreement, there are no pending organizational campaigns, petitions or other unionization activities seeking recognition of a collective bargaining unit relating to any employee of the Company any of
its Subsidiaries. Except as would not have a Company Material Adverse Effect, (i) neither the Company nor any of its Subsidiaries has breached or otherwise failed to comply in any respect with
the provisions of any collective bargaining, trade union or works council agreement or other labor union contract, and there are no grievances outstanding against the Company or any of its
Subsidiaries under any such agreement or contract; and (ii) there are no unfair labor practice complaints pending against the Company or any of its Subsidiaries before the National Labor
Relations Board or any other Governmental Authority. The consent of, consultation of or the rendering of formal advice by any labor or trade union, works council, or any other employee representative
body is not required for the Company to enter into this Agreement or to consummate any of the Transactions.
(b) Except
as would not have a Company Material Adverse Effect, (i) the Company and its Subsidiaries are currently in compliance with all Laws relating to the
employment of labor, including those related to wages, hours, collective bargaining and the payment and withholding of Taxes, and (ii) there is no charge of discrimination relating to
employment or employment practices pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries before the United States Equal Employment Opportunity
Commission, or any other Governmental Authority in any jurisdiction in which the Company or any of its Subsidiaries has employed or currently employs any Person.
Section 4.12
Company Real Property; Title to Assets.
(a)
Section 4.12(a) of the Company Disclosure Schedule lists: (i) the street address or location of each parcel of Owned Company Real
Property, (ii) the current owner of each parcel of Owned Company Real Property and (iii) the current use of each parcel of Owned Company Real Property. Except as set forth on
Section 4.12(a) of the Company Disclosure Schedule or as would not have a Company Material Adverse Effect, the Company or one of its Subsidiaries, as the case may be, has good and marketable
title in fee simple, or the equivalent thereof, to each parcel of Owned Company Real Property, free and clear of all Encumbrances, except Permitted Encumbrances.
(b) Section 4.12(b)
of the Company Disclosure Schedule sets forth a true and complete list of all Leases for material Leased Company Real Property and any amendments
thereto and any guarantors thereunder. Except as would not have a Company Material Adverse Effect, the Company or one of its Subsidiaries, as the case may be, has a valid leasehold interest in the
Leased Company Real Property, free and clear of all Encumbrances, except for Permitted Encumbrances.
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(c) Except
as would not have a Company Material Adverse Effect, (i) either the Company or one of its Subsidiaries, as the case may be, is in peaceful and undisturbed
possession of each parcel of Company Real Property, (ii) there are no contractual or legal restrictions that preclude or restrict the ability to use the Company Real Property for the purposes
for which it is currently being used, (iii) neither the Company nor any of its Subsidiaries has leased or subleased any parcel or any portion of any parcel of Company Real Property to any other
Person, other than as set forth on Section 4.12(c) of the Company Disclosure Schedule, and (iv) neither the Company nor any of its Subsidiaries has assigned its interest under any Lease
listed in Section 4.12(b) of the Company Disclosure Schedule to any third party.
(d) Except
as would not have a Company Material Adverse Effect, all components of the buildings, structures or other material improvements within the Owned Company Real
Property compromising the demised premises of the Company and any of its Subsidiaries pursuant to each real property lease are in sufficient working condition and repair for the uses for which they
are currently employed (normal wear and tear excepted).
(e) Except
as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, as of the date of this Agreement, there are no
condemnation proceedings or eminent
domain proceedings of any kind pending or, to the knowledge of Company, threatened against any parcel of the Company Real Property.
(f) Except
as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, there are no outstanding options, rights of first offer
or rights of first refusal to purchase the Owned Company Real Property or any portion thereof or interest therein.
Section 4.13
Intellectual Property.
(a) Except as would
not have a Company Material Adverse Effect, (i) the Company and each of its Subsidiaries has sufficient rights to use the
Company Intellectual Property in connection with the operation of its respective business, (ii) the Company or one of its Subsidiaries is the exclusive owner of all right, title and interest in
and to each item of Owned Company Intellectual Property, free and clear of all Encumbrances other than Permitted Encumbrances and (iii) the Company and each of its Subsidiaries has a valid
license to use the Licensed Company Intellectual Property in connection with the operation of its respective business, subject only to the terms of the Company IP Agreements.
(b) Except
as would not have a Company Material Adverse Effect, (i) the Owned Company Intellectual Property is (A) to the knowledge of the Company, valid,
subsisting and enforceable and (B) not subject to any outstanding Order or agreement adversely affecting any of the Company's or any of its Subsidiaries' use thereof or rights thereto, or that
would impair the validity or enforceability thereof and (ii) there is no Action pending, asserted or, to the knowledge of the Company, threatened contesting or challenging the ownership,
validity, registerability or enforceability of, or the Company's or any of its Subsidiaries' right to use, any Owned Company Intellectual Property.
(c) Except
as would not have a Company Material Adverse Effect, (i) to the knowledge of the Company, the operation of the businesses of the Company and its
Subsidiaries and the use of the Company Intellectual Property in connection therewith does not, and has not in the last three (3) years, infringed, misappropriated or otherwise violated or
conflicted with the Intellectual Property rights of any other Person, (ii) there is no Action pending, asserted or, to the knowledge of the Company, threatened against any of the Company or any
of its Subsidiaries concerning any of the foregoing and (iii) to the knowledge of the Company, no Person is engaging, or has engaged in the last three (3) years, in any activity that
infringes, misappropriates or otherwise violates or conflicts with any Owned Company Intellectual Property.
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(d) Except
as would not have a Company Material Adverse Effect, the Company and its Subsidiaries have taken reasonable measures to maintain the confidentiality of all
confidential information in its or
its Subsidiaries' possession, including, but not limited to, trade secrets, used or held for use in connection with the operation of its business.
(e) Except
as would not have a Company Material Adverse Effect, to the extent that any Intellectual Property has been conceived, developed or created for the Company or any
of its Subsidiaries by any other Person, the Company or each of its Subsidiaries, as applicable, have executed valid and enforceable written agreements with such Person with respect thereto
(i) transferring to the Company or one of its Subsidiaries the entire and unencumbered right, title and interest therein and thereto by operation of law or by valid written assignment and
(ii) providing for the non-disclosure by such Person of the confidential information of the Company or any of its Subsidiaries.
(f) Except
as would not have a Company Material Adverse Effect, consummation of the Transactions will not result in (i) the grant of any license under, or creation of
any lien on, any Owned Company Intellectual Property, (ii) the Company or any of its Subsidiaries being bound by or subject to any non-compete obligation, covenant not to sue or other
restriction on the operation or scope of its business, which such party was not bound by or subject to prior to the Closing or (iii) the Company or any of its Subsidiaries being obligated to
(A) pay any royalties, honoraria, fees or other payments to any Person in excess of those payable by the Company or any of its Subsidiaries prior to the Closing or (B) provide or offer
any discounts or other reduced payment obligations to any Person in excess of those provided to such Person prior to the Closing.
Section 4.14
Taxes
.
(a) All income and other material Tax Returns required to be filed by or with respect to the Company or any of its Subsidiaries have been timely filed (after giving effect
to any filing extension properly granted by a Governmental Authority having authority to do so) and all such Tax Returns are true, correct, and complete in all material respects.
(b) All
material amounts of Taxes of the Company and its Subsidiaries (whether or not shown to be due and payable on any Tax Return) have been timely paid. The unpaid Taxes
of the Company and its Subsidiaries did not, as of the date of the most recent consolidated financial statements of the Company, materially exceed the reserve or accrual for Tax liability (excluding
any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of such consolidated financial statements (rather than in any notes
thereto). Between January 1, 2016 and the date of this Agreement, none of the Company or any of its Subsidiaries has incurred any material liability for Taxes outside the ordinary course of
business. There are no material Tax liens on the assets of the Company or any of its Subsidiaries other than Permitted Encumbrances.
(c) Each
of the Company and its Subsidiaries has timely paid or withheld all material amounts of Taxes required to be paid or withheld with respect to their employees,
independent contractors, creditors and other third parties (and timely paid over such Taxes to the appropriate Governmental Authority).
(d) As
of the date of this Agreement, neither the Company nor any of its Subsidiaries has executed any outstanding waiver of any statute of limitations, or outstanding
extension of the period, for the assessment or collection of any material Tax and there has been no request by a Governmental Authority to execute such a waiver or extension. As of the date of this
Agreement, no audit or other examination or administrative, judicial or other proceeding of, or with respect to, any material Tax Return or material Taxes of the Company or any of its Subsidiaries is
currently in progress, and neither the Company nor any of its Subsidiaries has been notified in writing of any request for such an audit or other examination or administrative, judicial or other
proceeding. As of the date of this Agreement, no deficiency for any material amount of Tax has been asserted or
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assessed
by a Governmental Authority against the Company or any of its Subsidiaries that has not been satisfied by payment, settled or withdrawn. As of the date of this Agreement, within the last
three (3) years, no written claim has been made by a Governmental Authority in a jurisdiction where the Company or any Subsidiary of the Company does not file Tax Returns that the Company or
such Subsidiary is or may be subject to taxation by such jurisdiction.
(e) Within
the last two (2) years, neither the Company nor any of its Subsidiaries has been a party to any transaction treated by the parties as a distribution to
which Section 355 of the Code applies.
(f) Each
of the Company and its Subsidiaries (i) is not a party to any Tax sharing, indemnification or allocation agreement (other than customary Tax indemnification
provisions in commercial agreements or arrangements, in each case not primarily relating to Taxes, or any agreement solely between or among the Company and its Subsidiaries) and (ii) has no
liability for the Taxes of any Person under Treasury Regulation § 1.1502-6 (or any similar provision of state, local or foreign Law), by reason of being a member of an affiliated,
consolidated, combined or unitary group (other than any group that solely includes the Company and/or its Subsidiaries), or as a transferee or successor.
(g) Neither
the Company nor any of its Subsidiaries has "participated" in a "listed transaction" within the meaning of Treasury Regulation § 1.6011-4.
(h) Neither
the Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing
Date, (ii) "closing agreement" as described in
Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date, (iii) intercompany transaction
entered into prior to the Closing Date, (iv) installment sale or open transaction disposition made on or prior to the Closing Date, or (v) prepaid amount existing on or prior to the
Closing Date.
(i) Interests
in the Company are not and have not been during the relevant period United States real property interests, as defined in Section 897(c)(1) of the Code.
(j) This
Section 4.14
,
Section 4.10
and
Section 4.08
, to the extent it relates to
Section 6.01(b)(xi)
, contain the sole
representations and warranties of the Company and its Subsidiaries with respect to Tax matters.
Section 4.15
Environmental Matters
.
Except as would not have a Company Material Adverse Effect, (a) none of the Company nor any of its Subsidiaries is in violation of or, since January 1, 2014, has violated,
any Environmental Law; (b) none of the properties currently or formerly owned, leased or operated by the Company or any current or former Subsidiary of the Company (including soils and surface
and ground waters) are contaminated with any Hazardous Substance; (c) none of the Company or any of its current or former Subsidiaries has received any written notice from any Person alleging
that any of the foregoing are actually, potentially or allegedly liable under, or not in compliance with, any Environmental Law (including pending or threatened liens, or with respect to exposure to,
or the off-site disposal of, Hazardous Substances); and (d) each of the Company and its Subsidiaries has obtained, currently maintains and is, and since January 1, 2014 has been, in
compliance with all Environmental Permits necessary for its operations.
Section 4.16
Company Material Contracts
.
(a) Section 4.16(a) of the Company Disclosure Schedule contains a complete list, as of the date of this Agreement, of the following types of contracts and agreements,
whether written or oral, including all amendments, supplements and modifications in
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effect
as of the date of this Agreement, to which the Company or any of its Subsidiaries is a party (such contracts and agreements, the "
Company Material
Contracts
"):
(i) any
"material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K under the Securities Act) with respect to the Company or any of its
Subsidiaries that was required to be filed with
the SEC with the Company's Annual Report on Form 10-K for the year ended December 31, 2015 or any Company SEC Reports filed after the date of filing of such Form 10-K until the
date hereof;
provided
, that any such contract that was filed by the Company with the SEC shall not be required to be listed on Section 4.16(a) of
the Company Disclosure Schedule;
(ii) any
contract (other than any purchase orders) for the purchase of materials, supplies, goods, services, equipment or other assets (A) providing for annual
payments by the Company or any of its Subsidiaries of $20,000,000 or more, (B) which involved consideration or payments by the Company or any of its Subsidiaries in excess of $20,000,000 in the
aggregate during the calendar year ended December 31, 2015, or (C) which is expected to involve consideration or payments by the Company or any of its Subsidiaries in excess of
$20,000,000 in the aggregate during the calendar year ending December 31, 2016;
(iii) any
contract (other than any purchase orders) for the furnishing of materials, supplies, goods, services, equipment or other assets (A) providing for annual
payments to the Company or any of its Subsidiaries of $40,000,000 or more, (B) which involved consideration or payments to the Company or its Subsidiaries in excess of $40,000,000 in the
aggregate during the calendar year ended December 31, 2015, or (C) which is expected to involve consideration or payments to the Company or its Subsidiaries in excess of $40,000,000 in
the aggregate during the calendar year ending December 31, 2016;
(iv) all
contracts concerning the establishment, management or operation of a joint venture, partnership, limited liability company (other than formation agreements related
to one of the Company's wholly-owned Subsidiaries) or business alliance with any third party;
(v) (A)
all contracts relating to Indebtedness of the Company or any of its Subsidiaries for borrowed money and (B) all other contracts relating to other Indebtedness
of the Company or any of its Subsidiaries in excess of $5,000,000, in each case of (A) and (B), other than intercompany Indebtedness;
(vi) all
contracts containing any material non-compete or exclusivity provision or any similarly restrictive provision with respect to any material line of business, Person
or geographic area with respect to the Company or any of its Subsidiaries;
(vii) all
Company IP Agreements that are material to the business of the Company or any of its Subsidiaries;
(viii) all
other contracts not specified in sub-clause (v) that contain obligations of the Company or its Subsidiaries secured by an Encumbrance (other than a
Permitted Encumbrance) on the assets of the Company or any of its Subsidiaries, and interest rate or currency hedging agreements, in each case in connection with which the aggregate actual or
contingent obligations of the Company and its Subsidiaries under such agreement are greater than $5,000,000;
(ix) all
material contracts, agreements and Leases concerning the use, occupancy, management or operation of any Company Real Property (including all contracts, agreements
and Leases listed or otherwise set forth in Section 4.12(b) of the Company Disclosure Schedule);
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(x) all
material management contracts and contracts with consultants requiring payments in excess of $10,000,000, including any contracts involving the payment of royalties
or other amounts calculated based upon the revenues or income of the Company or any of its Subsidiaries or income or revenues related to any product of the Company or any of its Subsidiaries that
require or would reasonably be expected to result in payments of more than $10,000,000 in the aggregate;
(xi) each
contract pursuant to which the Company or any of its Subsidiaries is bound that includes a continuing indemnification, "earn out" or other contingent payment
obligation, in each case, that could result in payments in excess of $5,000,000 other than ordinary course agreements with customers or suppliers;
(xii) except
as set forth on Section 4.10(a) of the Company Disclosure Schedule, each contract between or among the Company or any of its Subsidiaries, on the one
hand, and any of their respective Affiliates (other than the Company or any of its Subsidiaries), on the other hand, that involves payments of more than $2,000,000 in any one year;
(xiii) other
than as set forth in any customer's standard purchase order terms and conditions, any contract that grants or conveys rights of refusal, or contains "most
favored nation", "most favored customer" or similar pricing provisions, or that obligates the Company or any of its Subsidiaries to conduct any material portion of the Company's or any of its
Subsidiaries' business on an exclusive or preferential basis with any third party; and
(xiv) any
contract that contains "take or pay" or similar provisions.
(b) Except
as would not have a Company Material Adverse Effect, (i) each Company Material Contract is a legal, valid and binding obligation of the Company or its
Subsidiaries party thereto and, to the knowledge of the Company, the other parties thereto, enforceable against the Company or such Subsidiaries and, to the knowledge of the Company, the other parties
thereto in accordance with its terms, (ii) neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any other party thereto, is in breach or violation of, or
default under, any Company Material Contract and no event has occurred or not occurred through the Company's or any of its Subsidiaries' action or inaction or, to the knowledge of the Company, the
action or inaction of any third party, that with notice or lapse of time or both would constitute a breach or violation of, or default under, any Company Material Contract and (iii) the Company
and its Subsidiaries have not received any written claim or written notice of default, termination (other than as a result of expiration in accordance with its terms) or cancellation under any such
Company Material Contract. The Company has furnished or made available to Parent correct and complete copies of all Company Material Contracts, including any amendments, waivers or changes thereto
that are currently in effect.
Section 4.17
Insurance
.
To the knowledge of the Company, the Company has in place insurance policies providing appropriate coverage given the size of the Company and the Company's line of businesses. Each such
insurance policy is legal, valid, binding and enforceable in accordance with its terms and, except for policies that have expired under their terms in the ordinary course, is in full force and effect.
Neither the Company nor any of its Subsidiaries is in material breach or default (including any such material breach or default with respect to the payment of premiums or the giving of notice) under
any such policy, and, to the knowledge of the Company, no event has occurred which, with notice or the lapse of time or both, would constitute such a material breach or default, or permit termination
or modification, under such policy, and, as of the date of this Agreement, no written notice of cancellation or termination has been received with respect to any such party.
Section 4.18
Customers
.
Section 4.18 of the Company Disclosure Schedule sets forth a true and complete list of the top ten customers of the Company and its Subsidiaries (based on the revenue from
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such
customer during the 12-month period ended September 30, 2016). None of the customers listed in Section 4.18 of the Company Disclosure Schedule and no material supplier of the
Company and its Subsidiaries (a) has cancelled or otherwise terminated any contract with the Company or any of its Subsidiaries prior to the expiration of the contract term, (b) has
returned, or threatened to return, a substantial amount of any of the products, equipment, goods and services purchased from the Company or any of its Subsidiaries, or (c) to the knowledge of
the Company, has indicated in writing its intention to cancel or otherwise terminate its relationship with the Company or its Subsidiaries or to reduce substantially its purchase from or sale to the
Company or any of its Subsidiaries of any products, equipment, goods or services.
Section 4.19
Quality and Safety of Products
.
(a) Since January 1, 2014, neither the Company nor any of its Subsidiaries has received written notice from (i) any of its customers that such customer has
(A) received any written notice or allegation from a Governmental Authority, (B) been a party or subject to any Action brought or initiated by a Governmental Authority or (C) been
threatened in writing by a Governmental Authority with any Action or (ii) a Governmental Authority that contained allegations or threatened or stated a basis for initiating an Action, in each
of the foregoing clauses (i) and (ii), with respect to the failure or alleged failure of any product produced, sold or distributed by or on behalf of the Company or any of its Subsidiaries to
meet applicable manufacturing, quality or labeling standards established by Law, except, in the case of each of clause (i) and (ii), as would not have a Company Material Adverse Effect.
(b) Since
January 1, 2014, (i) there have been no recalls of any product of the Company or any of its Subsidiaries whether ordered by a Governmental Authority
or undertaken voluntarily by the Company or any of its Subsidiaries and (ii) the Company has not received any written notice from any customer or Governmental Authority in connection with a
claim or allegation against the Company or its Subsidiaries, in each case related to any such recall, except in each of the foregoing clauses (i) and (ii) for any such recalls that would
not have a Company Material Adverse Effect.
Section 4.20
Anti-Corruption Compliance
.
(a) None of the Company, nor any of its Subsidiaries, directors, officers or employees, nor, to the knowledge of the Company, any Affiliate or agent of the Company, has
taken any action, directly or indirectly, over the last five (5) years, that constitutes: (i) a violation by any such Person of the FCPA, including making use of the mails or any means
or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any "foreign official" (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign
political office; (ii) a violation by any such Person of any other applicable Anti-Corruption Laws; or (iii) a violation of, or operation in noncompliance with, any export restrictions,
anti-boycott regulations, embargo regulations or other similar Laws.
(b) The
Company and each of its Subsidiaries have conducted their businesses in compliance in all material respects with (i) the FCPA and the Anti-Corruption Laws and
have retained, and continue to retain, accurate books and records and have instituted and continue to maintain policies and procedures reasonably designed to promote compliance therewith, and
(ii) (A) all Laws relating to United States export controls, and (B) anti-boycott prohibitions promulgated pursuant to the Export Administration Act of 1979, as amended, and
regulations promulgated thereunder.
Section 4.21
Takeover Laws
.
As of the date of this Agreement, no "fair price," "moratorium," "control share acquisition," "interested stockholder" or other anti-takeover Law (including Section 203 of the
DGCL), or any comparable anti-takeover provisions of the certificate of incorporation or bylaws of the Company, would reasonably be expected to restrict or prohibit the execution of this Agreement,
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each
party performing its obligations hereunder or the consummation of the Transactions. The Company has no "rights plan", "rights agreement" or "poison pill" in effect.
Section 4.22
Opinion of Financial Advisor
.
The Company has received the written opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated, to the effect that, as of the date of such opinion, the Merger Consideration to
be paid to the holders of Shares is fair, from a financial point of view, to such holders. A copy of such opinion shall be delivered to Parent promptly after the execution of this Agreement.
Section 4.23
Brokers
.
No broker, finder or investment banker (other than Merrill Lynch, Pierce, Fenner & Smith Incorporated) is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of the Company. The Company has furnished to Parent a correct and complete copy of all agreements (including any
amendments, waivers or changes thereto) between the Company and Merrill Lynch, Pierce, Fenner & Smith Incorporated as of the date of this Agreement pursuant to which such firm would be entitled
to any payment relating to the Transactions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except (a) as set forth in the corresponding section of the Parent Disclosure Schedule (with specific reference to the particular section
or subsection of this Agreement to which the information in the Parent Disclosure Schedule relates;
provided
, that any disclosure shall be deemed to
qualify that particular section or subsection and such other sections or subsections of this Agreement to
the extent that it is reasonably apparent from the face of such disclosure that such disclosure also qualifies or applies to such other sections or subsections), or (b) other than with respect
to
Section 5.07(a)
and
Section 5.07(b)
, as disclosed in the Parent SEC Reports filed or
furnished during the period from January 1, 2014 through the date that is two (2) Business Days prior to the date of this Agreement, to the extent reasonably apparent in such Parent SEC
Reports that such disclosed item relates to the applicable representation or warranty set forth in this
Article V
, but excluding (i) any
documents filed as exhibits, annexes and schedules thereto or incorporated by reference therein (other than in any other Parent SEC Reports), (ii) any risk factor disclosures contained under
the heading "Risk Factors" (other than any factual information contained therein), and (iii) any disclosure of risks included in any "forward-looking statements" disclaimer or any other
statements that are similarly non-specific or precise or forward-looking in nature, Parent and Merger Sub hereby, jointly and severally, represent and warrant to the Company that:
Section 5.01
Corporate Organization and Qualification; Subsidiaries
.
(a) Parent and each of its Subsidiaries is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization and has the
requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power and authority would not have a Parent Material Adverse Effect. Each of Parent and its Subsidiaries is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties or assets owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not have a Parent Material Adverse Effect.
(b) A
true and complete list of all the Subsidiaries of Parent, identifying the jurisdiction of incorporation or organization of each such Subsidiary and, with respect to
each Subsidiary that is not directly or indirectly wholly owned by Parent and/or one of its other Subsidiaries, the percentage of the outstanding capital stock or other equity or similar interests of
each such
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Subsidiary
owned by Parent and each of its other Subsidiaries, is set forth in Section 5.01(b) of the Parent Disclosure Schedule. Except as set forth in Section 5.01(b) of the Parent
Disclosure Schedule, Parent and Merger Sub do not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture or other business association or entity.
Section 5.02
Certificate of Incorporation and Bylaws
.
Parent has heretofore furnished to the Company a complete and correct copy of the certificate of incorporation and bylaws and other equivalent organizational documents, each as amended
to date, of Parent, Merger Sub and each Subsidiary that is not directly or indirectly wholly owned by Parent and/or one of its other Subsidiaries, in each case, to the extent not filed as of the date
of this Agreement with the Parent SEC Reports. Such certificates of incorporation, bylaws and equivalent organizational documents are in full force and effect. Neither the Company nor any of its
Subsidiaries is in violation of any of the provisions of its certificate of incorporation, bylaws or equivalent organizational documents.
Section 5.03
Capitalization
.
(a) The authorized capital stock of Parent consists of 150,000,000 shares of Parent Common Stock, 40,000,000 shares of Parent Series Common Stock and 10,000,000 shares of
Parent Preferred Stock. At the close of business on October 31, 2016, (i) 76,473,166 shares of Parent Common Stock were issued and outstanding, all of which are duly authorized, validly
issued, fully paid and non-assessable, (ii) 6,532,020 shares of Parent Common Stock were held in the treasury of Parent, (iii) no shares of Parent Common Stock were held by the
Subsidiaries of Parent, and (iv) 5,909,591 shares of Parent Common Stock were reserved for future issuance pursuant to outstanding Parent Stock Awards (including 347,700 shares of Parent Common
Stock subject to outstanding Parent Stock Options, 1,797,360 Shares subject to outstanding Parent Restricted Stock Unit Awards, and 1,038,324 Shares subject to outstanding Parent Performance Awards
(assuming satisfaction of any performance vesting conditions at target levels)). As of the date of this Agreement, no shares of Parent Series Common Stock and no shares of Parent Preferred Stock are
issued and outstanding. Except as set forth in this
Section 5.03
or the Voting Agreement, there are no options, warrants, convertible debt, other
convertible instruments or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of Parent or any of its Subsidiaries or obligating
Parent or any of its Subsidiaries to issue or sell any shares of capital stock of, or other equity interests in, Parent or any of its Subsidiaries. All shares of Parent Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and
non-assessable and free of preemptive (or similar) rights. Except as contemplated in the Parent Stock Plans, there are no outstanding contractual obligations of Parent or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of Parent Common Stock or any capital stock of, or other equity interests in, Parent or any Subsidiary of Parent, or granting any preemptive rights,
subscription rights, anti-dilutive rights, rights of first refusal or similar rights with respect to any shares of Parent Common Stock or any capital stock of, or other equity interests in, Parent or
any Subsidiary of Parent, or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any third party by Parent or any Subsidiary of Parent. All
outstanding shares of Parent Common Stock, all outstanding Parent Stock Awards, and all outstanding shares of capital stock of each Subsidiary of Parent have been issued in compliance with all
applicable securities Laws and other applicable Laws.
(b) The
authorized capital stock of Merger Sub consists of 100 shares of common stock, par value $0.01 per share, all of which are duly authorized, validly issued, fully
paid and non-assessable and free of any preemptive rights in respect thereof and all of which are owned by Parent. Each outstanding share of capital stock of Merger Sub is owned by Parent free and
clear of all Encumbrances, except where failure to own such shares free and clear would not, individually or in the aggregate, materially adversely affect Parent's ability to consummate the
Transactions.
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(c) Each
outstanding share of capital stock of, or other equity interests in, each Subsidiary of Parent is (i) duly authorized, validly issued, fully paid, and
non-assessable and free of preemptive (or similar) rights, and (ii) owned by Parent or another of its wholly-owned Subsidiaries free and clear of all Encumbrances (other than those set forth in
the organizational documents of such Subsidiary (to the extent such organizational documents have been furnished to the Company prior to the date of this Agreement), under applicable securities Laws
or created by this Agreement).
(d) As
of the date of this Agreement, no bonds, debentures, notes or other Indebtedness of Parent having the right to vote (or convertible into or exercisable for securities
having the right to vote) on any matters on which stockholders of Parent may vote are issued or outstanding.
(e) Except
as created by this Agreement, there are no outstanding obligations of Parent or any of its Subsidiaries (i) restricting the transfer of,
(ii) relating to the voting of, or (iii) requiring the registration under any securities Law for sale of, any shares of Parent Common Stock, shares of Parent Series Common Stock, shares
of Parent Preferred Stock or any other capital stock of, or other equity interests in, Parent or any of its Subsidiaries. None of Parent or any of its Subsidiaries is a party to any stockholders'
agreement, voting trust agreement or registration rights agreement relating to any capital stock of, or other equity interests in, Parent or any of its Subsidiaries or any other contract or
arrangement relating to disposition, voting or dividends with respect to any capital stock of, or other equity interests in, Parent or any of its Subsidiaries.
Section 5.04
Authority Relative to This Agreement; Vote Required
.
(a) Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement or to consummate the Transactions (other
than, with respect to the Merger, obtaining the Parent Stockholder Approval and the filing and recordation of the Certificate of Merger as required by the DGCL). This Agreement has been duly and
validly executed and delivered by Parent and Merger Sub and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding obligation of each of Parent
and Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency (including all Laws relating to
fraudulent transfers), reorganization, moratorium or similar Laws affecting creditors' rights generally and subject to the effect of general principles of equity (regardless of whether considered in a
proceeding at law or in equity).
(b) The
Parent Board, by resolutions duly adopted by unanimous vote of those voting at a meeting duly called and held and not subsequently rescinded or modified in any way,
has (i) determined that the Merger is fair to, and in the best interests of, Parent and its stockholders, (ii) approved this Agreement and declared its advisability, and
(iii) resolved to recommend that the stockholders of Parent approve the Parent Share Issuance and directed that the Parent Share Issuance be submitted for consideration by Parent's stockholders
at the Parent Stockholders' Meeting.
(c) The
Parent Stockholder Approval is the only vote or consent of the holders of any class or series of Parent's capital stock or other securities necessary to approve the
Share Issuance and consummate the Transactions.
Section 5.05
No Conflict; Required Filings and Consents
.
(a) The execution and delivery of this Agreement by each of Parent and Merger Sub do not, and the performance of this Agreement by each of Parent and Merger Sub, and the
consummation of the Merger, will not, (i) conflict with or violate the certificate of incorporation, bylaws or other equivalent organizational documents of Parent or any
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of
its Subsidiaries, (ii) assuming all consents, approvals, authorizations and other actions described in
Section 5.05(b)
have been
obtained or taken and all filings and obligations described in
Section 5.05(b)
have been made or satisfied, conflict with or violate any Law
applicable to Parent or any of its Subsidiaries or by which any property or asset of Parent or any of its Subsidiaries is bound or affected, or (iii) violate, conflict with, require consent
under, result in any breach of, result in loss of any benefit under, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others
any right of termination, amendment, acceleration or cancellation of, or result in the creation of an Encumbrance on any property or asset of Parent or any of its Subsidiaries pursuant to, any note,
bond, mortgage, indenture, deed of trust, contract, agreement, Lease, Parent Permit or other instrument or obligation to which Parent of any of its Subsidiaries is a party or by which Parent or any of
its Subsidiaries or any of their respective assets or properties is bound or affected, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or
other occurrences which would not have a Parent Material Adverse Effect.
(b) The
execution and delivery of this Agreement by each of Parent and Merger Sub do not, and the performance of this Agreement by each of Parent and Merger Sub, and the
consummation of the Merger, will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Securities Act, the Exchange Act, Blue Sky Laws and state takeover Laws, (ii) the filing with the SEC of the Joint Proxy Statement and the Registration Statement,
(iii) any filings required under the rules and regulations of the NYSE, (iv) the pre-merger notification requirements of the HSR Act or other applicable foreign,
federal or state antitrust or competition Laws specified in Section 8.01(d) of the Company Disclosure Schedule or Section 8.01(d) of the Parent Disclosure Schedule, (v) the filing
and recordation of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, and (vi) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not have a Parent Material Adverse Effect.
Section 5.06
Permits; Compliance.
Parent and each of its Subsidiaries is in possession of all
Parent Permits, except where the failure to possess, or the suspension or cancellation of, any of the
Parent Permits would not have a Parent Material Adverse Effect. No suspension or cancellation of any of the Parent Permits is pending or, to the knowledge of Parent, threatened, except where the
failure to possess, or the suspension or cancellation of, any of the Parent Permits would not have a Parent Material Adverse Effect. Neither Parent nor any of its Subsidiaries is or, since
January 1, 2014, has been, in conflict with, or in default, breach or violation of, any Law or Parent Permit applicable to Parent or any of its Subsidiaries or by which any property or asset of
Parent or any of its Subsidiaries is bound or affected, except for any such conflicts, defaults, breaches or violations that would not have a Parent Material Adverse Effect.
Section 5.07
SEC Filings; Financial Statements.
(a) Parent has filed all
forms, reports, statements, schedules and other documents required to be filed by it with the SEC since January 1,
2014 (the "
Parent SEC Reports
"). The Parent SEC Reports (i) at the time they were filed and, if amended, as of the date of such amendment,
complied in all material respects with all applicable requirements of the Securities Act, the Exchange Act and the Sarbanes Oxley Act, as the case may be, and the rules and regulations promulgated
thereunder, and (ii) did not, at the time they were filed, and, if amended, as of the date of such amendment, contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary of Parent is
required to file any form, report, statement, schedule or other document with the SEC.
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(b) Each
of the consolidated financial statements (including, in each case, any notes thereto) contained (or incorporated by reference) in the Parent SEC Reports was
prepared (i) from, and in accordance with, the books and records of Parent and its Subsidiaries in all material respects and (ii) in all material respects in accordance with GAAP applied
on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by the SEC) and each fairly presents, in
all material respects, the consolidated financial position, results of operations and cash flows of Parent and its consolidated Subsidiaries as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments).
(c) Neither
Parent nor any of its Subsidiaries has any liability or obligation of any nature (whether accrued, absolute, contingent, determined, determinable or otherwise
and whether due or to become due), except for liabilities and obligations (i) reflected or reserved against on the consolidated balance sheet of Parent and its consolidated Subsidiaries as at
December 31, 2015, including the notes thereto, or (ii) incurred in the ordinary course of business consistent with past practice since December 31, 2015, which would not have a
Parent Material Adverse Effect.
(d) As
of the date of this Agreement, there are no material outstanding or unresolved comments in comment letters received from the SEC with respect to the Parent SEC
Reports. To the knowledge of Parent, (i) none of the Parent SEC Reports is the subject of ongoing SEC review and (ii) there are no inquiries or investigations by the SEC or any
Governmental Authority or any internal investigations pending or threatened in writing, in each case regarding any accounting practices of Parent or any of its Subsidiaries.
(e) The
management of Parent has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) reasonably designed
to ensure that material information relating to Parent, including its consolidated Subsidiaries, is in all material respects made known to the principal executive officer and the principal financial
and accounting officer of Parent by others within those entities. Based on Parent's management's most recently completed evaluation of Parent's internal control over financial reporting,
(i) Parent had no significant deficiencies or material weaknesses in the design or operation of its internal control over financial reporting that would reasonably be expected to adversely
affect Parent's ability to record, process, summarize and report financial information and (ii) to the knowledge of Parent, Parent does not have any fraud that involves management or other
employees who have a significant role in Parent's internal control over financial reporting.
(f) Since
January 1, 2014, subject to any applicable grace periods, Parent has been in and is in material compliance with the applicable provisions of the Sarbanes
Oxley Act and the applicable rules and regulations of the NYSE.
(g) Neither
Parent nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar
contract, agreement or arrangement (including any contract, agreement or arrangement relating to any transaction or relationship between or among Parent and any of its Subsidiaries, on the one hand,
and any unconsolidated affiliate, on the other hand), including any structured finance, special purpose or limited purpose entity or Person, or any "off-balance sheet arrangements" (as defined in
Item 303(a) of Regulation S-K under the Securities Act), where the result, purpose or effect of such contract, agreement or arrangement is to avoid disclosure of any material transaction
involving, or material liabilities of, Parent or any of its Subsidiaries in the Parent SEC Reports (including any audited financial statements and unaudited interim financial statements of Parent
included therein).
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Section 5.08
Absence of Certain Changes or Events.
From January 1, 2016
through the date of this Agreement, (a) Parent and its Subsidiaries have conducted their businesses in the ordinary course and
in a manner consistent with past practice, (b) there has not been any Parent Material Adverse Effect and (c) since June 30, 2016, neither Parent nor any of its Subsidiaries has
taken any action that, if taken after the date of this Agreement, would constitute a breach of any of the covenants set forth in
Section 6.02
were such provision then in effect.
Section 5.09
Absence of Litigation.
As of the date of this Agreement, there is no Action pending
or, to the knowledge of Parent, threatened in writing against Parent or any of its Subsidiaries, or
any property or asset of Parent or any of its Subsidiaries (or, to the knowledge of Parent, any director or officer of Parent in such capacity as director or officer), before any Governmental
Authority that, if adversely determined against Parent or its applicable Subsidiary, would be, or would reasonably be expected to be, material to Parent and its Subsidiaries, taken as a whole. As of
the date of this Agreement, neither Parent nor any of its Subsidiaries nor any property or asset of Parent or any of its Subsidiaries is subject to any continuing order of, consent decree, settlement
agreement or other similar written agreement with, or, to the knowledge of Parent, any continuing investigation by, any Governmental Authority or any Order of any Governmental Authority that is, or
would reasonably be expected to be, material to Parent and its Subsidiaries, taken as a whole.
Section 5.10
Employee Benefit Plans.
(a) Section 5.10(a) of Parent
Disclosure Schedule lists (i) all material compensation, benefit, fringe benefit and other plans,
programs, arrangements or agreements (A) to which Parent or any of its Subsidiaries is a party, (B) with respect to which Parent or any of its Subsidiaries has any obligation or
(C) that are maintained, contributed to or sponsored by Parent or any of its Subsidiaries for the benefit of any current or former Service Provider, and (ii) all material contracts,
arrangements or understandings between Parent or any of its Subsidiaries and any current or former Service Provider that provide for compensation or benefits, or the acceleration of the vesting or
payment of compensation or benefits, to any current or former Service Provider arising from or related to the Transactions, in whole or in part (collectively, the "
Parent
Plans
"). Section 5.10(a) of Parent Disclosure Schedule also separately lists all employee benefit plans for which Parent or any of its Subsidiaries could incur liability
under Section 4069 or 4212(c) of ERISA.
(b) None
of the Parent Plans provides for or promises medical, dental, disability, hospitalization, life or similar benefits (whether insured or self-insured) to any current
or former Service Provider following termination of employment or service with Parent and its Subsidiaries (other than coverage mandated by applicable Law) that would result in a material liability to
Parent and its Subsidiaries taken as a whole.
(c) Except
as would not have a Parent Material Adverse Effect, (i) each document prepared in connection with a Parent Plan complies with applicable Law and each
Parent Plan has been operated in accordance with its terms and applicable Law, (ii) Parent and its Subsidiaries have performed all
obligations required to be performed by them under, are not in any respect in default under or in violation of, and have no knowledge of any default or violation by any party to, any Parent Plan and
(iii) no Action is pending or, to the knowledge of Parent, threatened with respect to any Parent Plan (other than claims for benefits in the ordinary course).
(d) For
each Parent Plan that is intended to be qualified under Section 401(a) of the Code, Parent has timely received a favorable determination letter from the IRS
relating to the most recently completed IRS qualification cycle applicable to such Parent Plan and, to the knowledge of Parent, nothing has occurred since the date of such letter that would reasonably
be expected to cause the loss of the qualified status of such Parent Plan.
(e) Neither
Parent, its Subsidiaries nor any member of their ERISA Affiliates sponsors maintains, contributes to or is required to contribute to or within the past six
(6) years has sponsored, maintained, contributed to or been required to contribute to: (i) a "multiemployer
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plan"
(within the meaning of ERISA section 3(37)), (ii) Pension Plan that is subject to Title IV of ERISA or Section 412 of the Code, or (iii) a Pension Plan which is a
"multiple employer plan" as defined in Section 413 of the Code. With respect to each Parent Plan that is subject to Title IV of ERISA, (A) there does not exist any accumulated funding
deficiency within the meaning of Section 412 of the Code or Section 302 of ERISA, whether or not waived, (B) no such Parent Plan is currently in "at risk" status within the
meaning of Section 430 of the Code or Section 303(i) of ERISA, (C) no reportable event within the meaning of Section 4043(c) of ERISA for which the 30-day notice
requirement has not been waived has occurred, (D) neither Parent, its Subsidiaries nor any of their respective ERISA Affiliates has engaged in any transaction described in Section 4069,
4204(a) or 4212(c) of ERISA, (E) all premiums to the PBGC have been timely paid in full, (F) no liability (other than for premiums to the PBGC) has been or, to the knowledge of Parent,
is expected to be incurred by Parent or any of its Subsidiaries and (G) the PBGC has not instituted proceedings to terminate any such Parent Plan. Neither Parent nor any of its Subsidiaries has
incurred any liability under, arising out of or by operation of Title IV of ERISA (other than liability for premiums to the PBGC arising in the ordinary course), except as would not have a Parent
Material Adverse Effect.
(f) Neither
the execution of this Agreement nor the consummation of the Transactions shall (either alone or in connection with the termination of employment or service of
any Service Provider following, or in connection with, the Transactions): (i) entitle any current or former Service Provider to severance pay or benefits or any increase in severance pay or
benefits upon any termination of employment or service with Parent or any of its Subsidiaries; (ii) accelerate the time of payment or
vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, or increase the amount payable or trigger any other obligation pursuant to, any of
the Parent Plans to any current or former Service Provider or (iii) limit or restrict the right of Parent any of its Subsidiaries or, after the consummation of the Transactions, Parent, to
merge, amend or terminate any of the Parent Plans. None of the Parent Plans in effect immediately prior to the Closing would result separately or in the aggregate (including as a result of this
Agreement or the transactions contemplated hereby) in the payment of any "excess parachute payment" within the meaning of Section 280G of the Code.
(g) Except
as would not have a Parent Material Adverse Effect, each Parent Plan that is or forms part of a "nonqualified deferred compensation plan" within the meaning of
Section 409A of the Code has been timely amended to comply and has been operated in compliance with, and Parent and its Subsidiaries have complied in practice and operation with, all applicable
requirements of Section 409A of the Code.
(h) In
addition to the foregoing, with respect to each Non-U.S. Parent Benefit Plan:
(i) all
employer and employee contributions to each Non-U.S. Parent Benefit Plan required by Law or by the terms of such Non-U.S. Parent Benefit Plan or pursuant to any
contractual obligation (including contributions to all mandatory provident fund schemes) have been made or, if applicable, accrued in accordance with generally accepted accounting practices in the
applicable jurisdiction applied to such matter, except as would not have a Parent Material Adverse Effect; and
(ii) each
Non-U.S. Parent Benefit Plan required to be registered has been registered and has been maintained in good standing with applicable regulatory authorities, except
as would not have a Parent Material Adverse Effect.
Section 5.11
Labor and Employment Matters.
(a) Except as set forth on
Section 5.11(a) of the Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries is a party to any
collective bargaining, trade union or works council agreement or other labor union contract applicable to persons employed by Parent or any of its Subsidiaries, and, as of the date of this Agreement,
there are no
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pending
organizational campaigns, petitions or other unionization activities seeking recognition of a collective bargaining unit relating to any employee of Parent any of its Subsidiaries. Except as
would
not have a Parent Material Adverse Effect, (i) neither Parent nor any of its Subsidiaries has breached or otherwise failed to comply in any respect with the provisions of any collective
bargaining, trade union or works council agreement or other labor union contract, and there are no grievances outstanding against Parent or any of its Subsidiaries under any such agreement or
contract; and (ii) there are no unfair labor practice complaints pending against Parent or any of its Subsidiaries before the National Labor Relations Board or any other Governmental Authority.
The consent of, consultation of or the rendering of formal advice by any labor or trade union, works council, or any other employee representative body is not required for Parent to enter into this
Agreement or to consummate any of the Transactions.
(b) Except
as would not have a Parent Material Adverse Effect, (i) the Parent and its Subsidiaries are currently in compliance with all Laws relating to the
employment of labor, including those related to wages, hours, collective bargaining and the payment and withholding of Taxes, and (ii) there is no charge of discrimination relating to
employment or employment practices, pending or, to the knowledge of Parent, threatened against Parent or any of its Subsidiaries before the United States Equal Employment Opportunity Commission, or
any other Governmental Authority in any jurisdiction in which Parent or any of its Subsidiaries has employed or currently employs any Person.
Section 5.12
Parent Real Property; Title to Assets.
(a) Section 5.12
(a) of Parent Disclosure Schedule lists: (i) the street address or location of each parcel of Owned Parent Real
Property, (ii) the current owner of each parcel of Owned Parent Real Property and (iii) the current use of each parcel of Owned Parent Real Property. Except as set forth on
Section 5.12(a) of Parent Disclosure Schedule or as would not have a Parent Material Adverse Effect, Parent or one of its Subsidiaries, as the case may be, has good and marketable title in fee
simple, or the equivalent thereof, to each parcel of Owned Parent Real Property, free and clear of all Encumbrances, except Permitted Encumbrances.
(b) Section 5.12(b)
of Parent Disclosure Schedule sets forth a true and complete list of all Leases for material Leased Parent Real Property and any amendments
thereto and any guarantors thereunder. Except as would not have a Parent Material Adverse Effect, Parent or one of its Subsidiaries, as the case may be, has a valid leasehold interest in the Leased
Parent Real Property, free and clear of all Encumbrances, except for Permitted Encumbrances.
(c) Except
as would not have a Parent Material Adverse Effect, (i) either Parent or one of its Subsidiaries, as the case may be, is in peaceful and undisturbed
possession of each parcel of Parent Real Property, (ii) there are no contractual or legal restrictions that preclude or restrict the ability to use the Parent Real Property for the purposes for
which it is currently being used, (iii) neither Parent nor any of its Subsidiaries has leased or subleased any parcel or any portion of any parcel of Parent Real Property to any other Person
and (iv) neither Parent nor any of its Subsidiaries has assigned its interest under any Lease listed in Section 5.12(b) of the Parent Disclosure Schedule to any third party.
(d) Except
as would not have a Parent Material Adverse Effect, all components of the buildings, structures or other material improvements within the Owned Parent Real
Property compromising the
demised premises of Parent and any of its Subsidiaries pursuant to each real property lease are in sufficient working condition and repair for the uses for which they are currently employed (normal
wear and tear excepted).
(e) Except
as would not reasonably be expected to be material to Parent and its Subsidiaries, taken as a whole, as of the date of this Agreement, there are no condemnation
proceedings or eminent domain proceedings of any kind pending or, to the knowledge of Parent, threatened against any parcel of the Parent Real Property.
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(f) Except
as would not reasonably be expected to be material to Parent and its Subsidiaries, taken as a whole, there are no outstanding options, rights of first offer or
rights of first refusal to purchase the Parent Real Property or any portion thereof or interest therein.
Section 5.13
Intellectual Property.
(a) Except as would not have a Parent
Material Adverse Effect, (i) Parent and each of its Subsidiaries has sufficient rights to use the Parent
Intellectual Property in connection with the operation of its respective business, (ii) Parent or one of its Subsidiaries is the exclusive owner of all right, title and interest in and to each
item of Owned Parent Intellectual Property, free and clear of all Encumbrances other than Permitted Encumbrances and (iii) Parent and each of its Subsidiaries has a valid license to use the
Licensed Parent Intellectual Property in connection with the operation of its respective business, subject only to the terms of Parent IP Agreements.
(b) Except
as would not have a Parent Material Adverse Effect, (i) the Owned Parent Intellectual Property is (A) to the knowledge of Parent, valid, subsisting
and enforceable and (B) not subject to any outstanding Order or agreement adversely affecting any of Parent's or any of its Subsidiaries' use thereof or rights thereto, or that would impair the
validity or enforceability thereof and (ii) there is no Action pending, asserted or, to the knowledge of Parent, threatened contesting or challenging the ownership, validity, registerability or
enforceability of, or Parent's or any of its Subsidiaries' right to use, any Owned Parent Intellectual Property.
(c) Except
as would not have a Parent Material Adverse Effect, (i) to the knowledge of Parent, the operation of the businesses of Parent and its Subsidiaries and the
use of Parent Intellectual Property in connection therewith does not, and has not in the last three (3) years, infringed, misappropriated or otherwise violated or conflicted with the
Intellectual Property rights of any other Person, (ii) there is no Action pending, asserted or, to the knowledge of Parent, threatened against any of Parent or any of its Subsidiaries
concerning any of the foregoing and (iii) to the knowledge of Parent, no Person is engaging,
or has engaged in the last three (3) years, in any activity that infringes, misappropriates or otherwise violates or conflicts with any Owned Parent Intellectual Property.
(d) Except
as would not have a Parent Material Adverse Effect, Parent and its Subsidiaries have taken reasonable measures to maintain the confidentiality of all confidential
information in its or its Subsidiaries' possession, including, but not limited to, trade secrets, used or held for use in connection with the operation of its business.
(e) Except
as would not have a Parent Material Adverse Effect, to the extent that any Intellectual Property has been conceived, developed or created for Parent or any of its
Subsidiaries by any other Person, Parent or each of its Subsidiaries, as applicable, have executed valid and enforceable written agreements with such Person with respect thereto
(i) transferring to Parent or one of its Subsidiaries the entire and unencumbered right, title and interest therein and thereto by operation of law or by valid written assignment and
(ii) providing for the non-disclosure by such Person of the confidential information of the Company or any of its Subsidiaries.
(f) Except
as would not have a Parent Material Adverse Effect, consummation of the Transactions will not result in (i) the grant of any license under, or creation of
any lien on, any Owned Parent Intellectual Property, (ii) Parent or any of its Subsidiaries being bound by, or subject to, any non-compete obligation, covenant not to sue, or other restriction
on the operation or scope of its business, which such party was not bound by, or subject to, prior to the Closing or (iii) Parent or any of its Subsidiaries being obligated to (A) pay
any royalties, honoraria, fees or other payments to any Person in excess of those payable by Parent or any of its Subsidiaries prior to the Closing or (B) provide or offer any discounts or
other reduced payment obligations to any Person in excess of those provided to such Person prior to the Closing.
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Section 5.14
Taxes.
(a) All income and other material Tax Returns
required to be filed by or with respect to Parent or any of its Subsidiaries have been timely filed
(after giving effect to any filing extension properly granted by a Governmental Authority having authority to do so) and all such Tax Returns are true, correct, and complete in all material respects.
(b) All
material amounts of Taxes of Parent and its Subsidiaries (whether or not shown to be due and payable on any Tax Return) have been timely paid. The unpaid Taxes of
Parent and its Subsidiaries did not, as of the date of the most recent consolidated financial statements of Parent, materially exceed the reserve or accrual for Tax liability (excluding any reserve
for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of such consolidated financial statements (rather than in any notes thereto). Between January 1, 2016 and the date of this
Agreement, none of Parent or any of its Subsidiaries has incurred any material liability for Taxes outside the ordinary course of business. There are no material Tax liens on the assets of Parent or
any of its Subsidiaries other than Permitted Encumbrances.
(c) Each
of Parent and its Subsidiaries has timely paid or withheld all material amounts of Taxes required to be paid or withheld with respect to their employees,
independent contractors, creditors and other third parties (and timely paid over such Taxes to the appropriate Governmental Authority).
(d) As
of the date of this Agreement, neither Parent nor any of its Subsidiaries has executed any outstanding waiver of any statute of limitations, or outstanding extension
of the period, for the assessment or collection of any material Tax and there has been no request by a Governmental Authority to execute such a waiver or extension. As of the date of this Agreement,
no audit or other examination or administrative, judicial or other proceeding of, or with respect to, any material Tax Return or material Taxes of Parent or any of its Subsidiaries is currently in
progress, and neither Parent nor any of its Subsidiaries has been notified in writing of any request for such an audit or other examination or administrative, judicial or other proceeding. As of the
date of this Agreement, no deficiency for any material amount of Tax has been asserted or assessed by a Governmental Authority against Parent or any of its Subsidiaries that has not been satisfied by
payment, settled or withdrawn. As of the date of this Agreement, within the last three (3) years, no written claim has been made by a Governmental Authority in a jurisdiction where Parent or
any Subsidiary of Parent does not file Tax Returns that Parent or such Subsidiary is or may be subject to taxation by such jurisdiction.
(e) Within
the last two (2) years, neither Parent nor any of its Subsidiaries has been a party to any transaction treated by the parties as a distribution to which
Section 355 of the Code applies.
(f) Each
of Parent and its Subsidiaries (i) is not a party to any Tax sharing, indemnification or allocation agreement (other than customary Tax indemnification
provisions in commercial agreements or arrangements, in each case not primarily relating to Taxes, or any agreement solely between or among Parent and its Subsidiaries) and (ii) has no
liability for the Taxes of any Person under Treasury Regulation § 1.1502-6 (or any similar provision of state, local or foreign Law), by reason of being a member of an affiliated,
consolidated, combined or unitary group (other than any group that solely includes Parent and/or its Subsidiaries), or as a transferee or successor.
(g) Neither
Parent nor any of its Subsidiaries has "participated" in a "listed transaction" within the meaning of Treasury Regulation § 1.6011-4.
(h) Neither
Parent nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a
taxable period ending on or prior to the Closing Date, (ii) "closing agreement" as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or
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foreign
income Tax law) executed on or prior to the Closing Date, (iii) intercompany transaction entered into prior to the Closing Date, (iv) installment sale or open transaction
disposition made on or prior to the Closing Date, or (v) prepaid amount existing on or prior to the Closing Date.
(i) Parent
is not a United States real property holding corporation, as defined in Section 897(c)(2) of the Code.
(j) This
Section 5.14
,
Section 5.10
and
Section 5.08
, to the extent it relates to Section 6.02(b)(ix), contain the sole representations and warranties of Parent and its
Subsidiaries with respect to Tax matters.
Section 5.15
Environmental Matters.
Except as would not have a Parent Material Adverse Effect,
(a) none of Parent nor any of its Subsidiaries is in violation of or, since January 1,
2014, has violated, any Environmental Law; (b) none of the properties currently or formerly owned, leased or operated by Parent or any current or former Subsidiary of Parent (including soils
and surface and ground waters) are contaminated with any Hazardous Substance; (c) neither Parent nor any of its current or former Subsidiaries has received any written notice from any Person
alleging that any of the foregoing are actually, potentially or allegedly liable under, or not in compliance with, any Environmental Law (including pending or threatened liens, or with respect to
exposure to, or the off-site disposal of, Hazardous Substances); and (d) each of Parent and its Subsidiaries has obtained, currently maintains and is, and since January 1, 2014, has
been, in compliance with all Environmental Permits necessary for its operations.
Section 5.16
Parent Material Contracts.
(a) Section 5.16(a) of Parent
Disclosure Schedule contains a complete list, as of the date of this Agreement, of the following types of
contracts and agreements, whether written or oral, including all amendments, supplements and modifications in effect as of the date of this Agreement, to which Parent or any of its Subsidiaries is a
party (such contracts and agreements, the "
Parent Material Contracts
"):
(i) any
"material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K under the Securities Act) with respect to Parent or any of its
Subsidiaries that was required to be filed with the SEC with Parent's Annual Report on Form 10-K for the year ended December 31, 2015 or any Parent SEC Reports filed after the date of
filing of such Form 10-K until the date hereof;
provided
that any such contract that was filed by Parent with the SEC shall not be required to be
set forth on Section 5.16(a) of Parent Disclosure Schedule;
(ii) any
contract (other than any purchase orders) for the purchase of materials, supplies, goods, services, equipment or other assets (A) providing for annual
payments by Parent or any of its Subsidiaries of $20,000,000 or more, or (B) which involved consideration or payments by Parent or any of its Subsidiaries in excess of $20,000,000 in the
aggregate during the calendar year ended December 31, 2015, or (C) which is expected to involve consideration or payments by Parent or any of its Subsidiaries in excess of $20,000,000 in
the aggregate during the calendar year ending December 31, 2016;
(iii) any
contract (other than any purchase orders) for the furnishing of materials, supplies, goods, services, equipment or other assets (A) providing for annual
payments to Parent or any of its Subsidiaries of $40,000,000 or more, (B) which involved consideration or payments to Parent or its Subsidiaries in excess of $40,000,000 in the aggregate during
the calendar year ended December 31, 2015, or (C) which is expected to involve consideration or payments to Parent or its Subsidiaries in excess of $40,000,000 in the aggregate during
the calendar year ending December 31, 2016;
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(iv) all
contracts concerning the establishment, management or operation of a joint venture, partnership, limited liability company (other than formation agreements related
to one of Parent's wholly-owned Subsidiaries) or business alliance with any third party;
(v) (A)
all contracts relating to Indebtedness of Parent or any of its Subsidiaries for borrowed money and (B) all other contracts relating to other Indebtedness of
Parent or any of its Subsidiaries in excess of $5,000,000, in each case of (A) and (B), other than intercompany Indebtedness;
(vi) all
contracts containing any material non-compete or exclusivity provision or any similarly restrictive provision with respect to any material line of business, Person
or geographic area with respect to Parent or any of its Subsidiaries;
(vii) all
Parent IP Agreements that are material to the business of Parent or any of its Subsidiaries;
(viii) all
other contracts not specified in sub-clause (v) that contain obligations of Parent or its Subsidiaries secured by an Encumbrance (other than a Permitted
Encumbrance) on the assets of Parent or any of its Subsidiaries, and interest rate or currency hedging agreements, in each case in connection with which the aggregate actual or contingent obligations
of Parent and its Subsidiaries under such agreement are greater than $5,000,000;
(ix) all
material contracts, agreements and Leases concerning the use, occupancy, management or operation of any Parent Real Property (including all contracts, agreements
and Leases listed or otherwise set forth in Section 5.12(b) of Parent Disclosure Schedule);
(x) all
material management contracts and contracts with consultants requiring payments in excess of $10,000,000, including any contracts involving the payment of royalties
or other amounts calculated based upon the revenues or income of Parent or any of its Subsidiaries or income or revenues related to any product of Parent or any of its Subsidiaries that require or
would reasonably be expected to result in payments of more than $10,000,000 in the aggregate;
(xi) each
contract pursuant to which Parent or any of its Subsidiaries is bound that includes a continuing indemnification, "earn out" or other contingent payment
obligation, in each case, that could result in payments in excess of $5,000,000 other than ordinary course agreements with customers or suppliers;
(xii) except
as set forth on Section 5.10(a) of the Parent Disclosure Schedule, each contract between or among Parent or any of its Subsidiaries, on the one hand, and
any of their respective Affiliates (other than Parent or any of its Subsidiaries), on the other hand, that involves payments of more than $2,000,000 in any one year;
(xiii) other
than as set forth in any customer's standard purchase order terms and conditions, any contract that grants or conveys rights of refusal, or contains "most
favored nation", "most favored customer" or similar pricing provisions, or that obligates Parent or any of its Subsidiaries to conduct any material portion of Parent's or any of its Subsidiaries'
business on an exclusive or preferential basis with any third party; and
(xiv) any
contract that contains "take or pay" or similar provisions.
(b) Except
as would not have a Parent Material Adverse Effect, (i) each Parent Material Contract is a legal, valid and binding obligation of Parent or its
Subsidiaries party thereto and, to the knowledge of Parent, the other parties thereto, enforceable against Parent or such Subsidiaries and, to the knowledge
of Parent, the other parties thereto in accordance with its terms, (ii) neither Parent nor any of its Subsidiaries nor, to the knowledge of Parent, any other party thereto, is in
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breach
or violation of, or default under, any Parent Material Contract and no event has occurred or not occurred through Parent's or any of its Subsidiaries' action or inaction or, to the knowledge of
Parent, the action or inaction of any third party, that with notice or lapse of time or both would constitute a breach or violation of, or default under, any Parent Material Contract and
(iii) Parent and its Subsidiaries have not received any written claim or written notice of default, termination (other than as a result of expiration in accordance with its terms) or
cancellation under any such Parent Material Contract. Parent has furnished or made available to the Company correct and complete copies of all Parent Material Contracts, including any amendments,
waivers or changes thereto that are currently in effect.
Section 5.17
Insurance.
To the knowledge of Parent, Parent has in place insurance policies
providing appropriate coverage given the size of Parent and Parent's line of businesses. Each
such insurance policy is legal, valid, binding and enforceable in accordance with its terms and, except for policies that have expired under their terms in the ordinary course, is in full force and
effect. Neither Parent nor any of its Subsidiaries is in material breach or default (including any such material breach or default with respect to the payment of premiums or the giving of notice)
under any such policy, and, to the knowledge of Parent, no event has occurred which, with notice or the lapse of time or both, would constitute such a material breach or default, or permit termination
or modification, under such policy, and, as of the date of this Agreement, no written notice of cancellation or termination has been received with respect to any such party.
Section 5.18
Customers.
Section 5.18 of the Parent Disclosure Schedule sets forth a true
and complete list of the top ten customers of Parent and its Subsidiaries (based on the
revenue from such customer during the 12-month period ended September 30, 2016). None of the customers listed in Section 5.18 of the Parent Disclosure Schedule and no material supplier
of Parent and its Subsidiaries (a) has cancelled or otherwise terminated any contract with Parent or any of its Subsidiaries prior to the expiration of the contract term, (b) has
returned, or threatened to return, a substantial amount of any of the products, equipment, goods and services purchased from Parent or any of its Subsidiaries, or (c) to the knowledge of Parent
has indicated in writing its intention, to cancel or otherwise terminate its relationship with Parent or its Subsidiaries or to reduce substantially its purchase from or sale to Parent or any of its
Subsidiaries of any products, equipment, goods or services.
Section 5.19
Quality and Safety of Products.
(a) Since January 1,
2014, neither Parent nor any of its Subsidiaries has received written notice from (i) any of its customers that
such customer has (A) received any written notice or allegation from a Governmental Authority, (B) been a party or subject to any Action brought or initiated by a Governmental Authority
or (C) been threatened in writing by a Governmental Authority with any Action or (ii) a Governmental Authority that contained allegations or threatened or stated a basis for initiating
an Action, in each of the foregoing clauses (i) and (ii), with respect to the failure or alleged failure of any product produced, sold or distributed by or on behalf of Parent or any of its
Subsidiaries to meet applicable manufacturing, quality or labeling standards established by Law, except, in the case of each of clause (i) and (ii), as would not have a Parent Material Adverse
Effect.
(b) Since
January 1, 2014, (i) there have been no recalls of any product of Parent or any of its Subsidiaries whether ordered by a Governmental Authority or
undertaken voluntarily by Parent or any of its Subsidiaries and (ii) Parent has not received any written notice from any customer or Governmental Authority in connection with a claim or
allegation against Parent or its Subsidiaries, in each case related to any such recall, except in each of the foregoing clauses (i) and (ii) for any such recalls that would not have a
Parent Material Adverse Effect.
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Section 5.20
Anti-Corruption Compliance.
(a) None of
Parent, nor any of its Subsidiaries, directors, officers or employees, nor, to the knowledge of Parent, any Affiliate or agent of Parent,
has taken any action, directly or indirectly, over the last five (5) years, that constitutes: (i) a violation by any such Person of the FCPA, including making use of the mails or any
means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or
authorization of the giving of anything of value to any "foreign official" (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign
political office; (ii) a violation by any such Person of any other applicable Anti-Corruption Laws; or (iii) a violation of, or operation in noncompliance with, any export restrictions,
anti-boycott regulations, embargo regulations or other similar Laws.
(b) Parent
and each of its Subsidiaries have conducted their businesses in compliance in all material respects with (i) the FCPA and the Anti-Corruption Laws and have
retained, and continue to retain, accurate books and records and have instituted and continue to maintain policies and procedures reasonably designed to promote compliance therewith, and
(ii) (A) all Laws relating to United States export controls, and (B) anti-boycott prohibitions promulgated pursuant to the Export Administration Act of 1979, as amended, and
regulations promulgated thereunder.
Section 5.21
Operations of Merger Sub.
Merger Sub is a direct, wholly-owned Subsidiary of Parent,
was formed solely for the purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as contemplated by this Agreement.
Section 5.22
Opinion of Financial Advisor.
Parent has received the written opinion of
Greenhill & Co., LLC, to the effect that, as of the date of such opinion and subject to the
limitations and assumptions set forth therein, the Merger Consideration to be paid by Parent to the holders of the Company Common Stock pursuant to this Agreement is fair, from a financial point of
view, to Parent. A copy of such opinion shall be delivered to the Company promptly after the execution of this Agreement.
Section 5.23
Brokers.
No broker, finder or investment banker (other than
Greenhill & Co., LLC and J.P. Morgan Securities LLC) is entitled to any brokerage,
finder's or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent or Merger Sub.
Section 5.24
Financing.
(a) Parent has delivered to the Company a true,
correct and complete copy of the fully executed commitment letter, dated as of the date hereof, among
Parent, American Axle & Manufacturing, Inc. and JPMorgan Chase Bank, N.A. (including the exhibits thereto, the "
Commitment Letter
"),
pursuant to which, upon the terms and subject to the conditions set forth therein, the Financing Sources party thereto have committed to lend the amounts set forth therein for the purpose of funding
the transactions contemplated by this Agreement and the other purposes set forth therein and related fees and expenses (the "
Financing
"). When funded in
accordance with, and subject to, the terms and conditions of the Commitment Letter, together with Parent's cash on hand, the Financing will provide Parent with financing on the Closing Date sufficient
to pay all amounts contemplated to be paid hereunder, including all fees and expenses and the repayment of all indebtedness that will be repaid at Closing.
(b) As
of the date hereof, the Commitment Letter is a legal, valid and binding obligation of Parent and, to the knowledge of Parent, the other parties thereto, enforceable
against Parent and, to the knowledge of Parent, such other parties thereto in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency (including all Laws relating to
fraudulent transfers), reorganization, moratorium or similar Laws affecting creditors' rights generally and subject to the
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effect
of general principles of equity (regardless of whether considered in a proceeding at law or in equity). As of the date hereof, the obligations of the Financing Sources to fund the full amount
of commitments under the Commitment Letter are not subject to any conditions or contingencies other than as set forth therein. As of the date hereof no event has occurred that (with or without notice,
lapse of time, or both) would constitute a breach or default or failure to satisfy a condition precedent under the Commitment Letter on the part of Parent or, to the knowledge of Parent, any other
party thereto. The Commitment Letter has not been amended or modified prior to the date of this Agreement and, as of the date of this Agreement, the respective commitments contained in the Commitment
Letter have not been withdrawn, modified or rescinded in any respect.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.01
Conduct of Business by the Company Pending the Merger.
(a) The
Company covenants and agrees that, between the date of this Agreement and the Effective Time, except (i) as set forth in
Section 6.01 of the Company Disclosure Schedule, (ii) as expressly contemplated by any other provision of this Agreement or (iii) with the prior written consent of Parent (such
consent not to be unreasonably withheld, conditioned or delayed), the businesses of the Company and its Subsidiaries shall be conducted in the ordinary course of business and in a manner consistent
with past practice and the Company and each of its Subsidiaries shall use their reasonable best efforts to (A) preserve substantially intact their existing assets, (B) preserve
substantially intact their business organization, (C) keep available the services of their current officers, employees and consultants, (D) maintain and preserve intact their current
relationships with their significant customers, suppliers, distributors, creditors and other Persons with which the Company or any of its Subsidiaries has significant business relations and
(E) comply in all material respects with applicable Law.
(b) By
way of amplification and not limitation, except as set forth in Section 6.01 of the Company Disclosure Schedule, as expressly contemplated by any other
provision of this Agreement or with the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed), neither the Company nor any of its Subsidiaries shall,
between the date of this Agreement and the Effective Time, directly or indirectly, do, or propose to do, any of the following:
(i) amend
or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents;
(ii) issue,
sell, pledge or dispose of, grant an Encumbrance on or permit an Encumbrance to exist on, or authorize the issuance, sale, pledge or disposition of, or granting
or placing of an Encumbrance on, any shares of any class of capital stock, or other ownership interests, of the Company or any of its Subsidiaries, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of such capital stock, any restricted stock units or restricted stock awards, or any other ownership interest of the Company or any of its Subsidiaries,
except for (A) the issuance of Shares required to be issued pursuant to the exercise of employee stock options, or restricted stock units or restricted stock awards that are outstanding on the
date hereof pursuant to the terms of the applicable Company Plans as in effect immediately prior to the date of this Agreement, and (B) the issuance by a Subsidiary of the Company of its
capital stock to the Company or another Subsidiary of the Company;
(iii) sell,
pledge or dispose of, grant an Encumbrance on or permit an Encumbrance to exist on, or authorize the sale, pledge or disposition of, or granting or placing of an
Encumbrance on, any material assets of the Company or any of its Subsidiaries, except (A) sales of inventory in the ordinary course of business, (B) pursuant to any contracts or
agreements in force on the date of this Agreement, as may be amended from time to time in
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accordance
with the terms hereof, or (C) such dispositions among the Company and its Subsidiaries;
(iv) declare,
set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for
(A) the declaration and payment of quarterly cash dividends by the Company, declared and paid in the ordinary course of business consistent with past practice, including as to record date,
timing of payment and amount thereof, in an amount per quarter not in excess of $0.0925 per Share, and (B) the declaration and payment of dividends by any of the Company's direct or indirect
wholly-owned Subsidiaries to the Company or any of its other wholly-owned Subsidiaries;
(v) reclassify,
combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(vi) (A)
acquire (including by merger, consolidation or acquisition of stock or assets or any other business combination) any corporation, partnership, other business
organization or any division thereof or any material amount of assets; (B) incur additional Indebtedness in respect of borrowed money and the issuance of any debt securities in an amount more
than $50,000,000 in excess of the aggregate Indebtedness of the Company and its Subsidiaries as of the date of this Agreement, (C) except as required by the terms of any Indebtedness
outstanding as of the date hereof, assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person, or make any material loans or material advances or capital
contribution to, or investment in, any Person; or (D) enter into or materially amend any contract, agreement, commitment or arrangement with respect to any matter set forth in
clauses (A) through (C) of this
Section 6.01(b)(vi)
;
(vii) except
as otherwise required by Law or a Company Benefit Plan in existence as of the date of this Agreement or as disclosed in
Section 6.01(b)(vii)
of the Company Disclosure Schedule, (A) except in
the ordinary course of business for employees who are not officers
under Section 16 of the Exchange Act, increase the compensation payable or to become payable or the benefits provided to Service Providers; (B) grant any cash incentives, retention,
severance or termination pay to, or enter into any employment, bonus, change of control or severance agreement with, any current or former Service Provider (other than annual bonuses in the ordinary
course of business consistent with past practice); (C) establish, adopt, enter into, terminate or amend any Company Plan, or establish, adopt or enter into any plan, agreement, program, policy,
trust, fund or other arrangement that would be a Company Plan if it were in existence as of the date of this Agreement, for the benefit of any Service Provider; (D) loan or advance any money or
other property to any current or former Service Provider; or (E) establish, adopt, enter into or amend any collective bargaining agreement;
(viii) except
as necessary to comply with
Section 3.03
,
Section 3.04
or
Section 3.05
, (A) exercise
discretion with respect to or otherwise
voluntarily accelerate the lapse of restriction or vesting of any equity or equity-based awards as a result of the Merger, any other change of control of the Company or otherwise; or
(B) exercise its discretion with respect to or otherwise amend, modify or supplement any employee stock purchase plan;
(ix) terminate,
discontinue, close or dispose of any plant, facility or other business operation, or lay off any employees (other than layoffs of less than 50 employees at a
single site in any six-month period in the ordinary course of business consistent with past practice) or implement any early retirement or separation program, or any program providing early retirement
window benefits or announce or plan any such action or program for the future;
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(x) materially
change its financial accounting policies or procedures in effect as of the date hereof, other than as required or permitted by Law or GAAP;
(xi) (A)
make any material change (or file any material change) in any material method of accounting for Tax purposes, (B) make, change or rescind any material Tax
election; (C) settle or compromise any proceeding with respect to any material Tax claim or assessment relating to the Company or any of its Subsidiaries; (D) file any material amended
Tax Return or any material Tax Return in a manner inconsistent with past practice or claim for any material refund (or surrender any right to claim a material refund of Taxes); (E) enter into
any material closing agreement relating to Taxes; or (F) waive or extend for a period of greater than twelve (12) months the statute of limitations in respect of the assessment or
determination of material Taxes, except in each case, (i) if required by Law or (ii) in the ordinary course of business consistent with past practice;
(xii) (A)
settle (or agree to settle) any Action, other than (i) settlements involving not more than $500,000 in monetary damages in the aggregate (net of insurance
proceeds) payable by the Company or any of its Subsidiaries in respect of such settlement and that do not (x) require any actions or impose any material restrictions on the business or
operations of the Company and its Subsidiaries (taken as a whole), or after the Effective Time, Parent and its Subsidiaries (taken as a whole) or (y) include the admission of wrongdoing by the
Company or any of its Subsidiaries and (ii) stockholder litigation, which is the subject of
Section 7.13
, (B) settle or compromise
any material investigation or inquiry by any Governmental Authority, including by entering into any consent decree or other similar agreement, or (C) waive, release or assign any claims or
rights of material value;
(xiii) enter
into, amend, waive or renew (in each case, other than in the ordinary course of business) or terminate (excluding any expiration in accordance with its terms)
any Company Material Contract (or any other contract or agreement that would be deemed a Company Material Contract if it had been entered into prior to the date of this Agreement);
(xiv) (A)
abandon, disclaim, dedicate to the public, sell, assign or grant any security interest in, to or under any material Company Intellectual Property, including
failing to perform or cause to be performed all applicable filings, recordings and other acts, or to pay or cause to be paid all required fees and Taxes, to maintain and protect its interest in such
Company Intellectual Property; or (B) grant to any third party any license, or enter into any covenant not to sue, with respect to any Company Intellectual Property, except in the ordinary
course of business consistent with past practice;
(xv) fail
to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulations promulgated thereunder;
(xvi) adopt
a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, other
than internal reorganizations in the ordinary course of business that would not have a material and adverse impact on the Company and its Subsidiaries or the transactions contemplated by this
Agreement;
(xvii) enter
into, amend, waive or terminate (other than terminations in accordance with their terms) transactions, contracts, arrangements, commitments or understandings
between the Company or any of its Subsidiaries, on the one hand, and any of the Company's Affiliates, on the other hand, that would be required to be disclosed by the Company under Item 404 of
Regulation S-K under the Securities Act; or
(xviii) agree,
resolve, announce an intention, enter into any formal or informal agreement or otherwise make a commitment, to do any of the foregoing.
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(c) In
addition, between the date of this Agreement and the Effective Time, the Company and its Subsidiaries shall (i) prepare and timely file all material Tax
Returns required to be filed, (ii) timely pay all Taxes shown to be due and payable on such Tax Returns and (iii) promptly notify Parent of any written notice received by the Company
after the date of this Agreement with respect to any material suit, claim, action, investigation, audit or proceeding in respect of any Tax matters (or any significant developments with respect to
such suits, claims, actions, investigations, audits or proceedings) that the Company reasonably believes would result in a material amount of Tax liability to the Company and its Subsidiaries taken as
a whole.
Section 6.02
Conduct of Business by Parent Pending the Merger.
(a) Parent
covenants and agrees that, between the date of this Agreement and the Effective Time, except (i) as set forth in
Section 6.02 of the Parent Disclosure Schedule, (ii) as expressly contemplated by any other provision of this Agreement or (iii) with the prior written consent of the Company
(such consent not to be unreasonably withheld, conditioned or delayed), the businesses of Parent and its Subsidiaries shall be conducted in the ordinary course of business and in a manner consistent
with past practice and Parent and each of its Subsidiaries shall use their reasonable best efforts to (A) preserve substantially intact their existing assets, (B) preserve substantially
intact their business organization, (C) keep available the service of Parent's named executive officers, (D) maintain and preserve intact their current relationships with customers,
suppliers, distributors, creditors and other Persons with which Parent or any of its Subsidiaries has significant business relations and (E) comply in all material respects with applicable Law.
(b) By
way of amplification and not limitation, except as set forth in Section 6.02 of the Parent Disclosure Schedule, as expressly contemplated by any other
provision of this Agreement or with the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed), neither Parent nor any of its Subsidiaries shall,
between the date of this Agreement and the Effective Time, directly or indirectly, do, or propose to do, any of the following:
(i) amend
or otherwise change its certificate of incorporation or bylaws or equivalent organizational documents;
(ii) issue,
sell, pledge or dispose of, grant an Encumbrance on or permit an Encumbrance to exist on, or authorize the issuance, sale, pledge or disposition of, or granting
or placing of an Encumbrance on, any shares of any class of capital stock, or other ownership interests, of Parent or any of its Subsidiaries, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any other ownership interest of Parent or any of its Subsidiaries (except for (A) the issuance of (x) shares of Parent
Common Stock issuable pursuant to employee stock options, performance share awards, restricted stock units or restricted stock awards outstanding on the date hereof or (y) employee stock
options, performance share awards, restricted stock units or restricted stock awards in the ordinary course of business, in each case, pursuant to the terms of the applicable Parent Plans as in effect
immediately prior to the date of this Agreement and (B) the issuance by a Subsidiary of Parent of its capital stock to Parent or another Subsidiary of Parent);
(iii) sell,
pledge or dispose of, grant an Encumbrance on or permit an Encumbrance to exist on, or authorize the sale, pledge or disposition of, or granting or placing of an
Encumbrance on, any material assets of the Parent and its Subsidiaries, (taken as a whole) except (A) sales of inventory in the ordinary course of business, (B) pursuant to any contracts
or agreements in force on the date of this Agreement, as may be amended from time to time in accordance with the terms hereof, (C) such dispositions among the Parent and its Subsidiaries, or
(D) in connection with the Financing;
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(iv) declare,
set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for
dividends by any of Parent's direct or indirect wholly-owned Subsidiaries to Parent or any of its other wholly-owned Subsidiaries;
(v) reclassify,
combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock;
(vi) except
as set forth in Section 6.02(b)(vi) of the Parent Disclosure Schedule, (A) acquire (including by merger, consolidation or acquisition of stock or
assets or any other business combination) any corporation, partnership, other business organization or any division thereof, which acquisition would be material to Parent, or any other material amount
of assets or would be reasonably likely to materially adversely affect the ability of Parent and the Company to obtain those consents, approvals, non-disapprovals, orders and other authorizations of
any Governmental Authority set forth on Section 8.01(d) of the Company Disclosure Schedule and/or Section 8.01(d) of the Parent Disclosure
Schedule or materially delay obtaining such consents, approvals, non-disapprovals, orders or authorizations; (B) other than in connection with the Financing or otherwise in the ordinary course
of business, incur additional Indebtedness in respect of borrowed money and the issuance of any debt securities in an amount more than $50,000,000 in excess of the aggregate Indebtedness of the
Company and its Subsidiaries as of the date of this Agreement, (C) except as required by the terms of any Indebtedness outstanding as of the date hereof, and other than in the ordinary course
of business, assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person, or make any material loans or material advances or capital contribution to, or investment
in, any Person; or (D) enter into or materially amend any contract, agreement, commitment or arrangement with respect to any matter set forth in clauses (A) through (C) of this
Section 6.02(b)(vi)
;
(vii) except
as otherwise required by Law or a Parent Benefit Plan in existence as of the date of this Agreement, terminate or amend any Parent Plan if it would materially
decrease the aggregate benefits provided to Service Providers;
(viii) materially
change its financial accounting policies or procedures in effect as of the date hereof, other than as required or permitted by Law or GAAP;
(ix) (A)
make any material change (or file any material change) in any material method of accounting for Tax purposes, (B) make, change or rescind any material Tax
election; (C) settle or compromise any proceeding with respect to any material Tax claim or assessment relating to Parent or any of its Subsidiaries; (D) file any material amended Tax
Return or any material Tax Return in a manner inconsistent with past practice or claim for any material refund (or surrender any right to claim a material refund of Taxes); (E) enter into any
material closing agreement relating to Taxes; or (F) waive or extend for a period of greater than twelve (12) months the statute of limitations in respect of the assessment or
determination of material Taxes, except in each case, (i) if required by Law or (ii) in the ordinary course of business consistent with past practice;
(x) fail
to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulations promulgated thereunder;
(xi) adopt
a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Parent or any of its Subsidiaries, other than
internal reorganizations in the ordinary course of business that would not have a material and adverse impact on the Company and its Subsidiaries or the transactions contemplated by this Agreement; or
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(xii) agree,
resolve, announce an intention, enter into any formal or informal agreement or otherwise make a commitment, to do any of the foregoing.
Section 6.03
Control of Operations.
Without limiting
Section 6.01
or
Section 6.02
,
nothing contained in this Agreement shall give (a) Parent or Merger Sub, directly or indirectly, the right to control or direct the operations of the Company or any of its Subsidiaries prior to
the Closing, or (b) the Company, directly or indirectly, the right to control or direct the operations of Parent or any of its Subsidiaries prior to the Closing. Prior to the Closing, each of
the Company and Parent shall exercise, consistent with and subject to the terms and conditions of this Agreement, control and supervision over such matters.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.01
Registration Statement; Joint Proxy Statement.
(a) As promptly as
practicable after the execution of this Agreement, (i) Parent and the Company shall cooperate in preparing and shall
prepare and file with the SEC a joint proxy statement (such joint proxy statement, as amended or supplemented from time to time, the "
Joint Proxy
Statement
") to be sent to the stockholders of the Company relating to the Company Stockholders' Meeting and to be sent to the stockholders of Parent relating to the Parent
Stockholders' Meeting and (ii) Parent shall prepare and file with the SEC a registration statement on Form S-4 (together with all amendments thereto, the
"
Registration Statement
") in which the Joint Proxy Statement shall be included as a prospectus, in connection with the registration under the Securities
Act of the shares of Parent Common Stock to be issued to the stockholders of the Company pursuant to the Merger. Each of Parent and the Company shall use their reasonable best efforts to cause the
Joint Proxy Statement in preliminary form and the Registration Statement to be filed, in each case, within forty five (45) days of the date of this Agreement and to cause the Registration
Statement to become effective as promptly as practicable and to keep the Registration Statement effective as long as necessary to consummate the Transactions. The Company shall furnish all information
concerning the Company and the holders of the Company Common Stock as Parent may reasonably request in connection with such actions and the preparation of the Registration Statement and the Joint
Proxy Statement, and Parent shall furnish all information concerning Parent and the holders of the Parent Common Stock as the Company may reasonably request in connection with such actions and the
preparation of the Registration Statement and the Joint Proxy Statement. As promptly as practicable after the Registration Statement shall have become effective, the Company shall mail the Joint Proxy
Statement to its stockholders and Parent shall mail the Joint Proxy Statement to its stockholders.
(b) The
Joint Proxy Statement shall (i) state that the Company Board has unanimously (A) determined that the Merger is fair to, and in the best interests of,
the Company and its stockholders and (B) approved this Agreement and declared its advisability, (ii) include the Company Recommendation (except to the extent that the Company effects a
Change in the Company Recommendation in accordance with
Section 7.03
) and (iii) include the written opinion of Merrill Lynch, Pierce,
Fenner & Smith Incorporated, that, as of the date of such opinion and subject to the assumptions, limitations, qualifications and other matters set forth therein, the Merger Consideration to be
paid to the holders of Shares is fair, from a financial point of view, to such holders.
(c) The
Joint Proxy Statement shall (i) state that the Parent Board has unanimously approved the Parent Share Issuance, (ii) include the Parent Recommendation
(except to the extent that Parent effects a Change in the Parent Recommendation in accordance with
Section 7.04
) and (iii) include the
written opinion of Greenhill & Co., LLC, that, as of the date of such opinion and subject to the assumptions, limitations, qualifications and other matters set forth therein, the
Merger Consideration is fair, from a financial point of view, to Parent's stockholders.
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(d) No
filing of or amendment or supplement to the Joint Proxy Statement or the Registration Statement will be made by Parent or the Company without the prior consent of the
other party (which shall not be unreasonably withheld, conditioned or delayed);
provided
that this approval right shall not apply with respect to
information relating to a Change in the Company Recommendation or a Change in the Parent Recommendation. Parent and the Company, as applicable, will advise the other promptly after receiving oral or
written notice of (i) the time when the Registration Statement has become effective or any supplement or amendment to the Joint Proxy Statement or the Registration Statement has been filed,
(ii) the issuance of any stop order, (iii) the suspension of the qualification for offering or sale in any jurisdiction of the Parent Common Stock issuable in connection with the Merger,
or (iv) any oral or written request by the SEC for amendment of the Joint Proxy Statement or the Registration Statement or SEC comments thereon or requests by the SEC for additional
information. Parent and the Company shall promptly provide each other with copies of any written communication from the SEC and shall cooperate to prepare appropriate responses thereto (and will
provide each other with copies of any such responses given to the SEC) and make such modifications to the Joint Proxy Statement or the Registration Statement as shall be reasonably appropriate.
(e) Parent
represents and warrants to the Company that the information supplied by Parent for inclusion or incorporation by reference in the Registration Statement and the
Joint Proxy Statement shall not, at (i) the time the Registration Statement is declared effective, (ii) the time the Joint Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to the stockholders of the Company and the stockholders of Parent, (iii) the time of the Company Stockholders' Meeting,
(iv) the time of the Parent Stockholders' Meeting and (v) the Effective Time, contain any untrue statement of a material fact or fail 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. If, at any time prior to the Effective Time, any event or
circumstance relating to Parent or Merger Sub, or their respective officers or directors, shall be discovered by Parent which should be set forth in an amendment or a supplement to the Registration
Statement or the Joint Proxy Statement so that either such document would not include any misstatement of a material fact or fail to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, Parent shall promptly inform the Company and Parent and the Company shall cause an appropriate amendment or supplement
describing such information to be promptly filed with the SEC and, to the extent required by Law, disseminated to the stockholders of the Company and the stockholders of Parent. All documents that
Parent is responsible for filing with the SEC in connection with the Transactions will comply as to form and substance in all material respects with the applicable requirements of the Securities Act
and the rules and regulations thereunder and the Exchange Act and the rules and regulations thereunder, except that no representation or warranty is made by Parent with respect to statements made or
incorporated by reference therein based on information supplied by the Company specifically for inclusion or incorporation by reference in the Registration Statement or the Joint Proxy Statement.
(f) The
Company represents and warrants to Parent that the information supplied by the Company for inclusion or incorporation by reference in the Registration Statement and
the Joint Proxy Statement shall not, at (i) the time the Registration Statement is declared effective, (ii) the time the Joint Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the stockholders of the Company and the stockholders of Parent, (iii) the time of the Company Stockholders' Meeting, (iv) the time of the Parent Stockholders'
Meeting and (v) the Effective Time, contain any untrue statement of a material fact or fail 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. If, at any time prior to the Effective Time, any event or circumstance relating to the Company or any of its
Subsidiaries, or their
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respective
officers or directors, shall be discovered by the Company which should be set forth in an amendment or a supplement to the Registration Statement or the Joint Proxy Statement so that either
such document would not include any misstatement of a material fact or fail to state any material fact necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading, the Company shall promptly inform Parent and Parent and the Company shall cause an appropriate amendment or supplement describing such information to be promptly filed with the
SEC and, to the extent required by Law, disseminated to the stockholders of the Company and the stockholders of Parent. All documents that the Company is responsible for filing with the SEC in
connection with the Transactions will comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the rules and regulations thereunder and the
Exchange Act and the rules and regulations thereunder, except that no representation or warranty is made by the Company with respect to statements made or incorporated by reference therein based on
information supplied by Parent specifically for inclusion or incorporation by reference in the Registration Statement or the Joint Proxy Statement.
Section 7.02
Stockholders' Meetings.
(a) The Company
shall, as promptly as practicable after the Form S-4 is declared effective under the Securities Act, take all lawful action to
call, give notice of, convene and hold the Company Stockholders' Meeting for the purpose of obtaining the Company Stockholder Approval. The Company agrees that this Agreement shall be submitted for
adoption by the stockholders of the Company at the Company Stockholders' Meeting and, except in the event of the termination of this Agreement in accordance with
Article IX
, the obligation of the
Company to call, give notice of, convene and hold the Company Stockholders' Meeting and to submit this
Agreement for adoption at the Company Stockholders' Meeting shall not be limited or otherwise affected by (i) the commencement, disclosure, announcement or submission to the Company or its
stockholders of any Company Acquisition Proposal or (ii) any Change in the Company Recommendation. Subject to
Section 7.03(e)
, the Company
shall solicit from its stockholders proxies in favor of the adoption of this Agreement and shall use its reasonable best efforts to secure the Company Stockholder Approval. The Company agrees that,
prior to any termination of this Agreement, it shall not submit to a vote of the stockholders of the Company any Company Acquisition Proposal or Acquisition Agreement (in either case, whether or not a
Company Superior Proposal) prior to the vote of the Company's stockholders regarding the adoption of the Agreement at the Company Stockholders' Meeting. The Company may only postpone or adjourn the
Company Stockholders' Meeting (x) to solicit additional proxies for the purpose of obtaining the Company Stockholder Approval, (y) for the absence of a quorum and (z) to allow
reasonable additional time for the filing or mailing of any supplemental or amended disclosure that the Company has determined after consultation with outside legal counsel is reasonably likely to be
required under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by stockholders of the Company prior to the Company Stockholders' Meeting;
provided
,
however
, that the Company may not postpone or adjourn the Company Stockholders' Meeting more
than fifteen (15) Business Days in the aggregate from the originally scheduled date of the Company Stockholders' Meeting without the prior written consent of Parent.
(b) Parent
shall, as promptly as practicable after the Form S-4 is declared effective under the Securities Act, take all lawful action to call, give notice of,
convene and hold the Parent Stockholders' Meeting for the purpose of obtaining the Parent Stockholder Approval. Parent agrees that the Parent Share Issuance shall be submitted for adoption by the
stockholders of Parent at the Parent Stockholders' Meeting and, except in the event of the termination of this Agreement in accordance with
Article IX
, the obligation of Parent to call, give notice
of, convene and hold the Parent Stockholders' Meeting shall not be limited or otherwise
affected by (i) the commencement, disclosure, announcement or submission to Parent or its stockholders of any Parent Acquisition Proposal or (ii) any Change in the Parent Recommendation.
Subject to
Section 7.04(e)
, Parent shall solicit from its stockholders proxies in favor of the Parent Share Issuance and shall use its reasonable
best efforts to secure the Parent Stockholder Approval.
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Parent
agrees that, prior to any termination of this Agreement, it shall not submit to a vote of the stockholders of Parent any Parent Acquisition Proposal or Acquisition Agreement (in either case,
whether or not a Parent Superior Proposal) prior to the vote of Parent's stockholders regarding the Parent Share Issuance at the Parent Stockholders' Meeting. Parent may only postpone or adjourn the
Parent Stockholders' Meeting (x) to solicit additional proxies for the purpose of obtaining the Parent Stockholder Approval, (y) for the absence of a quorum and (z) to allow
reasonable additional time for the filing or mailing of any supplemental or amended disclosure that Parent has determined after consultation with outside legal counsel is reasonably likely to be
required under applicable Law and for such supplemental or amended disclosure to be disseminated and reviewed by stockholders of Parent prior to the Parent Stockholders' Meeting;
provided
,
however
, that Parent may not postpone or adjourn the Parent Stockholders' Meeting more than
fifteen (15) Business Days in the aggregate from the originally scheduled date of the Parent Stockholders' Meeting without the prior written consent of the Company.
(c) Each
of the Company and Parent shall use its reasonable best efforts to cause the Company Stockholders' Meeting and the Parent Stockholders' Meeting to be held on the
same date.
Section 7.03
No Solicitation of Transactions by the Company.
(a) The
Company shall, and shall cause its Subsidiaries to, and shall instruct (and use its reasonable best efforts to cause) the Representatives of
the Company to, immediately cease and cause to be terminated any solicitation, discussions, communications or negotiations with any Person that may be ongoing with respect to a Company Acquisition
Proposal, or any inquiry, proposal or offer that would reasonably be expected to lead to a Company Acquisition Proposal, and shall request within two (2) Business Days of the date of this
Agreement (and shall use its reasonable best efforts to cause) the prompt return or destruction of all confidential information previously furnished to any Person in connection therewith and
immediately terminate all physical and electronic dataroom access previously granted to any such Person, its Affiliates or Representatives. The Company shall not, and shall cause each of its
Subsidiaries not to, terminate, waive, amend or modify any provision of any existing standstill or confidentiality agreement to which it or any of its Subsidiaries is a party, and the Company shall,
and shall cause its Subsidiaries to, enforce the provisions of any such agreement;
provided
,
however
,
that the Company may grant a waiver of, and shall not be obligated to enforce, any such provision (i) to the extent required to permit a party to submit a Company Acquisition Proposal and
(ii) if the Company Board (or any committee thereof) has determined in good faith, after consultation with outside legal counsel, that the failure to grant such waiver would be inconsistent
with its fiduciary duties under applicable Law.
(b) Except
as expressly permitted by this
Section 7.03
, prior to the Closing, the Company agrees that it shall not and
shall cause each of its Subsidiaries and any of the officers, directors or employees of it or
any of its Subsidiaries not to, and shall use its reasonable best efforts to cause the other Representatives of the Company not to, directly or indirectly, (i) solicit, initiate, facilitate or
encourage any inquiries or the implementation or submission of any Company Acquisition Proposal, or any proposals or offers that would be reasonably expected to lead to, a Company Acquisition
Proposal, (ii) engage in, continue or otherwise participate in any discussions, communications or negotiations regarding, or furnish to any Person any non-public information in connection with,
or for the purpose of facilitating or encouraging, any inquiries, proposals or offers that constitute, or would be reasonably expected to lead to, a Company Acquisition Proposal, except to notify such
Person of the existence of this
Section 7.03(b)
, or (iii) execute or enter into any Acquisition Agreement;
provided
that, notwithstanding the
foregoing, the Company may grant a waiver, amendment or release under any confidentiality or standstill agreement,
solely to the extent necessary to allow a confidential Company Acquisition Proposal to be made to the Company or the Company Board (or any committee thereof) so long as (x) the Company Board
has determined in good faith (after consultation with outside legal counsel) that the failure to
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grant
such waiver would be inconsistent with its fiduciary duties under applicable Law and (y) the Company promptly (and, in any event, within 24 hours) notifies Parent of any such
waiver, amendment or release;
provided
,
however
, that, prior to the receipt of the Company Stockholder
Approval, nothing contained in this
Section 7.03
shall prevent the Company or the Company Board (or any committee thereof) from furnishing
information to, or engaging in discussions, communications or negotiations with, any Person that made a bona fide Company Acquisition Proposal, which Company Acquisition Proposal did not result from a
breach (or deemed breach in accordance with
Section 7.03(h)
) of this
Section 7.03
, if, and
only if, prior to taking such action referred to in clause (ii) above, (A) the Company Board (1) determines in good faith (after consultation with its outside advisors) that such
Company Acquisition Proposal is, or would reasonably be expected to result in, a Company Superior Proposal, and (2) determines in good faith (after consultation with its outside legal counsel)
that its failure to take such actions would be inconsistent with its fiduciary duties under applicable Law, (B) the Company provides written notice to Parent of the determination referenced in
clause (A) promptly (and, in any event, within 24 hours of such determination), and (C) the Company receives from such Person an executed Acceptable Confidentiality Agreement. The
Company shall deliver to Parent a copy of any executed Acceptable Confidentiality Agreement promptly (and, in any event, within 24 hours) following its execution. The Company shall provide to
Parent any non-public information concerning the Company or any of its Subsidiaries provided by the Company or any of its Subsidiaries to any Person entering into an Acceptable Confidentiality
Agreement pursuant to this
Section 7.03(b)
that has not been previously provided to Parent prior to or substantially concurrently with the time
it is provided to such Person.
(c) The
Company shall promptly (and, in any event, within 24 hours) (i) provide Parent written notice of (A) the receipt of any Company Acquisition
Proposal or (B) subject to sub-clause (ii) below, any inquiries, proposals or offers received by the Company, any of its Subsidiaries or any Representatives of
the Company concerning a Company Acquisition Proposal and (ii) disclose to Parent the identity of such Person making, and an unredacted copy of, any such Company Acquisition Proposal or any
such inquiry, offer, proposal or request made in writing (or, in the case of sub-clause (i)(A), sub-clause (i)(B) or this sub-clause (ii), if made orally, and if the Company
reasonably believes that such oral Company Acquisition Proposal, inquiry, offer, proposal or request is likely to result in such Person making a Company Acquisition Proposal, inquiry, offer, proposal
or request in writing, a reasonably detailed description of such Company Acquisition Proposal, inquiry, offer, proposal or request). The Company shall, promptly upon receipt or delivery thereof (and,
in any event, within 24 hours), provide Parent (and its outside counsel) with copies of all drafts and final versions of definitive agreements including schedules and exhibits thereto (which
may be redacted to the extent necessary to protect confidential information of the Person making such Company Acquisition Proposal) relating to such Company Acquisition Proposal, in each case
exchanged between the Company or any of its Representatives, on the one hand, and the Person making such Company Acquisition Proposal or any of its Representatives, on the other hand. The Company
shall, in person or by telephone, keep Parent reasonably informed on a reasonably prompt basis (and, in any event, within 24 hours of any material development) of the status and details
(including with respect to any change in price or other material amendments) of any such Company Acquisition Proposal or other such inquiry, offer, proposal or request concerning a Company Acquisition
Proposal. The Company shall promptly (and, in any event, within 48 hours) following a determination by the Company Board (or any committee thereof) that a Company Acquisition Proposal is a
Company Superior Proposal, notify Parent of such determination.
(d) Except
as expressly set forth in
Section 7.03(e)
, neither the Company nor the Company Board, as applicable, shall,
and neither shall publicly propose to: (i) withhold, withdraw or modify, in a manner adverse to Parent, the Company Recommendation; (ii) approve or recommend any
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Company
Acquisition Proposal; (iii) enter into any Acquisition Agreement; or (iv) refrain from recommending against (and reaffirming the Company Recommendation) any Company Acquisition
Proposal that is a tender offer or exchange offer within ten (10) Business Days after the commencement thereof (any such action, other than those set forth in the preceding clause (iii),
a "
Change in the Company Recommendation
").
(e) Notwithstanding
anything in this Agreement to the contrary, prior to the receipt of the Company Stockholder Approval, the Company Board may effect a Change in the
Company Recommendation, and, in the case of clause (i) of this
Section 7.03(e)
, and so long as the Company has not committed an
intentional breach (or deemed intentional breach in accordance with
Section 7.03(h)
) of this
Section 7.03
that would have an adverse impact on
the ability of Parent to propose or negotiate any amendments or modifications to this Agreement
pursuant to this
Section 7.03(e)
, terminate this Agreement pursuant to
Section 9.01(d)(iv)
in order to concurrently with such termination enter into an Acquisition Agreement
with respect to a Company Superior Proposal, if (i) the Company receives an unsolicited, written Company Acquisition Proposal that the Company Board determines in good faith (after consultation
with its outside advisors) is a Company Superior Proposal and determines in good faith (after consultation with its outside legal counsel) that its failure to take such actions would be inconsistent
with its fiduciary duties under applicable Law or (ii) a Company Intervening Event occurs and as a result thereof the Company Board determines in good faith (after consultation with its outside
legal counsel) that the failure to effect a Change in the Company Recommendation would be inconsistent with its fiduciary duties under applicable Law;
provided
that
(A) prior
to effecting such Change in the Company Recommendation with respect to a Company Superior Proposal or, so long as the Company has not committed an intentional
breach (or deemed intentional breach in accordance with
Section 7.03(h)
) of this
Section 7.03
that would have an adverse impact on the ability of
Parent to propose or negotiate any amendments or modifications to this Agreement
pursuant to this
Section 7.03(e)
, terminating this Agreement pursuant to
Section 9.01(d)(iv)
, (w) the Company has notified Parent in writing
that it intends to effect a Change in the Company Recommendation or,
so long as the Company has not committed an intentional breach (or deemed intentional breach in accordance with
Section 7.03(h)
) of this
Section 7.03
that would have an adverse impact on the ability of Parent to propose or negotiate any amendments or modifications to this Agreement
pursuant to this
Section 7.03(e)
, terminate this Agreement pursuant to
Section 9.01(d)(iv)
, (x) the Company has provided Parent a summary of
the material terms and conditions of such Company Superior Proposal,
which shall include (at a minimum) all of the information that is specified in
Section 7.03(c)
, (y) if requested to do so by Parent, for a
period of four (4) calendar days following delivery of such notice, the Company shall have discussed and negotiated in good faith, and shall have made the Representatives of the Company
available to discuss and negotiate in good faith, with Parent and its Representatives, any bona fide proposed modifications to the terms and conditions of this Agreement; and (z) no earlier
than the end of such four (4) calendar day period, the Company Board (after consultation with its outside legal counsel and financial advisor), shall have determined in good faith, after
considering the terms of any proposed amendment or modification to this Agreement proposed by Parent during such four (4) calendar day period, that such Company Superior Proposal still
constitutes a Company Superior Proposal and that the failure to make a Change in the Company Recommendation or, so long as the Company has not committed an intentional breach (or deemed intentional
breach in accordance with
Section 7.03(h)
) of this
Section 7.03
that would have an adverse
impact on the ability of Parent to propose or negotiate any amendments or modifications to this Agreement pursuant to this
Section 7.03(e)
, to
terminate this Agreement pursuant to
Section 9.01(d)(iv)
in connection therewith would be inconsistent with its fiduciary duties under applicable
Law (it being understood and agreed
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that
any change to the financial or other material terms of a proposal that was previously the subject of a notice hereunder shall require a new notice to Parent as provided above, but with respect to
any such
subsequent notices references herein to a "four (4) calendar day period" shall be deemed to be references to a "two (2) calendar day period"); and
(B) prior
to effecting such Change in the Company Recommendation with respect to a Company Intervening Event, (x) the Company has notified Parent in writing that it
intends to effect such Change in the Company Recommendation, describing in reasonable detail the reasons for such Change in the Company Recommendation, (y) if requested to do so by Parent, for
a period of four (4) calendar days following delivery of such notice, the Company shall have discussed and negotiated in good faith, and shall have made the Representatives of the Company
available to discuss and negotiate in good faith, with Parent and its Representatives any bona fide proposed modifications to the terms and conditions of this Agreement and (z) no earlier than
the end of such four (4) calendar day period, the Company Board shall have determined in good faith, after considering the terms of any proposed amendment or modification to this Agreement
proposed by Parent during such four (4) calendar day period, that the failure to effect a Change in the Company Recommendation would still be inconsistent with the Company Board's fiduciary
duties under applicable Law.
(f) Nothing
contained in this Agreement shall prevent the Company or the Company Board from issuing a "stop, look and listen" communication pursuant to Rule 14d-9(f)
under the Exchange Act or complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act with respect to a Company Acquisition Proposal or from making any disclosure to the Company's
stockholders if the Company Board determines (after consultation with its outside legal counsel) that its failure to do so would be inconsistent with its fiduciary duties under applicable Law;
provided
that any Change in the Company Recommendation may only be made in accordance with
Section 7.03(e)
. For the avoidance of doubt, a factually accurate public statement that describes the Company's
receipt of a Company Acquisition
Proposal and the operation of this Agreement with respect thereto (without including a reaffirmation) shall not be deemed a Change in the Company Recommendation.
(g) Except
as set forth in
Section 9.03(a)(ii)
with respect to a Company Acquisition Proposal, for purposes of this
Agreement:
(i) "
Company Acquisition Proposal
" means any proposal or offer from any Person or group (other than Parent or Merger Sub)
relating to, in a single transaction or series of related transactions, (A) any direct or indirect acquisition of (x) more than 20% of the consolidated assets (whether based on the fair
market value, revenue generation or net income) of the Company and its Subsidiaries, taken as a whole, including in any such case through the acquisition of one or more Subsidiaries of the Company
owning such assets, or (y) more than 20% of any class of equity securities, or securities convertible into or exchangeable for equity securities, of the Company or any of its Subsidiaries;
(B) any tender offer or exchange offer, as defined pursuant to the Exchange Act, that if consummated would result, directly or indirectly, in any Person or group (or the shareholders of any
Person or group) beneficially owning 20% or more of any class of equity securities, or securities convertible into or exchangeable for equity securities, of the Company or any of its Subsidiaries; or
(C) any merger, consolidation, business combination, share exchange, recapitalization, liquidation, dissolution or other similar transaction involving the Company or any of its Subsidiaries
that would result in any Person or group (or the shareholders of any Person or group) beneficially owning, directly or indirectly, more than 20% of any class of equity securities, or securities
convertible into or exchangeable for equity securities, of the
Company or any of its Subsidiaries or 20% of the voting power of the surviving entity in a merger involving the Company or any of its Subsidiaries or the resulting direct or indirect
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parent
of the Company, such Subsidiary or such surviving entity (or any securities convertible into, or exchangeable for, securities representing such voting power). Whenever the term "group" is used
in this Agreement, it shall have the definition set forth in Rule 13d-3 of the Exchange Act.
(ii) "
Company Superior Proposal
" means any bona fide written Company Acquisition Proposal (with all references to 20% in the
definition of Company Acquisition Proposal being treated as references to 50% for purposes of this definition) made by any Person or group (other than Parent or any of its Subsidiaries) after the date
of this Agreement, which Company Acquisition Proposal did not result from a breach (or deemed breach pursuant to
Section 7.03(h)
) of this
Section 7.03
, that (A) is on terms that the Company Board determines in good faith (after receiving the advice of its financial advisor
and outside legal counsel and after taking into account all the terms and conditions of the Company Acquisition Proposal) are more favorable to the Company's stockholders from a financial point of
view than the Merger and the transactions contemplated thereby (taking into account any proposed amendment or modification proposed by Parent pursuant to
Section 7.03(e)(A)
) and (B) the
Company Board determines (after receiving the advice of its financial advisor and outside legal counsel)
is reasonably capable of being consummated in accordance with its terms, taking into account all financial, regulatory, legal, timing and other aspects (including certainty of closing, certainty of
financing and the identity of the Person making the Company Acquisition Proposal) of such proposal.
(h) It
is understood that for all purposes of this Agreement, in the event that any Representative of the Company or any of its Subsidiaries takes any action which, if taken
by the Company, would constitute a breach of this
Section 7.03
, such action shall be deemed to be a breach of this
Section 7.03
by the Company.
Section 7.04
No Solicitation of Transactions by Parent.
(a) Parent shall,
and shall cause its Subsidiaries to, and shall instruct (and use its reasonable best efforts to cause) the Representatives of
Parent to, immediately cease and cause to be terminated any solicitation, discussions, communications or negotiations with any Person that may be ongoing with respect to a Parent Acquisition Proposal,
or any inquiry, proposal or offer that would reasonably be expected to lead to a Parent Acquisition Proposal, and shall request within two (2) Business Days of the date of this Agreement (and
shall use its reasonable best efforts to cause) the prompt return or destruction of all confidential information previously furnished to any Person in connection therewith and immediately terminate
all physical and electronic dataroom access previously granted to any such Person, its Affiliates or Representatives. Parent shall not, and shall cause each of its Subsidiaries not to, terminate,
waive, amend or modify any provision of any existing standstill or confidentiality agreement to which it or any of its Subsidiaries is a party, and Parent shall, and shall cause its Subsidiaries to,
enforce the provisions of any such agreement;
provided
,
however
, that Parent may grant a waiver of, and
shall not be obligated to enforce, any such provision (i) to the extent required to permit a party to submit a Parent Acquisition Proposal and (ii) if the Parent Board (or any committee
thereof) has determined in good faith, after consultation with outside legal counsel, that the failure to grant such waiver would be inconsistent with its fiduciary duties under applicable Law. Parent
represents and warrants that as of the date of this Agreement: (x) neither Parent nor any of its Subsidiaries or Representatives are currently engaged in any discussions, communications or
negotiations with respect to any Parent Acquisition Proposal, (y) no Person has indicated to Parent that it is considering making a proposal that constitutes, or would reasonably be expected to
constitute, a Parent Acquisition Proposal and (z) no Person has entered into, or is in discussions or negotiations with respect to, a confidentiality or similar agreement in connection with any
Parent Acquisition Proposal.
(b) Except
as expressly permitted by this
Section 7.04
, prior to the Closing, Parent agrees that it shall not and
shall cause each of its Subsidiaries and any of the officers, directors or employees
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of
it or any of its Subsidiaries not to, and shall use its reasonable best efforts to cause the other Representatives of Parent not to, directly or indirectly, (i) solicit, initiate, facilitate
or encourage any inquiries or the implementation or submission of any Parent Acquisition Proposal, or any proposals or offers that would be reasonably expected to lead to, a Parent Acquisition
Proposal, (ii) engage in, continue or otherwise participate in any discussions, communications or negotiations regarding, or furnish to any Person any non-public information in connection with,
or for the purpose of facilitating or encouraging, any inquiries, proposals or offers that constitute, or would be reasonably expected to lead to, a Parent Acquisition Proposal, except to notify such
Person of the existence of this
Section 7.04(b)
, or (iii) execute or enter into any Acquisition Agreement;
provided
that, notwithstanding the
foregoing, Parent may grant a waiver, amendment or release under any confidentiality or standstill agreement, solely
to the extent necessary to allow a confidential Parent Acquisition Proposal to be
made to Parent or the Parent Board (or any committee thereof) so long as (x) the Parent Board has determined in good faith (after consultation with outside legal counsel) that the failure to
grant such waiver would be inconsistent with its fiduciary duties under applicable Law and (y) Parent promptly (and, in any event, within 24 hours) notifies the Company of any such
waiver, amendment or release;
provided
,
however
, that, prior to the receipt of the Parent Stockholder
Approval, nothing contained in this
Section 7.04
shall prevent Parent or the Parent Board (or any committee thereof) from furnishing information
to, or engaging in discussions, communications or negotiations with, any Person that made a bona fide Parent Acquisition Proposal, which Parent Acquisition Proposal did not result from a breach (or
deemed breach in accordance with
Section 7.04(h)
) of this
Section 7.04
, if, and only if,
prior to taking such action referred to in clause (ii) above, (A) the Parent Board (1) determines in good faith (after consultation with its outside advisors) that such Parent
Acquisition Proposal is, or would reasonably be expected to result in, a Parent Superior Proposal, and (2) determines in good faith (after consultation with its outside legal counsel) that its
failure to take such actions would be inconsistent with its fiduciary duties under applicable Law, (B) Parent provides written notice to the Company of the determination referenced in
clause (A) promptly (and, in any event, within 24 hours of such determination), and (C) Parent receives from such Person an executed Acceptable Confidentiality Agreement. Parent
shall deliver to the Company a copy of any executed Acceptable Confidentiality Agreement promptly (and, in any event, within 24 hours) following its execution. Parent shall provide to the
Company any non-public information concerning Parent or any of its Subsidiaries provided by Parent or any of its Subsidiaries to any Person entering into an Acceptable Confidentiality Agreement
pursuant to this
Section 7.04(b)
that has not been previously provided to Parent prior to or substantially concurrently with the time it is
provided to such Person.
(c) Parent
shall promptly (and, in any event, within 24 hours) (i) provide the Company written notice of (A) the receipt of any Parent Acquisition
Proposal or (B) subject to sub-clause (ii) below, any inquiries, proposals or offers received by Parent, any of its Subsidiaries or any Representatives of Parent concerning a Parent
Acquisition Proposal and (ii) disclose to the Company the identity of such Person making, and an unredacted copy of, any such Parent Acquisition Proposal or any such inquiry, offer, proposal or
request made in writing (or, in the case of sub-clause (i)(A), sub-clause (i)(B) or this sub-clause (ii), if made orally, and if Parent reasonably believes that such oral Parent
Acquisition Proposal, inquiry, offer, proposal or request is likely to result in such Person making a Parent Acquisition Proposal, inquiry, offer, proposal or request in writing, a reasonably detailed
description of such Parent Acquisition Proposal, inquiry, offer, proposal or request). Parent shall, promptly upon receipt or delivery thereof (and, in any event, within 24 hours), provide the
Company (and its outside counsel) with copies of all drafts and final versions of definitive agreements including schedules and exhibits thereto (which may be redacted to the extent necessary to
protect confidential information of the Person making such Parent Acquisition Proposal) relating to such Parent Acquisition Proposal, in each case exchanged
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between
Parent or any of its Representatives, on the one hand, and the Person making such Parent Acquisition Proposal or any of its Representatives, on the other hand. Parent shall, in person or by
telephone, keep the Company reasonably informed on a reasonably prompt basis (and, in any event, within 24 hours of any material development) of the status and details (including with respect
to any change in price or other material amendments) of any such Parent Acquisition Proposal or other such inquiry, offer, proposal or request concerning a Parent Acquisition Proposal. Parent shall
promptly (and, in any event, within 48 hours) following a determination by the Parent Board (or any committee thereof) that a Parent Acquisition Proposal is a Parent Superior Proposal, notify
the Company of such determination.
(d) Except
as expressly set forth in
Section 7.04(e)
, neither Parent nor the Parent Board, as applicable, shall, and
neither shall publicly propose to: (i) withhold, withdraw or modify, in a manner adverse to the Company, the Parent Recommendation; (ii) approve or recommend any Parent Acquisition
Proposal; (iii) enter into any Acquisition Agreement; or (iv) refrain from recommending against (and reaffirming the Parent Recommendation) any Parent Acquisition Proposal that is a
tender offer or exchange offer within ten (10) Business Days after the commencement thereof (any such action, other than those set forth in the preceding clause (iii), a
"
Change in the Parent Recommendation
").
(e) Notwithstanding
anything in this Agreement to the contrary, prior to the receipt of the Parent Stockholder Approval, the Parent Board may effect a Change in the Parent
Recommendation, and, in the case of clause (i) of this
Section 7.04(e)
, and so long as Parent has not committed a breach (or deemed breach
pursuant to
Section 7.04(h)
) of this
Section 7.04
that would have an adverse impact on the
ability of the Company to propose or negotiate any amendments or modifications to this Agreement pursuant to this
Section 7.04(e)
, terminate this
Agreement pursuant to
Section 9.01(c)(iii)
in order to concurrently with such termination enter into an Acquisition Agreement with respect to a
Parent Superior Proposal, if (i) Parent receives an unsolicited, written Parent Acquisition Proposal that the Parent Board determines in good faith (after consultation with its outside
advisors) is a Parent Superior Proposal and determines in good faith (after consultation with its outside legal counsel) that its failure to take such actions would be inconsistent with its fiduciary
duties under applicable Law or (ii) a Parent Intervening Event occurs and as a result thereof the Parent Board determines in good faith (after consultation with its outside legal counsel) that
the failure to effect a Change in the Parent Recommendation would be inconsistent with its fiduciary duties under applicable Law;
provided
that
(A) prior
to effecting such Change in the Parent Recommendation with respect to a Parent Superior Proposal or, so long as Parent has not committed an intentional breach (or
deemed intentional breach in accordance with
Section 7.04(h)
) of this
Section 7.04
that
would have an adverse impact on the ability of the Company to propose or negotiate any amendments or modifications to this Agreement pursuant to this
Section 7.04(e)
, terminating this Agreement
pursuant to
Section 9.01(c)(iii)
,
(w) Parent has notified the Company in writing that it intends to effect a Change in the Parent Recommendation or, so long as
Parent has not committed an intentional breach (or deemed intentional breach in accordance with
Section 7.04(h)
) of this
Section 7.04
that would
have an adverse impact on the ability of the Company to propose or negotiate any amendments or modifications to this
Agreement pursuant to this
Section 7.04(e)
, terminate this Agreement pursuant to
Section 9.01(c)(iii)
, (x) Parent has provided the Company a
summary of the material terms and conditions of such Parent Superior Proposal,
which shall include (at a minimum) all of the information that is specified in
Section 7.04(c)
, (y) if requested to do so by the Company,
for a period of four (4) calendar days following delivery of such notice, Parent shall have discussed and negotiated in good faith, and shall have made the Representatives of Parent available
to discuss and negotiate in good faith, with the Company and its Representatives, any bona fide proposed
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modifications
to the terms and conditions of this Agreement; and (z) no earlier than the end of such four (4) calendar day period, the Parent Board (after consultation with its outside
legal counsel and financial advisor), shall have determined in good faith, after considering the terms of any proposed amendment or modification to this Agreement proposed by the Company during such
four (4) calendar day period, that such Parent Superior Proposal still constitutes a Parent Superior Proposal and that the failure to make a Change in the Parent Recommendation or, so long as
Parent has not committed an intentional breach (or deemed intentional breach in accordance with
Section 7.04(h)
) of this
Section 7.04
that would
have an adverse impact on the ability of the Company to propose or negotiate any amendments or modifications to this
Agreement pursuant to this
Section 7.04(e)
, to terminate this Agreement pursuant to
Section 9.01(c)(iii)
in connection therewith would be
inconsistent with its fiduciary duties under applicable Law (it being understood and agreed
that any change to the financial or other material terms of a proposal that was previously the subject of a notice hereunder shall require a new notice to the Company as provided above, but with
respect to any such subsequent notices references herein to a "four (4) calendar day period" shall be deemed to be references to a "two (2) calendar day period"); and
(B) prior
to effecting such Change in the Parent Recommendation with respect to a Parent Intervening Event, (x) Parent has notified the Company in writing that it
intends to effect such Change in the Parent Recommendation, describing in reasonable detail the reasons for such Change in the Parent Recommendation, (y) if requested to do so by the Company,
for a period of four (4) calendar days following delivery of such notice, Parent shall have discussed and negotiated in good faith, and shall have made the Representatives of Parent available
to discuss and negotiate in good faith, with the Company and its Representatives any bona fide proposed modifications to the terms and conditions of this Agreement and (z) no earlier than the
end of such four (4) calendar day period, the Parent Board shall have determined in good faith, after considering the terms of any proposed amendment or modification to this Agreement proposed
by the Company during such four (4) calendar day period, that the failure to effect a Change in the Parent Recommendation would still be inconsistent with the Parent Board's fiduciary duties
under applicable Law.
(f) Nothing
contained in this Agreement shall prevent Parent or the Parent Board from issuing a "stop, look and listen" communication pursuant to Rule 14d-9(f) under
the Exchange Act or complying with Rule 14d-9 and Rule 14e-2 under the Exchange Act with respect to a Parent Acquisition Proposal or from making any disclosure to Parent's stockholders
if the Parent Board determines (after consultation with its outside legal counsel) that its failure to do so would be inconsistent with its fiduciary duties under applicable Law;
provided
that any
Change in the Parent Recommendation may only be made in accordance with
Section 7.04(e)
. For the avoidance of doubt, a factually accurate public statement that describes Parent's receipt of a
Parent Acquisition
Proposal and the operation of this Agreement with respect thereto (without including a reaffirmation) shall not be deemed a Change in the Parent Recommendation.
(g) Except
as set forth in
Section 9.03(c)(ii)
with respect to a Parent Acquisition Proposal, for purposes of this
Agreement:
(i) "
Parent Acquisition Proposal
" means any proposal or offer from any Person or group (other than the Company) relating to,
in a single transaction or series of related transactions, (A) any direct or indirect acquisition of (x) more than 20% of the consolidated assets (whether based on the fair market value,
revenue generation or net income) of Parent and its Subsidiaries, taken as a whole, including in any such case through the acquisition of one or more Subsidiaries of Parent owning such assets, or
(y) more than 20% of any class of equity securities, or securities convertible into or exchangeable for equity securities, of Parent or any of its Subsidiaries; (B) any tender offer or
exchange offer, as defined pursuant to the
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Exchange
Act, that if consummated would result, directly or indirectly, in any Person or group (or the shareholders of any Person or group) beneficially owning 20% or more of any class of equity
securities, or securities convertible into or exchangeable for equity securities, of Parent or any of its Subsidiaries; or (C) any merger, consolidation, business combination, share exchange,
recapitalization, liquidation, dissolution or other similar transaction involving Parent or any of its Subsidiaries that would result in any Person or group (or the shareholders of any Person or
group) beneficially owning, directly or indirectly, more than 20% of any class of equity securities, or securities convertible into or exchangeable for equity securities, of Parent or any of its
Subsidiaries or 20% of the voting power of the surviving entity in a merger involving Parent or any of its Subsidiaries or the resulting direct or indirect parent of Parent, such Subsidiary or such
surviving entity (or any securities convertible into, or exchangeable for, securities representing such voting power).
(ii) "
Parent Superior Proposal
" means any bona fide written Parent Acquisition Proposal (with all references to 20% in the
definition of Parent Acquisition Proposal being treated as references to 50% for purposes of this definition) made by any Person or group after the date of this Agreement, which Parent Acquisition
Proposal did not result from a breach (or deemed breach pursuant to
Section 7.04(h)
) of this
Section 7.04
, that (A) is on terms that the
Parent Board determines in good faith (after receiving the advice of its financial advisor and
outside legal counsel and after taking into account all the terms and conditions of the Parent Acquisition Proposal) are more favorable to Parent's stockholders from a financial point of view than the
Merger and the transactions contemplated thereby (taking into account any proposed amendment or modification proposed by the Company pursuant to
Section 7.04(e)(A)
) and (B) the Parent Board
determines (after receiving the advice of its financial advisor and outside legal counsel) is
reasonably capable of being consummated in accordance with its terms, taking into account all financial, regulatory, legal, timing and other aspects (including certainty of closing, certainty of
financing and the identity of the Person making the Parent Acquisition Proposal) of such proposal.
(h) It
is understood that for all purposes of this Agreement, in the event that any Representative of Parent or any of its Subsidiaries takes any action which, if taken by
Parent, would constitute a breach of this
Section 7.04
, such action shall be deemed to be a breach of this
Section 7.04
by Parent.
Section 7.05
Access to Information; Confidentiality.
(a) Except as
otherwise prohibited by applicable Law or the terms of any contract or agreement to which the Company or any of its Subsidiaries is
subject (provided that the Company shall use its commercially reasonable efforts to promptly obtain any consent required under such contract or agreement in order that it may comply with the terms of
this
Section 7.05(a)
), from the date of this Agreement until the Effective Time, the Company shall, and shall cause its Subsidiaries to,
(i) provide to Parent and Parent's Representatives access at reasonable times during normal business hours upon prior notice to the officers, employees, agents, properties, offices and other
facilities of the Company and its Subsidiaries and to the books and records thereof (so long as such access does not unreasonably interfere with the operations of the Company); and (ii) furnish
promptly to Parent such information concerning the business, properties, contracts, assets, liabilities, personnel and other aspects of the Company and its Subsidiaries as Parent or its
Representatives may reasonably request;
provided
,
however
, that the Company shall not be required to
provide access to or disclose any information if such access or disclosure would jeopardize any attorney-client privilege of the Company or any of its Subsidiaries or violate any contract, Law or
Order (provided that the Company shall use its commercially reasonable efforts to cause such information to be provided in a manner that would not result in such jeopardy or violation).
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(b) Except
as otherwise prohibited by applicable Law or the terms of any contract or agreement to which Parent or any of its Subsidiaries is subject (provided that Parent
shall use its commercially reasonable efforts to promptly obtain any consent required under such contract or agreement in order that it may comply with the terms of this
Section 7.05(b)
), from the
date of this Agreement until the Effective Time, Parent shall, and shall cause its Subsidiaries to, (i) provide
to the Company and the Company's Representatives access at reasonable times during normal business hours upon prior notice to the officers, employees, agents, properties, offices and other facilities
of Parent and its Subsidiaries and to the books and records thereof (so long as such access does not unreasonably interfere with the operations of Parent); and (ii) furnish promptly to the
Company such information concerning the business, properties, contracts, assets, liabilities, personnel and other aspects of Parent and its Subsidiaries as the Company or its Representatives may
reasonably request;
provided
,
however
, that Parent shall not be required to provide access to or
disclose any information if such access or disclosure would jeopardize any attorney-client privilege of Parent or any of its Subsidiaries or violate any contract, Law or Order (provided that Parent
shall use its commercially reasonable efforts to cause such information to be provided in a manner that would not result in such jeopardy or violation).
(c) All
information obtained by the parties pursuant to this
Section 7.05
shall be kept confidential in accordance
with the Confidentiality Agreement.
(d) No
investigation pursuant to this
Section 7.05
shall affect any representation, warranty, covenant or agreement in
this Agreement of any party hereto or any condition to the obligations of the parties hereto.
Section 7.06
Employee Benefits Matters.
From and after the Effective Time,
Parent shall cause the Surviving Corporation and its Subsidiaries to honor in accordance with their terms, all contracts,
agreements and plans of the Company and its Subsidiaries as in effect immediately prior to the Effective Time that are applicable to any current or former employees or directors of the Company or any
Subsidiary of the Company. For one (1) year following the Effective Time, Parent shall cause the Surviving Corporation and its Subsidiaries to provide each Service Provider of the Company or
any of its Subsidiaries that continues to provide services to the Parent, the Surviving Corporation or their respective Subsidiaries immediately following the Effective Time
(
"Continuing Service Providers"
) with base salary or wages, incentive compensation opportunities and severance benefits at least equal to the base
salary or wages, incentive compensation opportunities and severance benefits provided to such Continuing Service Provider immediately prior to the Effective Time and with employee benefits that are
substantially comparable in the aggregate to the employee benefits provided to such Continuing Service Provider immediately prior to the Effective Time. Employees of the Company or any Subsidiary of
the Company shall receive credit for purposes of eligibility to participate and vesting (but not for benefit accruals) under any employee benefit plan, program or arrangement established or maintained
by the Surviving Corporation or any of its Subsidiaries for service accrued or deemed accrued prior to the Effective Time with the Company or any Subsidiary of the Company;
provided
,
however
, that such crediting of service shall not operate to duplicate any benefit or the
funding of any such benefit. In addition, Parent shall waive, or cause to be waived, any limitations on benefits relating to any pre-existing conditions to the extent such conditions are covered
immediately prior to the Effective Time under the applicable Company Plans and to the same extent such limitations are waived under any comparable plan of Parent or its Subsidiaries and use reasonable
best efforts to recognize, for purposes of annual deductible and out-of-pocket limits under its medical and dental plans, deductible and out-of-pocket expenses paid by employees of the Company and its
Subsidiaries in the calendar year in which the Effective Time occurs. Nothing contained in this
Section 7.06
shall be construed as limiting the
ability of Parent or the Surviving Corporation to amend or terminate any Company Plan so long as such amendment or termination is effected in accordance with the terms of such Company Plan.
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Section 7.07
Directors' and Officers' Indemnification and Insurance.
(a)
Parent agrees that all rights to indemnification, advancement or reimbursement of expenses and exculpation from liabilities for acts or omissions
occurring at or prior to the Effective Time now existing in favor of the current or former directors, officers or employees of the Company and its Subsidiaries as provided in their respective
certificates of incorporation or bylaws (or equivalent organizational documents) and any indemnification or other similar agreements of the Company or any of its Subsidiaries, in each case as in
effect on the date of this Agreement and which the Company has furnished to Parent prior to the date of this Agreement, shall continue in full force and effect in accordance with their terms. The
certificate of incorporation and bylaws or other equivalent organizational documents of the Surviving Corporation and its Subsidiaries (to the extent the Company has furnished such organizational
documents to Parent prior to the date of this Agreement) shall contain provisions no less favorable with respect to indemnification, advancement and reimbursement of expenses and exculpation from
liabilities with respect to facts or circumstances occurring at or prior to the Effective Time than are set forth in the certificate of incorporation and bylaws or equivalent organizational documents
of the Company and its Subsidiaries (to the extent the Company has furnished such organizational documents to Parent prior to the date of this Agreement) as in effect on the date of this Agreement,
which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the Effective Time in any manner that would affect adversely the rights thereunder of
individuals who, at or prior to the Effective Time, were directors, officers, employees, fiduciaries or agents of the Company, unless such modification shall be required by Law. From and after the
Effective Time, to the fullest extent permitted by applicable Law (including to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of
this Agreement that increase the extent to which a corporation may indemnify its officers and directors), the Surviving Corporation agrees that it will indemnify and hold harmless each individual who
is, as of the date of this Agreement, or who becomes prior to the Effective Time, a director or officer of the Company or who is as of the date of this Agreement, or who thereafter commences prior to
the Effective Time, serving at the request of the Company as a director or officer of another Person, against all claims, losses, liabilities, damages, judgments, inquiries, fines, amounts paid in
settlement and fees, costs and expenses, including attorneys' fees and disbursements incurred in connection with any actual or threatened Action, whether civil, criminal, administrative, regulatory or
investigative (including with respect to matters existing or occurring or alleged to occur at or prior to the Effective Time (including this Agreement and the transactions and actions contemplated
hereby)), arising out of or pertaining to the fact that such individual is or was an officer or director of the Company or is or was serving at the request of the Company as a director or officer of
another Person, whether asserted or claimed prior to, at or after the Effective Time. In the event of any such Action, (x) each such individual will be entitled to advancement of expenses
incurred in the defense of any such Action in accordance with the certificate of incorporation and bylaws of the Surviving Corporation and (y) the Surviving Corporation shall reasonably
cooperate in the defense of any such matter.
(b) The
Company shall, in consultation with Parent, purchase a "tail" policy, which (i) has an effective term of six (6) years from the Effective Time (and
provides coverage until such later date as of which any Action commenced during such six (6) year period shall have been finally disposed of), (ii) covers each Person covered by the
Company's directors' and officers' insurance and/or fiduciary liability insurance policy in effect on the date of this Agreement or at the Effective Time for actions and omissions occurring prior to
the Effective Time, and (iii) provides coverage in an amount not less than the Company's existing coverage and contains other terms and conditions that are no less favorable to the Persons
covered by such policies maintained by the Company than those of the Company's directors' and officers' insurance and/or fiduciary liability insurance policy in effect on the date of this Agreement
with respect to claims arising from facts or events that occurred on or before the Effective
Time;
provided
,
however
, that the amount paid by the Company in respect of any one policy year shall not
be in excess of 300% of the annual premiums currently
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paid
by the Company for such insurance. The Surviving Corporation shall maintain such policies in full force and effect, for their full respective terms, and continue to honor its respective
obligations thereunder.
(c) In
the event that Parent or the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or merges into any other Person and
is not the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any Person, then, in each
case, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this
Section 7.07
.
(d) The
provisions of this
Section 7.07
(i) shall survive consummation of the Merger, (ii) are intended
to be for the benefit of, and will be enforceable by, each indemnified or insured party, his or her heirs and his or her Representatives, and (iii) are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such Person may have by contract or otherwise.
Section 7.08
Notification of Certain Matters.
(a) The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of (i) the occurrence, or
non-occurrence, of any event which would reasonably be expected to cause, in the case of the Company, any condition set forth in
Section 8.02
not
to be satisfied, or in the case of Parent, any condition set forth in
Section 8.03
not to be satisfied, at any time from the date of this
Agreement to the Effective Time and (ii) any failure of the Company, Parent or Merger Sub, as the case may be, to materially comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement;
provided
,
however
, that the delivery of any
notice or the failure to provide such notice pursuant to this
Section 7.08
shall not (A) limit or otherwise affect the respective rights,
obligations, representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement, or (B) be deemed to amend or
supplement the Company Disclosure Schedule or the Parent Disclosure Schedule or constitute an exception to any representation or warranty.
(b) The
Company shall give prompt notice to Parent, and Parent shall give prompt notice to the Company, of (i) any notice or other communication from any Governmental
Authority or the NYSE (or any other securities market) in connection with the Transactions or from any Person alleging in writing that the consent of such Person is or may be required in connection
with the Transactions and (ii) any Action commenced or, to its knowledge, threatened in writing, relating to or involving or otherwise affecting it or any of its Subsidiaries, in each case,
which relates to the consummation of the Transactions.
Section 7.09
Reasonable Best Efforts; Further Action.
(a) Each party
hereto shall use reasonable best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the Transactions, including (i) using reasonable best efforts to obtain, or cause to be
obtained, all permits, consents, approvals, authorizations, qualifications and Orders of all Governmental Authorities and officials that may be or become necessary for the performance of the
obligations of such party hereto pursuant to this Agreement and the consummation of the Transactions, (ii) cooperating fully with the other parties in promptly seeking to obtain all such
permits, consents, approvals, authorizations, qualifications and Orders, (iii) providing such other information to any Governmental Authority as such Governmental Authority may lawfully request
in connection herewith, and (iv) using reasonable best efforts to obtain such other consents, approvals or waivers from third parties that are (A) necessary to consummate the
Transactions or (B) as otherwise reasonably determined by Parent and the Company after the date of this Agreement;
provided
that neither the
Company nor any of its Subsidiaries shall pay any consideration or make any agreements or
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commitments
in connection with any such necessary consents, approvals or waivers without the prior written consent of Parent; and
provided further
that
Parent and the Company acknowledge that, other than those consents, approvals, non-disapprovals, orders and other authorizations of any Governmental Authority set forth on Section 8.01(d) of
the Company Disclosure Schedule and/or Section 8.01(d) of the Parent Disclosure Schedule, or that are otherwise expressly contemplated by
Article VIII
, no consents, approvals or waivers from
any Person shall be a condition to the obligations of the Company, Parent and Merger Sub to
consummate the Merger. Upon the terms and subject to the conditions of this Agreement each party hereto agrees to make an appropriate filing, if necessary, pursuant to the HSR Act as promptly as
reasonably practicable, but in any event no later than ten Business Days following the date of this Agreement, and to supply as promptly as reasonably practicable to the appropriate Governmental
Authorities any additional information and documentary material that may be requested pursuant to the HSR Act. Each party hereto agrees to make as promptly as reasonably practicable after the date of
this Agreement its respective filings and notifications, if any, under any other applicable foreign, federal or state antitrust, competition or fair trade Laws, and to supply as promptly as reasonably
practicable to the appropriate Governmental Authorities any additional information and documentary material that may be requested pursuant to such Laws. Each party will promptly notify the other of
any notice from any Person or Governmental Authority alleging that the consent of such Person is or may be required in connection with the Transactions.
(b) Notwithstanding
anything in this Agreement to the contrary, in no event will Parent or Merger Sub be obligated to take any action, including entering into any consent
decree, hold separate orders or other arrangements, that (i) requires the divestiture of any assets of any of the Company, Parent or Merger Sub or any of their respective Subsidiaries,
(ii) limits Parent's freedom of action with respect to, or its ability to retain, the Company and its Subsidiaries or any portion thereof or any of Parent's or its Affiliates' other assets or
businesses, or (iii) in Parent's reasonable judgment, would be expected to have a material adverse impact on any of its businesses, or the businesses to be acquired by it pursuant to this
Agreement, either individually or in the aggregate;
provided
,
however
, that, if necessary to obtain any
consent, approval, non-disapproval, order and other authorization of any Governmental Authority set forth on Section 8.01(d) of the Company Disclosure Schedule or Section 8.01(d) of the
Parent Disclosure Schedule, Parent shall agree to propose, negotiate, offer to commit and effect (and if such offer is accepted, commit to and effect), by consent decree, hold separate order, or
otherwise, the sale, divestiture, disposition of, or any limitation on, the assets or businesses or products or product lines of the Company and its Subsidiaries that, individually or in the
aggregate, generated total worldwide revenues of up to $150,000,000 for the twelve (12) month period ended September 30, 2016. If requested by Parent, the Company will agree to and take
any action contemplated by this
Section 7.09(b)
, provided that the effectiveness of such action is conditioned upon the Closing.
(c) Subject
to
Section 7.09(b)
, each of the parties hereto agrees to cooperate and use reasonable best efforts to
contest and resist any Action, including any administrative or judicial Action, and to have vacated, lifted, reversed or overturned any Order (whether temporary, preliminary or permanent) that is in
effect and that restricts, prevents or prohibits consummation of the Transactions, including by pursuing all available avenues of administrative and judicial appeal. Parent shall be entitled to
direct, in consultation with the Company, the defense of the Transactions in any antitrust investigation or litigation by, or negotiations with, any Governmental Authority or other Person relating to
the Merger or regulatory filings under applicable Law.
(d) Each
party shall promptly notify the others of any material communication it receives from any Governmental Authority relating to any filings, or submissions under the
HSR Act or other applicable foreign, federal or state antitrust, competition or fair trade Laws. The Company agrees to provide promptly to Parent and Merger Sub all necessary information and
assistance as any Governmental Authority may from time to time require in connection with the obtaining of
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the
relevant approvals, consents or expiration of waiting periods in relation to these filings. The Company shall promptly provide all reasonable assistance and cooperation to allow Parent and Merger
Sub to prepare and submit any filings, or submissions under the HSR Act or other applicable foreign, federal or state antitrust, competition or fair trade Laws, including providing to Parent and
Merger Sub
any information that Parent and Merger Sub may from time to time require for the purpose of any filing, notification, application or request for further information made in respect of any such filing.
Notwithstanding anything to the contrary contained in this Agreement, Parent, after prior consultation with the Company, shall have the principal responsibility for devising and implementing the
strategy for obtaining any necessary antitrust, competition or investment review clearances, and shall take the lead in all meetings and communications with any Governmental Authority in connection
with obtaining any necessary antitrust, competition or investment review clearances. Neither Parent nor Company shall agree to participate in any substantive meeting, telephone call or discussion with
any Governmental Authority in respect of any filings, investigation (including any settlement of an investigation), or other inquiry related to the Transactions unless it consults with the other party
in advance and, unless prohibited by such Governmental Authority, gives the other party the opportunity to attend and participate at such meeting, telephone call or discussion.
Section 7.10
Obligations of Merger Sub.
Parent shall take all action necessary to cause Merger
Sub to perform its obligations under this Agreement and to consummate the Merger on the terms and subject
to the conditions set forth in this Agreement.
Section 7.11
Listing of Shares of Parent Common Stock.
Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in the Merger to be approved for listing on the NYSE, subject
to official notice of issuance, and the Company shall cooperate with Parent with respect to such listing.
Section 7.12
Takeover Laws.
If any "fair price," "moratorium," "control share acquisition,"
"interested stockholder" or other anti-takeover Law (including Section 203 of the DGCL)
becomes or is deemed to be applicable to this Agreement or the Transactions, then each of the parties hereto and their respective Board of Directors shall grant such approvals and take such actions as
are necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to render such Law or Laws inapplicable to
the foregoing.
Section 7.13
Stockholder Litigation.
The Company shall give Parent reasonable opportunity to
participate in the defense (at Parent's sole cost and subject to a joint defense agreement) of any Action
brought by the Company's stockholders against the Company or any of its directors, officers, Affiliates or Representatives arising out of or relating to this Agreement or the Transactions or by any
other Person seeking to enjoin or otherwise prohibit or make illegal the consummation of the Transactions, in each case, whether commenced prior to or after the date of this Agreement. Without
limiting the preceding sentence, the Company shall give Parent the right to review and comment on all material filings or responses to be made by the Company in connection with any such Action, and
the right to consult on the settlement with respect to such Action, and the Company will in good faith take such comments into account, and, no such settlement shall be agreed to without Parent's
prior written consent (not to be unreasonably withheld, conditioned or delayed). The Company shall promptly notify Parent of any such Action and shall keep Parent reasonably and promptly informed with
respect to the status thereof.
Section 7.14
Public Announcements.
The initial press release relating to this Agreement shall be
a joint press release the text of which has been agreed to by each of Parent and the Company.
Thereafter, until the Effective Time, each of Parent and the Company shall each use its reasonable best efforts to consult with the other before issuing any press release or otherwise making any
public
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statements
with respect to this Agreement, the Merger or any of the other Transactions, except to the extent (a) the press release or public statement contains information that is consistent
with the press release referred to in the preceding sentence or any other release or public statement previously issued or made in accordance with this
Section 7.14
or (b) public disclosure is
required by applicable Law or the requirements of the NYSE, in which case the issuing party shall
use reasonable efforts to consult with the other party before issuing any press release or making any such public statements, except with respect to the matters described in, and subject to the
requirements of,
Section 7.03
,
Section 7.04
,
Section 9.01
and
Section 9.03
or in connection with any dispute between the parties hereto
regarding this Agreement;
provided
that, notwithstanding anything to the contrary in this
Section 7.14
, AS shall be permitted to share the content of
any such press release or any other communication with respect to this Agreement, the
Merger or any of the other Transactions with its investors.
Section 7.15
Board of Directors of Parent.
Prior to the Effective Time, Parent shall take all
actions as may be necessary (a) to cause the number of directors comprising the Parent Board as of the
Effective Time to be increased to eleven (11), (b) subject to Parent's standard qualification requirements for directors, to cause each of the Company Designated Directors to be appointed to a
different class of the Parent Board as of the Effective Time, to serve until the next applicable annual election of directors of Parent, and (c) subject to the independence and other
requirements of the NYSE and applicable Law, if applicable, to cause one (1) Company Designated Director to be appointed to each of Parent's Executive Committee, Audit Committee, Compensation
Committee, and Nominating/Corporate Governance Committee as of the Effective Time.
Section 7.16
Transfer Taxes and Other Matters.
The Company and Parent shall cooperate in the
preparation, execution and filing of all Tax Returns or other documents regarding any Transfer Taxes. All Transfer
Taxes shall be paid by the Company, and expressly shall not be a liability of any holder of Shares. Parent and the Company shall comply with the terms of Section 7.16 of the Company Disclosure
Schedule with respect to the matters described therein.
Section 7.17
Section 16 Matters.
Prior to the Effective Time, each of Parent and the
Company shall use all reasonable efforts, including in accordance with the interpretive guidance set forth by
the SEC, to cause any dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) or acquisitions of Parent Common Stock (including derivative
securities with respect to Parent Common Stock) resulting from the Transactions by each officer or director who is or will be subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to Parent or the Company, to be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 7.18
Dividends.
After the date of this Agreement, each of Parent and the Company shall
coordinate with the other regarding the payment of dividends with respect to Parent Common
Stock and Company Common Stock and the record dates and payment dates relating thereto. Notwithstanding the foregoing, the Company shall be permitted to continue to pay its quarterly cash dividend
with respect to the Company Common Stock consistent with past practice, including as to record date, timing of payment and amount thereof;
provided
that
the aggregate amount of any such dividend is not in excess of $0.0925 per Share.
Section 7.19
Financing; Cooperation.
(a) Parent shall use its reasonable
best efforts to obtain the Financing on or prior to the Closing Date on the terms and conditions described in the
Commitment Letter. Parent shall not amend, modify, waive the terms of, or replace, the Commitment Letter or reduce the aggregate amount of the Financing available under the Commitment Letter (other
than through the issuance of securities in lieu of the bridge facility contemplated by the Commitment Letter) without the prior written consent of the Company, unless such amendment, modification,
waiver or replacement or reduction would not (i) reduce the aggregate amount of the Financing below the amount required to consummate the transactions contemplated by this Agreement (including
by changing the amount of fees to be paid or original issue discount of the Financing), except to the
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extent
(A) replacement commitments for indebtedness to be incurred by Parent after the date hereof are then made available in order to consummate the transactions contemplated by this Agreement
or (B) the representations set forth in
Section 5.24(a)
would be true after giving effect to such reduction;
provided
that the terms and
conditions of such replacement commitments (including with respect to conditionality) shall be no less favorable, in the
aggregate, to Parent than those contained in the Commitment Letter; or (ii) impose new, additional or more expansive conditions precedent, or otherwise amend, modify or expand any conditions
precedent, to the receipt of the Financing, in each case, in a manner that would reasonably be expected to (x) materially delay or prevent the consummation of the transactions contemplated by
this Agreement; or (y) adversely impact in any material respect the ability of Parent to consummate the transactions contemplated by this Agreement or enforce its rights under the Commitment
Letter;
provided
,
however
, that Parent may amend the Commitment Letter without the prior written consent
of the Company to add additional financing sources, lenders, lead arrangers, bookrunners, syndication agents or similar entities. References in this Agreement to the Financing shall include the
financing contemplated by the Commitment Letter as amended or modified in compliance with this
Section 7.19
and references to the Commitment
Letter shall include such document as amended or modified in compliance with this
Section 7.19
.
(b) Parent
shall use reasonable best efforts to (i) maintain in effect the Commitment Letter until the consummation of the transactions contemplated by this
Agreement, other than any reduction in the amount of the Financing available under the Commitment Letter through the issuance of securities in lieu of the bridge facility contemplated by the
Commitment Letter; (ii) satisfy on a timely basis all conditions within the control of Parent to obtaining the Financing, including delivery of all information required by items 4 and 10
of Exhibit C of the Commitment Letter, and (iii) negotiate and enter into definitive agreements with respect to the Financing ("
Financing
Agreements
") on the terms and conditions contained in the Commitment Letter (including any "market flex" provisions related thereto). Parent shall keep the Company reasonably
informed with respect to all material activity concerning the status of the Financing and shall give the Company notice of any material change with respect to such Financing as promptly as
practicable. Parent shall give the Company reasonably prompt notice of (A) any material breach by any party to the Commitment Letter of which Parent becomes aware to the extent such breach
would reasonably be expected to impair or materially delay the Closing or result in insufficient financing to consummate the transactions contemplated by this Agreement; and
(B) any termination of the Commitment Letter (or the Financing Documents) or the receipt of any notice of termination, breach or default under the Commitment Letter (or the Financing
Documents). In the event that all conditions in the Commitment Letter have been satisfied or, upon funding will be satisfied, and Parent is otherwise required under the terms of this Agreement to
consummate the Merger, Parent shall use reasonable best efforts to (1) consummate the Financing and (2) enforce its rights under the Commitment Letter (or the Financing Documents);
provided
that, notwithstanding anything to the contrary herein, Parent shall have no obligation hereunder to threaten or initiate any Action against any
of the Financing Sources or any other party to the Commitment Letter or to the Financing Agreements. If any portion of the Financing becomes unavailable on the terms and conditions contemplated in the
Commitment Letter, Parent shall use reasonable best efforts to arrange and obtain alternative debt financing from alternative sources in an amount sufficient to consummate the transactions
contemplated by this Agreement (the "
Alternative Financing
");
provided
that the terms and conditions of
such Alternative Financing (including with respect to conditionality, structure, covenants and pricing) shall be no less favorable, in the aggregate, to Parent than those contained in the Commitment
Letter. For the purposes of this Agreement, (x) the term "Commitment Letter" shall be deemed to include any commitment letter or similar agreement with respect to any Alternative Financing
arranged in compliance with this
Section 7.19
(and any Commitment Letter remaining in effect at the time in question); and (y) the term
"Financing Agreements" shall also be deemed to include any definitive
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agreements
with respect to the Alternative Financing arranged in compliance with this
Section 7.19
(and any Financing Agreements remaining in
effect at the time in question).
(c) Prior
to the Closing, the Company shall, and shall use reasonable best efforts to cause its Subsidiaries and its and their respective Representatives to, provide to
Parent all cooperation reasonably requested by Parent in connection with the arrangement, marketing and consummation of the Financing or, if applicable, the Alternative Financing
(
provided
,
however
, that such requested cooperation does not unreasonably interfere with the ongoing
operations of the Company or its Subsidiaries), including using reasonable best efforts to: (i) deliver to Parent financial and other pertinent information regarding the Company and its
Subsidiaries as may be reasonably requested by Parent and that is customarily required for the Financing or, if applicable, the Alternative Financing, including (A) the financial statements,
business and other financial data expressly referred to in the Commitment Letter and (B) such information as to enable Parent to prepare any required pro forma financial statements;
(ii) to the extent customarily required for the Financing or, if applicable, the Alternative Financing, make appropriate officers available to participate upon reasonable notice in a reasonable
number of meetings, presentations, road shows, due diligence sessions and sessions with rating agencies at times and locations to be mutually agreed; (iii) provide reasonable assistance to
Parent in the preparation of customary offering documents, including confidential information memoranda, prospectuses, private placement memoranda, offering memoranda and bank confidential information
memoranda and road show materials, rating agency materials and other similar documents
necessary in connection with the Financing or, if applicable, the Alternative Financing, and provide reasonable and customary authorization letters related thereto; (iv) if requested in writing
by a Financing Source, furnish to such Financing Source all information regarding the Company and its Subsidiaries that is required in connection with the Financing or, if applicable, the Alternative
Financing, by regulatory authorities under applicable "know your customer" and anti-money laundering rules and regulations, including the Patriot Act, to the extent reasonably requested at least ten
(10) Business Days prior to the Closing Date; (v) assist Parent in obtaining corporate, corporate family, credit, facility and securities ratings from rating agencies; (vi) assist
Parent in obtaining (A) customary releases and consents (including consents with respect to inclusion of the Company's financial statements and any audit opinions in respect thereof required to
be included in any prospectus or offering memorandum or similar documents for any portion of the Financing or, if applicable, the Alternative Financing) and (B) customary comfort letters of the
Company's current and former independent accountants (including "negative assurance" comfort), including by executing and delivering any customary representation letters to the accountants in
connection therewith and subject to the completion by such accountants of customary procedures related thereto; (vii) assist Parent in obtaining customary legal opinions related to the Company
required to be obtained in connection with the Financing or, if applicable, the Alternative Financing; and (viii) obtain and, if applicable, execute customary payoff letters and execute
customary certificates as may be reasonably requested by Parent as necessary in connection with the Financing or, if applicable, the Alternative Financing
(
provided
,
however
, that (A) any such certificates will not be executed except in connection with
the pricing or closing of any Financing or, if applicable, any Alternative Financing, and (B) no personal liability will be imposed on the officers or employees involved with such
certificates). Notwithstanding the foregoing, nothing in this Agreement shall require the Company or any of its Subsidiaries or any of their respective Representatives (1) to take any action
that would reasonably be expected to conflict with or violate the certificate of incorporation or bylaws of the Company or any of the provisions of the certificate of incorporation or bylaws (or
equivalent organizational documents) of a Subsidiary of the Company or any Law or result in the breach of any contract if the consequences of the breach of such Law or contract would be material to
the business or operations of the Company and its Subsidiaries, taken as a whole, (2) to pay any commitment or similar fee or reimburse any expenses incurred by Parent in
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connection
with the Financing or, if applicable, the Alternative Financing, (3) to execute and deliver any definitive agreements with respect to the Financing prior to the Closing Date (other
than any definitive agreements that are executed and delivered in escrow pending the occurrence of the Closing or effective as of the Closing) or incur any liability that is not contingent on the
occurrence of the Closing Date or (4) to take any action in its capacity as a shareholder, member, partner or member of the board of directors of any of the Company or its Subsidiaries to
authorize or approve the Financing;
provided
,
however
, that the foregoing clauses (3) and
(4) of this sentence and clause (A) of the proviso in the immediately preceding sentence shall not apply to customary resolutions, representation letters, officer's certificates,
supplemental indentures (which do not result in the creation or assumption of any additional obligations by the Company or any of its Subsidiaries prior to the Effective Time) and similar documents
required to be executed in connection with the closing of a debt financing into
escrow on customary terms so long as such documents are not released from escrow or become effective prior to the Closing Date. The Company consents to the reasonable use of the Company's logos in
connection with any Financing in a manner customary for such financing transactions;
provided
, that such logos are used solely in a manner that is not
intended, or reasonably likely, to harm or disparage the Company or the reputation or goodwill of the Company or any of its Affiliates. Parent shall, promptly upon request by the Company, reimburse
the Company for all reasonable and documented out-of-pocket costs (including reasonable attorneys' fees) incurred by the Company or any of its Subsidiaries (other than with respect to any costs
associated with preparing regular quarterly and annual financial statements) in performing their obligations under this
Section 7.19
, and
indemnify the Company for any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred by the Company or any of its Subsidiaries
arising therefrom, in each case other than to the extent any of the foregoing (x) arises from the bad faith, gross negligence or intentional misconduct of, or material breach of this Agreement
by, the Company or any of its Subsidiaries or (y) arises from or relates to information provided by or on behalf of the Company or any of its Subsidiaries for use in connection with the
Financing or, if applicable, the Alternative Financing. None of the representations, warranties or covenants of the Company set forth in this Agreement shall be deemed to apply to, or deemed breached
or violated by, any of the actions taken by the Company or any of its Subsidiaries at the express request of Parent set forth in this
Section 7.19
.
Each
of Parent and Merger Sub acknowledges and agrees that in no event will the availability of the Financing constitute a condition precedent to Closing.
Section 7.20
Stockholders' Agreement.
Parent shall take all actions necessary to cause Parent to
enter into the Stockholders' Agreement, effective as of the Effective Time.
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.01
Conditions to the Obligations of Each Party.
The respective obligations of the Company,
Parent and Merger Sub to consummate the Merger are subject to the satisfaction or written waiver (where permissible
under applicable Law) at or prior to the Effective Time of the following conditions:
(a)
Registration Statement.
The Registration Statement shall have been declared effective by the SEC under the
Securities Act and no stop order suspending the effectiveness of the Registration Statement
shall have been issued by the SEC and no proceeding for that purpose shall be pending before the SEC.
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(b)
Stockholder Approvals.
The Company Stockholder Approval and the Parent Stockholder
Approval shall have been obtained.
(c)
No Order.
No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any decision, injunction, decree, ruling, Law or Order (whether temporary, preliminary or permanent) that is in effect and enjoins or otherwise prohibits or makes illegal the
consummation of the Transactions (collectively, a "
Restraint
").
(d)
Regulatory Approvals.
(i) Any waiting period (and any extension thereof) applicable to the consummation of
the Merger under the HSR Act or as set forth in Section 8.01(d) of the Company Disclosure Schedule or Section 8.01(d) of the Parent Disclosure Schedule shall have expired or been
terminated and (ii) all consents, approvals, non-disapprovals, orders and other authorizations of any Governmental Authority set forth in Section 8.01(d) of the Company Disclosure
Schedule and Section 8.01(d) of the Parent Disclosure Schedule shall have been obtained.
(e)
NYSE Listing.
The shares of Parent Common Stock to be issued in the Merger shall have been approved for
listing on the NYSE, subject to official notice of issuance.
(f)
Stockholders' Agreement.
The Stockholders' Agreement shall have been entered into, effective as of the
Effective Time.
Section 8.02
Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent
and Merger Sub to consummate the Merger are subject to the satisfaction or written waiver (where permissible under applicable Law) at or
prior to the Effective Time of the following additional conditions:
(a)
Representations and Warranties.
(i) The representations and warranties of the Company contained
in
Section 4.03(a)
shall be true and correct in all respects, except for
de minimis
inaccuracies,
(ii) the representations and warranties of the Company contained in the first sentence of
Section 4.01(a)
(solely as it relates to the
Company),
Section 4.03
(other than
Section 4.03(a)
),
Section 4.04
,
Section 4.21
and
Section 4.23
shall be true and correct (without giving effect to any qualification set forth therein as to "materiality" or "Company Material
Adverse Effect") in all material respects, and (iii) each of the other representations and warranties of the Company contained in this Agreement shall be true and correct (without giving effect
to any qualification set forth therein as to "materiality", "Company Material Adverse Effect" or other qualifications based on the word "material" or similar phrases), in each case of
clauses (i), (ii) and (iii), as of the date of this Agreement and as of the Effective Time, as if made on and as of such date or time (except to the extent such representations and
warranties are, by their terms, made as of a specified date, in which case as of such specified date), except, in the case of clause (iii), where the failure of such representations and
warranties of the Company to be so true correct does not have, and would not reasonably be expected to have, a Company Material Adverse Effect.
(b)
Agreements and Covenants.
The Company shall have performed or complied in all material respects with all of
the agreements and covenants required by this Agreement to be performed or complied with by it at or prior to the Effective Time.
(c)
Officer Certificate.
The Company shall have delivered to Parent a certificate, dated the Closing Date,
signed by an executive officer of the Company, certifying as to the satisfaction of the conditions specified in
Section 8.02(a)
and
Section 8.02(b)
.
(d)
Company Material Adverse Effect.
Since the date of this Agreement, there shall not have occurred a Company
Material Adverse Effect.
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Section 8.03
Conditions to the Obligations of the Company.
The obligations of the Company to
consummate the Merger are subject to the satisfaction or waiver (where permissible under applicable Law) at or prior to the
Effective Time of the following additional conditions:
(a)
Representations and Warranties.
(i) The representations and warranties of Parent and Merger Sub
contained in
Section 5.03(a)
shall be true and correct in all respects, except for
de minimis
inaccuracies, (ii) the representations and warranties of Parent and Merger Sub contained in the first sentence of
Section 5.01(a)
(solely
as it relates to Parent),
Section 5.03
(other than
Section 5.03(a)
),
Section 5.04
,
Section 5.23
and
Section 7.04(a)
shall be true and correct (without giving effect to any qualification set forth therein as to "materiality" or
"Parent Material
Adverse Effect") in all material respects, and (iii) each of the other representations and warranties of Parent and Merger Sub contained in this Agreement shall be true and correct (without
giving effect to any qualification set forth therein as to "materiality", "Parent Material Adverse Effect" or other qualifications based on the word "material" or similar phrases), in each case of
clauses (i), (ii) and (iii), as of the date of this Agreement and as of the Effective Time, as if made on and as of such date or time (except to the extent such representations and
warranties are, by their terms, made as of a specified date, in which case as of such specified date), except, in the case of clause (iii), where the failure of such representations and
warranties of Parent and Merger Sub to be so true and correct does not have, and would not reasonably be expected to have, a Parent Material Adverse Effect.
(b)
Agreements and Covenants.
Parent and Merger Sub shall have performed or complied in all material respects
with all of the agreements and covenants required by this Agreement to be performed or complied with by it at or prior to the Effective Time.
(c)
Officer Certificate.
Parent shall have delivered to the Company a certificate, dated the Closing Date,
signed by an executive officer of Parent, certifying as to the satisfaction of the conditions specified in
Section 8.03(a)
and
Section 8.03(b)
.
(d)
Parent Material Adverse Effect.
Since the date of this Agreement, there shall not have occurred a Parent
Material Adverse Effect.
(e)
Company Board Designees.
The size of the Parent Board shall have been increased to eleven (11), each of the
Company Designated Directors shall have been appointed to a different class on the Parent Board, and one of the Company Designated Directors shall have been appointed to each of Parent's
Executive Committee, Audit Committee, Compensation Committee, and Nominating/Corporate Governance Committee, in each case, effective as of the Effective Time.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.01
Termination.
This Agreement may be terminated and the Transactions may be abandoned at any
time prior to the Effective Time, as follows:
(a) by
mutual written consent of Parent and the Company duly authorized by the Parent Board and the Company Board, respectively; or
(b) by
either Parent or the Company if:
(i) the
Effective Time shall not have occurred on or before the Outside Date;
provided
,
however
, that if on the Outside Date all of the conditions set forth in
Section 8.01
,
Section 8.02
and
Section 8.03
have been satisfied (or, with respect to the
conditions that
by their terms must be satisfied at the Closing, would have been so satisfied if the Closing would have occurred) other than the conditions set forth in
Section 8.01(c)
(to the extent such
Restraint
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arises
under the HSR Act or other applicable foreign, federal or state antitrust, competition or fair trade Laws as specified in Section 8.01(d) of the Company Disclosure Schedule or
Section 8.01(d) of the Parent Disclosure Schedule) or
Section 8.01(d)
, then the Outside Date shall be automatically extended for an
additional ninety (90) days;
provided
,
further
, that the right to terminate this Agreement under
this
Section 9.01(b)(i)
shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the principal
cause of, or resulted in, the failure of the Effective Time to occur on or before the Outside Date (other than, in the case of Parent, a failure to consummate the Closing solely as a result of a
Financing Failure, provided that Parent pays the Enhanced Termination Fee pursuant to
Section 9.03(c)
) and without limiting the Company's right
to seek damages for any intentional breach by Parent pursuant to
Section 9.02
, but subject to the limitations therein, including
Section 9.02(b)
); or
(ii) any
Restraint having the effect set forth in
Section 8.01(c)
hereof shall have become final and nonappealable;
provided
,
however
, that the party seeking to terminate this Agreement shall not have failed to comply
with its obligations under
Section 7.09
, which such failure was the principal cause of, or resulted in, any such Restraint becoming final and
nonappealable.
(iii) (A)
the Company Stockholder Approval shall not have been obtained upon a vote held at the Company Stockholders' Meeting or (B) the Parent Stockholder Approval
shall not have been obtained upon a vote held at the Parent Stockholders' Meeting; or
(c) by
Parent:
(i) upon
a breach by the Company of any representation, warranty, covenant or agreement set forth in this Agreement such that the conditions set forth in
Section 8.02(a)
or
Section 8.02(b)
would not be satisfied and such breach cannot be cured
by the Outside Date or, if capable of being cured, has not been cured on or before the earlier of (A) the Outside Date, or (B) within 30 calendar days of the receipt by the Company of
written notice thereof from Parent; or
(ii) if,
at any time prior to the receipt of the Company Stockholder Approval, (A) a Change in the Company Recommendation shall have occurred; (B) the Company
shall have failed to include the Company Recommendation in the Joint Proxy Statement (except to the extent the Company effects a Change in the Company Recommendation); (C) the Company or the
Company Board shall have approved, endorsed, adopted, recommended or entered into an Acquisition Agreement; (D) the Company Board shall have failed to publicly recommend against, subject to
Section 7.03(e)
and to the
extent permitted by applicable Law, (I) any Company Acquisition Proposal that is a tender offer or exchange offer under a Schedule TO within ten (10) Business Days after a written
request by Parent that it do so or (II) any other Company Acquisition Proposal that has been publicly disclosed and that the Company reasonably believes could lead to a Superior Proposal within
seven (7) calendar days after a written request by Parent that it do so; or (E) the Company shall have materially breached, or shall be deemed to have materially breached pursuant to
Section 7.03(h)
, its obligations under
Section 7.02(a)
or
Section 7.03
; or
(iii) if,
at any time prior to the receipt of the Parent Stockholder Approval, after complying with the provisions of
Section 7.04(e)
, the Parent Board (or any committee thereof) authorizes Parent to enter
into any Acquisition Agreement concerning a Parent
Superior Proposal concurrently with termination of this Agreement;
provided
that (A) the right to terminate this Agreement pursuant to this
Section 9.01(c)(iii)
shall not be available if Parent has committed an intentional breach (or deemed intentional breach in accordance with
Section 7.04(h)
) of
Section 7.04
that had an adverse impact on the ability of the Company
to propose or negotiate any amendments or modifications to this Agreement pursuant to
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Section 7.04(e)
, and (B) as a condition to the effectiveness of such termination, Parent shall pay the Parent Termination Fee to the Company.
(d) by
the Company:
(i) upon
a breach by Parent or Merger Sub of any representation, warranty, covenant or agreement set forth in this Agreement such that the conditions set forth in
Section 8.03(a)
or
Section 8.03(b)
would not be satisfied and such breach cannot be cured
by the Outside Date or, if capable of being cured, has not been cured on or before the earlier of (A) the Outside Date, or (B) within 30 calendar days of the receipt by Parent of written
notice thereof from the Company;
(ii) if,
at any time prior to the receipt of the Parent Stockholder Approval, (A) a Change in the Parent Recommendation has occurred; (B) Parent shall have
failed to include the Parent Recommendation in the Joint Proxy Statement (except to the extent Parent effects a Change in the Parent Recommendation); (C) Parent or the Parent Board shall have
approved, endorsed, adopted, recommended or entered into an Acquisition Agreement; (D) the Parent Board shall have failed to publicly recommend against, subject to
Section 7.04(e)
and to the
extent permitted by applicable Law,
(I) any Parent Acquisition Proposal that is a tender offer or exchange offer under a Schedule TO within ten (10) Business Days after a written request by the Company that it do so
or (II) any other Parent Acquisition Proposal that has been publicly disclosed and that Parent reasonably believes could lead to a Superior Proposal within seven (7) calendar days after
a written request by the Company that it do so; or (E) Parent shall have materially breached, or shall be deemed to have materially breached pursuant to
Section 7.04(h)
, its obligations under
Section 7.02(b)
or
Section 7.04
;
(iii) if
(A) all of the conditions to the Closing set forth in
Section 8.01
and
Section 8.02
have been satisfied (or, with respect to the conditions
that by their terms must be satisfied at the Closing, would have been so
satisfied if the Closing would have occurred), (ii) the Company has confirmed in an irrevocable written notice to Parent that the conditions set forth in
Section 8.01
and
Section 8.03
have been satisfied or, to the extent allowed by applicable
Law, waived by the Company, and that it is ready, willing and able to perform its obligations to effect the Closing, and (iii) Parent and Merger Sub fail to fulfill their obligation to effect
the Closing within three (3) Business Days of the written notice of the Company pursuant to the preceding clause (ii); or
(iv) if,
at any time prior to the receipt of the Company Stockholder Approval, after complying with the provisions of
Section 7.03(e)
, the Company Board (or any committee thereof) authorizes the Company to
enter into any Acquisition Agreement concerning a Company
Superior Proposal concurrently with termination of this Agreement;
provided
that (A) the right to terminate this Agreement pursuant to this
Section 9.01(d)(iv)
shall not be available if the Company has committed an intentional breach (or deemed intentional breach in accordance with
Section 7.03(h)
) of
Section 7.03
that had an adverse impact on the ability of Parent to
propose or negotiate any amendments or modifications to this Agreement pursuant to
Section 7.03(e)
, and (B) as a condition to the
effectiveness of such termination, the Company shall pay the Termination Fee to Parent.
Section 9.02
Effect of Termination.
(a) In
the event of the valid termination of this Agreement pursuant to
Section 9.01
, written notice thereof shall be
given to the other party or parties, specifying the provision or provisions hereof pursuant to which such termination shall have been made, and this Agreement shall forthwith become void, and there
shall be no liability under this Agreement on the part of any party hereto or any Company Related Parties or Parent Related Parties, except that (i) this
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Section 9.02
,
Section 7.05(c)
,
Section 9.03
,
Section 10.02
,
Section 10.03
,
Section 10.07
,
Section 10.09
,
Section 10.10
and
Section 10.11
shall remain in full force and effect and
(ii) nothing in this
Section 9.02
or
Section 9.03
shall relieve any party from
liability or damages for fraud committed prior to such termination or, except as set forth in
Section 9.02(b)
and
Section 9.02(c)
, for any
intentional breach prior to such termination of any of its representations, warranties, covenants or agreements set
forth in this Agreement, in which case the aggrieved party shall be entitled to all rights and remedies available at law or in equity. For purposes of this Agreement, "intentional breach" shall mean
(i) with respect to any breach of a representation or warranty contained in this Agreement, a material breach of such representation or warranty that has been made with the knowledge of the
breaching party and (ii) with respect to any breaches or failures to perform any of the covenants or other agreements contained in this Agreement, a material breach, or failure to perform, that
is a consequence of an act or omission undertaken by the breaching party with the knowledge that the taking of, or failure to take, such act would, or would be reasonably expected to, cause a material
breach of this Agreement.
(b) Notwithstanding
anything to the contrary in this Agreement or otherwise, prior to the Closing, except in the case of fraud or intentional breach, but subject to the last
two sentences of this
Section 9.02(b)
, the sole and exclusive remedies of the Company, any former, current, or future Affiliate of the Company,
any of their respective former, current or future direct or indirect officers, directors, general or limited partners, members, managers, stockholders, other equityholders, controlling Persons,
employees, agents, successors, assigns, Affiliates, or representatives, and any Person claiming by, through or for the benefit of the Company or any of its Affiliates (all such foregoing Persons, the
"
Company Related Parties
") against Parent, Merger Sub, the Financing Sources, or any of their respective former, current or future direct or indirect
officers, directors, general or limited partners, members, managers, stockholders, other equityholders, controlling Persons, employees, agents, successors, assigns, Affiliates, or representatives (all
such foregoing Persons, the "
Parent Related Parties
") for any losses, damages, liabilities, costs, expenses, claims, obligations or actions (whether in
law or equity and whether based in contract, tort or otherwise) based upon, arising out of or relating to this Agreement or the Commitment Letter (including any breach or alleged breach hereof or
thereof), the negotiation, execution or performance hereof or thereof, or the transactions contemplated hereby or thereby or in respect of any other document or theory of applicable Law or equity or
in respect of any oral or written representations made or alleged to be made in connection herewith or therewith, whether at law or in equity, in contract, in tort or otherwise, shall be
(i) payment of the Termination Fee, Parent Termination Fee or Enhanced Termination Fee, as applicable, by Parent to the Company in the event the Termination Fee, Parent Termination Fee or
Enhanced Termination Fee, as applicable, is payable by Parent to the Company pursuant to
Section 9.03(c)
or
Section 9.01(c)(iii)
or as a result
of a termination of this Agreement by the Company pursuant to
Section 9.01(d)(iii)
, (ii) reimbursement by Parent of the Company's Expenses to the extent that such Expenses are reimbursable
under
Section 9.03(d)
and (iii) subject to all of the other provisions of this
Section 9.02
, the right of the Company to seek specific performance
of this Agreement pursuant to, and subject to the provisions of,
Section 10.08
. For the avoidance of doubt, and notwithstanding anything to the contrary herein or otherwise, while the Company may
pursue both a
grant of specific performance, as and only to the extent expressly permitted by
Section 10.08
, and the payment of the Termination Fee, Parent
Termination Fee or Enhanced Termination Fee, as applicable (only to the extent expressly permitted by
Section 9.03(c)
), under no circumstances shall the Company be permitted or entitled to receive
both such grant of specific performance and
payment of the Termination Fee, Parent Termination Fee or Enhanced Termination Fee, as applicable. Without limiting the generality of the foregoing or of any other provision of this Agreement, except
in the case of fraud or intentional breach by Parent of
Section 7.19
, (x) upon payment of the Enhanced Termination Fee to the Company as a
result of a
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termination
of this Agreement by the Company pursuant to
Section 9.01(d)(iii)
, no Company Related Party shall have any rights or claims against
any Parent Related Party in connection with this Agreement, the Commitment Letter, or any of the transactions contemplated hereby or thereby (whether at law or in equity and whether based on contract,
tort or otherwise), or for any breach or alleged breach hereof or thereof, (y) no Company Related Party shall have any rights or claims against any Parent Related Party under or in connection
with this Agreement, the Commitment Letter, or any of the transactions contemplated hereby or thereby (whether at law or in equity and whether based on contract, tort or otherwise), or for any breach
or alleged breach hereof or thereof for any damages of any kind or nature or for any other monetary amounts, except as otherwise set forth in this
Section 9.02
or in circumstances where the
Enhanced Termination Fee is payable as a result of a termination of this Agreement by the Company
pursuant to
Section 9.01(d)(iii)
, and (z) the Company shall cause any claim which is brought against any Parent Related Party and which is
inconsistent with the limitations set forth in this
Section 9.02
to be dismissed promptly and in any event with five Business Days after it is
first initiated (or payment of the Enhanced Termination Fee).
(c) Notwithstanding
anything to the contrary in this Agreement or otherwise, but subject to the last sentence of this
Section 9.02(c)
, prior to the Closing, except in the case of fraud or intentional breach, the sole
and exclusive remedies of the Parent Related
Parties against the Company Related Parties for any losses, damages, liabilities, costs, expenses, claims, obligations or actions (whether in law or equity and whether based in contract, tort or
otherwise) based upon, arising out of or relating to this Agreement (including any breach or alleged breach hereof or thereof), the negotiation, execution or performance hereof or thereof, or the
transactions contemplated hereby or thereby or in respect of any other document or theory of applicable Law or equity or in respect of any oral or written representations made or alleged to be made in
connection herewith or therewith, whether at law or in equity, in contract, in tort or otherwise, shall be (i) payment of the Termination Fee by the Company to Parent in the event the
Termination Fee is payable by the Company to Parent pursuant to
Section 9.03(a)
or
Section 9.01(d)(iv)
, (ii) reimbursement by the Company of
Parent's Expenses to the extent that such Expenses are reimbursable under
Section 9.03(b)
and (iii) subject to all of the other provisions of this
Section 9.02
, the right of Parent to seek specific performance of this Agreement pursuant to, and subject to the provisions of,
Section 10.08
. For the
avoidance of doubt, and notwithstanding anything to the contrary herein or otherwise, while Parent may pursue both a grant
of specific performance, as and only to the extent expressly permitted by
Section 10.08
, and the payment of the Termination Fee, as applicable
(only to the extent expressly permitted by
Section 9.03(a)
), under no
circumstances shall Parent be permitted or entitled to receive both such grant of specific performance and payment of the Termination Fee.
Section 9.03
Fees and Expenses.
(a) The Company agrees that:
(i) if
Parent terminates this Agreement pursuant to
Section 9.01(c)(ii)
(provided that, in the case of a termination
pursuant to clause (E) thereof, only if the Company shall have committed an intentional breach); or
(ii) if
(A) Parent or the Company terminates this Agreement pursuant to
Section 9.01(b)(i)
(without the Company
Stockholder Approval having been obtained) or
Section 9.01(b)(iii)(A)
or Parent terminates this Agreement pursuant to
Section 9.01(c)(i)
,
(B) prior to the termination of this Agreement, a Company Acquisition Proposal shall have been publicly announced or
shall have become publicly known and not withdrawn, and (C) on or prior to the date that is 12 months after the date of such termination, the Company or any of its Subsidiaries enters
into, or submits to the stockholders of the Company for adoption, an Acquisition Agreement with respect to any Company Acquisition Proposal (which Company Acquisition Proposal is ultimately
consummated) or consummates any Company Acquisition
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Proposal
(in each case, whether or not such Company Acquisition Proposal is the same Company Acquisition Proposal described in clause (B) above);
provided
,
however
, that for purposes of this
Section 9.03(a)(ii)
, all references to 20% in the definition of "Company Acquisition Proposal" shall be replaced with references to 50%;
then,
in any such event, the Company shall pay to Parent promptly (but in any event no later than two Business Days) after (x) Parent terminates this Agreement pursuant to
Section 9.01(c)(ii)
, or
(y) the earlier of the date the Company enters into an Acquisition Agreement or the date a Company Acquisition
Proposal referred to in
Section 9.03(a)(ii)(C)
is consummated, the Termination Fee, which amount shall be payable in cash in immediately
available funds.
(b) The
Company agrees that if the Company or Parent shall terminate this Agreement pursuant to
Section 9.01(b)(iii)(A)
or
Section 9.01(c)(i)
, the
Company shall reimburse Parent and
Merger Sub for all of their Expenses, up to a maximum of $15,000,000, in the aggregate (not later than two Business Days after submission by Parent of statements therefor). In the event Parent becomes
entitled to receive a Termination Fee pursuant to
Section 9.03(a)
after the payment to Parent or Merger Sub of any Expenses under this
Section 9.03(b)
, the amount of the Termination Fee payable shall be reduced by any Expenses previously reimbursed pursuant to the preceding
sentence.
(c) Parent
agrees that:
(i) if
the Company or Parent terminates this Agreement pursuant to
Section 9.01(b)(i)
or
Section 9.01(b)(ii)
, or if the Company terminates this
Agreement pursuant to
Section 9.01(d)(ii)
(provided that, in the case of a termination pursuant to clause (E) thereof, only if Parent shall have committed an
intentional breach) or
Section 9.01(d)(iii)
; or
(ii) if
(A) Parent or the Company terminates this Agreement pursuant to
Section 9.01(b)(i)
(without the Parent
Stockholder Approval having been obtained) or the Company terminates this Agreement pursuant to
Section 9.01(d)(i)
, (B) prior to the
termination of this Agreement, a Parent Acquisition Proposal shall have been publicly announced or shall have become publicly known and not withdrawn, and (C) on or prior to the date that is
12 months after the date of such termination, Parent or any of its Subsidiaries enters into, or submits to the stockholders of Parent for adoption, an Acquisition Agreement with respect to any
Parent Acquisition Proposal (which Parent Acquisition Proposal is ultimately consummated) or consummates any Parent Acquisition Proposal (in each case, whether or not such Parent Acquisition Proposal
is the same Parent Acquisition Proposal described in clause (B) above);
provided
,
however
, that
for purposes of this
Section 9.03(c)(ii)
, all references to 20% in the definition of "Parent Acquisition Proposal" shall be replaced with
references to 50%;
then,
in any such event, Parent shall pay to the Company promptly (but in any event no later than two Business Days) after (A) the Company terminates this Agreement pursuant to
Section 9.01(d)(ii)
(other than in connection with a Parent Superior Proposal), the Termination Fee, (B) the Company terminates this
Agreement pursuant to
Section 9.01(d)(ii)
(in connection with a Parent Superior Proposal), the Parent Termination Fee, (C) the Company or
Parent terminates this Agreement pursuant to
Section 9.01(b)(i)
(and at such time, all of the conditions set forth in
Section 8.01
,
Section 8.02
and
Section 8.03
have been satisfied (or, with respect to the conditions that by their terms must be satisfied at the Closing, would have been so
satisfied if the Closing would have occurred) other than the conditions set forth in
Section 8.01(d)
) or
Section 9.01(b)(ii)
(to the extent such
Restraint arises under the HSR Act or other applicable foreign, federal or state antitrust, competition
or fair trade Laws as specified in Section 8.01(d) of the Company Disclosure Schedule or Section 8.01(d) of the Parent Disclosure Schedule), or the Company terminates this Agreement
pursuant to
Section 9.01(d)(iii)
, the Enhanced Termination
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Fee,
or (D) the earlier of the date Parent enters into an Acquisition Agreement or the date a Parent Acquisition Proposal referred to in
Section 9.03(c)(ii)(C)
is consummated, the Parent
Termination Fee, which amount shall be payable in cash in immediately available funds.
(d) Parent
agrees that if Parent or the Company shall terminate this Agreement pursuant to
Section 9.01(b)(iii)(B)
or
Section 9.01(d)(i)
, Parent shall
reimburse the Company for all of its Expenses, up to a maximum of $15,000,000, in the aggregate (not later than
two Business Days after submission by the Company of statements therefor). In the event the Company becomes entitled to receive a Termination Fee, Parent Termination Fee or Enhanced Termination Fee,
as applicable, pursuant to
Section 9.03(c)
after the payment to the Company of any Expenses under this
Section 9.03(d)
, the amount of the
Termination Fee, Parent Termination Fee or Enhanced Termination Fee payable shall be reduced by any Expenses
previously reimbursed pursuant to the preceding sentence.
(e) Except
as set forth in this
Section 9.03
and
Section 7.19
,
all Expenses incurred in connection with this Agreement and the Transactions shall be paid by the party incurring such Expenses, whether or not the Merger or any other Transaction is consummated,
except that the Company and Parent shall each pay one-half of all Expenses relating to printing, filing and mailing the Registration Statement and the Joint Proxy Statement and all SEC and other
regulatory filing fees incurred in connection with the Registration Statement and the Joint Proxy Statement. Parent shall be responsible for paying the filing fee for the Notification and Report Forms
filed under HSR Act and all other filing fees for filings under other applicable foreign, federal or state antitrust, competition or fair trade Laws.
(f) The
Company and Parent acknowledge that the agreements contained in this
Section 9.03
are an integral part of the
transactions contemplated by this Agreement. In the event that the Company or Parent shall fail to pay the Termination Fee, Parent Termination Fee or Enhanced Termination Fee, as applicable, or the
Company or Parent shall fail to pay any Expenses when due, the term "Expenses" shall be deemed to include the costs and expenses actually incurred or accrued by Parent and Merger Sub or the Company,
as the case may be (including fees and expenses of counsel) in connection with the collection under and enforcement of this
Section 9.03
,
together with interest on such unpaid Termination Fee, Parent Termination Fee or Enhanced Termination Fee, as applicable, and Expenses, commencing on the date that the Termination Fee, Parent
Termination Fee or Enhanced Termination Fee, as applicable, or such Expenses became due, at a rate of interest equal to the prime lending rate as published in the Wall Street Journal in effect on the
date such payment was required to be made. Payment of the fees and expenses described in this
Section 9.03
shall not be in lieu of any damages
incurred in the event of fraud or intentional breach of this Agreement. For the avoidance of doubt, in the event this Agreement is terminated by a party for any reason at a time when the other party
would have had the right to terminate this Agreement, such other party shall be entitled to receipt of any Expenses and/or Termination Fee, Parent Termination Fee or Enhanced Termination Fee (or
portion thereof), as applicable, that would have been (or would have subsequently become) payable had such
other party terminated this Agreement at such time. In no event shall the Company or Parent be required to pay the Termination Fee, Parent Termination Fee or Enhanced Termination Fee, as applicable,
or any Expenses in connection with the termination of this Agreement more than once.
(g) The
payment by the Company to Parent or its designees of the Termination Fee and any Expenses pursuant to this
Section 9.03
shall, subject always to
Section 9.02(a)(ii)
,
Section 9.02(c)
and
Section 9.03(f)
, in circumstances in which the Termination Fee and
Expenses are owed to Parent, be the sole and exclusive remedy of Parent for any loss suffered by Parent or Merger Sub as a result of the failure of the Transactions to be consummated to the extent
paid and upon such payment in accordance with this
Section 9.03
, subject always to
Section 9.02(a)(ii)
,
Section 9.02
(c)
and
Section 9.03(f)
, the Company shall not have any further liability or obligation relating to or
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arising
out of this Agreement or the Transactions, except as set forth in
Section 9.02(a)(ii)
. The payment by Parent to the Company or its
designees of the Termination Fee, Parent Termination Fee or Enhanced Termination Fee, as applicable, and any Expenses pursuant to this
Section 9.03
shall, subject always to
Section 9.02(a)(ii)
,
Section 9.02(b)
and
Section 9.03(f)
, in circumstances in which the Termination Fee,
Parent
Termination Fee or Enhanced Termination Fee, as applicable, and Expenses are owed to the Company, be the sole and exclusive remedy of the Company for any loss suffered by the Company as a result of
the failure of the Transactions to be consummated to the extent paid and upon such payment in accordance with this
Section 9.03
, subject always
to
Section 9.02(a)(ii)
,
Section 9.02(b)
and
Section 9.03(f)
, Parent and Merger Sub shall not
have any further liability or obligation relating to or arising out of this Agreement or the
Transactions, except as set forth in
Section 9.02(a)(ii)
.
(h) In
the event (i) (A) Parent is unable to obtain the Financing, after having complied in all material respects with its obligations under
Section 7.19
, (B) the Registration Statement is not
declared effective by the SEC, after Parent shall have complied in all material
respects with its obligations under
Section 7.01
and applicable Law or (C) the Joint Proxy Statement is not declared effective by the SEC,
after Parent shall have complied in all material respects with its obligations under
Section 7.01
and applicable Law, (ii) in each case,
the cause of the foregoing is the failure by an auditor of the Company to provide, with respect to any historical financial statements of the Company required in connection with the Financing as
contemplated by
Section 7.19
or required to be included in the Registration Statement or Joint Proxy Statement as required by
Section 7.01
and
applicable Law, any consents to the inclusion of any such historical financial statements of the Company or any audit opinions
in respect thereof by such auditor in the Registration Statement, the Joint Proxy Statement or any prospectus or offering memorandum or similar documents for any portion of the Financing as required
by
Section 7.19
, or to provide any comfort letters that may be required in connection the Financing as required by
Section 7.19
, in all cases of
this clause (ii), as a result of the matters contemplated in
Section 7.16
of the Company Disclosure Schedule and (iii) this Agreement is terminated (other than a
termination pursuant to (1)
Section 9.01(b)(i)
in circumstances where the conditions set forth in
Section 8.01(c)
(to the extent such
Restraint arises under the HSR Act or other applicable foreign, federal or state antitrust, competition or
fair trade Laws as specified on Section 8.01(d) of the Company Disclosure Schedule or Section 8.01(d) of the Parent Disclosure Schedule) or
Section 8.01(d)
have not been satisfied or
(2)
Section 9.01(b)(ii)
) pursuant to a
subsection of
Section 9.01
in circumstances where Parent is obligated to pay the Company the Termination Fee or the Enhanced Termination Fee
pursuant to this
Section 9.03
, then, notwithstanding anything to the contrary in this Agreement, including other subsections of this
Section 9.03
,
in each case, Parent shall have no obligation to pay such Termination Fee or Enhanced Termination Fee and the parties shall have no
further rights or obligations under this Agreement, except as set forth in
Section 9.02
.
Section 9.04
Amendment.
This Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective Boards of Directors at any time prior to the Effective
Time;
provided
,
however
, that, after either the Company Stockholder Approval or the Parent Stockholder
Approval has been obtained, no amendment may be made that would reduce the amount or change the type of consideration into which each Share shall be converted upon consummation of the Merger or that
would otherwise require the approval of the stockholders of the Company or the stockholders of Parent, as applicable, under applicable Law or in accordance with the rules of any relevant stock
exchange, without such approval having been obtained. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto. Notwithstanding anything to the
contrary contained herein,
Section 9.02
, this
Section 9.04
,
Section 10.07
,
Section 10.08
,
Section 10.10
and
Section 10.11
may not be amended, supplemented, waived or otherwise
modified in a manner adverse to the Financing Sources without the prior written consent of the adversely affected Financing Sources.
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Section 9.05
Waiver.
At any time prior to the Effective Time, any party hereto
may (a) extend the time for the performance of any obligation or other act of any other party
hereto, (b) waive any breach of or inaccuracy in the representations and warranties of any other party contained in this Agreement or in any document delivered pursuant hereto and
(c) subject to the proviso in the first sentence of
Section 9.04
and to the extent permitted by applicable Law, waive compliance with any
agreement of any other party or any condition to its own obligations contained in this Agreement. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby. Notwithstanding the foregoing, no failure or delay by the Company or Parent or Merger Sub in exercising any right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or future exercise of any other right hereunder.
ARTICLE X
GENERAL PROVISIONS
Section 10.01
Non-Survival of Representations, Warranties, Covenants and Agreements.
The
representations, warranties, covenants and agreements in this Agreement and in any instrument delivered pursuant hereto shall terminate at the Effective Time,
except for those covenants and agreements contained in this Agreement (including
Article II
,
Article III
,
Section 7.05(c)
,
Section 7.07
,
Section 9.03
and this
Article X
) that by their terms are to be performed in whole or in part after the Effective Time.
Section 10.02
Notices.
All notices, requests, claims, demands and other communications under
this Agreement shall be in writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, upon delivery by an internationally recognized overnight courier service, upon delivery by facsimile transmission (solely with confirmation
of receipt and with a confirmatory copy sent by an internationally recognized overnight courier service) or by email transmission (upon sending, so long as the sender of such email does not receive an
automatic reply from the recipient's email server indicating the recipient did not receive such email) to the respective parties hereto at the following addresses (or at such other address for a party
as shall be specified in a notice given in accordance with this
Section 10.02
):
if
to Parent or Merger Sub:
American
Axle & Manufacturing Holdings, Inc.
One Dauch Drive
Detroit, Michigan 48211-1198
Attention: David E. Barnes
Facsimile: (313) 758-3897
Email: david.barnes@aam.com
with
a copy (which shall not constitute notice) to:
Shearman &
Sterling LLP
599 Lexington Avenue
New York, New York 10022
Attention: Scott Petepiece
Daniel Litowitz
Facsimile: (212) 848-7179
Email: spetepiece@shearman.com
daniel.litowitz@shearman.com
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if
to the Company:
Metaldyne
Performance Group Inc.
One Towne Square
Suite 550
Southfield, MI 48076
Attention: Thomas M. Dono, Jr.
Email: TDono@mpgdriven.com
with
a copy (which shall not constitute notice) to:
Weil,
Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Michael E. Lubowitz
Facsimile: (212) 310-8007
Email: michael.lubowitz@weil.com
Section 10.03
Severability.
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties hereto as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent
possible.
Section 10.04
Disclaimer of Other Representations and Warranties.
Parent, Merger Sub and the
Company each acknowledges and agrees that, except for the representations and warranties expressly set forth in this Agreement,
(a) no party makes, and no party has made, any representations or warranties relating to itself or its businesses or otherwise in connection with the Transactions, (b) no Person has been
authorized by any party to make any representation or warranty relating to such party or its businesses or otherwise in connection with the Transactions and, if made, such representation or warranty
must not be relied upon as having been authorized by such party, and (c) any estimates, projections, predictions, data, financial information, memoranda, presentations or any other materials or
information provided or addressed to any party or any of its Representatives are not and shall not be deemed to be or to include representations or warranties unless any such materials or information
is the subject of any representation or warranty set forth in this Agreement.
Section 10.05
Entire Agreement.
This Agreement (including the exhibits and schedules hereto,
including the Company Disclosure Schedule and the Parent Disclosure Schedule), the Voting Agreement
(solely with respect to Parent and the Company) and the Confidentiality Agreement constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede
all prior agreements and undertakings, both written and oral, among the parties or any of their Affiliates, or any of them, with respect to the subject matter hereof and thereof.
Section 10.06
Assignment.
Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any of the parties, in whole or in part (whether pursuant to a
merger, by operation of Law or otherwise), without the prior written consent of the other parties, except that Merger Sub may assign all or any of its rights and obligations under this Agreement to
any direct or indirect wholly-owned Subsidiary of Parent;
provided
that no such assignment shall relieve the assigning party of its obligations under
this Agreement if such assignee does not perform such obligations. Any attempted assignment in breach of this
Section 10.06
shall be null and
void.
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Section 10.07
Parties in Interest.
This Agreement shall be binding upon, inure solely to the
benefit of, and be enforceable by, only the parties hereto and their respective successors and permitted
assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement;
provided
that the Financing Sources shall be express third party beneficiaries with respect to
Section 9.02
,
Section 9.04
, this
Section 10.07
,
Section 10.08
,
Section 10.10
and
Section 10.11
, and each of such Sections shall expressly inure to the
benefit of the Financing Sources, and the Financing Sources shall be entitled to rely on and enforce the provisions of such Sections;
provided
,
further
,
that the Persons covered by
Section 7.07
shall be express third party beneficiaries
thereof.
Section 10.08
Specific Performance.
(a) The
parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. Each party agrees that, in the event of any breach or threatened breach by any other party of any covenant or obligation contained in this
Agreement, the non-breaching party shall be entitled (in addition to any other remedy that may be available to it whether in law or equity, including monetary damages, except as limited by
Section 9.03
) to (a) an Order of specific performance to enforce the observance and performance of such covenant or obligation, and
(b) an injunction restraining such breach or threatened breach. Each party further agrees that no other party or any other Person shall be required to obtain, furnish or post any bond or
similar instrument in connection with or as a condition to obtaining any remedy referred to in this
Section 10.08
, and each party irrevocably
waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.
(b) Notwithstanding
anything herein (including
Section 10.08(a)
) to the contrary or otherwise, the parties hereto
acknowledge and agree that the Company shall be entitled to specific performance to cause Parent or Merger Sub to cause the Financing to be funded and to take all other required actions to effect the
Closing only if (i) all of the conditions to the Closing set forth in
Section 8.01
and
Section 8.02
have been satisfied (other than those
conditions that by their terms are to be satisfied at the Closing), (ii) the Company
has confirmed in an irrevocable written notice to Parent that the conditions set forth in
Section 8.01
and
Section 8.03
have been satisfied or,
to the extent allowed by applicable Law, waived by the Company, and that it is ready, willing and able to
perform its obligations to effect the Closing, (iii) there has not been a Financing Failure and (iv) Parent and Merger Sub fail to fulfill their obligation to effect the Closing within
three (3) Business Days of the written notice of the Company pursuant to the preceding clause (ii), it being understood that in no event shall the Company or any of its Affiliates
be entitled to seek the remedy of specific performance of this Agreement against the Financing Sources.
Section 10.09
Governing Law.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to any applicable principles of
conflict of laws that would cause the Laws of another State to otherwise govern this Agreement. The parties hereto agree that any Action seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall
be heard and determined exclusively in the Delaware Court of Chancery;
provided
,
however
, that if the
Delaware Court of Chancery does not have jurisdiction over such Action, such Action shall be heard and determined exclusively in the United States District Court for the District of Delaware.
Consistent with the preceding sentence, each of the parties hereto hereby (i) submits to the exclusive jurisdiction of such courts for the purpose of any Action arising out of or relating to
this Agreement brought by either party hereto; (ii) agrees that service of process will be validly effected by sending notice in accordance with
Section 10.02
; (iii) irrevocably waives,
and agrees not to assert by way of motion, defense, or otherwise, in any such Action, any claim
that it is not subject personally to the jurisdiction of the
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above-named
courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above named courts; and (iv) agrees not to move to transfer any such Action to a court other
than any of the above-named courts.
Section 10.10
Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS (INCLUDING WITH RESPECT TO THE FINANCING SOURCES). EACH OF THE PARTIES HERETO HEREBY
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.10
.
Section 10.11
Certain Claims.
(a) Notwithstanding anything to the
contrary contained in this Agreement, each of the parties hereto agrees that it will not, and it will not permit
any of its Representatives or Affiliates to, bring or support any Action (whether based on contract, tort or otherwise) against the Financing Sources in any way relating to this Agreement or the
Merger, including any dispute arising out of or relating in any way to the Financing, any Alternative Financing, the Commitment Letter or the Financing Agreements, in any forum other than the Supreme
Court of the State of New York, County of New York, or, if under applicable Law, exclusive jurisdiction is vested in the federal courts, the United States District Court for the Southern District of
New York (and appellate courts thereof). The parties hereto further agree that all of the provisions of
Section 10.10
relating to waiver of jury
trial shall apply to any Action referenced in this
Section 10.11(a)
.
(b) Notwithstanding
anything to the contrary contained in this Agreement, each of the parties hereto agrees that all Actions (whether based on contract, tort or otherwise)
against the Financing Sources in any way relating to this Agreement or the Merger, including any dispute arising out of or relating in any way to the Financing, the Alternative Financing, the
Commitment Letter or the Financing Agreements, shall be governed by and construed in accordance with the laws of the State of New York;
provided
,
however
,
that on or prior to the Closing Date, the definitions of Company Material Adverse Effect, Parent Material Adverse Effect and the
representations and warranties set forth in this Agreement shall, for the purposes of the Financing, any Alternative Financing, the Commitment Letter or the Financing Agreements, shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without giving effect to any applicable principles of conflict of laws that would cause the Laws of another State to otherwise
apply.
(c) Notwithstanding
anything to the contrary contained in this Agreement, the Company agrees that neither it nor any of its Representatives or Affiliates shall have any
rights or claims, or shall bring any Action, against any Financing Source in connection with or related to this Agreement, the Merger, the Financing, any Alternative Financing, the Commitment Letter
or the Financing Agreements. In addition, no Financing Source shall have any liability or obligation to the Company or any of the Company's Affiliates or Representatives in connection with or related
to this Agreement, the Merger, the Financing, any Alternative Financing, the Commitment Letter or the Financing Agreements, including for any consequential, special, exemplary, punitive or indirect
damages (including any loss of profits, business or anticipated savings) or damages of a
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tortious
nature. Nothing in this
Section 10.11(c)
shall modify or alter the rights of Parent under the Commitment Letter or the Financing
Agreements, and in the event of a conflict between the foregoing
and any provision in the Commitment Letter or the Financing Agreements, as applicable, the provisions of the Commitment Letter or the Financing Agreements, as applicable, shall govern and control.
Section 10.12
Counterparts.
This Agreement may be executed and delivered (including by facsimile
transmission or other means of electronic transmission, such as by electronic mail in "pdf"
form) in counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one
and the same agreement.
[
Remainder of this page intentionally left blank
]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be executed as of the date first written above by their respective officers
thereunto duly authorized.
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AMERICAN AXLE & MANUFACTURING
HOLDINGS, INC.
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By:
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/s/ DAVID C. DAUCH
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Name:
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David C. Dauch
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Title:
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Chief Executive Officer
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ALPHA SPV I, INC.
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By:
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/s/ DAVID C. DAUCH
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Name:
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David C. Dauch
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Title:
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President and Chief Executive Officer
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METALDYNE PERFORMANCE GROUP INC.
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By:
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/s/ GEORGE THANOPOULOS
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Name:
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George Thanopoulos
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Title:
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Chief Executive Officer
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[
Signature Page to Agreement and Plan of Merger
]
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Table of Contents
EXHIBIT A
Table of Contents
STOCKHOLDERS'
AGREEMENT
by and among
AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.,
ASP MD INVESTCO L.P.,
EACH AFFILIATE SHAREHOLDER THAT IS OR BECOMES PARTY HERETO,
and, solely for the purposes of Section 5.3 hereof,
AMERICAN SECURITIES LLC
Dated [
·
], 2017
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TABLE OF CONTENTS
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STOCKHOLDERS' AGREEMENT
This STOCKHOLDERS' AGREEMENT, dated as of
[
·
], 2017 (this "
Agreement
"), is
by and among American Axle & Manufacturing Holdings, Inc., a Delaware corporation (the "
Company
"), ASP MD Investco L.P., a Delaware
limited partnership (the "
Shareholder
"), each Affiliate Shareholder that is or becomes party hereto in accordance with
Section 1.1(b)
, and, solely for
purposes of
Section 5.3
, American Securities LLC, a
New York limited liability company ("
American Securities
"). The Shareholder, each Affiliate Shareholder, American Securities and the Company are
referred to hereinafter each as a "
Party
" and collectively as the "
Parties
."
RECITALS
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of November 3, 2016 (the "
Merger
Agreement
"), by and among the Company, Metaldyne Performance Group Inc., a Delaware corporation ("
MPG
"), and Alpha SPV
I, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company ("
Merger Sub
"), at the Effective Time, Merger Sub will merge with
and into MPG, with MPG continuing as the surviving entity and a wholly-owned subsidiary of the Company (the "
Merger
");
WHEREAS,
as a result of the Merger, the Shareholder will become the Beneficial Owner of shares of common stock of the Company, as set forth on
Schedule A
attached hereto;
WHEREAS,
the Parties are entering into this Agreement at the Closing to set forth certain rights and restrictions with respect to the Shares; and
WHEREAS,
this Agreement is the Stockholders' Agreement referred to in the Merger Agreement;
NOW,
THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and intending to be legally bound
hereby, the Parties agree as follows:
ARTICLE I
TRANSFER RESTRICTIONS
Section 1.1
General
.
(a) The
Shareholder shall not Transfer any Shares except as permitted by
Section 1.1(b)
,
Section 1.2
or
Article II.
(b) The
Shareholder may freely Transfer Shares to any controlled Affiliate of American Securities, unless prohibited by Law;
provided
that the Shareholder shall cause the applicable Affiliate transferee to
execute a joinder to this Agreement, in form and substance reasonably
acceptable to the Company, as a condition to the effectiveness of any such Transfer. Each such Affiliate of the Shareholder that Beneficially Owns Shares (an "
Affiliate
Shareholder
") shall, and the Shareholder shall cause each Affiliate Shareholder to, comply with the terms of this Agreement as if such Affiliate Shareholder were the
Shareholder. If any Affiliate Shareholder ceases to be a controlled Affiliate of American Securities (a "
Former Affiliate
"), such Former Affiliate shall
Transfer any Shares Beneficially Owned by such Former Affiliate to the Shareholder or another controlled Affiliate of American Securities before such Former Affiliate ceases to be a controlled
Affiliate of American Securities.
(c) The
Shareholder shall promptly notify the Company in writing of any Transfer of Shares by the Shareholder or any Affiliate Shareholder, and the Company shall update
Schedule A
hereto to reflect any
such Transfer.
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Section 1.2
Restricted Period
.
(a) Except
as permitted by
Section 1.1(b)
or
Article II
, the
Shareholder shall not Transfer any Shares during the Restricted Period without the prior written consent of the Company.
(b) Following
the Restricted Period and until (and including) the Expiration Date, the Shareholder shall not Transfer any Shares except:
-
(i)
-
in
accordance with the provisions of
Article II
;
-
(ii)
-
in
accordance with Rule 144;
-
(iii)
-
to
any Person or Group who, after giving effect to such Transfer, would, together with its Affiliates, Beneficially Own no more than seven and one-half percent
(7.5%) of the outstanding common stock of the Company and would be eligible to file a Schedule 13G pursuant to Rule 13d-1(b)(1)(ii) of the Exchange Act;
-
(iv)
-
in
any distribution to all of the limited partners (on a pro rata basis in accordance with their respective ownership percentages) and the general partner (and its
representative members) of the Shareholder or an Affiliate Shareholder in accordance with the terms of the organizational documents of such Shareholder or Affiliate Shareholder;
provided
that, after
giving effect to such Transfer, no such partner who is Transferred more than two percent (2%) of the outstanding common stock of
the Company (together with its Affiliates (other than the Shareholder or any Affiliate Shareholder)) would, to the knowledge of the Shareholder, Beneficially Own more than seven and one-half percent
(7.5%) of the outstanding common stock of the Company;
-
(v)
-
up
to seven and one-half percent (7.5%) of the outstanding common stock of the Company to each Exempt Person; or
-
(vi)
-
with
the prior written consent of the Company.
Section 1.3
Legend
.
(a) All
certificates or other instruments representing the Shares will bear the following legend:
THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT OR SUCH LAWS.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER, OWNERSHIP AND OTHER RESTRICTIONS SET FORTH IN THE STOCKHOLDERS' AGREEMENT, DATED
[
·
], 2017, BY AND AMONG AMERICAN AXLE & MANUFACTURING
HOLDINGS, INC., ASP MD
INVESTCO L.P., AMERICAN SECURITIES LLC, AND, IF APPLICABLE, THE OTHER PARTIES THERETO, AS IT MAY BE AMENDED FROM TIME TO TIME, COPIES OF WHICH ARE ON FILE WITH AND AVAILABLE FROM THE
SECRETARY OF THE COMPANY, WITHOUT COST.
(b) At
the Shareholder's request, upon delivery to the Company of a legal opinion of the Shareholder's counsel, in form and substance reasonably acceptable to the Company,
to the effect that the legend in
Section 1.3(a)
is no longer required under the Securities Act and applicable state
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laws,
and no restrictions set forth herein continue to apply to the Shares, the Company will promptly take such commercially reasonable actions as are required to cause such legend to be removed from
any certificate or other instrument representing the Shares.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1
Demand Registration
.
(a) At
any time following the Restricted Period, the Shareholder may, by providing written notice (a "
Demand Registration
Request
") to the Company, request to sell all or a portion of the Registrable Securities Beneficially Owned by the Shareholder pursuant to a Registration Statement in the
manner specified in such notice,
provided
that the aggregate market value of such Registrable Securities so requested to be sold, as measured by the
market price of such Registrable Securities on the date of the Demand Registration Request, shall not be less than $100 million (a "
Demand
Registration
"). Each Demand Registration Request shall specify the number of Registrable Securities intended to be offered and sold pursuant to the Demand Registration and the
intended method of disposition thereof, including whether the registration requested is for an underwritten offering. A Demand Registration shall be effected by way of a Registration Statement on
Form S-3 or any similar short-form registration
to the extent the Company is permitted to use such form at such time (or to the extent the Company is not permitted to use such form, on Form S-1 or a similar long-form registration). The
Company may, after consultation with the Shareholder, comply with a Demand Registration Request by, at the Company's option, (x) filing a Registration Statement (including a Shelf Registration
Statement) which will be used to offer the Registrable Securities and/or (y) providing a prospectus supplement for an already effective Registration Statement. If the Company is then ASR
Eligible, the Company shall use its commercially reasonable efforts to cause the Registration Statement to be an ASRS containing a Prospectus naming the Shareholder as the selling shareholder and
registering the offering and sale of the Registrable Securities by the Shareholder on a delayed or continuous basis pursuant to Rule 415 (an "
ASRS Resale Shelf
Registration Statement
"). The Company shall use its commercially reasonable efforts to cause any Registration Statement (or prospectus supplement, as applicable) relating to a
Demand Registration (xx) to be filed with the SEC as promptly as reasonably practicable following the receipt of the Demand Registration Request, and in no event more than twenty
(20) Business Days after receipt of a Demand Registration Request (or such longer period agreed to by the Shareholder), (yy) to be declared effective by the SEC or otherwise become effective
under the Securities Act as promptly as reasonably practicable after the filing thereof and (zz) to remain continuously effective during the Effectiveness Period.
(b) The
Shareholder shall have the right to request up to a total of two (2) Demand Registrations in any twelve (12)-month period pursuant to this
Section 2.1
; provided, that such obligation shall be
deemed satisfied (and such request shall count as one Demand Registration Request for the
Shareholder) only when a Registration Statement shall have become effective and (x) if the method of disposition thereof is a firm commitment Public Offering, at least 50% of such Registrable
Securities requested to be sold, after giving effect to any Underwriter Cutback (described in
Section 2.1(e)
), shall have been sold pursuant
thereto, and (y) in any other case, such Registration Statement shall have remained effective for the Effectiveness Period. The Shareholder may revoke a request for a Demand Registration by
notifying the Company prior to the effective date of the applicable Registration Statement or the filing of any prospectus supplement with respect to any particular underwritten offering;
provided
that
such request shall count as one of the Shareholder's requests for a Demand Registration unless the Shareholder (i) provides such
notice of revocation (A) except with respect to Underwritten Block Trades, within three (3) Business Days after requesting such Demand Registration, or (B) pursuant to
Section 2.4(c)
as a result of a
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Notice
of Suspension, or (ii) reimburses the Company for all reasonable and documented out-of-pocket expenses (including Registration Expenses) actually incurred by the Company relating to such
Demand Registration.
(c) The
Company shall (i) prepare, (ii) file with the SEC and (iii) use commercially reasonable efforts to have effective starting one hundred eighty
(180) days from the date of this Agreement, a Shelf Registration Statement on Form S-3 or such other form as the Company is then eligible to use (such Shelf Registration Statement shall
be an ASRS to the extent that the Company is then ASR Eligible) (or, at its option, after consultation with the Shareholder, provide a prospectus supplement for an already effective Shelf Registration
Statement) with respect to the registration under the Securities Act of the resale of up to [ ]
1
Shares (the "
Transaction
Shelf Registration Statement
") (such Transaction Shelf Registration Statement shall include a prospectus sufficient to permit the resale of all such Shares by the Shareholder).
The Company shall use its commercially reasonable efforts to keep the Transaction Shelf Registration Statement continuously effective for the Effectiveness Period, including by filing subsequent
registration statements, if necessary, subject to the Securities Act and the provisions of
Section 2.4
. For a period of two (2) years
following the Closing Date, any Shares which have been registered on the Transaction Shelf Registration Statement may be included in any underwritten offering conducted by the Company upon the proper
exercise of a demand or piggyback right hereunder pursuant to and in accordance with
Section 2.1
or
Section 2.2
, as applicable, subject to
compliance with the notice and cutback procedures contained herein.
(d) If
a Demand Registration is a Public Offering, the Shareholder shall have the right to select the investment banking firm(s) to act as the managing underwriter(s)
(subject to the consent of the Company, which shall not be unreasonably withheld or delayed) and counsel for the Shareholder in connection with such offering (including in any underwritten offering
under a Shelf Registration Statement or any Underwritten Block Trade).
(e) For
the first two (2) years following the date of this Agreement, in no event shall any Person (other than the Company with respect to a primary offering of its
equity securities) be entitled to include any equity securities of the Company in any offering requested pursuant to this
Section 2.1
without the
prior written consent of the Shareholder, such consent not to be unreasonably withheld after consultation with its advisors. In the event the managing underwriter shall be of the opinion that the
number of such securities, when taken together with the Registrable Securities requested to be included in a Public Offering pursuant to a Demand Registration Request, alone or taken together with the
equity securities of the Company to be included therein, would adversely affect the marketing of such offering (including the price at which the securities of the Company may be sold), then the number
of securities of the Company to be included in such underwritten offering will be reduced (an "
Underwriter Cutback
"), with the securities of the Company
to be included in such offering based on the following priority: (x) first, the number of Shares requested to be included on behalf of the Shareholder up to the number that, in the opinion of
the managing underwriter, would not adversely affect the marketing of the offering (including the price at which the Shares may be sold); and (y) second, in addition to the Shares included
pursuant to the preceding clause (x), the number of the equity securities of the Company elected to be included by the Company (whether for the Company's own account or for the account of any
other holder of equity security of the Company consented by the Shareholder to participate in the offering) up to the number that, in the opinion of the managing underwriter, would not adversely
affect the marketing of the offering (including the price at which the securities of the Company (including the Shares) may be sold).
-
1
-
Note to Draft
: The Transaction Shelf Registration Statement will include the Shares issued at Closing.
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(f) Notwithstanding
any other provision of this
Article II
, but subject to
Section 2.4
, if the Shareholder wishes to effect a Demand Registration through an
underwritten block trade or similar transaction or other
transaction with a one-day or less marketing period, including overnight bought deals (collectively, an "
Underwritten Block Trade
"), pursuant to a Shelf
Registration Statement (either through filing an ASRS or through a take-down from an already effective Shelf Registration Statement), then notwithstanding any other time periods in this
Article II
,
the Shareholder shall notify the Company of the Underwritten Block Trade five (5) Business Days prior to the date such
Underwritten Block Trade is to commence. As expeditiously as possible, the Company shall use its commercially reasonable efforts to facilitate such Underwritten Block Trade (which may price as early
as five (5) Business Days after the date it commences). The Shareholder shall use commercially reasonable efforts to work with the Company and the underwriters prior to making such request
(including by disclosing the maximum number of Shares proposed to be the subject of such Underwritten Block Trade) in order to facilitate preparation of the Registration Statement (including filing of
an ASRS), Prospectus and other offering documentation related to the Underwritten Block Trade and any related due diligence and comfort procedures.
(g) Notwithstanding
anything else in this agreement, the Company shall have no obligation to facilitate a Public Offering of Registrable Securities initiated by the
Shareholder except pursuant to, and subject to the limitations contained in, this
Section 2.1
,
Section 2.2
, and in accordance with
Section 2.6
.
(h) The
Company hereby represents that, as of the date hereof, it is a "well-known seasoned issuer" (having the meaning given thereto pursuant to Rule 405 promulgated
under the Securities Act) and eligible to use Form S-3.
Section 2.2
Piggyback Registration
.
(a) If
the Company at any time following the Closing Date proposes to file a registration statement or conduct a securities offering, including an Underwritten Block
Trade, off an already filed Shelf Registration Statement using a prospectus supplement (such registration statement or prospectus supplement, a "
Primary Registration
Statement
") for the primary sale of any equity securities of the Company (except with respect to registration statements on Form S-4, Form S-8 or another form not
available for registering the Registrable Securities for sale to the public), it will give prompt written notice thereof to the Shareholder of its intention to do so (such notice to be given not less
than five (5) Business Days (or, in the case of Underwritten Block Trades, three (3) Business Days) prior to the anticipated filing date of the Primary Registration Statement). The
Shareholder, to the extent it still holds any Registrable Securities, shall within five (5) Business Days (or, in the case of Underwritten Block Trades, three (3) Business Days) of
receipt of such notice indicate to the Company if it wishes to participate in the offering contemplated by the Primary Registration Statement and, if so, the number of Registrable Securities it wishes
to offer and sell. The Company will use its commercially reasonable efforts to cause the Registrable Securities as to which inclusion shall have been so requested to be included in the Primary
Registration Statement. The Shareholder shall be entitled to sell the Registrable Securities included in a Primary Registration Statement in accordance with the method of distribution requested by it;
provided
that, if the Primary Registration Statement relates to an underwritten offering, then (i) the Company shall be entitled to select the
underwriters in its sole discretion and (ii) the Shareholder must sell all Registrable Securities included on the Primary Registration Statement in such underwritten offering pursuant to an
underwriting agreement containing terms and conditions that are customary for secondary offerings. In the event that an Underwriter Cutback is required in the view of the managing underwriter, then
the securities of the Company to be included in such underwritten offering will be based on the following priority: (x) first, the number of securities that the Company seeks to include in the
offering, up to the number that, in
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the
opinion of the managing underwriter, would not adversely affect the marketing of the offering (including the price at which such securities of the Company may be sold); (y) second, in
addition to the securities of the Company included pursuant to the preceding clause (x), (A) for the first two (2) years following the date of this Agreement, the number of
Registrable Securities requested to be included by the Shareholder, and (B) after the date that is two (2) years following the date of this Agreement, the
number of the securities of the Company requested to be included by the Shareholder and any other Person(s) who has (have) elected to include securities pursuant to written agreements with the
Company, in each case, up to the number that, in the opinion of the managing underwriter, would not adversely affect the marketing of the offering (including the price at which the securities
(including the Registrable Securities) may be sold), and (z) third, in addition to securities of the Company included pursuant to the preceding clause (x) and the Registrable Securities
of the Shareholder and the securities of any other Person included pursuant to the preceding clause (y), the number of securities of the Company requested to be included by any other Person(s)
in the offering with the permission of the Company, up to the number that, in the opinion of the managing underwriter, would not adversely affect the marketing of the offering (including the price at
which the securities of the Company may be sold). The Underwriter Cutbacks described in the immediately preceding clause (y)(B) shall be allocated pro rata among the participating Persons,
including the Shareholder, on the basis of the number of securities, including Registrable Securities, requested to be included in such registration by such Persons. The Company may withdraw a Primary
Registration Statement prior to its being declared effective without incurring any liability to the Shareholder and shall not be required to keep a Primary Registration Statement effective for longer
than the period contemplated by the intended manner of distribution for the securities of the Company to be sold by the Company as described in the Prospectus included in the Primary Registration
Statement. The Shareholder may, at least two (2) Business Days prior to the effective date of a Primary Registration Statement or the filing of any prospectus supplement with respect to any
particular underwritten offering, as applicable, withdraw any Registrable Securities that it had sought to have included therein, without any liability to the Company or requirement to reimburse for
any out-of-pocket expenses of the Company. No registration of Registrable Securities pursuant to this
Section 2.2
shall relieve the Company of
its obligations to effect registrations pursuant to
Section 2.1
.
(b) If
the Company at any time following the Closing Date proposes to file a registration statement or conduct an offering of any of its securities off an already
filed Shelf Registration Statement using a prospectus supplement (such registration statement or prospectus supplement, a "
Secondary Registration
Statement
") for the secondary sale of its equity securities under the Securities Act on behalf of one or more holders of equity securities of the Company other than the
Shareholder (the "
Requesting Third Party Shareholders
"), the Company will give prompt written notice to the Shareholder of its intention to do so (such
notice to be given not less than five (5) Business Days (or, in the case of Underwritten Block Trades, three (3) Business Days) prior to the anticipated filing date of the Secondary
Registration Statement). The Shareholder, to the extent it still holds Registrable Securities, shall within five (5) Business Days (or, in the case of Underwritten Block Trades, three
(3) Business Days) of receipt of such notice indicate to the Company if it wants to participate in the offering contemplated by the Secondary Registration Statement and, if so, the number of
Registrable Securities it wishes to offer and sell. The Company will use its commercially reasonable efforts to cause the Registrable Securities as to which inclusion shall have been so requested to
be included in the Secondary Registration Statement. The Shareholder shall be entitled to sell the Registrable Securities included in a Secondary Registration Statement in accordance with the method
of distribution requested by it;
provided
that, if the Secondary Registration Statement relates to a Public Offering, then (i) the Requesting
Third Party Shareholders (or the Company) shall be entitled to select the underwriters and (ii) the Shareholder must sell all Registrable Securities included on the Secondary Registration
Statement
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in
such Public Offering pursuant to an underwriting agreement on the same terms and conditions as those applicable to the Requesting Third Party Shareholders. In the event that an Underwriter Cutback
is required in the view of the managing underwriter, then the securities to be included in such Public Offering will be based on the following priority: (x) first, the number of the securities
of the Company that the Requesting Third Party Shareholders seek to include, up to the number that, in the opinion of the managing underwriter, would not adversely affect the marketing of the offering
(including the price at which such securities may be sold); (y) second, in addition to the securities included pursuant to the preceding clause (x), (A) for the first two
(2) years following the date of this Agreement, the number of Registrable Securities requested to be included by or on behalf of the Shareholder, and (B) after the date that is two
(2) years following the date of this Agreement, the number of the securities of the Company requested to be included by the Shareholder and any other Person(s) who has (have) elected to include
securities pursuant to written agreements with the Company, in each case, up to the number that, in the opinion of the managing underwriter, would not adversely affect the marketing of the offering
(including the price at which the securities (including the Registrable Securities) may be sold); (z) third, in addition to the securities included pursuant to the preceding clauses (x)
and (y), the number of securities sought to be included by other Persons permitted to participate in such underwritten offering, up to the number that, in the opinion of the managing underwriter,
would not adversely affect the marketing of the offering (including the price at which the securities may be sold). The Underwriter Cutbacks described in the immediately preceding clause (y)(B)
shall be allocated pro rata among the participating Persons, including the Shareholder, on the basis of the number of securities (including Registrable Securities) requested to be included in such
registration by such Persons. Requesting Third Party Shareholders or the Company may withdraw a Secondary Registration Statement prior to its being declared effective without incurring any liability
to the Shareholder, and the Company shall not be required to keep a Secondary Registration Statement effective for longer than the period contemplated by the intended manner of distribution for the
sale of the securities by the Requesting Third Party Shareholders as described in the Prospectus included in the Secondary Registration Statement. The Shareholder may, at least two (2) Business
Days prior to the effective date of a Secondary Registration Statement or the filing of any prospectus supplement with respect to any particular underwritten offering, as applicable, withdraw any
Registrable Securities that it had sought to have included therein, without any liability to the Company or any other Person or requirement to reimburse for any out-of-pocket expenses of the Company.
Section 2.3
Expenses
.
Except as specifically provided herein, all Registration Expenses incurred in connection with the registration or offering and sale of the Registrable Securities shall be borne by the
Company and all Selling Expenses shall be borne by the Shareholder.
Section 2.4
Suspensions
.
(a) Notwithstanding
anything to the contrary contained in this Agreement, the Company shall be entitled, by providing written notice (a "
Notice of
Suspension
") to the Shareholder, to delay the filing or effectiveness of a Registration Statement or require the Shareholder to suspend the use of the Prospectus for sales of
Registrable Securities under an effective Registration Statement for a reasonable period of time not to exceed sixty (60) consecutive days or ninety (90) days in the aggregate in any
twelve (12)-month period (a "
Suspension Period
") if the Company Board (or the executive committee thereof) determines in good faith that such filing,
effectiveness or use would (i) require the public disclosure of material non-public information concerning any material transaction or negotiations involving the Company that would interfere
with such material transaction or negotiations or (ii) otherwise materially interfere with material financing plans, acquisition activities or business activities of the Company;
provided
, that if
at the time of receipt of such notice by the Shareholder, the Shareholder shall have sold all or a portion of the
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Registrable
Securities (or have signed a firm commitment underwriting agreement with respect to the sale of such Registrable Securities) pursuant to an effective Registration Statement and the reason
for the Suspension Period is not of a nature that would require a post-effective amendment to the Registration Statement, then,
provided
that the
Shareholder has given the Company at least two (2) Business Days' notice prior to entering into such sale, the Company shall use its commercially reasonable efforts to take such action as to
eliminate any restriction imposed by federal securities Laws by the time such Registrable Securities are scheduled to be delivered. Immediately upon receipt of a Suspension Notice, the Shareholder
shall discontinue the disposition of Registrable Securities under an effective Registration Statement and Prospectus relating thereto until the Suspension Period is terminated.
(b) The
Company agrees to promptly notify in writing the Shareholder, to the extent it still holds Registrable Securities, of the termination of a Suspension Period. After
the expiration of any Suspension Period in the case of an effective Registration Statement, and without the need for any further request from the Shareholder, the Company shall, as promptly as
reasonably practicable, prepare a post-effective amendment or supplement to such Registration Statement, the relevant Prospectus, or any document incorporated therein by reference, or file any other
required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the Registration Statement or the Prospectus, as applicable, will not include an untrue
statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(c) If
a Suspension Period occurs during the Effectiveness Period for a Registration Statement, such Effectiveness Period shall be extended for a number of days equal to the
total number of days during
which the distribution of Registrable Securities is suspended under this
Section 2.4
. If the Company notifies the Shareholder of a Suspension
Period with respect to a Registration Statement requested pursuant to
Section 2.1
(including a Demand Registration Request) that has not yet been
filed or declared effective, (x) the Shareholder may by notice to the Company withdraw such request without such request counting as a Demand Registration Request and (y) the Shareholder
will not be obligated to reimburse the Company for any of its out-of-pocket expenses, including Registration Expenses.
(d) Notwithstanding
anything to the contrary contained in this Agreement, the Company may delay the filing or effectiveness of a Registration Statement or require the
Shareholder to suspend the use of the Prospectus for sale of Registrable Securities under an effective Registration Statement: (i) during any of the Company's recurring quarterly earnings
blackout periods, determined in accordance with such policy as the Company shall generally maintain and communicate to the Shareholder from time to time, and any such blackout period shall be deemed
to constitute a Suspension Period hereunder but shall not be subject to, and shall not count against, the time periods in
Section 2.4(a)
or be
subject to
Section 2.4(c)
; and (ii) if, in the good faith determination of the Company, it is not feasible for the Company to proceed with
the registration or offering because (x) audited financial statements of the Company, or (y) audited financial statements of any acquired company or pro forma financial statements that
are required by the Securities Act to be included in any related registration statement or prospectus are then unavailable, until such time as such financial statements are prepared or obtained by the
Company, and any delay or suspension shall be treated as a Suspension Period hereunder, except that it shall not be subject to, and shall not count against, the time periods in
Section 2.4(a)
or be
subject to
Section 2.4(c)
;
provided
that, with respect to clause (y), the Company shall use its reasonable best efforts to prepare or obtain the
relevant acquired company
or pro forma financial statements as quickly as reasonably practicable; and
provided
,
further
, that in
no event will more than forty (40) days of the period from which such financial statements are required to be filed pursuant to
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Item 9.01
of Form 8-K be excluded from the time periods in
Section 2.4(a)
or be subject to
Section 2.4(c)
.
Section 2.5
Lock-Up Obligations
.
To the extent reasonably requested by a managing underwriter, if any, of any underwritten Public Offering (including any Underwritten Block Trade) of the equity securities of the
Company, the Shareholder and, if such offering is pursuant to
Section 2.1
or
Section 2.2
,
the Company, each hereby severally agree, (i) not to (A) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction that is designed to, or could be expected
to, result in the disposition by any Person at any time in the future of) any shares of common stock of the Company or any other form of Capital Stock (collectively, the
"
Restricted Stock
") (other than, in the case of the Company, the grant of equity awards with respect to, or the issuance of shares of Capital Stock
under, any of the Company's bona fide equity incentive plans in existence at the start of the lock-up period specified in this
Section 2.5
),
(B) enter into any swap or other derivatives transaction that transfers to another Person, in whole or in part, any of the economic benefits or risks of ownership of Restricted Stock, whether
any such transaction described in clause (A) above or this clause (B) is to be settled by delivery of Restricted Stock or other securities, in cash or otherwise, or (C) publicly
disclose the intention to do any of the foregoing, in each case, for a period specified by such managing underwriter or co-managing underwriter but no more than the ten (10) days prior to and
the sixty (60) days (or ninety (90) days if reasonably requested by the managing underwriters) following the pricing date of the Public Offering of such securities.
Section 2.6
Registration Procedures
.
Whenever the Shareholder requests that any Registrable Securities be registered pursuant to
Section 2.1
or
Section 2.2
,
subject to the provisions of those Sections, the Company will use its commercially reasonable efforts to effect the registration and
the offer and sale of such Registrable Securities in accordance with the intended method of disposition thereof as soon as reasonably practicable, and shall, in connection with any such request, other
than during any Suspension Period, use commercially reasonable efforts to:
(a) prepare
and promptly file with the SEC a Registration Statement (or a prospectus supplement, as applicable) with respect to such securities and use its commercially
reasonable efforts to cause such Registration Statement to become effective as soon as practicable thereafter and remain effective for the period of the distribution contemplated thereby (but in no
event longer than the Effectiveness Period) and at least three (3) Business Days (or, with regard to any Underwritten Block Trade, as soon as reasonably practicable) before filing a
Registration Statement or Prospectus or any amendments or supplements thereto (but, for the avoidance of doubt, not any documents incorporated by reference therein), or any related free writing
prospectus, furnish to the Shareholder and the underwriter(s), if any, copies of all such documents proposed to be filed, and provide the Shareholder with the opportunity to object to any information
pertaining to it and the plan of distribution that is contained therein;
(b) (i)
prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith and such free writing
prospectuses and Exchange Act reports as may be necessary to keep such Registration Statement effective for the period specified in paragraph (a) above and comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement and any prospectus so supplemented to be filed pursuant to Rule 424 under the
Securities Act in accordance with the
Shareholder's intended method of disposition set forth in such Registration Statement for such period, and (ii) provide reasonable notice to the Shareholder and the managing underwriter(s), if
any, to the extent that the Company determines that a post-effective amendment to a registration statement would be appropriate;
(c) furnish
to the Shareholder and the underwriter(s), if any, without charge, such number of copies of the Registration Statement, each amendment and supplement thereto,
the Prospectus
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included
therein (including each preliminary prospectus) and any other prospectuses filed under Rule 424 and each free writing prospectus as such Persons reasonably may request in order to
facilitate the public sale or other disposition of the Registrable Securities covered by such Registration Statement;
(d) use
its commercially reasonable efforts to register or qualify the Registrable Securities covered by such Registration Statement under the securities or "blue sky" Laws
of such jurisdictions as the Shareholder or, in the case of a Public Offering, the managing underwriter reasonably shall request and do any and all other acts and things which may be reasonably
necessary or advisable to enable the Shareholder to consummate the disposition in such jurisdictions of the Registrable Securities Beneficially Owned by it;
provided
,
however
, that the Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction;
(e) promptly
notify the Shareholder and each managing underwriter, if any: (i) when the Registration Statement, any pre-effective amendment, the Prospectus or any
prospectus supplement related thereto, any post-effective amendment to the Registration Statement or any free writing prospectus has been filed with the SEC and, with respect to the Registration
Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the SEC or state securities authority for amendments or supplements to the Registration
Statement or the Prospectus related thereto or for additional information, including copies of any and all transmittal letters and other correspondence with the SEC and all correspondence (including
comment letters and a copy of the Company's draft responses thereto), from the SEC to the Company relating to such Registration Statement or any Prospectus or any amendment or supplement thereto (but
not, for the avoidance of doubt, any documents incorporated by reference therein); (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement
or the initiation of any proceedings for that purpose; or (iv) of the receipt by the Company of any notification with respect to the suspension of the
qualification of any Registrable Securities for sale under the securities or state "blue sky" Laws of any jurisdiction or the initiation of any proceeding for such purpose.
(f) if
at any time (A) any event or development shall occur or condition shall exist as a result of which the Disclosure Package, as then amended or supplemented,
would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances existing when the
Disclosure Package is delivered to a purchaser, not misleading, or (B) it is necessary to amend or supplement the Disclosure Package to comply with Law, the Company will promptly notify the
Shareholder and each managing underwriter, if any, and promptly prepare and file with the SEC (to the extent required) and furnish to the Shareholder and each underwriter, if any, such amendments or
supplements to the Disclosure Package as may be necessary so that the statements in the Disclosure Package, as so amended or supplemented, will not, in the light of the circumstances existing when the
Disclosure Package is delivered to a purchaser, be misleading, or so that the Disclosure Package will comply with Law;
(g) use
its commercially reasonable efforts to make generally available to its security holders, as soon as reasonably practicable, an earnings statement covering the period
of at least twelve (12) months beginning with the first day of the Company's first full calendar quarter after the effective date of a Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158;
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(h) use
its commercially reasonable efforts to list the Registrable Securities covered by such Registration Statement on the New York Stock Exchange or any other national
securities exchange selected by the Company;
(i) use
its commercially reasonable efforts to cause its officers, employees and independent public accountants (in the case of the independent public accountants, subject
to any applicable accounting guidance regarding their participation in the offering or the due diligence process) to participate in, make themselves reasonably available, supply such information as
may reasonably be requested and to otherwise facilitate and cooperate with the preparation of the Registration Statement and Prospectus and any amendments or supplements thereto, taking into account
the Company's reasonable business needs;
(j) provide
a transfer agent and registrar for all such Registrable Securities not later than the effective date of such Registration Statement (or the pricing date of the
relevant offering);
(k) if
the offering is underwritten pursuant to a Demand Registration Request, then at the request of the Shareholder, (i) enter into such customary agreements
(including underwriting agreements in customary form) and take all such other customary actions as the Shareholder reasonably requests in order to expedite or facilitate the disposition of such
Registrable Securities, (ii) use commercially reasonable efforts, subject to the Company's reasonable business needs, upon reasonable advance notice and without unduly interfering with the
Company's business, to have members of its management participate in due diligence sessions and, in the case of marketed offerings and investor calls and "road shows" (to the extent reasonably
determined by the underwriters to be necessary or desirable for a successful offering of the securities), and (iii) use commercially reasonable efforts to furnish to the underwriters a
customary legal opinion and disclosure letter from counsel to the Company and customary comfort letters from the independent public accountants retained by the Company (and brought down to the closing
under the underwriting agreement);
(l) in
connection with the preparation and filing of each Registration Statement registering Registrable Securities under the Securities Act, and before filing any such
Registration Statement or any other document in connection therewith, give reasonable consideration to the inclusion in such documents of any comments reasonably and timely made by the Shareholder or
its legal counsel; participate in, and make documents available for, the reasonable and customary due diligence review of underwriters during normal business hours, on reasonable advance notice and
without undue burden or hardship on the Company;
provided
that (i) any party receiving confidential materials shall execute a confidentiality
agreement on customary terms if reasonably requested by the Company and (ii) the Company may in its sole discretion restrict access to competitively sensitive or legally privileged documents or
information;
(m) use
its commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, or the suspension of
the qualification of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to use its commercially reasonable efforts to obtain the withdrawal
of such order or suspension at the earliest possible moment and to notify the Shareholder of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or
threat of any proceeding for such purpose;
(n) otherwise
use its commercially reasonable efforts to comply with the Securities Act, the Exchange Act and any other applicable rules and regulations of the SEC and
reasonably cooperate with the Shareholder in the disposition of its Registrable Securities in accordance with the method of distribution described in the Prospectus included in any Registration
Statement, such cooperation to include the endorsement and transfer of any certificates representing Registrable Securities (or a book-entry transfer to similar effect) transferred in accordance with
this Agreement and delivery of any necessary instructions or opinions to the Company's transfer agent in order to cause the transfer agent to allow Shares to be sold from time to time as permitted by
Law;
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(o) take
all reasonable action to ensure that any Free Writing Prospectus utilized in connection with any registration covered by
Section 2.1
or
Section 2.2
complies in all material respects with the Securities Act, is
filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby, will not conflict with a related
Prospectus, prospectus supplement and related documents and, when taken together with the related Prospectus, prospectus supplement and related documents, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(p) use
its commercially reasonable efforts to cooperate with the managing underwriters, if any, the Shareholder and their respective counsel in connection with the
preparation and filing of any applications, notices, registrations and responses to requests for additional information with FINRA, the New York Stock Exchange or any other national securities
exchange on which the Shares are listed; and
(q) pay
the applicable filing fees covering the Registrable Securities in compliance with the SEC rules and to file such amendments or subsequent registration statements as
may be required to maintain an effective registration statement for the relevant Effectiveness Period.
Section 2.7
Effectiveness Period
.
For purposes of this
Article II
, the period of distribution of Registrable Securities in a firm commitment Public Offering shall be
deemed to extend until the earlier of (w) when each underwriter participating in the offering has completed the distribution of all securities of the Company purchased by it and
(x) 180 days after the pricing of such offering, and the period of distribution of Registrable Securities pursuant to a Registration Statement for any other manner of distribution shall
be deemed to extend, in the case of a Shelf Registration Statement, until the sale of all Registrable Securities covered thereby or, in the case of any other Registration Statement, the earlier of
(y) the sale of all Registrable Securities covered thereby and (z) ninety (90) days after the effective date thereof (such period, including any extension pursuant to
Section 2.4
,
the "
Effectiveness Period
").
Section 2.8
Indemnification.
(a)
Indemnification Rights.
(i) In
the event of any registration or other offer and sale of any securities of the Company under the Securities Act pursuant to this
Article II
, the Company shall indemnify and hold harmless the
Shareholder and each Person, if any, that controls the Shareholder within the
meaning of Section 15 of the Securities Act (each a "
controlling person
"), their respective officers, directors, employees, stockholders, general
and limited partners, members, Representatives and Affiliates, and each controlling person of each Affiliate of any of the foregoing Persons (each, a "
Shareholder Registration
Rights Indemnitee
"), to the fullest extent lawful, from and against any and all Damages arising out of or based upon (A) any untrue statement of material fact (or
alleged untrue statement of a material fact) contained in any Disclosure Package, any Registration Statement, any Prospectus (including any preliminary Prospectus), any Free Writing Prospectus, or in
any amendment or supplement thereto or (B) any omission or alleged omission to state therein 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;
provided
that the Company shall not be liable to a Shareholder Registration
Rights Indemnitee to the extent that any such Damages are arising out of or based upon any untrue statement or omission (or alleged untrue statement or omission) made in such Disclosure Package,
Registration Statement, Prospectus (including any preliminary Prospectus), Free Writing Prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information
about the Shareholder furnished
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to
the Company by or on behalf of the Shareholder expressly for use therein. This indemnity agreement shall be in addition to any liability which the Company may otherwise have. Such indemnity and
reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of any Shareholder Registration Rights Indemnitee and shall survive the transfer of
securities by the Shareholder.
(ii) The
Shareholder shall indemnify and hold harmless the Company and each of its officers who execute any of the Company's filings with the SEC pursuant to the Exchange
Act or the Securities Act, its directors, employees, stockholders, and each Person, if any, that controls the Company and each Affiliate of any of the foregoing Persons (each, a
"
Company Registration Rights Indemnitee
"), to the fullest extent lawful, from and against any and all Damages arising out of or based upon
(A) any untrue statement of material fact (or alleged untrue statement of a material fact) contained in any Disclosure Package, any Registration Statement, any Prospectus (including any
preliminary Prospectus), any Free Writing Prospectus or in any amendment or supplement thereto or (B) any omission (or alleged omission) to state therein 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, in each case, to the extent that such untrue statement or omission was
made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Shareholder expressly for use therein;
provided
,
however
, that in no event shall the obligations of the Shareholder hereunder exceed the net
proceeds received by it from the sale of its Registrable Securities related to the matter in which Damages are sought. Such indemnity and reimbursement of expenses shall remain in full force and
effect regardless of any investigation made by or on behalf of a Company Registration Rights Indemnitee and shall survive the Transfer of such securities by the Shareholder.
(iii) If
the indemnification provided for in
Section 2.8(a)(i)
or
Section 2.8(a)(ii)
is unavailable to a Shareholder Registration Rights Indemnitee or a
Company Registration Rights Indemnitee, as applicable,
with respect to any Damages referred to therein or is unenforceable or insufficient to hold a Shareholder Registration Rights Indemnitee or Company Registration Rights Indemnitee, as applicable,
harmless as contemplated therein, then the Company or the Shareholder, as applicable, in lieu of indemnifying such Shareholder Registration Rights Indemnitee or Company Registration Rights Indemnitee,
as applicable, shall contribute to the amount paid or payable by such Shareholder Registration Rights Indemnitee or Company Registration Rights Indemnitee, as applicable, as a result of such Damages
in such proportion as is appropriate to reflect the relative fault of such Shareholder Registration Rights Indemnitee or Company Registration Rights Indemnitee, as applicable, on the one hand, and the
Company or the Shareholder, as applicable, on the other hand, in connection with the statements or omissions which resulted in such Damages as well as any other relevant equitable considerations. The
relative fault of the Company or the Shareholder, as applicable, on the one hand, and of a Shareholder Registration Rights Indemnitee or Company Registration Rights Indemnitee, as applicable, on the
other hand, shall be determined by reference to, among other factors, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates
to information supplied by or on behalf of the Company or the Shareholder, as
applicable, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; the Company and the Shareholder agree that it would not
be just and equitable if contribution pursuant to this
Section 2.8(a)(iii)
were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred to in this
Section 2.8(a)(iii)
. No Shareholder Registration Rights
Indemnitee or Company Registration Rights Indemnitee guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled
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to
contribution from the Company or the Shareholder, as applicable, if the Company or the Shareholder, as applicable, was not guilty of such fraudulent misrepresentation. Notwithstanding anything
herein to the contrary, in no event shall the liability of the Shareholder pursuant to this
Section 2.8(a)(iii)
be greater in amount than the
amount of net proceeds received by it from the sale of such Registrable Securities related to the matter in which indemnification or contribution for Damages are sought.
(b)
Notice of Reg Rights Claim.
(i) As
used in this Agreement, the term "
Reg Rights Claim
" means a claim for indemnification or contribution by or on behalf
of any Company Registration Rights Indemnitee or Shareholder Registration Rights Indemnitee, as the case may be, for Damages under
Section 2.8(a)
(such Person making a Reg Rights Claim, a "
Reg Rights Indemnified Person
"). The Company (for its own Damages or for the Damages incurred by any other
Company Registration Rights Indemnitee) or the Shareholder (for its own Damages or for the Damages incurred by any other Shareholder Registration Rights Indemnitee), as applicable, shall give notice
of a Reg Rights Claim under this Agreement pursuant to a written notice of such Reg Rights Claim executed by the Company or the Shareholder, as applicable (a "
Notice of Reg
Rights Claim
"), and delivered to the Company or the Shareholder, as applicable (such receiving party, the "
Reg Rights Indemnifying
Person
"), promptly after such Reg Rights Indemnified Person becomes aware of the existence of any potential claim by such Reg Rights Indemnified Person for indemnification
arising out of or resulting from any item indemnified pursuant to the terms of
Section 2.8(a)(i)
or
Section 2.8(a)(ii)
;
provided
that the failure to timely give such notice shall not limit or
reduce the Reg Rights Indemnified Person's right to indemnification hereunder unless (and then only to the extent that) the Reg Rights Indemnifying Person's defense of such Reg Rights Claim is
materially and adversely prejudiced thereby.
(ii) Each
Notice of Reg Rights Claim shall: (A) state the aggregate amount (where practicable) that the Reg Rights Indemnified Person has incurred or paid in Damages
arising from such Reg Rights Claim
(which amount may include the amount of Damages claimed by a third party in an action (a "
Third-Party Reg Rights Claim
") brought against such Reg Rights
Indemnified Person based on alleged facts, which if true, would give rise to liability for Damages to such Reg Rights Indemnified Person); and (B) contain a brief description, in reasonable
detail (to the extent reasonably available to the Reg Rights Indemnified Person) of the facts, circumstances or events giving rise to the alleged Damages based on the Reg Rights Indemnified Person's
good faith belief and knowledge thereof, including the identity and address of any third party claimant (to the extent reasonably available to the Reg Rights Indemnified Person).
(c)
Defense of Third-Party Reg Rights Claims.
(i) Subject
to the provisions hereof, the applicable Reg Rights Indemnifying Person shall have the right (at its own expense) to elect to defend and assume control of the
defense of any Third-Party Reg Rights Claim on behalf of a Reg Rights Indemnified Person, utilizing legal counsel reasonably acceptable to such Reg Rights Indemnified Person. In the event such
election is made, the Reg Rights Indemnified Person (unless itself controlling the Third-Party Reg Rights Claim in accordance with this
Section 2.8(c)
) may participate, through counsel of its own
choice and, except as provided herein, at its own expense, in the defense of any
Third-Party Reg Rights Claim. The reasonable and documented costs and expenses incurred by the Reg Rights Indemnifying Person in connection with such defense (including reasonable attorneys' fees,
other professionals' and experts' fees and court or arbitration costs) shall be paid by the Reg Rights Indemnifying Person.
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(ii) A
Reg Rights Indemnifying Person shall not be entitled to assume control of such defense, and the applicable Reg Rights Indemnified Person may assume the control and
defense thereof, at the sole expense of the applicable Reg Rights Indemnifying Person, if (A) the Reg Rights Claim relates to, or arises in connection with, any criminal or governmental
proceeding, action, indictment, allegation or investigation, (B) the Reg Rights Claim seeks an injunction against the Reg Rights Indemnified Person, to the extent that such defense relates to
the claim for such injunction, (C) a conflict of interest between the Reg Rights Indemnifying Person and the Reg Rights Indemnified Person exists with respect to the Reg Rights Claim or the Reg
Rights Indemnifying Person and the Reg Rights Indemnified Person have one or more conflicting defenses, in the reasonable view of their respective counsel, or (D) the Reg Rights Indemnifying
Person has elected to have the Reg Rights Indemnified Person defend, or assume the control and defense of, a Third-Party Reg Rights Claim in accordance with this
Section 2.8(c)
;
provided
that in no event shall the Reg Rights Indemnifying Person be liable for
the fees and expenses of more than one separate counsel for all Reg Rights Indemnified Persons, which counsel shall be selected by the Shareholder (in the case of the Shareholder Registration Rights
Indemnitees) or by the Company (in the case of the Company Registration Rights Indemnitees).
(iii) Any
party controlling the defense of any Third-Party Reg Rights Claim pursuant hereto shall: (A) conduct the defense of such Third-Party Reg Rights Claim with
reasonable diligence and keep the other parties reasonably informed of material developments in the Third-Party Reg Rights Claim at all stages thereof (including by promptly providing the other
parties with copies of material legal documents filed or received in connection therewith) and (B) permit the other parties and their counsel to confer on the conduct of the defense thereof.
The parties not controlling the defense will render to the party controlling the defense such assistance as may be reasonably required in order to insure the proper and adequate defense thereof and
shall furnish such records, information and testimony and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested by the party controlling the
defense in connection therewith. The Reg Rights Indemnifying Person shall reimburse the parties not controlling the defense for any reasonable and documented costs and expenses incurred in connection
with providing such assistance. Notwithstanding anything to the contrary in this Agreement, no Party shall be required to disclose any information to the other Party or its Representatives, if doing
so would be reasonably expected to violate any Law to which such Party is subject or could jeopardize (in the reasonable discretion of the disclosing Party) any attorney-client privilege available
with respect to such information.
(iv) If
the Reg Rights Indemnifying Person controls the defense of and defends any Third-Party Reg Rights Claim under this
Section 2.8(c)
, the Reg Rights Indemnifying Person shall have the right to effect
a settlement of such Third-Party Reg Rights Claim on the Reg
Rights Indemnified Person's behalf and without the consent of the Reg Rights Indemnified Person;
provided
that (A) such settlement shall not
involve any injunctive relief binding upon the Reg Rights Indemnified Person or any of its Affiliates, and (B) such settlement expressly and unconditionally releases the Reg Rights Indemnified
Person and the other applicable Reg Rights Indemnified Persons (that is, each of the Company Registration Rights Indemnitees, if the Reg Rights Indemnified Person is a Company Registration Rights
Indemnitee, and each of the Shareholder Registration Rights Indemnitees, if the Reg Rights Indemnified Person is a Shareholder Registration Rights Indemnitee) from any and all liabilities with respect
to such Third-Party Reg Rights Claim, with prejudice. If the Reg Rights Indemnified Person controls the defense of and defends any Third-Party Reg Rights Claim under this
Section 2.8(c)
, the Reg
Rights Indemnified Person shall have the right to effect a settlement of such Third-Party Reg Rights Claim only with the
consent of the Reg Rights Indemnifying Person (which
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consent
shall not be unreasonably withheld, conditioned or delayed). No settlement by the Reg Rights Indemnified Person of such Third-Party Reg Rights Claim effected in accordance with this
Section 2.8(c)
shall limit or reduce the right of any Reg Rights Indemnified Person to indemnity hereunder for all Damages they may incur arising
out of or resulting from the Third-Party Reg Rights Claim, to the extent such Damages are indemnifiable hereunder. As used in this
Section 2.8(c)(iv)
, the term "settlement" refers to any consensual
resolution of the claim in question, including by consent decree or by
permitting any judgment or other resolution of a claim to occur without disputing the same, and the term "settle" has a corresponding meaning.
Section 2.9
Free Writing Prospectuses.
Except for a Prospectus relating to Registrable
Securities included in a Registration Statement, an "issuer free writing prospectus" (as defined in
Rule 433 under the Securities Act) prepared by the Company or other materials prepared by Company, the Shareholder represents and agrees that it (a) will not make any offer relating to
the Registrable Securities that would constitute an issuer free writing prospectus or that would otherwise constitute a Free Writing Prospectus, and (b) will not distribute any written
materials in connection with the offer or sale pursuant to a Registration Statement of Registrable Securities, in each case, without the prior written consent of the Company and, in connection with
any Public Offering, the underwriters.
Section 2.10
Information from and Obligations of the Shareholder.
The Company's obligation to
include the Shareholder's Registrable Securities in any Registration Statement or Prospectus is contingent upon the Shareholder
promptly:
(a) furnishing
to the Company in writing information with respect to its ownership of Registrable Securities and the intended method of disposition of its Registrable
Securities as the Company may reasonably request or as may be required by Law for use in connection with a Registration Statement or Prospectus (or any amendment or supplement thereto) and all
information required to be disclosed in order to make the information the Shareholder previously furnished to the Company not contain a material misstatement of fact or necessary to cause such
Registration Statement or Prospectus (or amendment or supplement thereto) not to omit a material fact with respect to the Shareholder necessary in order to make the statements therein not misleading;
(b) complying
with (i) the Securities Act and the Exchange Act, (ii) all applicable state securities Laws, (iii) the rules of any securities exchange or
trading market on which the Shares are listed or traded and (iv) all other applicable regulations, in each case, in connection with the registration and the disposition of Registrable
Securities;
(c) notifying
the Company of the occurrence of any event that makes any statement made in a Registration Statement, Prospectus, issuer free writing prospectus or other Free
Writing Prospectus regarding the Shareholder untrue in any material respect or that requires the making of any changes in a Registration Statement, Prospectus, issuer free writing prospectus or other
Free Writing Prospectus so that, in such regard, it will not contain any untrue statement of a material fact or omit any material fact required to be stated therein or necessary to make the statements
not misleading;
(d) providing
the Company with such information as may be required to enable the Company to prepare a supplement or post-effective amendment to any such Registration
Statement or a supplement to such Prospectus or Free Writing Prospectus;
(e) using
commercially reasonable efforts to cooperate with the Company in preparing the applicable Registration Statement and any related Prospectus; and
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(f) furnishing
the Company with all information required to be included in such Registration Statement or Prospectus by applicable securities Laws in connection with the
disposition of such Registrable Securities as the Company reasonably requests.
Section 2.11
Rule 144 Reporting.
With a view to making available to the Shareholder the
benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable
Securities to the public without registration, the Company agrees to use its commercially reasonable efforts to make and keep available adequate current public information, as defined in
Rule 144(c), including all periodic and annual reports and other documents (other than Form 8-K reports) required of the Company under Sections 13 or 15(d) of the Exchange Act,
and so long as the Shareholder Beneficially Owns any Registrable Securities or securities convertible into or exercisable for Registrable Securities, furnish to the Shareholder forthwith upon request
(and all of the following shall be deemed furnished if available on the SEC's EDGAR system): a written statement by the Company as to its compliance with the reporting requirements of Rule 144,
and of the Exchange Act; a copy of the most recent annual or quarterly report of the Company; and such other reports and documents as the Shareholder may reasonably request in availing itself of any
rule or regulation of the SEC allowing it to sell any Registrable Securities without registration.
Section 2.12
Termination of Registration Rights.
Notwithstanding anything to the contrary
contained herein, the registration rights granted under this
Article II
terminate and are of no further force and effect (other than
Section 2.3
and
Section 2.8
), on the date on which there cease to be any Registrable Securities.
Section 2.13
Transfer of Registration Rights.
Subject to
Section 1.2
, the Shareholder shall have the right to Transfer to any Person (such Person, a
"
Transferee Shareholder
"), directly or indirectly, by written agreement, any or all of its rights and obligations granted under this
Article II
(and
no other rights or obligations under this Agreement) in connection with a Transfer of all or a portion of its Registrable
Securities to such Person;
provided
that (a) the Shareholder shall have the sole power to exercise the rights granted to the Shareholder under
this
Article II
on behalf of any such Transferee Shareholder, and the Company shall not be obligated to take any action with respect to any
Registrable Securities of any such Transferee Shareholder except upon notice and instructions by the Shareholder, (b) any notice or other communication by the Company to the Shareholder with
respect to the matters governed by this
Article II
shall be deemed notice to a Transferee Shareholder with respect to any Registrable Securities
held by such Transferee Shareholder, (c) no such Transfer shall increase the aggregate number of Demand Registrations that may be made under
Section 2.1
by the Shareholder on behalf of itself
or any such Transferee Shareholder to more than two (2) Demand Registrations in any
twelve (12)-month period, (d) for purposes of this
Article II
, including, without limitation, any priority of inclusion or Underwriter
Cutback, but not for purposes of determining whether the securities held by any Transferee Shareholder are Registrable Securities, all Registrable Securities held by such Transferee Shareholder shall
be deemed held by the Shareholder, and (e) such Transferee Shareholder executes a joinder to this Agreement (a "
Joinder
"), in form and substance
reasonably acceptable to the Company, pursuant to which (x) such Transferee Shareholder shall, following the applicable Transfer, become responsible for all obligations applicable to the
Shareholder under this
Article II
with respect to the Registrable Securities Transferred to such Transferee Shareholder and (y) the
Company shall acknowledge the rights of the Shareholder Transferee under this
Article II
. If the Shareholder Transfers only a portion of its
Registrable Securities, the Shareholder shall retain all rights and obligations under this Agreement with respect to the portion of the Registrable Securities that it continues to hold following such
Transfer.
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ARTICLE III
PREEMPTIVE RIGHTS
Section 3.1
General.
From the Closing Date until the Expiration Date, the Company shall not
issue any New Securities to any Person, except in compliance with the provisions of this
Article III
.
Section 3.2
Timing and Procedure.
Prior to the consummation of the issuance of New Securities,
the Company shall send a written notice thereof (a "
Participation
Notice
") to the Shareholder. The Participation Notice shall include:
(a) the
principal terms of the proposed issuance, including (i) the number and kind of New Securities to be included in the issuance, (ii) the price per
security of the New Securities, (iii) the percentage equal to the number of Shares immediately prior to the issuance of the New Securities divided by the aggregate number of the shares of
common stock of the Company then issued and outstanding (the "
Participation Percentage
"), and (iv) the name of each Person to whom the New
Securities are proposed to be issued (each a "
Prospective Subscriber
");
provided
that, if the
consideration to be paid by the Prospective Subscriber for the New Securities contains non-cash consideration, then the Participation Notice shall also specify the fair market value (as reasonably
determined by the Company Board) of such non-cash consideration; and
(b) an
offer by the Company to issue to the Shareholder such portion (not in any event to exceed the Shareholder's Participation Percentage) of the New Securities to be
included in the issuance as may be requested by the Shareholder (the "
Preemptive Rights Shares
"), at the same price and otherwise on the same terms and
conditions as the issuance to each of the Prospective Subscribers;
provided
that, if consideration to be paid by the Prospective Subscriber for the New
Securities contains non-cash consideration, then such offer shall give the Shareholder the option to pay, in lieu of delivery of such non-cash consideration, cash in the amount of the fair market
value (as reasonably determined by the Company Board) of such non-cash consideration; and
provided
,
further
, that, if the issuance of the Preemptive Rights
Shares to the Shareholder would require approval of the stockholders of the Company pursuant to
the NYSE Rule, such offer and any issuance of the Preemptive Rights Shares shall be conditioned on such stockholder approval being obtained (it being agreed that the Company shall not issue New
Securities to any Person if such stockholder approval is not obtained).
Section 3.3
Exercise of Rights.
If the Shareholder desires to accept the offer contained in the
Participation Notice, it shall send an irrevocable commitment (each a
"
Participation Commitment
") to the Company within ten (10) Business Days after the date of delivery of the Participation Notice specifying the
amount or proportion of the Preemptive Rights Shares (not in any event to exceed the Shareholder's Participation Percentage) which it desires to be issued. If the Shareholder has not so accepted such
offer pursuant to the foregoing sentence, it shall be deemed to have irrevocably waived its right under this
Article III
and the Company shall
thereafter be free to issue the New Securities to the Prospective Subscribers within one hundred and twenty (120) days following the date of the Participation Notice on terms not materially
more favorable to the Prospective Subscribers than those set forth in the Participation Notice, without any further obligation to the Shareholder. If the Company has not completed the sale of the New
Securities in accordance with the foregoing sentence, the Company shall provide a new Participation Notice to the Shareholder on the terms and provisions set forth in
Section 3.2
.
Section 3.4
Closing of Preemptive Issuance.
The closing of an issuance pursuant to this
Article III
shall take place at such time and place as the
Company shall specify by notice to the Shareholder given not less than three (3) Business Days prior to the closing of the issuance. At the closing of any issuance under this
Article III
, the
Company shall deliver to the Shareholder the originals of notes, certificates or other instruments evidencing the New Securities
issued to the Shareholder, in each case, free and clear
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of
any liens or encumbrances, with any transfer tax stamps affixed (if applicable), against delivery by the Shareholder of the applicable consideration.
Section 3.5
Reduction of Preemptive Issuance.
Notwithstanding anything in this
Article III
to the contrary, if the amount of New Securities to be issued
is for any reason less than the amount that was initially proposed to be issued as indicated in the Participation Notice, the Company may (whether before or after the Shareholder has delivered a
Participation Commitment to the Company) decrease the number of Preemptive Rights Shares that the Shareholder is entitled to subscribe for or purchase pursuant to this
Article III
to an amount not
less than the amount necessary to allow the Shareholder to maintain (but not exceed) its Participation Percentage
after giving effect to the issuance of the applicable New Securities.
Section 3.6
Exclusions.
The preceding provisions of this
Article III
shall not apply to:
(a) any
issuance of New Securities to officers, employees, directors, advisors or consultants of the Company or any subsidiary of the Company, in each case, in connection
with their compensation or employment as such;
(b) any
issuance of New Securities in a Public Offering (which, for the avoidance of doubt, shall be governed by the provisions of
Article II
);
(c) any
pro rata dividend of New Securities made to all holders of the common stock of the Company; or
(d) for
the avoidance of doubt, any issuance of New Securities in connection with the transactions contemplated by the Merger Agreement.
ARTICLE IV
BOARD OF DIRECTORS
Section 4.1
Increase in the Company Board Size.
Effective on the date of this Agreement, the
Company has increased the number of Directors constituting the Company Board from eight (8) to eleven
(11) and has elected the following Persons to serve as new Directors in the class of Directors and the committee of the Company Board, in each case, as identified below:
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Section 4.2
Right of Shareholder to Nominate Directors.
From the Closing Date until the
Expiration Date, the Shareholder shall have the right to nominate to the Company Board: (a) if the total number of
Directors constituting the Company Board is less than fourteen (14), three (3) Directors; (b) if the total number of Directors constituting the Company Board is fourteen (14), four
(4) Directors; and (c) if the total number of Directors constituting the Company Board is greater than fourteen (14), a number of Directors equal to such total number of Directors
multiplied by 27%, rounding down in the case of any fractional number (each, an "
AS Nominee
" and, after being elected to the Company Board, an
"
AS Director
"). For example, if the size of the Company Board is increased to nineteen (19), then the Shareholder shall be entitled to nominate five
(5) Directors to the Company Board. If the number of AS Directors is three (3), each AS Director shall serve in a different class of Directors. If the number of AS Directors is greater than
three (3), no more than two (2) AS Directors
-
2
-
Note to Draft
: To be determined prior to the Effective Time.
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shall
serve in any class of Directors. The Shareholder shall have the right to nominate the AS Nominees from its Affiliates.
Section 4.3
Election of AS Directors to the Board.
Following the Closing Date, to the extent
that an AS Nominee must stand for election or an AS Director must stand for reelection, as the case may be, to the
Company Board in connection with any annual or special meeting of stockholders of the Company at which Directors are to be elected (each such annual or special meeting, an
"
Election Meeting
"), subject to the first sentence of
Section 4.5(a)
, the Company agrees to
(a) nominate and recommend that the holders of Capital Stock of the Company who are entitled to vote at such Election Meeting vote in favor of the election of such AS Nominees or the reelection
of such AS Directors, as the case may be, (b) support the AS Nominees for election or the AS Directors for reelection, as the case may be, in a manner no less rigorous and favorable than the
manner in which the Company supports its other nominees and (c) otherwise use its commercially reasonable efforts to cause the election of the AS Nominees or the reelection of the AS Directors,
as the case may be, to the Company Board at each Election Meeting.
Section 4.4
Proxy or Information Statement.
Within a reasonable time prior to the filing with
the SEC of the Company's proxy statement or information statement with respect to any Election Meeting, the
Company shall, to the extent the Shareholder is then entitled to representation on the Company Board in accordance with this Agreement, provide the Shareholder with the opportunity to review and
comment on the information contained in such proxy or information statement applicable to AS Nominees or AS Directors and shall take into account all reasonable comments from the Shareholder.
Section 4.5
Qualification and Replacements of AS Directors.
(a) Each
AS Director shall at all times until cessation of service on the Company Board meet any (x) applicable requirements or qualifications under applicable Law or
applicable stock exchange rules and (y) the Company's standard qualifications for Directors. Notwithstanding anything set forth to the contrary in the Charter or the Bylaws, if an AS Director
(i) is unable or unwilling to serve as a Director for any reason, (ii) is removed (upon death, resignation or otherwise), (iii) in the event that an AS Director or an AS Nominee,
as the case may be, fails to be reelected or elected, as the case may be, at an Election Meeting solely as a result of failing to receive the required vote of the holders of voting Capital Stock as
required by the Charter and the Bylaws, the Shareholder shall have the exclusive right to submit the name of a replacement candidate for such AS Director or AS Nominee, as the case may be (a
"
Replacement
"), to the Governance Committee of the Company for its approval. If so approved, such Replacement shall serve as the AS Nominee for election
in the same class of Directors on the Company Board as the AS Director or AS Nominee for which such Person serves as a Replacement. For each proposed Replacement that is not approved by the Company,
the Shareholder shall have the right to submit another proposed Replacement to the Governance Committee for its approval on the same basis as set forth in the immediately preceding sentence and, for
the avoidance of doubt, the Company shall not fill the vacancy on the Company Board during any period in which the appointment of an AS Director is pending without the prior written consent of the
Shareholder. The Shareholder shall have the right to continue submitting the name of a proposed Replacement to the Governance Committee for its approval until the Governance Committee approves that a
Replacement may serve as a nominee for election or appointment as a Director or to serve as a Director, whereupon such Person shall be appointed as the Replacement. To the extent a Replacement is
nominated pursuant to this
Section 4.5(a)
, the Company's obligations under
Section 4.3
shall be fulfilled with respect to such Replacement.
(b) If
any AS Director is serving on the Company Board on the Expiration Date, the Shareholder shall use its commercially reasonably efforts to cause such AS Director to
promptly tender his or her resignation to the Company Board, which resignation the Governance Committee shall determine to accept or reject in its sole discretion.
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Section 4.6
Board Committee Representation.
So long as the Shareholder has the right to nominate
Directors to the Company Board in accordance with the terms of this Agreement, the Shareholder shall have the
right to require that one AS Director be appointed to each of the committees of the Company Board, subject to applicable requirements or qualifications under applicable Law or applicable stock
exchange rules (including with respect to director independence);
provided
that the Shareholder shall not have any right to require that any AS Director
be appointed as the chair of any committee of the Company Board; and
provided
,
further
, that the
identity of the particular AS Director appointed to each particular committee shall be subject to the reasonable mutual agreement of the Shareholder and the Company Board.
Section 4.7
Rights of the AS Directors.
(a) The
Company shall notify each AS Director, at the same time and in the same manner as such notification is delivered to the other members of the Company Board, of all
regular meetings and special meetings of the Company Board and of all regular and special meetings of any committee of the Company Board of which such AS Director is a member. The Company and the
Company Board shall provide each AS Director with copies of all notices, minutes, consents and other material that it provides to all other members of the Company Board concurrently as such materials
are provided to the other members.
(b) Each
AS Director shall be entitled to the same directors' and officers' insurance coverage as the other Directors and the same indemnification from the Company as such
other Directors, in each case, effective no later than the date on which such AS Director joins the Company Board. If the Company enters into indemnification agreements with its Directors generally,
the Company will enter into an indemnification agreement with each AS Director in the same form and substance as the other Directors.
Section 4.8
No duty for Corporate Opportunities.
Notwithstanding anything to the contrary in
this Agreement or in any policy or code of the Company, the Company, on behalf of itself and its subsidiaries,
(a) acknowledges and affirms that the Shareholder and its Affiliates, employees, directors, partners and members, including any AS Director (the "
AS
Group
"), (i) have participated (directly or indirectly) and will continue to participate (directly or indirectly) in private equity, venture capital and other direct
investments in corporations, joint ventures, limited liability companies and other entities ("
Other Investments
"), including Other Investments engaged
in various aspects of businesses similar to those engaged in by the Company and its subsidiaries that may, are or will be competitive with the Company's or any of its subsidiaries' businesses or that
could be suitable for the Company's or any of its subsidiaries' interests, (ii) have interests in, participate with, aid and maintain seats on the board of directors or similar governing bodies
of, Other Investments, (iii) may develop or become aware of business opportunities for Other Investments; and (iv) may or will, as a result of matters referred to in this Agreement, the
nature of the AS Group's businesses and other factors, have conflicts of interest or potential conflicts of interest, (b) hereby renounces and disclaims any interest or expectancy in any
business opportunity (including any Other Investments) or any other opportunities, in each case, that may arise in connection with the circumstances described in the foregoing
clauses (i) - (iv) (collectively, the "
Renounced Business Opportunities
"), (c) acknowledges and affirms that no member of
the AS Group shall have any obligation to communicate or offer any Renounced Business Opportunity to the Company or any of its subsidiaries, and any member of the AS Group may pursue a Renounced
Business Opportunity, and (d) acknowledges and affirms that any of the activities set forth in this
Section 4.8
shall not be considered a
violation of any policies and codes of the Company. Notwithstanding the foregoing, the Company does not renounce its interest in, and an AS Director shall have an obligation to communicate to the
Company Board, any business opportunity of which such AS Director first became aware in his or her capacity as a Director.
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ARTICLE V
VOTING RIGHTS
Section 5.1
General
.
Until the later of the Expiration Date and such time that the Shareholder continues to have an AS Director on the Company Board in accordance with
Section 4.5(b)
, the
Shareholder and any Affiliate Shareholder (i) shall attend, in person or by proxy, all meetings of the stockholders of
the Company and shall vote all the Shares Beneficially Owned by the Shareholder or any Affiliate Shareholder, and (ii) shall deliver (or cause to be delivered) written consents for all the
Shares Beneficially Owned by the Shareholder or any Affiliate Shareholder on any matter submitted for the written consent of the stockholders of the Company, in each case (i) and (ii), in the
following manner:
(a) with
respect to any matter relating to (A) the election or removal of Directors to or from the Company Board, (B) compensation of directors, officers or
other employees of the Company (including say-on-pay matters and option grants) and (C) the engagement of accountants, as recommended by the Company Board; and
(b) with
respect to any other matter (other than any Extraordinary Transaction), at the Shareholder's or Affiliate Shareholder's discretion, either (i) as recommended
by the Company Board or (ii) in the same proportion in which all shares of Capital Stock entitled to vote or consent, as applicable, on such matter (other than the Shares Beneficially Owned by
the Shareholder or any Affiliate Shareholder) that voted or submitted a written consent on such matter, as applicable, are actually voted or consented, as applicable.
Section 5.2
Extraordinary Transactions
.
(a) Neither
the Shareholder nor any Affiliate Shareholder shall have an obligation to vote its shares or submit written consents in any prescribed manner in the case of any
Extraordinary Transaction. For the avoidance of doubt, nothing in this
Article V
shall (i) restrict the Shareholder's or any Affiliate
Shareholder's ability to tender any of its Shares into a tender or exchange offer (regardless of whether or not the Company Board has recommended such tender or exchange offer) or (ii) be
considered a waiver of any appraisal or dissenters' rights with respect to any Extraordinary Transaction that the Shareholder or any Affiliate Shareholder may be entitled to under any applicable Law.
(b) For
the avoidance of doubt, nothing in this
Article V
shall require the Company Board to submit to a vote or
written consent of the holders of any Capital Stock any matter that is not required to be submitted to such a vote or written consent by applicable Law.
Section 5.3
Standstill
.
From the Closing until the date that is three (3) months following the Expiration Date, unless approved in writing by a majority of the Company Board (excluding the AS Directors),
none of the Shareholder, any Affiliate Shareholder or American Securities shall, and American Securities shall cause its controlled Affiliates not to:
(a) other
than pursuant to
Article III
, acquire additional shares of common stock of the Company or any instruments
convertible into or exercisable or exchangeable for common stock of the Company (including any options, swaps or other derivatives relating thereto), including any economic or voting interest in any
of the foregoing;
(b) propose
to acquire the Company or take other actions to seek control of the Company, or to control or influence the Company Board or the management or policies of the
Company, other than a private offer to the Company Board to acquire control of the Company made in a manner that would not reasonably be expected to require public disclosure by the Company, American
Securities or any controlled Affiliate of American Securities (including in any Schedule 13D filed by American Securities or any controlled Affiliate of American Securities);
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provided
that, in the event the Company Board rejects any such offer, American Securities shall, or shall cause its applicable controlled Affiliate to, promptly withdraw such
offer;
(c) make
any public announcement with respect to, or submit a proposal for, any Extraordinary Transaction (
provided
that the
Shareholder and any Affiliate Shareholder shall have the right to vote its Shares with respect to any Extraordinary Transaction in its discretion);
(d) initiate
or participate in proxy contests or other solicitations or campaigns seeking to replace, remove or oppose the election of any Director or other proxy contests,
solicitations or campaigns with respect to governance or the operation of the business of the Company or its subsidiaries, including any Extraordinary Transaction or other proposals that do not have
the support of the Company Board (
provided
that the Shareholder and any Affiliate Shareholder shall have the right to vote its Shares with respect to
any Extraordinary Transaction in its discretion);
(e) solicit,
or participate in any solicitation of, proxies with respect to any Capital Stock, or become a "participant" in a "solicitation" (as such terms are defined in
Regulation 14A of the Exchange Act) in opposition to any matter that has been recommended by a majority of the Company Board or in favor of any matter that has not been approved by a majority
of the Company Board;
(f) execute,
or seek or solicit support for (whether publicly or privately), any written consent of stockholders with respect to the Company or the Shares;
(g) seek
(i) to call a meeting of holders of shares of common stock of the Company, (ii) to obtain additional representation on the Company Board (other than
as a result of an increase in the size of
the Company Board and pursuant to
Section 4.2
) or (iii) the removal or resignation of any of the Directors (other than any AS Director);
(h) deposit
any Shares in any voting trust or subject any Shares to any voting arrangement (other than solely among the Shareholder and/or any Affiliate Shareholder(s));
(i) (A)
enter into any substantive discussions or arrangements with, or actively assist or encourage, any third party with respect to any of the activities in
clauses (a), (f) or (h), (B) enter into any discussions or arrangements with, or actively assist or encourage, any third party with respect to any of the activities in
clauses (b), (c), (d), (e) or (g), or (C) otherwise form or join a Group in connection with any of the foregoing in clauses (a) through (h); or
(j) seek
an amendment of this Agreement or waiver, in each case, with respect to, or propose to do, any of the foregoing in clauses (a) through (i). For the avoidance
of doubt, nothing in this
Section 5.3
shall restrict any actions taken by any AS Director at any meeting of the Company Board while exercising
his or her fiduciary duties in his or her performance as a director.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1
Representations and Warranties of the Company
.
The
Company hereby represents and warrants to the Shareholder that:
(a) The
Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.
(b) The
Company has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of
this Agreement by the Company has been duly and validly authorized by all necessary corporate action, and no other corporate action or proceeding on the part of the Company is necessary to authorize
this Agreement. This Agreement has been duly executed and delivered by the Company and,
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assuming
due authorization, execution and delivery by each other Party, constitutes a legally valid and binding obligation of the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency, reorganization, preference, fraudulent transfer, moratorium or other similar Laws relating to or affecting the rights and
remedies of creditors and by general principles of equity regardless of whether enforcement is considered in a proceeding in equity or at Law.
(c) The
execution and delivery of this Agreement by the Company does not, and the performance of the Company's obligations hereunder will not, (i) conflict with or
violate any provision of the Company's organizational documents, (ii) conflict with or violate any Law applicable to the Company or (iii) conflict with or violate any provisions of any
contracts or agreements to which the Company is party or by which the Company is bound.
Section 6.2
Representations and Warranties of the Shareholder
.
The
Shareholder hereby represents and warrants to the Company that:
(a) The
Shareholder is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware.
(b) The
Shareholder has all requisite partnership power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by the Shareholder has been duly and validly authorized by all necessary partnership action, and no other partnership or similar proceeding on the part of the Shareholder is
necessary to authorize this Agreement. This Agreement has been duly executed and delivered by the Shareholder and, assuming due authorization, execution and delivery by the other Parties, constitutes
a legally valid and binding obligation of the Shareholder, enforceable against the Shareholder in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, preference, fraudulent transfer, moratorium or other similar Laws relating to or affecting the rights and remedies of creditors and by general principles of equity regardless of
whether enforcement is considered in a proceeding in equity or at Law.
(c) The
execution and delivery of this Agreement by the Shareholder does not, and the performance of the Shareholder's obligations hereunder will not, (i) conflict
with or violate any provision of the Shareholder's organizational documents, (ii) conflict with or violate any Law applicable to the Shareholder or (iii) conflict with or violate any
provisions of any contracts or agreements to which the Shareholder is party or by which the Shareholder is bound.
(d) No
limited partner of the Shareholder owns more than 10% of the partnership interests of the Shareholder.
Section 6.3
Representations and Warranties of each Affiliate Shareholder
.
Each
Affiliate Shareholder hereby represents and warrants to the Company that:
(a) Such
Affiliate Shareholder is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation.
(b) Such
Affiliate Shareholder has all requisite corporate or similar power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by such Affiliate Shareholder has been duly and validly authorized by all necessary corporate or similar action, and no other corporate or similar proceeding
on the part of such Affiliate Shareholder is necessary to authorize this Agreement. This Agreement has been duly executed and delivered by such Affiliate Shareholder and, assuming due authorization,
execution and delivery by the other Parties, constitutes a legally valid and binding obligation of such Affiliate Shareholder, enforceable against such Affiliate Shareholder in accordance with its
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terms,
except as such enforceability may be limited by bankruptcy, insolvency, reorganization, preference, fraudulent transfer, moratorium or other similar Laws relating to or affecting the rights and
remedies of creditors and by general principles of equity regardless of whether enforcement is considered in a proceeding in equity or at Law.
(c) The
execution and delivery of this Agreement by such Affiliate Shareholder does not, and the performance of such Affiliate Shareholder's obligations hereunder will not,
(i) conflict with or violate any provision of such Affiliate Shareholder's organizational documents, (ii) conflict with or violate any Law applicable to such Affiliate Shareholder or
(iii) conflict with or violate any provisions of any contracts or agreements to which such Affiliate Shareholder is party or by which such Affiliate Shareholder is bound.
Section 6.4
Representations and Warranties of American Securities
.
American
Securities hereby represents and warrants to the Company that:
(a) American
Securities is a limited liability company duly organized, validly existing and in good standing under the laws of the State of New York.
(b) American
Securities has all requisite limited liability company power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by American Securities has been duly and validly authorized by all necessary corporate or similar action, and no other corporate or similar proceeding on the
part of American Securities is necessary to authorize this Agreement. This Agreement has been duly executed and delivered by American Securities and, assuming due authorization, execution and delivery
by the other Parties, constitutes a legally valid and binding obligation of American Securities, enforceable against American Securities in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, preference, fraudulent transfer, moratorium or other similar Laws relating to or affecting the rights and remedies of creditors and by general
principles of equity regardless of whether enforcement is considered in a proceeding in equity or at Law.
(c) The
execution and delivery of this Agreement by American Securities does not, and the performance of American Securities' obligations hereunder will not,
(i) conflict with or violate any provision of American Securities' organizational documents, (ii) conflict with or violate any Law applicable to American Securities or
(iii) conflict with or violate any provisions of any contracts or agreements to which American Securities is party or by which American Securities is bound.
ARTICLE VII
TERMINATION
Section 7.1
Termination
.
This Agreement, other than
Article II
, shall terminate upon the earlier of (a) the date that is three (3) months
following the Expiration Date and (b) the mutual written agreement of the Shareholder and the Company. The provisions of
Article II
shall
terminate upon the earlier of (a) the time when there are no longer any Registrable Securities and (b) the mutual written agreement of the Shareholder and the Company.
Section 7.2
Effect of Termination; Survival
.
In the event of any termination of this Agreement pursuant to the first sentence of
Section 7.1
, this Agreement shall be
terminated, and there shall be no further liability or obligation hereunder on the part of any Party, other than this
Section 7.2
and
Article VIII
, which provisions shall survive such termination;
provided
,
however
, that nothing contained in this Agreement (including this
Section 7.2
) shall relieve a
Party from liability for any breach of any of its representations, warranties, covenants or agreements set forth in this Agreement to the extent occurring prior to such termination.
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ARTICLE VIII
GENERAL PROVISIONS
Section 8.1
Confidential Information
.
The Shareholder and each Affiliate Shareholder shall hold, in strict confidence, and shall not disclose to any Person, unless and to the extent disclosure is required by judicial or
administrative process or by other requirement of Law or the applicable requirements of any regulatory agency or relevant stock exchange, all non-public records, books, contracts, instruments,
computer data and other data and information (collectively, "
Confidential Information
") concerning the Company and its subsidiaries furnished to it by
Company or its Representatives pursuant to this Agreement (except (a) to the extent such Confidential Information can be shown to have been (i) previously known by the Shareholder or
such Affiliate Shareholder on a non-confidential basis, (ii) in the public domain through no breach of the Shareholder or any Affiliate Shareholder of any of the confidentiality obligations to
the Company, (iii) later acquired by the Shareholder or such Affiliate Shareholder from other sources not known by the Shareholder or such Affiliate Shareholder, after reasonable inquiry, to be
subject to a duty of confidentiality with respect to such Confidential Information, and (b) Confidential Information may be disclosed by the Shareholder or such Affiliate Shareholder to its
officers, directors, employees, partners, accountants, lawyers or other professional advisors to the extent any such Person needs to know such information in connection with (i) the management
of the investment of the Shareholder and the Affiliate Shareholders in the Company or (ii) any offerings under
Article II
;
provided
that the
Shareholder or such Affiliate Shareholder informs any such Person that such information is confidential. If disclosure is required by
judicial or administrative process or by any other requirement of Law, the Shareholder shall provide the Company with prompt written notice to the extent permissible by Law, together with a copy of
any material proposed to be disclosed, so that the Company may (a) seek, at the Company's expense, an appropriate protective order or other appropriate relief (and the Shareholder and the
Affiliate Shareholders shall reasonably cooperate with the Company, at the Company's expense, to obtain such order or relief), or (b) if the Company so elects, waive compliance with the
provisions of this
Section 8.1
.
Section 8.2
Fees and Expenses; Tax Treatment
.
Except as otherwise expressly provided herein or in the Merger Agreement, all expenses incurred by the Parties in connection with the negotiation, execution and delivery of this
Agreement will be borne solely and entirely by the Party incurring such expenses. The Company shall, and shall cause its applicable subsidiaries, not to take any action that could reasonably be
expected to prevent the Merger from constituting a taxable transaction to the Shareholder pursuant to Section 1001 of the United States Internal Revenue Code of 1986, as amended. The Company
shall report the Merger as a taxable transaction and not take any position inconsistent with such treatment on any Tax Return, in connection with any audit or other legal proceeding or otherwise,
unless required by a determination of the applicable Governmental Authority that is final.
Section 8.3
Notices
.
All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made
upon receipt) by delivery in person, upon delivery by an internationally recognized overnight courier service, upon delivery by facsimile transmission (solely with confirmation of receipt and with a
confirmatory copy sent by an internationally recognized overnight courier service) or by email transmission (upon sending, so long as the sender of such email does not receive an automatic reply from
the recipient's email server indicating the recipient did not receive such email) to the respective parties hereto at the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this
Section 8.3
):
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If
to the Company, addressed to it at:
American
Axle & Manufacturing Holdings, Inc.
One Dauch Drive
Detroit, Michigan 48211-1198
Attention: David E. Barnes
Facsimile: (313) 758-3897
Email: David.Barnes@aam.com
with
a copy (which shall not constitute notice) to:
Shearman &
Sterling LLP
599 Lexington Avenue
New York, New York 10022
Attention: Scott Petepiece
Daniel Litowitz
Facsimile: (212) 848-7179
Email: spetepiece@shearman.com
daniel.litowitz@shearman.com
If
to the Shareholder or any Affiliate Shareholder, addressed to it at:
c/o
American Securities LLC
299 Park Avenue, 34th Floor
New York, NY 10171
Attention: Eric Schondorf, Esq. / Kevin Penn
Facsimile: (212) 697-5524
Email: eschondorf@american-securities.com
kpenn@american-securities.com
with
a copy (which shall not constitute notice) to:
Weil,
Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Michael E. Lubowitz
Facsimile: (212) 310-8007
Email: michael.lubowitz@weil.com
If
to American Securities, addressed to it at:
American
Securities LLC
299 Park Avenue, 34th Floor
New York, NY 10171
Attention: Eric Schondorf, Esq. / Kevin Penn
Facsimile: (212) 697-5524
Email: eschondorf@american-securities.com
kpenn@american-securities.com
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with
a copy (which shall not constitute notice) to:
Weil,
Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Michael E. Lubowitz
Facsimile: (212) 310-8007
Email: michael.lubowitz@weil.com
Section 8.4
Definitions
.
For purposes of this Agreement, the following terms have the meanings indicated:
"
Action
" means any litigation, suit, claim, action, proceeding, arbitration, mediation, hearing, inquiry or investigation (in each case,
whether civil, criminal or investigative).
"
Affiliate
" means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls,
is controlled by or is under common control with such specified Person, for so long as such Person remains so affiliated to the specified Person. For purposes of this definition, "control" (including
the terms control, controlled by or common control) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise;
provided
that no portfolio company of the Shareholder shall be deemed to be an
"Affiliate" of the Shareholder; and
provided
,
further
, that the "controlled Affiliates" of American
Securities shall be deemed to include American Securities Partners VI, L.P. and successor and predecessor private equity funds.
"
Affiliate Shareholder
" has meaning set forth in
Section 1.1(b)
.
"
Agreement
" has the meaning set forth in the preamble to this Agreement.
"
American Securities
" has meaning set forth in the preamble to this Agreement.
"
AS Director
" has meaning set forth in
Section 4.2
.
"
AS Group
" has meaning set forth in
Section 4.8
.
"
AS Nominee
" has meaning set forth in
Section 4.2
.
"
ASR Eligible
" means the Company meets or is deemed to meet the eligibility requirements to file an ASRS as set forth in General
Instruction I.D. to Form S-3.
"
ASRS
" means an "automatic shelf registration statement" as defined in Rule 405 promulgated under the Securities Act.
"
Beneficial Ownership
" and related terms such as "Beneficially Owned" or "Beneficial Owner" have the meaning given such terms in
Rule 13d-3 under the Exchange Act and a Person's Beneficial Ownership of Capital Stock shall be calculated in accordance with the provisions of such Rule.
"
Business Day
" means any day other than a day on which the SEC is closed.
"
Bylaws
" means the Second Amended and Restated By-Laws of the Company, dated as of July 28, 2016, as may be amended from time to
time.
"
Capital Stock
" means any and all shares of common stock, preferred stock or other forms of equity authorized and issued by the Company
(however designated, whether voting or non-voting) and any instruments convertible into or exercisable or exchangeable for any of the foregoing (including any options or swaps).
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"
Charter
" means the Company's Certificate of Incorporation, dated January 22, 1999, as may be amended from time to time.
"
Closing
" has the meaning ascribed to such term in the Merger Agreement.
"
Closing Date
" has the meaning ascribed to such term in the Merger Agreement.
"
Company
" has the meaning set forth in the preamble to this Agreement.
"
Company Board
" means the Board of Directors of the Company.
"
Company Registration Rights Indemnitee
" has the meaning set forth in
Section 2.8(a)(ii)
.
"
Confidential Information
" has the meaning set forth in
Section 8.1
.
"
Confidentiality Agreement
" means that certain Confidentiality Agreement, dated August 23, 2016, by and among the Company, MPG and,
with respect to the standstill provisions therein, American Securities LLC.
"
controlling person
" has the meaning set forth in
Section 2.8(a)(i)
.
"
Damages
" means any and all claims, demands, suits, actions, causes of actions, losses, costs, damages, liabilities, judgments, and
reasonable and documented out-of-pocket expenses incurred or paid, including reasonable attorneys' fees, costs of investigation or settlement, other professionals' and experts' fees, court or
arbitration costs, but specifically excluding consequential damages, lost profits and indirect damages and punitive damages, exemplary damages and any taxes incurred as a result of any recovery
received.
"
Delaware Law
" means the Delaware General Corporation Law.
"
Demand Registration
" has the meaning set forth in
Section 2.1(a)
.
"
Demand Registration Request
" has the meaning set forth in
Section 2.1(a)
.
"
Director
" means a director of the Company.
"
Disclosure Package
" means, with respect to any offering of Registrable Securities, (i) the preliminary Prospectus,
(ii) each Free Writing Prospectus, and (iii) all other information, in each case, that is deemed, under Rule 159 under the Securities Act, to have been conveyed to purchasers of
Registrable Securities at the time of sale of such securities.
"
Effectiveness Period
" has the meaning set forth in
Section 2.7
.
"
Effective Time
" has the meaning ascribed to such term in the Merger Agreement.
"
Election Meeting
" has the meaning set forth in
Section 4.3
.
"
Exchange Act
" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as in effect
from time to time.
"
Exempt Person
" means, collectively, a Person named on
Schedule B
attached hereto,
together with such Person's controlled Affiliates.
"
Expiration Date
" means the date at which the Shareholder and any Affiliate Shareholders cease to Beneficially Own, in the aggregate, at
least seven and one-half percent (7.5%) of the outstanding shares of common stock of the Company.
"
Extraordinary Transaction
" means, in respect of any matter that is submitted to a vote of the holders of voting Capital Stock,
(i) any amendments to the Charter or the Bylaws, (ii) any recapitalization, restructuring or similar transaction or series of transactions involving the Company, (iii) any
dissolution or complete or partial liquidation, or similar arrangement, of the Company, (iv) any
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merger,
consolidation or other business combination of the Company, (v) any issuance of any Capital Stock, (vi) any transaction with an "interested stockholder" (as such term is defined
in Section 203 of Delaware Law), (vii) any ratification of a "defective corporate action" (as such term is defined in Section 205 of Delaware law) or (viii) any sale,
lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company to
any third party.
"
FINRA
" means the Financial Industry Regulatory Authority, Inc. or any successor regulatory organization.
"
Former Affiliate
" has meaning set forth in
Section 1.1(b)
.
"
Free Writing Prospectus
" means any "free writing prospectus" as defined in Rule 405 promulgated under the Securities Act relating
to the Registrable Securities included in the applicable Registration Statement that has been approved for use by the Company.
"
Governance Committee
" means the Nominating/ Corporate Governance Committee of the Company.
"
Governmental Authority
" means any federal, national, foreign, supranational, state, provincial, county, local or other government,
governmental, regulatory or administrative authority, agency, instrumentality or commission or any court, tribunal, or judicial or arbitral body of competent jurisdiction.
"
Group
" means a group within the meaning of Section 13d-3 of the Exchange Act.
"
issuer free writing prospectus
" has the meaning set forth in
Section 2.9
.
"
Joinder
" has the meaning set forth in Section 2.13.
"
Law
" means any U.S. or non-U.S. federal, state, local, national, supranational, foreign or administrative law (including common law),
statute, ordinance, regulation, requirement, regulatory interpretation, rule, code or Order.
"
Merger Agreement
" has the meaning set forth in the recitals to this Agreement.
"
Merger Sub
" has the meaning set forth in the recitals to this Agreement.
"
MPG
" has the meaning set forth in the recitals to this Agreement.
"
New Securities
" means new shares of common stock of the Company, or any instrument convertible into or exercisable or exchangeable for
common stock of the Company (including any options or swaps).
"
Notice of Reg Rights Claim
" has the meaning set forth in
Section 2.8(b)(i)
.
"
Notice of Suspension
" has the meaning set forth in
Section 2.4(a)
.
"
NYSE Rule
" means Rule 312 of the New York Stock Exchange Listed Company Manual or any successor rule thereof, or any similar rule
of any other national securities exchange on which New Securities will be listed.
"
Order
" means any order (temporary or otherwise), judgment, injunction, award, decision, determination, stipulation, ruling, subpoena,
writ, decree or verdict entered by or with any Governmental Authority.
"
Other Investments
" has meaning set forth in
Section 4.8
.
"
Participation Commitment
" has the meaning set forth in
Section 3.3
.
"
Participation Notice
" has the meaning set forth in
Section 3.2
.
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"
Participation Percentage
" has the meaning set forth in
Section 3.2(a)
.
"
Party
" and "
Parties
" have the meanings set forth in the preamble to this Agreement.
"
Person
" means any individual, corporation, partnership, limited partnership, limited liability company, joint venture, syndicate, person
(as defined in Section 13(d)(3) of the Exchange Act), trust, association, entity, Governmental Authority or other organization of any kind.
"
Preemptive Rights Shares
" has the meaning set forth in
Section 3.2(b)
.
"
Primary Registration Statement
" has the meaning set forth in
Section 2.2
.
"
Prospective Subscriber
" has the meaning set forth in
Section 3.2(a)
.
"
Prospectus
" means the prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material incorporated by reference, or deemed to be incorporated by reference, into such prospectus.
"
Public Offering
" means an underwritten public offering of the Shares pursuant to an effective registration statement under the Securities
Act, other than (i) pursuant to a registration statement on Form S-4 or Form S-8 or any similar or successor form under the Securities Act or (ii) in connection with an
offering of subscription rights.
"
Reg Rights Claim
" has the meaning set forth in
Section 2.8(b)(i)
.
"
Reg Rights Indemnified Person
" has the meaning set forth in
Section 2.8(b)(i)
.
"
Reg Rights Indemnifying Person
" has the meaning set forth in
Section 2.8(b)(i)
.
"
Registrable Securities
" means the Shares held by the Shareholder, any Affiliate Shareholder and any Transferee Shareholder at any time
following the date of this Agreement;
provided
, that any such Shares will cease to be Registrable Securities when (x) they are sold pursuant to a
Registration Statement, (y) they are sold pursuant to Rule 144 (or any similar provisions then in force), or (z) with respect Shares held by (i) the Shareholder or any
Affiliate Shareholders, when the Shareholder Beneficially Owns less than seven and one-half percent (7.5%) of the shares of common stock of the Company then outstanding and there are no AS Directors
on the Company Board, or (ii) any Transferee Shareholders (other than an Affiliate Shareholder), where such Shares may be sold in a single transaction or series of transactions without volume,
manner of sale or other limitations under Rule 144 (or any similar provisions then in force).
"
Registration Expenses
" means (whether or not any Registration Statement is declared effective or any of the transactions described herein
is consummated) all expenses incurred by the Company in filing a Registration Statement, including, all registration and filing fees, fees and disbursements of counsel for the Company, SEC or FINRA
registration and filing fees, all applicable ratings agency fees, expenses of the Company's independent accountants in connection with any regular or special reviews or audits incident to or required
by any such registration, fees and expenses of compliance with securities or "blue sky" Laws, costs of any comfort letters required by any underwriter, listing fees, printing, transfer agent's and
registrar's fees, cost of distributing Prospectuses in preliminary and final form as well as any supplements thereto, the Company's internal expenses, the expense of any annual audit or quarterly
review, the expenses and fees for listing the securities to be registered on the New York Stock Exchange or any other securities exchange, roadshow expenses, all other expenses incident to the
registration of the Registrable Securities and all reasonable fees and disbursements of one counsel to the Shareholder selected by the Shareholder;
provided
, that the term "Registration Expenses" does
not include, and the Company shall not be responsible for, Selling Expenses.
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"
Registration Statement
" means a registration statement of the Company on an appropriate form under the Securities Act filed with the SEC
covering the resale of Registrable Securities, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all materials
incorporated by reference or deemed to be incorporated by reference in such Registration Statement.
"
Renounced Business Opportunities
" has meaning set forth in
Section 4.8
.
"
Replacement
" has the meaning set forth in
Section 4.5(a)
. At such time as a
Replacement is elected, under the terms of this Agreement, to serve as a Director, such Replacement shall be deemed an AS Director for purposes of this Agreement.
"
Representatives
" means a Person's officers, directors, employees, accountants, consultants, legal counsel, investment bankers, other
advisors, authorized agents and other representatives.
"
Requesting Third Party Shareholders
" has the meaning set forth
Section 2.2(b)
.
"
Restricted Period
" means the 6-month period commencing on the Closing Date.
"
Restricted Stock
" has the meaning set forth
Section 2.5
.
"
Rule 144
" means Rule 144 under the Securities Act or any replacement or successor rule promulgated under the Securities
Act.
"
SEC
" means the United States Securities and Exchange Commission.
"
Secondary Registration Statement
" has the meaning set forth
Section 2.2(b)
.
"
Securities Act
" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as in effect from
time to time.
"
Selling Expenses
" means, in connection with the registration or offering and sale of the Registrable Securities, (i) all
underwriting fees, discount and selling commissions fees, (ii) stock transfer taxes applicable to the sale of the Registrable Securities, and (iii) fees and expenses of any counsel to
the Shareholder other than the counsel referred to in the definition of Registration Expenses.
"
settlement
" and "
settle
" have the meanings set forth in
Section 2.8(c)(iv)
.
"
Shareholder
" has the meaning set forth in the preamble to this Agreement.
"
Shareholder Registration Rights Indemnitee
" has the meaning set forth in
Section 2.8(a)(i)
.
"
Shares
" means any shares of common stock of the Company Beneficially Owned by the Shareholder or any Affiliate Shareholder.
"
Shelf Registration Statement
" means a registration statement filed with the SEC for the sale of Shares pursuant to Rule 415 under
the Securities Act.
"
Suspension Period
" has the meaning set forth in
Section 2.4
.
"
Taxes
" means (a) any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority, including taxes or other charges on or with respect to income,
franchise, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers' compensation, unemployment compensation or net worth;
(b) taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes; and (c) customs duties, tariffs and similar charges.
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"
Tax Return
" shall mean any return, declaration, report, election, claim for refund or information return or other statement or form filed
or required to be filed with any Governmental Authority relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
"
Third-Party Reg Rights Claim
" has the meaning set forth in
Section 2.8(b)(ii)
.
"
Transaction Shelf Registration Statement
" shall have the meaning set forth in
Section 2.1(c)
.
"
Transfer
" means to, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either
voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar
disposition of, Shares.
"
Transferee Shareholder
" shall have the meaning set forth in
Section 2.13
.
"
Underwriter Cutback
" shall have the meaning set forth in
Section 2.1(e)
.
"
Underwritten Block Trade
" shall have the meaning set forth in
Section 2.1(f)
.
"
well-known seasoned issuer
" has the meaning set forth in
Section 2.1(h)
.
Section 8.5
Interpretation; Headings
.
When a reference is made in this Agreement to an Article, Section or Schedule, such reference shall be to an Article or Section of, or a 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." The words "hereof", "hereto", "hereby", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term "or" is not exclusive. The
word "extent" in the phrase "to the extent" shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply "if". The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms. Any agreement, instrument or Law defined or referred to herein means such agreement, instrument or Law as from time to time
amended, modified or supplemented, unless otherwise specifically indicated. References to a Person are also to its successors and permitted assigns. When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded, and if the last day of
such period is not a Business Day, the period shall end on the immediately following Business Day. Each of the parties hereto has participated in the drafting and negotiation of this Agreement. If an
ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if it is drafted by all the parties hereto, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of authorship of any of the provisions of this Agreement. References to "days" shall mean "calendar days" unless expressly stated otherwise.
Section 8.6
Severability
.
If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any
Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
Section 8.7
Entire Agreement
.
This Agreement (including any Schedule hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior
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agreements
(including the standstill provisions in the Confidentiality Agreement) and undertakings, both written and oral, between the Parties with respect to the subject matter hereof.
Section 8.8
Assignment
.
Except to the extent provided in
Section 1.1(b)
and
Section 2.13
, neither
this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by the Shareholder or any Affiliate Shareholder without the prior written
consent of the Company or by the Company without the prior written consent of the Shareholder. Any purported assignment in breach of this
Section 8.8
shall be null and void.
Section 8.9
Further assurances
.
Each Party shall cooperate, take such actions, enter into such agreements (including customary indemnification and contribution agreements) and execute such documents as may be
reasonably requested by any other Party in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby;
provided
,
however
, that no Party shall be obligated to take any actions or omit to take any actions that
would be inconsistent with applicable Law.
Section 8.10
Parties in Interest; Third Party Beneficiaries
.
This Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. The representations and warranties in this
Agreement are the product of negotiations between the Parties and are for the sole benefit of the Parties. The representations and warranties in this Agreement may represent an allocation between the
Parties of risks associated with particular matters regardless of the knowledge of either Party. Accordingly, Persons other than the Parties may not rely upon the representations and warranties in
this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 8.11
Governing Law; Consent to Jurisdiction
.
This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any applicable principles of conflict of laws that
would cause the Laws of another State to otherwise govern this Agreement. The Parties agree that any Action seeking to enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its Affiliates or against any party or any of its Affiliates) shall be heard and determined
exclusively in the Delaware Court of Chancery;
provided
,
however
, that if the Delaware Court of Chancery
does not have jurisdiction over such Action, such Action shall be heard and determined exclusively in the United States District Court for the District of Delaware. Consistent with the preceding
sentence, each of the Parties hereby (i) submits to the exclusive jurisdiction of such courts for the purpose of any Action arising out of or relating to this Agreement brought by any Party;
(ii) agrees that service of process will be validly effected by sending notice in accordance with
Section 8.3
; (iii) irrevocably
waives, and agrees not to assert by way of motion, defense, or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that the Action is brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions
contemplated by this Agreement may not be enforced in or by any of the above named courts; and (iv) agrees not to move to transfer any such Action to a court other than any of the above-named
courts.
Section 8.12
Waiver of Jury Trial
.
EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED,
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EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 8.12
.
Section 8.13
Counterparts
.
This Agreement may be executed and delivered (including by facsimile transmission or other means of electronic transmission, such as by electronic mail in "pdf" form) in counterparts,
and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
Section 8.14
Specific Performance
.
The Parties acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms
or were otherwise breached. Each Party agrees that, in the event of any breach or threatened breach by any other Party of any covenant or obligation contained in this Agreement, a non-breaching Party
shall be entitled to (a) an order of specific performance to enforce the observance and performance of such covenant or obligation and (b) an injunction restraining such breach or
threatened breach. Each Party further agrees that the non-breaching Party shall not be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to
obtaining any remedy referred to in this
Section 8.14
, and each Party irrevocably waives any right it may have to require the obtaining,
furnishing or posting of any such bond or similar instrument.
Section 8.15
Amendment
.
This Agreement may not be amended except by an instrument in writing signed by the Company and the Shareholder.
Section 8.16
Waiver
.
At any time, either the Company or the Shareholder (on behalf of itself and any Affiliate Shareholder) may, to the extent permitted by applicable Law, (a) extend the time for the
performance of any obligation or other act of the other Party, (b) waive any breach or inaccuracy in the representations and warranties of the other Party contained in this Agreement or in any
document delivered pursuant hereto, and (c) waive compliance by the other Party with any agreement or condition to its own obligations contained in this Agreement. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the Party to be bound thereby. Notwithstanding the foregoing, no failure or delay by either Party in exercising any right
hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or future exercise of any other right hereunder.
[
Signature Page Follows
]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed, as of the date first written above, by their respective officers thereunto duly
authorized.
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AMERICAN AXLE & MANUFACTURING
HOLDINGS, INC.
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By:
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Name:
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Title:
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ASP MD INVESTCO L.P.
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By:
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Name:
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Title:
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AMERICAN SECURITIES LLC,
solely for purposes of Section 5.3
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By:
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Name:
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[
Signature Page to Stockholders' Agreement
]
AA-39
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Annex B
EXECUTION VERSION
VOTING AGREEMENT
This Voting Agreement (this "
Agreement
") is entered into as of November 3, 2016, among
American Axle & Manufacturing Holdings, Inc., a Delaware corporation ("
Parent
"), and ASP MD Investco LP, a Delaware limited
partnership ("
Stockholder
"). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Merger Agreement.
RECITALS
WHEREAS,
concurrently with the execution and delivery of this Agreement, the Company, Parent and Alpha SPV I, Inc., a Delaware corporation and wholly-owned subsidiary of Parent
("
Merger Sub
"), are entering into an Agreement and Plan of Merger (as the same may be amended, supplemented or otherwise modified, the
"
Merger Agreement
"), which provides, among other things, for the acquisition of the Company by Parent by means of a merger of Merger Sub with and into
the Company (the "
Merger
"), all on the terms and subject to the conditions set forth in the Merger Agreement;
WHEREAS,
Stockholder beneficially owns (as such term is defined in Rule 13d-3 under the Exchange Act) the number of shares of Company Common Stock set forth across from
Stockholder's name on
Part I of Exhibit A
hereto (such securities, as they may be adjusted by stock dividend, stock split,
recapitalization, combination or exchange of shares, merger, consolidation, reorganization or other change or transaction of or by the Company, together with securities of the Company that may be
acquired after the date hereof by Stockholder are collectively referred to herein as the "
Securities
"); and
WHEREAS,
as an inducement and a condition to the willingness of Parent and Merger Sub to enter into the Merger Agreement, and in consideration of the substantial expenses incurred and to
be incurred by them in connection therewith, Stockholder has agreed to enter into, be legally bound by and perform this Agreement.
AGREEMENTS
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:
1.
Covenants of Stockholder.
Stockholder agrees as follows:
(a) Stockholder
shall not, directly or indirectly, (i) sell, transfer, pledge, assign or otherwise encumber or dispose of any of the Securities to, or enter into any
agreement, option or other arrangement (including any profit sharing arrangement) or understanding with respect to any of the Securities with, any Person
other than Parent or Parent's designee, (ii) deposit any Securities into a voting trust or enter into any voting arrangement, whether by proxy, voting agreement, voting trust,
power-of-attorney, attorney-in-fact, agent or otherwise, with respect to the Securities, except as contemplated by this Agreement and except for that certain Stockholders' Agreement, dated as of
August 4, 2014, by and among the Company, Stockholder, ASP HHI Investco LP, ASP Grede Investco LP and the minority investors made a party from time to time or (iii) take
any other action that would in any way make any representation or warranty of Stockholder herein untrue or incorrect in any material respect or otherwise restrict, limit or interfere in any material
respect with the performance of Stockholder's obligations hereunder or the transactions contemplated hereby.
(b) From
the date hereof until the earlier of the conclusion of the Company Stockholders' Meeting and any termination of this Agreement in accordance with its terms, at any
meeting of
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stockholders
of the Company called to vote upon the Merger and the Merger Agreement or at any adjournment thereof or in any other circumstances upon which a vote, consent or other approval (including
by written consent) is sought with respect to the Merger and the Merger Agreement, Stockholder shall vote (or cause to be voted) (i) the number of its Securities set forth across from
Stockholder's name in
Part II of Exhibit A
hereto in favor of the Merger, the adoption of the Merger Agreement and the approval of the
terms thereof and each of the other transactions contemplated by the Merger Agreement and (ii) all other Securities owned by Stockholder in a manner that is proportionate to the manner in which
all shares of Company Common Stock (other than the Securities voted by Stockholder) which are voted in respect of the Merger, the adoption of the Merger Agreement and the approval of the terms thereof
and each of the other transactions contemplated by the Merger Agreement, are voted;
provided
, that in the event that the Company Board makes a Change in
the Company Recommendation pursuant to Section 7.03(e)(i) of the Merger Agreement, Stockholder shall have no obligation as to whether to vote (or cause to be voted) or how to vote (or cause to
be voted) any of its Securities in such event.
(c) Stockholder
shall attend, if applicable, the Company Stockholders' Meeting or any adjournment thereof (or execute valid and effective proxies to any other attending
participant of a Company Stockholders' Meeting in lieu of attending such Company Stockholders' Meeting or any adjournment thereof).
(d) Stockholder
(solely in its capacity as a stockholder of the Company) shall not and shall cause each of its Subsidiaries not to, and shall use its reasonable best efforts
to cause its Representatives not to, directly or indirectly, (i) solicit, initiate, facilitate or encourage any inquiries or the implementation or
submission of any Company Acquisition Proposal, or any proposals or offers that would be reasonably expected to lead to, a Company Acquisition Proposal, or (ii) engage in, continue or otherwise
participate in any discussions, communications or negotiations regarding, or furnish to any Person any non-public information in connection with, or for the purpose of facilitating or encouraging, any
inquiries, proposals or offers that constitute, or would be reasonably expected to lead to, a Company Acquisition Proposal, except to notify such Person of the existence of this
Section 1(d)
.
Stockholder shall, and shall cause its Subsidiaries to, and shall instruct (and use its reasonable best efforts to cause) its
Representatives to, immediately cease and cause to be terminated any solicitation, discussions, communications or negotiations with any Person that may be ongoing with respect to a Company Acquisition
Proposal, or any inquiry, proposal or offer that would reasonably be expected to lead to a Company Acquisition Proposal, and shall request within two (2) Business Days of the date of this
Agreement (and shall use its reasonable best efforts to cause) the prompt return or destruction of all confidential information previously furnished to any Person in connection therewith and
immediately terminate all physical and electronic dataroom access previously granted to any such Person, its Affiliates or Representatives. Stockholder shall promptly (and, in any event, within
24 hours) (i) provide Parent written notice of (A) Stockholder's receipt of any Company Acquisition Proposal or (B) subject to sub-clause (ii) below, any inquiries,
proposals or offers received by Stockholder, any of its Subsidiaries or any Representatives of Stockholder concerning a Company Acquisition Proposal and (ii) disclose to Parent the identity of
such Person making, and an unredacted copy of, any such Company Acquisition Proposal or any such inquiry, offer, proposal or request made in writing (or, in the case of sub-clause (i)(A),
sub-clause (i)(B) or this sub-clause (ii), if made orally, and if the Company reasonably believes that such oral Company Acquisition Proposal, inquiry, offer, proposal or request is
likely to result in such Person making a Company Acquisition Proposal, inquiry, offer, proposal or request in writing, a reasonably detailed description of such Company Acquisition Proposal, inquiry,
offer, proposal or request). Stockholder shall, promptly upon receipt or delivery thereof (and, in any event, within 24 hours), provide Parent (and its outside counsel) with copies of all
drafts and final versions of definitive agreements including schedules and exhibits thereto (which may be redacted to the extent necessary to protect confidential information of the Person
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making
such Company Acquisition Proposal) relating to such Company Acquisition Proposal, in each case exchanged between Stockholder or any of its Representatives, on the one hand, and the Person
making such Company Acquisition Proposal or any of its Representatives, on the other hand. Stockholder shall, in person or by telephone, keep Parent reasonably informed on a reasonably prompt basis
(and, in any event, within 24 hours of any material development) of the status and details (including with respect to any material amendments) of any such Company Acquisition Proposal or other
such inquiry, offer, proposal or request concerning a Company Acquisition Proposal. Notwithstanding the foregoing, (i) if the Company or the Company Board has the right under
Section 7.03(b)
of the Merger Agreement to engage in discussions, communications or negotiations with any Person, Stockholder shall also have the
right to engage in such discussions, communications or negotiations with such Person, subject to the terms of
Section 7.03
of the Merger
Agreement, and (ii) for purposes of this
Section 1(d)
, no reference herein to any Subsidiary of Stockholder shall mean the Company or any
of its Subsidiaries.
(e) Stockholder
hereby (i) irrevocably and unconditionally waives, and agrees not to exercise, any rights of appraisal with respect to the Securities or rights to
dissent from the Merger or any similar right (including under Section 262 of the DGCL) that Stockholder may have and (ii) agrees not to commence, institute, maintain or prosecute any
claim, derivative or otherwise prior to the Effective Time, (A) against the Company, any of its Representatives or any of its successors, including claims relating to the negotiation, execution
or delivery of the Merger Agreement or the consummation of the Merger, including any claim alleging a breach of any fiduciary duty of the Company Board in connection with the Merger and the other
transactions contemplated by the Merger Agreement, or (B) challenging the validity of or seeking to enjoin the operation of any provision of this Agreement (other than with respect to
Stockholder enforcing its rights under the terms of this Agreement).
(f) Stockholder
shall take all actions necessary to cause Stockholder to enter into the Stockholders' Agreement, effective as of the Effective Time.
2.
Representations and Warranties of Stockholder.
Stockholder hereby represents and warrants to Parent
as follows:
(a) Stockholder
has all necessary organizational power and authority to execute and deliver this Agreement and to perform Stockholder's obligations under this Agreement. The
execution, delivery and performance of this Agreement by Stockholder have been duly and validly authorized by Stockholder. This Agreement has been duly and validly executed and delivered by
Stockholder and, assuming the due authorization, execution and delivery by Parent, constitutes a legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with
its terms, subject to the effect of any applicable bankruptcy, insolvency (including all Laws relating to fraudulent transfers), reorganization, moratorium or similar Laws affecting creditors' rights
generally and subject to the effect of general principles of equity (regardless of whether considered in a proceeding at law or in equity).
(b) The
Securities and the certificates (or any book-entry notations used to represented any uncertificated shares of Company Common Stock) representing the Securities are
now, and at all times during the term hereof will be, held by Stockholder, or by a nominee or custodian for the benefit of Stockholder, and Stockholder has title to the Securities, free and clear of
all Encumbrances (including voting trusts and voting commitments), except as provided by this Agreement. As of the date of this Agreement, Stockholder owns of record or beneficially no shares of
Company Common Stock or Company Preferred Stock or any other capital stock of, or any other equity interests in, the Company, other than the Securities set forth across from Stockholder's name on
Part I of
Exhibit A
hereto. Stockholder has full power to vote the Securities as provided herein. Other than the Stockholders' Agreement,
dated as of August 4, 2014, among
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the
Company, Stockholder and the other parties thereto, none of Stockholder or any of the Securities is subject to any stockholders' agreement, voting trust, registration rights agreement, proxy or
other agreement, arrangement or restriction with respect to the voting or disposition of the Securities, except as otherwise contemplated by this Agreement or the Merger Agreement.
(c) The
execution and delivery of this Agreement by Stockholder does not, and the performance of this Agreement by Stockholder will not, (i) require any consent,
approval, authorization or permit of, or filing with or notification to, any Governmental Authority, or (ii) result in the creation of an Encumbrance on any of the Securities, or conflict with
or violate any Law, except for restrictions of general applicability under the Securities Act, state "blue sky" laws or any of the Company Stock Plans, applicable to Stockholder or any of the
Securities, except, with respect to clause (ii), for any such conflicts, violations or other occurrences that would not, or would not reasonably be expected to, prevent or materially impair or
delay the ability of Stockholder to perform its obligations hereunder.
(d) Stockholder
understands and acknowledges that Parent and Merger Sub are entering into the Merger Agreement in reliance upon Stockholder's execution and delivery of this
Agreement.
(e) As
of the date of this Agreement, there is no Action pending or, to the knowledge of Stockholder, threatened in writing as of the date of this Agreement against
Stockholder before any Governmental Authority that, if adversely determined against Stockholder, would, or would reasonably be expected to, prevent or materially impair or delay the ability of
Stockholder to perform its obligations hereunder.
3.
Representations and Warranties of Parent.
Parent hereby represents and warrants to Stockholder as
follows:
(a) Parent
has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by Parent have been duly and validly authorized by all necessary corporate action on the part of Parent. This Agreement has been duly and validly executed and delivered
by Parent and, assuming the due authorization, execution and delivery by Stockholder, constitutes a legal, valid and binding obligation of Parent enforceable against Parent in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency (including all Laws relating to fraudulent transfers), reorganization, moratorium or similar Laws affecting creditors' rights
generally and subject to the effect of general principles of equity (regardless of whether considered in a proceeding at law or in equity).
(b) The
execution and delivery of this Agreement by Parent does not, and the performance of this Agreement by Parent will not, (i) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental Authority, or (ii) conflict with or violate any Law, except for restrictions of general applicability under the
Securities Act or any state "blue sky" laws applicable to Parent, except, with respect to clause (ii), for any such conflicts, violations or other occurrences that would not, or would not
reasonably be expected to, prevent or materially impair or delay the ability of Parent to perform its obligations hereunder.
(c) Nothing
contained in this Agreement has caused or shall cause Parent to acquire ownership of any of the Securities.
4.
Further Assurances.
Stockholder shall, from time to time, execute and deliver, or cause to be
executed and delivered, in each case without further consideration, such additional or
further transfers, assignments, endorsements, consents and other instruments as Parent may reasonably request for the purpose of effectively carrying out Stockholder's obligations under this
Agreement; provided, however, that this
Section 4
shall not require Stockholder to deliver a proxy in connection with any of the Securities.
Parent agrees to take, or cause to be taken, (a) all actions reasonably necessary or desirable
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to
comply promptly with all legal requirements that may be imposed with respect to the transactions contemplated by this Agreement and (b) all actions reasonably necessary or desirable to
consummate the transactions contemplated by this Agreement.
5.
Assignment; Binding Effect.
Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any of the parties hereto, in whole or in part (whether
pursuant to a merger, by operation of Law or otherwise), without the prior written consent of the other parties, except that Parent may assign all or any of its rights and obligations hereunder to any
permitted assignee which obtains an assignment under the Merger Agreement pursuant to the terms thereof;
provided
,
however
, that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does not perform such obligations.
Subject to the preceding sentence, this Agreement shall be binding upon, inure solely to the benefit of, and be enforceable by, only the parties hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
6.
Termination.
This Agreement, and all rights and obligations of the parties hereunder, shall
terminate upon the first to occur of (a) the Effective Time, (b) the
termination of the Merger Agreement in accordance with its terms, (c) the mutual written agreement of the parties to terminate this Agreement or (d) at the sole election of Stockholder
following any amendment of or modification to the Merger Agreement with respect to any terms of the Merger Consideration, the allocation of the Merger Consideration between cash and stock, the closing
conditions, any change to Section 7.15 of the Merger Agreement or any change to the Merger Agreement that would have a materially adverse impact on Stockholder. In the event of termination of
this Agreement pursuant to this
Section 6
, this Agreement will become null and void and of no effect with no liability on the part of any party
hereto;
provided
,
however
, that
Section 5
, this
Section 6
, and
Section 8
shall survive any such termination, and no such termination will
relieve any party hereto from any liability for any fraud or intentional breach (as defined in the Merger Agreement) of this Agreement occurring prior to such termination.
7.
Stockholder Capacity.
Notwithstanding anything to the contrary in this Agreement, the parties
acknowledge that (a) Stockholder is entering into this Agreement solely in
Stockholder's capacity as a record and/or beneficial owner of the Company Common Stock and not in Stockholder's capacity as a director, officer, employee, or other fiduciary of the Company (if
applicable) or in Stockholder's capacity as a trustee or fiduciary of any Company Plans and (b) nothing in this Agreement is intended to restrict or affect any action or inaction of Stockholder
or any representative of Stockholder, as applicable, serving on the Company Board or on the board of directors of any Subsidiary of the Company or as an officer or fiduciary of the Company or any
Subsidiary of the Company, acting in such person's capacity as a director, officer, employee or fiduciary of the Company or any Subsidiary of the Company.
8.
General Provisions.
(a)
Expenses.
Except as otherwise set forth in the Merger Agreement, all Expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expense, whether or not the transactions contemplated hereby are consummated.
(b)
Waiver.
At any time prior to the Effective Time, any party hereto may (i) extend the time for the
performance of any obligation or other act of any other party hereto, (ii) waive any breach of or inaccuracy in the representations and warranties of any other party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any agreement of any other party or any condition to its own obligations contained herein. Any such extension or waiver shall
be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby. Notwithstanding the foregoing, no failure or delay by Stockholder or Parent in
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exercising
any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or future exercise of any other right hereunder.
(c)
Notices.
All notices, requests, claims, demands and other communications under this Agreement shall be in
writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, upon delivery by an internationally recognized overnight courier service,
upon delivery by facsimile transmission (solely with confirmation of receipt and with a confirmatory copy sent by an internationally recognized overnight courier service) or by email transmission
(upon sending, so long as the sender of such email does not receive an automatic reply from the recipient's email server indicating the recipient did not receive such email) to the respective parties
hereto at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this
Section 8(c)
):
If
to Parent:
American
Axle & Manufacturing Holdings, Inc.
One Dauch Drive
Detroit, Michigan 48211-1198
Attention: David E. Barnes
Facsimile: (313) 758-3897
Email: david.barnes@aam.com
with
a copy (which shall not constitute notice) to:
Shearman &
Sterling LLP
599 Lexington Avenue
New York, New York 10022
Attention: Scott Petepiece
Daniel Litowitz
Facsimile: (212) 848-7179
Email: spetepiece@shearman.com
daniel.litowitz@shearman.com
If
to Stockholder:
At
the address and facsimile number and email address set forth set forth across from Stockholder's name on
Exhibit A
hereto
with
a copy (which shall not constitute notice) to:
Weil,
Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Michael E. Lubowitz
Facsimile: (212) 310-8007
Email: michael.lubowitz@weil.com
(d)
Interpretation and Rules of Construction.
When a reference is made in this Agreement to an Exhibit or a
Section, such reference shall be to an Exhibit or a Section of this Agreement unless otherwise indicated. The 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." The words "hereof", "hereto", "hereby", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The term "or" is not exclusive. The word "extent" in the phrase "to the extent" shall mean the degree to which a
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subject
or other thing extends, and such phrase shall not mean simply "if". The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms. Any
agreement,
instrument or Law defined or referred to herein means such agreement, instrument or Law as from time to time amended, modified or supplemented, unless otherwise specifically indicated. References to a
Person are also to its successors and permitted assigns. When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this
Agreement, the date that is the reference date in calculating such period shall be excluded, and if the last day of such period is not a Business Day, the period shall end on the immediately following
Business Day. Each of the parties hereto has participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be
construed as if it is drafted by all the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship of any of the provisions of this
Agreement. References to "days" shall mean "calendar days" unless expressly stated otherwise. No specific provision, representation or warranty shall limit the applicability of a more general
provision, representation or warranty. It is the intent of the parties hereto that each representation, warranty, covenant, condition and agreement contained in this Agreement shall be given full,
separate, and independent effect and that such provisions are cumulative. Any reference in this Agreement to a date or time shall be deemed to be such date or time in the City of New York, New York,
U.S.A., unless otherwise specified.
(e)
Entire Agreement; Amendment.
This Agreement, taken together with the Merger Agreement, constitutes the
entire agreement among the parties hereto with respect to the subject matter hereof and thereof and supersedes all prior agreements and undertakings, both written and oral, among the parties hereto,
or any of them, with respect to the subject matter hereof and thereof. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.
(f)
Governing Law.
This Agreement shall be governed by, and construed in accordance with, the laws of the State
of Delaware, without giving effect to any applicable principles of conflict of laws that would cause the Laws of another State to otherwise govern this Agreement. The parties hereto agree that any
Action seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of
its Affiliates or against any party or any of its Affiliates) shall be heard and determined exclusively in the Delaware Court of Chancery;
provided
,
however
, that if the Delaware Court of Chancery does not have jurisdiction over such Action, such Action shall be heard and determined exclusively in
the United States District Court for the District of Delaware. Consistent with the preceding sentence, each of the parties hereto hereby (i) submits to the exclusive jurisdiction of such courts
for the purpose of any Action arising out of or relating to this Agreement brought by either party hereto; (ii) agrees that service of process will be validly effected by sending notice in
accordance with
Section 8(c)
; (iii) irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise, in any such
Action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above named courts; and
(iv) agrees not to move to transfer any such Action to a court other than any of the above-named courts.
(g)
Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS. EACH OF THE PARTIES
HERETO HEREBY
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(A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 8(G)
.
(h)
Severability.
If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of
the Transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in a mutually acceptable manner in order that the
Transactions be consummated as originally contemplated to the fullest extent possible.
(i)
Specific Performance.
The parties hereto acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Each party agrees that, in the event of any breach or
threatened breach by any other party of any covenant or obligation contained in this Agreement, the non-breaching party shall be entitled (in addition to any other remedy that may be available to it
whether in law or equity, including any monetary damages) to (i) an Order of specific performance to enforce the observance and performance of such covenant or obligation, and (ii) an
injunction restraining such breach or threatened breach. Each party further agrees that no other party or any other Person shall be required to obtain, furnish or post any bond or similar instrument
in connection with or as a condition to obtaining any remedy referred to in this
Section 8(i)
, and each party irrevocably waives any right it may
have to require the obtaining, furnishing or posting of any such bond or similar instrument.
(j)
Counterparts.
This Agreement may be executed and delivered (including by facsimile transmission or other
means of electronic transmission, such as by electronic mail in "pdf" form) in counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed
to be an original but all of which taken together shall constitute one and the same agreement.
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Signature pages follow
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B-8
Table of Contents
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
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AMERICAN AXLE & MANUFACTURING HOLDINGS, INC.
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By:
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/s/ DAVID C. DAUCH
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Name:
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David C. Dauch
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Title:
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Chief Executive Officer
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[Voting
Agreement Signature Page]
B-9
Table of Contents
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ASP MD INVESTCO LP
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By:
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/s/ KEVIN PENN
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Name:
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Kevin Penn
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Title:
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Vice President
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[Voting
Agreement Signature Page]
B-10
Table of Contents
Exhibit A