Exhibit 2.1
Execution Version
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
THE BOEING COMPANY
BOEING-AVENGER, INC.
and
AVIALL, INC.
Dated as of April 30, 2006
Execution Version
TABLE OF CONTENTS
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Page
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ARTICLE 1 Defined Terms........................................................1
ARTICLE 2 The Merger..........................................................10
2.1 The Merger..................................................10
2.2 The Closing.................................................11
2.3 Effective Time..............................................11
2.4 Effect of the Merger........................................11
2.5 Certificate of Incorporation; Bylaws........................11
2.6 Directors and Officers......................................11
ARTICLE 3 Conversion of Securities; Exchange of Certificates..................11
3.1 Conversion of Securities....................................11
3.2 Exchange of Certificates....................................12
3.3 Share Transfer Books........................................14
3.4 Convertible Securities......................................14
3.5 Dissenting Stockholders.....................................15
ARTICLE 4 Company Representations and Warranties..............................15
4.1 Organization and Qualification; Subsidiaries................15
4.2 Certificate of Incorporation and Bylaws; Corporate Books
and Records.................................................16
4.3 Capitalization..............................................16
4.4 Authority...................................................18
4.5 No Conflict; Required Filings and Consents..................18
4.6 Permits; Compliance With Law................................19
4.7 SEC Filings; Financial Statements...........................20
4.8 Disclosure Documents........................................24
4.9 Absence of Certain Changes or Events........................24
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Execution Version
4.10 Employee Benefit Plans......................................26
4.11 Contracts; Customers and Suppliers..........................30
4.12 Litigation..................................................33
4.13 Environmental Matters.......................................33
4.14 Intellectual Property.......................................34
4.15 Taxes.......................................................39
4.16 Insurance...................................................40
4.17 Opinion of Financial Advisor................................41
4.18 Brokers.....................................................41
4.19 Properties..................................................41
4.20 Interested Party Transactions...............................42
ARTICLE 5 Representations and Warranties of Parent and Merger Sub.............42
5.1 Organization and Qualification; Subsidiaries................42
5.2 Authority...................................................42
5.3 No Conflict; Required Filings and Consents..................43
5.4 Ownership of Merger Sub; No Prior Activities................43
5.5 Financing...................................................43
5.6 Company Stock...............................................43
ARTICLE 6 Covenants...........................................................44
6.1 Conduct of Business by the Company Pending the Closing......44
6.2 Takeover Statutes...........................................47
6.3 Proxy Statement.............................................47
6.4 Company Stockholders Meeting; Board Recommendation..........48
6.5 Access to Information; Confidentiality......................49
6.6 No Solicitation of Transactions.............................49
6.7 Appropriate Action; Consents; Filings.......................51
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Execution Version
6.8 Certain Notices.............................................53
6.9 Public Announcements........................................53
6.10 Indemnification.............................................53
6.11 Employees...................................................54
6.12 Benefit Plans...............................................55
6.13 Standstill Provisions.......................................56
6.14 Third Party Consents; Notices...............................56
6.15 Section 16 Matters..........................................56
6.16 Reasonable Efforts; Cooperation.............................57
6.17 Notes Tender Offer..........................................57
ARTICLE 7 Closing Conditions..................................................58
7.1 Conditions to Obligations of Each Party Under
This Agreement..............................................58
7.2 Additional Conditions to Obligations of Parent and
Merger Sub..................................................58
7.3 Additional Conditions to Obligations of the Company.........59
ARTICLE 8 Termination, Amendment and Waiver...................................60
8.1 Termination.................................................60
8.2 Effect of Termination.......................................61
8.3 Amendment...................................................62
8.4 Waiver......................................................62
8.5 Fees and Expenses...........................................62
ARTICLE 9 General Provisions..................................................63
9.1 Non-Survival of Representations and Warranties..............63
9.2 Notices.....................................................63
9.3 Headings....................................................64
9.4 Severability................................................64
9.5 Entire Agreement............................................64
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Execution Version
9.6 Assignment..................................................64
9.7 Parties in Interest.........................................65
9.8 Mutual Drafting.............................................65
9.9 Governing Law; Consent to Jurisdiction; Waiver of Trial
by Jury.....................................................65
9.10 Disclosure..................................................66
9.11 Counterparts................................................66
9.12 Remedies Cumulative; Specific Performance...................66
9.13 Agreement to Protect Parent's Acquired Goodwill.............66
9.14 Interpretation..............................................66
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Execution Version
EXHIBITS
Exhibit A Form of Restated Certificate of Incorporation
Exhibit B Form of Amended and Restated Bylaws
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 30, 2006 (this
"Agreement"), by and among The Boeing Company, a Delaware corporation
("Parent"), Boeing-Avenger, Inc., a Delaware corporation and a direct wholly
owned subsidiary of Parent ("Merger Sub"), and Aviall, Inc., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have approved and declared advisable this Agreement and the merger
of Merger Sub with and into the Company (the "Merger") upon the terms and
subject to the conditions of this Agreement and in accordance with the General
Corporation Law of the State of Delaware (the "DGCL"); and
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have determined that the Merger is in furtherance of and consistent
with their respective business strategies and is in the best interest of their
respective stockholders; and
WHEREAS, as a material inducement to the willingness of Parent to enter
into this Agreement, simultaneously with the execution of this Agreement,
certain employee-stockholders are entering into amendments and restatements to
their employment or severance agreements with each of the parties hereto and
non-competition agreements with Parent (the "Retention and Non-Competition
Agreements").
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 hereto agree as
follows:
ARTICLE 1
Defined Terms
For purposes of this Agreement, the term:
"Acquisition Proposal" means, with respect to the Company, any
agreement, offer, proposal or indication of interest (other than this Agreement,
the Merger or any other offer, proposal or indication of interest by Parent)
relating to or involving (i) the purchase from the Company or any Company
Subsidiary or any acquisition by any Person or Group of more than a 10% interest
in the total outstanding voting securities of the Company or more than a 10%
interest in the total outstanding voting securities of any Company Subsidiary or
any tender offer or exchange offer that if consummated would result in any
Person or Group Beneficially Owning 10% or more of the total outstanding voting
securities of the Company or 10% or more of the total outstanding voting
securities of any Company Subsidiary, (ii) any merger, consolidation, business
combination or similar transaction involving the Company or any Company
Subsidiary, or (iii) any sale, lease, mortgage, pledge, exchange, transfer,
license, acquisition or disposition of 10% or more of the consolidated assets of
the Company and the Company Subsidiaries in any single transaction or series of
related transactions (other than in the ordinary course of business).
"Affiliate" has the meaning used in Rule 145 promulgated under the
Securities Act.
"Agreement" has the meaning set forth in the preamble.
"Anti-Bribery Laws" has the meaning set forth in Section 4.6(d).
"Antitrust Laws" has the meaning set forth in Section 6.7(c).
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"Beneficial Ownership" (and related terms such as "Beneficially Owning"
or "Beneficial Owner") shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.
"Blue Sky Laws" means state securities or "blue sky" laws.
"Business Day" has the meaning used in Rule 14d-1(g) promulgated under
the Exchange Act.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended as of the date hereof.
"Certificate of Merger" has the meaning set forth in Section 2.3.
"Certificates" has the meaning set forth in Section 3.2(a).
"Certifications" has the meaning set forth in Section 4.7(a).
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"COBRA" has the meaning set forth in Section 4.10(c).
"Code" means the United States Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Company" has the meaning set forth in the preamble.
"Company Balance Sheet" has the meaning set forth in Section 4.7(b).
"Company Balance Sheet Date" has the meaning set forth in Section
4.7(b).
"Company Benefit Plans" has the meaning set forth in Section 4.10(a).
"Company Board" means the Board of Directors of the Company.
"Company Board Recommendation" means the unanimous recommendation by
the Company Board that the Company's stockholders vote in favor of the adoption
of this Agreement.
"Company Bylaws" has the meaning set forth in Section 4.2.
"Company Certificate of Incorporation" has the meaning set forth in
Section 4.2.
"Company Common Share" means a share of common stock, par value $0.01
per share, of the Company.
"Company Disclosure Schedule" has the meaning set forth in the preamble
to Article 4.
"Company Financial Advisor" has the meaning set forth in Section 4.17.
"Company Financial Statements" has the meaning set forth in Section
4.7(b).
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"Company IP Rights" means (i) any and all Intellectual Property used or
held for use in the conduct of the business of the Company and the Company
Subsidiaries as currently conducted and (ii) any and all other Intellectual
Property owned by the Company and the Company Subsidiaries.
"Company IP Rights Agreements" has the meaning set forth in Section
4.14(h).
"Company Option" means any option granted, and not exercised, expired
or terminated, in connection with the performance of services, to a current or
former employee, director or independent contractor of the Company or any of the
Company Subsidiaries or any predecessor thereof to purchase Company Common
Shares pursuant to any Company Stock Option Plan.
"Company-Owned IP Rights" means Company IP Rights that are owned by the
Company or any of the Company Subsidiaries.
"Company Permits" has the meaning set forth in Section 4.6(a).
"Company Preferred Shares" has the meaning set forth in Section 4.3(a).
"Company Registered Intellectual Property" means all United States,
international and foreign (i) patents and patent applications (including
provisional applications) and all reissues, divisions, renewals, extensions,
continuations and continuations in part, (ii) registered trademarks and service
marks, applications to register trademarks or service marks, intent-to-use
applications, or other registrations or applications related to trademarks or
service marks, (iii) registered Internet domain names, (iv) registered
copyrights and applications for copyright registration, and (v) any other
Intellectual Property that is the subject of an application, certificate,
filing, registration or other document issued, filed with, or recorded by the
United States Patent and Trademark Office, the United States Copyright Office,
or any equivalent Governmental Entity, in each case of (i) through (v) that is
owned by, registered or filed in the name of, the Company or any of the Company
Subsidiaries.
"Company SARs" has the meaning set forth in Section 3.4(c).
"Company SEC Reports" has the meaning set forth in Section 4.7(a).
"Company Source Code" means any software source code, any material
portion or aspect thereof, or any material proprietary information or algorithm
contained in or relating to any software source code of any Company-Owned IP
Rights.
"Company Stockholders Approval" has the meaning set forth in Section
4.4(a).
"Company Stockholders Meeting" has the meaning set forth in Section
4.4(a).
"Company Stock Option Plan" means any stock option, stock bonus, stock
award or stock purchase plan, program or arrangement, as amended to date, of the
Company or any of the Company Subsidiaries or any predecessor thereof, including
the Company's 1998 Director's Stock Plan and the 1998 Stock Incentive Plan.
"Company Subsidiary" has the meaning set forth in Section 4.1(a).
"Company Warrants" means warrants to purchase Company Common Shares
(other than Company Options and stock appreciation rights).
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"Confidential Information" has the meaning set forth in Section
4.14(s).
"Confidentiality Agreement" has the meaning set forth in Section 6.5.
"Continuing Employees" has the meaning set forth in Section 6.11(a).
"Contract" means any agreement, contract, subcontract, lease, sublease,
power of attorney, note, loan, evidence of Indebtedness, purchase and sales
order, letter of credit, undertaking, covenant not to compete, license,
instrument, obligation, commitment, binding understanding, promise, indenture,
option, warranty, policy or quotation, whether oral or written, express or
implied.
"Cost Accounting Standards" has the meaning set forth in Section
4.11(c).
"Credit Facility" means the Company's senior secured credit facility,
as described in the Company's Annual Report on Form 10-K for the period ending
December 31, 2005, and any footnotes, schedules or exhibits thereto including
any other documents or instruments executed in connection therewith.
"Dallas Lease" has the meaning set forth in Section 4.19(a).
"Dissenting Shares" has the meaning set forth in Section 3.5.
"Divestiture" means (a) the sale, license or other disposition or
holding separate (through the establishment of a trust or otherwise) of any
assets or categories of assets of Parent or any of its Affiliates or the Company
or any Company Subsidiary or (b) the holding separate of the Company Common
Shares or any limitation or regulation on the ability of Parent or any of its
Affiliates to exercise full rights of ownership of the Company Common Shares.
"DGCL" has the meaning set forth in the preamble.
"D&O Insurance" has the meaning set forth in Section 6.10(b).
"XXXXX" has the meaning set forth in Section 4.7(a).
"Effective Time" has the meaning set forth in Section 2.3.
"Encumbrance" means, with respect to any asset, any mortgage, deed of
trust, lien, pledge, charge, security interest, title retention device,
conditional sale or other security arrangement, collateral assignment, claim,
charge, adverse claim of title, ownership or other similar encumbrance of any
kind in respect of such asset (including any restriction on (i) the voting of
any security or the transfer of any security or other asset, (ii) the receipt of
any income derived from any asset, and (iii) the use of any asset) other than
any encumbrance arising (A) under applicable Laws with respect to Taxes not yet
due and payable, or (B) under the Credit Facility.
"Engagement Letter" has the meaning set forth in Section 4.18.
"Environmental Claims" means all written or oral accusations,
allegations, complaints, notices of violation, claims, demands, suits or causes
of action for any damage, including personal injury or property damage,
investigatory costs, clean-up costs, governmental response costs, natural
resources damages, fines or penalties, arising out of or related to
Environmental Conditions or pursuant to applicable Environmental Laws.
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"Environmental Conditions" means Releases relating to or arising out of
the use, handling, storage, treatment, disposal, recycling, generation or
transportation of Hazardous Substances by the Company or any Company Subsidiary
or any entity for which the Company has financial responsibility. With respect
to Environmental Claims by third parties, Environmental Conditions also include
the exposure of Persons to Hazardous Substances from the operations of the
Company or any Company Subsidiary or any entity for which the Company has
financial responsibility at the workplace or the exposure of Persons or property
to Hazardous Substances from the operations of the Company or any Company
Subsidiary or any entity for which the Company has financial responsibility
migrating from or otherwise emanating from the Facilities.
"Environmental Laws" means all applicable foreign, federal, state,
district and local laws, all rules or regulations promulgated thereunder, and
all orders, consent orders, judgments, notices, or permits issued, promulgated
or entered pursuant thereto (collectively, "Regulations"), relating to pollution
or protection of the environment and occupational safety and health, including
(i) Regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Substances into the environment, (ii) Regulations relating
to the identification, generation, manufacture, processing, distribution, use,
treatment, storage, disposal, recovery, transport or other handling of Hazardous
Substances, (iii) Regulations relating to the health and safety of Persons
(including employees) or property, (iv) CERCLA, (v) the Toxic Substances Control
Act, (vi) the Hazardous Materials Transportation Act, (vii) the Resource
Conservation and Recovery Act, (viii) the Clean Water Act, (ix) the Safe
Drinking Water Act, (x) the Clean Air Act, (xi) the Occupational Health and
Safety Act, (xii) Federal Insecticide, Fungicide, Rodenticide Act, and (xiii)
the Emergency Planning and Community Right-to-Know Act.
"Environmental Reports" means any and all written reports, audits,
inspections, reviews, assessments, evaluations or other analyses that are in the
possession or control of the Company or any Company Subsidiary of (i) any
Environmental Conditions in, on or about the Facilities or (ii) compliance with
applicable Environmental Laws.
"Equity Interest" means any share, capital stock, partnership, member
or similar interest in any Person, and any option, warrant, right or security
(including debt securities) convertible, exchangeable or exercisable therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means any entity or trade or business (whether or not
incorporated), other than the Company, that together with the Company is
considered under common control and treated as a single employer under Sections
414(b), (c), (m) or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Agent" has the meaning set forth in Section 3.2(b).
"Exchange Fund" has the meaning set forth in Section 3.2(b).
"Expenses" includes all reasonable out-of-pocket expenses (including
all fees and expenses of legal counsel, accountants, investment bankers, experts
and consultants to a party hereto and its Affiliates) incurred by a party or on
its behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and the transactions
contemplated
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hereby, including the preparation, printing, filing and mailing of the Proxy
Statement and the solicitation of stockholder approvals and all other matters
related to the transactions contemplated hereby.
"Export Control Laws" has the meaning set forth in Section 4.6(c).
"Facilities" means all plants, offices, manufacturing facilities,
stores, warehouses, administration buildings and real property and related
facilities and fixtures owned or leased at any time by the Company or any of the
Company Subsidiaries.
"Foreign Plan" means each compensation and benefit plan required to be
maintained or contributed to by the Law or applicable custom or rule of the
relevant jurisdiction outside of the United States except for plans maintained
by Governmental Entities.
"GAAP" means generally accepted accounting principles as applied in the
United States.
"Government Contract" has the meaning set forth in Section 4.11(c).
"Governmental Entity" means any supranational, national, state,
municipal, local or foreign government, any court, tribunal, arbitrator,
administrative agency, commission or other governmental official, authority or
instrumentality, in each case whether domestic or foreign, any stock exchange or
similar self-regulatory organization or any quasi-governmental or private body
exercising any regulatory, Taxing or any other governmental or
quasi-governmental entity.
"Group" has the meaning as used in Section 13 of the Exchange Act,
except where the context otherwise requires.
"Hazardous Substances" means all pollutants, contaminants, chemicals,
wastes, and any other infectious, carcinogenic, ignitable, corrosive, reactive,
toxic or otherwise hazardous substances or materials (whether solids, liquids or
gases) subject to regulation, control or remediation under applicable
Environmental Laws. By way of example only, the term Hazardous Substances
includes petroleum and/or petroleum by-products, urea formaldehyde, flammable,
explosive and radioactive materials, radon gas, polychlorinated biphenyls,
pesticides, herbicides and asbestos.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"Indemnified Parties" has the meaning set forth in Section 6.10(a).
"Indebtedness" means, with respect to any Person, without duplication,
(i) all obligations of such Person for borrowed money, or with respect to
deposits or advances of any kind to such Person, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (iii) all
obligations of such Person upon which interest charges are customarily paid,
(iv) all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person, (v) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services (excluding obligations of such Person to creditors for raw
materials, inventory, services and supplies incurred in the ordinary course of
such Person's business), (vi) all capitalized lease obligations of such Person,
(vii) all obligations of others secured by any Encumbrance on property or assets
owned or acquired by such Person, whether or not the obligations secured thereby
have been assumed, (viii) all obligations of such Person under interest rate or
currency swap transactions (valued at the termination value thereof), (ix) all
letters of credit issued for the account of such Person (excluding letters of
credit issued for the benefit of suppliers to support accounts payable to
suppliers incurred in the ordinary course
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of business), (x) all obligations of such Person to purchase securities (or
other property) that arise out of or in connection with the sale of the same or
substantially similar securities or property, and (xi) all guarantees and
arrangements having the economic effect of a guarantee of such Person of any
indebtedness of any other Person.
"Intellectual Property" means any and all worldwide industrial and
intellectual property rights, including all patents and applications therefor
and all reissues, divisions, renewals, extensions, provisionals, continuations
and continuations-in-part thereof, all inventions (whether patentable or not),
invention disclosures, improvements, trade secrets, proprietary information,
know-how, technology, technical data, proprietary processes and formulae,
algorithms, specifications, customer lists and supplier lists, all designs and
any registrations and applications therefor, all trade names, logos, common law
trademarks and service marks, trademark and service xxxx registrations and
applications therefor, Internet domain names, all copyrights, copyright
registrations and applications therefor, and all other rights corresponding
thereto, all computer software, including all source code, object code,
firmware, and development tools, images, drawings, graphics, files, records and
data, all rights in prototypes, all databases and data collections and all
rights therein, all moral and economic rights of authors and inventors, however
denominated, and any similar or equivalent rights to any of the foregoing.
"IRS" means the United States Internal Revenue Service.
"knowledge" means, with respect to a Person, the actual knowledge of a
fact, circumstance, event or other matter by the officers and directors of such
Person.
"Law" means any foreign or domestic federal, state, provincial, local,
municipal or other law, statute, code, treaty, ordinance, requirement, rule,
regulation, legal doctrine, order, permit, judgment, writ, stipulation, award,
injunction, decree or arbitration award or finding.
"Made Available" means the Company or its Representatives (i) made such
materials available to Parent or its Representatives during Parent's physical
due diligence inspection conducted between April 4, 2006 and April 8, 2006 at
the offices of Xxxxxx and Xxxxx, LLP, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx
00000-0000, which materials were (x) as set forth on the data room indices
previously provided to Parent or its Representatives (true, correct and complete
copies of which are posted to the electronic database referred to in (iii) below
and physically delivered to Parent) or (y) physically delivered on or before
April 29, 2006 to Parent in the manner described in the applicable Section of
the Company Disclosure Schedule, (ii) posted such materials on the Company's
website at xxx.xxxxxx.xxx on or before Xxxxx 00, 0000, (xxx) provided access to
such materials, to Parent or its Representatives on an electronic database
managed by Xxxxxx and Xxxxx, LLP at xxx.xxxxxxxxxxxxx.xxx, between April 10,
2006 and April 29, 2006, or (iv) filed Company SEC Reports with the SEC which
were available through XXXXX on or prior to the date of this Agreement.
"Material Adverse Effect" means any effect, event, occurrence,
development, circumstance, change or condition, including without limitation a
conflict with, or default or violation of, any Law (each an "Effect") that,
individually or in the aggregate with other Effects is, or is reasonably likely,
to (i) be materially adverse to the capitalization, assets (including intangible
assets), liabilities, business, financial condition or results of operations of
the Company and the Company Subsidiaries, taken as a whole, or (ii) materially
impede or delay the Company's ability to consummate the transactions
contemplated by this Agreement in accordance with its terms and applicable Laws;
except for the purposes of clause (i) above to the extent that such Effect
results from (A) changes or conditions affecting economic or capital markets in
the United States or internationally (which changes or conditions, in each case,
do not affect the Company in a substantially disproportionate manner), (B)
changes in international or national political conditions generally (which
changes, in each case, do not affect the Company in a substantially
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disproportionate manner), (C) changes or conditions affecting the aerospace
industry generally (which changes or conditions, in each case, do not affect the
Company in a substantially disproportionate manner), (D) changes in any Laws or
GAAP or the accounting rules and regulations of the SEC (which changes, in each
case, do not affect the Company in a substantially disproportionate manner), (E)
the announcement of this Agreement or the transactions contemplated hereby, or
(F) any changes in the trading volume or trading prices of Company Common
Shares, or any failure by the Company to meet analyst's forecasts or projections
(it being understood that the underlying cause of or causes of such changes or
failure may be deemed to constitute a Material Adverse Effect, and this clause
(F) shall be disregarded in determining whether the underlying cause of such
changes or failure is itself a Material Adverse Effect).
"Material Contract" has the meaning set forth in Section 4.11(a).
"Merger" has the meaning set forth in the preamble.
"Merger Consideration" has the meaning set forth in Section 3.1(a).
"Merger Sub" has the meaning set forth in the preamble.
"Noteholders" has the meaning set forth in Section 6.17(c).
"Notes Consents" has the meaning set forth in Section 6.17(b).
"Notes Offer to Purchase" has the meaning set forth in Section 6.17(a).
"Notes Tender Offer" has the meaning set forth in Section 6.17(a).
"Notes Tender Offer Documents" has the meaning set forth in Section
6.17(c).
"Notice of Superior Offer" has the meaning set forth in Section 6.6(d).
"Open Source Materials" means all software or other material that is
distributed as "free software," "open source software" or under a similar
licensing or distribution term.
"Other Filings" means all filings made by, or required to be made by,
the Company or Parent, as the case may be, with the SEC, other than the Proxy
Statement.
"Outside Date" has the meaning set forth in Section 8.1(b).
"Parent" has the meaning set forth in the preamble.
"Parent Material Adverse Effect" means any Effect that, individually or
in the aggregate with other Effects, is, or is reasonably likely, to (i) be
materially adverse to the capitalization, assets (including intangible assets),
liabilities, business, financial condition or results of operations of Parent
and Parent Subsidiaries, taken as a whole, or (ii) materially impede or delay
Parent's ability to consummate the transactions contemplated by this Agreement
in accordance with its terms and applicable Laws; except for the purposes of
clause (i) above to the extent that such Effect results from (A) changes or
conditions affecting economic or capital markets in the United States or
internationally (which changes or conditions, in each case, do not affect Parent
in a substantially disproportionate manner), (B) changes in international or
national political or regulatory conditions generally (which changes do not
affect Parent in a substantially disproportionate manner), (C) changes or
conditions affecting the aerospace industry
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generally (which changes or conditions, in each case, do not affect Parent in a
substantially disproportionate manner), (D) changes in any Laws or GAAP or the
accounting rules and regulations of the SEC (which changes, in each case, do not
affect Parent in a substantially disproportionate manner), (E) the announcement
of this Agreement or the transactions contemplated hereby, or (F), any changes
in the trading volume or trading prices of the capital stock of Parent or
failure by Parent to meet analyst's forecasts or projections (it being
understood that the underlying cause of or causes of such changes or failure may
be deemed to constitute a Parent Material Adverse Effect, and this clause (F)
shall be disregarded in determining whether the underlying cause of such changes
or failure is itself a Parent Material Adverse Effect).
"Parent Subsidiary" has the meaning set forth in Section 5.3(a).
"Person" means an individual, corporation, limited liability company,
partnership (limited, general or otherwise), association, trust, business trust,
unincorporated organization, or other entity or group.
"Proposed Amendments" has the meaning set forth in Section 6.17(d).
"Proxy Statement" has the meaning set forth in Section 6.3(a).
"Regulatory Conditions" has the meaning set forth in Section 8.1(b).
"Release" means any past or present releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping into the environment or the workplace of any
Hazardous Substance.
"Representatives" means an entity's directors, officers, employees,
Affiliates, accountants, consultants, legal counsel, advisors, investment
bankers, brokers, agents and other representatives.
"Repurchase Rights" means outstanding rights to repurchase Company
Common Shares that are held by the Company or similar restrictions in the
Company's favor with respect to Company Common Shares.
"Restraint" has the meaning set forth in Section 7.1(b).
"Savings Plan" has the meaning set forth in Section 6.12(b).
"SEC" means the Securities and Exchange Commission.
"Secretary of State" has the meaning set forth in Section 2.3.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Notes" has the meaning set forth in Section 6.17(a).
"SOXA" has the meaning set forth in Section 4.7(a).
"Standard NDAs" has the meaning set forth in Section 4.14(g).
"Statement No. 5" has the meaning set forth in Section 4.7(b).
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"Subsidiary" of a specified entity means any corporation, partnership,
limited liability company, joint venture or other entity of which the specified
entity (either alone or through or together with any other subsidiary) owns,
directly or indirectly, 50% or more of the stock or other equity or partnership
interests.
"Superior Offer" means, with respect to the Company, an unsolicited,
bona fide written offer made by a third party for an Acquisition Proposal
(except that references to "10%" in clauses (i) and (iii) of the definition of
"Acquisition Proposal" shall be deemed to be a reference to "50%"), on terms
that the Company Board has in good faith concluded (after consultation with its
outside legal counsel and its financial advisor), taking into account, among
other things, all legal, financial, regulatory and other aspects of the offer
and the Person making the offer, to be more favorable, from a financial point of
view, to the Company's stockholders (in their capacities as stockholders) than
the terms of the Merger and is reasonably capable of being consummated.
"Supplemental Indenture" has the meaning set forth in Section 6.17(d).
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Taxes" means (i) all taxes, levies, assessments, duties, imposts or
other like assessments, charges or fees (including estimated taxes, charges and
fees), including income, profits, corporations, advance corporation, gross
receipts, transfer, excise, property, sales, use value-added, ad valorem,
license, capital, wage, employment, payroll, withholding, social security,
severance, occupation, import, custom, stamp, alternative, add-on minimum,
environmental, franchise or other governmental taxes or charges, imposed by any
Governmental Entity responsible for the imposition of any such tax (each, a "Tax
Authority"), including any interest, penalties or additions to tax applicable or
related thereto, (ii) all liability for the payment of any amounts of the type
described in clause (i) as the result of being (or ceasing to be) a member of an
affiliated, consolidated, combined or unitary group (or being included (or
required to be included) in any Tax Return related thereto), and (iii) all
liability for the payment of any amounts as a result of an express or implied
obligation to indemnify or otherwise assume or succeed to the liability of any
other Person with respect to the payment of any amounts of the type described in
clause (i) or clause (ii).
"Tax Return" means any report, return, statement, declaration, claim
for refund, information return or other written information (including any
related or supporting schedules, statements or information and amended returns)
filed or required to be filed in connection with any Taxes, including the
administration of any Laws, regulations or administrative requirements relating
to any Taxes.
"Third Party Intellectual Property Rights" means any Intellectual
Property owned by a third party.
"WARN Act" has the meaning set forth in Section 4.10(n).
ARTICLE 2
The Merger
2.1 The Merger. Upon the terms and subject to satisfaction or waiver of
the conditions set forth in this Agreement, and in accordance with the DGCL,
Merger Sub, at the Effective Time, 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").
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2.2 The Closing. The closing of the transactions contemplated hereby
(the "Closing") shall take place at 10:00 am (EST) on a date designated by
Parent but that shall be no later than five Business Days after the satisfaction
or waiver of each of the conditions set forth in Article 7 (other than those
conditions that by their terms are to be satisfied at Closing, but subject to
the satisfaction or waiver of such condition at such time) or at such other time
or date as the parties hereto agree. The Closing shall take place at the offices
of Sheppard, Mullin, Xxxxxxx & Xxxxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000,
Xxx Xxxx, XX 00000, or at such other location as the parties hereto agree. The
date on which the Closing occurs is herein referred to as the "Closing Date."
2.3 Effective Time. Subject to the provisions of this Agreement, a
certificate of merger satisfying the applicable requirements of the DGCL (the
"Certificate of Merger") shall be duly executed by the Company, and,
simultaneously with or as soon as practicable following the Closing, filed with
the Secretary of State of the State of Delaware (the "Secretary of State"). The
Merger shall become effective upon the later of: (a) the date and time of the
filing of the Certificate of Merger with the Secretary of State, or (b) such
later date and time as may be specified in the Certificate of Merger with the
prior written consent of Parent. The date and time the Merger becomes effective
is referred to in this Agreement as the "Effective Time."
2.4 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. Without limiting the generality of the
foregoing, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
2.5 Certificate of Incorporation; Bylaws. At the Effective Time, the
Company Certificate of Incorporation and the Company Bylaws as in effect
immediately prior to the Effective Time shall be amended so as to read in the
forms of Exhibits A and B hereto, respectively, and, as so amended, shall be the
certificate of incorporation and bylaws of the Surviving Corporation.
2.6 Directors and Officers. The directors of Merger Sub immediately
prior to the Effective Time, together with Xxxx X. Xxxxxxxx, shall be the
directors of the Surviving Corporation, each to hold office in accordance with
the certificate of incorporation and bylaws of the Surviving Corporation. The
officers of the Company immediately prior to the Effective Time shall be the
officers of the Surviving Corporation, together with such other Persons (if any)
as set forth on Section 2.6 of the Company Disclosure Schedule, each to hold
office in accordance with the certificate of incorporation and bylaws of the
Surviving Corporation.
ARTICLE 3
Conversion of Securities; Exchange of Certificates
3.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities:
(a) Conversion Generally. Each Company Common Share issued and
outstanding immediately prior to the Effective Time (other than any Company
Common Shares to be canceled pursuant to Section 3.1(b) and Dissenting Shares
referred to in Section 3.5) shall be converted, subject to other provisions of
this Section 3.1 and Section 3.2(e), into the right to receive $48.00 in cash
without interest (the "Merger Consideration"). At the Effective Time, all such
Company Common Shares shall no longer be outstanding and shall automatically
cease to exist, and each certificate previously representing
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any such shares shall thereafter represent only the right to receive the Merger
Consideration, subject to other provisions of this Section 3.1, Section 3.2(e)
and Section 3.5.
(b) Cancellation of Certain Shares. Each Company Common Share
held, immediately prior to the Effective Time, by the Company, Parent, Merger
Sub or any Subsidiary of Company, Parent or Merger Sub shall be canceled and
extinguished without any conversion thereof, and no payment shall be made with
respect thereto.
(c) Change in Shares. In the event of any stock split, reverse
stock split, stock dividend (including any dividend or distribution of
securities convertible into capital stock), reorganization, reclassification,
combination, recapitalization or other like change with respect to the Company
Common Shares occurring after the date of this Agreement and prior to the
Effective Time, the Merger Consideration and all references in this Agreement to
specified numbers of shares of any class or series affected thereby, and all
calculations provided therefor that are based upon numbers of shares of any
class or series (or trading prices therefor) affected thereby, shall be
equitably adjusted to the extent necessary to provide the parties the same
economic effect as contemplated by this Agreement prior to such stock split,
reverse stock split, stock dividend, reorganization, reclassification,
combination, recapitalization or other like change.
(d) Capital Stock of Merger Sub. At the Effective Time, each
share of capital stock of Merger Sub that is issued and outstanding immediately
prior to the Effective Time will, by virtue of the Merger and without further
action on the part of the sole stockholder of Merger Sub, be converted into and
become one share of common stock of the Surviving Corporation (and the shares of
Surviving Corporation into which the shares of Merger Sub capital stock are so
converted shall be the only shares of the Surviving Corporation's capital stock
that are issued and outstanding immediately after the Effective Time). Each
certificate evidencing ownership of shares of Merger Sub common stock will
evidence ownership of such shares of common stock of the Surviving Corporation.
3.2 Exchange of Certificates.
(a) Exchange Procedures.
(i) Promptly after the Effective Time, Parent will
instruct the Exchange Agent to mail to each holder of record of Company Common
Shares (as of immediately prior to the Effective Time) (i) a letter of
transmittal that shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper delivery of the
certificates which immediately prior to the Effective Time represented such
holder's Company Common Shares ("Certificates") to the Exchange Agent and shall
contain such other provisions as Parent may reasonably specify and (ii)
instructions for use in effecting surrender by such holder of Certificates to
the Exchange Agent in exchange for the Merger Consideration.
(ii) The holder of each Certificate, upon the
surrender by such holder to the Exchange Agent of such Certificate, together
with the letter of transmittal duly completed and validly executed by such
holder in accordance with the instructions thereto, and such other documents as
may reasonably be required by the Exchange Agent, shall be entitled to receive
in exchange for such Certificate a check for the Merger Consideration into which
the Company Common Shares theretofore represented by such Certificate have been
converted pursuant to Section 3.1, and such Certificate shall forthwith
thereafter be canceled. In the event of a transfer of ownership of Company
Common Shares that is not registered on the transfer records of the Company, the
cash consideration payable hereunder with respect to such Company Common Shares
may be paid to a Person other than the Person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
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otherwise be in proper form for transfer. Each Certificate shall be deemed at
all times from and after the Effective Time to represent only the right to
receive, upon exchange as contemplated in this Section 3.2, the Merger
Consideration into which the Company Common Shares formerly represented by such
Certificate are converted in the Merger. No interest shall be paid or accrue on
any Merger Consideration payable upon surrender of any Certificate.
(b) Exchange Agent. At or prior to the Effective Time, Parent
or a direct or indirect Subsidiary of Parent shall enter into an agreement with
a nationally recognized financial institution designated by Parent (the
"Exchange Agent"), which shall establish reasonable procedures mutually
acceptable to Parent and the Company, for exchange in accordance with this
Article 3, through the Exchange Agent, an amount of cash sufficient to deliver
to the holders of Company Common Shares (other than Dissenting Shares) the
aggregate Merger Consideration (such cash being hereinafter referred to as the
"Exchange Fund") deliverable pursuant to Section 3.1 in exchange for outstanding
Company Common Shares. The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Merger Consideration contemplated to be issued
pursuant to Section 3.1 out of the Exchange Fund.
(c) Further Rights in Company Common Shares. All Merger
Consideration issued and paid upon conversion of the Company Common Shares in
accordance with the terms hereof shall be deemed to have been issued and paid in
full satisfaction of all rights pertaining to such Company Common Shares.
(d) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of Company Common Shares for six
(6) months after the Effective Time shall be promptly delivered to Parent upon
demand, and any holders of Company Common Shares who have not theretofore
complied with this Article 3 shall thereafter look only to Parent (subject to
applicable abandoned property, escheat and similar Laws) for the Merger
Consideration, without any interest thereon, only as a general unsecured
creditor thereof. Notwithstanding anything to the contrary contained herein, if
any Certificate has not been surrendered prior to the fifth anniversary of the
Effective Time (or immediately prior to such earlier date on which the Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity), any amounts payable in respect
of such Certificate shall, to the extent permitted by applicable Laws, become
the property of Parent, free and clear of all claims or interests of any Person
previously entitled thereto.
(e) No Liability. None of Parent, the Company, Merger Sub or
the Surviving Corporation shall be liable to any Person for any cash from the
Exchange Fund delivered to a Governmental Entity pursuant to any applicable
abandoned property, escheat or similar Laws.
(f) 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 or the Exchange Agent in their respective discretion, the
posting by such Person of a bond, in such reasonable amount as Parent or the
Exchange Agent may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will deliver in
exchange for such lost, stolen or destroyed Certificate the Merger
Consideration, without any interest thereon.
(g) Withholding. Parent, Merger Sub or the Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Company Common Shares,
Company Options or Company Warrants such amounts as Parent, Merger Sub or the
Exchange Agent are required to deduct and withhold under the Code, or any
provision of state, local, provincial or foreign Tax Law, or pursuant to other
applicable judgments, decrees, injunctions or orders, with respect to the making
of such payment. To the extent that amounts are so withheld by Parent,
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Merger Sub or the Exchange Agent, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of Company Common
Shares, Company Options or Company Warrants in respect of whom such deduction
and withholding was made by Parent, Merger Sub or the Exchange Agent.
3.3 Share Transfer Books. At the Effective Time, the share transfer
books of the Company shall be closed, and, thereafter, there shall be no further
registration of transfers of Company Common Shares theretofore outstanding on
the records of the Company. From and after the Effective Time, the holders of
certificates representing Company Common Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Company
Common Shares, except as otherwise provided herein or by applicable Laws. On and
after the Effective Time, any Certificates presented to the Exchange Agent or
Parent for any reason shall be converted into the Merger Consideration, without
interest.
3.4 Convertible Securities.
(a) Company Options. Prior to the Effective Time, the Company
shall take all action, including obtaining consents from holders of Company
Options, necessary to cause each then-outstanding unexpired and unexercised
Company Option, whether vested or unvested, to be canceled immediately prior to,
but subject to the occurrence of, the Effective Time. In consideration for such
cancellation, the holder of each such Company Option shall receive, as soon as
reasonably practicable at or after the Effective Time, a cash payment from
Parent or the Surviving Corporation equal to the product of (i) the total number
of shares that were subject to such Company Option immediately prior to the
Effective Time, and (ii) the excess (if any) of (A) the Merger Consideration
over (B) the exercise price per share subject to such Company Option, such cash
payment to be reduced by any required withholding of Taxes.
(b) Company Warrants. Following the Effective Time, each
Company Warrant shall represent only the right, upon the valid exercise thereof,
if any, to receive the Merger Consideration for each Company Common Share into
which such Company Warrant may be exercised and shall in no event be exercisable
for any equity securities of Parent, the Company or any of their Subsidiaries.
In addition, the Company shall take all action necessary to cause all holders of
Company Warrants to either fully exercise such Company Warrants prior to the
Effective Time or agree that such Company Warrants shall be terminated upon the
Effective Time; provided, however, that the holder of any such terminated
Company Warrant shall be entitled to receive following the Effective Time, upon
surrender of the certificate representing such Company Warrant, only an amount
equal to the product of (x) the number of Company Common Shares issuable upon
exercise of such Company Warrant multiplied by (y) the excess, if any, of the
per share Merger Consideration over the per share exercise price in effect for
such Company Warrant.
(c) Stock Appreciation Rights. At the Effective Time, except
as otherwise provided in the Retention and Non-Competition Agreements, all
Company stock appreciation rights ("Company SARs") then unvested shall vest in
accordance with their terms and each holder of Company SARs shall receive as
soon as reasonably practicable at or after the Effective Time, a cash payment
from Parent or the Surviving Corporation equal to the product of (i) the total
number of vested Company SARs (including those that vest pursuant to the
operation of this subsection (c)), and (ii) the excess (if any) of (A) the
Merger Consideration over (B) the xxxxx xxxxx of such Company SARs, such cash
payment to be reduced by any required withholding of Taxes.
(d) The Company shall take all action necessary in order to
effect the foregoing provisions of this Section 3.4 as of the Effective Time.
Any materials to be submitted to the holders of
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Company Options or Company Warrants shall be subject to review and approval by
Parent (which approval shall not be unreasonably withheld or delayed).
3.5 Dissenting Stockholders. Notwithstanding anything in this Agreement
to the contrary, Company Common Shares that are outstanding immediately prior to
the Effective Time and held by a holder who has not voted in favor of the Merger
or consented thereto in writing and who has demanded appraisal for such Company
Common Shares in accordance with Section 262 of the DGCL ("Dissenting Shares")
shall not be converted into a right to receive the Merger Consideration and will
be paid for by the Surviving Corporation in accordance with Section 262 of the
DGCL; provided, however, that if any such holder shall fail to perfect or
otherwise shall waive, withdraw or lose the right to appraisal and payment under
the DGCL, the right of such holder to such appraisal of its Company Common
Shares shall cease, and such Company Common Shares shall be deemed converted as
of the Effective Time into the right to receive the Merger Consideration as
provided in this Article 3. The Company shall give Parent prompt notice of any
written demands (or purported demands) for appraisal received by the Company,
withdrawals of such demands, and any other related instruments served pursuant
to Section 262 of the DGCL and received by the Company. Parent shall direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL and the Company shall not, except with Parent's prior written consent, (i)
voluntarily make any payment with respect to any demands for appraisal for
Dissenting Shares, (ii) offer to settle, or settle, any such demands, (iii)
waive any failure to timely deliver a written demand for appraisal in accordance
with the DGCL, or (iv) agree to do any of the foregoing.
ARTICLE 4
Company Representations and Warranties
Except as set forth in the disclosure schedule delivered by the Company
to Parent concurrently with the execution of this Agreement (the "Company
Disclosure Schedule"), which identifies exceptions by specific Section
references, the Company hereby represents and warrants to Parent and Merger Sub
as follows:
4.1 Organization and Qualification; Subsidiaries.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
Subsidiary of the Company (each a "Company Subsidiary" and, collectively, the
"Company Subsidiaries") has been duly organized, and is validly existing and in
good standing, under the laws of the jurisdiction of its incorporation or
organization, as the case may be. Each of the Company and each Company
Subsidiary has the requisite power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted and as currently proposed by it to be conducted,
except where failure to have such governmental approvals would not have a
Material Adverse Effect. Each of the Company and each Company Subsidiary is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification, licensing or good
standing necessary, except where the failure to be so qualified, licensed or in
good standing would not have, individually or in the aggregate, a Material
Adverse Effect.
(b) Section 4.1(b) of the Company Disclosure Schedule sets
forth a true, correct and complete list of all of the Company Subsidiaries and
the jurisdictions of their incorporation or organization, as the case may be.
None of the Company or any Company Subsidiary holds an Equity Interest in any
other Person (other than a Company Subsidiary). The Company is the direct or
indirect owner of all of the issued and outstanding shares of capital stock or
limited liability company interests of
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each Company Subsidiary, and all such shares of capital stock and limited
liability company interests are duly authorized, validly issued, fully paid and
nonassessable. All of the issued and outstanding shares of capital stock or
limited liability company interests of each Company Subsidiary are owned
directly or indirectly by the Company free and clear of all Encumbrances and are
not subject to any preemptive right or right of first refusal created by
statute, the Certificate of Incorporation and Bylaws or other equivalent
organizational documents, as applicable, of such Company Subsidiary or any
Contract to which such Company Subsidiary is a party or by which it is bound.
Other than prepaid purchase obligations to suppliers, there are no outstanding
contractual obligations of the Company or any Company Subsidiary to loan funds
to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Person, other than a Company Subsidiary.
(c) There are no outstanding subscriptions, options, warrants,
"put" or "call" rights, exchangeable or convertible securities or other
Contracts of any character relating to the issued or unissued capital stock or
other securities of any Company Subsidiary, or otherwise obligating the Company
or any Company Subsidiary to issue, transfer, sell, purchase, redeem or
otherwise acquire or sell any such securities of a Company Subsidiary.
(d) The Company has Made Available to Parent copies of all
certificate or articles of incorporation, bylaws, and other organizational
documents of each of the Company Subsidiaries, as currently in effect. The
Company has Made Available to Parent copies of all charters of each committee of
the Company Board and any code of conduct or similar policy adopted by the
Company.
4.2 Certificate of Incorporation and Bylaws; Corporate Books and
Records. The copy of the Company's Restated Certificate of Incorporation (the
"Company Certificate of Incorporation") attached to Section 4.2(i) of the
Company Disclosure Schedule and the copy of the Company's Amended and Restated
Bylaws (the "Company Bylaws") attached to Section 4.2(ii) of the Company
Disclosure Schedule are true, correct and complete copies thereof as in effect
on the date hereof. The Company has Made Available to Parent a true, correct and
complete copy of the Certificate of Incorporation and Bylaws or other equivalent
organizational documents, as applicable, of each Company Subsidiary, in each
case as amended to date. Neither the Company nor any Company Subsidiary is in
violation of any of the provisions of its Certificate of Incorporation or Bylaws
or equivalent organizational documents. True, correct and complete copies of all
minute books of the Company and Aviall Services, Inc. (containing records of all
proceedings, consents, actions and meetings of the Board of Directors,
committees of the Board of Directors and stockholders of the Company and Aviall
Services, Inc.) from January 1, 2003 through February 23, 2006 and January 30,
2006, respectively, have been Made Available by the Company to Parent. For the
period from January 1, 2003 through the date of this Agreement, there are no
records of any material proceedings, consents, actions or meetings of the Board
of Directors and stockholders of any Company Subsidiary other than those that
have been Made Available. The minute books of the Company and each Company
Subsidiary Made Available to Parent contain materially accurate summaries of all
meetings of directors and stockholders or actions by written consent of the
directors and stockholders of the Company and the respective Company
Subsidiaries from January 1, 2003 through January 30, 2006 and there have been
no material proceedings, consents, actions or meetings of the Board of Directors
or stockholders of any Company Subsidiary since January 30, 2006 until the date
of this Agreement.
4.3 Capitalization.
(a) The authorized capital shares of the Company consist of
80,000,000 Company Common Shares and 10,000,000 shares of preferred stock, par
value $0.01 per share (the "Company Preferred Shares"). As of April 24, 2006,
(A) 34,206,454 Company Common Shares (other than treasury shares) were issued
and outstanding, all of which were validly issued and fully paid, nonassessable
and
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free of preemptive rights of which 169,367 are subject to unvested awards of
restricted stock, and (B) 2,068,165 Company Common Shares were held in the
treasury of the Company. As of the date hereof, no Company Preferred Shares are
issued or outstanding. There are no options, warrants, reserved Company Common
Shares, or other rights, Contracts or arrangements of any character to which the
Company or any Company Subsidiary is a party or by which the Company or any
Company Subsidiary is bound relating to the issued or unissued Equity Interests
of the Company or any Company Subsidiary, or securities convertible into or
exchangeable for such Equity Interests, or obligating the Company or any Company
Subsidiary to issue or sell any of its capital shares or other Equity Interests,
or securities convertible into or exchangeable for such capital shares of, or
other Equity Interests in, the Company or any Company Subsidiary. Since December
31, 2005, the Company has not issued any Equity Interests, or securities
convertible into or exchangeable for such Equity Interests, other than those
Company Common Shares reserved for issuance as set forth in this Section 4.3 or
Section 4.3(a) of the Company Disclosure Schedule. All issued and outstanding
Company Common Shares and all outstanding Company Options and Company Warrants
were issued, and all repurchases of Company Common Shares were made, in material
compliance with all applicable Laws, including federal and state securities laws
and all requirements set forth in applicable Contracts.
(b) As of April 24, 2006, the Company has reserved 3,190,220
Company Common Shares for issuance to employees, non-employee directors and
consultants pursuant to the Company Stock Option Plans, of which 2,862,884
shares are subject to outstanding and unexercised Company Options or Company
SARs with a weighted average exercise or base price of $18.77. As of the date of
this Agreement, there were no Company Common Shares that are subject to
Repurchase Rights. All of the Company Common Shares subject to issuance under
the Company Stock Option Plans, upon issuance prior to the Effective Time on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. True, correct and complete copies of each of the
Company Stock Option Plans and the standard form of all agreements and
instruments relating to or issued under each Company Stock Option Plan and all
agreements and instruments relating to or issued under the Company Stock Option
Plans or Company Options that differ in any material respect from such standard
form agreements have been Made Available to Parent, and such agreements and
instruments have not been amended, modified or supplemented since being Made
Available to Parent, and there are no agreements, understandings or commitments
to amend, modify or supplement such agreements or instruments in any case from
those Made Available to Parent.
(c) As of the date of this Agreement, there are outstanding
and unexercised Company Warrants to purchase 262,500 Company Common Shares and
262,500 Company Common Shares were reserved for issuance pursuant thereto.
Section 4.3(c) of the Company Disclosure Schedule identifies for each Company
Warrant, (i) the name of the holder of such Company Warrant as of the date of
this Agreement, (ii) the date on which such Company Warrant was granted, (iii)
the exercise price per share of such Company Warrant, (iv) the number of shares
covered by such Company Warrant, (v) the number of Company Common Shares as to
which such Company Warrant had vested at such date, (vi) the applicable vesting
schedule for such Company Warrant and whether the exercisability or vesting of
such Company Warrant will be accelerated in any way by the Merger or the
transactions contemplated hereby, (vii) whether such Company Warrant was issued
in connection with the performance of services and (viii) the date on which such
Company Warrant expires. All of the Company Common Shares subject to issuance
pursuant to Company Warrants, upon issuance prior to or at the Effective Time on
the terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. The Company has Made Available to Parent complete and
correct copies of all Company Warrants. All outstanding Company Warrants will
represent rights to acquire only the Merger Consideration following the
Effective Time pursuant to Section 3.4(b).
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(d) Other than arising under the Credit Facility and as
provided in the Company Stock Option Plans or Company's agreements granting
Company Stock Options to employees of the Company or any Company Subsidiary,
there are no outstanding contractual obligations of the Company or any Company
Subsidiary (i) restricting the transfer of, (ii) affecting the voting rights of,
(iii) requiring the repurchase, redemption or disposition of, or containing any
right of first refusal with respect to, (iv) requiring the registration for sale
of, or (v) granting any preemptive or antidilutive right with respect to, any
Company Common Shares or any other Equity Interests in the Company or any
Company Subsidiary.
4.4 Authority.
(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 contemplated by this Agreement
(other than the Company Stockholders Approval). The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action (other than the Company Stockholders Approval). This
Agreement has been duly authorized and validly executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject only to
the effect, if any, of (i) applicable bankruptcy and other similar Laws
affecting the rights of creditors generally and (ii) rules of Law governing
specific performance, injunctive relief and other equitable remedies. The
Company Board has unanimously (A) approved and declared advisable this Agreement
and the Merger, (B) determined that this Agreement and the terms and conditions
of the Merger are fair to, advisable and in the best interests of the Company
and its stockholders, and (C) has directed that the adoption of this Agreement
be submitted to the Company's stockholders for approval at a meeting of such
stockholders and recommended that all of the Company's stockholders adopt this
Agreement. The affirmative vote of the holders of a majority of all Company
Common Shares issued and outstanding on the record date set for the meeting of
the Company's stockholders to adopt this Agreement (the "Company Stockholders
Meeting") is the only vote of the holders of capital stock of the Company
necessary to adopt this Agreement and effect the Merger under applicable Law and
the Company Certificate of Incorporation (the "Company Stockholders Approval").
(b) The Company has taken all appropriate actions so that the
restrictions on "business combinations" contained in Section 203 of the DGCL
will not apply with respect to or as a result of this Agreement and the
transactions contemplated hereby, including the Merger, without any further
action on the part of the Company's stockholders or the Company Board. Other
than Section 203 of the DGCL, no state takeover statute or similar statute or
regulation is applicable to, or purports to be applicable to, this Agreement,
the Merger or any other transactions contemplated by this Agreement.
4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company or
consummation of the transactions contemplated by this Agreement, subject to
obtaining the Company Stockholders Approval, will not, (i) conflict with or
violate any provision of the Company Certificate of Incorporation or Company
Bylaws or any equivalent organizational documents of any Company Subsidiary,
(ii) assuming that all consents, approvals, authorizations and permits described
in Section 4.5(b) have been obtained and all filings and notifications described
in Section 4.5(b) have been made and any waiting periods thereunder have
terminated or expired, conflict with or violate any Law applicable to the
Company or any Company Subsidiary, or by which any property or asset of the
Company or any Company Subsidiary is bound or affected, (iii) result in the
creation of any Encumbrance on any of the properties or assets of the Company or
any Company
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Subsidiary or (iv) require any consent or approval under, result in any breach
of or any loss of any benefit under, or modify, accelerate or terminate any
rights or obligations under, or constitute a change of control or default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any right of termination, vesting, amendment, acceleration or
cancellation pursuant to, any Material Contract or Company Permit, except in the
case of clauses (iii) and (iv), for such Encumbrances, or absences of consents
or approvals, which would not have a 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 will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entity, except under the Exchange Act, the
Securities Act, any applicable Blue Sky Laws, the rules and regulations of the
New York Stock Exchange, Antitrust Laws, and the filing of the Certificate of
Merger as required by the DGCL.
4.6 Permits; Compliance With Law.
(a) Each of the Company and each Company Subsidiary is in
possession of all authorizations, licenses, permits, certificates,
registrations, approvals and clearances of any Governmental Entity, and has made
all filings, applications and registrations with any Governmental Entity, in
each case that are necessary for the Company and each Company Subsidiary to own,
lease and/or operate its properties or other assets, or to carry on its
respective businesses substantially in the manner described in the Company SEC
Reports filed prior to the date hereof and substantially as it is being
conducted as of the date hereof (the "Company Permits"), and all such Company
Permits are valid and in full force and effect, except where the failure to
have, or the suspension or cancellation of, or failure to be valid or in full
force and effect of, any of the Company Permits would not, individually or in
the aggregate, have a Material Adverse Effect.
(b) None of the Company or any Company Subsidiary is in
conflict with, or in default or violation of, (A) any Law applicable to the
Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected or (B) any Company
Permit, except, with respect to both clauses (A) and (B), for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, be material to the Company and the Company Subsidiaries taken as a
whole. None of the Company Permits will become terminable, in whole or in part,
as a result of the transactions contemplated by this Agreement, except as would
not, individually or in the aggregate, have a Material Adverse Effect. Neither
the Company nor any Company Subsidiary has, within the last three (3) years,
received any written warning, notice of violation, notice of revocation or other
communication from or on behalf of any Governmental Entity, alleging (x) any
material violation of any Company Permit or (y) that the Company or any Company
Subsidiary requires any material Company Permit for its business as currently
conducted that is not currently held by it. No investigation or material inquiry
by any Governmental Entity with respect to the Company or any Company Subsidiary
is pending or, to the knowledge of the Company, threatened, in each case with
respect to any alleged or claimed violation of Law applicable to the Company or
any Company Subsidiary or by which any property or asset of the Company or any
Company Subsidiary is bound or affected.
(c) The Company and each Company Subsidiary are in material
compliance with all statutory and regulatory requirements under the Arms Export
Control Act (22 U.S.C. 2778), the International Traffic in Arms Regulations (22
C.F.R. ss. 120 et seq.), the Export Administration Regulations (15 C.F.R. ss.
730 et seq.) and associated executive orders, the Laws implemented by the Office
of Foreign Assets Controls, United States Department of Treasury and all other
domestic or foreign Laws relating to export control (collectively, the "Export
Control Laws") except as would not individually or in the aggregate be material
to the Company and the Company Subsidiaries taken as a whole. Neither the
Company nor any Company Subsidiary has received any written communication that
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alleges that the Company or any Company Subsidiary is not, or may not be, in
compliance with, or has, or may have, any liability under Export Control Laws.
The Company and each Company Subsidiary has all necessary authority under the
Export Control Laws to conduct their respective businesses substantially in the
manner described in the Company SEC Reports filed prior to the date hereof and
substantially as they are being conducted on the date hereof except as would
not, individually or in the aggregate, be material to the Company or the Company
Subsidiaries.
(d) The Company, each Company Subsidiary, all directors,
officers, employees, Affiliates and authorized agents of each of the foregoing
and any other Person associated with or acting on behalf of the Company or any
Company Subsidiary are in compliance with all legal requirements under (i) the
Foreign Corrupt Practices Act (15 U.S.C. xx.xx. 78dd-1, et seq) and the
Organization for Economic Cooperation and Development Convention Against Bribery
of Foreign Public Officials in International Business Transactions and
legislation implementing such Convention, (ii) all international anti-bribery
conventions (other than the convention described in clause (i)), and (iii) all
other applicable Laws where any of the foregoing Persons do business relating to
corruption, bribery, ethical business conduct, money laundering, political
contributions, gifts and gratuities, or lawful expenses, to public officials and
private persons, and Laws requiring the disclosure of agency relationships or
commissions and the anticorruption rules of any international financial
institutions with which it does business (collectively, the "Anti-Bribery Laws")
except as would not, individually or in the aggregate, be material to the
Company or the Company Subsidiaries. Neither the Company nor any Company
Subsidiary has received any written communication that alleges that the Company,
any Company Subsidiary, any director, officer, employee, Affiliate or authorized
agents of any of the foregoing or any other Person associated with or acting on
behalf of the Company or any Company Subsidiary is, or may be, in violation of,
or has, or may have, any material liability under, the Anti-Bribery Laws.
(e) Neither the Company nor any of the Company Subsidiaries
(i) takes title to, or takes possession of, any products or goods (other than
goods of the Company or any Company Subsidiary) that are listed for sale on the
Inventory Locator Service, LLC electronic marketplace or any other electronic
marketplace, auction- or exchange-related Internet or online website or postings
owned or controlled by the Company or the Company Subsidiaries or (ii) receives
or collects any compensation or fees from the Inventory Locator Service, LLC
electronic marketplace or any other electronic marketplace, auction- or
exchange-related Internet or online website or postings, owned or controlled by
the Company or the Company Subsidiaries other than subscription fees for
participation or membership in the Inventory Locator Service, LLC electronic
marketplace.
(f) Neither the Company nor any Company Subsidiary is a
"Specially Designated National" or other "Blocked Person" identified by the
United States government, nor a Person that is owned or controlled by or acts on
behalf of a "Specially Designated National" or "Blocked Person." To the
Company's knowledge, none of Company's Affiliates or brokers or any director,
officer, employee, nor authorized agent of the Company or any Company Subsidiary
(if any), acting or benefiting in any capacity in connection with this
Agreement, and none of the funds or other assets to be transferred hereunder are
the property of, or beneficially owned, directly or indirectly, by any
"Specially Designated National" or "Blocked Person," nor are such funds or other
assets the proceeds of any specified unlawful activity as defined by 18 U.S.C.
ss. 1956(c)(7). None of the Company or any Company Subsidiary has engaged in or
facilitated any prohibited transactions with any "Specially Designated National"
or other "Blocked Person" without proper prior authorization from the United
States government.
4.7 SEC Filings; Financial Statements.
(a) The Company has filed on a timely basis all forms,
reports, statements, schedules and documents (including items incorporated by
reference) required to be filed by it with the SEC since
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January 1, 2003. Except to the extent available in full without redaction on the
SEC's web site through the Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX"), including those filed on or after the date of this Agreement,
the Company has Made Available to Parent copies of, in the form filed with the
SEC, all of the following documents filed on or after January 1, 2003 through
the date hereof: (i) the Company's Annual Reports on Form 10-K, (ii) the
Company's Quarterly Reports on Form 10-Q, (iii) all proxy and information
statements relating to the Company's meetings of stockholders (whether annual or
special) and all information statements relating to stockholder consents, (iv)
the Company's Current Reports on Form 8-K, (v) all other forms, reports,
statements, schedules and documents filed by the Company with the SEC (the
forms, reports, statements, schedules and other documents referred to in clauses
(i), (ii), (iii), (iv) and (v) above, whether or not available through XXXXX,
are, collectively, including those filed on or after the date of this Agreement,
the "Company SEC Reports" and (vi) all certifications and statements required by
Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of the
Xxxxxxxx-Xxxxx Act of 2002 ("SOXA"), and the rules and regulations of the SEC
promulgated thereunder, with respect to any report referred to in clause (i) or
(ii) (collectively, the "Certifications"). To the Company's knowledge, except as
disclosed in the Company SEC, each director and officer (as defined in Rule
16a-1(f) under the Exchange Act) of the Company has filed with the SEC on a
timely basis all statements required by Section 16(a) of the Exchange Act and
the rules and regulations thereunder. No Company Subsidiary is, or since January
1, 2003 has been, required to file any form, report, statement, schedule or
other document with the SEC. As used in this Section 4.7, the term "file" shall
be broadly construed to include any manner in which a document or information is
furnished, transmitted or otherwise made available to the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in the Company SEC Reports
(the "Company Financial Statements"), including each of the Company SEC Reports
filed after the date of this Agreement until the Closing, (i) complied as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, (ii) was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q, Form 8-K or any successor form under
the Exchange Act), and (iii) fairly presented the consolidated financial
position of the Company and the Company Subsidiaries as at the respective dates
thereof and the consolidated results of Company's and the Company Subsidiaries'
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements may not contain footnotes and were or are subject
to normal and recurring immaterial year-end adjustments in accordance with GAAP.
The balance sheet of the Company as of December 31, 2005 (the "Company Balance
Sheet Date") contained in the Company SEC Reports is hereinafter referred to as
the "Company Balance Sheet." Neither the Company nor any Company Subsidiary has
any liabilities (absolute, accrued, contingent or otherwise) required under GAAP
to be set forth on a balance sheet that are, individually or in the aggregate,
material to the business, results of operations or financial condition of the
Company and the Company Subsidiaries taken as a whole, except for (A)
liabilities incurred since the Company Balance Sheet Date in the ordinary course
of business consistent with past practice which are of the type that typically
recur and which do not result from any breach of contract, tort or violation of
any Law, (B) those specifically set forth or specifically and adequately
reserved against in the Company Balance Sheet, and (C) the fees and expenses of
investment bankers, attorneys and accountants incurred in connection with this
Agreement. Except as reflected in the Company Financial Statements, neither the
Company nor any Company Subsidiary is a party to any material off-balance sheet
arrangements (as defined in Item 303 of Regulation S-K). All reserves that are
set forth in or reflected in the Company Balance Sheet have been established in
accordance with GAAP consistently applied. At the Company Balance Sheet Date,
there were no material loss contingencies (as such term is used in Statement of
Financial Accounting Standards No. 5 ("Statement No. 5") issued by the Financial
Accounting Standards Board in March 1975) that are not adequately provided for
in the Company Balance Sheet as required by Statement No. 5. The Company
Financial Statements comply in all material
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respects with the American Institute of Certified Public Accountants' Statement
of Position 97-2. The Company has not had any material dispute with any of its
auditors regarding accounting matters or policies during any of its past three
(3) full fiscal years or during the current fiscal year-to-date including
without limitation any dispute that would be required to be disclosed in the
Company SEC Reports. The books and records of the Company and each Company
Subsidiary have been maintained, and are being maintained, in all material
respects in accordance with applicable Law and accounting requirements, and the
Company Financial Statements are consistent with such books and records.
(c) The Company has Made Available to Parent a true, correct
and complete copy of (i) any amendments or modifications, which have not yet
been filed with the SEC but that are required to be filed, to Contracts or
documents that previously had been filed by the Company with the SEC pursuant to
the Securities Act or the Exchange Act, and (ii) any correspondence between the
Company and the SEC (including all comment letters received by the Company from
the SEC and all responses to such comment letters by or on behalf of the
Company) for the Company's three (3) prior fiscal years. No investigation by the
SEC with respect to the Company or any Company Subsidiary is pending or, to the
knowledge of the Company, threatened.
(d) Each of the Company SEC Reports (i) as of the date of the
filing of such report, complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as the case may be, and, to the
extent then applicable, SOXA, including in each case, the rules and regulations
thereunder, and (ii) as of its filing date (or, if amended or superseded by a
subsequent filing prior to the date hereof, on the date of such filing) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(e) Each of the principal executive officer and principal
financial officer of the Company (or each former principal executive officer and
each former principal financial officer of the Company) has made all of the
Certifications required by Rules 13a-14 and 15d-14 under the Exchange Act and
Sections 302 and 906 of SOXA, and the rules and regulations of the SEC
promulgated thereunder. The Certifications complied in all material respects
with Rules 13a-14 and 15d-14 under the Exchange Act and Sections 302 and 906 of
SOXA, and the rules and regulations promulgated thereunder and the statements
contained in the Certifications were true and correct as of the date of the
filing thereof. For purposes of this Agreement, "principal executive officer"
and "principal financial officer" shall have the meanings given to such terms in
SOXA.
(f) The Company has implemented and maintains "disclosure
controls and procedures" (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act), and such disclosure controls and procedures are reasonably
designed to ensure that (i) all information (both financial and non-financial)
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC, and (ii) all such
information is accumulated and communicated to the Company's management,
including its principal executive officer and principal financial officer, or
Persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure and to make the certifications of the principal
executive officer and the principal financial officer of the Company required by
Section 302 of SOXA with respect to such reports. The Company has Made Available
to Parent copies of all written descriptions of, and all policies, manuals and
other material documents promulgating such disclosure controls and procedures.
(g) The Company is, and since January 1, 2003 has been, in
compliance in all material respects with (i) the applicable listing and
corporate governance rules and regulations of the New
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York Stock Exchange, and (ii) the applicable provisions of SOXA. There has been
no material correspondence between the Company and the New York Stock Exchange
since January 1, 2003.
(h) Neither the Company nor any Company Subsidiary nor, to the
knowledge of the Company, any director, officer, employee, auditor, accountant
or Representative of the Company or any Company Subsidiary has received any
complaint, allegation, assertion or claim, in each case, regarding the
accounting or auditing practices, procedures, methodologies or methods or
potential fraudulent conduct of the Company or any Company Subsidiary or their
respective internal controls, or any material inaccuracy in the Company's
Financial Statements, including any complaint, allegation, assertion or claim
that the Company or any Company Subsidiary has engaged in questionable
accounting or auditing practices. No attorney representing the Company or any
Company Subsidiary, or current or former employee of the Company or of any
Company Subsidiary, has reported to the Company Board or any committee thereof
or to any director or officer of the Company evidence of a violation of
securities Laws, breach of fiduciary duty, fraudulent conduct or similar
violation by the Company or any of its officers, directors, employees or agents.
(i) PricewaterhouseCoopers LLP, which has expressed its
opinion with respect to the Company's Financial Statements for each of the years
in the five (5) year period ended December 31, 2005 included in the Company SEC
Reports (including the related notes), is "independent" with respect to the
Company and the Company Subsidiaries within the meaning of Regulation S-X and
has been "independent" within such meaning at all times since December 31, 2000.
The Company has made such disclosure of non-audit services performed by
PricewaterhouseCoopers LLP in its proxy statements with respect to its annual
meetings of stockholders as is required under the rules and regulations of the
SEC, and all such non-audit services have been approved in advance by the audit
committee of the Company Board.
(j) The Company has implemented and maintains a system of
internal control over "financial reporting" (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) sufficient to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP, including,
without limitation, that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Since January 1, 2003, other than in connection with SOXA
compliance and process improvements implemented voluntarily by the Company, (a)
there have not been any changes in the Company's internal control over financial
reporting that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting; (b) there have
not been any "significant deficiencies" or "material weaknesses" (as defined by
the Public Company Accounting Board) in the design or operation of the Company's
internal controls and procedures that could adversely affect the Company's
ability to record, process, summarize and report the financial data, (c) to the
extent there have been any such significant deficiencies or material weaknesses,
they have been disclosed to the Company's outside auditors and the audit
committee of the Company Board, and (d) there has not been any fraud, whether or
not material, that involves management or other employees who have a significant
role in the Company's internal control and procedures. The Company has Made
Available to Parent copies of all reports and other documents concerning
internal controls filed with the SEC or delivered to the Company by its
auditors, in each case, prior to the date of this Agreement. The Company has
Made Available to Parent accurate and complete copies of all written
descriptions of, and all policies, manuals and other material documents
promulgating such internal accounting controls in effect as of the date of this
Agreement.
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4.8 Disclosure Documents.
(a) The Proxy Statement and any Other Filings made by the
Company, and any amendments or supplements thereto, at (i) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the Company's stockholders, (ii) the time of the Company Stockholders Meeting,
and (iii) the Effective Time, will comply as to form in all material respects
with the applicable requirements of the Securities Act, the Exchange Act and
other applicable Laws.
(b) The Proxy Statement and any Other Filings made by the
Company, and any amendments or supplements thereto, do not, and will not, at (i)
the time the Proxy Statement (or any amendment thereof or supplement thereto) is
first mailed to the Company's stockholders, (ii) the time of the Company
Stockholders Meeting, and (iii) the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading. Notwithstanding
the foregoing, no representation or warranty is made by the Company with respect
to statements made or incorporated by reference therein about Parent or Merger
Sub supplied by Parent or Merger Sub for inclusion or incorporation by reference
in the Proxy Statement.
4.9 Absence of Certain Changes or Events. Since December 31, 2005, the
Company and each Company Subsidiary has, except as otherwise permitted by this
Agreement, conducted its business only in the ordinary course consistent with
past practice and, since such date:
(a) there has not been any Material Adverse Effect or an event
or development that would, individually or in the aggregate, have a Material
Adverse Effect;
(b) there has not been any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of the Company's capital stock, or any purchase,
redemption or other acquisition by the Company of any of the Company's capital
stock or any other securities of the Company or any options, warrants, calls or
rights to acquire any such shares or other securities except for repurchases
from employees or consultants following their termination pursuant to the terms
of existing Repurchase Rights;
(c) there has not been any split, combination or
reclassification of any of the Company's capital stock;
(d) there has not been any material increase in compensation
or fringe benefits paid or payable to any of the officers, directors or managers
or employees of the Company or any Company Subsidiary at the Vice President or
director level or higher, or who earn base salary of more than $150,000 per
year, or any payment by the Company or any of the Company Subsidiaries of any
bonus to any of their officers, directors or managers or employees at the Vice
President or director level or higher, or who earn base salary of more than
$150,000 per year, or any granting, by the Company or any of the Company
Subsidiaries of any increase in severance or termination pay, or any entry by
the Company or any of the Company Subsidiaries into, or material modification or
amendment of, any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent,
or the terms of which are materially altered, upon the occurrence of a
transaction involving the Company of the nature contemplated hereby, or any
subsequent event, other than increases in the ordinary course of business in
base salary and target bonuses for employees who are not officers of the
Company, in an amount that does not exceed 10% of such base salary, in
connection with periodic compensation or performance reviews;
-24-
(e) there has not been any material modification of any
deferred compensation plan within the meaning of Section 409A of the Code and
the proposed regulations promulgated thereunder and Internal Revenue Service
Notice 2005-1;
(f) there has not been any change by the Company or any of the
Company Subsidiaries in its accounting methods, principles or practices
(including any material change in depreciation or amortization policies or rates
or revenue recognition policies), except as required by concurrent changes in
GAAP;
(g) there has not been any revaluation by the Company or any
of the Company Subsidiaries of any of its material assets, including, without
limitation, writing-off notes or accounts receivable other than immaterial
write-offs in the ordinary course of business;
(h) neither the Company nor any of the Company Subsidiaries
has cancelled or forgiven any material debts or waived any claims or rights
having material value;
(i) there has not been any sale, transfer, or other
disposition of any Company IP Rights or any other material properties or assets
(real, personal or mixed, tangible or intangible) by the Company or any of the
Company Subsidiaries, except for non-exclusive licenses in the ordinary course
of business consistent with past practice;
(j) there has not been any material impairment of any Company
IP Rights or any material adverse change in the Company's or any of the Company
Subsidiaries' rights to use any Intellectual Property licensed from a third
party, in each case, other than in the ordinary course of business consistent
with past practice;
(k) there has not been any material damage, destruction or
loss with respect to assets of the Company or any of the Company Subsidiaries;
(l) neither the Company nor any Company Subsidiary has made
any material loan, advance or capital contribution to, or investment in, any
Person (other than a Company Subsidiary), including without limitation any loan,
advance or capital contribution (regardless of amount) to any director, officer
or other Affiliate of the Company, in each case, other than (i) loans, advances
or capital contributions to or investments in wholly-owned Subsidiaries or
entities that became wholly-owned Subsidiaries made in the ordinary course of
business, (ii) investments made in accordance with the Company's investment
guidelines, a copy of which has been Made Available to Parent, in the ordinary
course of business consistent with past practice and (iii) routine travel
advances in accordance with the Company's travel and expense policy in effect as
of the date of this Agreement (a copy of which has been Made Available to
Parent), sales commission draws to employees of the Company or any Company
Subsidiary and advance purchase payments to the suppliers set forth on Section
4.9(l) of the Company Disclosure Schedule, in an aggregate amount not in excess
of $1,000,000 in the ordinary course of business consistent with past practice;
(m) there has not been any material change with respect to the
management, supervisory or other key personnel of the Company, any termination
of employment of any such employees or a material number of employees, or any
labor dispute or claim arising under the National Labor Relations Act involving
the Company or any Company Subsidiary;
(n) neither the Company nor any Company Subsidiary has
incurred, created or assumed any Encumbrance on any material assets;
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(o) neither the Company nor any Company Subsidiary has paid or
discharged any material Encumbrance or material liability other than in
accordance with its terms in the ordinary course of business consistent with
past practices;
(p) neither the Company nor any Company Subsidiary has agreed,
whether in writing or otherwise, to take any action described in this Section;
and
(q) there has not been any termination or any material
modification, amendment or change to, or waiver of any rights under, any
Material Contract.
4.10 Employee Benefit Plans.
(a) Section 4.10(a) of the Company Disclosure Schedule lists
as of the date of this Agreement, with respect to the Company, any Company
Subsidiary and any ERISA Affiliate, (i) all employee benefit plans within the
meaning of Section 3(3) of ERISA, (ii) each loan from the Company or an ERISA
Affiliate to an employee in excess of $10,000, (iii) all stock option, stock
purchase, phantom stock, stock appreciation right, stock-based compensation,
supplemental retirement, severance, sabbatical, employee relocation, cafeteria
benefit (Section 125 of the Code), dependent care (Section 129 of the Code),
life insurance or accident insurance plans, programs or arrangements, (iv) all
bonus, pension, profit sharing, savings, retirement, deferred compensation or
incentive plans, programs and arrangements, (v) other fringe and employee
benefit plans, programs or arrangements that apply to senior management and that
do not generally apply to all employees, and (vi) any employment or service
agreements (except for offer letters providing for at-will employment that do
not provide for severance, acceleration or post-termination benefits),
compensation agreements and severance agreements, written or otherwise, for the
benefit of, or relating to, any present or former director, officer, employee,
or consultant (provided that, for former directors, officers, employees and
consultants, such arrangements need only be listed if unsatisfied obligations of
the Company or any Company Subsidiary of greater than $10,000 remain thereunder)
under which any of the Company or any Company Subsidiary or ERISA Affiliate
could reasonably be expected to have any liability (all of the foregoing
described in clauses (i) through (vi), collectively, but exclusive of any
Foreign Plan, the "Company Benefit Plans"). There are no defined benefit or
retiree medical plans outside of the United States other than any Foreign Plan.
Furthermore, to the knowledge of the Company, there are no benefit plans outside
the United States that have a material cost to the local business other than any
Foreign Plan. The Company has not, since July 30, 2002, extended credit,
arranged for the extension of credit, or renewed, modified or forgiven an
extension of credit made prior to such date, in the form of a personal loan to
or for any Person who was, at any time since such date, an officer or director
of the Company.
(b) Prior to the date of this Agreement, the Company has Made
Available to Parent a true, correct and complete copy of each of the Company
Benefit Plans and any related plan documents (including adoption agreements,
vendor Contracts and administrative services agreements, trust documents,
insurance policies or Contracts including policies relating to fiduciary
liability insurance, bonds required by ERISA, amendments to the Company Benefit
Plans, employee booklets, summary plan descriptions, and summaries of material
modifications and any material employee communications of the Company relating
to changes to the Company Benefit Plans) and has, with respect to each Company
Benefit Plan that is subject to ERISA reporting requirements, Made Available to
Parent true, correct and complete copies of the Form 5500 reports filed for the
last three (3) plan years (including all audits, financial statements, schedules
and attachments thereto). Any Company Benefit Plan intended to be qualified
under Section 401(a) of the Code has (i) obtained from the IRS a current
favorable determination letter as to its qualified status under the Code, or
(ii) has been established under a standardized master and prototype or volume
submitter plan for which a current favorable IRS advisory letter or opinion
letter has been obtained by the plan sponsor and is valid as to the adopting
employer.
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The Company has also Made Available to Parent a true, correct and complete copy
of the most recent such IRS determination letter, advisory letter or opinion
letter issued with respect to each such the Company Benefit Plan, and to the
knowledge of the Company nothing has occurred since the issuance of each such
letter that could reasonably be expected to cause the loss of the Tax-qualified
status of any Company Benefit Plan subject to Section 401(a) of the Code. The
Company has also Made Available to Parent all registration statements and
prospectuses and investment policy statements prepared in connection with each
Company Benefit Plan. All individuals who, pursuant to the terms of any Company
Benefit Plan, are entitled to participate in any Company Benefit Plan, are
currently participating in such Company Benefit Plan or have been offered an
opportunity to do so and have declined in writing. Neither the Company nor any
Company Subsidiary nor any ERISA Affiliate sponsors or maintains any self-funded
employee benefit plan, including any plan to which a stop-loss policy applies.
(c) None of the Company Benefit Plans promises or provides
retiree medical or other retiree welfare benefits to any Person other than as
required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA") or applicable state law. There has been no "prohibited
transaction" (within the meaning of Section 406 of ERISA and Section 4975 of the
Code) with respect to any Company Benefit Plan that is not exempt under Section
408 of ERISA which has not been corrected and as to which any unsatisfied
penalties and excise taxes are reasonably likely to exist. Each Company Benefit
Plan has been administered in all material respects in accordance with its terms
and the requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code), and the Company, each Company Subsidiary and
each ERISA Affiliate has performed all obligations required to be performed by
it under, is not in any material respect in default under or in violation of,
and has no knowledge of any material default or violation by any other party to,
any of the Company Benefit Plans. All contributions required to be made by the
Company, any Company Subsidiary or any ERISA Affiliate to any Company Benefit
Plan have been made on or before their due dates and, to the extent required by
GAAP, all amounts have been accrued for the current plan year (and no further
contributions will be due or will have accrued thereunder as of the Closing
Date, other than contributions accrued in the ordinary course of business,
consistent with past practice, after the Company Balance Sheet Date as a result
of the operations of the Company and the Company Subsidiaries after the Company
Balance Sheet Date). In addition, with respect to each Company Benefit Plan
intended to include a Code Section 401(k) arrangement, the Company and each
Company Subsidiary and ERISA Affiliate have at all times made timely deposits of
employee salary reduction contributions and participant loan repayments, as
determined pursuant to regulations issued by the United States Department of
Labor. No Company Benefit Plan is subject to, and neither the Company nor any
Company Subsidiary or ERISA Affiliate has incurred or reasonably expects to
incur any liability under Title IV of ERISA (other than for the payment of
insurance premiums to the Pension Benefit Guaranty Corporation). No Company
Benefit Plan has an accumulated funding deficiency within the meaning of Section
412 of the Code. With respect to each Company Benefit Plan subject to ERISA as
either an employee pension benefit plan within the meaning of Section 3(2) of
ERISA or an employee welfare benefit plan within the meaning of Section 3(1) of
ERISA, the Company has prepared in good faith and timely filed all requisite
governmental reports (which were true, correct and complete as of the date
filed), including any required audit reports, and has properly and timely filed
and distributed or posted all notices and reports to employees required to be
filed, distributed or posted with respect to each such Company Benefit Plan. No
suit, administrative proceeding, action or other litigation has been brought, or
to the knowledge of the Company or any Company Subsidiary, is threatened,
against the Company or any Company Subsidiary or with respect to any such
Company Benefit Plan, including any audit or inquiry by the IRS or United States
Department of Labor.
(d) Neither the Company nor any Company Subsidiary or ERISA
Affiliate is a party to, or has made any contribution to or otherwise incurred
any obligation under, any "multiemployer plan" as such term is
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defined in Section 3(37) of ERISA or any "multiple employer plan" as such term
is defined in Section 413(c) of the Code to which the Company or any Company
Subsidiaries has any liability (contingent or otherwise). There has been no
termination or partial termination of any Company Benefit Plan within the
meaning of Section 411(d)(3) of the Code in respect of which the Company or any
Company Subsidiaries has any liability (contingent or otherwise).
(e) As regards each Foreign Plan, (i) such Foreign Plan is in
compliance with the provisions of the Laws of each jurisdiction in which such
Foreign Plan is maintained, to the extent those Laws are applicable to such
Foreign Plan, (ii) the Company, each Company Subsidiary, and each ERISA
Affiliate has complied with all applicable reporting and notice requirements,
and such Foreign Plan has obtained from the Governmental Entity having
jurisdiction with respect to such Foreign Plan any required determinations, if
any, that such Foreign Plan is in compliance with the laws of the relevant
jurisdiction if such determinations are required in order to give effect to such
Foreign Plan, and (iii) such Foreign Plan has been administered in all material
respects in accordance with its terms and applicable Law and regulations.
(f) Section 4.10(f) of the Company Disclosure Schedule lists
each Person who the Company reasonably believes is, with respect to the Company,
any Company Subsidiary and/or any ERISA Affiliate, a "disqualified individual"
(within the meaning of Section 280G of the Code and the regulations promulgated
thereunder) determined as of the date hereof.
(g) Section 4.10(g) of the Company Disclosure Schedule lists
as of the date of this Agreement the number of employees of the Company or any
Company Subsidiary who are absent from active work because of disability or
other leave in excess of four Business Days, the nature of such leave (e.g.,
short-term or long-term disability), and the number of such employees who have
been absent for more than thirty (30) days.
(h) None of the execution and delivery of this Agreement, the
consummation of the Merger or any other transaction contemplated hereby or any
termination of employment or service in connection therewith or subsequent
thereto will (i) result in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any Person
other than accrued payments, (ii) materially increase or otherwise enhance any
benefits otherwise payable by the Company or any Company Subsidiary, (iii)
result in the acceleration of the time of payment or vesting of any such
benefits, except as required under Section 411(d)(3) of the Code, (iv) increase
the amount of compensation due to any Person, or (v) result in the forgiveness
in whole or in part of any outstanding loans made by the Company or any Company
Subsidiary to any Person.
(i) To the knowledge of the Company, (i) Section 4.10(i) of
the Company Disclosure Schedule lists each Company Benefit Plan that grants any
compensation, equity award or bonus that could be deemed deferred compensation
within the meaning of Section 409A of the Code, and (ii) such Company Benefit
Plan is in compliance with Section 409A of the Code.
(j) (i) Each of the Company and each Company Subsidiary is in
compliance in all material respects with all currently applicable Laws
respecting employment, discrimination in employment, terms and conditions of
employment, worker classification (including the proper classification of
workers as independent contractors and consultants), wages, hours and
occupational safety and health and employment practices, including the
Immigration Reform and Control Act, (ii) the Company and each Company Subsidiary
has paid in full to all employees, independent contractors and consultants all
wages, salaries, commissions, bonuses, benefits, and other compensation due to
or on behalf of such employees, independent contractors or consultants in
accordance with applicable Law, (iii) neither the Company nor any Company
Subsidiary is liable for any payment to any trust or other fund or to any
Governmental Entity, with respect to unemployment compensation benefits, social
security or
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other benefits or obligations for employees (other than routine payments to be
made in the normal course of business and consistent with past practice), and
(iv) there are no material controversies pending or, to the knowledge of the
Company, threatened, between the Company or any Company Subsidiary and any of
their respective employees, which controversies have or could reasonably be
expected to result in an action, suit, proceeding, claim, arbitration or
investigation before any Governmental Entity.
(k) To the knowledge of the Company, neither Company nor any
of the Company Subsidiaries has any obligation to pay any amount or provide any
benefit to any former employee or officer, other than obligations (i) for which
Company has established a reserve for such amount on the Company Balance Sheet
in accordance with GAAP and (ii) pursuant to Contracts entered into after the
Company Balance Sheet Date and disclosed on Section 4.10(k) of the Company
Disclosure Schedule. Neither the Company nor any Company Subsidiary is a party
to or bound by any collective bargaining agreement or other labor union
Contract, no collective bargaining agreement is being negotiated by the Company
or any Company Subsidiary and neither the Company nor any Company Subsidiary has
any duty to bargain with any labor organization. There is no pending demand for
recognition or, to the knowledge of the Company, any other request or demand
from a labor organization for representative status with respect to any Person
employed by the Company or any Company Subsidiary. The Company has no knowledge
of any activities or proceedings of any labor union to organize their respective
employees. There is no labor dispute, strike or group work stoppage against the
Company or any Company Subsidiary pending or, to the knowledge of the Company,
threatened that may materially interfere with the respective business activities
of the Company or any Company Subsidiary. Neither the Company nor any Company
Subsidiary, nor to the knowledge of the Company, any of their respective
representatives or employees has been found in the past two (2) years to have
committed an unfair labor practice in connection with the operation of the
respective businesses of the Company or any Company Subsidiary, and there is no
charge or complaint against the Company or any Company Subsidiary by the
National Labor Relations Board or any comparable Governmental Entity pending or,
to the knowledge of the Company, threatened.
(l) To the knowledge of the Company, no employee of the
Company or any Company Subsidiary is in violation of any term of any employment
agreement, patent disclosure agreement, non-competition agreement, or any
restrictive covenant to a former employer relating to the right of any such
employee to be employed by the Company or any Company Subsidiary because of the
nature of the business conducted or presently proposed to be conducted by the
Company or any Company Subsidiary or to the use of trade secrets or proprietary
information of others. No officer or director of the Company or any Company
Subsidiary has given notice of termination or resignation to the Company or any
Company Subsidiary, nor does the Company otherwise have knowledge that any such
officer or director intends to terminate his or her employment with the Company
or any Company Subsidiary. The employment of each of the U.S. employees of the
Company or any Company Subsidiary is on an "at will" basis, and the Company and
each Company Subsidiary does not have any obligation to provide any particular
form or period of notice prior to terminating the employment of any such U.S.
employees, except as may be required by applicable Law.
(m) Each of the Company and each Company Subsidiary has Made
Available to Parent true, correct and complete copies of each of the following
currently in force and effect as of the date of this Agreement: (i) all forms of
employment agreements and severance agreements and (ii) basic forms of
confidentiality, non-competition and/or invention agreements by and between
current and former employees and consultants that the Company has had in place
since January 1, 2004, (iii) all agreements and/or insurance policies providing
for the indemnification of any officers or directors (other than entity
formation or organizational documents described in Section 4.2 hereof), (iv) a
summary or copy of the Company's standard severance policy, (v) a summary of
material outstanding liability for termination
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payments and benefits to current and former directors, officers, employees and
consultants, and (vi) other material bonus plans.
(n) The Company and each Company Subsidiary is in compliance
in all material respects with the Worker Adjustment Retraining Notification Act
of 1988, as amended ("WARN Act"), and all similar state or local Laws. In the
past two (2) years (i) the Company has not effectuated a "plant closing" (as
defined in the WARN Act) affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of its
business, (ii) there has not occurred a "mass layoff" (as defined in the WARN
Act) affecting any site of employment or facility of the Company or any Company
Subsidiary, and (iii) the Company has not engaged in activity that may trigger
application of the WARN Act or any similar state, local or foreign law or
regulation. The Company has not caused any of its employees to suffer an
"employment loss" (as defined in the WARN Act) during the 90-day period prior to
the date of this Agreement.
(o) Neither the Company nor any Company Subsidiary (nor any
officer of the Company or any Subsidiary) is a party to any agreement, Contract,
or arrangement that, individually or collectively, either alone or together with
any other event (including the execution of and consummation of the transactions
contemplated by this Agreement), could give rise to the payment of any amount
(whether in cash or property, including shares of capital stock) that would not
be deductible pursuant to the terms of Section 280G or 162(m) of the Code.
(p) Section 4.10(p) of the Company Disclosure Schedule sets
forth the name, title, and reporting relationship for each of the Company's
officers.
4.11 Contracts; Customers and Suppliers.
(a) Section 4.11(a) of the Company Disclosure Schedule lists
each of the Material Contracts that are in effect or otherwise binding on the
Company or any Company Subsidiary or their respective properties or assets. The
term "Material Contract" shall include each of the following: (i) any credit
agreement, note, bond, guarantee, mortgage, indenture, lease, or other
instrument or obligation pursuant to which any Indebtedness of the Company or
any Company Subsidiary is outstanding or may be incurred, in each case, other
than (x) equipment leases entered into in the ordinary course of business, (y)
capital or operating leases that require annual payments not in excess of
$500,000, individually, and (z) guarantees of Company Subsidiary obligations (in
the case of each of clauses (x) - (z), with respect to Contracts that would not
otherwise be Material Contracts); (ii) any agreement, Contract or binding
commitment which was or was required to be filed as an exhibit to the Company
SEC Reports; (iii) any Government Contract with the United States government in
excess of $500,000 annually; and (iv) any (A) collective bargaining agreement;
(B) employment agreement, Contract or binding commitment providing for annual
compensation or payments in excess of $250,000 in the current or any future
year; (C) agreement, Contract or commitment of indemnification or guaranty not
entered into in the ordinary course of business providing for indemnification
which would reasonably be expected to exceed $100,000, as well as any agreement,
Contract or commitment of indemnification or guaranty between the Company or any
Company Subsidiary and any of their respective officers or directors,
irrespective of the amount (other than pursuant to the organizational documents
of the Company or any Company Subsidiary); (D) agreement, Contract or binding
commitment containing any covenant directly or indirectly limiting the freedom
of the Company or any of Company Subsidiary to engage in any line of business,
compete with any Person, or sell any product or service (other than Contracts
containing (i) geographic limitations or (ii) limitations related to sales to
the aftermarket, which limitations have been entered into in the ordinary course
of business and, in the case of each (i) and (ii) that would not otherwise be
Material Contracts); (E) agreement, Contract or binding commitment that shall
result in the payment by, or the creation of any commitment or obligation
(absolute or contingent) to pay on behalf of
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the Company or any Company Subsidiary any severance, termination, "golden
parachute," or other similar payments to any employee following termination of
employment or otherwise as a result of the consummation of the transactions
contemplated by this Agreement; (F) agreement, Contract or binding commitment by
the Company or any of its Subsidiaries entered into since January 1, 2004 or
that has material obligations that are to be performed subsequent to date
hereof, relating to the disposition or acquisition of material assets not in the
ordinary course of business or any ownership interest in any Subsidiary or other
Person; (G) material agreement, Contract or binding commitment regarding the
development, ownership or use of Intellectual Property (including material
licenses to or from third parties, but other than commercial off-the-shelf
software, as the term is commonly understood); (H) original equipment
manufacturer distribution agreement, material partnership, joint venture or
similar agreement or arrangement; in excess of (i) $10,000,000 in annual revenue
or (ii) Contracts that relate to the purchase by the Company or any Company
Subsidiary of distribution rights with payments of $5,000,000 or more; (I)
Contract or agreement involving a standstill or similar obligation of the
Company or any of its Subsidiaries to a third party; (J) lease for real property
which involves consideration or other obligation in excess of $400,000 annually;
or (K) (x) any other agreement, Contract or binding commitment which is material
to the operation of the Company's and the Company Subsidiaries' business, taken
as a whole, or (y) which is entered into outside the ordinary course of business
and which involves consideration or other obligation in excess of $100,000
annually and, in the case of clauses (x) and (y), which has not been described
in the foregoing clauses (A) through (J) above.
(b) There are no material defaults or breaches under any
Material Contract by the Company or any Company Subsidiary, or to the knowledge
of the Company, any other party thereto. All Material Contracts are in written
form. The Company has Made Available to Parent true, correct and complete copies
of each Material Contract. Each Material Contract is (i) valid and binding on
the Company and each Company Subsidiary party thereto and, to the Company's
knowledge, each other party thereto, (ii) in full force and effect, and (iii)
immediately following consummation of the transactions contemplated by this
Agreement, shall remain in full force and effect, except, in each case, as would
not be material to the Company and the Company Subsidiaries, taken as a whole.
The Company and each Company Subsidiary has in all material respects performed
all obligations required to be performed by it to the date hereof under each
Material Contract and, to the Company's knowledge, each other party to each
Material Contract has in all material respects performed all obligations
required to be performed by it under such Material Contract. As of the date
hereof, none of the Company or any Company Subsidiary has knowledge of, or has
received notice of, any actual or alleged violation or default under (or any
condition that with the passage of time or the giving of notice or both would
cause such a violation of or default under) any Material Contract. There exists
no default or event of default or event, occurrence, condition or act with
respect to the Company or any Company Subsidiary or to the knowledge of the
Company, with respect to any other contracting party, which, with the giving of
notice, the lapse of time or the happening of any other event or conditions
would reasonably be expected to (A) become a material default or event of
default under any Material Contract or (B) give any third party (a) the right to
declare a default or exercise any remedy under any Material Contract, (b) the
right to a rebate, chargeback, refund, credit, penalty or change in delivery
schedule under any Material Contract, (c) the right to accelerate the maturity
or performance of any obligation of the Company or any Company Subsidiary under
any Material Contract, or (d) the right to cancel, terminate or modify any
Material Contract, except, in each case, as would not be material to the Company
and the Company Subsidiaries, taken as a whole.
(c) With respect to each Contract, agreement, bid or proposal
between the Company or any Company Subsidiary and any (i) Governmental Entity,
including any facilities Contract for the use of government-owned facilities or
(ii) third party relating to a Contract between such third party and any
Governmental Entity (each a "Government Contract"), (A) the Company and each
Company Subsidiary have complied in all material respects with all requirements
of all applicable Laws, or agreements pertaining to such Government Contract,
including where applicable the "Cost Accounting Standards"
-31-
disclosure statement of the Company or such Company Subsidiary; (B) all
representations and certifications executed, acknowledged or set forth in or
pertaining to such Government Contract were complete and correct as of their
effective dates and the Company and each Company Subsidiary have complied with
all such representations and certifications; (C) neither the United States
government nor any prime contractor, subcontractor or other Person has notified
the Company or any Company Subsidiary, in writing or orally, that the Company or
any of its Subsidiaries has breached or violated any Laws, certification,
representation, clause, provision or requirement pertaining to such Government
Contract; (D) neither the Company nor any Company Subsidiary has received any
notice of termination for convenience, notice of termination for default, cure
notice or show cause notice pertaining to such Government Contract; (E) other
than in the ordinary course of business, no cost incurred by the Company or any
Company Subsidiary pertaining to such Government Contract has been questioned or
challenged, is the subject of any audit or investigation or has been disallowed
by any Governmental Entity; and (F) no payments due to the Company or any
Company Subsidiary pertaining to such Government Contract have been withheld or
set off, nor has any claim been made to withhold or set off money, and the
Company and its Subsidiaries are entitled to all progress or other payments
received with respect thereto, except, in the case of (A) through (F) above, as
would not be material to the Company and the Company Subsidiaries, taken as a
whole.
(d) Neither the Company nor any Company Subsidiary or to their
knowledge, any of their respective directors, officers, employees or authorized
agents is or since January 1, 2004 has been under (i) any civil or criminal
investigation or indictment by any Governmental Entity or under investigation by
the Company or any Company Subsidiaries or (ii) administrative investigation or
audit by any Governmental Entity in either case with respect to any alleged
improper act or omission arising under or relating to any Government Contract.
(e) There exist (i) no outstanding material claims against the
Company or any Company Subsidiary, either by any Governmental Entity or by any
prime contractor, subcontractor, vendor or other Person, arising under or
relating to any Government Contract, and (ii) no material disputes between the
Company or any of Company Subsidiary and the United States government under the
Contract Disputes Act, as amended, or any other federal statute, or between the
Company or any Company Subsidiary and any prime contractor, subcontractor or
vendor arising under or relating to any Government Contract. Neither the Company
nor any Company Subsidiary has any interest in any material pending claim
against any prime contractor, subcontractor, vendor or other Person arising
under or relating to any Government Contract.
(f) Since January 1, 2004, neither the Company nor any Company
Subsidiary has been debarred or suspended from participation in the award of
Contracts with the United States government or any other Governmental Entity. To
the Company's knowledge, there exist no facts or circumstances that would
warrant the institution of suspension or debarment proceedings or the finding of
nonresponsibility or ineligibility on the part of the Company, any Company
Subsidiary or any of their respective directors, officers or employees.
(g) Since January 1, 2004 (i) no supplier or customer of the
Company or any Company Subsidiary has cancelled or otherwise terminated its
relationship with the Company or any Company Subsidiary, except for such
cancellations and terminations that, would not have a Material Adverse Effect,
(ii) no supplier or customer of the Company or any Company Subsidiary has
provided written notice to the Company or any Company Subsidiary of its intent
either to terminate its relationship with the Company or any Company Subsidiary
or to cancel any material agreement with the Company or any Company Subsidiary,
except for such terminations and cancellations that, individually or in the
aggregate, would not have a Material Adverse Effect, (iii) none of the suppliers
of the Company or any Company Subsidiary is unable to continue to supply the
products or services supplied to the Company or
-32-
any Company Subsidiary by such supplier, except for such inabilities that,
individually or in the aggregate, would not have a Material Adverse Effect, and
(iv) except as set forth in Section 4.11(g) of the Company Disclosure Schedule,
the Company and each Company Subsidiary have no direct or indirect ownership
interest in any supplier or customer of the Company or any Company Subsidiary
that is material to the Company and the Company Subsidiaries taken as a whole.
(h) Neither the Company nor any Company Subsidiary provides
any Company warranty for products sold or services rendered by the Company and
the Company Subsidiaries since January 1, 2001. With respect to the Company's
and the Company Subsidiaries' businesses or assets, (i) to the Company's
knowledge, there are no outstanding Federal Aviation Administration or other non
U.S. civil or military aviation administration mandated retro-fit campaigns for
warrantable conditions applicable to any products manufactured, sold, leased or
delivered by the Company or any Company Subsidiary other than retro-fit
campaigns that have already been put into effect and are not material to the
Company and the Company Subsidiaries, taken as a whole, and (ii) to the
Company's knowledge, there is no systemic design, manufacturing or other defect
in any model or type of product or product specification of the Company or the
Company Subsidiaries in connection with any product manufactured, sold, leased,
or delivered by the Company or the Company Subsidiaries, in each case, other
than defects for which a recall has been put into effect and is not material to
the Company and the Company Subsidiaries, taken as a whole.
(i) No facility or personnel security clearances of any
Governmental Entity are necessary or required to conduct the Company's and the
Company Subsidiaries' businesses as currently conducted by the Company and the
Company Subsidiaries. None of the Company or any Company Subsidiary possess,
hold or are subject to any facility or personnel security clearances of any
Governmental Entity.
4.12 Litigation. Except as set forth in the Company SEC Reports filed
prior to the date of this Agreement, (i) there is no suit, claim, ethics
complaint, action, proceeding or investigation pending or, to the knowledge of
the Company, threatened against the Company or any Company Subsidiary or, to the
knowledge of the Company, for which the Company or any Company Subsidiary is
obligated to indemnify a third party, (ii) none of the Company or any Company
Subsidiary is subject to any outstanding order, writ, judgment, injunction,
decree, or arbitration ruling or award, and (iii) there has been no refusal to
indemnify or denial of indemnification and no intention to refuse
indemnification, by any third party in connection with any past, pending or
threatened suit, claim, action, proceeding, investigation, order, ruling or
award with respect to which the Company or any Company Subsidiary is or may be
entitled to indemnification from any third party, except, in each case, as would
not be material to the Company and the Company Subsidiaries, taken as a whole.
Neither the Company nor any Company or Subsidiary has any material action, suit,
proceeding, claim, mediation or arbitration pending against any other Person.
There has not been since December 31, 2001, nor are there currently, any
internal investigations or inquiries being conducted by the Company, the Company
Board (or any committee thereof) or any third party at the request of any of the
foregoing concerning any financial, accounting, Tax, conflict of interest,
illegal activity, fraudulent or deceptive conduct, violation of Company policy
or other misfeasance or malfeasance issues.
4.13 Environmental Matters.
(a) The Company and each Company Subsidiary are in material
compliance with all Environmental Laws.
(b) There are no Environmental Claims against the Company, any
Company Subsidiary or, to the knowledge of the Company, any entity for which the
Company has financial
-33-
responsibility, nor to the knowledge of the Company have any of them received
any written or oral notification of any allegation of any actual or potential
responsibility for, or any inquiry or investigation regarding, (i) any alleged
violation of Environmental Laws or (ii) any Release or threatened Release of any
Hazardous Substance generated or transported by the Company, any Company
Subsidiary or any entity for which the Company has financial responsibility,
except, in each case, as would not have a Material Adverse Effect.
(c) There have been no Releases from the Company's operations
at the Facilities currently owned or leased by Company or any Company Subsidiary
of Hazardous Substances or with respect to Facilities formerly owned or leased
by Company or any Company Subsidiary, during the Company's or Company
Subsidiary's term of ownership or lease in quantities that could trigger the
need for investigation and/or remediation pursuant to Environmental Laws, except
as would not, individually or in the aggregate, have a Material Adverse Effect.
(d) There are no consent decrees, consent orders, judgments or
judicial or administrative orders currently in force and effect under
Environmental Law entered into by any Governmental Entity and the Company or any
Company Subsidiary or to the knowledge of the Company any entity for which the
Company has or may have financial responsibility, or judgments, judicial order
or administrative orders under Environmental Law issued by any Governmental
Entity against the Company, any Company Subsidiaries or to the knowledge of the
Company any entity for which the Company has or may have financial
responsibility.
(e) Parent has been provided with reasonable access to true
and correct copies of all Environmental Reports.
4.14 Intellectual Property.
(a) The Company and the Company Subsidiaries (i) own and have
independently developed or acquired or (ii) have the valid right or license to
all Company IP Rights. The Company IP Rights are sufficient for the conduct of
the business of the Company and the Company Subsidiaries as currently conducted
by the Company or any Company Subsidiary. Immediately following the Closing,
except as would not have a Material Adverse Effect, the Company IP Rights will
continue in full force and effect and shall be transferable, alienable or
licensable by the Company to the same extent as immediately prior to the Closing
without any additional notices or payments of any kind to any third party. The
Company-Owned IP Rights and, to the Company's knowledge, the other Company IP
Rights, are not subject to any material Encumbrances or restrictions or
limitations regarding ownership, use, license or disclosure (including any
"rights in data" claims of the United States Government), other than pursuant to
a written agreement set forth in Section 4.14(a) of the Company Disclosure
Schedule, or that, individually or in the aggregate, would not have a Material
Adverse Effect.
(b) Neither the Company nor any of the Company Subsidiaries
has transferred ownership of any Intellectual Property that consists of
Company-Owned IP Rights to any third party.
(c) The Company and the Company Subsidiaries own and have good
and exclusive title to each item of Company Registered Intellectual Property and
each material item of Company-Owned IP Rights free and clear of any
Encumbrances. The right, license and interest of the Company or a Company
Subsidiary of the Company in and to all Third Party Intellectual Property Rights
licensed by the Company or a Company Subsidiary from a third party are free and
clear of all Encumbrances (excluding restrictions contained in the applicable
license agreements with such third parties).
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(d) Neither the execution and delivery or effectiveness of
this Agreement nor the performance of the Company's obligations under this
Agreement will cause the forfeiture or termination of, or give rise to a right
of forfeiture or termination of, any material Company-Owned IP Right, or impair
the right of the Company, any Company Subsidiary or Parent to use, possess, sell
or license any material Company-Owned IP Right or any portion thereof.
(e) Section 4.14(e) of the Company Disclosure Schedule lists
all Company Registered Intellectual Property including the jurisdictions in
which each such item of Intellectual Property has been issued or registered or
in which any application for such issuance and registration has been filed, or
any other filing or recordation of Company Registered Intellectual Property has
been made.
(f) Each item of Company Registered Intellectual Property is
subsisting (or in the case of applications, applied for), all registration,
maintenance and renewal fees currently due in connection with such Company
Registered Intellectual Property have been paid and all documents, recordations
and certificates in connection with such Company Registered Intellectual
Property currently required to be filed have been submitted to the relevant
patent, copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of prosecuting,
maintaining and perfecting such Company Registered Intellectual Property and
recording the Company's and the Company Subsidiaries' ownership interests
therein.
(g) Section 4.14(g) of the Company Disclosure Schedule lists,
respectively by subsection number, (i) other than non-disclosure agreements
entered into by the Company or any Company Subsidiary in the ordinary course of
business ("Standard NDAs") and end user customer Contracts on the Company or a
Company Subsidiary's standard form, all material Contracts as to which the
Company or any Company Subsidiary is a party and pursuant to which any Person is
authorized to use, make, offer for sale, sell, license or distribute any Company
IP Rights, (ii) other than "shrink wrap" and similar generally available
commercial end-user licenses to software that is not redistributed with the
Company products that have an individual acquisition cost of $250,000 or less
(or multi-seat licenses that have an aggregate acquisition cost of $250,000 or
less) and Standard NDAs, all material Contracts to which the Company or any
Company Subsidiary is a party and pursuant to which the Company or any Company
Subsidiary acquired or is authorized to use or distribute any Third Party
Intellectual Property Rights, including without limitation any material inbound
licenses to Third Party Intellectual Property Rights included in any Company
product, (iii) all material Contracts to which the Company or any Company
Subsidiary is a party and pursuant to which any third party agrees to develop
for or on behalf of the Company or any Company Subsidiary any part of any
Company products, (iv) all Contracts (other than any Contract listed in the
Company Disclosure Schedule in response to clause (i) above) pursuant to which
the Company or any of the Company Subsidiaries has agreed to any material
restriction on the right of the Company or any of the Company Subsidiaries to
use or enforce any Company-Owned IP Rights, including all material Contracts
granting any third party exclusive rights in Company-Owned IP Rights; and (v)
all Contracts pursuant to which the Company or any Company Subsidiary has
granted to a university, college, or other educational institution or research
center any material rights in any Company-Owned IP Rights in exchange for
resources provided by such institution or research center.
(h) Except as would not have a Material Adverse Effect,
neither the Company nor any Company Subsidiary is or shall be as a result of the
execution and delivery or effectiveness of this Agreement or the performance of
the Company's obligations under this Agreement in breach of any Contract
described in Section 4.14(g), above, (the "Company IP Rights Agreements"), and
the consummation of the transactions contemplated by this Agreement will not
result in the modification, cancellation, termination, suspension of or
acceleration of any payments with respect to any Company IP Rights Agreements,
or give any non-Company party to any Company IP Rights Agreement the right to do
any of the foregoing. Except as would not have a Material Adverse Effect,
following the Closing, the
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Surviving Corporation (as wholly owned by Parent) will be entitled to exercise
all of the Company's and the Company Subsidiaries' rights under the Company IP
Rights Agreements to the same extent the Company and the Company Subsidiaries
would have been able to had the transactions contemplated by this Agreement not
occurred and without the payment of any additional amounts or consideration
other than ongoing fees, royalties or payments that the Company or any of the
Company Subsidiaries would otherwise be required to pay.
(i) There are no material royalties, honoraria, fees or other
payments payable by the Company or any of the Company Subsidiaries to any Person
(other than compensation payable to employees, consultants and independent
contractors not contingent on or related to use of their work product) as a
result of the ownership, use, possession, license-in, license-out, sale,
marketing, advertising or disposition of any Company-Owned IP Rights by the
Company or any of the Company Subsidiaries.
(j) To the knowledge of the Company, there is no unauthorized
use, unauthorized disclosure, infringement or misappropriation of any
Company-Owned IP Rights by any third party, including any employee or former
employee of the Company or any Company Subsidiary. Neither the Company nor any
Company Subsidiary has within the past four (4) years brought any action, suit
or proceeding for infringement or misappropriation of any Intellectual Property
or breach of any Company IP Rights Agreement.
(k) Neither the Company nor any Company Subsidiary has within
the past four (4) years been sued in any suit, action or proceeding (or received
any written notice or, to the knowledge of the Company, threat of suit, action
or proceeding) that involves a claim of infringement or misappropriation of any
Intellectual Property right of any third party or which contests the validity,
ownership or right of the Company or any Company Subsidiary to exercise any
Intellectual Property right or received any oral or written communication
offering to license or grant any other rights or immunities in a manner that
communicates or otherwise suggests or implies that the Company or any Company
Subsidiary is infringing or otherwise violating any Third Party Intellectual
Property Right.
(l) The operation of the business of the Company and the
Company Subsidiaries as such business is currently conducted, and to the
Company's knowledge, as currently proposed to be conducted by the Company or any
Company Subsidiary, including without limitation the design, development,
manufacturing, reproduction, marketing, licensing, sale, offer for sale,
importation, distribution, provision and/or use of any Company product or
provision of any Company service, has not, does not and will not infringe or
misappropriate the Intellectual Property of any third party and does not and
will not constitute unfair competition or unfair trade practices under the Laws
of any jurisdiction and to the Company's knowledge, there is no substantial
basis for such a claim.
(m) None of the Company-Owned IP Rights, the Company or any of
the Company Subsidiaries is subject to any judicial or governmental proceeding
or outstanding order, or material Contract or stipulation, (A) restricting in
any manner the use, transfer, or licensing by the Company or any of the Company
Subsidiaries of any Company-Owned IP Right or which may affect the validity, use
or enforceability of any such Company-Owned IP Right, or (B) restricting the
conduct of the business of the Company or any of the Company Subsidiaries in
order to accommodate Third Party Intellectual Property rights, in both cases
other than in connection with prosecution of Company-Owned IP Rights before the
United States Patent and Trademark Office, the United States Copyright Office,
or any equivalent Governmental Entity.
(n) Neither the Company nor any Company Subsidiary has
received any opinion of legal counsel that the operation of the business of the
Company or any Company Subsidiary, as
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previously or currently conducted, or as currently proposed to be conducted by
the Company or any Company Subsidiary, infringes or misappropriates any Third
Party Intellectual Property Rights.
(o) The Company and the Company Subsidiaries take commercially
reasonable steps to secure from all of its consultants, employees and
independent contractors who independently or jointly contributed to the
conception, reduction to practice, creation or development of any Company-Owned
IP Rights, proprietary information and invention disclosure and assignment
agreements and exclusive ownership of, all such third party's Intellectual
Property in such contribution that the Company or any Company Subsidiary does
not already own by operation of Law or as a work for hire and such third party
has not retained any material rights or licenses with respect thereto.
(p) No current or former employee, consultant or independent
contractor of the Company or any Company Subsidiary has any material right,
license, claim or interest whatsoever in or with respect to any Company-Owned IP
Rights.
(q) To the knowledge of the Company, no current or former
employee, consultant or independent contractor of the Company or any Company
Subsidiary (i) is in violation of any term or covenant of any Contract relating
to employment, invention disclosure, invention assignment, non-disclosure or
non-competition or any other Contract with any other party by virtue of such
employee's, consultant's or independent contractor's being employed by, or
performing services for, the Company or any Company Subsidiary or using trade
secrets or proprietary information of others without permission or (ii) has
developed any technology, software or other copyrightable, patentable or
otherwise proprietary work for the Company or any Company Subsidiary that is
subject to any agreement under which such employee, consultant or independent
contractor has assigned or otherwise granted to any third party any material
rights (including Intellectual Property rights) in or to such technology,
software or other copyrightable, patentable or otherwise proprietary work.
(r) To the knowledge of the Company, the employment of any
employee of the Company or any Company Subsidiary or the use by the Company or
any Company Subsidiary of the services of any consultant or independent
contractor does not subject the Company or any Company Subsidiary to any
liability to any third party for improperly soliciting such employee, consultant
or independent Contractor to work for the Company or any Company Subsidiary,
whether such liability is based on contractual or other legal obligations to
such third party.
(s) The Company and the Company Subsidiaries have taken
commercially reasonable steps to protect and preserve the confidentiality of all
confidential or non-public information or similar proprietary information
included in the Company IP Rights ("Confidential Information"), including
without limitation, taking commercially reasonable steps to ensure that all use,
disclosure or appropriation of Confidential Information owned by the Company or
any Company Subsidiary by or to a third party has been pursuant to the terms of
a written agreement or other legal binding arrangement between the Company or a
Company Subsidiary and such third party. The Company and the Company
Subsidiaries takes commercially reasonable steps to ensure that all use,
disclosure or appropriation of Confidential Information by the Company and the
Company Subsidiaries not owned by the Company or any Company Subsidiary has been
pursuant to the terms of a written agreement between the Company or such Company
Subsidiary and the owner of such Confidential Information, or is otherwise
lawful. Without limiting the foregoing, the Company and each of the Company
Subsidiaries have and enforce a policy requiring all employees and consultants
of the Company and the Company Subsidiaries having access to Confidential
Information of any of their respective customers or business partners to execute
and deliver to the Company an agreement regarding the protection of such
Confidential Information (in the case of proprietary information of the
Company's and the Company Subsidiaries' customers and business partners, to the
extent required by such customers and business partners).
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(t) To the knowledge of the Company and any Company
Subsidiary, all software products sold, licensed, leased or delivered by the
Company or any Company Subsidiary to customers of the Company or any Company
Subsidiary within twenty (20) months prior to the Closing Date conform in all
material respects (i) to applicable contractual commitments, and express and
implied warranties (to the extent not subject to legally effective express
exclusions thereof); (ii) to all packaging, advertising and marketing materials
to the extent required by law; (iii) to any legally binding representations
provided to customers; and (iv) applicable product or service specifications or
documentation. To the knowledge of the Company and any Company Subsidiary, there
is no legitimate basis for any present or future action, suit, proceeding,
hearing, claim, or demand based on the foregoing against the Company or any
Company Subsidiary giving rise to any material liability relating to the
foregoing products for replacement or repair thereof or other damages in
connection therewith in excess of any reserves therefor reflected on the Company
Balance Sheet.
(u) Neither the Company nor any Company Subsidiary has (i)
incorporated Open Source Materials into, or combined Open Source Materials with
the Company-Owned IP Rights, (ii) distributed Open Source Materials in
conjunction with any Company-Owned IP Rights, or (iii) used Open Source
Materials, in such a way that, with respect to (i), (ii) or (iii), creates, or
purports to create, obligations for the Company or such Company Subsidiary with
respect to any Company-Owned IP Rights or grant, or purport to grant, to any
third party any rights or immunities under any Company-Owned IP Rights
(including, but not limited to, using any Open Source Materials that require, as
a condition of use, modification and/or distribution of such Open Source
Materials that other software incorporated into, derived from or distributed
with such Open Source Materials be (A) disclosed or distributed in source code
form, (B) be licensed for the purpose of making derivative works, or (C) be
redistributable at no charge).
(v) No government funding was used in the development of the
Company-Owned IP Rights.
(w) (i) Neither the Company nor any Company Subsidiary nor any
other Person then acting on their behalf has disclosed, delivered or licensed to
any Person other than an employee or consultant under an obligation to keep
confidential and not use for any purpose other than carrying out duties or
obligations to the Company or any Company Subsidiary, agreed to disclose,
deliver or license to any Person of any material Company Source Code, and (ii)
no event has occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time, or both) will, or would reasonably be expected
to, result in the disclosure, delivery or license by the Company or any Company
Subsidiary or any Person then acting on their behalf to any Person of any
material Company Source Code other than a Person carrying out duties or
obligations to the Company or any Company Subsidiary. Section 4.14(w) of the
Company Disclosure Schedule identifies each Contract pursuant to which the
Company or any Company Subsidiary has deposited, or is or may be required to
deposit, with an escrow holder or any other Person, any of the Company Source
Code, and describes whether the execution of this Agreement or any of the
transactions contemplated by this Agreement, in and of itself, would reasonably
be expected to result in the release from escrow of any Company Source Code.
(x) To the Company's knowledge, except as would not have a
Material Adverse Effect, no Governmental Entity is currently, nor since January
1, 2004 has been, entitled to claim any rights (including license rights) in:
(i) any "Technical Data" included in or related to any Company-Owned IP Rights
or any of its Subsidiaries, other than "Limited Rights;" (ii) any "Computer
Software" included in the Intellectual Property owned by the Company or any of
its Subsidiaries, other than "Restricted Rights;" (iii) any patents or
patentable invention included in the Intellectual Property owned by the Company;
or (iv) any copyright included in the Intellectual Property owned by the Company
or any of its Subsidiaries. The terms "Technical Data" and "Limited Rights" have
the meanings set forth at
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48 C.F.R. 252.227-7013, and the terms "Restricted Rights" and "Computer
Software" have the meanings set forth at 48 C.F.R. 252.227-7014.
4.15 Taxes.
(a) The Company and the Company Subsidiaries have timely filed
all material federal, state, local, and foreign Tax Returns required to be filed
by it in the manner prescribed by applicable Laws and all such Tax Returns were
true, complete and correct in all material respects. All Taxes (other than Taxes
that are not material in amount) of the Company and the Company Subsidiaries
(whether or not shown or required to be shown on any Tax Return) that are due
and payable have been timely paid in full and the accruals and reserves for
Taxes (rather than any reserve for deferred Taxes established to reflect timing
difference between book and Tax income) reflected in the Company Balance Sheet
(rather than any notes thereto) are adequate to cover all unpaid Taxes (other
than Taxes that are not material in amount) of the Company and the Company
Subsidiaries. All reserves for Taxes as adjusted for operations and transactions
and the passage of time through the Effective Time in accordance with past
custom and practice of the Company and the Company Subsidiaries are adequate to
cover all unpaid Taxes of the Company and the Company Subsidiaries accruing
through the Effective Time (other than Taxes that are not material in amount).
(b) The Company and the Company Subsidiaries have withheld and
paid over all Taxes (other than Taxes that are not material in amount) required
to have been withheld and paid over and complied in all material respects with
all information reporting and backup withholding requirements, including the
maintenance of required records with respect thereto, in connection with amounts
paid or owing to any employee, creditor, independent contractor or other third
party.
(c) No audit of the Tax Returns or other examination of the
Company or any Company Subsidiary is pending or, to the knowledge of Company,
threatened. No deficiencies have been asserted in writing against the Company or
any Company Subsidiary as a result of examinations by any state, local, federal
or foreign Taxing authority which have not been fully resolved and paid and, to
the knowledge of the Company, no issue has been raised by any examination
conducted by any state, local, federal or foreign Taxing authority that, by
application of the same principles, could reasonably be expected to result in a
proposed deficiency for any other period not so examined. Each deficiency
resulting from any audit or examination relating to Taxes of the Company or any
Company Subsidiary by any Taxing authority has been paid or is being contested
in good faith and in accordance with the Law and is fully reserved for on the
Company Balance Sheet in accordance with GAAP. To the knowledge of the Company,
no claim has ever been made in writing by an authority in a jurisdiction where
the Company or any of the Company Subsidiaries does not file Tax Returns that
the Company or any Company Subsidiary, as the case may be, is or may be subject
to Tax in that jurisdiction. Neither the Company nor any Company Subsidiary is
subject to any private letter ruling of the IRS or comparable rulings of other
Tax authorities that will be binding on the Company or any Company Subsidiary
with respect to any period following the Closing Date. Neither the stock of any
Company Subsidiary nor any asset, right or property of the Company or any
Company Subsidiary is subject to any Encumbrance for Taxes (other than an
Encumbrance for Taxes not yet due and payable). Neither the Company nor any of
the Company Subsidiaries has granted any power of attorney that is currently in
force with respect to any Taxes or Tax Returns.
(d) Neither the Company nor any Company Subsidiary has
requested any extension of time within which to file any Tax Return which Tax
Return has not yet been filed. There are no agreements, waivers of statutes of
limitations, or other arrangements providing for extensions of time in respect
of the assessment or collection of any unpaid Taxes against the Company or any
Company Subsidiary.
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(e) To the knowledge of the Company, (i) the Company and each
Company Subsidiary have disclosed on their federal income Tax returns all
positions taken therein that could, if not so disclosed, be reasonably be
expected to give rise to a substantial understatement penalty within the meaning
of Section 6662 of the Code, and (ii) neither the Company nor any Company
Subsidiary has participated in a "listed transaction" within the meaning of
Treasury Regulation Section 1.6011-4(b) or Treasury Regulation Section
301.6111-2.
(f) Neither the Company nor any Company Subsidiary has been a
member of any affiliated, combined, consolidated or unitary group other than the
group of which the Company is the parent. Neither the Company nor any Company
Subsidiary is a party to any Tax sharing agreement, Tax indemnity obligation or
similar agreement, arrangement or practice with respect to Taxes (including any
advance pricing agreement, closing agreement or other agreement relating to
Taxes with any Taxing authority).
(g) Neither the Company nor any Company Subsidiary has agreed
to or is required to make any adjustment under Code Section 481(a) or Section
482 (or an analogous provision of state, local or foreign law) by reason of a
change in accounting method or otherwise. Neither the Company nor any Company
Subsidiary will be required to include in income, or exclude any item of
deduction from, Taxable income for any Taxable period (or portion thereof)
ending after the Closing Date as a result of any (i) "closing agreement" as
described in Code Section 7121 (or any corresponding or similar provision of
state, local or foreign income Tax law), (ii) open transaction or installment
disposition made on or prior to the Closing Date, or (ii) prepaid amount
received on or prior to the Closing Date.
(h) Neither the Company nor any Company Subsidiary is or has
been a United States real property holding corporation (as defined in Section
897(c)(2) of the Code).
(i) To the knowledge of the Company, other than as a result of
the Merger, neither the Company nor any Company Subsidiary is subject to any
limitation on the use of its Tax attributes under Section 382, 383, and 384 of
the Code or Treasury Regulation Section 1.1502-15 or -21 (regarding separate
return limitation years) or any comparable provisions of state law.
(j) Neither the Company nor any Company Subsidiary has
constituted a "distributing corporation" or a "controlled corporation" (within
the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
intended to qualify for tax-free treatment under Section 355 or 361 of the Code
(A) in the two years prior to the date of this Agreement (or will constitute
such a corporation in the two years prior to the Closing Date) or (B) in a
distribution that otherwise constitutes part of a "plan" or "series of related
transactions" (within the meaning of Section 355(e) of the Code) in conjunction
with the Merger.
4.16 Insurance. The Company has Made Available to Parent a true,
correct and complete list of policies and bonds of insurance maintained by the
Company and each Company Subsidiary, and the Company has Made Available to
Parent true, correct and complete copies of such policies and bonds of
insurance. There is no material claim pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds of insurance maintained by the Company or
any Company Subsidiary. All premiums due and payable under all such policies and
bonds have been paid, and the Company and each Company Subsidiary is otherwise
in compliance in all material respects with the terms of such policies and
bonds. Neither the Company nor any Company Subsidiary has been notified of any
threatened termination of, or material premium increase with respect to, any
such policies or bonds of insurance maintained by the Company or any Company
Subsidiary. All such policies and bonds that provide insurance against liability
to third parties were written on an occurrence basis. The Company maintains
insurance coverage in such amounts and
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covering such risks, and with such deductibles, as in the good faith judgment of
the Company are adequate with respect to the business in which the Company and
the Company Subsidiaries are engaged.
4.17 Opinion of Financial Advisor. The Company Board has received the
opinion of Credit Suisse Securities (USA) LLC (the "Company Financial Advisor")
addressed to the Company Board as of the date of this Agreement, to the effect
that the Merger Consideration to be received by the holders of Company Common
Shares, other than Parent and its Affiliates, in the Merger is fair from a
financial point of view to such holders, and the Company will deliver to Parent
a true, correct and complete copy of such opinion promptly following the
Company's receipt thereof.
4.18 Brokers. Except for fees payable to the Company Financial Advisor
as set forth in the engagement letter between the Company and the Company
Financial Advisor, dated March 25, 2006, (the "Engagement Letter"), a correct
and complete version of which has been Made Available by the Company to Parent,
neither the Company nor any Affiliate of the Company is obligated for the
payment of any fees or expenses of any investment banker, broker, advisor or
similar party in connection with the origin, negotiation or execution of this
Agreement or in connection with the Merger or any other transaction contemplated
by this Agreement, and neither Parent nor Merger Sub will incur or succeed to
any liability, either directly or indirectly, to any such investment banker,
broker, advisor or similar party as a result of this Agreement, the Merger or
any act or omission of the Company, any of its Affiliates or any of their
respective Representatives or stockholders. No such engagement letter obligates
the Company to continue to use the services of the Company Financial Advisor
following the Merger or pay the fees or expenses of the Company Financial
Advisor in connection with any transaction other than the Merger.
4.19 Properties.
(a) Neither the Company nor any of the Company Subsidiaries
owns any real property interests as of the date hereof. Section 4.19 of the
Company Disclosure Schedule lists all material real property leases to which the
Company or a Company Subsidiary is a party as of the date hereof and each
amendment thereto that is in effect as of the date hereof. The Lease Agreement
between Crow Family Holdings Industrial Texas Limited Partnership, as Landlord,
and Aviall Services, Inc., as Tenant, dated April 3, 2001, International
Commerce Park at DFW, Dallas/Fort Worth International Airport, Texas (the
"Dallas Lease"), is in full force and effect, is valid and effective in
accordance with its terms, and there is not, under such lease, any existing
default or event of default (or event that with notice or lapse of time, or
both, would constitute a default) by the Company or any Company Subsidiary, or
to the Company's knowledge, by any other party thereto that would give rise to a
material claim against the Company or any Company Subsidiary. All other current,
material leases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default (or event that with notice or
lapse of time, or both, would constitute a default) by the Company or any
Company Subsidiary, or to the Company's knowledge, by any other party thereto
that would give rise to a material claim against the Company or any Company
Subsidiary, except where failure to be in full force and effect or to be valid
and effective, and for such default and events of default and such claims, in
each case, which would not, individually or in the aggregate, have a Material
Adverse Effect. There is not, under the Dallas Lease any existing default or
event of default (or event that with notice or lapse or time or both would
constitute a default) by the landlord (or as the case may be, if applicable,
sublandlord) thereunder that would give rise to a material claim by the Company
or any Company Subsidiary against said landlord or sublandlord.
(b) Each of the Company and the Company Subsidiaries has good
and valid title to, or in the case of leased properties and assets, valid
leasehold interests in, all of its material tangible properties and assets,
real, personal and mixed, used or held for use in its business, in each case,
free and
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clear of any Encumbrances, except as reflected in the Company Financial
Statements and except for Encumbrances for Taxes not yet due and payable and
such Encumbrances or other imperfections of title and encumbrances, if any, that
are not material in character, amount or extent, and that do not materially
detract from the value, or materially interfere with the present use, of the
property subject thereto or affected thereby.
(c) The Facilities and equipment of the Company and each
Company Subsidiary that are used in the operations of their respective
businesses are (i) suitable for the uses to which they are currently employed,
(ii) in good operating condition and repair, subject to normal wear and tear,
(iii) regularly and properly maintained, (iv) not obsolete, dangerous or in need
of renewal or replacement, except for renewal or replacement in the ordinary
course of business, consistent with past practice, and (v) to the Company's
knowledge, free from any material defects or deficiencies, except in the case of
(i) through (v), as would not, individually or in the aggregate, have a Material
Adverse Effect.
4.20 Interested Party Transactions. Except as disclosed in the
Company's definitive proxy statements included in the Company SEC Reports, no
event has occurred and no relationship exists that would be required to be
reported by the Company pursuant to Item 404 of Regulation S-K.
ARTICLE 5
Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company as follows:
5.1 Organization and Qualification; Subsidiaries. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and has the requisite power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted and as
currently proposed by it to be conducted. Each of Parent and Merger Sub is duly
qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification, licensing or good
standing necessary, except where the failure to be so qualified, licensed or in
good standing would not have, individually or in the aggregate, a Parent
Material Adverse Effect.
5.2 Authority. 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 contemplated by
this Agreement. The execution and delivery of this Agreement by each of Parent
and Merger Sub and the consummation by Parent and Merger Sub, as applicable, of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action, except for the adoption of this Agreement by the
sole stockholder of Merger Sub. No other corporate proceedings on the part of
Parent and no vote of the holders of any shares of Parent capital stock is
required to approve this Agreement or the transactions contemplated hereby. The
affirmative vote or written consent of the sole stockholder of Merger Sub to
adopt this Agreement is the only vote or written consent necessary to adopt this
Agreement and approve the Merger under applicable Law and Merger Sub's
Certificate of Incorporation. This Agreement has been duly authorized and
validly executed and delivered by Parent and Merger Sub, as applicable, and
constitutes a legal, valid and binding obligation of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with its terms, subject
only to the effect, if any, of (i) applicable bankruptcy and other similar Laws
affecting the rights of creditors generally and (ii) rules of Law governing
specific performance, injunctive relief and other equitable remedies.
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5.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent and Merger
Sub will not, (i) conflict with or violate any provision of the Certificate of
Incorporation or Bylaws of Parent or Merger Sub, (ii) assuming that all
consents, approvals, authorizations and permits described in Section 5.3(b) have
been obtained and all filings and notifications described in Section 5.3(b) have
been made and any waiting periods thereunder have terminated or expired,
conflict with or violate any Law applicable to Parent or Merger Sub or any other
Subsidiary of Parent (each, a "Parent Subsidiary" and, collectively, the "Parent
Subsidiaries") or by which any property or asset of Parent, Merger Sub or any
Parent Subsidiary is bound or affected, or (iii) result in any breach of or any
loss of any benefit under, constitute a default (or an event that 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 a material Encumbrance on any property or asset of Parent, Merger
Sub or any Parent Subsidiary pursuant to, any material Contract, bond, mortgage
or permit, except, with respect to clause (iii), for any such conflicts,
violations, breaches, defaults, other occurrences, Encumbrances, or absences of
consents or approvals as would not have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent and Merger
Sub will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Entity or other Person, except
(i) under the Exchange Act, the Securities Act, any applicable Blue Sky Laws,
the rules and regulations of the New York Stock Exchange, Antitrust Laws, filing
and recordation of the Certificate of Merger as required by the DGCL and (ii)
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not have a Parent Material Adverse
Effect.
5.4 Ownership of Merger Sub; No Prior Activities.
(a) Merger Sub was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement.
(b) All of the outstanding capital stock of Merger Sub is
owned directly by Parent. There are no options, warrants or other rights
(including registration rights), agreements, arrangements or commitments to
which Merger Sub is a party of any character relating to the issued or unissued
capital stock of, or other Equity Interests in, Merger Sub or obligating Merger
Sub to grant, issue or sell any shares of the capital stock of, or other Equity
Interests in, Merger Sub, by sale, lease, license or otherwise. There are no
obligations, contingent or otherwise, of Merger Sub to repurchase, redeem or
otherwise acquire any shares of the capital stock of Merger Sub.
(c) Except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated by this Agreement, Merger Sub has not and, prior to the Effective
Time, will not have incurred, directly or indirectly, through any Subsidiary or
Affiliate, any obligations or liabilities or engaged in any business activities
of any type or kind whatsoever or entered into any agreements or arrangements
with any Person.
5.5 Financing. Parent has or at the Closing will have cash available to
pay the Merger Consideration as contemplated hereby.
5.6 Company Stock. Neither Parent nor any Parent Subsidiary has at any
time during the last three years been an "interested stockholder" of the Company
as defined in Section 203 of the DGCL. Neither Parent nor any Parent Subsidiary
owns (directly or indirectly, beneficially or of record), or is a
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party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, any shares of capital
stock of the Company (other than the Confidentiality Agreement and as
contemplated by this Agreement).
ARTICLE 6
Covenants
6.1 Conduct of Business by the Company Pending the Closing. The Company
agrees that, between the date of this Agreement and the earlier of (A) the
Effective Time or (B) the date of termination of this Agreement, except as
specifically permitted by any other provision of this Agreement, unless Parent
shall otherwise agree in writing or as required by applicable Law, the Company
will, and will cause each Company Subsidiary to, (i) conduct its operations in
all material respects only in the ordinary and usual course of business
consistent with past practice, and shall not take any action inconsistent
therewith or with this Agreement, (ii) use its reasonable best efforts to keep
available the services of the current officers, employees and consultants of the
Company and each Company Subsidiary and to preserve the current relationships of
the Company and each Company Subsidiary with such of the customers, suppliers,
distributors, business partners and other Persons with which the Company or any
Company Subsidiary has business relations, (iii) have in effect and maintain in
all material respects at all times, insurance substantially of the kinds and in
the amounts as is in effect as of the date of this Agreement, and (iv) keep
substantially in working condition and good order and repair all of its material
assets and other material properties, normal wear and tear excepted. Without
limiting the foregoing, and as an extension thereof, except as specifically
permitted by any other provision of this Agreement, the Company shall not, and
shall not permit any Company Subsidiary to, between the date of this Agreement
and the Effective Time, directly or indirectly, do, or agree to do, any of the
following without Parent's prior written consent, unless required by applicable
Law or in accordance with the Company's 2006 capital budget set forth on Section
6.1 of the Company Disclosure Schedule or as otherwise set forth on Section 6.1
of the Company Disclosure Schedule (with each exception specifically identified
by paragraph number):
(a) acquire by merging or consolidating with or by purchasing
a substantial Equity Interest in or a substantial portion of the assets of, or
by any other manner, any business, corporation, partnership, association or
other business organization or division thereof with a value or purchase price
in excess of $1,000,000, or enter into any agreement providing for any merger,
acquisition, divestiture or similar transaction;
(b) sell, lease, license or otherwise dispose of any of its
properties or assets, other than (i) non-exclusive licenses to customers in the
ordinary course of business consistent with past practice, (ii) dispositions of
equipment that is no longer used or useful, (iii) sales of assets in the
ordinary course of business consistent with past practice and (iv) sales,
leases, licenses or dispositions of assets with a fair market value not in
excess of $1,000,000 in respect of any one asset and not in excess of
$10,000,000 in the aggregate;
(c) amend or propose to amend the Company Certificate of
Incorporation or Company Bylaws or, in the case of the Company Subsidiaries,
their respective constituent documents;
(d) other than dividends from any wholly-owned Company
Subsidiary to its parent, declare, set aside or pay any dividend or other
distribution payable in cash, capital stock, property or otherwise with respect
to any shares of its capital stock, or purchase, redeem or otherwise acquire, or
offer to purchase, redeem or otherwise acquire, any shares of its capital stock,
other equity securities, other ownership interests or any options, warrants or
rights to acquire any such stock, securities or interests
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(except for repurchases of Company Common Shares to the extent required pursuant
to Repurchase Rights);
(e) split, combine or reclassify any outstanding shares of its
capital stock;
(f) issue, sell, authorize, or agree to the issuance or sale
of, any shares of, or any options, warrants or rights of any kind to acquire any
shares of, or any securities convertible into or exchangeable for any shares of,
any Equity Interests of the Company or any Company Subsidiary, except for the
Company Common Shares issuable upon exercise of (i) Company Options outstanding
on the date hereof or (ii) Company Warrants outstanding on the date hereof;
(g) grant, amend or change the terms of any Company Option or
stock appreciation right, phantom stock or other stock-based incentive award of
any kind, or accelerate or change the period of exercisability or vesting of any
Company Option or stock appreciation right, phantom stock or other stock-based
incentive award of any kind, or amend any Repurchase Rights or accelerate or
change the period of vesting of any Company Common Shares subject to Repurchase
Rights, or authorize cash payments in exchange for any Company Option or stock
appreciation right, phantom stock or other stock-based incentive award of any
kind, in each case, except as a result of the Merger;
(h) (i) take any action with respect to the grant of or
increase in any severance or termination pay to any current or former director,
executive officer or employee (solely with respect to employees, other than in
the ordinary course consistent with past practice) of the Company or any Company
Subsidiary, (ii) execute any employment, deferred compensation or other similar
agreement with any director, executive officer or employee (solely with respect
to employees, other than in the ordinary course consistent with past practice)
of the Company or any Company Subsidiary, (iii) increase the benefits payable
under any existing severance or termination pay policies or employment
agreements, (iv) increase the compensation, bonus, severance or other benefits
of current or former directors, executive officers or employees (solely with
respect to employees, other than in the ordinary course consistent with past
practice) of the Company or any Company Subsidiary, (v) adopt or establish any
new employee benefit plan (including any severance plan) or amend any existing
employee benefit plan (including any severance plan), except as may be required
by Law, or as may be required to comply with Section 409A of the Code, or (vi)
pay any benefit to a current or former director, executive officer or employee
of the Company or any Company Subsidiary not required by any existing agreement
or employee benefit plan (including any severance plan) or, (vii) take any
action that would result in its incurring any obligation for any payments or
benefits described in clauses (i), (ii) or (iii) except to the extent required
in a written Contract or agreement in existence as of the date of this Agreement
and set forth in the Company Disclosure Schedule;
(i) hire any Person as an executive officer of the Company or,
except in the ordinary course of business, enter into, amend or extend the term
of, any employment or consulting agreement with any officer, employee,
consultant or independent contractor (other than offer letters to new employees
using the Company's standard, unmodified form of offer letter which provides for
at-will employment and which does not provide for severance, acceleration or
post-termination benefits, other than those generally available to employees of
the Company or a Company Subsidiary), or enter into any collective bargaining
agreement;
(j) (i) make any material Tax election except in the ordinary
course of business and consistent with past practice; (ii) change in any
material respect any accounting method in respect of Taxes; and (iii) settle any
material Tax claim, action or proceeding, except (A) settlements in the ordinary
course of business consistent with past practice, or (B) settlements to the
extent subject to reserves existing as of the date hereof in accordance with
GAAP;
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(k) commence any legal proceeding, or settle, compromise or
otherwise resolve any litigation or other legal proceedings, other than
resolution through trial judgment for any legal proceeding in existence as of
the date hereof, involving a payment of more than $1,000,000 in any one case by
or to the Company or any of the Company Subsidiaries;
(l) incur any Indebtedness (other than capitalized lease
obligations permitted by clauses (o) or (s) below) in excess of $10,000,000 or
which may not be prepaid without penalty, or modify the terms of any existing
Indebtedness of the Company or any Company Subsidiary, except (i) draws made in
the ordinary course of business consistent with past practice pursuant to the
Company's Credit Facility not to exceed an amount of $215,000,000 outstanding at
any time or (ii) for real estate leases reasonably necessary in connection with
distribution Contracts entered into after the date hereof to the extent
permitted by this Agreement;
(m) assume, guarantee, endorse or otherwise as an
accommodation become responsible for, the obligations of any other Person, or,
subject to clause (p) below, make any loans, advances or investment in capital
contribution to any Person, except (i) to or for the benefit of the Company
Subsidiaries or (ii) for those not in excess of $1,000,000 in the aggregate;
(n) create or assume any material Encumbrance on any material
asset;
(o) make or commit to make capital expenditures in excess of
$1,000,000 in the aggregate after the date of this Agreement;
(p) make any loans or advances (other than routine travel
advances, sales commission draws to employees of the Company or any Company
Subsidiary and advance purchase payments to suppliers in an aggregate amount not
in excess of $1,250,000 in the ordinary course of business consistent with past
practice) to, or any investment in or capital contribution to, any Person
(including any officer, director or employee of the Company) other than
intra-company transfers between the Company and a Company Subsidiary in the
ordinary course of business consistent with past practice, or forgive or
discharge in whole or in part any outstanding loans or advances, or otherwise
modify any loan previously granted to any such Person;
(q) enter into any agreement, arrangement or commitment that
limits or otherwise restricts the Company or any Company Subsidiary, or that
would, after the Effective Time, limit or restrict Parent or any of the Parent
Subsidiaries or any of their respective Affiliates or any successor thereto,
from engaging or competing in any line of business or in any geographic area, or
which provides exclusive rights or "most favored nation" rights of any kind or
scope to any party;
(r) other than with respect to any agreement with Parent,
terminate, amend, modify or knowingly waive any material provision of any
confidentiality or standstill agreement to which it is a party or, upon notice
of a material breach, fail to enforce, to the fullest extent permitted by Law,
the provisions of such agreement;
(s) (i) amend, terminate or modify any Company Material
Contract, or (ii) enter into any Contract that would have been a Company
Material Contract if it were in effect on the date hereof involving
consideration or other obligation in excess of $1,000,000 annually, except for
real estate leases reasonably necessary in connection with distribution
Contracts entered into after the date hereof to the extent permitted by this
Agreement;
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(t) materially change the terms on which, or the manner in
which, it extends warranties or indemnification rights to customers in a manner
that is adverse to the Company or the Company Subsidiaries;
(u) knowingly take, or agree to commit to take, any action
that would reasonably be expected to result in any of the conditions to the
Merger not being satisfied, or would make any representation or warranty of the
Company contained herein inaccurate in any material respect at the Effective
Time, or that would materially impair the ability of the Company, Parent, Merger
Sub or the holders of Company Common Shares to consummate the Merger in
accordance with the terms hereof or materially delay such consummation
including, without limitation, adoption or implementation of a rights plan or
other anti-takeover arrangement or device;
(v) enter into any Contract to re-sell or distribute any
licensed or non-licensed "Parts Manufacturer Approvals" products or parts of
Parent or its Affiliates;
(w) enter into any agreement, arrangement or commitment that
subjects the Company to compliance with requirements of the Federal Acquisition
Regulation or Cost Accounting Standards beyond the level of compliance required
as of the date of this Agreement, provided, that with respect to this subsection
6.1(w) such consent shall not be unreasonably withheld or delayed; or
(x) agree to take any of the actions described in subsections
(a) through (w) of this Section 6.1.
Nothing contained in this Agreement shall give Parent, directly or indirectly,
rights to control or otherwise direct the Company's operations prior to the
Effective Time. Prior to the Effective Time, the Company shall exercise,
consistent with the terms and conditions of this Agreement, complete control and
supervision of its operations.
6.2 Takeover Statutes. The Company and the Company Board shall (i) take
all actions necessary to ensure that no takeover statute or similar statute or
regulation becomes applicable to this Agreement and the transactions
contemplated hereby and (ii) if any takeover statute or similar statute or
regulation becomes applicable to this Agreement or any transactions contemplated
hereby, take all reasonable action necessary to ensure that the Merger and the
other transactions contemplated hereby may be consummated as promptly as
reasonably practicable on the terms provided for in this Agreement and otherwise
to minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated hereby.
6.3 Proxy Statement.
(a) As promptly as reasonably practicable after the execution
of this Agreement, the Company shall prepare and file with the SEC a proxy
statement relating to the Company Stockholders Meeting (together with any
amendments thereof or supplements thereto, the "Proxy Statement"). The Company
shall prepare and file with the SEC any Other Filings as and when required or
requested by the SEC. The Company will use its reasonable best efforts to
respond to any comments made by the SEC with respect to the Proxy Statement and
any Other Filings as promptly as reasonably practicable. Parent shall furnish
all information concerning it as the Company may reasonably request in
connection with such actions and the preparation of the Proxy Statement and any
Other Filings. At the earliest practicable time, the Company shall file
definitive proxy materials with the SEC and cause the Proxy Statement to be
mailed to its stockholders. The Proxy Statement shall (subject to Section
6.6(d)) include the unanimous recommendation of the Company Board that adoption
of this Agreement and approval of the Merger by the Company's stockholders is
advisable and that the Company Board has unanimously determined that
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the Merger is fair to, advisable and in the best interests of the Company and
its stockholders. To the extent permitted by applicable Law, prior to filing the
preliminary proxy materials, definitive proxy materials or any other filing with
the SEC or any other Governmental Entity, the Company shall provide Parent
(which term shall in all instances in this Section 6.3 also include Parent's
counsel) with reasonable opportunity to review and comment on each such filing
in advance and the Company shall include in such filings all comments proposed
by Parent and reasonably acceptable to Company. The Company will advise Parent,
promptly after it receives notice thereof, of any request by the SEC for
amendment of the Proxy Statement or any Other Filings of the Company or comments
thereon and responses thereto or requests by the SEC for additional information.
(b) Parent agrees that the information supplied by Parent for
inclusion in the Proxy Statement shall not, at (i) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
Company's stockholders and (ii) the time of the Company Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
contained therein not misleading. If, at any time prior to the Effective Time,
any event or circumstance relating to Parent or any Parent Subsidiary, or their
respective officers or directors, should be discovered by Parent that should be
set forth in an amendment or a supplement to the Proxy Statement or any Other
Filing, Parent shall promptly inform the Company and shall promptly cooperate
with the Company in the prompt filing with the SEC of any amendment or
supplement to the Proxy Statement and, as required by Law, in disseminating the
information contained in such amendment or supplement to the Company's
stockholders.
(c) The Company agrees that the Proxy Statement (other than
information supplied by Parent for inclusion in the Proxy Statement) shall not,
at (i) the time the Proxy Statement (or any amendment thereof or supplement
thereto) is first mailed to the Company's stockholders and (ii) the time of the
Company Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements contained therein not misleading. If, at any time
prior to the Effective Time, any event or circumstance relating to the Company
or any Company Subsidiary, or their respective officers or directors, should be
discovered by the Company that should be set forth in an amendment or a
supplement to the Proxy Statement or any Other Filing, the Company shall
promptly inform Parent. All documents that the Company is responsible for filing
with the SEC in connection with the transactions contemplated herein will comply
as to form and substance in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and any other applicable
Laws.
6.4 Company Stockholders Meeting; Board Recommendation.
(a) The Company shall call and hold the Company Stockholders
Meeting as promptly as reasonably practicable for the purpose of obtaining the
Company Stockholders Approval. In connection with the Company Stockholders
Meeting, the Company will (i) subject to applicable Laws, use its reasonable
best efforts (including postponing or adjourning the Company Stockholders
Meeting to obtain a quorum or to solicit additional proxies, but for no other
reason without the prior consent of Parent, such consent not to be unreasonably
withheld) to obtain the Company Stockholders Approval and (ii) otherwise comply
with all legal requirements applicable to the Company Stockholders Meeting.
(b) Subject to Section 6.4(a) and Section 6.6(d), (i) the
Company Board shall unanimously recommend that the Company's stockholders vote
in favor of the adoption of this Agreement, (ii) the Proxy Statement shall be in
material compliance with the requirements of Section 6.3, including the
requirement that a statement to the effect that the Company Board has
unanimously recommended that the Company's stockholders vote in favor of the
adoption of this Agreement at the Company Stockholders Meeting be included in
the Proxy Statement, and (iii) neither the Company Board
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nor any committee thereof shall withhold, withdraw, amend or modify, or propose
or resolve to withhold, withdraw, amend or modify in a manner adverse to Parent,
the Company Board Recommendation.
6.5 Access to Information; Confidentiality. From the date of this
Agreement to the Effective Time (or earlier termination of this Agreement), to
the extent permitted by applicable Law, the Company shall, and shall cause each
Company Subsidiary and each of their respective directors, officers, employees
or authorized agents to (i) provide to Parent and Parent's Representatives
access, at reasonable times upon prior notice, to the officers, employees,
agents, properties, offices and other facilities of the Company and the Company
Subsidiaries and to the books and records thereof and (ii) furnish promptly such
information concerning the business, properties, Contracts, assets (tangible and
intangible, including Intellectual Property), liabilities, Tax Returns, Tax
elections and all other workpapers (provided that with respect to workpapers the
Company need only provide access to workpapers in the actual possession of the
Company or any Company Subsidiary) relating to Taxes, personnel, internal
financial statements and other aspects of the Company and the Company
Subsidiaries as Parent or Parent's Representatives may reasonably request. The
Company shall be entitled to have a representative present at any inspection. No
investigation conducted pursuant to this Section 6.5 shall affect or be deemed
to modify or limit any representation or warranty made in this Agreement or
affect the satisfaction or non-satisfaction of any condition to the Merger set
forth in this Agreement. Subject to compliance with applicable Laws, from the
date of this Agreement until the earlier of the termination of this Agreement
and the Effective Time, the Company shall confer from time to time as requested
by Parent to meet with one or more representatives of Parent to discuss any
material changes or developments in the operational matters of the Company and
each Company Subsidiary and the general status of the ongoing operations of the
Company and each Company Subsidiary. Notwithstanding the foregoing, neither the
Company nor any Company Subsidiary shall be required to provide access to or to
disclose any information (i) where such access or disclosure would result in the
loss of the attorney-client privilege or work product privilege of the Company
or any Company Subsidiary or contravene any Law or binding agreement entered
into prior to the date of this Agreement (provided that with respect to any such
binding agreements, and following execution of this Agreement, the Company will
use commercially reasonable efforts, to the extent requested by Parent, to
obtain all necessary third party consents to allow Parent to review all such
agreements), or (ii) to the extent that outside counsel to the Company advises
that such access or disclosure should not be disclosed in order to ensure
compliance with any applicable Law. Parent agrees to hold confidential all
information which it has received or to which it has gained access pursuant to
this Section 6.5 in accordance with the Confidentiality Agreement, dated as of
March 3, 2006 between the Company and Parent, as amended from time to time (the
"Confidentiality Agreement"). As soon as practicable after delivering or making
available any nonpublic information to any Person in connection with a Superior
Offer, the Company shall deliver such nonpublic information to Parent (to the
extent such information has not already been deliver to Parent).
6.6 No Solicitation of Transactions.
(a) No Solicitation Generally. Except as specifically
permitted by Sections 6.6(c) and 6.6(d), from and after the date of this
Agreement until the Effective Time or termination of this Agreement pursuant to
Article 8, the Company will not, and will cause the Company Subsidiaries not to,
and will use all reasonable efforts to ensure that its Representatives do not,
directly or indirectly, (i) solicit, initiate, seek, entertain, encourage,
facilitate, support or induce the making, submission or announcement of any
inquiry, expression of interest, proposal or offer that constitutes, or could
reasonably be expected to lead to, an Acquisition Proposal, (ii) enter into,
participate in, maintain or continue any communications (except solely to
provide written or oral notice as to the existence of these provisions) or
negotiations regarding, or deliver or make available to any Person any
non-public information in response to, or in connection with, any inquiry,
expression of interest, proposal or offer that constitutes, or could reasonably
be expected to lead to, an Acquisition Proposal, (iii) agree to, accept,
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approve, endorse or recommend (or publicly propose or announce any intention or
desire to agree to, accept, approve, endorse or recommend) any Acquisition
Proposal, (iv) enter into any letter of intent, exclusivity agreement, term
sheet or any other Contract contemplating or otherwise relating to any
Acquisition Proposal, (v) submit any Acquisition Proposal to the vote of any
stockholders of the Company, (vi) withhold, withdraw or modify (or publicly
propose or announce any intention or desire to withhold, withdraw or modify), in
a manner adverse to Parent, the approval of the Company Board of this Agreement
and/or any of the transactions contemplated hereby, or (vii) take any action or
position that is inconsistent with, or withdraw or modify (or publicly propose
or announce any intention or desire to withdraw or modify), in a manner adverse
to Parent, any determination or recommendation referred to in Section 6.4. The
Company and the Company Subsidiaries will immediately cease any and all existing
activities, discussions and negotiations with any Persons conducted prior to or
on the date of this Agreement with respect to any Acquisition Proposal and
request the prompt return or destruction of all confidential information
previously furnished to any Person with which the Company has engaged in any
activities related to any Acquisition Proposal within the twelve (12) month
period preceding the date of this Agreement. If any Representative of the
Company, whether in his or her capacity as such or in any other capacity, takes
any action that the Company is obligated pursuant to this Section 6.6 to use all
reasonable efforts to ensure that its Representatives do not take, then the
Company shall be deemed for all purposes of this Agreement to have breached this
Section 6.6.
(b) Notice. The Company, as promptly as practicable (but in no
event more than twenty-four (24) hours after receipt), shall advise Parent
orally and in writing of (i) an Acquisition Proposal, (ii) any inquiry,
expression of interest, proposal or offer that constitutes, or could reasonably
be expected to lead to, an Acquisition Proposal, (iii) any other notice that any
Person is considering making an Acquisition Proposal, or (iv) any request for
non-public information that could reasonably be expected to lead to an
Acquisition Proposal, as well as, in the event of any of (i)-(iv) above, (1) the
material terms and conditions of such Acquisition Proposal, inquiry, expression
of interest, proposal, offer, notice or request and (2) the identity of the
Person or Group making any such Acquisition Proposal, inquiry, expression of
interest, proposal, offer, notice or request. The Company will (x) keep Parent
informed, as promptly as practicable, of the status and details (including any
amendments, modifications or proposed amendments or modifications) of any such
Acquisition Proposal, inquiry, expression of interest, proposal, offer, notice
or request and (y) provide to Parent, as promptly as practicable, a copy of all
written materials and other information provided to the Company in connection
with any such Acquisition Proposal, inquiry, expression of interest, proposal,
offer, notice or request. The Company shall provide Parent with at least the
same prior notice provided to the members of the Company Board of any meeting of
the Company Board at which the Company Board is reasonably expected to discuss
any Acquisition Proposal, including to determine whether such Acquisition
Proposal is a Superior Offer.
(c) Superior Offers. In the event that any Person submits to
the Company (and does not withdraw) an Acquisition Proposal that the Company
Board concludes in good faith (after consultation with its outside legal counsel
and a financial advisor of national standing) is, or is reasonably likely to
become, a Superior Offer, then notwithstanding Section 6.6(a), the Company may,
so long as the Company Stockholders Approval has not yet been obtained, (i)
enter into discussions with such Person regarding such Acquisition Proposal, and
(ii) deliver or make available to such Person non-public information regarding
the Company and the Company Subsidiaries; provided, that: (A) in each case,
neither the Company, any Company Subsidiary nor any Representative of the
Company shall have violated any of the restrictions set forth in this Section
6.6; (B) in each case, the Company Board first shall have concluded in good
faith, after consultation with its outside legal counsel, that such action is
reasonably required in order for the Company Board to comply with its fiduciary
obligations to the Company's stockholders under applicable Laws; (C) in each
case the Company first shall have provided Parent with written notice of the
identity of such Person and all of the material terms and conditions of such
Acquisition Proposal and of the Company's intention to take actions in response
to such Superior
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Offer, specifying the actions it intends to take; and (D) in the case of clause
(ii), the Company first shall have received from such Person an executed
confidentiality agreement containing terms at least as restrictive with regard
to the Company's Confidential Information as the Confidentiality Agreement, it
being understood that such confidentiality agreement shall not include any
provision for any exclusive right to negotiate with such Person or having the
actual or purported effect of restricting the Company from fulfilling its
obligations under this Agreement.
(d) Changes of Recommendation. Nothing in this Agreement shall
prevent the Company Board from (i) withholding, withdrawing, amending or
modifying the Company Board Recommendation or (ii) terminating this Agreement
pursuant to Section 8.1(h) simultaneously with the payment of the Termination
Fee if (A) the Company Stockholders Approval has not yet been obtained, (B) the
Company shall not have violated any of the restrictions set forth in Section 6.4
or this Section 6.6, (C) a Superior Offer is made to the Company and is not
withdrawn, (D) the Company shall have promptly provided written notice to Parent
(a "Notice of Superior Offer") advising Parent that the Company has received a
Superior Offer and that it intends (or may intend) to change the Company Board
Recommendation or terminate the Agreement pursuant to Section 8.1(h) and the
manner and timing in which it intends (or may intend) to do so, (E) Parent shall
not have, within four (4) Business Days of Parent's receipt of the Notice of
Superior Offer, made an offer that the Company Board determines in its good
faith judgment (after consultation with a financial advisor of national
standing) to be at least as favorable to the Company's stockholders as such
Superior Offer (it being agreed that (1) the Company Board shall convene a
meeting to consider any such offer by Parent promptly following the receipt
thereof, (2) that the Company Board will not withhold, withdraw, amend or modify
the Company Board Recommendation or terminate the Agreement pursuant to Section
8.1(h) for four (4) Business Days after receipt by Parent of the Notice of
Superior Offer, and (3) any change to the financial or other material terms of
such Superior Offer shall require a new Notice of Superior Offer to Parent and a
new four (4) Business Day period under this clause (E)), and (F) the Company
Board concludes in good faith, after consultation with its outside legal
counsel, that, in light of such Superior Offer and any offer made by Parent
pursuant to Section 6.6(d)(E), the Company Board is required to withhold,
withdraw, amend or modify the Company Board Recommendation or terminate this
Agreement pursuant to Section 8.1(h) to comply with its fiduciary obligations to
the Company's stockholders under applicable Law.
(e) Compliance with Tender Offer Rules. Nothing contained in
this Agreement shall prohibit the Company or the Company Board from taking and
disclosing to its stockholders a position contemplated by Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act or taking any action required by any
order or` decree of any Governmental Entity; provided, however, that neither the
Company Board nor any committee thereof shall withhold, withdraw, amend or
modify the Company Board Recommendation unless specifically permitted to do so
pursuant to this Section 6.6.
(f) Stockholder Disclosures. Nothing contained in this
Agreement shall prohibit the Company from making any disclosure to the
stockholders of the Company if the Company Board has concluded in its good faith
judgment (after receipt of advice from its outside legal counsel) that such
disclosure is required in order to comply with its fiduciary obligations to the
Company's stockholders under applicable Law or to comply with securities laws.
Such disclosure shall not be deemed to withhold, withdraw, amend or modify the
Company Board Recommendation or otherwise constitute a breach of this Section
6.6.
6.7 Appropriate Action; Consents; Filings.
(a) Promptly after the execution of this Agreement, each of
Parent and the Company shall apply for or otherwise seek, and shall use its
reasonable best efforts to obtain, all consents and approvals required to be
obtained by it for the consummation of the Merger. Without limiting the
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generality or effect of the foregoing, each of Parent and the Company shall, (i)
as soon as practicable, and in any event no later than ten (10) Business Days
after the date of this Agreement, make any initial filings required under the
HSR Act and (ii) as promptly as practicable, make any additional filings
required by any other applicable Antitrust Laws. The parties hereto shall
consult and cooperate with one another, afford one another (or one another's
counsel) an opportunity to review in advance any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals to be made
or submitted by or on behalf of any party hereto in connection with proceedings
under or relating to any Antitrust Law; and consider in good faith the views of
one another, in connection with any analyses, appearances, presentations,
memoranda, briefs, arguments, opinions and proposals; provided, however, that,
with respect to any such analyses, appearances, presentations, memoranda,
briefs, arguments, opinions or proposals, each of Parent and the Company need
not supply the other (or its counsel) with copies (or in case of oral
presentations, a summary) to the extent that any Law applicable to such party
requires such party or the Company Subsidiaries to restrict or prohibit access
to any such properties or information. Unless otherwise agreed, to the extent
reasonably practicable and permitted by applicable Law, no party shall have any
material discussions or communications with any Governmental Entity with respect
to the Transactions contemplated by this Agreement without, where practical,
consulting with a representative of the other party.
(b) Each party will notify the other promptly upon the receipt
of (i) any comments from any officials of any Governmental Entity in connection
with any filings made pursuant hereto and (ii) any request by any officials of
any Governmental Entity for amendments or supplements to any filings made
pursuant to, or information provided to comply in all material respects with,
any Laws. Whenever any event occurs that is required to be set forth in an
amendment or supplement to any filing made pursuant to Section 6.7(a), each
party will promptly inform the other of such occurrence and cooperate in filing
with the applicable Governmental Entity such amendment or supplement.
(c) Each of Parent and the Company shall use its reasonable
best efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement under the HSR Act, the Xxxxxxx Act, as amended, the Xxxxxxx Act, as
amended, the Federal Trade Commission Act, as amended, Council Regulation
139/2004 of the European Community and any other federal, state or foreign
statutes, rules, regulations, orders or decrees that are designed to prohibit,
restrict or regulate actions having the purpose or effect of monopolization,
lessening of competition or restraint of trade (collectively, "Antitrust Laws").
Each of Parent and the Company shall use its reasonable best efforts to take
such action as may be required to cause the expiration or termination of the
waiting or notice periods or the receipt of approval decisions under the HSR Act
or other Antitrust Laws with respect to such transactions as promptly as
possible after the execution of this Agreement. Without limiting the foregoing,
Parent and the Company shall take any and all of the following actions to the
extent necessary to obtain the approval of any Governmental Entity with
jurisdiction over the enforcement of any applicable Laws regarding the
transactions contemplated hereby: (i) entering into negotiations, (ii) providing
information required by Law, and (iii) substantially complying with any "second
request" for information pursuant to the Antitrust Laws.
(d) Notwithstanding anything in this Agreement to the
contrary, if any administrative or judicial action or proceeding is instituted
(or threatened to be instituted) challenging any transaction contemplated by
this Agreement as violative of any Antitrust Law, it is expressly understood and
agreed that (i) Parent and the Company shall litigate, contest or defend against
any administrative or judicial action or proceeding that seeks to obtain a
temporary restraining order or a preliminary injunction preventing, in whole or
in part, the transactions contemplated by this Agreement, provided, however,
that if a Governmental Entity issues a Restraint either Parent or the Company
may, in its sole discretion, terminate this Agreement pursuant to Section 8.1(c)
and (ii) Parent shall make reasonable best efforts to eliminate the grounds of
objection to the transactions contemplated by this Agreement, that may be
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asserted by any Governmental Entity under any Antitrust Laws, so as to enable
the Closing to occur as soon as reasonably possible (and in any event, no later
than the Outside Date), provided, however, that Parent shall not be required to
undertake any efforts that, in its judgment, would or could substantially impair
its ability to conduct any of its businesses or the business of the Company in
the manner that they have been conducted in the past.
(e) Notwithstanding Section 6.7(d) or any other provision of
this Agreement, nothing in this Section 6.7 shall (i) require Parent to make
proposals, execute or carry out agreements, or submit to orders, providing for a
Divestiture or (ii) limit a party's right to terminate the Agreement pursuant to
Sections 8.1(b) or 8.1(c) so long as such party has until such termination
complied in all material respects with its obligations under this Section 6.7.
6.8 Certain Notices. Each of Company and Parent, as the case may be,
will notify the other party in writing promptly after learning of (i) any notice
or other communication from any Person alleging that the consent of such Person
is or may be required in connection with the Merger, (ii) any notice or other
communication from any Governmental Entity in connection with the Merger, (iii)
any change, occurrence or event that, individually or in the aggregate with any
other changes, occurrences and events, would reasonably be expected to have a
Material Adverse Effect, or that is reasonably likely to cause any of the
conditions to closing set forth in Article 7 not to be satisfied, or (iv) any
claim, or any verbal or written inquiry by any Tax Authority, regarding Taxes in
excess of $5,000 payable by the Company. Each of Parent and Company shall give
prompt notice to the other party of any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in any material
respect, or any failure by it to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement, provided, however, that no such notification shall affect
the representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
6.9 Public Announcements. Parent and the Company have agreed to the
text of the press release announcing the signing of this Agreement and the
transactions contemplated hereby. Other than with respect to any announcement
relating to any action specifically permitted to be taken by the Company
pursuant to Section 6.6(d), Parent and the Company shall provide to each other
any subsequent press releases related to this Agreement, the Merger and the
transactions contemplated hereby and shall consult with each other before
issuing or making any such release. Neither Parent nor the Company shall issue
any such press release or make any such public statement without the prior
written consent of the other party; provided that the either party may, without
obtaining the prior consent of the other party, issue such press release or make
such public statements as such party determines in good faith, following
consultation with legal counsel, are required by Law or the rules and
regulations of the New York Stock Exchange, if it has used all reasonable
efforts to consult with the other party. Each of Parent and the Company shall
cause its employees, officers and directors to comply with this Section 6.9.
6.10 Indemnification.
(a) From and after the Effective Time, Parent will assume, and
will cause the Surviving Corporation to fulfill and honor in all respects, the
obligations of the Company pursuant to any indemnification agreements between
the Company and its directors and officers set forth on Section 6.10 of the
Company Disclosure Schedule as of the Effective Time (the "Indemnified Parties")
and any indemnification provisions under the Company Certificate of
Incorporation or Company Bylaws as in effect on the date of this Agreement, in
each case, subject to applicable Law. The Certificate of Incorporation and
Bylaws of the Surviving Corporation will contain provisions with respect to
indemnification that are at least as favorable to the Indemnified Parties as
those contained in the Company Certificate of Incorporation and Company Bylaws
as in effect on the date of this Agreement, which
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provisions will not be amended, repealed or otherwise modified for a period of
six (6) years from the Effective Time in any manner that would adversely affect
the rights thereunder of the Indemnified Parties, unless such modification is
required by applicable Law.
(b) For six (6) years after the Effective Time, Parent shall
cause to be maintained directors' and officers' liability insurance ("D&O
Insurance") in respect of acts or omissions occurring prior to the Effective
Time covering each individual who at the date of this Agreement was an
Indemnified Party covered as of the date hereof or hereafter by the Company's
D&O Insurance on terms with respect to coverage and amounts no less favorable
than those of such policy in effect on the date hereof; Parent shall have the
right to cause coverage to be extended under the Company's D&O Insurance by
obtaining a six (6) year "tail" policy on terms and conditions no less
advantageous than the Company's existing D&O Insurance, and such "tail" policy
shall satisfy the provisions of this Section 6.10. In lieu of the foregoing,
prepaid policies may be obtained prior to the Effective Time, which policies
shall provide for terms and conditions no less advantageous than the Company's
existing D&O Insurance with the prior written consent of Parent, which shall not
be unreasonably withheld. If such prepaid policies have been obtained prior to
the Effective Time, Parent shall, and shall cause the Surviving Corporation to,
maintain such policies in full force and effect, and continue to honor the
obligations thereunder.
(c) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation, or at Parent's option, Parent, shall assume the obligations set
forth in this Section 6.10.
(d) This Section 6.10 shall survive the consummation of the
Merger, is intended to benefit each of the Indemnified Parties, shall be binding
on all successors and assigns of the Surviving Corporation and Parent, shall be
enforceable by each Indemnified Party and his or her heirs and representatives,
and may not be amended, altered or repealed with respect to any Indemnified
Party after the Effective Time without the prior written consent of such
Indemnified Party (provided that any amendment, alteration or repeal prior to
the Effective Time shall be governed by Section 8.3).
6.11 Employees.
(a) From and after the Effective Time, Parent and Merger Sub
shall have the rights and obligations described in this Section 6.11 and Section
6.12 regarding the individuals who were employees of the Company or a Company
Subsidiary immediately prior to the Effective Time and who continue employment
with the Company, a Company Subsidiary or Parent or a Parent Subsidiary
following the Effective Time (including each such individual who is on vacation,
temporary layoff, leave of absence, sick leave or short- or long-term disability
leave) ("Continuing Employee").
(b) All Continuing Employees shall be employed solely on an
"at will" basis, except to the extent required by the provisions of written
employment Contracts or as required by applicable Law.
(c) Within a reasonable period of time after the last Business
Day of each month after the date of this Agreement and on or about the date that
is five (5) Business Days prior to the expected date on which the Closing will
occur, the Company shall, as and to the extent necessary, deliver to Parent a
revised Section 4.10(f) of the Company Disclosure Schedule, which sets forth
each Person who the Company reasonably believes is, with respect to the Company
or any ERISA Affiliate, a "disqualified individual" (within the meaning of
Section 280G of the Code and the regulations
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promulgated thereunder), as of the date such revised Section 4.10(f) of the
Company Disclosure Schedule is made available to Parent.
6.12 Benefit Plans.
(a) Subject to Section 6.11(b):
(i) Parent shall, through the period beginning at the
Effective Time and ending December 31, 2007, cause each Continuing Employee to
be provided compensation (including wages and cash and equity incentive
compensation opportunities) and employee benefits substantially no less
favorable in the aggregate than the compensation and employee benefits,
respectively, to which they were entitled in the aggregate immediately before
the Effective Time; provided that in no event shall Parent cause a reduction in
the severance benefits to which Continuing Employees are entitled during the
period ending December 31, 2007 below the level of entitlement in effect
immediately before the Effective Time;
(ii) For all purposes under each employee benefit plan
maintained by Parent, any Parent Subsidiary or any of their Affiliates in which
Continuing Employees become eligible to participate upon or after the Effective
Time, the Continuing Employees shall be given credit for all service with the
Company or a Company Subsidiary, as applicable, to the same extent as if such
services had been rendered to Parent or any of its Affiliates. Notwithstanding
the foregoing, such credit shall not be used to determine benefit accruals,
except with respect to severance and vacation benefits; and
(iii) As to the plan years then in place at the Effective
Time, Parent shall, or shall cause the Company and each Company Subsidiary, to
use all best efforts to: (i) waive all limitations as to pre-existing
conditions, exclusions, evidence of insurability requirements and waiting
periods with respect to participation and coverage requirements applicable to
the Continuing Employees under any welfare or fringe benefit plan in which the
Continuing Employees may be eligible to participate after the Closing; and (ii)
provide each Continuing Employee with credit under any general leave, welfare
plan or fringe benefit plan in which the Continuing Employee becomes eligible to
participate after the Closing for any co-payments and deductibles paid by and
out of pocket requirements satisfied by such Continuing Employee for the then
current plan year under the corresponding welfare or fringe benefit plan
maintained by the Company or any Company Subsidiary prior to the Closing.
(b) As promptly as practicable following the execution of this
Agreement, the Company shall appoint an independent nationally recognized
financial institution to serve as fiduciary for the Company Employee Savings
Plan (the "Savings Plan") with respect to Company Common Shares held under the
Savings Plan who, together with the trustee of the Savings Plan, shall
coordinate and take any and all appropriate actions to effectuate the voting of
such Company Common Shares held under the Savings Plan in the Company
Stockholders Meeting.
(c) As promptly as reasonably practicable following the
execution of this Agreement and in no event later than thirty (30) days
following execution of this Agreement, the Company shall amend in form and
substance agreed to in writing by Parent the Company Supplemental Executive
Retirement Income Plan to provide that, for purposes of determining whether a
Company executive's "Annual Compensation" is substantially similar to his or her
Annual Compensation in the year immediately preceding a Change in Control, the
reference in Section 9.1 of such Plan to incentive compensation is intended to
denote the incentive opportunities made available to such executive, rather than
the amount of incentive compensation actually paid to him or her.
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(d) As promptly as reasonably practicable following the
execution of this Agreement and in no event later than thirty (30) days
following execution of this Agreement, the Company shall duly approve and adopt
resolutions of the Company Board appointing, effective as of the Effective Time,
the Employee Benefit Plans Committee of Parent (provided that it consists of at
least three members) as the sole Plan Administrator under all Company Benefit
Plans and appointing, effective as of the Effective Time, the Employee Benefit
Investment Committee of Parent as the sole fiduciary for investment of the
assets of all Company Benefit Plans, each case in form and substance approved in
writing by Parent.
(e) The Company acknowledges and agrees that benefits payable
in the event of a change of control under the Company's Benefit Restoration
Plan, effective as of January 1, 1994, as amended, shall be paid in accordance
with the terms of the Company's Benefit Restoration Plan, subject to the offset
for benefits payable pursuant to the Company's Retirement Plan, as amended,
including but not limited to Amendment No. 13, which will be applied as if the
IRS had already issued the determination letter referenced in it provided that,
to the extent such Amendment No. 13 is the subject of an unfavorable IRS
determination letter or the Company elects not to pursue a favorable IRS
determination letter covering (or withdraws a determination application to the
extent applicable to) such Amendment No. 13, the Company shall make an
additional payment as soon as practical thereafter (together with interest at an
annualized rate equal to the so-called composite "prime rate" as quoted from
time to time during the relevant period in the Southwest Edition of The Wall
Street Journal, plus two percent (2%)) to each affected participant, who
participated in the Company's Benefit Restoration Plan at the Effective Time,
equal to the amount that would have been paid had Amendment No. 13 not been in
effect, less any amounts actually paid since the Effective Time.
(f) Notwithstanding the foregoing, this Section 6.12 is not
intended to and shall not require Parent to continue any Company Benefit Plan
beyond the time when it otherwise lawfully could be terminated or modified, or
to provide any Continuing Employee with any rights to continued employment,
severance pay (except as provided in Section 6.12(a)(i)) or similar benefits
following any termination of employment.
6.13 Standstill Provisions. The parties hereto acknowledge that Parent
and the Company have previously executed the Confidentiality Agreement which
shall continue in full force and effect in accordance with its terms, provided,
however, that the standstill restrictions on Parent and Merger Sub set forth in
the Confidentiality Agreement are hereby waived by the Company, provided
however, that in the event this Agreement is terminated pursuant to Section 8.1
such standstill restrictions shall survive in accordance with the terms of the
Confidentiality Agreement.
6.14 Third Party Consents; Notices. The Company shall use commercially
reasonable efforts, to the extent requested by Parent, to obtain and deliver to
Parent at or prior to the Closing, all consents, waivers and approvals under
each Material Contract set forth on Section 6.14 of the Company Disclosure
Schedule, using a form reasonably acceptable to Parent. The Company shall give
all notices and other information required to be given to the employees of the
Company or any Company Subsidiary, any collective bargaining unit representing
any group of employees of the Company or any Company Subsidiary and any
applicable Governmental Entity under the WARN Act, the National Labor Relations
Act, as amended, the Code, COBRA and other applicable Laws in connection with
the transactions contemplated by this Agreement.
6.15 Section 16 Matters. Prior to the Effective Time, the Company shall
take all such steps as may be required (to the extent permitted under applicable
Law) to cause any disposition of Company Common Shares (including derivative
securities with respect to Company Common Shares) resulting from the
transactions contemplated by this Agreement by each individual who is subject to
the reporting
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requirements of Section 16(a) of the Exchange Act with respect to the Company to
be exempt under Rule 16b-3 promulgated under the Exchange Act.
6.16 Reasonable Efforts; Cooperation. Subject to the limitations set
forth in Section 6.6(d), each of the parties hereto agrees to use reasonable
best efforts, and to cooperate with each other party hereto, to take, or cause
to be taken, all actions, and to do, or cause to be done, all things reasonably
necessary, appropriate or desirable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated hereby, including (i) taking all reasonable actions necessary to
satisfy the respective conditions set forth in Article 7 and (ii) executing and
delivering such other instruments and doing and performing such other acts and
things as may be necessary or reasonably desirable to effect completely the
consummation of the Merger and the other transactions contemplated hereby. The
Company shall keep Parent reasonably informed of, and cooperate with Parent in
connection with, any stockholder litigation or claim against the Company or its
directors and officers relating to the Merger or the other transactions
contemplated by this Agreement, provided, however, that no settlement of any
such litigation shall be agreed to without Parent's consent, and provided,
further that all obligations in this Section 6.16 shall be subject to
obligations of the Company under applicable Laws relating to attorney-client
communication and privilege.
6.17 Notes Tender Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1, the Company will commence a tender
offer (the "Notes Tender Offer") for all of the $200,000,000 aggregate principal
amount at maturity of the 7-5/8% Senior Notes due 2011 (the "Senior Notes") as
promptly as reasonably practicable after the execution of this Agreement, but in
no event later than the mailing of the Company Proxy Statement. The aggregate
consideration payable to each holder of Senior Notes pursuant to the Notes
Tender Offer shall be an amount in cash established by Parent. The Notes Tender
Offer shall be made pursuant to an Offer to Purchase and Consent Solicitation
Statement prepared by the Company in connection with the Notes Tender Offer in
form and substance satisfactory to Parent (as amended from time to time, the
"Notes Offer to Purchase").
(b) As part of the Notes Tender Offer, the Company shall
solicit the consent of the holders of the Senior Notes, to amend, eliminate or
waive certain sections (as selected by Parent) of the Senior Notes Indenture
(the "Notes Consents"). The Surviving Corporation's obligation to accept for
payment and pay for the Senior Notes tendered pursuant to the Notes Tender Offer
or make any payment for the Notes Consents shall be subject to the conditions
that (i) the conditions set forth in Article 7 below shall have been satisfied
or waived, (ii) the simultaneous occurrence of the Effective Time and (iii) such
other conditions as are customary for transactions similar to the Notes Tender
Offer. Subject to the terms and conditions of the Notes Tender Offer, the Parent
agrees to cause the Surviving Corporation to accept for payment, as promptly as
practicable after expiration of the Notes Tender Offer, all Senior Notes validly
tendered and not withdrawn. The Company will not waive any of the conditions to
the Notes Tender Offer without the prior written consent of Parent.
(c) The Company shall prepare, as promptly as practicable, the
Notes Offer to Purchase, together with related letters of transmittal and
similar ancillary agreements (such documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Notes Tender
Offer Documents"), relating to the Notes Tender Offer and to disseminate to the
record holders of the Senior Notes, and to the extent known by the Company, the
beneficial owners of the Senior Notes (collectively, the "Noteholders"), the
Notes Tender Offer Documents; provided, however, that prior to the dissemination
thereof, the Company shall consult with Parent with respect to the Notes Tender
Offer Documents and shall include in such Notes Tender Offer Documents all
comments reasonably proposed by Parent. Parent shall provide the Company with
any information for inclusion in the Notes Tender
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Offer Documents which may be required under applicable Law and which is
reasonably requested by the Company. If at any time prior to the acceptance of
Senior Notes pursuant to the Notes Tender Offer any event should occur that is
required by applicable Law to be set forth in an amendment of, or a supplement
to, the Notes Tender Offer Documents, the Company will prepare and disseminate
such amendment or supplement; provided, however, that prior to such
dissemination, the Company shall consult with Parent with respect to such
amendment or supplement and shall include in such Notes Tender Offer Documents
all comments reasonably proposed by Parent. The Company will notify Parent at
least 48 hours prior to the dissemination of the Notes Tender Offer Documents,
or 24 hours prior to the mailing of any amendment or supplement thereto, to the
Noteholders.
(d) At such time as the Company receives consents from
Noteholders holding at least a majority of the aggregate principal amount of
Senior Notes, the Company agrees to execute, and to cause all of the guarantors
that are a party to the Senior Notes Indenture to execute, and will use
reasonable best efforts to cause the trustee under the Senior Notes Indenture to
execute, a supplemental indenture (the "Supplemental Indenture") in order to
give effect to the amendments of the Indenture contemplated in the Notes Tender
Offer Documents; provided, however, that notwithstanding the fact that the
Supplemental Indenture will become effective upon such execution, the proposed
amendments set forth therein (the "Proposed Amendments") will not become
operative unless and until all conditions to the Notes Tender Offer have been
satisfied or waived by the Company and the Company accepts all Senior Notes (and
related consents) validly tendered for purchase and payment pursuant to the
Notes Tender Offer. In such event, the parties hereto agree that the Proposed
Amendments will be deemed operative as of immediately prior to such acceptance
for payment, and the Company will thereafter be obligated to make all payments
for the Senior Notes (and related consents) so tendered.
ARTICLE 7
Closing Conditions
7.1 Conditions to Obligations of Each Party Under This Agreement. The
respective obligations of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction, at or
prior to the Effective Time, of the following conditions, any or all of which
may be waived, in whole or in part, to the extent permitted by applicable Law:
(a) Company Stockholders Approval. The Company Stockholders
Approval shall have been obtained.
(b) No Order. No Governmental Entity shall have obtained,
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, judgment, injunction, arbitration award, finding or
other order (whether temporary, preliminary or permanent), in any case that is
in effect and prevents or prohibits consummation of the Merger (each, a
"Restraint").
(c) HSR Act. Any applicable waiting periods, together with any
extensions thereof, under the (i) HSR Act and (ii) other Antitrust Laws required
to consummate the Merger shall have expired or been terminated.
7.2 Additional Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger and the other
transactions contemplated herein are also subject to the satisfaction, at or
prior to the Effective Time, of the following conditions:
(a) Representations and Warranties. (i) The representations
and warranties of the Company contained in Section 4.1, Section 4.3, Section
4.4, and Section 4.5 shall be true and correct in all material respects as of
the date hereof and as of the Effective Time as though made on and as of the
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Effective Time (except that those representations and warranties that address
matters only as of a particular date need only be true and correct as of such
date) and (ii) all other representations and warranties of the Company contained
in this Agreement and in any certificate or other writing delivered by the
Company pursuant hereto, in each case disregarding and without giving any effect
to all qualifications and exceptions contained herein and therein relating to
materiality or Material Adverse Effect or any similar standard or qualification,
shall be true and correct as of the date hereof and as of the Effective Time
(except that those representations and warranties that address matters only as
of a particular date need only be true and correct as of such date), except
where the failure of such representations and warranties to be so true and
correct has not had and would not, individually or in the aggregate, have a
Material Adverse Effect.
(b) Agreements and Covenants. The Company shall have performed
or complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time.
(c) Material Adverse Effect. There shall not have occurred any
Material Adverse Effect.
(d) Court Proceedings. No action, suit, proceeding, claim,
arbitration or investigation shall be pending or threatened in which any
Governmental Entity is a party wherein an unfavorable injunction, judgment,
order, decree, ruling or charge would (i) prevent, restrain or otherwise
interfere with the consummation of any of the transactions contemplated by this
Agreement or (ii) affect adversely the right or powers of Parent to own, operate
or control the Company or any portion of the business or assets of the Company
or Parent, and no such injunction, judgment, order, decree, ruling or charge
shall be in effect.
(e) Xxxxxxxx-Xxxxx Certifications. With respect to any of the
Company SEC Reports filed with the SEC after the date of this Agreement, neither
the principal executive officer nor the principal financial officer of the
Company shall have failed to provide the necessary certifications in the form
required under Section 302 and Section 906 of the SOXA.
(f) Officer's Certificate. The Company shall have delivered to
Parent a certificate, signed by the Chief Executive Officer of the Company and
dated as of the Closing Date, to the effect that the conditions set forth in
this Section 7.2 have been satisfied.
7.3 Additional Conditions to Obligations of the Company. The obligation
of the Company to effect the Merger and the other transactions contemplated
herein are also subject to the satisfaction, at or prior to the Effective Time,
of the following conditions:
(a) Representations and Warranties. (i) The representations
and warranties of Parent and Merger Sub contained in Section 5.1, Section 5.3
and Section 5.4 shall be true and correct in all material respects as of the
date hereof and as of the Effective Time as though made on and as of the
Effective Time (except that those representations and warranties that address
matters only as of a particular date need only be true and correct as of such
date) and (ii) all other representations and warranties of Parent and Merger Sub
contained in this Agreement and in any certificate or other writing delivered by
Parent or Merger Sub pursuant hereto, in each case disregarding and without
giving any effect to all qualifications and exceptions contained herein and
therein relating to materiality or Parent Material Adverse Effect or any similar
standard or qualification pursuant hereto shall be true and correct as of the
date hereof and as of the Effective Time (except that those representations and
warranties that address matters only as of a particular date need only be true
and correct as of such date), except where
-59-
the failure of such representations and warranties to be so true and correct has
not had and would not, individually or in the aggregate, have a Parent Material
Adverse Effect.
(b) Agreements and Covenants. Parent shall have performed or
complied with, in all material respects, all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time.
(c) Officer's Certificate. Parent shall have delivered to the
Company a certificate, signed by an authorized officer of Parent and dated as of
the Closing Date, to the effect that the conditions set forth in this Section
7.3 have been satisfied.
ARTICLE 8
Termination, Amendment and Waiver
8.1 Termination. This Agreement may be terminated, and the Merger and
the other transactions contemplated by this Agreement may be abandoned, at any
time prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, whether before or after the
Company Stockholders Approval has been obtained:
(a) By mutual written consent of Parent and the Company, by
action of their respective Boards of Directors;
(b) By either Parent or the Company if the Merger shall not
have been consummated prior to November 30, 2006; provided, however, that such
date may, from time to time, be extended by Parent (by written notice thereof to
the Company) or by the Company (by written notice thereof to Parent) up to and
including February 28, 2007, in the event all conditions to effect the Merger
other than one or more conditions set forth in Section 7.1(c) (the "Regulatory
Conditions") have been or are capable of being satisfied at the time of each
such extension and the Regulatory Conditions have been or are reasonably capable
of being satisfied on or prior to February 28, 2007 (such earlier date, as it
may be so extended, shall be referred to herein as the "Outside Date");
provided, further, that the right to terminate this Agreement under this Section
8.1(b) shall not be available to any party whose failure to fulfill any of its
obligations under this Agreement has been the cause of, or resulted in, the
failure of the Merger to be consummated on or before such date;
(c) By either Parent or the Company subject to Section 6.7(d)
of this Agreement if any Governmental Entity shall have issued a Restraint;
provided that the party seeking to terminate this Agreement pursuant to this
Section 8.1(c) shall have satisfied its obligations under Section 6.7;
(d) By either Parent or the Company if the Company
Stockholders Approval shall not have been obtained upon a vote taken thereon at
the Company Stockholders Meeting or at any adjournment or postponement thereof;
provided, however, that the right to terminate this Agreement under this Section
8.1(d) shall not be available to the Company where the failure to obtain the
Company Stockholders Approval is caused by any action or failure to act of the
Company that constitutes a breach of this Agreement; provided, further, that no
termination by the Company pursuant to this Section 8.1(d) shall be effective
unless concurrently therewith it fulfills its obligations under Section 8.2;
(e) By Parent if (at any time prior to obtaining the Company
Stockholders Approval) (i) the Company Board or any committee thereof shall for
any reason have withheld, withdrawn, amended or modified in a manner adverse to
Parent the Company Board Recommendation, (ii) the Company shall have failed to
include the Company Board Recommendation in the Proxy Statement, (iii) the
Company Board or any committee thereof shall have approved or publicly
recommended any Acquisition Proposal,
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(iv) the Company shall have entered into any letter of intent with respect to or
other Contract for any Acquisition Proposal, (v) the Company shall have
materially breached any of the provisions of Sections 6.4 or 6.6, or (vi) a
tender or exchange offer relating to securities of the Company shall have been
commenced by a Person unaffiliated with Parent, and the Company shall not have
sent to its security holders pursuant to Rule 14e-2 promulgated under the
Securities Act, within ten (10) Business Days after such tender or exchange
offer is first published sent or given, a statement disclosing that the Company
recommends rejection of such tender or exchange offer;
(f) By Parent, if there shall have been or have been disclosed
any Effect that constitutes a Material Adverse Effect or if (i)(A) the Company
shall have materially breached any of its covenants or agreements set forth in
this Agreement or (B) any representation or warranty of the Company set forth in
this Agreement shall have become materially untrue or incorrect, (ii) such
breach or misrepresentation, if curable, is not cured within twenty (20)
Business Days after written notice thereof, and (iii) such breach or
misrepresentation would cause the conditions set forth in Section 7.2(a) or
Section 7.2(b) not to be satisfied;
(g) By the Company, if (i)(A) either Parent or Merger Sub has
materially breached any of its covenants or agreements set forth in this
Agreement or (B) any representation or warranty of Parent or Merger Sub set
forth in this Agreement shall have become materially untrue or incorrect, (ii)
such breach or misrepresentation, if curable, is not cured within twenty (20)
Business Days after written notice thereof, and (iii) such breach or
misrepresentation would cause the conditions set forth in Section 7.3(a) or
Section 7.3(b) not to be satisfied; or
(h) By Company, in accordance with Section 6.6(d); provided,
that, in order for the termination of this Agreement pursuant to this Section
8.1(h) to be deemed effective, Company shall have complied with Section 6.6(d)
and concurrently therewith fulfilled its obligation under Section 8.2.
8.2 Effect of Termination.
(a) Limitation on Liability. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent or the Company or their respective
Subsidiaries, officers, directors or stockholders, except (i) with respect to
Section 6.5 (Confidentiality), Section 6.9 (Public Announcements), this Section
8.2 (Effects of Termination) and Article 9 (General Provisions) and (ii) with
respect to any liabilities or damages incurred or suffered by a party as a
result of the willful breach by the other party of any of its representations,
warranties, covenants or other agreements set forth in this Agreement.
(b) Parent Expenses. Parent and the Company agree that if this
Agreement is terminated pursuant to Section 8.1(d) (at a time when the condition
described in Section 8.2(c)(iv)(B) exists), Section 8.1(e) or Section 8.1(h)
then the Company shall pay Parent an amount equal to the sum of Parent's
Expenses in an amount not to exceed $2,500,000. Payment of Parent's Expenses
shall be made no later than two (2) Business Days after delivery to the Company
of notice of demand for payment and a documented itemization setting forth in
reasonable detail all of Parent's Expenses (which itemization may be
supplemented and updated from time to time by Parent until the 90th day after
Parent delivers such notice of demand for payment).
(c) Company Termination Fee. In addition to any payment
required by Section 8.2(b), the Company shall pay to Parent a termination fee of
$44,400,000 in immediately available funds in the event that this Agreement is
terminated (i) by Parent pursuant to Section 8.1(e), (ii) by the Company
pursuant to Section 8.1(d) if at such time Parent was entitled to terminate
pursuant to
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Section 8.1(e), (iii) by Company pursuant to Section 8.1(h) or (iv) (A) in the
event that this Agreement is terminated by either party pursuant to Section
8.1(d) (other than by the Company if at such time Parent was entitled to
terminate pursuant to Section 8.1(e)), (B) at any time after the date of this
Agreement and before the vote on this Agreement of the Company Stockholders
Meeting, an Acquisition Proposal with respect to the Company shall have been
publicly announced, and (C) the Company enters into a definitive agreement with
respect to an Acquisition Proposal, or an Acquisition Proposal is consummated,
within twelve (12) months following the termination of this Agreement. For
purposes of the directly preceding sentence, references (x) to "10%" in clauses
(i) and (iii) of the definition of "Acquisition Proposal" shall be deemed to be
a reference to "50% and (y) to "Company Subsidiaries" in such definition shall
be deemed to be a reference to "Company Subsidiaries" that constitute a
"significant subsidiary" (as defined in Rule 1.-02(w) of Regulation S-X).
Payment of any amount described in Section 8.2(b) and this Section shall not be
in lieu of damages incurred in the event of willful breach of this Agreement.
Any payment required to be made pursuant to Section 8.2(c)(i), 8.2(c)(ii) or
8.2(c)(iii) shall be made no later than two (2) Business Days after the date of
termination. Any payment required to be made pursuant to Section 8.2(c)(iv)
shall be made no later than two (2) Business Days after the entering into of a
definitive agreement with respect to, or the consummation of, an Acquisition
Proposal. All payments under this Section 8.2 shall be made by wire transfer of
immediately available funds to an account designated by Parent. The Company
acknowledges that the agreements contained in this Section 8.2 are an integral
part of the transactions contemplated by this Agreement and that, without these
agreements, Parent would not enter into this Agreement. Accordingly, if the
Company fails promptly to pay any amount due to the other party pursuant to this
Section 8.2 and, in order to obtain such payment, Parent commences a suit that
results in a judgment against the Company for all or any portion of the amounts
set forth in this Section 8.2, the Company shall pay to Parent its costs and
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with such suit, together with interest on the aggregate amount of the
fees and expenses at a rate equal to the prime rate reported in The Wall Street
Journal on the date such payment was required to be made plus 2%.
8.3 Amendment. This Agreement may be amended by the parties hereto,
whether before or after the Company Stockholders' Approval has been obtained, at
any time prior to the Effective Time; provided, however, that, after the Company
Stockholders Approval has been obtained, no amendment may be made without
further stockholder approval that, by Law or in accordance with the rules of any
relevant stock exchange, requires further approval by such stockholders. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
8.4 Waiver. At any time prior to the Effective Time, any party hereto
may (i) extend the time for the performance of any of the obligations or other
acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance by the other
party with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby, but such extension or waiver
or failure to insist on strict compliance with an obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
8.5 Fees and Expenses. Subject to Section 8.2, all Expenses incurred by
the parties hereto shall be borne solely and entirely by the party that has
incurred the same; provided, however, that each of Parent and the Company shall
pay one-half of the filing fee(s) for filings made pursuant to Antitrust Laws;
provided further that Parent shall reimburse all Expenses up to an aggregate of
$625,000 incurred by the Company in connection with the Notes Tender Offer in
the event this Agreement is terminated other than pursuant to Sections 8.1(d)
(at a time when the condition described in Section 8.2(c)(iv)(B) exists), (e) or
(h).
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ARTICLE 9
General Provisions
9.1 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties that by its terms
contemplates performance after the Effective Time.
9.2 Notices. Any notices or other communications required or permitted
under, or otherwise in connection with, this Agreement shall be in writing and
shall be deemed to have been duly given when delivered in person or upon
confirmation of receipt when transmitted by facsimile transmission (but only if
followed by transmittal by national overnight courier or hand delivery on the
next Business Day) or upon receipt after dispatch by registered or certified
mail, postage prepaid, or on the next Business Day if transmitted by national
overnight courier, in each case addressed as follows:
If to Parent or Merger Sub, addressed to it at:
The Boeing Company
X.X. Xxx 0000 XX 00-00
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Vice President, Commercial
Aviation Services
Boeing Commercial Airplanes
Xxxxx Xxxxxx, Director, New Business Ventures,
Boeing Commercial Airplanes
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a mandated copy, which shall not constitute notice, to:
The Boeing Company
000 Xxxxx Xxxxxxxxx
XX 0000-0000
Xxxxxxx, XX 00000
Attention: Senior Vice President
General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Xxxxxxxx Xxxxxx Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx
C. Xxxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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If to the Company, addressed to it at:
Aviall, Inc.
0000 Xxxxxx Xxxxxxxxx
XXX Xxxxxxx, XX 00000
Attention: Chief Executive Officer
General Counsel
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a mandated copy, which shall not constitute notice, to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Xxxx X. Xxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a further mandated copy, which shall not constitute notice, to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Xxxxxxx X. XxXxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
9.3 Headings. 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.
9.4 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 terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
9.5 Entire Agreement. This Agreement (together with the Exhibits,
Company Disclosure Schedule, and the other documents entered into in connection
with the Merger) and the Confidentiality Agreement constitute the entire
agreement of the parties and supersede all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
9.6 Assignment. None of this Agreement or any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto, in
whole or in part, by operation of Law or otherwise, without the prior written
consent of the other parties, and any attempt to make any such
-64-
assignment without such consent shall be null and void. Notwithstanding the
foregoing, Merger Sub may assign, in its sole discretion, any and all rights,
interests and obligations under this Agreement to any wholly owned Parent
Subsidiary without the Company's consent.
9.7 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns, and nothing in this Agreement, express or implied, other than pursuant
to Section 6.10, 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.
9.8 Mutual Drafting. Each party hereto has participated in the
preparation and drafting of this Agreement, which each party acknowledges is the
result of extensive negotiations between the parties.
9.9 Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury.
(a) This Agreement shall be governed by, and construed in
accordance with, the Laws of the State of Delaware without reference to such
state's principles of conflicts of law.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the Court of Chancery of the State of Delaware or Federal court
of the United States of America, located in the State of Delaware, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the agreements delivered in connection herewith or
the transactions contemplated hereby or thereby or for recognition or
enforcement of any judgment relating thereto, and each of the parties hereby
irrevocably and unconditionally (i) agrees not to commence any such action or
proceeding except in such courts, (ii) agrees that any claim in respect of any
such action or proceeding may be heard and determined in such Delaware state
court or, to the extent permitted by Law, in such Federal court, (iii) waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any such action or
proceeding in any such Delaware state or Federal court, and (iv) waives, to the
fullest extent permitted by Law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such Delaware state or Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law.
Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 9.2. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by Law.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (1) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF SUCH WAIVERS, (2) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (3) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (4) IT
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.9(c).
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9.10 Disclosure. Any matter disclosed in any section of a party's
disclosure schedule shall be considered disclosed for other sections of such
disclosure schedule, but only to the extent that it would be readily apparent
that such matter on its face would apply to a particular section of a party's
disclosure schedule. The provision of monetary or other quantitative thresholds
for disclosure does not and shall not be deemed to create or imply a standard of
materiality hereunder.
9.11 Counterparts. This Agreement may be executed in one or more
original or facsimile 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.
9.12 Remedies Cumulative; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
hereto shall be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by Law or equity upon such party, and the exercise by a
party hereto of any one remedy shall not preclude the exercise of any other
remedy and nothing in this Agreement shall be deemed a waiver by any party of
any right to specific performance or injunctive relief. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in addition to any
other remedy to which they are entitled at Law or in equity. Each party hereto
agrees to waive any requirement for the posting of, or securing of, a bond in
connection with any such remedy.
9.13 Agreement to Protect Parent's Acquired Goodwill. As part of the
Merger, certain employee stockholders have executed non-competition agreements
agreeing not to compete, not to solicit employees, and not to solicit customers
during the time they are employed by Parent and for two (2) years thereafter,
and the parties hereto agree that such agreements are necessary to protect the
legitimate business interest of Parent in acquiring the Company including the
goodwill of the Company and that the covenants set forth in such agreements are
ancillary to this Agreement.
9.14 Interpretation.
(a) When a reference is made in this Agreement to Articles,
Sections, Exhibits or Schedules, such reference shall be to an Article or
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. Where a reference is made to a Law, such reference is to such Law as
amended.
(b) The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The phrases "provided to," "furnished to," and phrases of similar
import when used herein, unless the context otherwise requires, shall mean that
a true, correct and complete paper copy of the information or material referred
to has been delivered to the party to whom such information or material is to be
provided. Unless the context of this Agreement otherwise requires, (i) words of
any gender include each other gender, (ii) words using the singular or plural
number also include the plural or singular number, respectively, and (iii) the
terms "hereof," "herein," "hereunder" and derivative or similar words refer to
this entire Agreement.
[Remainder of 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.
THE BOEING COMPANY
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President General Manager
Commercial Aviation Services
BOEING-AVENGER, INC.
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Name: Xxxxx Xxxxxx
Title: President
AVIALL, INC.
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President and Chief Executive
Officer
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
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EXHIBIT A
FORM OF RESTATED
CERTIFICATE OF INCORPORATION
OF
AVIALL, INC.
--------------------------------------------------------------------------------
ARTICLE 1
---------
The name of the corporation is: Aviall, Inc.
ARTICLE 2
---------
The address of the corporation's registered office in the State of
Delaware is 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, in the City of Wilmington, County
of New Castle. The name of the corporation's registered agent at such address is
Corporation Service Company.
ARTICLE 3
---------
The purpose of the corporation is to engage in any part of the world in
any lawful act or activity for which corporations may be organized under the
General Corporation Law of the State of Delaware.
ARTICLE 4
---------
The total number of shares of stock which the corporation shall have
authority to issue is 1,000, all of which shall be common stock having a par
value of $0.01 per share.
ARTICLE 5
---------
In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to adopt, amend or
repeal the by-laws of the corporation; provided, however, that such
authorization shall not divest the stockholders of the power or limit the power
of the stockholders to adopt, amend or repeal the by-laws of the corporation.
ARTICLE 6
---------
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the corporation. Election of directors need not be by written ballot unless
the by-laws of the corporation so provide. Directors may be removed, with or
without
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cause, by the affirmative vote of the holders of a majority in voting
power of the outstanding shares of capital stock of the corporation entitled to
vote thereon.
ARTICLE 7
---------
Each person who is or was or had agreed to become a director or officer
of the corporation, or each such person who is or was serving or who had agreed
to serve at the request of the board of directors or an officer of the
corporation as an employee of the corporation or as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise (including the heirs, executor, administrators or estate of such
person) shall be indemnified by the corporation in accordance with the by-laws
of the corporation, to the full extent permitted from time to time by the
General Corporation Law of the State of Delaware as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment) or any other applicable laws as presently or hereafter in effect.
Without limiting the generality or the effect of the foregoing, the corporation
may enter into one or more agreements with any person which provide for
indemnification greater or different than that provided in this Article 7. Any
amendment or repeal of this Article 7 shall not adversely effect any right or
protection existing hereunder immediately prior to such amendment or repeal.
ARTICLE 8
---------
No director shall be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director except as provided
for in Section 102(b)(7) of the General Corporation Law of the State of Delaware
as now in force or as hereinafter amended. Any repeal or modification of this
Article shall not adversely affect any right or protection of a director of the
corporation existing at the time such repeal or modification.
ARTICLE 9
---------
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed by the laws of the State of Delaware, and all rights and
powers, conferred upon stockholders herein are granted subject to this
reservation.
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EXHIBIT B
FORM OF AMENDED AND
RESTATED BYLAWS
OF
[AVENGER]
AVIALL, INC.
As Adopted (________, 2006)
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1. OFFICES..................................................... 1
ARTICLE 2. STOCKHOLDERS................................................ 1
2.1 Annual Meeting.............................................. 1
2.2 Special Meetings............................................ 1
2.3 Place of Meeting............................................ 1
2.4 Notice of Meeting........................................... 1
2.5 Waiver of Notice............................................ 2
2.6 Fixing of Record Date for Determining Stockholders.......... 2
2.7 Voting List................................................. 2
2.8 Quorum...................................................... 2
2.9 Manner of Acting............................................ 2
2.10 Proxies..................................................... 3
2.11 Voting of Shares............................................ 3
2.12 Action by Stockholders Without a Meeting.................... 3
ARTICLE 3. BOARD OF DIRECTORS.......................................... 3
3.1 General Powers.............................................. 3
3.2 Number and Tenure........................................... 3
3.3 Resignation................................................. 3
3.4 Annual and Regular Meetings................................. 3
3.5 Special Meetings............................................ 3
3.6 Notice of Special Meetings.................................. 4
3.7 Waiver of Notice............................................ 4
3.7.1. Written............................................. 4
3.7.2. Attendance.......................................... 4
3.8 Quorum...................................................... 4
3.9 Manner of Acting............................................ 4
3.10 Vacancies................................................... 4
3.11 Removal..................................................... 5
3.12 Presumption of Assent....................................... 5
3.13 Committees.................................................. 5
3.14 Compensation................................................ 5
3.15 Action by Directors Without a Meeting....................... 5
3.16 Meetings by Telephone....................................... 5
-i-
ARTICLE 4. OFFICERS.................................................... 6
4.1 Number...................................................... 6
4.2 Election or Appointment and Term of Office.................. 6
4.3 Removal..................................................... 6
4.4 Vacancies................................................... 6
4.5 Chairman of the Board....................................... 6
4.6 President................................................... 6
4.7 Vice President.............................................. 7
4.8 Secretary................................................... 7
4.9 Treasurer................................................... 7
ARTICLE 5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS...................... 8
5.1 Loans....................................................... 8
5.2 Loans to Officers and Directors............................. 8
5.3 Checks, Drafts, Etc......................................... 8
5.4 Deposits.................................................... 8
ARTICLE 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER.................. 8
6.1 Issuance of Shares.......................................... 8
6.2 Certificates for Shares..................................... 8
6.3 Transfer of Shares.......................................... 9
ARTICLE 7. BOOKS AND RECORDS........................................... 9
ARTICLE 8. FISCAL YEAR................................................. 9
ARTICLE 9. SEAL........................................................ 9
ARTICLE 10. INDEMNIFICATION............................................. 9
ARTICLE 11. AMENDMENTS..................................................10
ARTICLE 12. THE CORPORATION AS STOCKHOLDER..............................10
-ii-
FORM OF AMENDED
AND RESTATED BYLAWS
OF
AVIALL, INC.
ARTICLE 1. OFFICES
The principal office of the corporation shall be located at its
principal place of business, which at the time of adoption of these Bylaws is
000 X. Xxxxxxxxx Xxxxx, Xxxxxxx, XX 00000-0000. The corporation may have such
other offices, either within or without the State of Delaware, as the Board of
Directors ("Board") may designate or as the business of the corporation may
require from time to time.
ARTICLE 2. STOCKHOLDERS
2.1 Annual Meeting. The annual meeting of stockholders shall be held on
a date and at a time designated by the Board, for the purpose of electing
directors and transacting such other business as may properly come before the
meeting. If the day fixed for the annual meeting is a legal holiday at the place
of the meeting, the meeting shall be held on the next succeeding business day.
If the election of directors is not held on the day designated for the annual
meeting of stockholders, or at any adjournment thereof, the election shall be
held at a special meeting of the stockholders called as soon thereafter as
practicable.
2.2 Special Meetings. The President, the Board, or the holders of not
less than one-tenth of all the outstanding shares of the corporation entitled to
vote at the meeting may call special meetings of the stockholders for any
purpose.
2.3 Place of Meeting. All meetings shall be held at the principal office
of the corporation or at such other place within or without the State of
Delaware designated by the Board or by any persons entitled to call a meeting
hereunder, or by a waiver of notice signed by all of the stockholders entitled
to vote at the meeting.
2.4 Notice of Meeting. The President, the Secretary, the Board, or
stockholders calling an annual or special meeting of stockholders as provided
for herein, shall cause to be delivered to each stockholder entitled to vote at
the meeting either personally or by mail, not less than ten nor more than sixty
days before the meeting, written notice stating the place, day, and hour of the
meeting and, in the case of a special meeting, the purpose of purposes for which
the meeting is called. If such notice is mailed, it shall be deemed delivered
when deposited in the United States mail properly addressed to the stockholders
at their respective addresses as they appear on the stock transfer books of the
corporation, with postage prepaid.
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2.5 Waiver of Notice. Whenever any notice is required to be given to any
stockholder under the provisions of these Bylaws or the Certificate of
Incorporation or the General Corporation Law of the State of Delaware ("DGCL"),
a waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
2.6 Fixing of Record Date for Determining Stockholders. For the purpose
of determining stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or stockholders entitled to receive
payment of any dividend, or in order to make a determination of stockholders for
any other purpose, the Board may fix in advance a date as the record date for
any such determination. Such record date shall be not more than fifty days and,
in case of a meeting of stockholders, not less than ten days prior to the date
on which the particular action requiring such determination is to be taken. If
no record date is fixed for the determination of stockholders entitled to vote
at a meeting or to receive payment of a dividend, the date and hour on which the
notice of meeting is mailed or on which the resolution of the Board declaring
such dividend is adopted, as the case may be, shall be the record date and time
for such determination. When a determination of stockholders entitled to vote at
any meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
2.7 Voting List. At least ten days before each meeting of stockholders,
a complete list of the stockholders entitled to vote at such meeting, or any
adjournment thereof, shall be made, arranged in alphabetical order, with the
address of and number of shares held by each stockholder. This list shall be
open to inspection in accordance with the DGCL for a period of ten days prior to
such meeting. The list shall be kept open at such meeting for the inspection of
any stockholder.
2.8 Quorum. A majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of the stockholders. If less than a majority of the outstanding
shares are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At a meeting
adjourned and reconvened, if a quorum is present or represented at the
reconvened meeting, any business may be transacted that might have been
transacted at the meeting as originally notified. The stockholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
2.9 Manner of Acting. If a quorum is present, the affirmative vote of
the majority of the shares represented at the meeting and entitled to vote on
the subject matter shall be the act of the stockholders, unless the vote of a
greater number is required by these Bylaws, the Certificate of Incorporation, or
the DGCL.
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2.10 Proxies. A stockholder may vote by proxy executed in writing by the
stockholder or by the stockholder's attorney-in- fact. Such proxy shall be filed
with the Secretary of the corporation before or at the time of the meeting.
Unless otherwise provided in the proxy, a proxy shall be invalid after eleven
months from the date of its execution.
2.11 Voting of Shares. Each outstanding share entitled to vote shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
stockholders.
2.12 Action by Stockholders Without a Meeting. Any action required or
permitted to be taken at a meeting of the stockholders may be taken without a
meeting if a written consent setting forth the action so taken is signed by all
stockholders entitled to vote with respect to the subject matter thereof. Any
such consent shall be inserted in the minute book as if it were the minutes of a
meeting of the stockholders.
ARTICLE 3. BOARD OF DIRECTORS
3.1 General Powers. The business and affairs of the corporation shall be
managed by the Board.
3.2 Number and Tenure. The number of directors shall not be more than
seven and not fewer than one, as shall be determined from time to time by
resolution of the Board. The initial board shall be composed of six directors.
No decrease in the number of directors shall have the effect of shortening the
term of any incumbent director. Unless a director dies, resigns, or is removed,
each director shall hold office until the next annual meeting of stockholders or
until the director's successor is elected, whichever is later. Directors need
not be stockholders of the corporation or residents of the State of Delaware.
3.3 Resignation. Any director may resign at any time by delivering
written notice to the President or the Secretary, or to the registered office of
the corporation, or by giving oral notice at any meeting of the directors or
stockholders.
3.4 Annual and Regular Meetings. An annual Board meeting shall be held
without notice promptly after and at the same place as the annual meeting of the
stockholders. By resolution, the Board may specify the time and place either
within or without the State of Delaware for holding regular meetings without
other notice than such resolution.
3.5 Special Meetings. Special Board meetings may be called by or at the
request of the President, the Secretary or any two directors. The person or
persons authorized to call special meetings may fix any place either within or
without the State of Delaware as the place for holding any special Board meeting
called by them.
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3.6 Notice of Special Meetings. Notice of each special meeting, stating
the time and place of the meeting, shall be given to each director by mail,
telephone, or other electronic transmission or personally. If by mail, such
notice shall be given not less than five days before the meeting; and if by
telephone, other electronic transmission or personally, not less than two days
before the meeting. Neither the business to be transacted at nor the purpose of
any special meeting need be specified in the notice of such meeting.
3.7 Waiver of Notice.
3.7.1 Written. Whenever any notice is required to be given to
any director under the provisions of these Bylaws, the Certificate of
Incorporation, or the DGCL, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Neither the
business to be transacted at nor the purpose of any regular or special meeting
of the Board need be specified in the waiver of notice of such meeting.
3.7.2 Attendance. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened.
3.8 Quorum. Except as provided in these Bylaws, the Certificate of
Incorporation, or the DGCL, a majority of the total number of directors shall
constitute a quorum for the transaction of business at any Board meeting but, if
less than a majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice.
3.9 Manner of Acting. The act of the majority of the directors present
at a meeting at which there is a quorum shall be the act of the Board, unless
the vote of a greater number is required by these Bylaws, the Certificate of
Incorporation, or the DGCL.
3.10 Vacancies. Any vacancy occurring on the Board may be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the Board. A director elected to fill a vacancy shall be elected for
the unexpired term of such director's predecessor in office. Any directorship to
be filled by reason of an increase in the number of directors may be filled by
the Board for a term of office continuing only until the next election of
directors by the stockholders.
3.11 Removal. At a meeting of stockholders called expressly for that
purpose, one or more members of the Board (including the entire Board) may be
removed, with or without cause, by a vote of the holders of a majority of the
shares then entitled to vote on the election of directors.
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3.12 Presumption of Assent. A director of the corporation present at a
Board meeting at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless such director's dissent is entered
in the minutes of the meeting, or unless such director files a written dissent
to such action with the person acting at the secretary of the meeting before the
adjournment thereof, or unless such director forwards such dissent by registered
mail to the Secretary of the corporation immediately after the adjournment of
the meeting. A director who voted in favor of such action may not dissent.
3.13 Committees. The Board may, by resolution passed by a majority of
the whole Board, appoint standing or temporary committees, each committee to
consist of one or more directors of the corporation, and invest such committees
with such powers as it may see fit, subject to such conditions as may be
prescribed by the Board and by applicable law. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not they
constitute a quorum, may unanimously appoint another member of the Board to act
at the meeting in the place of any such absent or disqualified member. The
designation of any such committee and the delegation of authority thereto shall
not relieve the Board, or any member thereof, of any responsibility imposed by
law.
3.14 Compensation. By Board resolution, directors and committee members
may be paid their expenses, if any, of attendance at each Board or committee
meeting, or a fixed sum for attendance at each Board or committee meeting, or a
stated salary as director or a committee member, or a combination of the
foregoing. No such payment shall preclude any director or committee member from
serving the corporation in any other capacity and receiving compensation
therefor.
3.15 Action by Directors Without a Meeting. Any action that could be
taken at a meeting of the Board or of any committee appointed by the Board may
be taken without a meeting if a written consent setting forth the action to be
taken is signed by each of the directors or by each committee member. Any such
written consent shall be inserted in the minute book as if it were the minutes
of a Board or a committee meeting.
3.16 Meetings by Telephone. Members of the Board or any committee
thereof may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation by such
means shall constitute presence in person at a meeting
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ARTICLE 4. OFFICERS
4.1 Number. The officers of the corporation shall be a President, a
Secretary, and a Treasurer, each of whom shall be elected by the Board. One or
more Vice Presidents and such other officers, including a Chairman of the Board
and assistant officers as may be deemed necessary, may be elected or appointed
by the Board, such officers and assistant officers to hold office for such
period, have such authority and perform such duties as are provided in these
Bylaws or as may be provided by resolutions of the Board. The Board may delegate
to any officer or agent the power to appoint any such subordinate officers or
agents and to prescribe their respective terms of office, authorities, and
duties. Any two or more offices may be held by the same person.
4.2 Election or Appointment and Term of Office. The officers of the
corporation shall be elected or appointed annually by the Board at the Board
meeting held after the annual meeting of the stockholders. If the officers are
not elected at such meeting, such election shall be held as soon thereafter as a
Board meeting conveniently may be held. Unless an officer dies, resigns, or is
removed, each officer shall hold office until the next annual meeting of the
Board or until such officer's successor is elected.
4.3 Removal. Any officer or agent elected or appointed by the Board may
be removed by the Board whenever in its judgment the best interests of the
corporation would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed.
4.4 Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification, or any other cause may be filled by the Board for the
unexpired portion of the term.
4.5 Chairman of the Board. The Chairman of the Board, if elected, shall
be chosen from among the directors. The Chairman shall preside, when present, at
all meetings of the stockholders and at all meetings of the Board and shall have
such other powers and duties as may from time to time be prescribed by the Board
upon written directions given to him pursuant to Resolutions duly adopted by the
Board.
4.6 President. The President shall be the chief executive officer of the
corporation unless some other officer is so designated by the Board, and,
subject to the Board's control, the President shall supervise and control all of
the business and affairs of the corporation. In the absence of the Chairman of
the Board, the President shall preside over all meetings of the stockholders and
over all Board meetings. The President may sign certificates for shares of the
corporation, deeds, mortgages, bonds, contracts, or other instruments, except
when the signing thereof has been expressly delegated by the Board or by these
Bylaws to some other officer or agent of the corporation or is required by law
to be otherwise signed by some other officer or in
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some other manner. In general, the President shall perform all duties incident
to the office of President and such other duties prescribed by the Board from
time to time.
4.7 Vice President. In the event of the absence or death, inability or
refusal to act, of the President, the Vice President (or, in the event of more
than one Vice President, the Vice President who was first elected to such
office) shall perform the duties of the President, with all the powers of and
subject to all the restrictions upon the President. Any Vice President may sign,
with the Secretary or Assistant Secretary, certificates for shares of the
corporation. Vice Presidents shall have, to the extent authorized by the
President or the Board, the same powers as the President to sign deeds,
mortgages, bonds, contracts, or other instruments. Vice Presidents shall perform
such other duties as from time to time may be assigned to them by the President
or by the Board.
4.8 Secretary. The Secretary shall: (a) keep the minutes of meetings of
the stockholders and the Board in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the provisions of
these Bylaws or as required by law; (c) be custodian of the corporate records
and seal of the corporation, the execution of which on behalf of the corporation
under its seal is duly authorized; (d) keep registers of the post office address
of each stockholder as furnished to him or her by each stockholder; (e) sign
with the President or a Vice President certificates for shares of the
corporation, the issuance of which has been authorized by resolution of the
Board; (f) have general charge of the stock transfer books of the corporation;
(g) sign with the President deeds, mortgages, contracts, bonds, or other
instruments; and (h) in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to the
Secretary by the President or by the Board. In the absence of the Secretary, an
Assistant Secretary may perform his or her duties.
4.9 Treasurer. If required by the Board, the Treasurer shall give a bond
for the faithful discharge of his or her duties in such sum and with such surety
or sureties as the Board shall determine. The Treasurer shall have charge and
custody of and be responsible for all funds and securities of the corporation;
receive and give receipts for monies due and payable to the corporation from any
source whatsoever, and deposit all such monies in the name of the corporation in
banks, trust companies, or other depositories selected by the Board in
accordance with the provisions of these Bylaws; and in general perform all of
the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him or her by the President or by the Board. In
the absence of the Treasurer, an Assistant Treasurer may perform his or her
duties.
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ARTICLE 5. CONTRACTS, LOANS, CHECKS, AND DEPOSITS
5.1 Loans. No loans shall be contracted on behalf of the corporation and
no evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the Board. Such authority may be general or confined to specific
instances. No loans shall be made by the corporation secured by its shares.
5.2 Loans to Officers and Directors. No loans shall be made by the
corporation to its officers or directors, unless first approved by the holders
of two-thirds of the shares.
5.3 Checks, Drafts, Etc. All checks, drafts, or other orders for the
payment of money, notes, or other evidences of indebtedness issued in the name
of the corporation shall be signed by such officers or agents of the corporation
and in such manner as is from time to time determined by resolution of the
Board.
5.4 Deposits. All funds of the corporation not otherwise employed shall
be deposited from time to time to the credit of the corporation in such banks,
trust companies, or other depositories as the Board may select.
ARTICLE 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 Issuance of Shares. No shares of the corporation shall be issued
unless authorized by the Board, which authorization shall include the maximum
number of shares to be issued and the consideration to be received for each
share.
6.2 Certificates for Shares.
6.2.1 Certificates representing shares of the corporation
shall be signed by the President or the Vice President and by the Secretary or
an Assistant Secretary and shall include on their face written notice of any
restrictions which the Board may impose on the transferability of such shares.
All certificates shall be consecutively numbered or otherwise identified.
6.2.2 The name and address of the person to whom the shares
represented thereby are issued, together with the number of shares and date of
issue, shall be entered on the stock transfer books of the corporation. The
person in whose name shares stand on the books of the corporation shall be
deemed by the corporation to be the owner thereof for all purposes.
6.3 Transfer of Shares. Transfer of shares of the corporation shall be
made only on the stock transfer books of the corporation by the holder of record
thereof or by such holder's legal representative, who shall furnish proper
evidence of authority to transfer, or by such holder's attorney-in-fact
authorized by power of attorney duly
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executed and filed with the Secretary of the corporation. All certificates
surrendered to the corporation for transfer shall be canceled and no new
certificate shall be issued until the former certificates for a like number of
shares shall have been surrendered and canceled, except that in case of a lost,
destroyed, or mutilated certificate, a new one may be issued therefor upon such
terms and indemnity to the corporation as the Board may prescribe.
ARTICLE 7. BOOKS AND RECORDS
The corporation shall keep correct and complete books and records of
account, stock transfer books, minutes of the proceedings of its stockholders
and Board, and such other records as may be necessary or advisable.
ARTICLE 8. FISCAL YEAR
The fiscal year of the corporation shall be the calendar year, provided
that if a different fiscal year is selected for purposes of federal income
taxes, the fiscal year shall be the year so selected.
ARTICLE 9. SEAL
The seal of the corporation shall consist of the name of the
corporation, the state of its incorporation, and the year of its incorporation.
ARTICLE 10. INDEMNIFICATION AND INSURANCE
10.1 Each person who was or is made a party or is threatened to be made
a party to or is involved in any action, suit, or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she or a person of whom he or she is the legal
representative is or was a director, officer or employee of the corporation or
is or was serving at the request of the corporation as a director, officer or
employee of another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an official capacity
as a director, officer or employee or in any other capacity while serving as a
director, officer or employee, shall be indemnified and held harmless by the
corporation to the fullest extent authorized by the DGCL as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such amendment), against all expense, liability and loss (including, without
limitation, attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably
-9-
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer or employee and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that except as provided in
section 10.2 of this Bylaw with respect to proceedings seeking to enforce rights
to indemnification, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of the corporation.
10.2 If a claim under section 10.1 of this Bylaw is not paid in full by
the corporation within thirty days after a written claim has been received by
the corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the corporation) that the claimant has
not met the standards of conduct which make it permissible under the DGCL for
the corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the corporation. Neither the failure of the
corporation (including its Board, independent legal counsel or stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the DGCL, nor an actual
determination by the corporation (including its Board, independent legal counsel
or stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
10.3 Following any "change in control" of the corporation of the type
required to be reported under Item 1 of Form 8-K promulgated under the
Securities Exchange Act of 1934, as amended, any determination as to entitlement
to indemnification shall be made by independent legal counsel selected by the
claimant, which such independent legal counsel shall be retained by the Board on
behalf of the corporation.
10.4 The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
Bylaw shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Restated Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
10.5 The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense,
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liability or loss, whether or not the corporation would have the power to
indemnify such person against such expense, liability or loss under the DGCL.
10.6 The corporation may, to the extent authorized from time to time by
the Board, grant rights to indemnification, and rights to be paid by the
corporation the expenses incurred in defending any proceeding in advance of its
final disposition, to any agent of the corporation to the fullest extent of the
provisions of this Bylaw with respect to the indemnification and advancement of
expenses of directors, officers and employees of the corporation.
10.7 The right to indemnification conferred in this Bylaw shall be a
contract right and shall include the right to be paid by the corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that if the DGCL requires, the payment of such
expenses incurred by a director or officer in his or her capacity as a director
or officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the corporation of an
undertaking by or on behalf of such director or officer, to repay all amounts so
advanced if it shall ultimately be determined that such director or officer is
not entitled to be indemnified under this Bylaw or otherwise.
ARTICLE 11. AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board at any regular or special meeting of the Board. The
stockholders may also make, alter, amend, and repeal the Bylaws of the
corporation at any annual meeting or at a special meeting called for that
purpose; and all Bylaws made by the directors may be amended, repealed, altered,
or modified by the stockholders at any regular or special meeting called for
that purpose.
ARTICLE 12. ACTIONS BY THE CORPORATION AS STOCKHOLDER
Each of the Chairman, the President, any Vice President and the
Secretary of the corporation may from time to time execute on behalf of the
corporation (a) waivers of notice of annual or special stockholders' meetings of
any of the corporation's subsidiary corporations or any other corporation the
stock of which is held by or for the benefit of the corporation; (b) written
consents to action taken without a meeting by all stockholders of such
corporations; and (c) proxies appointing persons to vote the stock of such
corporations that is held by or for the benefit of the corporation at annual or
special meetings for the purpose of electing directors of such corporations and
for the transaction of such other business as may properly come before such
meetings or any adjournment thereof, and instructing the person or persons so
appointed as to the manner of casting such vote or giving such consent.
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