CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
Among
GENERAL ELECTRIC COMPANY,
GB MERGER CORP.
and
GREENWICH AIR SERVICES, INC.
Dated March 9, 1997
TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.01. The Merger.................................................. 2
SECTION 1.02. Effective Time; Closing..................................... 2
SECTION 1.03. Effect of the Merger........................................ 2
SECTION 1.04. Certificate of Incorporation; By-laws....................... 2
SECTION 1.05. Directors and Officers...................................... 3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Capital Stock of Merger Sub................................. 3
SECTION 2.02. Cancellation of Treasury Stock and Parent Owned Stock....... 3
SECTION 2.03. Conversion of Company Common Stock.......................... 3
SECTION 2.04. Exchange of Certificates.................................... 6
SECTION 2.05. Stock Transfer Books........................................ 9
SECTION 2.06. Company Stock Options....................................... 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries................ 10
SECTION 3.02. Certificate of Incorporation and By-laws.................... 10
SECTION 3.03. Capitalization.............................................. 11
SECTION 3.04. Authority Relative to this Agreement........................ 12
SECTION 3.05. No Conflict; Required Filings and Consents.................. 12
SECTION 3.06. Compliance with Laws; Permits............................... 13
SECTION 3.07. SEC Filings; Financial Statements........................... 14
SECTION 3.08. Absence of Certain Changes or Events........................ 15
SECTION 3.09. Absence of Litigation....................................... 15
SECTION 3.10. Employee Benefit; ERISA..................................... 16
SECTION 3.11. Labor Matters............................................... 18
SECTION 3.12. Title to and Sufficiency of Assets.......................... 19
SECTION 3.13. Intellectual Property....................................... 20
SECTION 3.14. Tax Matters................................................. 21
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SECTION 3.15. Environmental Matters....................................... 23
SECTION 3.16. Material Contracts; Government Contracts.................... 24
SECTION 3.17. Suppliers................................................... 26
SECTION 3.18. Tax Treatment............................................... 26
SECTION 3.19. Insurance................................................... 26
SECTION 3.20. Approval of Company Board and Independent Directors......... 27
SECTION 3.21. Stockholder Vote Required................................... 27
SECTION 3.22. Accuracy of Information..................................... 27
SECTION 3.23. Transactions with Affiliates................................ 27
SECTION 3.24. Opinion of Financial Advisor................................ 28
SECTION 3.25. Brokers..................................................... 28
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
SECTION 4.01. Organization and Qualification; Subsidiaries................ 29
SECTION 4.02. Certificate of Incorporation and By-laws.................... 29
SECTION 4.03. Parent Common Stock to Be Issued in the Merger.............. 29
SECTION 4.04. Authority Relative to This Agreement........................ 29
SECTION 4.05. No Conflict; Required Filings and Consents.................. 30
SECTION 4.06. SEC Filings; Financial Statements........................... 30
SECTION 4.07. Absence of Certain Changes or Events........................ 31
SECTION 4.08. Brokers..................................................... 31
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger....... 31
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Proxy Statement..................... 34
SECTION 6.02. Stockholders' Meeting....................................... 35
SECTION 6.03. Appropriate Action; Consents; Filings....................... 36
SECTION 6.04. Access to Information; Confidentiality...................... 37
SECTION 6.05. No Solicitation of Competing Transactions................... 37
SECTION 6.06. Indemnification and Insurance............................... 39
SECTION 6.07. Notification of Certain Matters............................. 40
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SECTION 6.08. Stock Exchange Listing...................................... 40
SECTION 6.09. Public Announcements........................................ 40
SECTION 6.10. Plan of Reorganization...................................... 41
SECTION 6.11. Affiliates; Tax Treatment................................... 41
SECTION 6.12. Company Employee Stock Purchase Plan........................ 41
SECTION 6.13. Consulting Agreement........................................ 41
SECTION 6.14. Supplemental Indenture...................................... 41
SECTION 6.15. UNC Merger Agreement........................................ 41
SECTION 6.16. Clean Air Act Permit........................................ 42
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party................. 42
SECTION 7.02. Conditions to the Obligations of Parent and Merger Sub...... 43
SECTION 7.03. Conditions to the Obligations of the Company................ 44
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination................................................. 45
SECTION 8.02. Effect of Termination....................................... 46
SECTION 8.03. Fees and Expenses........................................... 47
SECTION 8.04. Amendment................................................... 48
SECTION 8.05. Waiver...................................................... 48
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and Agreements.. 48
SECTION 9.02. Notices..................................................... 49
SECTION 9.03. Certain Definitions......................................... 50
SECTION 9.04. Accounting Terms............................................ 52
SECTION 9.05. Severability................................................ 52
SECTION 9.06. Entire Agreement; Assignment................................ 52
SECTION 9.07. Parties in Interest......................................... 53
SECTION 9.08. Specific Performance........................................ 53
SECTION 9.09. Governing Law............................................... 53
SECTION 9.10. Headings.................................................... 53
SECTION 9.11. Counterparts................................................ 53
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EXHIBITS
Exhibit 5.01(g) Form of Retention Agreements
Exhibit 6.11 Form of Company Affiliate Letter
Exhibit 6.13 Form of Consulting Agreement
Exhibit 7.02(a) Form of Parent Tax Opinion Representation Letter
Exhibit 7.02(b) Form of Company Tax Opinion Representation Letter
Exhibit 7.02(c) Form of Continuity of Interest Certificate
iv
v
Index of Defined Terms
Defined Term Location of Definition
------------ ----------------------
Additional Payments Section 2.04(c)
affiliate Section 9.03(a)
Affiliated Person Section 3.23(a)
Agreement Recitals
American Stock Transfer and Trust Section 6.14
Average Parent Share Price Section 2.03(a)
beneficial owner Section 9.03(b)
Blue Sky Laws Section 3.05(b)
business day Section 9.03(c)
Cash Consideration Section 2.03(a)
Cash Election Section 2.03(b)
Cash Election Number Section 2.03(b)
Cash Election Shares Section 2.03(b)
Cash Fraction Section 2.03(b)
Certificate of Merger Section 1.02
Certificates Section 2.04(b)
Change of Control Section 8.03(a)
Closing Agreement Section 3.14(a)(i)
Closing Date Section 1.02
Code Recitals
Combination Section 8.03(a)
Commonly Controlled Entity Section 3.10(a)
Company Recitals
Company Aeroderivative Business Section 9.03(d)
Company Benefit Plans Section 3.10(a)
Company Businesses Section 9.03(e)
Company Class A Stock Section 2.01
Company Class B Stock Section 2.01
Company Commercial Aircraft Business Section 9.03(f)
Company Common Stock Section 2.01
Company Disclosure Schedule Article III
Company Financial Advisor Section 3.24
Company Foreign Benefit Plan Section 3.10(h)
Company Government Business Section 9.03(g)
Company Group Section 9.03(h)
Company Indemnified Parties Section 6.06(e)
Company Intellectual Property Section 3.13
vi
Defined Term Location of Definition
------------ ----------------------
Company Licenses Section 3.13
Company Material Adverse Effect Section 3.01
Company 1996 Balance Sheet Section 3.07(d)
Company Pension Plans Section 3.10(a)
Company Permits Section 3.06(c)
Company Preferred Stock Section 3.03
Company SEC Reports Section 3.07(a)
Company Stock Option Section 2.06(a)
Company Stock Option Plan Section 2.06(a)
Competing Transaction Section 6.05(a)
Confidentiality Agreement Section 6.04(a)
control Section 9.03(i)
controlled by Section 9.03(i)
Current Offering Section 6.12
Delaware Law Recitals
Effective Time Section 1.02
Election Deadline Section 2.03(e)
Election Form Record Date Section 2.03(d)
Environmental Law Section 3.15(a)(ii)
Environmental Permit Section 3.15(a)(iii)
ERISA Section 3.10(a)
ESPP Section 3.03
Exchange Act Section 3.05(b)
Exchange Agent Section 2.04(a)
Exchange Fund Section 2.04(a)
Form of Election Section 2.03(d)
Governmental Authority Section 9.03(j)
Government Contracts Section 3.16(c)
Xxxxxxxxx, Xxxxxxx Section 2.03(c)
Hazardous Substances Section 3.15(a)(i)
HSR Act Section 3.05(b)
Indemnified Parties Section 6.06(e)
Knowledge Section 9.03(k)
Laws Section 3.05(a)
Liens Section 3.12(a)
Material Contracts Section 3.16(a)
Merger Recitals
Merger Consideration Section 2.03(a)
Merger Sub Recitals
vii
Defined Term Location of Definition
------------ ----------------------
NASD Section 3.05(b)
NASDAQ/NMS Section 3.03
Net Option Spread Section 2.06(a)
NYSE Section 2.03(a)
Option and Voting Agreement Recitals
Option Spread Section 2.06(a)
Parent Recitals
Parent Break-Up Fee Section 8.03(a)
Parent Common Stock Section 2.03(a)
Parent Material Adverse Effect Section 4.01
Parent SEC Reports Section 4.06(a)
PBGC Section 3.10(g)
person Section 9.03(l)
Proxy Statement Section 6.01(a)
Real Estate Section 9.03(m)
Registration Statement Section 6.01(a)
Representatives Section 6.04(b)
SEC Section 3.07(a)
Securities Act Section 3.05(b)
Stock Consideration Section 2.03(a)
Stockholders' Meeting Section 6.02(a)
subsidiaries Section 9.03(n)
subsidiary Section 9.03(n)
Subsidiary Section 3.01
Superior Proposal Section 6.05(b)
Superior Proposal Notice Section 6.05(b)
Surviving Corporation Section 1.01
Tax Return Section 3.14(a)(ii)
Tax Ruling Section 3.14(a)(iii)
Taxes Section 3.14(a)(iv)
Terminating Company Breach Section 8.01(e)
Terminating Parent Breach Section 8.01(d)
UNC Section 6.15
UNC Indemnified Parties Section 6.06(e)
UNC Merger Section 6.15
UNC Merger Agreement Section 6.15
under common control with Section 9.03(i)
Valuation Period Section 2.03(a)
Welfare Plans Section 3.10(a)
AGREEMENT AND PLAN OF MERGER dated March 9, 1997 (this
"Agreement") among GENERAL ELECTRIC COMPANY, a New York corporation ("Parent"),
GB MERGER CORP., a Delaware corporation and a wholly owned subsidiary of Parent
("Merger Sub"), and GREENWICH AIR SERVICES, INC., a Delaware corporation (the
"Company").
WHEREAS, the parties hereto desire to cause the Company, upon
the terms and subject to the conditions of this Agreement and in accordance with
the General Corporation Law of the State of Delaware ("Delaware Law"), to merge
with and into Merger Sub (the "Merger");
WHEREAS, the Board of Directors of the Company has (i)
determined that the Merger is fair to the holders of shares of Company Common
Stock (as such term is defined in Section 2.01) and is in the best interests of
such stockholders and (ii) approved this Agreement and the transactions
contemplated hereby and recommended unanimously that the holders of shares of
Company Class A Stock (as such term is defined in Section 2.01) approve and
adopt this Agreement;
WHEREAS, the Board of Directors of Parent has determined that
the Merger is in the best interests of Parent and its stockholders and, as sole
stockholder of Merger Sub, has approved and adopted this Agreement and the
transactions contemplated hereby;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization under the provisions of Section
368(a) of the United States Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, as a condition and inducement to Parent's and Merger
Sub's entering into this Agreement and incurring the obligations set forth
herein, concurrently with the execution and delivery of this Agreement, Parent
is entering into a Stock Option and Voting Agreement with certain stockholders
of the Company, dated the date hereof (the "Option and Voting Agreement"),
pursuant to which, among other things, such stockholders have agreed, subject to
the terms and conditions contained therein, to vote all shares of Class A Common
Stock then owned by such stockholders to approve and adopt this Agreement, and
have granted to Parent an option to acquire their shares of Company Common Stock
upon the terms and subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained and intending to be legally
bound hereby, Parent, Merger Sub and the Company hereby agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with Section 251 of
Delaware Law, at the Effective Time (as defined below), the Company shall be
merged with and into Merger Sub. As a result of the Merger, the separate
corporate existence of the Company shall cease, and Merger Sub shall be the
surviving corporation of the Merger (the "Surviving Corporation").
SECTION 1.02. Effective Time; Closing. As promptly as
practicable, and in no event later than five business days after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII (other than those conditions that can only be satisfied on the Closing Date
(as defined below)), the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, in such form as is required by, and
executed in accordance with, Section 251 of Delaware Law. The term "Effective
Time" means the date and time of the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware (or such later time as may be
agreed by the parties hereto and specified in the Certificate of Merger).
Immediately prior to the filing of the Certificate of Merger, a closing will be
held at the offices of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx (or such other place as the parties may agree) (the date on which such
closing takes place being the "Closing Date").
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of each of the Company and Merger Sub shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
SECTION 1.04. Certificate of Incorporation; By-laws.
(a) Subject to the terms of Section 6.06, at the Effective
Time, the Certificate of Incorporation of the Surviving Corporation shall be the
Certificate of Incorporation of Merger Sub as in effect immediately prior to the
Effective Time, except that Article I thereof shall be amended as of the
Effective Time to read as follows: "the name of the Corporation is Greenwich Air
Services, Inc."
(b) Subject to the terms of Section 6.06, at the Effective
Time, the By-laws of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the By-laws of
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the Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such By-laws.
SECTION 1.05. Directors and Officers. The directors of Merger
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation, and the
officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Capital Stock of Merger Sub. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of Company Class A Common Stock, par value $.01 per share (the
"Company Class A Stock"), or Company Class B Common Stock, par value $.01 per
share (the "Company Class B Stock" and, together with the Company Class A Stock,
the "Company Common Stock"), or any shares of capital stock of Merger Sub, each
share of common stock, par value $.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one fully paid and nonassessable share of common stock, par value $.01
per share, of the Surviving Corporation.
SECTION 2.02. Cancellation of Treasury Stock and Parent Owned
Stock. As of the Effective Time, by virtue of the Merger and without any action
on the part of the holder of any shares of Company Common Stock or any shares of
capital stock of Merger Sub, each share of Company Common Stock issued and held
immediately prior to the Effective Time in the Company's treasury or by any of
the Company's direct or indirect wholly owned subsidiaries and each share of
Company Common Stock that is owned by Parent, Merger Sub or any other
wholly-owned subsidiary of Parent shall automatically be cancelled and retired
and shall cease to exist, and no consideration shall be delivered in exchange
therefor.
SECTION 2.03. Conversion of Company Common Stock. (a) As of
the Effective Time, by virtue of the Merger and without any action on the part
of the holder of any shares of Company Common Stock or any shares of capital
stock of Merger Sub, except as otherwise provided in this Section 2.03 and
subject to Section 2.04(f), each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 2.02) shall be converted into the right to
receive the number of shares of common stock, par value $0.32 per share, of
Parent ("Parent Common Stock") determined by dividing $31.00 by the Average
Parent Share Price
4
(as defined below) and rounding the result to the nearest one thousandth of a
share (the "Stock Consideration") or, in the event the holder thereof shall have
made the election provided for herein, such share of Company Common Stock shall
be converted into the right to receive in cash from Parent, without interest, an
amount equal to $31.00 (the "Cash Consideration") (or a combination of shares of
Parent Common Stock and cash determined in accordance with Section 2.03(b)) (the
"Merger Consideration"); provided, however, that, in any event, if, between the
first day of the Valuation Period (as defined below) and the Effective Time, the
outstanding shares of Parent Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Stock Consideration shall be correspondingly adjusted to
the extent appropriate to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
The "Average Parent Share Price" means the average of the last sales prices per
share of Parent Common Stock on the New York Stock Exchange, Inc. (the "NYSE")
Composite Tape for the 10 consecutive trading days ending on the trading day
which is five days prior to the Closing Date (the "Valuation Period"). As of the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration.
(b) Cash Election; Cash Election Adjustments. Each holder of
record of Company Common Stock as of the record date for the Stockholders'
Meeting (as defined in Section 6.02) will be entitled, with respect to each
share of Company Common Stock held by such holder, to elect to receive the Cash
Consideration (a "Cash Election"); provided, however, that if the aggregate
number of shares of Company Common Stock covered by Cash Elections ("Cash
Election Shares") exceeds 55% of the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time (the "Cash Election
Number"), the Cash Election Shares shall be converted into the right to receive
Parent Common Stock and cash in the following manner:
each Cash Election Share shall be converted into the right to
receive (i) an amount in cash, without interest, equal to the
product of (x) the Cash Consideration and (y) a fraction (the
"Cash Fraction"), the numerator of which shall be the Cash
Election Number and the denominator of which shall be the
total number of Cash Election Shares, and (ii) such number of
shares of (rounded to the nearest one thousandth of a share)
Parent Common Stock equal to the product of (x) the Cash
Consideration divided by the Average Parent Share Price and
(y) a fraction equal to one minus the Cash Fraction.
(c) Adjustments Relating to Tax Opinions. If either (i) the
tax opinion of counsel to Parent referred to in Section 7.02(c) cannot be
rendered (as reasonably determined
5
by counsel to Parent and concurred in by Greenberg, Traurig, Hoffman, Rosen,
Xxxxxx & Xxxxxxx ("Xxxxxxxxx, Xxxxxxx")) or (ii) the tax opinion of Xxxxxxxxx,
Traurig referred to in Section 7.03(b) cannot be rendered (as reasonably
determined by Xxxxxxxxx, Xxxxxxx and concurred in by counsel to Parent), in
either case as a result of the Merger potentially failing to satisfy continuity
of interest requirements under applicable federal income tax principles relating
to reorganizations under Section 368(a) of the Code, then Parent shall reduce to
the minimum extent necessary to enable the relevant tax opinion or opinions, as
the case may be, to be rendered, the Cash Election Number.
(d) Exercise of Election. All Cash Elections shall be made on
a form designed for that purpose and mutually acceptable to the Company and
Parent (a "Form of Election") and mailed to holders of record of shares of
Company Common Stock as of the record date for the Stockholders' Meeting or such
other date as Parent and the Company shall mutually agree (the "Election Form
Record Date"). Parent and the Company shall make available one or more Forms of
Election as may be reasonably requested by all persons who become holders (or
beneficial owners) of Company Common Stock between the Election Form Record Date
and the close of business on the day prior to the Election Deadline (as defined
below). Elections shall be made by holders of Company Common Stock by mailing to
the Exchange Agent (as defined in Section 2.04) a Form of Election. To be
effective, a Form of Election must be properly completed, signed and submitted
to the Exchange Agent and accompanied by the Certificates (as defined in Section
2.04(b)) representing the shares of Company Common Stock as to which the
election is being made (or an appropriate guarantee of delivery by an
appropriate trust company in the United States or a member of a registered
national securities exchange or the National Association of Securities Dealers,
Inc.). Parent will have the discretion, which it may delegate in whole or in
part to the Exchange Agent, to reasonably determine whether Forms of Election
have been properly completed, signed and submitted or revoked and to disregard
immaterial defects in Forms of Election. The decision of Parent (or the Exchange
Agent) in such matters shall be conclusive and binding. The Exchange Agent shall
make a good faith effort to notify any person of any defect not waived by Parent
in a Form of Election submitted to the Exchange Agent. The Exchange Agent shall
also make all computations contemplated by this Section 2.03 and all such
computations shall, absent manifest error, be conclusive and binding on the
holders of Company Common Stock.
(e) Election Deadline. A Form of Election must be received by
the Exchange Agent (as defined below) by the close of business on the last
business day prior to the Closing Date (the "Election Deadline") in order to be
effective. Any holder of Company Common Stock who has made an election by
submitting a Form of Election to the Exchange Agent may at any time prior to the
Election Deadline change such holder's election by submitting a revised Form of
Election, properly completed and signed, that is received by the Exchange Agent
prior to the Election Deadline. Any holder of Company Common Stock may at any
time prior to the Election Deadline revoke his election and withdraw his
Certificates deposited with the Exchange Agent by written notice to the Exchange
Agent received by the
6
Election Deadline. As soon as practicable after the Election Deadline, the
Exchange Agent shall determine the allocation of the cash portion of the Merger
Consideration and the stock portion of the Merger Consideration and shall notify
Parent of its determination. Promptly after such notification, Parent shall
issue a press release announcing in reasonable detail the results of the
Exchange Agent's allocation of the Merger Consideration.
(f) Deemed Non-Election. For the purposes hereof, a holder of
record of Company Common Stock who does not submit a Form of Election which is
received and accepted as such by the Exchange Agent prior to the Election
Deadline shall be deemed not to have made a Cash Election.
SECTION 2.04. Exchange of Certificates. (a) Exchange Agent.
From and after the Effective Time, (i) Parent shall make available to a bank or
trust company designated by Parent and reasonably satisfactory to the Company
(the "Exchange Agent"), for the benefit of the holders of shares of Company
Common Stock, for exchange in accordance with this Article II through the
Exchange Agent, (i) certificates evidencing such number of shares of Parent
Common Stock issuable to holders of Company Common Stock in the Merger pursuant
to Section 2.03 and (ii) cash in the amount required to be exchanged for shares
of Company Common Stock in the Merger pursuant to Section 2.03 (such
certificates for shares of Parent Common Stock, together with any dividends or
distributions with respect thereto, and such cash, being hereinafter referred to
as the "Exchange Fund"). The Exchange Agent shall, pursuant to written
instructions jointly furnished by Parent and the Company, deliver the cash and
the Parent Common Stock contemplated to be issued pursuant to Section 2.03 out
of the Exchange Fund. Except as contemplated by Section 2.04(g) hereof, the
Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
a certificate or certificates (to the extent such certificates have not already
been submitted to the Exchange Agent with Forms of Election) which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock (the "Certificates") (i) a letter of transmittal (which shall be in
customary form and shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration.
(c) Exchange of Certificates. Upon surrender to the Exchange
Agent of a Certificate for cancellation, together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor (A) a certificate representing that number of whole shares of
Parent Common Stock, if any, to which such holder is entitled pursuant to this
7
Article II and (B) a check in the amount equal to the cash, if any, to which
such holder is entitled pursuant to the provisions of this Article II (including
any cash in lieu of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.04(f) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.04(d)
(together, the "Additional Payments")), and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of shares of
Company Common Stock which is not registered in the transfer records of the
Company, the applicable Merger Consideration and Additional Payments, if any,
may be issued to a transferee if the Certificate representing such shares of
Company Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.04, each Certificate shall be deemed at all times
after the Effective Time to represent only the right to receive upon such
surrender the applicable Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby and Additional Payments, if
any.
(d) Distributions with Respect to Unsurrendered Certificates.
No dividends or other distributions declared or made after the Effective Time
with respect to Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock the holder thereof is entitled to receive upon
surrender thereof, and no cash payment in lieu of any fractional shares shall be
paid to any such holder pursuant to Section 2.04(f), until the holder of such
Certificate shall surrender such Certificate. Subject to the effect of escheat,
tax or other applicable Laws, following surrender of any such Certificate, there
shall be paid to the holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor, without interest, (i) promptly,
the amount of any cash payable with respect to a fractional share of Parent
Common Stock to which such holder is entitled pursuant to Section 2.04(f) and
the amount of dividends or other distributions with a record date after the
Effective Time and theretofore paid with respect to such whole shares of Parent
Common Stock, and (ii) at the appropriate payment date, the amount of dividends
or other distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole shares of Parent Common Stock. After the Effective Time, each
outstanding Certificate which theretofore represented shares of Company Common
Stock shall, until surrendered for exchange in accordance with this Section
2.04, be deemed for all purposes to evidence ownership of the number of shares
of Parent Common Stock into which the shares of Company Common Stock (which,
prior to the Effective Time, were represented thereby) shall have been so
converted.
(e) No Further Rights in Company Common Stock. All shares of
Parent Common Stock issued or cash paid upon conversion of the shares of Company
Common Stock in accordance with the terms hereof (including any cash paid
pursuant to Section
8
2.04(d) or (f)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock.
(f) No Fractional Shares. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to any other rights of a stockholder of
Parent. Each holder of a fractional share interest shall be paid an amount in
cash equal to the product obtained by multiplying (i) such fractional share
interest to which such holder (after taking into account all fractional share
interests then held by such holder) would otherwise be entitled by (ii) the
Average Parent Share Price. As promptly as practicable after the determination
of the amount of cash, if any, to be paid to holders of fractional share
interests, the Exchange Agent shall so notify Parent, and Parent shall deposit
such amount with the Exchange Agent and shall cause the Exchange Agent to
forward payments to such holders of fractional share interests subject to and in
accordance with the terms of Sections 2.04(b), (c) and (d).
(g) Termination of Exchange Fund. Any portion of the Exchange
Fund (including any shares of Parent Common Stock) which remains undistributed
to the holders of Company Common Stock for six months after the Effective Time
shall be delivered to Parent, upon demand, and any holders of Company Common
Stock who have not theretofore complied with this Article II shall thereafter
look only to Parent for the applicable Merger Consideration and any Additional
Payments to which they are entitled. Any portion of the Exchange Fund remaining
unclaimed by holders of shares of Company Common Stock as of a date which is
immediately prior to such time as such amounts would otherwise escheat to or
become property of any government entity shall, to the extent permitted by
applicable Law, become the property of Parent free and clear of any claims or
interest of any person previously entitled thereto.
(h) No Liability. None of the Exchange Agent, Parent or the
Surviving Corporation shall be liable to any holder of Certificates for any
shares of Parent Common Stock (or dividends or distributions with respect
thereto), or cash delivered to a public official pursuant to any abandoned
property, escheat or similar law.
(i) Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Certificates such amounts as
it is required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by the Surviving Corporation or Parent, as
the case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Certificates in respect of
which such deduction and withholding was made by the Surviving Corporation or
Parent, as the case may be.
9
(j) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration and Additional Payments, if any.
(k) Further Assurances. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Merger Sub or the Company acquired
or to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of each of the Merger Sub and the Company or otherwise, all such
deeds, bills of sale, assignments and assurances and to take and do, in such
names and on such behalves or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the purposes of this Agreement.
SECTION 2.05. Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to such shares of
Company Common Stock, except as otherwise provided herein or by law. On or after
the Effective Time, any Certificates presented to the Exchange Agent or Parent
for any reason shall be converted into the applicable Merger Consideration and
Additional Payments, if any.
SECTION 2.06. Company Stock Options. (a) Each option (a
"Company Stock Option") outstanding, whether or not exercisable and whether or
not vested, at the Effective Time under the Company's 1992 Employee Incentive
and Non-Qualified Stock Option Plan or any other plans (the "Company Stock
Option Plans") shall be cancelled by the Company immediately prior to the
Effective Time, and each holder of a cancelled Company Stock Option shall be
entitled to receive at the Effective Time or as soon as practicable thereafter
from the Company in consideration for the cancellation of such Company Stock
Option an amount (the "Option Spread") equal to the product of (i) the number of
shares of Company Common Stock previously subject to such Company Stock Option
and (ii) the excess, if any, of the Cash Consideration over the exercise price
per share of Company Common Stock previously subject to such Company Stock
Option. The Option Spread, after
10
reduction for applicable tax withholding, if any (the "Net Option Spread"),
shall be paid in cash or, if a holder of Company Stock Options so elects in
writing at least 10 days prior to the Effective Time with respect to any portion
of such holder's Company Stock Options, in a number of shares of Parent Common
Stock determined by dividing (i) the aggregate Net Option Spread payable to such
holder by (ii) the Average Parent Share Price (subject to adjustment in
accordance with the proviso in the first sentence of Section 2.03(a) hereof).
(b) Not later than 40 days prior to the expected Effective
Time, the Company shall provide each holder of a Company Stock Option an
election form pursuant to which each holder may make the election specified in
Section 2.06(a).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in a separate disclosure schedule
referring to the Sections contained in this Agreement, which has been delivered
by the Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), the Company hereby represents and warrants to the Parent
and Merger Sub that:
SECTION 3.01. Organization and Qualification; Subsidiaries.
Each of the Company and each subsidiary of the Company (each, a "Subsidiary") is
a corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
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, except where the lack of such power, authority and approval would
not, individually or in the aggregate, have a Company Material Adverse Effect
(as defined below). Each of the Company and each Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, have a
Company Material Adverse Effect. The term "Company Material Adverse Effect"
means any circumstances, change in, or effect on, the Company Group, when taken
as a consolidated whole, or affecting the Company Commercial Aircraft Business,
the Company Government Business or the Company Aeroderivative Business, whether
individually or collectively as to any one or more of such Company Businesses,
which is, or could reasonably be expected in the future to be, materially
adverse to the operations, assets or liabilities, employee relationships,
customer or supplier relationships, earnings or results of operations, financial
projections or forecasts, or the business prospects and condition (financial or
otherwise) of the Company Group or any one or more of the Company Businesses,
whether individually or taken as a consolidated
11
whole with respect to the Company Group. A true and complete list of all the
Subsidiaries, together with the jurisdiction of incorporation of each Subsidiary
and the percentage of the outstanding capital stock of each Subsidiary owned by
the Company and each other Subsidiary, is set forth in Section 3.01 of the
Company Disclosure Schedule. Except as set forth in Section 3.01 of the Company
Disclosure Schedule, the Company does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or exchangeable or
exercisable for any equity or similar interest in, any corporation, partnership,
limited liability company, joint venture or other business association or
entity.
SECTION 3.02. Certificate of Incorporation and By-laws. The
Company has heretofore furnished to Parent complete and correct copies of the
Certificates of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company and each Subsidiary. Such
Certificates of Incorporation, By-laws and equivalent organizational documents
are in full force and effect. Neither the Company nor any Subsidiary is in
violation of any provision of its Certificate of Incorporation, By-laws or
equivalent organizational documents.
SECTION 3.03. Capitalization. The authorized capital stock of
the Company consists of (i) 25,000,000 shares of Company Class A Stock, (ii)
25,000,000 shares of Company Class B Stock, and (iii) 2,500,000 shares of
preferred stock, par value $.01 per share, issuable in such series and with such
rights and designations as the Board of Directors of the Company may from time
to time determine (the "Company Preferred Stock"). As of December 31, 1996, (a)
6,971,213 shares of Company Class A Stock were issued and outstanding, all of
which were validly issued, fully paid and nonassessable, (b) 2,900 shares of
Company Class A Stock were held in the treasury of the Company or the
Subsidiaries, (c) 142,875 shares of Company Class A Stock were reserved for
future issuance pursuant to the Company Stock Option Plans, (d) 9,778,176 shares
of Company Class B Stock were issued and outstanding, all of which were validly
issued, fully paid and nonassessable, (e) 47,231 shares of Company Class B Stock
were held in the treasury of the Company or the Subsidiaries, (f) 377,875 shares
of Company Class B Stock were reserved for future issuance pursuant to the
Company Stock Option Plan, (g) 185,531 shares of Company Class B Stock were
reserved for future issuance pursuant to the Company's 1995 Employee Stock
Purchase Plan (the "ESPP") and (h) no shares of Company Preferred Stock were
issued and outstanding. All publicly traded shares of Company Class A Stock and
Company Class B Stock have been approved for trading on the National Association
of Securities Dealers, Inc. Automated Quotation/National Market System
("NASDAQ/NMS"). Set forth in Section 3.03 of the Company Disclosure Schedule is
a summary setting forth the number of outstanding Company Options, stock
incentive rights or any other rights to acquire shares of Company Common Stock
pursuant to the Company Stock Option Plan and the exercise price therefor as of
December 31, 1996. From December 31, 1996 through the date of this Agreement,
the Company has not issued, sold, pledged, disposed of, granted, encumbered, or
authorized the issuance, sale, pledge, disposition, grant or encumbrance of any
shares of capital stock of any
12
class of the Company or any Subsidiary or any rights to acquire such shares or
other equity interests in the Company or any Subsidiary, except pursuant to the
exercise of Company Options that were outstanding as of December 31, 1996 and
those additional Company Options granted since December 31, 1996 that are set
forth in Section 3.03 of the Company Disclosure Schedule, and except for the
authorization to issue shares of Company Class B Stock pursuant to the UNC
Merger Agreement, which authorization has been conditionally revoked and
rescinded in connection with the execution and delivery of this Agreement.
Except as set forth in this Section 3.03 or in Section 3.03 of the Company
Disclosure Schedule, and except for the authorization to issue shares of Company
Class B Stock pursuant to the UNC Merger Agreement, which authorization has been
conditionally revoked and rescinded in connection with the execution and
delivery of this Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or any Subsidiary or obligating the
Company or any Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Subsidiary. All shares of Company
Common Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. Except as
disclosed in Section 3.03 of the Company Disclosure Schedule, there are no
outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of Company Class A Stock or
Company Class B Stock or any capital stock of or any equity interests in any
Subsidiary. Except as disclosed in Section 3.03 of the Company Disclosure
Schedule, each outstanding share of capital stock of each Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and each such share
owned by the Company or any Subsidiary is free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or such other Subsidiary's voting rights, charges
and other encumbrances of any nature whatsoever.
SECTION 3.04. Authority Relative to this Agreement. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Merger. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the Merger have been duly and validly authorized
by all necessary corporate action and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
Merger (other than, with respect to the Merger, the adoption of this Agreement
by the holders of a majority of the shares of Company Class A Stock and the
filing and recordation of appropriate merger documents as required by Delaware
Law). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Merger Sub, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
13
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company will not,
(i) conflict with or violate the Certificate of Incorporation or By-laws or
equivalent organizational documents of the Company or any Subsidiary, as
applicable, (ii) conflict with or violate any domestic (federal, state or local)
or foreign law, rule, regulation, order, judgment or decree (collectively,
"Laws") applicable to the Company or any Subsidiary or by which any property or
asset of the Company or any Subsidiary is bound or affected, except for such
conflicts or violations that, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect, or (iii) result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any property or asset of the Company or any Subsidiary is bound or
affected, except as disclosed in Section 3.05(a) of the Company Disclosure
Schedule and except for any such breaches, defaults or other occurrences that,
individually or in the aggregate, would not have a Company Material Adverse
Effect and will not prevent or delay the consummation of the transactions
contemplated by this Agreement.
(b) Except as disclosed in Section 3.05(b) of the Company
Disclosure Schedule, 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 or regulatory authority, domestic, foreign or
supranational, except (i) for applicable requirements, if any, of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Securities Act of
1933, as amended (the "Securities Act"), state securities or "blue sky" laws
("Blue Sky Laws"), state takeover laws, the pre-merger notification requirements
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"), and filing and recordation of
appropriate merger documents as required by Delaware Law and the rules of the
National Association of Securities Dealers ("NASD") and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect.
SECTION 3.06. Compliance with Laws; Permits. (a) Neither the
Company nor any Subsidiary is in conflict with, or in default or violation of,
(i) any Laws applicable to
14
the Company or any Subsidiary or by which any property or asset of the Company
or any Subsidiary is bound or affected, or (ii) any of the Company Permits (as
defined below), except for any such conflicts, defaults or violations that do
not, individually or in the aggregate, have a Company Material Adverse Effect.
(b) Except where non-compliance would not have a Company
Material Adverse Effect, the Company and the Subsidiaries have complied with all
applicable federal procurement laws and regulations including, without
limitation, the Truth in Negotiations Act, the Foreign Corrupt Practices Act,
the Office of Federal Procurement Policy Act Amendments of 1988 ("Procurement
Integrity" Amendments), the Cost Principles and Cost Accounting Standards, and
the Federal Acquisition Regulations and all supplements thereto, in connection
with the Government Contracts (as defined below), and to the Company's
Knowledge, no person has made any allegation that the Company or any Subsidiary
has not so complied.
(c) Each of the Company and the Subsidiaries is in possession
of all franchises, grants, authorizations, licenses, permits, easements,
variances, exceptions, consents, certificates, approvals and orders from all
federal, state, local and foreign authorities and agencies, including without
limitation, the Federal Aviation Administration, necessary for the Company or
any of its Subsidiaries, to own, lease and operate its properties or to carry on
the Company Businesses (as hereinafter defined) (the "Company Permits"), and no
suspension or cancellation of any of the Company Permits is pending or, to the
Company's Knowledge, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Company Permits, individually or in
the aggregate, would not have a Company Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents
required to be filed by it with the Securities and Exchange Commission (the
"SEC") since September 30, 1993 and has made available to the Parent all
registration statements filed by the Company with the SEC, including all
exhibits filed in connection therewith (on all forms applicable to the
registration of securities) since September 30, 1993 and prior to the date of
this Agreement (collectively, the "Company SEC Reports"), and has heretofore
made available to Parent complete (i.e., unredacted) copies of each exhibit
(which is in effect as of the date hereof) to the Company SEC Reports filed with
the SEC. The Company SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations thereunder and (ii) did not at
the time they were filed 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.
15
(b) Except as disclosed in the Company SEC Reports, no
Subsidiary is required to file any form, report or other document with the SEC.
(c) Each of the consolidated financial statements (including,
in each case, any notes and schedules thereto) contained in the Company SEC
Reports complied as to form with the applicable accounting requirements and
rules and regulations of the SEC and was prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto), and each fairly presented the consolidated financial position, results
of operations and cash flows of the Company and the consolidated Subsidiaries as
at the respective dates thereof and for the respective periods indicated therein
in accordance with United States generally accepted accounting principles
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or in the
aggregate, to have a Company Material Adverse Effect).
(d) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries as of September
30, 1996, including the notes thereto (the "Company 1996 Balance Sheet"),
neither the Company nor any Subsidiary has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with United States generally accepted accounting principles,
except for liabilities and obligations (i) disclosed in any Company SEC Report
filed since September 30, 1996 and prior to the date of this Agreement, (ii)
incurred since September 30, 1996 in the ordinary course of business which,
individually or in the aggregate, do not have a Company Material Adverse Effect,
or (iii) incurred pursuant to this Agreement.
(e) The Company has heretofore furnished to Parent complete
and correct copies of all material amendments and modifications that have not
been filed by the Company with the SEC to all agreements, documents and other
instruments that previously had been filed by the Company with the SEC and are
currently in effect.
SECTION 3.08. Absence of Certain Changes or Events. Since
September 30, 1996, except as contemplated by this Agreement, disclosed in
Section 3.08 of the Company Disclosure Schedule, or disclosed in any Company SEC
Report filed since September 30, 1996, the Company and the Subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since September 30, 1996, there has not been
(a) any event or events having, individually or in the aggregate, a Company
Material Adverse Effect, (b) any change by the Company in its accounting
methods, principles or practices, (c) any revaluation by the Company of any
material asset (including, without limitation, any writing down or writing up of
the value of inventory, writing off of notes or accounts receivable or reversing
of any accruals or reserves), other than in the ordinary course of business
consistent with past practice, (d) any entry by the Company or any Subsidiary
into
16
any commitment or transaction material to the Company and the Subsidiaries taken
as a whole, except in the ordinary course of business and consistent in all
material respects with past practice, (e) other than regular dividends, of which
$.01 per share of Company Common Stock was paid in February 1996 and $.012 per
share of Company Common Stock was paid in January 1997, any declaration, setting
aside or payment of any dividend or distribution in respect of any capital stock
of the Company or any redemption, purchase or other acquisition of any of its
securities, or (f) other than pursuant to the contracts referred to in Section
3.10 or as expressly provided for in this Agreement, any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee benefit plan, or any other increase in the compensation payable or to
become payable to any officers or key employees of the Company or any
Subsidiary, except in the ordinary course of business consistent in all material
respects with past practice. The results of operations for the most recently
completed fiscal quarter are not materially lower than the results of operations
for the immediately preceding fiscal quarter, and there is no reason to believe
that the results of operations for the current fiscal quarter will be materially
lower than the results of operations for the Company's most recently completed
fiscal quarter.
SECTION 3.09. Absence of Litigation.
(a) Except as disclosed in the Company SEC Reports or in
Section 3.09 of the Company Disclosure Schedule, there is no claim, action,
proceeding or investigation pending or, to the Company's Knowledge, threatened
against the Company or any Subsidiary, or any property or asset of the Company
or any Subsidiary, before any court, arbitrator or Governmental Authority,
which, individually or when aggregated with other claims, actions, proceedings
or investigations or product liability claims, actions, proceedings or
investigations which are reasonably likely to result from facts and
circumstances that have given rise to such a claim, action, proceeding or
investigation, would have a Company Material Adverse Effect. As of the date
hereof, neither the Company nor any Subsidiary nor any property or asset of the
Company or any Subsidiary is subject to any order, writ, judgment, injunction,
decree, determination or award having, individually or in the aggregate, a
Company Material Adverse Effect.
(b) Neither the Company nor any Subsidiary has received notice
from any source that the Company or any Subsidiary may be liable with respect to
product liability or worker's compensation claims, except for such claims that,
if determined adversely to the Company and the Subsidiaries, would not,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.10. Employee Benefit; ERISA.
17
(a) Section 3.10(a) of the Company Disclosure Schedule
contains a list of all "employee pension benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Company Pension Plans"), "employee
welfare benefit plans" (as defined in Section 3(1) of ERISA) (sometimes referred
to herein as "Welfare Plans"), and each other plan, arrangement or policy
(written or oral) relating to stock options, stock purchases, compensation,
deferred compensation, severance, fringe benefits or other employee benefits, in
each case maintained, or contributed to, by the Company or any of the
Subsidiaries or any other person or entity that, together with the Company is
treated as a single employer under Section 414(b), (c), (m) or (o) of the Code
(each, together with the Company, a "Commonly Controlled Entity"), for the
benefit of any current or former employees, officers, agents or directors of the
Company or any of its subsidiaries (all of the foregoing being herein called
"Company Benefit Plans"). The Company has made available to Parent true and
complete copies of (w) each Company Benefit Plan (or, in the case of any
unwritten Company Benefit Plans, descriptions thereof), (x) the most recent
annual report on Form 5500 filed with the Internal Revenue Service with respect
to each Company Benefit Plan (if any such report was required), (y) the most
recent summary plan description (or similar document) for each Company Benefit
Plan for which a summary plan description is required or was otherwise provided
to plan participants or beneficiaries and (z) each trust agreement and group
annuity contract relating to any Company Benefit Plan.
(b) Except as disclosed in Section 3.10(b) of the Company
Disclosure Schedule or where non-disclosure would not have a Company Material
Adverse Effect, all Company Pension Plans and related trusts that are intended
to be tax-qualified plans have been, since the effective date of the Tax Reform
Act of 1986, the subject of determination letters from the Internal Revenue
Service to the effect that such Company Pension Plans and related trusts are
qualified and exempt from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination letter has been revoked
nor, to the Knowledge of the Company, has revocation been threatened; no event
has occurred and no circumstances exist that would adversely affect the tax
qualification of such Company Pension Plan nor has any such Company Pension Plan
been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs or require security under Section
302 of ERISA.
(c) Except as would not, individually or in the aggregate,
have a Company Material Adverse Effect: (i) each Company Benefit Plan has been
administered in accordance with its terms; (ii) the Company Benefit Plans are,
and have been administered, in compliance with the applicable provisions of
ERISA, the Code, and all other applicable laws; (iii) there are no
investigations by any governmental agency, termination proceedings or other
claims (except claims for benefits payable in the normal operation of the
Company Benefit Plans), suits or proceedings against or involving any Company
Benefit Plan or asserting any rights to or claims for benefits under any Company
Benefit Plan that could give rise to any liability,
18
and there are not any facts that would reasonably be expected to give rise to
any liability in the event of any such investigation, claim, suit or proceeding.
(d) No Commonly Controlled Entity is required to contribute to
any "multiemployer plan" as defined in Section 4001(a)(3) of ERISA or, except as
set forth in Section 3.10(d) of the Company Disclosure Schedule, has withdrawn
from any such multiemployer plan where such withdrawal has resulted or would
result in any material "withdrawal liability" (within the meaning of Section
4201 of ERISA) that has not been fully paid. Except as set forth in Section
3.10(d) of the Company Disclosure Schedule, no Commonly Controlled Entity would
incur any material withdrawal liability if it were to withdraw from a
multiemployer plan with respect to which it currently has a contribution
obligation. No Commonly Controlled Entity, nor any officer of any Commonly
Controlled Entity, nor any of the Company Benefit Plans which are subject to
ERISA, including the Company Pension Plans, any trusts created thereunder or any
trustee or administrator thereof, has engaged in a "prohibited transaction" (as
such term is defined in Section 406 of ERISA or Section 4975 of the Code) or any
other breach of fiduciary responsibility that could subject any Commonly
Controlled Entity or any officer of any Commonly Controlled Entity to any tax or
penalty on prohibited transactions imposed by such Section 4975 or to any
material liability under Section 502(i) or (l) of ERISA. Neither any of such
Company Benefit Plans nor any of such trusts has been terminated, nor has there
been any "reportable event" (as that term is defined in Section 4043 of ERISA)
with respect thereto, during the last five years.
(e) Except as set forth in Section 3.10(e) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any agreement, contract or arrangement that could result, separately or in
the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code.
(f) Except as set forth in Section 3.10(f) of the Company
Disclosure Schedule, to the Knowledge of the Company, the disallowance of a
deduction under Section 162(m) of the Code for employee remuneration will not
apply to any amount paid or payable by the Company or any Subsidiary.
(g) Except as would not have a Company Material Adverse
Effect, no liability under Title IV of ERISA has been incurred by any Commonly
Controlled Entity that has not been satisfied in full, and no condition exists
that presents a material risk to any Commonly Controlled Entity of incurring a
liability under such Title, other than liability for premiums due the Pension
Benefit Guaranty Corporation ("PBGC") (which premiums have been paid when due).
To the extent this representation applies to sections 4064, 4069 or 4204 of
Title IV of ERISA, it is made not only with respect to each Company Pension Plan
but also with respect to any employee benefit plan, program, agreement or
arrangement subject to Title IV of ERISA to which the Company or any Commonly
Controlled Entity made, or was required to make, contributions during the five
(5) year period ending on the Closing Date.
19
Except as would not have a Company Material Adverse Effect, no Company Pension
Plan or any trust established thereunder has incurred any "accumulated funding
deficiency" (as defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, as of the last day of the most recent fiscal year of each
Company Pension Plan ended prior to the Closing Date; and all contributions
required to be made with respect thereto (whether pursuant to the terms of any
Company Pension Plan or otherwise) on or prior to the Closing Date have been
timely made.
(h) With respect to each Company Benefit Plan not subject to
United States Law (a "Company Foreign Benefit Plan"), except as would not have a
Company Material Adverse Effect, (i) the fair market value of the assets of each
funded Company Foreign Benefit Plan, the liability of each insurer for any
Company Foreign Benefit Plan funded through insurance or the book reserve
established for any Company Foreign Benefit Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations, as of the Effective Time, with respect to all current and former
participants in such plan according to the actuarial assumptions and valuations
most recently used to determine employer contributions to such Company Foreign
Benefit Plan and no transaction contemplated by this Agreement shall cause such
assets or insurance obligations or book reserve to be less than such benefit
obligations; and (ii) each Company Foreign Benefit Plan required to be
registered has been registered and has been maintained in good standing with the
appropriate regulatory authorities.
(i) The Company and each of its Subsidiaries have not incurred
any liability under, and have complied in all respects with, the Worker
Adjustment and Retraining Notification Act of 1988 and the regulations
promulgated thereunder.
SECTION 3.11. Labor Matters.
(a) Except as set forth in Section 3.11(a) of the Company
Disclosure Schedule, with respect to employees of the Company: (i) to the
Knowledge of the Company, no senior executive or key employee has any plans to
terminate employment with the Company or any of its Subsidiaries; (ii) there is
no unfair labor practice charge or complaint against the Company or any of its
Subsidiaries pending or, to the Knowledge of the Company, threatened before the
National Labor Relations Board or any other comparable authority; (iii) there is
no demand for recognition made by any labor organization or petition for
election filed with the National Labor Relations Board or any other comparable
authority which, individually or in the aggregate, would have a Company Material
Adverse Effect; (iv) no grievance or any arbitration proceeding arising out of
or under collective bargaining agreements is pending and, to the Knowledge of
Company, no claims therefor have been threatened other than grievances or
arbitrations incurred in the ordinary course of business which, individually or
in the aggregate, would not have a Company Material Adverse Effect; (v) the
consummation of the Merger and related transactions contemplated by this
Agreement
20
will not give rise to termination of any existing collective bargaining
agreement or permit any labor organization to reopen negotiations in respect of
wages, hours or working conditions under any such existing collective bargaining
agreements; and (vi) there is no litigation, arbitration proceeding,
governmental investigation, administrative charge, citation or action of any
kind pending or, to the Knowledge of the Company or any of its Subsidiaries,
proposed or threatened against the Company relating to employment, employment
practices, terms and conditions of employment or wages and hours which,
individually or in the aggregate, would have a Company Material Adverse Effect.
(b) Except as identified in Section 3.11(b) of the Company
Disclosure Schedule, none of the Company nor any of its Subsidiaries has any
collective bargaining relationship or duty to bargain with any Labor
Organization (as such term is defined in Section 2(5) of the National Labor
Relations Act, as amended), and none of the Company nor any of its Subsidiaries
has recognized any labor organization as the collective bargaining
representative of any of its employees.
SECTION 3.12. Title to and Sufficiency of Assets.
(a) As of the date hereof the Company and the Subsidiaries
own, and as of the Effective Time the Company and the Subsidiaries will own,
good and marketable title to all of their assets constituting personal property
which is material to their business (excluding, for purposes of this sentence,
assets held under leases), free and clear of any and all mortgages, liens,
encumbrances, charges, claims, restrictions, pledges, security interests or
impositions (collectively, "Liens"), except as set forth in the Company SEC
Reports or Section 3.12(a) of the Company Disclosure Schedule. Such assets,
together with all assets held by the Company and the Subsidiaries under leases,
include all tangible and intangible personal property, contracts and rights
necessary or required for the operation of the businesses of the Company
Businesses.
(b) As of the date hereof the Company and the Subsidiaries
own, and as of the Effective Time the Company and the Subsidiaries will own,
good and marketable title to all of their Real Estate which is material to such
persons (excluding, for purposes of this sentence, Real Estate leases), free and
clear of any and all Liens, except as set forth in the Company SEC Reports or in
Section 3.12(b) of the Company Disclosure Schedule or such other Liens on Real
Estate which would not, individually or in the aggregate, have a Company
Material Adverse Effect. Such Real Estate assets, together with all Real Estate
assets held by the Company and the Subsidiaries under leases, are adequate for
the operation of the Company Businesses as presently conducted. The leases to
all Real Estate occupied by the Company and the Subsidiaries which are material
to the operation of the Company Businesses are in full force and effect and no
event has occurred which with the passage of time, the giving of notice, or
both, would constitute a default or event of default by the Company or any
Subsidiary or, to the Knowledge of the Company, any other person who is a
21
party signatory thereto, other than such defaults or events of default which,
individually or in the aggregate, would not have a Company Material Adverse
Effect.
SECTION 3.13. Intellectual Property. "Company Intellectual
Property" means all trademarks, trademark registrations, trademark rights, trade
names, trade name rights, patents, patent rights, patent applications,
industrial models, inventions, invention disclosures, copyrights, copyright
registrations, servicemarks, servicemark registrations, servicemark rights,
trade secrets, applications for trademarks and for servicemarks, know-how and
other proprietary rights, data and information of any nature or form used or
held for use in connection with the businesses of the Company and the
Subsidiaries as currently conducted or as currently contemplated by the Company,
together with all applications currently pending for any of the foregoing.
Except as disclosed in the Company SEC Reports, the Company and the Subsidiaries
own or possess adequate licenses or other valid rights to use all of the Company
Intellectual Property that is necessary or appropriate for the conduct or
contemplated conduct of the Company's or Subsidiaries' businesses. Section
3.13(a) of the Company Disclosure Schedule lists each material license or other
agreement pursuant to which the Company has the right to use Company
Intellectual Property utilized in connection with any product of the Company and
the Subsidiaries, the cancellation or expiration of which would have a Company
Material Adverse Effect (the "Company Licenses"). There are no pending, and
between the date hereof and the Effective Time, there shall not be any pending,
or to the Company's Knowledge, threatened interferences, re-examinations,
oppositions or nullities involving any patents, patent rights or applications
therefor of the Company or any Subsidiary, except such as may be commenced by
Parent or any subsidiary of Parent and except such as would not, individually or
in the aggregate, have a Company Material Adverse Effect. There is no breach or
violation by the Company under, and, to the Company's Knowledge, there is no
breach by any other party to, any Company License that is reasonably likely to
give rise to any termination or any loss of rights thereunder. The Company has
put in place policies and procedures to maintain the confidentiality of, and
trade secret rights to, the processes and formulas, research and development
results and other know-how of the Company, the value of which to the Company is
dependent upon the maintenance of the confidentiality thereof and, to the
Knowledge of the Company, such policies and procedures have been complied with.
The conduct of the business of the Company and the Subsidiaries as currently
conducted or contemplated does not and will not infringe upon or conflict with,
in any way, any license, trademark, trademark right, trade name, trade name
right, patent, patent right, industrial model, invention, service xxxx, service
right, copyright or any other intellectual property rights of any third party
that, individually or in the aggregate, would have a Company Material Adverse
Effect. Except as disclosed in the Company SEC Reports, there are no
infringements of any Company Intellectual Property which, individually or in the
aggregate, would have a Company Material Adverse Effect. Except as set forth in
Section 3.13(b) of the Company Disclosure Schedule, neither the Company nor any
Subsidiary has licensed or otherwise permitted the use by any third party of any
proprietary
22
information or Company Intellectual Property on terms or in a manner which,
individually or in the aggregate, would have a Company Material Adverse Effect.
SECTION 3.14. Tax Matters. (a) Definitions. As used in this
Agreement:
(i) "Closing Agreement" means a written and legally binding
agreement with a taxing authority relating to Taxes.
(ii) "Tax Return" means any report, return, information
statement, payee statement or other information required to be provided
to any federal, state, local or foreign Governmental Authority, or
otherwise retained, with respect to Taxes or the Company Benefit Plans.
(iii) "Tax Ruling" means a written ruling of a taxing
authority relating to Taxes.
(iv) "Taxes" means any and all taxes, levies, imposts, duties,
assessments, charges and withholdings imposed or required to be
collected by or paid over to any federal, state, local, supra-national
or foreign Governmental Authority or any political subdivision thereof,
including without limitation income, gross receipts, ad valorem, value
added, minimum tax, franchise, sales, use, excise, license, real or
personal property, unemployment, disability, stock transfer, mortgage
recording, estimated, withholding or other tax, governmental fee or
other like assessment or charge of any kind whatsoever, and including
any interest, penalties, fines, assessments or additions to tax imposed
in respect of the foregoing, or in respect of any failure to comply
with any requirement regarding Tax Returns.
(b) Representations. Except for representations and warranties
made with respect to federal and state income Taxes, all
representations and warranties made in this Section 3.14(b) with
respect to Taxes are made to the best Knowledge of the Company. Subject
to the foregoing, and except as set forth in Section 3.14(b) of the
Company Disclosure Schedule or as would not, individually or in the
aggregate, have a Company Material Adverse Effect:
(i) Filing of Tax Returns. The Company and each of the
Subsidiaries have filed all Tax Returns required to be filed by each of
them and such Tax Returns are in all material respects true, complete
and correct and filed on a timely basis.
(ii) Payment of Taxes. The Company and each of the
Subsidiaries have, within the time and in the manner prescribed by law,
paid all Taxes that are currently due and payable, except for those
contested in good faith and for which adequate reserves have been
taken.
23
(iii) Tax Liens. There are no tax liens upon the assets of the
Company or of any of the Subsidiaries except for statutory liens for
current Taxes not yet due.
(iv) Withholding Taxes. The Company and each of the
Subsidiaries have complied in all material respects with the provisions
of the Code relating to the withholding of Taxes, as well as similar
provisions under any other Laws, and have, within the time and in the
manner prescribed by Law, withheld and paid over to the proper
governmental authorities all amounts required.
(v) Extensions of Time for Filing. Neither the Company nor any
of the Subsidiaries has requested any extension of time within which to
file any Tax Return, which Tax Return has not since been filed.
(vi) Waivers of Statute of Limitations. Neither the Company
nor any of the Subsidiaries has executed any outstanding waivers or
comparable consents regarding the application of the statute of
limitations with respect to any Taxes or Tax Returns.
(vii) No Deficiencies. The statute of limitations for the
assessment of any federal income Taxes has expired for all income Tax
Returns of the Company and of each of the Subsidiaries or such income
Tax Returns have been examined by the Internal Revenue Service for all
periods. No deficiency for any income Taxes has been proposed, asserted
or assessed against the Company or any of the Subsidiaries which has
not been resolved and paid in full. There are no deficiencies for state
income Taxes which individually, or in the aggregate, would have a
Company Material Adverse Effect.
(viii) Audit, Administrative and Court Proceedings. No audits
or other administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns of the Company or any
of the Subsidiaries.
(ix) Powers of Attorney. No power of attorney currently in
force has been granted by the Company or any of the Subsidiaries
concerning any Taxes or Tax Returns.
(x) Tax Rulings. Neither the Company nor any of the
Subsidiaries has received a Tax Ruling or entered into a Closing
Agreement with any taxing authority that would have a Company Material
Adverse Effect.
(xi) Tax Sharing Agreements. Neither the Company nor any
Subsidiary is a party to any agreement relating to allocating or
sharing of Taxes which has not been disclosed on its Tax Returns.
24
SECTION 3.15. Environmental Matters.
(a) For purposes of this Agreement, the following terms shall
have the following meanings: (i) "Hazardous Substances" means (A) petroleum and
petroleum products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (B) any other
chemicals, materials or substances regulated as toxic or hazardous or as a
pollutant, contaminant or waste under any applicable Environmental Law; (ii)
"Environmental Law" means any law, past, present or future and as amended, and
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, or common law, relating to
pollution or protection of the environment, health or safety or natural
resources, including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Substances; and (iii) "Environmental Permit" means any permit, approval,
identification number, license or other authorization required under any
applicable Environmental Law.
(b) Except as disclosed in Section 3.15(b) of the Company
Disclosure Schedule, the Company and the Subsidiaries are and have been in
compliance with all applicable Environmental Laws, have obtained all
Environmental Permits and are in compliance with their requirements, and have
resolved all past non-compliance with Environmental Laws and Environmental
Permits without any pending, on-going or future obligation, cost or liability,
except in each case for the notices set forth in Section 3.15(b) of the Company
Disclosure Schedule or where such non-compliance would not, individually or in
the aggregate, have a Company Material Adverse Effect.
(c) Except as disclosed in Section 3.15(c) of the Company
Disclosure Schedule, neither the Company nor any of the Subsidiaries has (i)
placed, held, located, released, transported or disposed of any Hazardous
Substances on, under, from or at any of the Company's or any of the
Subsidiaries' properties or any other properties, other than in a manner that
would not, in all such cases taken individually or in the aggregate, result in a
Company Material Adverse Effect, (ii) any Knowledge or reason to know of the
presence of any Hazardous Substances on, under, emanating from, or at any of the
Company's or any of the Subsidiaries' properties or any other property but
arising from the Company's or any of the Subsidiaries' current or former
properties or operations, other than in a manner that would not result in a
Company Material Adverse Effect, or (iii) any Knowledge or reason to know, nor
has it received any written notice (A) of any violation of or liability under
any Environmental Laws, (B) of the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any third party
in connection with any such violation or liability, (C) requiring the response
to or remediation of Hazardous Substances at or arising from any of the
Company's or any of the Subsidiaries' current or former properties or operations
or any other properties, (D) alleging noncompliance by the Company or any of the
Subsidiaries with the terms of any Environmental Permit in any manner reasonably
likely
25
to require material expenditures or to result in material liability or (E)
demanding payment for response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of the Subsidiaries' current or former
properties or operations or any other properties, except in each case for the
notices set forth in Section 3.15(c) of the Company Disclosure Schedule.
(d) Except as disclosed in Section 3.15(d) of the Company
Disclosure Schedule, no Environmental Law imposes any obligation upon the
Company or any of the Subsidiaries arising out of or as a condition to any
transaction contemplated by this Agreement, including any requirement to modify
or to transfer any permit or license, any requirement to file any notice or
other submission with any Governmental Authority, the placement of any notice,
acknowledgement or covenant in any land records, or the modification of or
provision of notice under any agreement, consent order or consent decree. Except
as disclosed in Section 3.15(d) of the Company Disclosure Schedule, no Lien has
been placed upon any of the Company's or the Subsidiaries' properties under any
Environmental Law.
(e) The Company and the Subsidiaries have provided Parent with
copies of any environmental assessment or audit report or other similar studies
or analyses currently in the possession of or available to the Company or any of
the Subsidiaries relating to any real property currently or formerly owned,
leased or occupied by the Company or any of the Subsidiaries.
SECTION 3.16. Material Contracts; Government Contracts.
(a) The contracts and agreements listed in Section 3.05 of the
Disclosure Schedule and all other contracts, agreements and arrangements that
are material to the Company and the Subsidiaries or, although not so material,
are of unique value to the Company and the Subsidairies are referred to herein
collectively as the "Material Contracts".
(b) Except as would not, individually or in the aggregate,
have a Company Material Adverse Effect, each Company License and each Material
Contract is a legal, valid and binding agreement, neither the Company nor any of
the Subsidiaries (or to the Knowledge of the Company, any other party thereto)
is in default under any of the Company Licenses or Material Contracts, and none
of the Company Licenses or Material Contracts has been cancelled by the other
party thereto; each Material Contract and Company License is in full force and
effect and no event has occurred which, with the passage of time or the giving
of notice or both, would constitute a default, event of default or other breach
by the Company or applicable Subsidiary party thereto which would entitle the
other party to such Material Contract or Company License to terminate the same
or declare a default or event of default thereunder; the Company and the
Subsidiaries are not in receipt of any claim of default under any such
agreement; the Company or the applicable Subsidiary party to such Material
26
Contract or Company License maintains good business relationships with the other
party to such agreement. The Company has made available to Parent true and
complete copies of all Company Licenses and all Material Contracts. The Company
is not a party to any contracts or agreements that limit the ability of the
Company or any Subsidiary or, after the Effective Time, Parent or any of its
affiliates, to compete in any line of business or with any person or in any
geographic area or during any period of time, or to solicit any customer or
client.
(c) Section 3.16(c) of the Company Disclosure Schedule
contains a complete list of all material bids, quotations and proposals made by,
all contracts and agreements between, and all commitments or sale or purchase
orders by, the Company or any of the Subsidiaries ("Government Contracts") with
or to the United States government, a foreign government or a department or
agency of the United States government or a foreign government, including,
without limitation, all contracts to supply goods and services, and all
subcontracts awarded to the Company or any of the Subsidiaries.
(d) All of the Government Contracts have been legally awarded
and are binding on the parties thereto and, except as may be disclosed in
Section 3.16(d) of the Company Disclosure Schedule or as would not have a
Company Material Adverse Effect, the Company and the Subsidiaries are in
compliance in all material respects with all terms and conditions in Government
Contracts, including all terms and conditions incorporated expressly by
reference or by operation of law therein.
(e) Except as set forth in Section 3.16(e) of the Company
Disclosure Schedule, as of the date of this Agreement, to the Company's
Knowledge the Company and the Subsidiaries have not received any notice, written
or, to the Company's Knowledge, oral, of material performance or administrative
deficiencies relating to or involving any Government Contract, other than
routine contract management interchanges such as deficiency reports, waivers,
technical deficiencies, discrepancies and similar type actions.
(f) Except as set forth in Section 3.16(f) of the Company
Disclosure Schedule, neither the Company, any of the Company's affiliates nor
any of their respective directors, officers or employees is currently debarred
or suspended from participation in the award of Government Contracts or from
otherwise conducting business with the U.S. government or any agency thereof,
nor, to the Company's Knowledge, are there facts or circumstances reasonably
likely to form the basis of a debarment or suspension proceeding.
(g) As of the date of this Agreement, except as set forth in
Section 3.16(g) of the Company Disclosure Schedule or as would not have a
Company Material Adverse Effect, the Company has not received any written notice
of any "stop orders", "cure notices", "show cause notices" or any "terminations
for convenience or default" of any Government Contract and, as at the Closing
Date, the Company shall not have received any such notices under any material
Government Contract.
27
(h) Except as set forth in Section 3.16(h) of the Disclosure
Schedule, as of the date of this Agreement, there are no Government Contracts
for the sale of goods or services for which, at the time of the most recent
scheduled contract milestone, the work schedule was delinquent in any respect
which could have a Company Material Adverse Effect.
(i) Except as would not have a Company Material Adverse
Effect, as of the date of this Agreement there is no outstanding bid for a
Government Contract for the sale of goods or services where performance of
contractual effort will be begun prior to contract award without advance funding
or customer acknowledgment that pre-contract costs will be incorporated in the
resultant contract nor are there any existing letter contracts having no defined
contract value relating to or involving Government Contracts where performance
will continue while awaiting additional contractual funding.
(j) As of the date of this Agreement there is no cost type
Government Contract which is material to the Company Government Business with a
ceiling, cap or share ratio, which is or is likely to be exceeded.
(k) The Company's pricing, cost accounting, estimating,
material management and accounting, property and resource planning and
procurement systems have been properly disclosed in all material respects to
and, to the extent required by applicable regulations, approved by the United
States government and such disclosures are in all material respects in
compliance with applicable federal procurement law regulations, including the
Cost Principles and Cost Accounting Standards.
SECTION 3.17. Suppliers. Except as set forth in Section 3.17
of the Company Disclosure Schedule, neither the Company nor any Subsidiary has
received any notice or has any reason to believe that any significant supplier
will not sell raw materials, supplies, merchandise and other goods to the
Company or any Subsidiary at any time after the Effective Time on terms and
conditions substantially similar to those used in its current sales to the
Company and the Subsidiaries, subject only to general and customary price
increases, unless comparable raw materials, supplies, merchandise or other goods
are readily available from other sources on comparable terms and conditions.
SECTION 3.18. Tax Treatment. Neither the Company nor, to the
Company's Knowledge, any of its affiliates has taken, agreed to take, or will
take any action that would prevent the Merger from constituting a transaction
qualifying under Section 368(a) of the Code. Neither the Company nor, to the
Company's Knowledge, any of its affiliates or agents is aware of any agreement,
plan or other circumstance that would prevent the Merger from qualifying under
Section 368(a) of the Code, and to the Company's Knowledge, the Merger will so
qualify.
28
SECTION 3.19. Insurance. All material fire and casualty,
general liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained by the Company or any of its
Subsidiaries are with reputable insurance carriers, provide full and adequate
coverage for all normal risks incident to the business of the Company and the
Subsidiaries and their respective properties and assets, and are in character
and amount at least equivalent to that carried by persons engaged in similar
businesses and subject to the same or similar perils or hazards, except for any
such failures to maintain insurance policies that, individually or in the
aggregate, would not have a Company Material Adverse Effect. The Company and
each Subsidiary have made any and all payments required to maintain such
policies in full force and effect. Except as set forth in Section 3.19 of the
Company Disclosure Schedule, neither the Company nor any Subsidiary has received
notice of default under any such policy, and has not received written notice or,
to the Knowledge of the Company, oral notice of any pending or threatened
termination or cancellation, coverage limitation or reduction or material
premium increase with respect to such policy.
SECTION 3.20. Approval of Company Board and Independent
Directors. The Board of Directors of the Company has approved unanimously the
execution and delivery of this Agreement and the Option and Voting Agreement for
purposes of Section 203 of Delaware Law and for purposes of Section 7 of Article
VII of the Company's By-Laws. A separate resolution approving the execution and
delivery of this Agreement and the Option and Voting Agreement for purposes of
Section 203 of Delaware Law and for purposes of Section 7 of Article VII of the
Company's By-Laws has been adopted unanimously by the independent directors of
the Company pursuant to a separate vote. A separate resolution approving the
execution and delivery of the Consulting Agreement has been adopted unanimously
by the independent directors of the Company pursuant to a separate vote.
SECTION 3.21. Stockholder Vote Required. The affirmative vote
of the holders of a majority of the outstanding shares of Company Class A Stock
is the only vote of the holders of any class or series of capital stock of the
Company necessary to approve the Merger.
SECTION 3.22. Accuracy of Information. Neither this Agreement
nor any other document provided by the Company or the Subsidiaries or any of
their respective employees or agents to Parent in connection with the
transactions contemplated herein contains an untrue statement of a material fact
or omits to state a material fact necessary to make the statements contained
therein not misleading.
SECTION 3.23. Transactions with Affiliates. (a) For purposes
of this Section 3.23, the term "Affiliated Person" means (i) any holder of 2% or
more of the Company Class A Stock, (ii) any director, officer or senior
executive of the Company or any Subsidiary, (iii) any person, firm or
corporation that directly or indirectly controls, is controlled by, or is
29
under common control with, any of the Company or any Subsidiary or (iv) any
member of the immediate family or any of such persons.
(b) Except as set forth in Section 3.23(b) of the Company
Disclosure Schedule or in the Company SEC Reports, since September 30, 1993, the
Company and the Subsidiaries have not, in the ordinary course of business or
otherwise, (i) purchased, leased or otherwise acquired any material property or
assets or obtained any material services from, (ii) sold, leased or otherwise
disposed of any material property or assets or provided any material services to
(except with respect to remuneration for services rendered in the ordinary
course of business as director, officer or employee of the Company or any
Subsidiary), (iii) entered into or modified in any manner any contract with, or
(iv) borrowed any money from, or made or forgiven any loan or other advance
(other than expenses or similar advances made in the ordinary course of
business) to, any Affiliated Person.
(c) Except as set forth in Section 3.23(c) of the Company
Disclosure Schedule or in the Company SEC Reports, (i) the contracts of the
Company and the Subsidiaries do not include any material obligation or
commitment between the Company or any Subsidiary and any Affiliated Person, (ii)
the assets of the Company or any Subsidiary do not include any receivable or
other obligation or commitment from an Affiliated Person to the Company or any
Subsidiary and (iii) the liabilities of the Company and the Subsidiaries do not
include any payable or other obligation or commitment from the Company or any
Subsidiary to any Affiliated Person.
(d) To the Knowledge of the Company and except as set forth in
Section 3.23(d) of the Company Disclosure Schedule or in the Company SEC
Reports, no Affiliated Person of any of the Company or any Subsidiary is a party
to any contract with any customer or supplier of the Company or any Subsidiary
that affects in any material manner the business, financial condition or results
of operation of the Company or any Subsidiary.
SECTION 3.24. Opinion of Financial Advisor. The Company has
received the opinion of Salomon Brothers Inc (the "Company Financial Advisor"),
to the effect that, as of the date hereof, the Merger Consideration is fair to
the Company stockholders from a financial point of view.
SECTION 3.25. Brokers. No broker, finder or investment banker
(other than the Company Financial Advisor) is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct copy of all agreements between the
Company and the Company Financial Advisor pursuant to which such firm would be
entitled to any payment relating to the Merger.
30
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Except as specifically disclosed in Parent SEC Reports (as
hereinafter defined) filed subsequent to December 31, 1996, Parent and Merger
Sub hereby, jointly and severally, represent and warrant to the Company that:
SECTION 4.01. 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 jurisdiction of its incorporation 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. Each of Parent and Merger Sub is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that, individually or in the aggregate, would not have a Parent
Material Adverse Effect. The term "Parent Material Adverse Effect" means any
circumstances, change in, or effect on, Parent, when taken as a consolidated
whole, which is, or could reasonably be expected to in the future be, materially
adverse to the operations, assets or liabilities, employee relationships,
customer or supplier relationships, earnings or results of operations, financial
projections or forecasts, or the business prospects and condition (financial or
otherwise), of Parent taken as a consolidated whole.
SECTION 4.02. Certificate of Incorporation and By-laws. Parent
has heretofore furnished to the Company a complete and correct copy of the
Certificate of Incorporation and the By-laws, each as amended to date, of Parent
and Merger Sub. Such Certificates of Incorporation and By-laws are in full force
and effect. Neither Parent nor Merger Sub is in violation of any provision of
its respective Certificate of Incorporation or By-laws.
SECTION 4.03. Parent Common Stock to Be Issued in the Merger.
The shares of Parent Common Stock to be issued pursuant to the Merger will be
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, Parent's Certificate of Incorporation or
By-laws or any agreement to which Parent is a party or by which Parent is bound
and will, when issued, be registered under the Securities Act and the Exchange
Act and registered or exempt from registration under applicable Blue Sky Laws.
SECTION 4.04. Authority Relative to This Agreement. Each of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver this
31
Agreement, to perform its obligations hereunder and to consummate the Merger.
The execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the Merger have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Parent or Merger Sub are necessary to authorize this Agreement or
to consummate the Merger (other than, with respect to the Merger, the filing and
recordation of appropriate merger documents as required by Delaware Law). This
Agreement has been duly and validly executed and delivered by Parent and Merger
Sub and, assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of Parent and Merger
Sub enforceable against each of Parent and Merger Sub in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
SECTION 4.05. 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 the Certificate of Incorporation or
By-laws of Parent or Merger Sub, (ii) conflict with or violate any Law
applicable to Parent or Merger Sub or by which any property or asset of Parent
or Merger Sub is bound or affected, except for such conflicts or violations
which would not, individually or in the aggregate, have a Parent Material
Adverse Effect, (iii) prevent or materially delay the consummation of the Merger
or (iv) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or Merger Sub is a party or by
which Parent or Merger Sub or any property or asset of either of them is bound
or affected, except for any such breaches or defaults which, individually or in
the aggregate, 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 or regulatory authority,
domestic, foreign or supranational, except (i) for applicable requirements, if
any, of the Exchange Act, the Securities Act, Blue Sky Laws, state takeover
laws, the HSR Act, and the filing and recordation of appropriate merger
documents as required by Delaware Law and the rules of the NYSE, and (ii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, is not reasonably likely to prevent or
materially delay consummation of the Merger, and would not, individually or in
the aggregate, have a Parent Material Adverse Effect.
SECTION 4.06. SEC Filings; Financial Statements.
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(a) Parent has filed all forms, reports and documents required
to be filed by it with the SEC since January 1, 1994 (collectively, the "Parent
SEC Reports"). The Parent SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations thereunder, (ii) did not at the time they were filed
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 and (iii) did not at the time they were filed omit any documents
required to be filed as exhibits thereto.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Parent SEC Reports was
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each fairly presented the
consolidated financial position, results of operations and cash flows of Parent
and its consolidated subsidiaries as at the respective dates thereof and for the
respective periods indicated therein in accordance with United States generally
accepted accounting principles (subject, in the case of unaudited statements, to
normal and recurring year-end adjustments that were not and are not expected,
individually or in the aggregate, to have a Parent Material Adverse Effect).
SECTION 4.07. Absence of Certain Changes or Events. Since
December 31, 1996, except as disclosed in any Parent SEC Report filed since
December 31, 1996, there has not been any event or events having, or reasonably
likely to have, individually or in the aggregate, a Parent Material Adverse
Effect.
SECTION 4.08. Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Parent or Merger
Sub.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the
Merger. The Company covenants and agrees that, between the date of this
Agreement and the Effective Time, except as set forth in Section 5.01 of the
Company Disclosure Schedule or as otherwise expressly provided for in this
Agreement, unless Parent shall otherwise agree (which agreement shall not be
unreasonably withheld or delayed) in writing, the Company Businesses shall be
conducted only in, and the Company and the Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner consistent in
all material
33
respects with past practice; and the Company shall use its best efforts to
preserve intact its business organization, to keep available the services of the
current officers, employees and consultants of the Company and the Subsidiaries
and to preserve the current relationships of the Company and the Subsidiaries
with customers, distributors, suppliers, licensors, licensees, contractors and
other persons with which the Company or any Subsidiary has significant business
relations. By way of amplification and not limitation, except as contemplated by
this Agreement, or as set forth in Section 5.01 of the Company Disclosure
Schedule, neither the Company nor any of the Subsidiaries shall, between the
date of this Agreement and the Effective Time, directly or indirectly do, or
propose to do, any of the following without the prior written consent of Parent,
which consent shall not be unreasonably withheld or delayed:
(a) amend or otherwise change its Certificate of Incorporation
or By-laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant or encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, (i) any shares of capital stock of any class of the Company or any
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary or (ii) any assets of the
Company or any Subsidiary, except for sales in the ordinary course of
business and in a manner consistent in all material respects with past
practice and other asset sales for consideration or having a fair
market value aggregating not more than $1,000,000;
(c) other than regularly scheduled periodic cash dividends in
amounts not in excess of those previously declared, set aside, make or
pay any dividend or other distribution, payable in cash, stock,
property or otherwise, with respect to any of its capital stock, except
that a United States Subsidiary may, after consultation with Parent,
declare and pay a dividend to the Company;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) except as contemplated by the UNC Merger Agreement, (i)
acquire (including, without limitation, by merger, consolidation or
acquisition of stock or assets) any corporation, partnership, limited
liability company, other business organization or any division thereof,
or any material amount of assets; (ii) enter into any contract or
agreement that, if entered into prior to the date of this Agreement,
would have been required to be disclosed as a Material Contract, other
than in the ordinary course of business, consistent in all material
respects with past practice; or (iii) enter into or amend any Material
Contract with respect to any matter set forth in this subsection (e);
34
(f) (i) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or
make any loans or advances, except in the ordinary course of business
and consistent in all material respects with past practice and in an
amount not in excess of $250,000; (ii) authorize capital expenditures
which are, in the aggregate, in excess of $1,000,000 for the Company
and the Subsidiaries taken as a whole; or (iii) enter into or amend any
contract, agreement, commitment or arrangement with respect to any
matter set forth in this subsection (f);
(g) increase (except in the ordinary course of business and
consistent in all material respects with past practice) the
compensation payable or to become payable to its officers or employees
generally or to any employee with an annual salary in excess of
$100,000, or grant any bonus, severance or termination pay to, or enter
into any employment or severance agreement with any director, officer
or other employee of the Company or any Subsidiary, or establish,
adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any director, officer or employee; provided, however, that
the Company and the executive officers identified in Exhibit 5.01(g)
hereto may enter into agreements in a form substantially identical to,
and in the amounts identified on, Exhibit 5.01(g) hereto;
(h) acquire, sell, lease or dispose of any Real Estate or
other material assets, other than sales or leases of fixed assets
(other than Real Estate) or sales of inventory, in each case, in the
ordinary course of business;
(i) accelerate the collection of accounts receivable, delay
the payment of accounts payable or take any action with respect to
credit, collection and fiscal policies and practices, other than in the
ordinary course of business and in a manner consistent with past
practice with respect to accounting policies or practices;
(j) make any material Tax election or settle or compromise any
material federal, state, local or foreign income Tax liability;
(k) take any action that would or is reasonably likely to
result in any of the covenants and agreements set forth in this Article
V or in Article VI or any of the conditions set forth in Article VII
not being satisfied as of the Closing Date;
(l) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent in all material
respects with past practice, with respect to accounting policies or
procedures (including, without limitation, procedures with respect to
the payment of accounts payable and collection of accounts receivable);
35
(m) knowingly take any action that could reasonably be
expected to prevent the Merger from constituting a transaction
qualifying under Section 368(a) of the Code; or
(n) except for the payment of reasonable professional fees
relating to the Merger, the UNC Merger, or otherwise and reasonable
fees to financial advisors (which financial advisory fees have
heretofore been disclosed or are otherwise acceptable, to Parent), pay,
discharge or satisfy any claim, liability or obligation (absolute,
accrued, asserted or unasserted, contingent or otherwise) in an amount
in excess of $500,000 in the aggregate, other than the payment,
discharge or satisfaction, in the ordinary course of business and
consistent in all material respects with past practice, of liabilities
reflected or reserved against in the Company 1996 Balance Sheet or
subsequently incurred in the ordinary course of business and consistent
in all material respects with past practice.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, the Company and Parent shall prepare and file with the SEC
preliminary proxy materials relating to the meeting of the holders of shares of
Company Class A Stock to be held in connection with the Merger (together with
any amendments thereof or supplements thereto, the "Proxy Statement"). As
promptly as practicable after comments are received from the SEC on the
preliminary proxy materials and after the furnishing by the Company and Parent
of all information required to be contained therein, the Company and Parent
shall prepare and file with the SEC a registration statement on Form S-4
(together with all amendments thereto, the "Registration Statement"), in which
the Proxy Statement shall be included as a prospectus in connection with the
registration under the Securities Act of the shares of Parent Common Stock to be
issued to the holders of shares of Company Common Stock pursuant to the Merger.
Parent shall use all reasonable efforts to cause the Registration Statement to
become effective as promptly as practicable, and shall take all action required
under any applicable federal or state securities laws in connection with the
issuance of shares of Parent Common Stock pursuant to the Merger. The Company
shall furnish all information concerning the Company as Parent may reasonably
request in connection with such actions and the preparation of the Registration
Statement. As promptly as practicable after the Registration Statement shall
have become effective, the Company shall mail the Proxy Statement to its
stockholders. The Proxy Statement shall include the unanimous recommendation of
the Board of Directors of the Company in favor of the Merger, unless otherwise
necessary due to the
36
applicable fiduciary duties of the directors of the Company, as determined by
such directors in good faith after consultation with independent legal counsel
(who may be the Company's regularly engaged independent legal counsel).
(b) The Registration Statement and the information supplied by
Parent for inclusion in the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective by the SEC; (ii) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the holders of shares of Company Class A Stock; (iii) the time of the
Stockholders' Meeting (as defined in Section 6.02); and (iv) 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
therein not misleading. If at any time prior to the Effective Time any event or
circumstance relating to Parent or any of its subsidiaries, or their respective
officers or directors, is discovered by Parent which should be set forth in an
amendment or a supplement to the Registration Statement or Proxy Statement,
Parent shall promptly inform the Company, and the Company shall make appropriate
amendments or supplements to the Proxy Statement. The Proxy Statement shall
comply in all material respects as to form and substance with the requirements
of the Securities Act, the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information supplied by Parent or Merger Sub
which is contained in, or furnished in connection with the preparation of, any
of the foregoing documents.
(c) The Proxy Statement and the information supplied by the
Company for inclusion in the Registration Statement shall not, at (i) the time
the Registration Statement is declared effective by the SEC; (ii) the time the
Proxy Statement (or any amendment thereof or supplement thereto) is first mailed
to the holders of shares of Company Class A Stock; (iii) the time of the
Stockholders' Meeting; and (iv) 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 therein not misleading. If
at any time prior to the Effective Time any event or circumstance relating to
the Company or any of the Subsidiaries, or their respective officers or
directors, is discovered by the Company which should be set forth in an
amendment or a supplement to the Registration Statement or Proxy Statement, the
Company shall promptly inform Parent. The Registration Statement and the Proxy
Statement shall comply in all material respects as to form and substance with
the requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, Parent and Merger Sub
make no representations or warranties with respect to any information supplied
by the Company which is contained in, or furnished in connection with the
preparation of, any of the foregoing documents.
SECTION 6.02. Stockholders' Meeting.
37
(a) Subject to the provisions of Section 6.05 and Section
8.01(g), the Company shall, consistent with applicable law, call and hold a
meeting of the holders of shares of Company Class A Stock (the "Stockholders'
Meeting") as promptly as practicable for the purpose of voting upon the approval
and adoption of this Agreement and the Company shall use its reasonable best
efforts to hold the Stockholders' Meeting as soon as practicable after the date
on which the Registration Statement becomes effective. The Company shall solicit
from the holders of shares of Company Class A Stock proxies in favor of the
approval and adoption of the Merger, and shall take all other action necessary
or advisable to secure the vote or consent of such holders required by Delaware
Law.
(b) Parent shall vote (or consent with respect to) any shares
of Company Class A Stock beneficially owned by it, or with respect to which it
has the power (by agreement, proxy or otherwise) or cause to be voted (or to
provide a consent), in favor of the approval and adoption of this Agreement at
any meeting of the stockholders of the Company at which this Agreement shall be
submitted for approval and adoption and at all adjournments or postponements
thereof (or, if applicable, by any action of the stockholders of the Company by
consent in lieu of a meeting).
SECTION 6.03. Appropriate Action; Consents; Filings.
(a) The Company and Parent shall use their reasonable efforts
to (i) take, or cause to be taken, all appropriate action and do, or cause to be
done, all things necessary, proper or advisable under applicable Law or
otherwise to consummate and make effective the Merger as promptly as
practicable, (ii) obtain expeditiously from any Governmental Authorities any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by Parent or the Company or any of their
Subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Merger, and (iii) as promptly as
practicable, make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under (A)
the Securities Act and the Exchange Act, and any other applicable federal or
state securities Laws, (B) the HSR Act and any related governmental request
thereunder and (C) any other applicable Law; provided that Parent and the
Company shall cooperate with each other in connection with the making of all
such filings, including providing copies of all such documents to the non-filing
party and its advisors prior to filing and, if requested, accepting all
reasonable additions, deletions or changes suggested by the other party in
connection therewith. From the date of this Agreement until the Effective Time,
each party shall promptly notify the other party in writing of any pending or,
to the knowledge of the first party, threatened action, proceeding or
investigation by any Governmental Authority or any other person (i) challenging
or seeking material damages in connection with the Merger or the conversion of
the Company Common into Parent Common Stock or cash pursuant to the Merger or
(ii) seeking to restrain or prohibit the consummation of the Merger or otherwise
limit the right of Parent or Parent's subsidiaries to own or operate
38
all or any portion of the businesses or assets of the Company or its
Subsidiaries, which in either case would have a Company Material Adverse Effect
prior to or after the Effective Time, or a Parent Material Adverse Effect after
the Effective Time.
(b) The Company and Parent shall furnish to each other all
information required for any application or other filing to be made pursuant to
the rules and regulations of any applicable Law (including all information
required to be included in the Proxy Statement and the Registration Statement)
in connection with the transactions contemplated by this Agreement.
(c) (i) Each of Parent and the Company shall give (or shall
cause its respective subsidiaries to give) any notices to third parties and use,
and cause its respective subsidiaries to use, their reasonable efforts to obtain
any third party consents, (A) necessary, proper or advisable to consummate the
transactions contemplated in this Agreement, (B) disclosed or required to be
disclosed in the Company Disclosure Schedule or (C) required to prevent a
Company Material Adverse Effect from occurring prior to or after the Effective
Time or a Parent Material Adverse Effect from occurring after the Effective
Time; provided, however, that the failure by the Company to obtain any one or
more of such third party consents (including those disclosed in Section 3.05(a)
and Section 3.05(b) of the Company Disclosure Schedule) shall not constitute a
condition precedent to Parent's obligation to consummate the Merger pursuant to
the terms of this Agreement or entitle Parent to delay the Effective Time.
(ii) In the event that Parent or the Company shall fail to
obtain any third party consent described in subsection (c)(i) above, it shall
use its reasonable efforts, and shall take any such actions reasonably requested
by the other party, to minimize any adverse effect upon the Company and Parent,
their respective subsidiaries, and their respective businesses resulting, or
which could reasonably be expected to result after the Effective Time, from the
failure to obtain such consent.
SECTION 6.04. Access to Information; Confidentiality.
(a) The parties shall comply with, and shall cause their
respective Representatives (as defined below) to comply with, to the extent
permitted by applicable Law, all of their respective obligations under the
Confidentiality Agreement dated March 4, 1997 (the "Confidentiality Agreement")
between the Company and Parent.
(b) Subject to the Confidentiality Agreement, from the date
hereof to the Effective Time, the Company will provide to Parent (and its
officers, directors, employees, accountants, consultants, legal counsel, agents
and other representatives, collectively, "Representatives") access to all
information and documents which Parent may reasonably request regarding the
business, assets, liabilities, employees and other aspects of the Company.
39
(c) From the date hereof to the Effective Time, the Company
shall: (i) provide to Parent and its Representatives access at reasonable times
upon prior notice to the officers, employees, agents, properties, offices and
other facilities of the Company and its Subsidiaries and to the books and
records thereof and (ii) furnish promptly such information concerning the
business, properties, contracts, assets, liabilities, personnel and other
aspects of the Company and its Subsidiaries as Parent or its Representatives may
reasonably request.
(d) No investigation by Parent or Merger Sub, whether prior to
the execution of this Agreement or pursuant to this Section 6.04, shall affect
any representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 6.05. No Solicitation of Competing Transactions. (a)
Neither the Company nor any Subsidiary shall, directly or indirectly, through
any officer, director, agent or otherwise, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate knowingly, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as defined below), or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any of the officers, directors or
employees of the Company or any Subsidiary or any investment banker, financial
advisor, attorney, accountant or other agent or representative of the Company or
any Subsidiary to take any such action, and the Company shall notify Parent
orally (within three business days) and in writing (as promptly as practicable)
of all of the relevant details relating to any inquiry or proposal which the
Company or any Subsidiary or any such officer, director, employee, investment
banker, financial advisor, attorney, accountant or other agent or representative
may receive relating to any of such matters and which the Company and any of its
officers or directors has knowledge of, and if such inquiry or proposal is in
writing, the Company shall deliver to Parent a copy of such inquiry or proposal;
provided, however, that nothing contained in this Section 6.05 shall prohibit
the Company or its Board of Directors from (i) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer,
(ii) referring any third party to this Section 6.05 or making a copy of this
Section 6.05 available to any third party, or (iii) failing to make or
withdrawing or modifying its recommendation referred to in Section 6.01(a)
following the making of a proposal that constitutes, or may reasonably be
expected to lead to, a Competing Transaction if the Board of Directors of the
Company, after consultation with independent legal counsel (who may be the
Company's regularly engaged independent legal counsel), determines in good faith
that such action is necessary for the directors of the Company to comply with
their fiduciary duties to the Company or its stockholders under applicable law,
or (iv) terminating this Agreement and the transactions contemplated hereby in
accordance with Section 8.01(g) hereof. The Company agrees not to release any
third party from, or waive any provision of, any confidentiality or standstill
agreement to which the
40
Company is a party. For purposes of this Agreement, "Competing Transaction"
shall mean any of the following involving the Company or any Subsidiary: (i) any
merger, consolidation, share exchange, recapitalization, business combination,
or other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 15% or more of the assets of the Company and
the Subsidiaries, taken as a whole, in a single transaction or series of related
transactions; (iii) any tender offer or exchange offer for 15% or more of the
shares of Company Class A Stock or Company Class B Stock or the filing of a
registration statement under the Securities Act in connection therewith; (iv)
any person having acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder)
having been formed which beneficially owns or has the right to acquire
beneficial ownership of, 15% or more of the shares of Company Class A Stock or
Company Class B Stock; or (v) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
(b) Provided that there has been no breach of Section 6.05(a)
which materially and adversely affects the rights of Parent contained herein or
in the Option and Voting Agreement, if the Board of Directors of the Company
determines that it has received a Superior Proposal (as defined below), the
Board of Directors may cause the Company to give to Parent a notice (a "Superior
Proposal Notice") of its intent to accept such Superior Proposal and the giving
of such notice shall not be a breach of this Agreement. The Board of Directors
of the Company may withdraw such Superior Proposal Notice and, following such
withdrawal, may deliver to Parent another Superior Proposal Notice provided that
such subsequent notice relates to a different proposal. A "Superior Proposal"
shall mean any proposal made by a third party to acquire, directly or
indirectly, including pursuant to a merger, consolidation, share exchange,
recapitalization, business combination, liquidation, dissolution or other
similar transaction, for consideration consisting of cash and/or securities,
more than 50% of the aggregate voting power or capital stock of the Company then
outstanding or all or substantially all the assets of the Company and otherwise
on terms and conditions to closing which the Board of Directors of the Company
determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation and independent counsel) to be more
favorable to the Company's stockholders than the Merger and for which financing,
to the extent required, is then committed or which, in the good faith judgment
of the Board of Directors of the Company, is reasonably capable of being
obtained by such third party.
SECTION 6.06. Indemnification and Insurance.
(a) Parent and the Surviving Corporation agree that, except as
may be limited by applicable Laws, for seven (7) years from and after the
Effective Time, the indemnification obligations set forth in the Company's
Certificate of Incorporation and the Company's By-Laws, in each case as of the
date of this Agreement, shall survive the Merger
41
(and, prior to the Effective Time, Parent shall cause the Certificate of
Incorporation and Bylaws of Merger Sub to include such provisions) and shall not
be amended, repealed or otherwise modified after the Effective Time in any
manner that would adversely affect the rights thereunder of the individuals who
on or at any time prior to the Effective Time were entitled to indemnification
thereunder with respect to matters occurring prior to the Effective Time.
(b) The Surviving Corporation shall maintain in effect, for
three (3) years from and after the Effective Time, directors' and officers'
liability insurance policies covering the persons who are currently covered in
their capacities as such directors and officers by the Company's current
directors' and officers' policies and on terms not materially less favorable
than the existing insurance coverage with respect to matters occurring prior to
the Effective Time.
(c) Parent hereby agrees that, effective upon the consummation
of the Merger, it will guarantee the Surviving Corporation's obligations under
Section 6.06(a) and (b) of this Agreement and under Section 6.9(c) of the UNC
Merger Agreement.
(d) Parent hereby agrees that, effective upon the consummation
of the Merger and the UNC Merger, it will guarantee the obligations of the
surviving corporation of the UNC Merger under Sections 6.9(a) and (b) of the UNC
Merger Agreement.
(e) In addition to, and not in lieu of the foregoing, Parent
shall indemnify, defend and hold harmless all officers and directors of the
Company (the "Company Indemnified Parties") and all officers and directors of
UNC (the "UNC Indemnified Parties" and, together with the Company Indemnified
Parties, the "Indemnified Parties") to the fullest extent permitted by Delaware
Law and in the Certificate of Incorporation and By-laws of the Company and UNC,
as currently in effect, from and against all liabilities, costs, expenses and
claims (including without limitation reasonable legal fees and disbursements,
which shall be paid, reimbursed or advanced by Parent in a manner consistent
with applicable provisions of Parent's By-laws) related to the Merger and other
transactions contemplated hereby, which may be asserted against the Indemnified
Parties from and after the date of this Agreement, other than liabilities
resulting from a breach of the fiduciary duties of any of such Indemnified
Parties; provided, however, that (i) Parent's obligations to the Company
Indemnified Parties under this Section 6.06(e) shall not be effective until
consummation of the Merger and (ii) Parent's obligations to the UNC Indemnified
Parties shall not be effective until the consummation of both the UNC Merger and
the Merger.
42
SECTION 6.07. Notification of Certain Matters. From and after
the date of this Agreement until the Effective Time, each party hereto shall
promptly notify the other parties hereto of (a) the occurrence, or
non-occurrence, of any event the occurrence or non-occurrence of which would be
reasonably likely to cause any condition to the obligations of any party to
effect the Merger or the UNC Merger not to be satisfied, (b) the failure of the
Company or Parent, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it pursuant to this
Agreement which would be reasonably likely to result in any condition to the
obligations of any party to effect the Merger not to be satisfied, or (c) the
failure of UNC to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it pursuant to the UNC Merger Agreement (as
defined below) which would be reasonably likely to result in any condition to
the obligations of the Company to effect the transactions contemplated by the
UNC Merger Agreement not to be satisfied; provided, however, that the delivery
of any notice pursuant to this Section 6.07 shall not be deemed to be an
amendment of this Agreement or any Section in the Company Disclosure Schedule
and shall not cure any breach of any representation or warranty requiring
disclosure of such matter prior to the date of this Agreement. No delivery of
any notice pursuant to this Section 6.07 shall limit or affect the remedies
available hereunder to the party receiving such notice, including the rights of
Parent under Section 7.02(a) and those of the Company under Section 7.03(a), in
the event that a representation or warranty made by the Company or Parent herein
shall not be true and correct (giving effect to any standards of materiality set
forth in such Sections) as of the date hereof or as of the date when made (if a
different date) and as of the Effective Time.
SECTION 6.08. Stock Exchange Listing. Parent shall as promptly
as reasonably practicable prepare and submit to the NYSE a listing application
covering the shares of Parent Common Stock to be issued in the Merger and shall
use its reasonable efforts to cause such shares to be approved for listing on
the NYSE prior to the Effective Time.
SECTION 6.09. Public Announcements. Parent and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or any transaction
contemplated hereby. Parent and the Company shall not issue any such press
release or make any such public statement without the prior consent of the other
(which consent shall not be unreasonably withheld), except as may be required by
Law or any listing agreement with the NYSE, the NASD or any national securities
exchange to which Parent or the Company is a party. The parties have agreed on
the text of a joint press release by which Parent and the Company will announce
the execution of this Agreement.
SECTION 6.10. Plan of Reorganization. This Agreement is
intended to constitute a "plan of reorganization" within the meaning of Section
1.368-2(g) of the income tax regulations promulgated under the Code.
43
SECTION 6.11. Affiliates; Tax Treatment. Within thirty (30)
days from the date hereof, the Company shall obtain from any person who may be
deemed to be an affiliate, as of the date of this Agreement, of the Company
under Rule 145 of the Securities Act, a written agreement substantially in the
appropriate form attached hereto as Exhibit 6.11. The Company shall use its
reasonable best efforts to cause the Merger to qualify, and shall not take any
actions which could prevent the Merger from qualifying, as a reorganization
qualifying under the provisions of Section 368(a) of the Code.
SECTION 6.12. Company Employee Stock Purchase Plan. The
Company shall take all actions necessary pursuant to the terms of the ESPP in
order to shorten the offering period under such plan which includes the
Effective Time (the "Current Offering") such that a new purchase date shall
occur prior to the Effective Time and shares of Company Class B Stock shall be
purchased by ESPP participants prior to the Effective Time. The Current Offering
shall expire immediately following such new purchase date, and the ESPP shall
terminate immediately prior to the Effective Time. Subsequent to such new
purchase date, the Company shall take no action pursuant to the terms of the
ESPP to commence any new offering period.
SECTION 6.13. Consulting Agreement. Parent and Xxxxxx X.
Xxxxxx, Xx. have entered into a Consulting Agreement as of the date hereof in
the form of Exhibit 6.13 hereto, which agreement shall become effective as of
the Effective Time.
SECTION 6.14. Supplemental Indenture. Immediately after the
Effective time, the Surviving Corporation will assume the Company's obligations
under the Indenture, dated as of June 10, 1996, among the Company, the
Subsidiaries and American Stock Transfer and Trust Company ("American Stock
Transfer and Trust") and, prior to the Effective Time, the Company will deliver
such certificates, opinions, agreements and other instruments as Parent or
American Stock Transfer and Trust may request in connection with the assumption
of the Company's obligations under such Indenture.
SECTION 6.15. UNC Merger Agreement. Simultaneously with the
execution and delivery of this Agreement, the Company and UNC Incorporated, a
Delaware corporation ("UNC"), have entered into an Amended and Restated Merger
Agreement, dated the date hereof (the "UNC Merger Agreement"), pursuant to which
the Company intends, on the terms and conditions set forth therein, to acquire
UNC pursuant to a merger (the "UNC Merger"). Unless this Agreement shall have
been terminated in accordance with its terms by Company or Parent, the Company
will not amend, modify, give any consent or grant any waiver under, nor will the
Company finally determine that all conditions to closing of the UNC Merger have
been satisfied without the prior written consent of Parent. The Company agrees
to provide to Parent, as promptly as practicable, copies of all notices given to
or by the Company pursuant to or in connection with the UNC Merger Agreement.
44
SECTION 6.16. Clean Air Act Permit. The Company covenants and
agrees that, between the date of this Agreement and the Effective Time, the
Company shall use its reasonable best efforts to obtain an operating permit
under Title V of the Clean Air Act, as amended, with respect to operations at
the Company's Miami International Airport Facility and in connection therewith
to ensure continuation of present operating levels of such facility pending the
issuance of such permit. Provided that the Company is using its reasonable best
efforts to obtain such permit, Parent hereby acknowledges that the failure to
obtain such permit shall not, in and of itself, be a breach of such covenant;
provided that Parent does not waive any breach that may result from the failure
to have such permit under any other provision of this Agreement and provided,
further, that, notwithstanding any disclosure of the failure to have such permit
in this Agreement, the Company Disclosure Schedule or otherwise, any adverse
consequences resulting or arising from the failure to have such permit may be
taken into account in determining whether a Company Material Adverse Effect has
occurred.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or, if permitted by applicable Law, waiver of the
following conditions:
(a) this Agreement and the transactions contemplated hereby
shall have been approved and adopted by the affirmative vote of the
holders of a majority of the outstanding shares of Company Class A
Stock in accordance with Delaware Law and the Company's Certificate of
Incorporation;
(b) any applicable waiting period under the HSR Act relating
to the Merger shall have expired or been terminated;
(c) no order, statute, rule, regulation, executive order,
stay, decree, judgment or injunction shall have been enacted, entered,
issued, promulgated or enforced by any Governmental Authority or a
court of competent jurisdiction which has the effect of making the
Merger illegal or otherwise prohibiting consummation of the Merger;
(d) the Registration Statement shall have been declared
effective, and no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for such
purpose shall be pending before or threatened by the SEC;
45
(e) the shares of Parent Common Stock to be issued in the
Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance; and
(f) all other necessary and material governmental and
regulatory clearances, consents, or approvals shall have been received,
other than the consent to assignment of the Company's FAA Certificate
which need not be received prior to the Effective Time.
SECTION 7.02. Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger
are subject to the satisfaction or, if permitted by applicable Law, waiver of
the following further conditions:
(a) (i) the Company shall have performed in all material
respects all of its obligations hereunder required to be performed by
it at or prior to the Effective Time; (ii) each of the representations
and warranties of the Company contained in this Agreement (disregarding
for this purpose any qualifications with respect to materiality or
Company Material Adverse Effect) shall be true and correct in all
material respects, in each case as of the date hereof and at and as of
the Closing Date as if made at and as of such time, it being understood
and agreed by Parent and Merger Sub that this Section 7.02(a) shall be
deemed to have been satisfied unless any failure of performance or
failure to be so true and correct, individually or in the aggregate,
would have a Company Material Adverse Effect; and (iii) Parent shall
have received a certificate signed by an executive officer of the
Company to the foregoing effect;
(b) Parent shall have received "cold comfort" letters of
Deloitte & Touche LLP and dated the date on which the Registration
Statement shall become effective and the Effective Time, respectively,
and addressed to Parent, such "cold comfort" letters being in such form
and substance as is reasonably customary for letters delivered by
independent public accountants in connection with registration
statements similar to the Registration Statement;
(c) Parent shall have received the opinion of counsel to
Parent, based upon representation letters and stockholder certificates,
dated on or about the Closing Date, substantially in the forms of
Exhibits 7.02(a), (b) and (c) to this Agreement, and such other facts,
representations and assumptions concerning, among other things, the
actions of the stockholders of the Company as counsel may reasonably
deem relevant, to the effect that the Merger will be treated for
federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code and that each of Parent,
Merger Sub and the Company will be a party to the reorganization within
the meaning of Section 368(b) of the Code, dated on the Closing Date;
46
(d) Parent shall have received from any person who may be
deemed to have become an affiliate of the Company, as reasonably
determined by the Company, pursuant to Rule 145 under the Securities
Act, after the date of this Agreement and on or prior to the Effective
Time, a signed agreement substantially in the form of Exhibit 6.11
hereto.
SECTION 7.03. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger are subject to the
satisfaction or, if permitted by applicable Law, waiver of the following further
conditions:
(a) (i) Parent and Merger Sub shall have performed in all
material respects all of their respective obligations hereunder
required to be performed by them at or prior to the Effective Time;
(ii) each of the representations and warranties of Parent contained in
this Agreement (disregarding for this purpose any qualifications with
respect to materiality or Parent Material Adverse Effect) shall be true
and correct in all material respects, in each case as of the date
hereof and at and as of the Closing Date as if made at and as of such
time; it being understood and agreed by the Company that this Section
7.03(a) shall be deemed to have been satisfied unless any failure of
performance or failure to be so true and correct, individually or in
the aggregate, would have a Parent Material Adverse Effect; and (iii)
the Company shall have received a certificate signed by an executive
officer of Parent to the foregoing effect; and
(b) Tax Opinion. The Company shall have received the opinion
of Greenberg, Traurig, counsel to the Company, based upon
representation letters and stockholder certificates substantially in
the forms of Exhibits 7.02(a), (b) and (c) to this Agreement, dated on
or about the Closing Date, and such other facts, representations and
assumptions concerning, among other things, the actions of the
stockholders of the Company as counsel may reasonably deem relevant, to
the effect that the Merger will be treated for federal income tax
purposes as a reorganization qualifying under the provisions of Section
368(a) of the Code and that each of Parent, Merger Sub and the Company
will be a party to the reorganization within the meaning of Section
368(b) of the Code, dated on the Closing Date.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement and the
transactions contemplated hereby
47
by the stockholders of the Company:
(a) by written consent duly authorized by the Boards of
Directors of each of Parent and the Company;
(b) by either Parent or the Company if (i) the waiting period
applicable to the consummation of the Merger under the HSR Act shall
not have expired or been terminated prior to September 30, 1997, (ii)
any court of competent jurisdiction in the United States or other
United States Governmental Authority shall have issued an order (other
than a temporary restraining order), decree or ruling, or taken any
other action, restraining, enjoining or otherwise prohibiting the
Merger (provided, however, that neither party may terminate this
Agreement pursuant to this Section 8.01(b)(ii) prior to September 30,
1997 if the party subject to such order, decree or ruling is using its
reasonable best efforts to have such order, decree or ruling removed,
unless such order, decree or ruling shall have become final and
non-appealable), or (iii) the Effective Time shall not have occurred on
or before September 30, 1997; provided that the right to terminate this
Agreement under this Section 8.01(b) shall not be available to any
party whose willful, deliberate or knowing failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before such date;
(c) by either Parent or the Company, if the Stockholders'
Meeting shall have been held and the holders of outstanding shares of
Company Class A Stock shall have failed to approve and adopt this
Agreement at such meeting (including any adjournment or postponement
thereof); provided, however, that if the Company shall have delivered a
Superior Proposal Notice to Parent, the Company shall not have the
right to terminate this Agreement pursuant to this Section 8.01(c)
until the Company would otherwise be permitted to do so pursuant to
Section 8.01(g);
(d) by the Company, upon a breach of any representation,
warranty, or agreement set forth in this Agreement such that the
condition set forth in Section 7.03(a) would not be satisfied (a
"Terminating Parent Breach"); provided, however, that, if such
Terminating Parent Breach is curable by Parent through the exercise of
its best efforts and Parent continues to exercise such best efforts,
the Company may not terminate this Agreement under this Section 8.01(d)
for a period of 30 days from the date on which the Company delivers to
Parent written notice setting forth in reasonable detail the
circumstances giving rise to such Terminating Parent Breach; or
(e) by Parent, upon a breach of any representation, warranty,
or agreement set forth in this Agreement such that the condition set
forth in Section 7.02(a) would not be satisfied (a "Terminating Company
Breach"); provided, however, that, if such Terminating Company Breach
is curable by the Company through the exercise of its
48
best efforts and the Company continues to exercise such best efforts,
Parent may not terminate this Agreement under this Section 8.01(e) for
a period of 30 days from the date on which Parent delivers to the
Company written notice setting forth in reasonable detail the
circumstances giving rise to such Terminating Company Breach;
(f) by Parent, at any time after the Company shall have
delivered a Superior Proposal Notice to Parent; or
(g) by the Company if the Company shall have delivered to
Parent a Superior Notice Proposal in accordance with Section 6.05(b),
(i) in the event that any applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated and at
such time there shall be no order, decree, ruling or stipulation
entered into restraining, enjoining or otherwise preventing the Merger
or the purchase of Company Common Stock pursuant to the Option and
Voting Agreement, at any time after the 15th business day following the
date the Company shall have delivered such Notice or (ii) in the event
that any applicable waiting period under the HSR Act relating to the
Merger shall not have expired or been terminated or there shall be in
effect any order, decree, ruling or stipulation entered into or
approved by any Governmental Authority restraining, enjoining or
otherwise preventing the Merger or the purchase of Company Common Stock
pursuant to the Voting and Option Agreement, at any time after the
later of June 30, 1997 and the 45th day following the date that the
Company shall have delivered such Notice, provided that, in the case of
each of (i) and (ii), (A) the Superior Proposal referred to in such
notice shall not have been withdrawn or changed in such a way that it
would no longer be a "Superior Proposal" pursuant to the definition
contained in this Agreement and (B) the 15 business day period in (i)
and the 45 day period in (ii) shall each be extended by an amount of
time equal to any period in which a stockholder is in breach of such
stockholder's obligations to deliver shares of Company Common Stock
pursuant to the Option and Voting Agreement and provided, further,
that, in the case of a Superior Proposal Notice delivered when the
circumstances described in clause (ii) existed and subsequent to such
delivery the applicable waiting period under the HSR Act relating to
the Merger shall have expired or been terminated and at such time there
shall be no order, decree, ruling or stipulation entered into
restraining, enjoining or otherwise preventing the Merger or the
purchase of Company Common Stock pursuant to the Option and Voting
Agreement, the Company may terminate this Agreement at any time after
the 15th business day following the date of such expiration of
termination.
SECTION 8.02. Effect of Termination. Except as provided in
Section 9.01, in the event of the termination of this Agreement pursuant to
Section 8.01, this Agreement shall forthwith become void, there shall be no
liability under this Agreement on the part of Parent, Merger Sub or the Company
or any of their respective officers or directors and all rights and obligations
of any party hereto shall cease; provided, however, that nothing herein shall
49
relieve any party from liability for, or be deemed to waive any rights of
specific performance of this Agreement available to a party by reason of, any
willful breach by the other party or parties of its or their willful breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
SECTION 8.03. Fees and Expenses. (a) In the event that:
(i)(A) this Agreement is terminated pursuant to Section
8.01(b)(i) and (B) the failure of the waiting period referred to in
Section 8.01(b)(i) to expire or terminate prior to September 30, 1997
shall not have been caused principally by, nor shall it have resulted
principally from, the Company's breach of any obligation under this
Agreement, or
(ii) any court of competent jurisdiction in the United States
or other United States Governmental Authority shall have issued an
order (other than a temporary restraining order which shall have been
lifted on or before September 30, 1997), decree or ruling, or taken any
other action, restraining, enjoining or otherwise prohibiting the
Merger pursuant to Section 7 of the Xxxxxxx Act of 1914, as amended, or
the Federal Trade Commission Act of 1914, as amended, and this
Agreement shall have been terminated pursuant to Section 8.01(b)(ii);
then, in either event, Parent shall pay the Company promptly a fee of $33.5
million (the "Parent Break-Up Fee"), which amount shall be payable in
immediately available funds; provided, however, that if, within 12 months after
this Agreement shall have been terminated in the circumstances described in
Section 8.03(a)(i) or (ii), a transaction which results in a Change of Control
(as defined below) is consummated for aggregate consideration in excess of the
aggregate Merger Consideration, then the Company shall, promptly after the
consummation of such transaction, reimburse Parent in immediately available
funds for the full amount of the Parent Break-Up Fee paid by Parent to the
Company pursuant to this Section 8.03(a), exclusive of interest. For purposes of
this Agreement, the term "Change of Control", shall mean the occurrence of any
of the following events with respect to the Company: (i) there shall be
consummated (A) any merger, consolidation or combination (any, a "Combination")
involving the Company in which the Company is not the continuing or surviving
corporation, or pursuant to which shares of a majority of the Company's voting
stock would be converted in whole or in part into cash, other securities or
other property, other than a Combination involving the Company in which the
holders of a majority of the Company's voting stock immediately prior to the
Combination either have substantially the same proportionate ownership of voting
stock of the surviving corporation immediately after the Combination or a
sufficient percentage of the voting stock of the surviving corporation to enable
such holders to effectively cause a majority of the members of the surviving
corporation's board of directors to be persons acceptable to such holders, or
(B) any sale, lease, exchange or transfer (in one transaction or a series
related transaction) of all or
50
substantially all of the assets of the Company, (ii) any person, other than the
Company or a Subsidiary or any employee benefit plan sponsored by the Company or
a Subsidiary or a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions in their ownership of stock
of the Company, shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of securities of the Company representing 50% or
more of the combined voting power of then outstanding securities ordinarily (and
apart from rights accruing in special circumstances) having the right to vote in
the election of directors, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise.
(b) All expenses incurred by the parties hereto shall be borne
solely and entirely by the party which has incurred the same; provided, however,
that (a) Parent shall pay any New York State Real Estate Transfer Tax and New
York City Real Property Transfer Tax and any similar Taxes in any jurisdiction
(and any penalties and interest with respect to such Taxes), which becomes
payable in connection with the Merger, on behalf of the stockholders of the
Company without the offset, deduction, counterclaim or deferment of the price to
be paid for shares of Company Common Stock pursuant to the Merger and (b) Parent
and the Company shall bear equally all expenses related to printing, filing and
mailing the Registration Statement and the Proxy Statement and all SEC and other
regulatory filing fees incurred in connection with the Registration Statement
and the Proxy Statement.
SECTION 8.04. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided that, after the
approval and adoption of this Agreement by the stockholders of the Company, no
amendment may be made which would reduce the amount or change the type of
consideration to be received by the stockholders of the Company pursuant to the
Merger. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.05. Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties of the other party contained herein or in any
document delivered by the other party pursuant hereto and (c) waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
51
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement and
any certificate delivered pursuant hereto by any person shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
8.01, as the case may be, except that the agreements set forth in Articles I and
II and Sections 6.06 and 6.14 shall survive the Effective Time indefinitely, and
those set forth in Sections 6.09, 8.02, 8.03, 8.04, 8.05 and this Article IX
shall survive termination indefinitely.
SECTION 9.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) or by a nationally recognized overnight courier service to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
9.02):
if to Parent or Merger Sub:
General Electric Company
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Vice President and
Senior Counsel-Transactions
52
with copies to:
General Electric Company
One Xxxxxxx Way
Mail Drop J104
Xxxxxxxx, Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Vice President and General Counsel
and
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx, Esq.
and Xxxx X. Xxxxxxxx, Xx., Esq.
if to the Company:
Greenwich Air Services, Inc.
0000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Xx., Chairman
and Chief Executive Officer
with a copy to:
Greenberg, Traurig, Hoffman, Lipoff, Xxxxx & Quentel
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
SECTION 9.03. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" of a specified person means a person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified person;
53
(b) "beneficial owner" with respect to any shares means a
person who shall be deemed to be the beneficial owner of such shares
(i) which such person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or
any of its affiliates or associates has, directly or indirectly, (A)
the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise, or (B) the
right to vote pursuant to any agreement, arrangement or understanding
or (iii) which are beneficially owned, directly or indirectly, by any
other persons with whom such person or any of its affiliates or
associates or any person with whom such person or any of its affiliates
or associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any such shares;
(c) "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or,
in the case of determining a date when any payment is due, any day on
which banks are not required or authorized to close in the City of New
York, New York;
(d) "Company Aeroderivative Business" shall mean the overhaul,
maintenance and repair of gas turbine engines used for industrial and
marine applications, and the management, sale, installation and
maintenance of power stations;
(e) "Company Businesses" shall mean, as of the date specified,
the collective reference to the Company Commercial Aircraft Business,
the Company Government Business and the Company Aeroderivative
Business, as presently conducted by the entities in the Company Group
and their respective business operations;
(f) "Company Commercial Aircraft Business" shall mean the
overhaul, maintenance and repair of commercial gas turbine aircraft
engines conducted at the engine service centers of the Company Group
located in Miami, Florida, Dallas, Texas, Ft. Worth, Texas, McAllen,
Texas, East Granby, Connecticut and Prestwick, Scotland;
(g) "Company Government Business" shall mean the aircraft
engine maintenance and repair programs managed and operated by the
Company Group for domestic and foreign governments and military
agencies;
(h) "Company Group" shall mean the Company, the Subsidiaries
and any partnerships in which the Company or any Subsidiary has an
interest, when taken as a whole;
54
(i) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction
of the management and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise;
(j) "Governmental Authority" means any United States (federal,
state or local), foreign or supra-national Government, or governmental,
regulatory or administrative authority, agency or commission;
(k) "Knowledge" means the actual knowledge of any of Xxxxxx X.
Xxxxxx, Xx., Xxxxxx X. Xxxxxx, Xx., Xxxxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxx, together with the knowledge that (i) Xxxxxx X. Xxxxxx, Xx. and
Xxxxxx X. Xxxxxx, Xx. would have had after making due inquiry of the
officers of the Company and the Subsidiaries who have responsibility
for the subject matter in question and who report directly to them,
including Xxxxxxxxx Volevesky, Xxxxxx Xxxxxxx, R. Xxxxx Xxxxxxxx,
Xxxxxxx Xxxxxx, Xxxxxx Xxxx and Xxxx Korsborough and, (ii) Xxxxxx X.
Xxxxxxx would have had after making due inquiry of Xxxxxxx Xxxxxxx,
Xxxxxxxxx Xxxxxxx and Xx Xxxxxxxxxxx;
(l) "person" means an individual, corporation, limited
liability company, partnership, limited partnership, syndicate, person
(including, without limitation, a "person" as defined in Section
13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a
government;
(m) "Real Estate" means, with respect to the Company or any
Subsidiary, as applicable, all of the fee or leasehold ownership right,
title and interest of such person, in and to all real estate and
improvements owned or leased by any such person and which is used by
any such person in connection with the operation of its business; and
(n) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which
such person (either above or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body
of such corporation or other legal entity.
SECTION 9.04. Accounting Terms. All accounting terms used
herein which are not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with United States generally
accepted accounting principles.
SECTION 9.05. 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
55
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the Merger 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 a mutually acceptable manner in order that the Merger be
consummated as originally contemplated to the fullest extent possible.
SECTION 9.06. Entire Agreement; Assignment. This Agreement
(including the Exhibits and the Company Disclosure Schedule, which are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein) and the Confidentiality Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof 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. This Agreement shall not
be assigned by operation of law or otherwise, except that Parent and Merger Sub
may assign all or any of their rights and obligations hereunder to any affiliate
of Parent provided that no such assignment shall change the amount or nature of
the Merger Consideration or relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations.
SECTION 9.07. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Section 6.06 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.08. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
SECTION 9.09. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed in that state. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined exclusively in the Court of Chancery for the State of
Delaware in and for the County of New Castle.
SECTION 9.10. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
56
SECTION 9.11. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
57
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.
GENERAL ELECTRIC COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
GB MERGER CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
and President
GREENWICH AIR SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
