AGREEMENT AND PLAN OF REORGANIZATION
By and Among
AEL INDUSTRIES, INC.
TRACOR, INC.
and
TRACOR AEL, INC.
OCTOBER 2, 1995
TABLE OF CONTENTS
Page
ARTICLE I PLAN OF REORGANIZATION 1
1.1 The Merger 1
1.2 Conversion and Cancellation of Securities 2
1.3 Timing 2
ARTICLE II REPRESENTATIONS AND WARRANTIES 3
2.1 Representations and Warranties by AEL 3
2.2 Representations and Warranties by Buyer and Sub 24
ARTICLE III ADDITIONAL COVENANTS 26
3.1 Shareholder Approval 26
3.2 Conduct of AEL's Business 27
3.3 AEL Stock Options 29
3.4 HSR Act 29
3.5 Other Actions 29
3.6 Inquiries and Negotiations 30
3.7 Notification of Certain Matters 30
3.8 Access to Information 30
3.9 Public Announcements 32
3.10 Indemnification; Director's and Officer's
LiabilityInsurance 32
3.11 Employee Benefit Plan 33
3.12 Update Information 33
3.13 Dissenting Shareholders 33
3.14 Commitment Letter 33
ARTICLE IV CONDITIONS TO THE MERGER 34
4.1 Conditions to the Merger Relating to Buyer and Sub 34
4.2 Conditions to the Merger Relating to AEL 36
ARTICLE V TERMINATION AND ABANDONMENT 37
5.1 Termination by Mutual Consent 37
5.2 Termination by AEL or Buyer and Sub 37
5.3 Termination by AEL 37
5.4 Termination by Buyer and Sub 38
5.5 Effect of Termination 38
5.6 Amendment 38
5.7 Waiver 39
ARTICLE VI MISCELLANEOUS 39
6.1 Notices 39
6.2 Counterparts 40
6.3 Headings 40
6.4 No Survival of Representations or Warranties 40
6.5 Entire Agreement 40
6.6 Cooperation 40
6.7 No Rights To Third Parties 41
6.8 No Assignment 41
6.9 Governing Law 41
6.10 Consent to Jurisdiction 41
ARTICLE VII CERTAIN DEFINITIONS 41
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of October 2, 1995
("Agreement"), by and among AEL INDUSTRIES, INC., a Pennsylvania
corporation ("AEL"), TRACOR, INC., a Delaware corporation ("Buyer"), and
TRACOR AEL, INC., a Delaware corporation and a wholly-owned subsidiary of
Buyer ("Sub").
BACKGROUND
The respective boards of directors of Buyer and Sub and the Long Range
Planning Committee of the Board of Directors of AEL (the "Long Range
Planning Committee") have each approved the acquisition of AEL by Buyer
through a merger of Sub with and into AEL (Sub and AEL are sometimes
hereinafter referred to as the "Constituent Corporations") in accordance
with the provisions of this Agreement and the Plan of Merger set forth as
Exhibit A hereto (the "Plan of Merger"), in which the outstanding shares of
AEL Class A Common Stock, par value $1.00 ("Class A Stock"), and AEL
Class B Common Stock, par value $1.00 ("Class B Stock"), (Class A Stock and
Class B Stock collectively the "AEL Common Stock") will be converted into
the right to receive cash, without interest, in the amount of $28.00 (the
"Merger Price") per share.
AEL has entered into certain other agreements each dated as of
February 28, 1995 (collectively the "Other Agreements") consisting of an
Agreement (the "Allocation Agreement") by and among AEL, Xx. Xxxx Xxxxxxx
and Xxxxxx X. Xxxxxxx (collectively the "Riebmans"); a Voting Trust
Agreement by and among AEL, the Riebmans and Messrs. Xxxxxxx X. Xxxxxxxx,
Xxxxxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxx and Xxxxx Xxxxx, as voting
trustees; a 1995 Agreement between AEL and Xx. Xxxx Xxxxxxx; and a
Participation Rights Agreement between AEL and Xx. Xxxx Xxxxxxx.
For federal income tax purposes, all parties intend that the Merger
(as hereinafter defined in Section 1.1) shall be treated as a taxable
purchase by Buyer of all outstanding capital stock (and options to purchase
capital stock) of AEL.
NOW, THEREFORE, in order to set forth the terms and conditions of the
Merger and the method of effecting the same, AEL, Buyer and Sub, each
intending to be legally bound hereby, agree as follows.
ARTICLE
PLAN OF REORGANIZATION
1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereinafter defined in Section 1.3),
Sub shall be merged with and into AEL pursuant to this Agreement and the
Plan of Merger and the separate corporate existence of Sub shall thereupon
cease (the "Merger"). Buyer shall cause Sub to perform its obligations
under the Plan of Merger. AEL shall be the surviving corporation in the
Merger (sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue to be governed by the Pennsylvania Business Corporation
Law of 1988, as amended (the "BCL") and other laws of the Commonwealth of
Pennsylvania, and all its rights, privileges, powers, immunities, purposes
and franchises shall continue unaffected by the Merger. The Merger shall
have the effects specified in the Delaware General Corporation Law (the
"DGCL") and the BCL.
1.2 Conversion and Cancellation of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of Buyer,
Sub, AEL or any holder of any shares of capital stock of either Constituent
Corporation, the shares of capital stock of each of the Constituent
Corporations shall be converted, and the Merger Price shall be payable, as
and to the extent set forth in the Plan of Merger. The aggregate cash
amount payable for all outstanding shares of AEL Common Stock and the
Cashed Options (as defined in the Plan of Merger) as a result of the Merger
is herein referred to as the "Merger Consideration."
1.3 Timing.
(a) Shareholder Approval. AEL shall submit: (1) this
Agreement, the Plan of Merger and the Merger (collectively the "Merger
Transaction") and (2) the Other Agreements to its shareholders for
ratification, approval and adoption at a meeting ("Shareholders
Meeting") to be held as soon as practicable. The Other Agreements and
the Merger Transaction shall be submitted to the AEL shareholders for
ratification, approval and adoption as a single proposition (the
"Proposal"). In connection with the Shareholders Meeting, AEL shall
take all steps as shall be necessary for the prompt preparation and
filing by AEL of a proxy statement (the "Proxy Statement"), as
contemplated by Rules 14a-1 et. seq. under the Securities Exchange Act
of 1934 (the "Exchange Act") with the Securities and Exchange
Commission (the "SEC") and shall cause the Proxy Statement to be
mailed to the holders of shares of AEL Common Stock as soon as
practicable. The affirmative vote of a majority of the votes cast by
the holders of shares of Class A Stock and by the holders of shares of
Class B Stock, each voting as a separate class, shall be required for
the ratification, approval and adoption of the Proposal at the
Shareholders Meeting by the shareholders of AEL ("Shareholder
Approval").
(b) The Closing. If Shareholder Approval is obtained, and
subject to the provisions of this Agreement, a closing (the "Closing")
shall be held on (i) the later of (A) the second business day
following the Shareholders Meeting and (B) the first business day on
which the last of the conditions set forth in Article IV to be
fulfilled prior to the Closing is fulfilled or waived or (ii) such
other date as the parties hereto may agree (the "Closing Date"), at
10:00 A.M. (local time) at the offices of Duane, Morris & Heckscher,
Philadelphia, Pennsylvania, or at such other time or place as the
parties hereto may agree.
(c) Effective Time. If all the conditions to the Merger set
forth in Article IV shall have been fulfilled or waived in accordance
herewith and this Agreement shall not have been terminated as provided
in Article V, the parties hereto shall cause Articles of Merger
meeting the requirements of Section 1926 of the BCL to be properly
filed with the Secretary of the Commonwealth of Pennsylvania in
accordance with the provisions of the BCL, and a Certificate of Merger
meeting the requirements of Section 252 of the DGCL to be properly
filed in accordance with the provisions of the DGCL on the Closing
Date. The Merger shall become effective at the time of the filing of
the Articles of Merger with the Secretary of State of the Commonwealth
of Pennsylvania (provided that the Certificate of Merger shall have
previously been filed in accordance with the DGCL) or at such later
time which the parties hereto shall have agreed upon and designated in
such filings as the effective time of the Merger (the "Effective
Time"). As a result of the Merger, the Surviving Corporation shall
become a wholly-owned subsidiary of Buyer at the Effective Time.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties by AEL. AEL represents and
warrants to Buyer and Buyer Sub as follows:
(a) Organization and Qualification. AEL and each of the AEL
Subsidiaries (as hereinafter defined) is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power
and authority to own or lease and operate its properties and to carry
on its business as now conducted. AEL and the AEL Subsidiaries taken
as a whole are collectively called the "AEL Group". AEL and each AEL
Subsidiary is duly qualified as a foreign corporation to do business,
and is in good standing, in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary, except for such jurisdictions where the
failure to so qualify would not have a Material Adverse Effect. For
the purposes of this Agreement, a "Material Adverse Effect" means a
material adverse effect on the business, operations or financial
condition of the AEL Group. Schedule 2.1(a) hereto lists all
corporations in which AEL has the voting power to elect a majority of
the board of directors. Schedule 2.1(a) hereto contains a listing and
summary description of any partnership or joint venture in which AEL
has an interest. AEL has furnished or made available to Buyer
accurate and complete copies of the Articles of Incorporation and
Bylaws of AEL and each of the AEL Subsidiaries.
(b) Capitalization. The authorized capital stock of AEL
consists of (i) 20,000,000 shares of Class A Stock of which 3,629,707
shares are issued and outstanding, including 180,947 Contingent Shares
(as defined in the Allocation Agreement); (ii) 440,000 shares of Class
B Stock of which 407,927 shares are issued and outstanding; and
(iii) 200,000 shares of Preferred Stock, par value $1.00, none of
which are issued and outstanding. All of such issued and outstanding
shares of AEL Common Stock were validly issued and are fully paid and
nonassessable. The outstanding shares of capital stock of each AEL
Subsidiary that is a corporation have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set forth on
Schedule 2.1(b), (A) each AEL Subsidiary is wholly-owned of record and
beneficially by AEL or another wholly-owned Subsidiary of AEL, and
(B) the ownership interests of AEL in each such Subsidiary are owned
of record and beneficially by AEL (or another Subsidiary of AEL), free
and clear of any security interest, pledge, hypothecation, lien or
other encumbrance of any kind. Except as set forth on Schedule 2.1(b)
or in any of the schedules to this Agreement, there are no outstanding
options, warrants, rights or other securities exercisable or
exchangeable for any capital stock or other securities of AEL or any
AEL Subsidiary, any other commitments or agreements providing for the
issuance of additional shares, the sale of treasury shares, or for the
repurchase or redemption of shares of AEL or any AEL Subsidiary
capital stock, or any agreements of any kind which may obligate AEL or
any AEL Subsidiary to issue, purchase, register for sale, redeem or
otherwise acquire any of its securities or other equity interests.
(c) Authority Relative to Agreement. AEL has all requisite
corporate power and authority to execute and deliver this Agreement
and, subject only to Shareholder Approval, the requisite approval to
perform its obligations hereunder and consummate the transactions
contemplated hereby. This Agreement has been approved by the Long
Range Planning Committee. The execution and delivery of this
Agreement by AEL and the consummation by AEL of the transactions
contemplated hereby have been duly authorized by the Long Range
Planning Committee and, except for Shareholder Approval, no other
corporate proceedings on the part of AEL are necessary to authorize
the Merger Transaction. This Agreement has been duly executed and
delivered by AEL and, subject only to Shareholder Approval, this
Agreement constitutes a valid and binding obligation of AEL
enforceable against AEL in accordance with its terms.
(d) Lack of Conflict With Other Agreements. The execution and
delivery of this Agreement by AEL and the consummation by AEL of the
Merger Transaction will not (i) conflict with any provision of the
Articles of Incorporation or Bylaws, as amended, of AEL or the AEL
Subsidiaries or (ii) except for the Credit Facilities (as hereinafter
defined in Section 2.1(o)(1)) result in any violation of or default
under, or permit the acceleration of any obligation under, any
mortgage, indenture, lease, agreement or other instrument, permit
concession, grant, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to AEL or the
AEL Subsidiaries, which violation, default or acceleration would
(i) have a Material Adverse Effect on the ability of AEL to enter into
and perform its obligations under this Agreement, or (ii) have a
Material Adverse Effect.
(e) Consents. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Federal, state, local
or foreign governmental or regulatory authority is required to be
obtained or made by AEL or the AEL Subsidiaries in connection with the
execution and delivery of this Agreement by AEL or the consummation by
AEL of the Merger Transaction, except for (i) filings pursuant to
Section 14 of the Exchange Act and the rules and regulations
promulgated by the SEC thereunder, (ii) the filing of a premerger
notification and the expiration or early termination of the waiting
period required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
0000 (xxx "XXX Xxx") and (iii) the filing of Articles of Merger with
the Secretary of the Commonwealth of Pennsylvania and a Certificate of
Merger with the Secretary of State of the State of Delaware.
(f) SEC Filings. AEL has made available to Buyer and Sub
accurate and complete copies of each report, schedule, registration
statement and definitive proxy statement filed by AEL with the SEC
with respect to all fiscal years since (and including) February 22,
1991 (together referred to as the "SEC Filings"). As of their
respective dates, the SEC Filings (i) were prepared in all material
respects in accordance with the applicable requirements of the
Exchange Act, the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations thereunder, (ii) did not contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except, in the case of any SEC Filing, any statement or
omission therein which has been corrected or otherwise disclosed or
updated in a subsequent SEC Filing. The financial statements of AEL
included in the SEC Filings have been prepared in accordance with
United States generally accepted accounting principles applied on a
consistent basis ("GAAP") (except as may be indicated therein or in
the notes thereto) and fairly present the financial position of AEL as
at the dates thereof and the results of its operations and changes in
financial position for the periods then ended, subject, in the case of
unaudited interim financial statements, to the omission of footnote
information and to normal year-end audit adjustments.
(g) Undisclosed Liabilities. Except as disclosed in the SEC
Filings or in this Agreement or any Schedule hereto:
(i) The AEL Group does not have any material liabilities or
obligations (whether absolute or contingent, liquidated or
unliquidated, or due or to become due) of a type normally
reflected on a balance sheet prepared in accordance with GAAP
except for liabilities and obligations (A) reflected or reserved
for on the balance sheet of AEL as of February 24, 1995 (the
"Balance Sheet Date"), or (B) that have arisen since the Balance
Sheet Date in the ordinary course of the operation of the
business and consistent with the past practice of the AEL Group
(and which are disclosed on Schedule 2.1(g) hereto).
(ii) Set forth on Schedule 2.1(g) is the current Reasonable
Best Estimate (as hereinafter defined) of AEL of all program cost
reserves of AEL and the AEL Subsidiaries with respect to the
Material Contracts listed on Schedule 2.1(o) pursuant to which
AEL or any of the AEL Subsidiaries is required to perform
services, deliver products or both. "Reasonable Best Estimate"
means an estimate as to which there is a reasonable basis and in
no event shall it be construed as a guarantee or other assurance
of a future result.
(h) Events Subsequent to Balance Sheet Date. Except as
disclosed on Schedule 2.1(h), since the date of the Balance Sheet
Date, (i) there has not been any Material Adverse Effect, or any
event, condition or contingency that is, in the reasonable judgment of
senior management of AEL, likely to result in a Material Adverse
Effect, other than any changes in the prospects of the business of AEL
or any of the AEL Subsidiaries which result from developments
affecting the defense industry generally, (ii) neither AEL nor any of
the AEL Subsidiaries has (A) sold, transferred, leased, pledged or
mortgaged any material assets, properties or rights, except in the
ordinary course of operations of their respective businesses,
consistent with past practices, (B) made any change in any method of
accounting, or (C) made any capital expenditures or commitments for
capital expenditures which exceed $100,000 in any case or $500,000 in
the aggregate.
(i) Proxy Statement. None of the information included in the
Proxy Statement (as amended or supplemented) will, at the time the
Proxy Statement is mailed or at the time of the meeting of AEL
shareholders to which the Proxy Statement relates, contain any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that
no representation or warranty is made with respect to information
relating to Buyer or Sub supplied by Buyer or Sub for inclusion in the
Proxy Statement. The Proxy Statement will comply in all material
respects, as to form and substance, with the requirements of the
Exchange Act and the rules and regulations promulgated by the SEC
thereunder.
(j) Litigation and Proceedings. Except as set forth on Schedule
2.1(j), and the other schedules attached hereto, there are no
lawsuits, actions, suits, claims or other proceedings at law or in
equity, or to the knowledge of AEL, investigations (including, without
limitation, investigations by any government involving any
Governmental Contract wherein a claim for improper charges was made),
before or by any court or governmental authority or instrumentality or
before any arbitrator pending or, to the knowledge of AEL, threatened,
against AEL or any AEL Subsidiary in which the relief sought includes
damages in excess of $100,000 in any individual case or $500,000 in
the aggregate or that seeks injunctive relief. Except as set forth on
Schedule 2.1(j) and to the knowledge of AEL, there are no
investigations (including, without limitation, investigations by any
governmental body or agent involving any Government Contract wherein a
claim for improper charges was made) involving, directly or
indirectly, AEL or any AEL Subsidiary. Except as set forth on
Schedule 2.1(j), there is no unsatisfied judgment, order or decree or
any outstanding injunction binding upon AEL or any of the AEL
Subsidiaries.
(k) Employee Benefit Plans.
(i) Definitions. The following terms, when used in this
Section 2.1(k), shall have the following meanings. Any of these
terms may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
(A) Benefit Arrangement. "Benefit Arrangement" shall
mean any employment, consulting, severance or other similar
contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment
providing for insurance coverage (including without
limitation any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment
benefits, vacation benefits, retirement benefits, life,
health, disability or accident benefits (including without
limitation any "voluntary employees' beneficiary
association" as defined in Section 501(c)(9) of the Code
providing for the same or other benefits) or for deferred
compensation, profit-sharing bonuses, stock options,
restricted stock, stock appreciation rights, stock purchases
or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (1) is not a
Welfare Plan, Pension Plan or Multiemployer Plan, (2) is
entered into, maintained, contributed to or required to be
contributed to, as the case may be, by AEL or any ERISA
Affiliate, and (C) covers any employee or former employee of
AEL or any ERISA Affiliate (with respect to their
relationship with any such entity).
(B) Employee Plans. "Employee Plans" shall mean all
Benefit Arrangements, Multiemployer Plans, Pension Plans and
Welfare Plans.
(C) ERISA. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.
(D) ERISA Affiliate. "ERISA Affiliate" shall mean any
entity which is (or at any relevant time was) a member of a
"controlled group of corporations" with, under "common
control" with, or a member of an "affiliated service group"
with AEL as defined in Section 414(b), (c), (m) or (o) of
the Code.
(E) Multiemployer Plan. "Multiemployer Plan" shall
mean any "multiemployer plan," as defined in Section
4001(a)(3) of ERISA, (1) which AEL or any ERISA Affiliate
maintains, administers, contributes to or is required to
contribute to and (2) which covers any employee or former
employee of AEL or any ERISA Affiliate (with respect to
their relationship with such entities).
(F) PBGC. "PBGC" shall mean the Pension Benefit
Guaranty Corporation.
(G) Pension Plan. "Pension Plan" shall mean any
"employee pension benefit plan" as defined in Section 3(2)
of ERISA (other than a Multiemployer Plan) (1) which AEL or
any ERISA Affiliate maintains, administers, contributes to
or is required to contribute to and (2) which covers any
employee or former employee of AEL or any ERISA Affiliate
(with respect to their relationship with such entities).
(H) Welfare Plan. "Welfare Plan" shall mean any
"employee welfare benefit plan" as defined in Section 3(1)
of ERISA, (1) which AEL or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to,
and (2) which covers any employee or former employee of AEL
or any ERISA Affiliate (with respect to their relationship
with such entities).
(ii) Disclosure; Delivery of Copies of Relevant Documents
and Other Information. Schedule 2.1(k) contains a complete list
of Employee Plans, true and correct copies of which have been
previously furnished or made available to Buyer.
(iii)Representations. Except as set forth in Schedule
2.1(k), AEL represents and warrants as follows:
(A) Pension Plans.
(1) No "accumulated funding deficiency" (for
which an excise tax is due or would be due in the
absence of a waiver) as defined in Section 412 of the
Code or as defined in Section 302(a)(2) of ERISA,
whichever may apply, has been incurred with respect to
any Pension Plan with respect to any plan year, whether
or not waived. Neither AEL nor any ERISA Affiliate has
failed to pay when due any "required installment,"
within the meaning of Section 412(m) of the Code and
Section 302(e) of ERISA, whichever may apply, with
respect to any Pension Plan. Neither AEL nor any ERISA
Affiliate is subject to any lien imposed under Section
412(n) of the Code or Section 302(f) or 4068 of ERISA,
whichever may apply, with respect to any Pension Plan.
All "benefit liabilities" within the meaning of Section
4001(a)(16) of ERISA, are fully funded as of the
Closing Date with respect to each Pension Plan on a
termination basis with an assumed interest rate of 6%.
(2) Neither AEL nor any ERISA Affiliate is
required to provide security to a Pension Plan under
Section 401(a)(29) of the Code.
(3) Except as otherwise disclosed in Schedule
2.1(k), each Pension Plan and each related trust
agreement, annuity contract or other funding instrument
is qualified and tax exempt under the provisions of the
Code Sections 401(a) and 501(a), and each has been so
determined by the Internal Revenue Service, or
application for such determination has been made and is
currently pending.
(4) Each Pension Plan, related trust agreement,
annuity contract or other funding instrument is in
material compliance with its terms and, both as to form
and in operation, with the requirements prescribed by
any and all statutes, orders, rules and regulations
which are applicable to such Pension Plan, including
without limitation ERISA and the Code.
(5) AEL or an ERISA Affiliate has paid all
premiums (and interest charges and penalties for late
payment, if applicable) due to the PBGC with respect to
each Pension Plan which is covered by Title IV of ERISA
for each plan year thereof for which such premiums are
required. Neither AEL nor any ERISA Affiliate has
engaged in, or is a successor or parent corporation to
an entity that has engaged in, a transaction which is
described in Section 4069 of ERISA. There has been no
unreported "reportable event" (as defined in Section
4043(b) of ERISA and the PBGC regulations under such
Section) requiring notice to the PBGC with respect to
any Pension Plan. No filing has been made by AEL or
any ERISA Affiliate with the PBGC, and no proceeding
has been commenced by the PBGC, to terminate any
Pension Plan. No condition exists and no event has
occurred that could constitute grounds for the
termination of any Pension Plan by the PBGC, or which
could reasonably be expected to result in liability of
AEL or any ERISA Affiliate to the PBGC with respect to
any Pension Plan, other than liabilities for premium
payments. Neither AEL nor any ERISA Affiliate has, at
any time, (1) ceased operations at a facility so as to
become subject to the provisions of Section 4062(e) of
ERISA, (2) withdrawn as a substantial employer so as to
become subject to the provisions of Section 4063 of
ERISA, or (3) ceased making contributions on or before
the Closing Date to any Pension Plan subject to Section
4064(a) of ERISA to which AEL or any ERISA Affiliate
made contributions during the six years prior to the
Closing Date.
(B) Multiemployer Plans . There are no Multiemployer
Plans, and neither AEL nor any ERISA Affiliate has ever
maintained, contributed to, or participated or agreed to
participate in any Multiemployer Plan.
(C) Welfare Plans.
(1) Each Welfare Plan is in material compliance
with its terms and, both as to form and operation, with
the requirements prescribed by any and all statutes,
orders, rules and regulations which are applicable to
such Welfare Plan, including without limitation ERISA
and the Code.
(2) An estimate of the liabilities of AEL and any
of its ERISA Affiliates for providing retiree life and
medical benefits coverage to active and retired
employees of AEL and any of its ERISA Affiliates has
been made and is reflected on the appropriate balance
sheet and books and records according to Statement of
Financial Accounting Standards No. 106. AEL or any of
the AEL Subsidiaries has the right to modify and to
terminate Welfare Plans, including the right to modify
or terminate Welfare Plans that provide coverage or
benefits for both retired and active employees or their
beneficiaries.
(3) Each Welfare Plan which is a "group health
plan," as defined in Section 607(1) of ERISA, has been
operated in material compliance with provisions of Part
6 of Title I, Subtitle B of ERISA and Section 4980B of
the Code at all times.
(D) Benefit Arrangements. Each Benefit Arrangement is
in material compliance with its terms and with the
requirements prescribed by any and all statutes, orders,
rules and regulations which are applicable to such Benefit
Arrangement, including without limitation the Code.
(E) Fiduciary Duties and Prohibited Transactions.
Neither AEL nor any of the AEL Subsidiaries has any
liability with respect to any transaction in violation of
Sections404 or 406 of ERISA or any "prohibited transaction,"
as defined in Section4975(c)(1) of the Code, for which no
exemption exists under Section408 of ERISA or
Section4975(c)(2) or (d) of the Code to which any Welfare
Plan or Pension Plan is subject. To the knowledge of AEL,
neither AEL nor any of its ERISA Affiliates has participated
in a violation of Part 4 of TitleI, SubtitleB of ERISA by
any plan fiduciary of any Welfare Plan or Pension Plan and
has no unpaid civil penalty under Section502(1) of ERISA.
(F) Litigation. There is no material action, order,
writ, injunction, judgment or decree outstanding or claim,
suit, litigation, proceeding, arbitral action, governmental
audit or investigation relating to or seeking benefits under
any Employee Plan that is pending, or, to the knowledge of
AEL, threatened or anticipated against AEL or any ERISA
Affiliate other than routine claims for benefits.
(G) Unpaid Contributions. Neither AEL nor any ERISA
Affiliate has any liability for unpaid contributions with
respect to any Employee Plan. AEL and all ERISA Affiliates
have made all required contributions under each Employee
Plan for all periods through and including the Closing Date
or proper accruals have been made and are reflected on the
appropriate balance sheet and books and records.
(H) Copies of Documentation. AEL has delivered
pursuant to this Agreement a true and complete set of copies
of (a) all Employee Plans and related trust agreements,
annuity contracts or other funding instruments as in effect
immediately prior to the Closing Date, together with all
amendments thereto which shall become effective at a later
date; (b) the latest Internal Revenue Service determination
letter obtained with respect to any such Employee Plan
qualified or exempt under Section 401 or 501 of the Code;
(c) Forms 5500 and certified financial statements for the
most recently completed three fiscal years for each Employee
Plan required to file such form, together with the most
recent actuarial report, if any, prepared by the Employee's
Plan's enrolled actuary; (d) all summary plan descriptions
for each Employee Plan required to prepare, file and
distribute summary plan descriptions; (e) all summaries
furnished or made available to employees, officers and
directors of AEL and its ERISA Affiliates of all incentive
compensation, other plans and fringe benefits for which a
summary plan description is not required; (f) current
registration statements on Form S-8 and amendments thereto
with respect to any Employee Plan; and (g) the notifications
to employees of their rights under Section 4980B of the
Code.
(l) Brokers. Except for the arrangement regarding Xxxxxx, Read
& Co. Inc. heretofore disclosed to Buyer, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger Transaction based upon
arrangements made by or on behalf of AEL.
(m) Environmental Matters.
(1) Environmental Definitions.
(A) Environment. "Environment" means soil, land, land
surface or subsurface strata, surface waters (including
navigable waters and ocean waters), groundwaters, drinking
water supply, stream sediments, ambient air and any other
environmental medium;
(B) Environmental, Health and Safety Liabilities.
"Environmental, Health and Safety Liabilities" means any
loss, cost, expense, claim, demand, liability, obligation or
other responsibility of whatever kind or otherwise, based
upon Environmental Law relating to:
(1) any environmental, health or safety matters
or conditions (including, but not limited to, on-site
or off-site contamination, occupational safety and
health, and regulation of chemical substances or
products);
(2) fines, penalties, judgments, awards, settle-
ments, legal or administrative proceedings, damages,
losses, claims, demands and response, remedial or
inspection costs and expenses arising under
Environmental Law;
(3) financial responsibility under Environmental
Law for cleanup costs or corrective action, including
for any removal, remedial or other response actions,
and for any natural resource damages;
(4) any other compliance, corrective or remedial
measures required under Environmental Law.
The terms "removal", "remedial" and "response" action shall
include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq., as amended
("CERCLA");
(C) Environmental Law. "Environmental Law" means any
provision of past or present federal, state, local or any
other legally enforceable governmental law, directive,
statute, ordinance, rule, regulation or standard, common law
or any judgment, order, writ, notice, decree, permit,
license, approval, consent or injunction, relating to any
environmental, health or safety matters or conditions,
Hazardous Materials (hereinafter defined), pollution or
protection of the Environment, including, but not limited
to, on-site or off-site contamination, occupational safety
and health and regulation of chemical substances or
products, emissions, discharges, releases or threatened
release of pollutants, contaminants, chemicals, or
industrial, toxic, radioactive or Hazardous Materials or
wastes into the Environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous
Materials, pollutants, contaminants, chemicals, or
industrial, toxic, radioactive or hazardous substances or
wastes;
(D) Facilities. "Facilities" means any real property,
leaseholds or other interests owned by AEL or any AEL
Subsidiary and/or any buildings, plants, structures or
equipment of AEL or any AEL Subsidiary;
(E) Hazardous Materials. "Hazardous Materials" means
and includes, but shall not be limited to, any (i)
"hazardous substance", "pollutant" or "contaminant" (as
defined in Section 101(14), (33) of CERCLA, 42 U.S.C.
Section 9601(14), (33) or the regulations designated pursuant
to Section 102 of CERCLA, 42 U.S.C. Section 9602 and found at
40 C.F.R. Part 302), including any element, compound, mixture,
solution, or substance which is designated pursuant to
Section 102 of CERCLA; (ii) all substances which are
designated pursuant to Section 311(b)(2)(A) of the Federal
Water Pollution Control Act, 33 U.S.C. Section 1251,
1321(b)(2)(A), as amended ("FWPCA"); (iii) any hazardous
waste having the characteristics which are identified under
or listed pursuant to Section 3001 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, 6921, as
amended ("RCRA"); (iv) any substance containing petroleum,
as that term is defined in Section 9001(8) of RCRA, 42
U.S.C. Section 991(8) or 40 C.F.R. Part 280; (v) any toxic
pollutant which is listed under Section 307(a) of the FWPCA,
33 U.S.C. Section 1317(a); (vi) any hazardous air pollutant
which is listed under Section 112 of the Clean Air Act, 42
U.S.C. Sections 7401, 7412, as amended; (vii) any imminently
hazardous chemical substance or mixture with respect to which
action has been or may be taken pursuant to Section 7 of the
Toxic Substances Control Act, 15 U.S.C. Sections 2601, 2602,
as amended; (ix) waste oil and other petroleum products; (x)
any asbestos, asbestos containing material or urea formaldehyde
or material which contains it; or (xi) any other toxic
materials, contaminants or hazardous substances or wastes
pursuant to any Environmental Law;
(F) Release. "Release" means any releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping into the
Environment;
(G) Threat of Release. "Threat of Release" means a
substantial likelihood of a Release which, to the best of
AEL's knowledge, might require action in order to prevent or
mitigate damage to the Environment that might result from
such Release;
(2) Compliance with Environmental Laws.
(A) Except as set forth in Schedule 2.1(m) hereto, to
the knowledge of AEL (i) each of the AEL Group is, and at
all times during the ten-year period prior to the date
hereof has been, in material compliance with all
Environmental Laws applicable to them, where any failure to
so be in compliance, or during the ten-year period prior to
the date hereof to have so been in compliance, would have a
Material Adverse Effect, and (ii) neither AEL nor any of the
AEL Subsidiaries has received, during the five-year period
prior to the date hereof, any written order or notice from
any federal, state, or local governmental agency
administering or enforcing any Environmental Law, of any
violation or failure to comply with any such Environmental
Law, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any Environmental, Health and
Safety Liabilities with respect to any of the Facilities or
any other property now owned or previously owned or leased
by the AEL Group or to which Hazardous Materials generated
by the AEL Group may have been transported;
(B) Set forth in Schedule 2.1(m) are all the consents,
licenses, permits, approvals, and certificates relating to
Environmental Laws held by the AEL Group on the date hereof,
which, in the reasonable judgment of senior management of
AEL, constitute all of the consents, licenses, permits,
approvals, and certificates required, including those
required under Environmental Laws, for the AEL Group to
lawfully own, operate, use, and maintain their assets and to
conduct their businesses. Except as set forth in Schedule
2.1(m), to the knowledge of AEL, AEL and the AEL
Subsidiaries have, at all times prior to Closing, maintained
their assets and conducted their businesses in compliance in
all material respects with the terms of all such consents,
licenses, permits, approvals, and certificates, and all
required filings and all required applications with respect
to and for renewal thereof have been timely made and filed.
All such consents, licenses, permits, approvals, and
certificates are in full force and effect and there are no
proceedings pending or, to the best knowledge of AEL,
threatened that seek the revocation, cancellation,
suspension, or adverse modification thereof;
(C) Except as set forth in Schedule 2.1(m), to the
knowledge of AEL neither AEL, nor any AEL Subsidiary (nor
any other Person for whose conduct they are responsible),
has any material Environmental, Health and Safety
Liabilities with respect to the Facilities or any other
properties and assets (real, personal and mixed, tangible
and intangible) in which any member of the AEL Group has or
had an interest;
(D) Except as set forth in Schedule 2.1(m), to the
knowledge of AEL neither AEL, nor any AEL Subsidiary, nor
any other Person for whose conduct they are responsible, has
generated, manufactured, refined, transported, treated,
stored, handled, disposed, transferred, produced, imported,
used or processed any toxic or Hazardous Materials except in
compliance in all material respects with all applicable
Environmental Laws;
(E) Except as set forth in Schedule 2.1(m), to the
knowledge of AEL neither AEL nor any AEL Subsidiary, nor any
other Person for whose conduct they are responsible, has
received any notice of any material violation of any
Environmental Law, or any notice of any material potential
Environmental, Health and Safety Liabilities with respect to
the Facilities or, to the best of AEL's knowledge, with
respect to any other properties and assets (real, personal
and mixed, tangible and intangible) in which AEL, or any AEL
Subsidiary, has or had an interest, or with respect to any
other property or facility where toxic or Hazardous
Materials generated, manufactured, refined, transferred,
imported, used or processed by AEL, or any AEL Subsidiary,
or any other Person for whose conduct they are responsible,
have been transported, treated, stored, handled, disposed,
transferred, recycled or received;
(F) Except as set forth in Schedule 2.1(m), to the
knowledge of AEL, there has been no illegal or reportable
Release or Threat of Release, of any toxic or Hazardous
Materials at or from the Facilities. Neither AEL, nor any
AEL Subsidiary, nor any other Person for whose conduct any
of them is responsible, has received any notice of any
illegal or reportable release or threat of release of any
toxic or hazardous materials at any other locations where
any toxic or Hazardous Materials generated, manufactured,
refined, transferred, produced, imported, used or processed
from or by the Facilities, or from or by any other
properties and assets (real, personal and mixed, tangible
and intangible) in which AEL or any AEL Subsidiary has or
had an interest, have been transported, treated, stored,
handled, disposed, transferred, recycled or received,
whether by AEL, any AEL Subsidiary or by any other Person
for whose conduct they are responsible;
(G) Except as listed in Schedule 2.1(m) hereto, to the
knowledge of AEL there are no Liens or any other
restrictions of any nature whatsoever, resulting from any
Environmental, Health or Safety Liabilities or arising under
or pursuant to any Environmental Law, with respect to or
affecting any of the Facilities or any other properties and
assets (real, personal and mixed, tangible and intangible)
in which the AEL Group, or any them, has an interest.
(n) Real Property. Schedule 2.1(n) lists (i) all Owned Real
Property and (ii) the address of all real property now used or
occupied by AEL and the AEL Subsidiaries and the name of the record
owner thereof. AEL or one of the AEL Subsidiaries has good and
marketable fee simple title to all Owned Real Property, subject only
to any (i) Permitted Liens, (ii) Liens constituting a lease, sublease
or occupancy agreement that gives any third party any right to occupy
any portion of the Owned Real Property and (iii) Liens reflected on
any survey or in any title report delivered to Buyer prior to the date
of this Agreement. AEL has delivered or made available to Buyer
correct and complete copies of the leases and subleases for the real
property listed on Schedule 2.1(n) which is leased by AEL or any of
the AEL Subsidiaries. Each such lease and sublease is in full force
and effect and gives the lessee or sublessee thereunder the right to
use and occupy the demised premises thereunder for the uses set forth
therein. Neither AEL or any of the AEL Subsidiaries nor, to the
knowledge of AEL, the other party or parties thereto, is in breach of
any term of any such lease or sublease, except where any such breach
would not have a Material Adverse Effect.
(o) Material Contracts.
(1) Schedule 2.1(o) hereto lists all Material Contracts to
which AEL or any AEL Subsidiary is a party. "Contracts" means
any bids, quotations, proposals, contracts (including, without
limitation, Government Contracts), agreements, subcontracts, work
authorizations, leases, memoranda of understanding and purchase
orders. For purposes of this Agreement, the term "Material
Contract" means any Contract providing for (i) AEL or any of the
AEL Subsidiaries to refrain from engaging in conduct which is
competitive with the business of the other party to the contract
in any way, (ii) the license to or from any third party of any
intellectual property rights that are material to the operation
of the business of AEL, (iii) the repayment of money borrowed
from a third party (hereinafter referred to as the "Credit
Facilities"), (iv) the sale by AEL or any of the AEL Subsidiaries
of goods and services pursuant to any individual contract in an
amount greater than One Million ($1,000,000) Dollars, (v) the
purchase by AEL or any of the AEL Subsidiaries of goods and
services pursuant to any individual contract which AEL reasonably
expects will account for at least five (5) percent of its
payments to suppliers during 1995, (vi) the partnership or joint
venture contracts referred to in Schedule 2.1(a) hereto, (vii)
each collective bargaining agreement or other Contract to or with
any labor union or other employee representative of a group of
employees relating to wages, hours, and other conditions of
employment, (viii) any other Contract (however named) in addition
to those shown on Schedule 2.1(a) involving a sharing of profits,
losses, costs, or liabilities of AEL or any of the AEL
Subsidiaries with any other Person, (ix) each Contract requiring
capital expenditures after the date hereof in an amount in excess
of $100,000, (x) each Contract providing for payments to or by
any Person or entity based on sales, purchases or profits, other
than direct payments for goods, (xi) each power of attorney which
is currently effective and outstanding, (xii) each written
warranty, guaranty or other similar undertaking with respect to
contractual performance extended by AEL or any of the AEL
Subsidiaries other than in the ordinary course of business,
(xiii) any other Contract which, in the reasonable judgment of
senior management of AEL, is material to the business or
operations of the AEL Group, and (xiv) each legally binding
amendment, supplement, and modification in respect of any of the
foregoing.
(2) AEL has made available to Buyer an accurate and
complete copy of each Material Contract except as noted on
Schedule 2.1(o) hereto and those Material Contracts which have
heretofore been filed as exhibits to the SEC Filings. Each
Material Contract is on terms which AEL believes are commercially
prudent taken as a whole and, with respect to items (iv) and (v)
of this Section 2.1(o)(1), was contracted in all material
respects in accordance with AEL's internal contracting and
bidding procedures.
(3) Except as set forth on Schedule 2.1(o), all the
Contracts listed pursuant to paragraph (1) hereof (A) are in full
force and effect, (B) represent the legal, valid and binding
obligations of AEL or the AEL Subsidiary party thereto and are
enforceable against AEL or such AEL Subsidiary in accordance with
their terms, and (C) to the knowledge of AEL, represent the
legal, valid and binding obligations of the other parties thereto
and are enforceable against such parties in accordance with their
terms. Except as set forth on Schedule 2.1(o), to the knowledge
of AEL no condition exists or event has occurred which, with
notice or lapse of time or both, would constitute a default under
any such Contract by AEL or any AEL Subsidiary party thereto or
any other party thereto or the basis for force majeure or the
claim of excusable delay or nonperformance under any such
Contract except where the occurrence of such event or existence
of any such condition individually or in the aggregate would not
have a Material Adverse Effect.
(4) Except as set forth on Schedule 2.1(o), there are no
renegotiations of, or, to the knowledge of AEL, attempts to
renegotiate, or outstanding rights to renegotiate, any material
amounts paid or payable to AEL or any of the AEL Subsidiaries
under current or completed Contracts, with any Person or entity
having the contractual or statutory right to demand or require
such renegotiation. Neither AEL nor any of the AEL Subsidiaries
has received any written demand for such renegotiation in respect
of any such Contract. Except as set forth on Schedule 2.1(o), no
customer or government contract officer has asserted that any
material adjustments are required to the terms of any Contracts.
(5) Except as set forth on Schedule 2.1(o), no consent of
any party to any such Contract is required in connection with the
Merger, except where the failure to obtain such consent would not
have a Material Adverse Effect.
(p) Government Contracts; Backlog.
(1) Except as set forth on Schedule 2.1(p) or on any other
Schedule to this Agreement, neither AEL nor any of the AEL
Subsidiaries has received notice of any claim, suit or
investigation asserting or alleging the commission of criminal
acts or bribery, or other violation of applicable law (either
civil or criminal), by either AEL or any of the AEL Subsidiaries
with respect to any Contract between AEL or any of the AEL
Subsidiaries and the United States Government or a department or
agency thereof (a "Government Contract"). Neither AEL nor any of
the AEL Subsidiaries has been debarred or suspended from
participation in the award of contracts with the United States
government or any agency or department thereof (it being
understood that debarment and suspension does not include
ineligibility to bid for certain contracts due to generally
applicable bidding requirements). Except as set forth on
Schedule 2.1(p), neither AEL nor any AEL Subsidiary has received
written notice of any kind from the U.S. government or any agency
or department thereof alleging any violation, or notifying AEL or
any AEL Subsidiary of any investigation of a possible violation,
of any applicable law, rule, or regulation of AEL or any of the
AEL Subsidiaries or any act for which AEL or any of the AEL
Subsidiaries could be debarred or suspended from contracting with
any agency of any government, or prohibiting or seeking to
prohibit AEL or any of the AEL Subsidiaries from conducting, or
restricting or seeking to restrict AEL's or any of the AEL
Subsidiaries' ability to conduct, all or any part of its business
or operations or from contracting with any government. No
payment has been made by AEL or any of the AEL Subsidiaries, or,
to the best knowledge of AEL, by any Person acting on its or
their behalf, to any Person in connection with any Government
Contract in violation of applicable procurement laws or
regulations or in violation of (or requiring disclosure pursuant
to) the Foreign Corrupt Practices Act. Except as set forth in
Schedule 2.1(p), the cost accounting and procurement systems
maintained by AEL and the AEL Subsidiaries with respect to
Government Contracts are in compliance in all material respects
with all applicable United States laws and regulations.
(2) Schedule 2.1(p) identifies the current Reasonable Best
Estimate of AEL of the "cost to complete" of each Material
Contract pursuant to which AEL or any of the AEL Subsidiaries is
required to perform services or deliver products and AEL's
current Reasonable Best Estimate of the aggregate amount of
payments to be received under each such Contract. Except as set
forth on Schedule 2.1(p), none of such Contracts has accrued or,
in the reasonable judgment of AEL's senior management, is
expected by AEL to result in any losses.
(q) Intellectual Property.
(1) Schedule 2.1(q) lists each material patent, registered
and unregistered trademark, service xxxx, trade dress, logo,
trade name, copyright, mask work, and registration or application
for any of the foregoing (the foregoing, together with all
material know-how, trade secrets, confidential information,
software, technical information, process technology, plans,
drawings, and blue prints, being hereinafter collectively
referred to as the "Intellectual Property"), owned by AEL or any
of its Subsidiaries.
(2) The Contracts listed on Schedule 2.1(o) include all
license or sublicense agreements with respect to any Intellectual
Property to which AEL or any of the AEL Subsidiaries is a party
and which is material to the business and operations of the AEL
Group as presently being conducted.
(3) Except as set forth on Schedule 2.1(q):
(A) AEL or one or more of the AEL Subsidiaries has
good title to each item of Intellectual Property owned by
it, free and clear of any Lien other than Permitted Liens;
(B) AEL and its Subsidiaries own or have the right to
use pursuant to license, sublicense, agreement or permission
all items of Intellectual Property used in the operation of
the business of AEL and its Subsidiaries, as presently
conducted.
(C) AEL and the AEL Subsidiaries' use of the
Intellectual Property and other trade rights, trade secrets,
designs, plans, specifications and other proprietary rights,
whether or not registered ("Proprietary Rights"), is not to
the knowledge of AEL infringing upon or otherwise violating
the Proprietary Rights of any third party in or to such
rights;
(D) no claims have been asserted by any Person against
AEL or any of the AEL Subsidiaries with respect to the use
of any Intellectual Property or Proprietary Rights used by
AEL or any of the AEL Subsidiaries challenging or
questioning the validity or effectiveness of such use or any
such right, license or agreement;
(E) to the knowledge of AEL no Person has a right to a
royalty or similar payment, or has any other rights, in
respect of any Intellectual Property or Proprietary Rights;
and
(F) neither AEL nor the AEL Subsidiaries, or to the
knowledge of AEL, the other party or parties thereto, is in
breach of any license or sublicense with respect to any item
of Intellectual Property, except where any such breach would
not have a Material Adverse Effect.
(R) Labor Relations.
(1) The Contracts listed on Schedule 2.1(r) include all
collective bargaining agreements to which either AEL or any of
the AEL Subsidiaries is a party. The Contracts listed on
Schedule 2.1(r) also include all written employment or severance
agreements to which either AEL or any of its Subsidiaries is a
party with respect to any employee or former employee whose
compensation or benefits during the fiscal year ended December
31, 1994 exceeded $75,000 and which may not be terminated at
will, or by giving notice of 30 days or less, without cost or
penalty. AEL has made available to Buyer true, correct and
complete copies of each such Contract, as amended to date.
Neither AEL nor any of the AEL Subsidiaries party thereto nor, to
the knowledge of AEL, the other party or parties thereto, is in
breach of any term of any such Contract.
(2) Except as set forth on Schedule 2.1(r):
(A) AEL and the AEL Subsidiaries have complied with
the applicable laws relating to the employment of labor,
including, without limitation, those relating to wages,
hours, unfair labor practices, discrimination and
immigration, except where such instances of noncompliance
would not have a Material Adverse Effect;
(B) neither AEL nor any of the AEL Subsidiaries has
engaged in any unfair labor practice and there are no
complaints against AEL or any of the AEL Subsidiaries
pending before the National Labor Relations Board or any
similar state or local labor agency by or on behalf of any
employee of AEL or any of the AEL Subsidiaries;
(C) there are no representation questions, arbitration
proceedings, labor strikes, slow downs or stoppages,
grievances or other labor disputes pending or, to the
knowledge of AEL, threatened with respect to the employees
of AEL or any of the AEL Subsidiaries;
(D) other than as set forth on Schedule 2.1(r),
neither AEL nor any of the AEL Subsidiaries has entered into
any severance or similar arrangement in respect of any
present employee of AEL or any of its Subsidiaries, that
will result in any obligation (absolute or contingent) of
Buyer, AEL or any of the AEL Subsidiaries to make any
payment to any present employee of AEL or any of the AEL
Subsidiaries following termination of employment;
(E) AEL and the AEL Subsidiaries have complied in all
respects with all laws, rules and regulations relating to
employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes,
occupational safety and health and plant closings
(hereinafter collectively referred to as the "Employment
Laws"), except where such instances of noncompliance would
not have a Material Adverse Effect.
(3) Neither AEL nor any of the AEL Subsidiaries is liable
for the payment of taxes, fines, penalties or other amounts,
however designated, for failure to comply with any of the
Employment Laws.
(s) Legal Compliance. Except with respect to (1) matters set
forth on Schedule 2.1(s), (2) compliance with Environmental Laws (as
to which certain representations and warranties are made pursuant to
Section 2.1(m)), (3) compliance with laws applicable to Government
Contracts (as to which certain representations and warranties are made
pursuant to Section 2.1(p)), and (4) compliance with Employment Laws
(as to which certain representations and warranties are made pursuant
to Section 2.1(r)), AEL and the AEL Subsidiaries are in compliance
with all laws (including rules and regulations thereunder) of federal,
state, local and foreign governments (and all agencies thereof)
applicable thereto, except where such instances of noncompliance would
not have a Material Adverse Effect.
(t) Taxes. Except as otherwise disclosed in Schedule 2.1(t):
(1) All federal, state, local, and foreign tax returns of
AEL and the AEL Subsidiaries and each consolidated or affiliated
group which AEL and the AEL Subsidiaries have been a part ("Tax
Returns"), including those Tax Returns relating to income,
employment, franchise, property, sales and use, and excise taxes,
and any other taxes due from and/or withheld by or required to be
withheld by AEL and the AEL Subsidiaries (collectively, "Taxes")
have been duly and timely filed and are correct and complete in
all material respects.
(2) All Taxes or estimates thereof that are due have been
timely paid.
(3) None of the Tax Returns has been audited or is being
audited by any taxing authority.
(4) No assessment, audit or other proceeding by any taxing
authority, court, or other governmental or regulatory authority
is proposed, pending, or, to the knowledge of AEL, threatened
with respect to the Taxes or Tax Returns of AEL or the AEL
Subsidiaries.
(5) There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitations
applicable to any claim for or the period for the collection or
assessment of Taxes due for any taxable period.
(6) No consent to the application of Section 341(f)(2) of
the Code (or any predecessor thereof) has been made or filed by
or with respect to any of AEL or the AEL Subsidiaries or any of
their assets and properties.
(7) None of the assets and properties of AEL or the AEL
Subsidiaries is an asset or property that Buyer or any of its
Affiliates is or will be required to treat as being (i) owned by
any other Person pursuant to the provisions of Section 168(f)(8)
of the Internal Revenue Code of 1954 as amended, and in effect
immediately before the enactment of the Tax Reform Act of 1986,
or (ii) tax-exempt use property within the meaning of Section
168(h)(1) of the Code.
(8) No closing agreement pursuant to Section 7121 of the
Code (or any predecessor provision) or any similar provision of
any state, local, or foreign law has been entered into by or with
respect to AEL or any of the AEL Subsidiaries or any assets
thereof.
(9) All positions taken on federal Tax Returns that could
give rise to a penalty for substantial understatement pursuant to
Section 6662 of the Code have been disclosed on such Tax Returns
or there is or was substantial authority for such treatment.
(10) Neither AEL nor any of the AEL Subsidiaries has made
any payments, is obligated to make any payments, or is a party to
any agreement that under certain circumstances could obligate it
to make any payments that will not be deductible under Section
280G of the Code or under Section 162(m) of the Code.
(11) None of AEL or any of the AEL Subsidiaries is a party
to, is bound by, or has any obligation under any tax sharing
agreement or similar agreement and no such agreement shall be
entered into or amended by AEL or the AEL Subsidiaries prior to
the Closing. None of AEL nor any of the AEL Subsidiaries has any
liability for the Taxes of any Person (other than any of AEL and
the AEL Subsidiaries) under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(12) No "excess loss account"or "deferred intercompany gain"
(as such terms are described in Treasury Regulation Section
1.1502) exists for, between or with respect to AEL or any of the
AEL Subsidiaries.
(13) Except as disclosed on Schedule 2.1(a), neither AEL nor
any of the AEL Subsidiaries is a partner in any partnership.
(14) Except as disclosed on federal tax returns, neither AEL
nor any of the AEL Subsidiaries has made any tax elections under
Sections 108, 168, 338, 441, 472, 1017, 1033 or 4977 of the Code,
or Treasury Regulation 1.1502.
(15) Neither AEL nor any of the AEL Subsidiaries has agreed
to or is required to make any adjustment pursuant to Section
481(a) of the Code by reason of any change in any accounting
method. Neither AEL nor any of the AEL Subsidiaries has an
application pending with any taxing authority requesting
permission for a change in any accounting method.
(16) Neither AEL nor any of the AEL Subsidiaries is a
foreign person within the meaning of Section 1445(b) of the Code.
(17) The unpaid Taxes of AEL and the AEL Subsidiaries did
not, as of the most recent fiscal month end, exceed the reserve
for tax liability (rather than any reserve for deferred Taxes
established to reflect the liability pursuant to FAS 109) set
forth on the face of the balance sheet for the same month and do
not exceed that reserve as adjusted for the passage of time
through the Closing Date.
(u) Licenses, Permits and Authorizations. Schedule 2.1(u)
contains a list of all material licenses, franchises and other permits
of or with any governmental, regulatory or administrative authority,
whether foreign, federal, state or local, which are held by AEL or any
of the AEL Subsidiaries. All such licenses, franchises and other
permits are in full force and effect and there are no proceedings
pending or, to the knowledge of AEL, threatened that seek the
revocation, cancellation, suspension or adverse modification thereof.
Such licenses, approvals, consents, franchises and permits constitute,
in the reasonable judgment of senior management of AEL, all of the
material licenses, approvals, consents, franchises and permits
necessary to permit AEL and the AEL Subsidiaries to own, operate, use
and maintain their assets in the manner in which they are now operated
and maintained and to conduct the business of AEL and the AEL
Subsidiaries as currently conducted. All required filings with
respect to such licenses, approvals, consents, franchises, and permits
have been timely made and all required applications for renewal
thereof have been timely filed except as to instances wherein the
failure to so timely file would not have a material adverse effect.
(v) Books and Records. The books of account, minute books, and
stock record books of AEL and the AEL Subsidiaries, all of which have
been made available to Buyer, are complete and correct in all material
respects and have been maintained in accordance with ordinary business
practices, including, but not limited to, the maintenance of a
reasonable system of internal controls. The minute books of AEL and
the AEL Subsidiaries contain records of all meetings held of, and
corporate action taken by, the shareholders and the Board of Directors
of AEL and the AEL Subsidiaries, and no meetings of such shareholders
or any such Board of Directors has been held at which any significant
action was taken for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those books
and records will be in the possession of AEL and the AEL Subsidiaries.
(w) Insurance.
(1) Schedule 2.1(w) contains a summary description of all
policies of property, fire and casualty, product liability,
workers' compensation, and all other forms of insurance held by
AEL or any of the AEL Subsidiaries. True, correct and complete
copies of such insurance policies have been made available to
Buyer.
(2) All policies described in paragraph (1) hereof (A) are
valid, outstanding, and enforceable policies, (B) provide
adequate insurance coverage for the assets and the operations of
AEL and the AEL Subsidiaries for all material risks normally
insured against by a Person or entity carrying on the same
business as AEL and the AEL Subsidiaries, and (C) will not
terminate, or lapse by reason of, the transactions contemplated
by this Agreement.
(3) Neither AEL or any of the AEL Subsidiaries has received
(A) any notice of cancellation of any policy described in
paragraph (1) hereof or refusal of coverage thereunder (B) any
notice that any issuer of such policy has filed for protection
under applicable bankruptcy laws or is otherwise in the process
of liquidating or has been liquidated, or (C) any other notice
that such polices are no longer in full force or effect or that
the issuer of any such policy is no longer willing or able to
perform its obligations thereunder.
(x) Takeover Laws. AEL has taken the requisite corporate action
to render the following provisions of Chapter 25 of the BCL
inapplicable to AEL: (a) Subchapter E. - Control Transactions; (b)
Subchapter F. - Business Combinations; (c) Subchapter G. - Control
Share Acquisitions; (d) Subchapter H. - Disgorgement by Certain
Controlling Shareholders Following Attempts to Acquire Control; (e)
Subchapter I. - Severance Compensation for Employees Terminated
Following Certain Control Share Acquisitions; and (f) Subchapter J. -
Business Combination Transactions - Labor Contracts.
2.2 Representations and Warranties by Buyer and Sub. Buyer and Sub
each represent and warrant to AEL as follows:
(a) Organization and Qualification; Etc. Each of Buyer and Sub
is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all
requisite corporate power and authority to own or lease and operate
its properties and to carry on its business as it is now being
conducted. Buyer owns beneficially and of record all the issued and
outstanding capital stock of Sub.
(b) Authority Relative to Agreements. Each of Buyer and Sub has
all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by Buyer and Sub and the consummation by
Buyer and Sub of the Merger Transaction have been duly authorized by
the Boards of Directors of Buyer and Sub and no other corporate
proceedings on the part of Buyer or Sub are necessary to authorize the
Merger Transaction. This Agreement has been duly executed and
delivered by Buyer or Sub and this Agreement constitutes a valid and
binding obligation of Buyer or Sub, as the case may be, enforceable
against Buyer and Sub in accordance with its terms.
(c) Lack of Conflicts with Other Agreements. The execution and
delivery of this Agreement by Buyer and Sub and the consummation by
Buyer and Sub of the Merger Transaction will not (i) conflict with any
provision of the Articles of Incorporation or Bylaws of Buyer or Sub
or (ii) result in any violation of or default under, or permit the
acceleration of any obligation under, any mortgage, indenture, lease,
agreement or other instrument, permit, concession, grant, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Buyer or Sub, which violation, default or
acceleration would have a material adverse effect on the business,
operations or financial condition of Buyer or Sub.
(d) Consents. No consent, approval, order or authorization of,
or registration, declaration or filing with, any Federal, state, local
or foreign governmental or regulatory authority is required to be made
or obtained by Buyer or Sub in connection with the execution and
delivery of this Agreement by Buyer or Sub or the consummation by
Buyer or Sub of the Merger Transaction, except for (i) the filing of a
premerger notification and the expiration or early termination of the
waiting period required by the HSR Act and (ii) the filing of Articles
of Merger with the Secretary of the Commonwealth of Pennsylvania and a
Certificate of Merger with the Secretary of State of the State of
Delaware.
(e) Proxy Statement and Other Information. None of the
information relating to Buyer or Sub which is supplied by Buyer or Sub
for inclusion in the Proxy Statement (as such information is amended
or supplemented) will, at the time the Proxy Statement is mailed or at
the time of the meeting of the AEL shareholders to which the Proxy
Statement relates, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(f) Brokers. No broker, finder, or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the Merger Transaction based upon arrangements made by
or on behalf of Buyer or Sub.
(g) Eligibility. Buyer and Buyer Sub each satisfy the
eligibility requirements for a facility security clearance as set
forth on the National Industrial Security Program Operating Manual
promulgated by the Department of Defense (including without limitation
Sections 1 and 3 of Chapter 2 thereof) at the level currently held by
AEL.
(h) Financing. Buyer has funds available (including those to be
provided to it pursuant to the Commitment Letter [as hereinafter
defined in Section 4.1(n)] which are sufficient to pay the Merger
Consideration and to pay all other amounts owing by AEL or Sub in
connection with the Merger Transaction. Buyer will, from time to time
prior to the Closing at the reasonable request of AEL, provide to AEL
substantiation of the status of the financing arrangements
contemplated in the Commitment Letter.
ARTICLE III
ADDITIONAL COVENANTS
3.1 Shareholder Approval.
(a) As soon as reasonably practicable following the date of this
Agreement, AEL shall take all action necessary in accordance with the
Exchange Act, the BCL and its Articles of Incorporation and Bylaws to
call a meeting (the "Meeting") of its shareholders to seek Shareholder
Approval and for such other purposes as may be appropriate. The Long
Range Planning Committee shall, subject to its fiduciary duties,
recommend without qualification that AEL's shareholders vote for the
Proposal. The Long Range Planning Committee shall, subject to its
fiduciary duties, solicit shareholder proxies with the intention of
obtaining Shareholder Approval.
(b) Promptly following the date of this Agreement, AEL shall
prepare and file with the SEC under the Exchange Act and the rules and
regulations promulgated by the SEC thereunder, a preliminary draft of
the Proxy Statement. AEL, Buyer and Sub shall cooperate fully with
each other in the preparation and filing of the Proxy Statement and
any amendments and supplements thereto. The Proxy Statement shall not
be filed, and no amendment or supplement thereto shall be made by AEL,
without Buyer's and Sub's prior approval which shall not be
unreasonably delayed or withheld. AEL will use reasonable efforts to
seek prompt review of the Proxy Statement by the SEC. As soon as
reasonably practicable following the date of this Agreement, AEL shall
cause to be mailed a definitive Proxy Statement to its shareholders
promptly following completion of any review by, or in the absence of
such review, the termination of any applicable waiting period of, the
SEC.
3.2 Conduct of AEL's Business.
(a) AEL agrees that, from the date of this Agreement to the
Effective Time, unless Buyer shall otherwise agree in writing or as
otherwise expressly contemplated by this Agreement, AEL shall conduct
its business and shall cause the AEL Subsidiaries to conduct their
respective businesses only in the ordinary course consistent with past
practice and shall use all reasonable efforts to preserve their
business organizations, maintain their rights and franchises, keep
available the services of their officers and employees, and preserve
their relationships with customers, suppliers and others having
material business dealings with them. Specifically, and without
limiting the generality of the foregoing, neither AEL nor any of the
AEL Subsidiaries shall, without the written consent of Buyer:
(i) directly or indirectly do any of the following: (A)
issue, sell, pledge, dispose of or encumber any material assets
other than in the ordinary course of its business consistent with
past practice, (B) amend or propose to amend its Articles of
Incorporation or Bylaws, (C) split, combine or reclassify any
outstanding shares of its capital stock, or declare, set aside or
pay any dividend in stock, property or otherwise with respect to
such shares, (D) redeem, purchase, acquire or offer to acquire
any shares of its capital stock or (E) enter into any agreement
with respect to any of the matters set forth in this Section
3.2(a);
(ii) (A), except in connection with the exercise of any AEL
Stock Options (as defined in the Plan of Merger) or the
conversion of any shares of Class B Stock, issue, sell, pledge or
dispose of, or agree to issue, sell, pledge or dispose of, any
additional shares of, or securities convertible or exchangeable
for, or any options, warrants or rights of any kind to acquire
any shares of, its capital stock of any class or other property
or assets whether pursuant to any rights agreement, stock plan or
otherwise, (B) acquire (by merger, consolidation or acquisition
of stock or assets) any corporation, partnership or other
business organization or division thereof, (C) incur any
indebtedness for borrowed money or issue any debt securities,
except in the ordinary course of its business consistent with
past practice under the Credit Facilities, (D) enter into any new
Material Contract or modify any existing Material Contract in any
material respect except in the ordinary course of its business
consistent with past practice, (E) terminate, modify, assign,
waive, release or relinquish any material contract rights or
amend any material rights or claims not in the ordinary course of
its business consistent with past practice or except as expressly
provided herein, or (F) dissolve or liquidate;
(iii)grant any increase in the salary or other compensation
of its employees or grant any bonus to any employee, except in
the ordinary course of its business consistent with past
practice;
(iv) enter into any employment agreement or make any loan to
or enter into any material transaction of any other nature with
any officer or other executive employee;
(v) take any action to institute any new severance or
termination pay practices with respect to any directors, officers
or employees or to increase the benefits payable under its
severance or termination pay practices;
(vi) hire any new employees except for employees having an
annualized salary of less than $100,000 who are terminable at
will;
(vii)adopt or amend, in any respect, except as may be
required by applicable law or regulation, any bonus, profit
sharing, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment or other employee
benefit plan, agreement, trust, fund, or arrangement for the
benefit or welfare of any directors, officers or employees,
except in the ordinary course of its business consistent with
past practice;
(viii)mortgage, pledge or otherwise subject to any lien,
security interest, encumbrance or charge of any nature, any of
its material assets, or become committed so to do, or permit or
suffer any of such material assets to become subject to any
mortgage, pledge, lien, security interest, encumbrance or charge
of any nature other than liens for current taxes not yet due and
payable, or become committed to do so;
(ix) make any new commitments for capital expenditures in
excess of $100,000 individually or $500,000 in the aggregate,
except for expenditures for maintenance of capital assets in the
ordinary course of its business consistent with past practice.
(b) Unless otherwise consented to in writing by Buyer, from the
Date of this Agreement until the Effective Time, AEL shall, and shall
cause each of the AEL Subsidiaries to:
(i) use all reasonable efforts to maintain its
relationships with its suppliers and customers and, if and as
requested by Buyer, (A) make reasonable arrangements as
reasonably requested by Buyer for representatives of Buyer to
meet with customers and suppliers of AEL and the AEL Subsidiaries
(if Buyer shall give AEL reasonable notice of such meetings), and
(B) schedule, and the senior management of AEL and the AEL
Subsidiaries shall participate in, meetings of representatives of
Buyer with employees of AEL and the AEL Subsidiaries;
(ii) maintain all of the assets used or useful to the
business of AEL and the AEL Subsidiaries in good repair, order
and condition, maintain in full force and effect all material
franchises, licenses, permits, consents, approvals, rights,
waivers and other authorizations, governmental or otherwise,
currently in effect and maintain in full force all policies of
insurance or satisfactory substitute insurance policies insuring
against the risks, damages and losses covered by the insurance
policies currently in force, in each case consistent with its
past practice; and
(iii)otherwise conduct its business in the ordinary course
consistent with past practice.
3.3 AEL Stock Options. Schedule 3.3 attached hereto describes all
AEL Stock Options which will be exercisable as of the Effective Time
("Exercisable Options") and all AEL Stock Options which will not be
exercisable as of the Effective Time ("Nonexercisable Options"). All
options to purchase AEL Stock, including both the Exercisable Options and
the Non-Exercisable Options, are herein referred to collectively as the
"AEL Stock Options." AEL shall make adjustments to the AEL Stock Options
as are permitted by the plans relating thereto to provide that immediately
prior to the Effective Time, each holder of AEL Stock Options shall be
entitled to receive from AEL, and each of the AEL Stock Options shall be
cancelled in exchange for, a payment by AEL to the holder of an amount
equal to the difference between the Merger Price and the per share exercise
price (the "Spread") of such AEL Stock Options multiplied by the number of
shares subject to such AEL Stock Options (such options are called the
"Cashed Options"). The funds required to make such payments shall be made
available to AEL by Buyer on the Closing Date. Appropriate arrangements
shall be made for reduction of the amount to be paid to each holder of
Cashed Options for any applicable withholding taxes or other amounts
required by law to be paid or withheld, either through reducing the amount
paid to, or obtaining a cash payment from, such holder.
3.4 HSR Act. Buyer, Sub and AEL, to the extent required shall as
soon as practicable, file Notification and Report Forms under the HSR Act
with the Federal Trade Commission ("FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") and shall respond as
promptly as practicable to all inquiries received from the FTC or the
Antitrust Division for additional information or documentation, and shall
use reasonable efforts to resolve, as soon as practicable, any questions
which may be raised by the FTC or the Antitrust Division.
3.5 Other Actions. Subject to the terms and conditions herein
provided, each of the parties hereby agrees to use reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including without limitation using reasonable efforts to obtain all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings, including without limitation filings required
under the Exchange Act.
3.6 Inquiries and Negotiations. AEL shall immediately cease any
existing discussions or negotiations with any parties conducted prior to
the date of this Agreement in respect of the acquisition of all or
substantially all the business of AEL, whether by sale of assets or shares
of capital stock of AEL, or by merger, consolidation, or similar
transaction (collectively, an "Acquisition Transaction"). AEL shall not,
and shall not permit its officers, employees, representatives or agents to,
directly or indirectly, (i) solicit or initiate discussions or negotiations
with, or provide any nonpublic information to, any person other than Buyer
or its affiliates concerning an Acquisition Transaction, or (ii) otherwise
solicit or initiate inquiries or the submission of any proposal
contemplating an Acquisition Transaction. AEL shall promptly communicate
to Buyer the terms, including the identity of the person making such
proposal, of any inquiry or proposal which it may receive in respect of an
Acquisition Transaction. Nothing contained in this Agreement shall be
construed to prohibit the Long Range Planning Committee from any or all of
the following, if the Long Range Planning Committee is advised by legal
counsel that the failure to so act could involve a breach of fiduciary duty
on the part of the Long Range Planning Committee: (a) engaging in
discussions or negotiations with, and providing nonpublic information to,
any person other than Buyer or its affiliates which has initiated
discussions or negotiations, or made an unsolicited inquiry or proposal,
concerning an Acquisition Transaction, (b) withdrawing, modifying or
refraining from making its recommendation to the AEL shareholders of the
Merger Transaction, and (c) accepting an offer for an Acquisition
Transaction which the Long Range Planning Committee believes is more
favorable to AEL or to its shareholders than the Merger Transaction
("Superior Transaction") and recommending the Superior Transaction to the
AEL shareholders.
3.7 Notification of Certain Matters. AEL shall give prompt notice to
Buyer and Sub, and Buyer and Sub shall give prompt notice to AEL, of (i)
the occurrence, or failure to occur, of any event which such party believes
would likely cause any of its representations or warranties contained in
this Agreement to be untrue or inaccurate in any material respect at any
time from the date of this Agreement to the Effective Time and (ii)
material failure of AEL, any Buyer or Sub, as the case may be, or any
officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
3.8 Access to Information.
(a) AEL shall cause its officers, directors and employees to,
and shall use reasonable efforts to cause its representatives and
agents (including without limitation its attorneys and accountants) to
afford, from the date of this Agreement to the Effective Time, the
officers, employees and agents of Buyer and Sub and to their
respective legal and financial advisors, lenders, financing sources,
and their respective legal advisors and representatives, so long as
such Persons agree to maintain the confidentiality of such information
in accordance with this Agreement, complete access at all reasonable
times to its officers, employees, agents, properties, books, records,
and work papers, and shall furnish Buyer and Sub all financial,
operating and other data and information as Buyer or Sub, through its
officers, employees or agents, may reasonably request, except to the
extent the foregoing are protected by the attorney-client privilege or
constitute attorney work product.
(b) Except for any governmental filings required in order to
complete the transactions contemplated herein, and except as Buyer and
AEL may agree in writing, each party hereto shall keep all Evaluation
Materials (hereinafter defined) confidential, and, except as required
by applicable law, no party shall disclose any Evaluation Materials or
any information contained therein to any Person; provided, however,
that any such information may be disclosed by any party hereto (i) to
its legal and financial advisors, lenders, financing sources and their
respective legal advisors and representatives, so long as such Persons
agree to maintain the confidentiality of such information in
accordance with this Section 3.8, and (ii) to those of such party's
directors, officers, employees, agents and representatives who need to
know such information for the purposes of evaluating the transactions
contemplated hereby (it being understood that such directors,
officers, employees, agents and representatives shall be informed by
such party of the confidential nature of such information and shall be
directed by such party, and shall each agree to treat such information
confidentially in accordance with this Section 3.8). Without limiting
the generality of the foregoing, in the event that the transactions
contemplated hereby are not consummated, neither party hereto nor its
directors, officers, employees, agents or representatives shall use
any of the Evaluation Materials made available to it by another party
hereto for any purpose. The foregoing restrictions shall not apply to
any disclosure by Buyer after the Closing of any information disclosed
by AEL or the AEL Subsidiaries.
(c) In the event that any party hereto or any of its
representatives receives a request or is required (by applicable law,
regulation or legal process) to disclose all or any part of the
information contained in the Evaluation Materials, such party or its
representatives, as the case may be, shall (i) promptly notify the
disclosing party of the existence, terms and circumstances surrounding
such a request, (ii) consult with the disclosing party on the
advisability of taking legally available steps to resist or narrow
such request, and (iii) assist the disclosing party in seeking a
protective order or other appropriate remedy. In the event that such
protective order or other remedy is not obtained or that the
disclosing party waives compliance with the provisions hereof, (i)
such party or its representatives, as the case may be, may disclose
only that portion of the Evaluation Materials which such party is
advised by opinion of legal counsel is legally required to be
disclosed and shall exercise reasonable efforts to assist the
disclosing party in obtaining assurance that confidential treatment
will be accorded such and (ii) such party shall not be liable for such
disclosure unless disclosure to any such tribunal was caused by or
resulted from a previous disclosure by such party or its
representatives not permitted by this Section 3.8.
(d) If this Agreement is terminated, the parties hereto shall
comply with the terms of the Confidentiality Agreement.
3.9 Public Announcements. Except to the extent otherwise required by
applicable law, neither AEL, Buyer nor Sub shall make, issue or release any
oral or written public announcement or statement concerning, or
acknowledgment of the existence of, or reveal the terms, conditions or
status of, the Merger Transaction or make any other communication to its
shareholders or the investing public, directly or indirectly (including
without limitation press releases and statements to securities analysts),
without first making a good faith attempt to obtain the prior approval of,
or concurrence in, the contents of such announcement, acknowledgment or
statement by the other of them, which approval or concurrence shall not be
unreasonably withheld or delayed.
3.10 Indemnification; Director's and Officer's Liability Insurance.
After the Effective Time, the Surviving Corporation shall continue to be
obligated to indemnify and hold harmless (and shall also advance expenses
as incurred to the fullest extent permitted under applicable law to) each
person who is now, or has been prior to the date hereof or who becomes
prior to the Effective Time, an officer or director of AEL or any of the
AEL Subsidiaries (the "Indemnified Officers and Directors") against (i) all
losses, claims, damages, costs, expenses (including without limitation
counsel fees and expenses), settlement payments or liabilities arising out
of or in connection with any claim, demand, action, suit, proceeding or
investigation based in whole or in part on, or arising in whole or in part
out of, the fact that such person is or was an officer or director of AEL
or any of the AEL Subsidiaries whether or not pertaining to any matter
existing or occurring at or prior to the Effective Time and whether or not
asserted or claimed prior to or at or after the Effective Time
("Indemnified Liabilities") and (ii) all Indemnified Liabilities based in
whole or in part on, or arising in whole or in part out of, or pertaining
to this Agreement, the Other Agreements or the transactions contemplated
hereby or thereby, in each case to the fullest extent required or permitted
under applicable law or under the Surviving Corporation's Articles of
Incorporation or Bylaws or any indemnification agreements in effect on the
date hereof (to the extent consistent with applicable law) (the "Existing
D&O Indemnification Provisions"). The Existing D&O Indemnification
Provisions shall survive the Merger and shall continue in full force and
effect after the Effective Time. Any determination required to be made
with respect to whether an Indemnified Officer's or Director's conduct
complies with the standards set forth under applicable law or the Surviving
Corporation's Articles of Incorporation or Bylaws shall be made in good
faith by the Board of Directors of the Surviving Corporation. The parties
hereto intend, to the extent not prohibited by applicable law, that the
indemnification provided for in this Section 3.10 shall apply without
limitation to negligent acts or omissions by an Indemnified Officer or
Director. The Surviving Corporation's Articles of Incorporation and Bylaws
shall not be rescinded or amended in a manner that adversely affects the
rights of any Indemnified Officer or Director thereunder or under this
Section 3.10 unless otherwise required by applicable law. To the extent
available on terms reasonably satisfactory to the Surviving Corporation,
the Surviving Corporation shall maintain, for not less than five years
after the Effective Time, director's and officer's liability insurance
covering each Indemnified Officer or Director on terms not materially less
favorable than the insurance maintained in effect by AEL on the date hereof
as to terms of coverage (including without limitation types of claims, time
period of claims, exclusions and persons covered), amounts and deductibles
(but in no event shall the coverage be greater at any time than that being
maintained for the benefit of the officers and directors of AEL prior to
the Effective Time). Buyer hereby guarantees the payment and performance
of the Surviving Corporation's obligations in this Section 3.10. Each
Indemnified Officer and Director is intended to be a third party
beneficiary of this Section 3.10 and may specifically enforce its terms.
This Section 3.10 shall not limit or otherwise adversely affect any rights
any Indemnified Officer and Director may have under any agreement with AEL
or under AEL's Articles of Incorporation or Bylaws.
3.11 Employee Benefit Plan. Neither AEL, nor any AEL Subsidiary, nor
any Welfare Plan or Pension Plan, nor any trust created thereunder, will
engage in any "prohibited transaction" (as such term is defined in Section
406 of ERISA), and neither AEL nor any AEL Subsidiary will (a) terminate
any Pension Plan in a manner that results in the imposition of a lien on
any property of AEL or any AEL Subsidiary pursuant to Section 4068 of
ERISA, or (b) take any action that adversely affects the qualification of
any Employee Plan or its compliance with the applicable requirements of
ERISA or the Code or results in a "reportable event" (as such term is
defined in Section 4043(b) of ERISA).
3.12 Update Information. Not less than 5 business days before the
date scheduled for Closing, AEL and Buyer shall correct and supplement in
writing any information furnished on Schedules that, to the knowledge of
AEL or Buyer, respectively, is incorrect or incomplete in any material
respect, and shall promptly furnish such corrected and supplemented
information to the other, so that such information shall be correct and
complete in all material respects to the knowledge of such party at the
time such updated information is so provided. Thereafter, prior to the
Closing, AEL and Buyer shall each notify the other in writing of any
changes or supplements to the updated information needed, to the knowledge
of AEL or Buyer, respectively, to make such information correct and
complete to the knowledge of such party as of the Closing. It is agreed
that the furnishing of such corrected and supplemental information, in and
of itself, shall not create any presumption that such information
constitutes or evidences the existence of a material change or any breach
or violation by AEL or Buyer of any provision of this Agreement, it being
understood that any determination as to whether such a breach or violation
exists shall be made on the basis of any and all relevant information,
which may include information as is so furnished under this Section 3.12.
3.13 Dissenting Shareholders. AEL shall give Buyer (a) prompt notice
of any demands received from Dissenting Shareholders, if any, for payment
of the fair value for their shares of capital stock and (b) the opportunity
to participate in all negotiations and proceedings with respect to any such
demands.
3.14 Commitment Letter. Buyer shall use all reasonable efforts to
consummate the financing contemplated in the Commitment Letter including
without limitation those which are appropriate to enforce the performance
by Bankers Trust Company of its obligations thereunder. Buyer shall not
terminate or amend the Commitment Letter in any material respect without
the prior written consent of AEL, which consent will not be unreasonably
withheld.
ARTICLE IV
CONDITIONS TO THE MERGER
4.1 Conditions to the Merger Relating to Buyer and Sub. The
obligation of Buyer and Sub to effect the Merger is subject to the
satisfaction, prior to the Effective Time, of each of the following
conditions unless waived by Buyer and Sub :
(a) Shareholder Approval and Dissenters Rights. Shareholder
Approval shall have been obtained by the requisite vote of the holders
of Class A Stock and Class B Stock, each voting as a class as
contemplated in Section 1.3(a) hereof. The aggregate number of
Dissenting Shares (as defined in the Plan of Merger) shall not exceed
5% of the outstanding shares of AEL Common Stock.
(b) No Injunction. No order, decree, ruling or other action of
a court or governmental agency of competent jurisdiction, restraining,
enjoining or otherwise prohibiting the Merger Transaction, shall be in
effect.
(c) HSR Act. The waiting periods under the HSR Act shall have
been terminated or early termination thereof shall have been granted,
or all approvals required in connection therewith, if any, shall have
been obtained.
(d) Accuracy of Representations and Warranties; Compliance With
Covenants; and Absence of Material Adverse Change. The
representations and warranties of AEL herein shall be accurate in all
material respects at and as of the Closing Date (except to the extent
that such representation and warranty speaks as of another date); AEL
shall have complied in all material respects with the covenants it has
agreed herein to undertake; and no material adverse change shall have
occurred to the business, operations or financial condition of AEL
since February 24, 1995.
(e) AEL shall have delivered to Buyer a certificate signed by an
officer of AEL, dated the Closing, certifying that, to the best of the
knowledge of such officer, the conditions specified in Section 4.1 as
they relate to AEL, have been fulfilled.
(f) There shall not be in force any order, decree, statute, rule
or regulation, nor shall there be on file any complaint by a
governmental agency seeking an order or decree, and Buyer shall not
have received written notice from any governmental agency that it has
determined to institute any suit or proceeding seeking an order or
decree, in each case, that would, as a result of the consummation of
the transactions contemplated hereby, require (i) any divestiture by
Buyer or any Significant Subsidiary of Buyer of a significant portion
of the business of Buyer or such Significant Subsidiary and its
Subsidiaries, taken as a whole, or (ii) any divestiture by AEL or any
Significant Subsidiary of AEL of a significant portion of the business
of AEL or such Significant Subsidiary.
(g) Any consent required for the consummation of the Merger
under any agreement, contract or license described in a schedule
hereto or for the continued enjoyment by AEL and the AEL Subsidiaries
of the benefits of any agreement, contract or license described in a
schedule hereto after the Merger shall have been obtained, except
where the failure to obtain such consent would not have a Material
Adverse Effect.
(h) Buyer shall have received an opinion, dated as of the
Closing Date, from counsel to AEL, substantially in the form of
Exhibit C.
(i) Xx. Xxxxx Xxxxx shall have executed and delivered to Buyer,
not later than the close of business on October 6, 1995, an agreement
in the form attached hereto as Exhibit E.
(j) Buyer shall not have been informed by a member of senior
management or a senior official of any of the customers of AEL and/or
the AEL Subsidiaries identified on Schedule 4.1(j) that such customer
intends to terminate or modify in any material respect its existing
contractual relationship with AEL and/or the AEL Subsidiaries after
the Effective Time of the Merger solely as a result of the
consummation of the Merger Transactions contemplated hereby and the
aggregate of all such terminations or modifications are reasonably
likely to have a Material Adverse Effect. Buyer shall notify AEL, in
writing, as soon as practicable upon receiving any such customer
notification. AEL shall have a period of not less than ten business
days in which to (a) verify to its reasonable satisfaction the
accuracy of such notification, and (b) address the matter with a view
to resolving any concerns which form the basis for such notification
so that the customer shall withdraw the notification.
(k) AEL shall have delivered all assignments, consents,
approvals and other documents, certificates and instruments as Buyer
may reasonably request for the purpose of (A) enabling its counsel to
provide the opinion required under this Agreement, (B) evidencing the
accuracy and completeness of any of the representations, warranties or
statements, the performance of any covenants or agreements of AEL or
the compliance by AEL with any of the conditions, all as contained or
referred to in this Agreement, or (C) effectuating or confirming the
consummation of the transactions contemplated hereby.
(l) Buyer shall have obtained debt financing in accordance with
the terms of the Commitment Letter attached hereto as Schedule 4.1(l)
issued by Bankers Trust Company to Buyer.
(m) Buyer shall have received possession of all corporate,
accounting, business and tax records of AEL and the AEL Subsidiaries.
(n) The form and substance of all actions, proceedings,
instruments and documents required to consummate the transactions
contemplated by this Agreement shall be satisfactory in all reasonable
and customary respects to Buyer and its counsel.
4.2 Conditions to the Merger Relating to AEL. The obligation of AEL
to effect the Merger is subject to the satisfaction prior to the Effective
Time of each of the following conditions unless waived by AEL:
(a) Shareholder Approval. Shareholder Approval shall have been
obtained by the requisite vote of the holders of Class A Stock and
Class B Stock, each voting as a class, as contemplated in Section
1.3(a) hereof.
(b) No Injunction. No order, decree, ruling or other action of
a court of competent jurisdiction, restraining, enjoining or otherwise
prohibiting the Merger Transaction, shall be in effect.
(c) HSR Act. The waiting period under the HSR Act shall have
been terminated or early termination thereof shall have been granted,
or all approvals required in connection therewith, if any, shall have
been obtained.
(d) Accuracy of Representations and Warranties and Compliance
With Covenants. The representations and warranties of Buyer and Sub
herein shall be accurate in all material respects at and as of the
Closing Date (except to the extent that such representation and
warranty speaks as of another date) and Buyer and Sub shall have
complied in all material respects with the covenants each of them has
agreed herein to undertake.
(e) Fairness Opinion. On the date on which the Proxy Statement
is mailed to the AEL shareholders, AEL shall have received an opinion
("Fairness Opinion") of Xxxxxx, Read & Co., Inc. (or other nationally
recognized investment banking firm) dated the date of such mailing and
acceptable to the Long Range Planning Committee to the effect that the
Merger Price is fair from a financial point of view to the AEL
shareholders, and on the date of the Shareholders Meeting and at the
Effective Time, such opinion shall not have been withdrawn or modified
in a manner which is not acceptable to the Long Range Planning
Committee.
(f) Buyer shall have delivered to AEL a certificate signed by an
officer of Buyer, dated the Closing, certifying that, to the knowledge
of such officer, the conditions specified in Section 4.2 as they
relate to Buyer have been fulfilled.
(g) AEL shall have received an opinion, dated as of the Closing
Date, from Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., counsel to Buyer,
substantially in the form of Exhibit B.
(h) The form and substance of all actions, proceedings,
instruments and documents required to consummate the transactions
contemplated by this Agreement shall be satisfactory in all reasonable
and customary respects to AEL and its counsel.
(i) There shall not be in force any order, decree, statute, rule
or regulation, nor shall there be on file any complaint by a
governmental agency seeking an order or decree, and AEL shall not have
received written notice from any governmental agency that it has
determined to institute any suit or proceeding seeking an order or
decree, in each case, that would, as a result of the consummation of
the transactions contemplated hereby, require (i) any divestiture by
Buyer or any Significant Subsidiary of Buyer of a significant portion
of the business of Buyer or such Significant Subsidiary and its
Subsidiaries, taken as a whole, or (ii) any divestiture by AEL or any
Significant Subsidiary of AEL of a significant portion of the business
of AEL or such Significant Subsidiary.
(j) Buyer shall have delivered all assignments, consents,
approvals and other documents, certificates and instruments as AEL may
reasonably request for the purpose of (A) enabling its counsel to
provide the opinion required under this Agreement, (B) evidencing the
accuracy and completeness of any of the representations, warranties or
statements, the performance of any covenants or agreements of Buyer or
the compliance by Buyer with any of the conditions, all as contained
or referred to in this Agreement, or (C) effectuating or confirming
the consummation of the transactions contemplated hereby.
ARTICLE V
TERMINATION AND ABANDONMENT
5.1 Termination by Mutual Consent. This Agreement may be terminated
and the Merger Transaction may be abandoned at any time prior to the
Effective Time, before or after Shareholder Approval shall have been
obtained, by the mutual consent of AEL (by action of the Long Range
Planning Committee), Buyer and Sub (by action of the respective Boards of
Directors of Buyer and Sub).
5.2 Termination by AEL or Buyer and Sub. This Agreement may be
terminated and the Merger Transaction may be abandoned by either AEL (by
action of the Long Range Planning Committee) or Buyer and Sub (by action of
the respective Boards of Directors of Buyer and Sub) if (a) the Merger
shall not have been consummated on or before six months after the date
hereof, or such later date as may be mutually agreed to by the parties
hereto (but only if the party seeking to terminate this Agreement is not
otherwise in breach in any material respect of any of its obligations
hereunder) or (b) any court or governmental agency of competent
jurisdiction shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the Merger
Transaction and such order, decree, ruling, or other action shall have
become final and nonappealable.
5.3 Termination by AEL. This Agreement may be terminated and the
Merger Transaction may be abandoned by AEL (by action of the Long Range
Planning Committee) if (a) Buyer or Sub shall have failed to comply in any
material respect with any of the covenants or agreements contained in this
Agreement to be complied with or performed by it or them at or prior to the
Effective Time and such failure has not been cured within 30 days after
receipt of notice thereof, (b) the Long Range Planning Committee shall have
withdrawn, modified in a manner adverse to Buyer or Sub, or refrained from
making, its recommendation to the AEL shareholders of the Merger
Transaction in connection with its approval and recommendation to the AEL
shareholders of a Superior Transaction, or (c) it becomes reasonably
certain that Buyer or Sub will be unable to satisfy any condition to the
Merger Transaction as set forth in Section 4.2 on or before six months
after the date hereof.
5.4 Termination by Buyer and Sub. This Agreement may be terminated
and the Merger Transaction may be abandoned by Buyer and Sub (by action of
the respective Boards of Directors of Buyer and Sub) if (a) AEL shall have
failed to comply in any material respect with any of the covenants or
agreements contained in this Agreement to be complied with or performed by
it at or prior to the Effective Time and such failure has not been cured
within 30 days after receipt of notice thereof, (b) it becomes reasonably
certain that AEL will be unable to satisfy any condition to the Merger
Transaction as set forth in Section 4.1 on or before six months after the
date hereof, (c) the Long Range Planning Committee shall have withdrawn,
modified in a manner adverse to Buyer or Sub, or refrained from making its
recommendation of the Merger Transaction to the AEL shareholders, or (d)
there shall have occurred an event which shall have caused a Material
Adverse Effect, or the representations and warranties of AEL have been
breached or become inaccurate in a material respect as of the Closing.
5.5 Effect of Termination. Except as provided in Section 3.8(b)
hereof with respect to information obtained in connection with the
transactions contemplated hereby, in the event of the termination of this
Agreement and the abandonment of the Merger Transaction, this Agreement
shall thereafter become void and have no effect, and no party thereto shall
have any liability to any other party hereto or its shareholders or
directors or officers in respect thereof, and each party shall be
responsible for its own expenses, except that nothing herein shall relieve
any party from liability for any willful breach thereof. Notwithstanding
the foregoing, in the event that AEL terminates this Agreement pursuant to
clause (b) in Section 5.3 hereof, or Buyer and Sub terminate this Agreement
pursuant to clause (c) of Section 5.4 hereof, then AEL shall, within ten
business days following the termination of this Agreement, pay Buyer a
termination fee payable in cash of $3,447,600. Except as provided in the
immediately preceding sentence, and whether or not the Merger is
consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses.
5.6 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto;
except that after Shareholder Approval shall have been obtained, no
amendment may be made which decreases the amount of cash to which the
shareholders of AEL are entitled pursuant to this Agreement or otherwise
materially adversely affects the shareholders of AEL without the further
approval of a majority of the votes cast by the holders of Class A Stock
and Class B Stock, each voting as a class, at a shareholders meeting duly
convened for this purpose.
5.7 Waiver. Any time prior to the Effective Time, any party hereto
may (a) in the case of the Buyer or Sub, extend the time for the
performance of any of the obligations or other acts of AEL or, subject to
the provisions contained in Section 5.6 hereof, waive compliance with any
of the agreements of AEL or with any conditions to the respective
obligations of Buyer or Sub, or (b) in the case of AEL, extend the time for
the performance of any of the obligations or other acts of Buyer or Sub, or
waive compliance with any conditions to its own obligations. Any agreement
on the part of a party hereto to any such extension or waiver shall be
valid if set forth in an instrument in writing signed on behalf of such
party by a duly authorized officer.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices and other communications among the parties
shall be in writing and shall be deemed to have been duly given when (i)
delivered in person, or (ii) five days after posting in the United States
mail having been sent registered or certified mail return receipt
requested, or (iii) delivered by telecopy and promptly confirmed by
delivery in person or post as aforesaid in each case, with postage prepaid,
addressed as follows:
(a) If to Buyer or Sub, to:
Tracor, Inc.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telecopy No.: (000) 000-0000
(b) If to AEL, to:
AEL Industries, Inc.
c/o Long Range Planning Committee
of the Board of Directors
Xxxxxxx X. Xxxxxxxx, Chairman
000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile No. 000-000-0000
with a copy to:
Duane, Morris & Heckscher
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx., Esq.
Facsimile No. 000-000-0000
or such other address as shall be furnished available in writing by any
party to the others prior to the giving of the applicable notice or
communication.
6.2 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.3 Headings. The headings herein are for convenience or reference
only, do not constitute a part of this Agreement, and shall not be deemed
to limit or affect any of the provisions of this Agreement.
6.4 No Survival of Representations or Warranties. None of the
representations or warranties included or provided for herein or in any
schedule or certificate or other document delivered pursuant to this
Agreement shall survive after the Effective Time.
6.5 Entire Agreement. This Agreement, which includes the Exhibits
and Schedules hereto, constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the
parties, with respect to the subject matter of this Agreement.
6.6 Cooperation. Subject to the terms and conditions of this
Agreement, each of the parties hereto shall use its reasonable efforts to
take, or cause to be taken, such action, to execute and deliver, or cause
to be executed and delivered, such governmental notifications and
additional documents and instruments and to do, or cause to be done, all
things necessary, proper or advisable under the provisions of this
Agreement and under applicable law to consummate and make effective the
transactions contemplated by this Agreement.
6.7 No Rights To Third Parties. Nothing in this Agreement express or
implied is intended to confer upon any other person, other than the
Indemnified Parties, any rights or remedies under or by reason of this
Agreement.
6.8 No Assignment. This Agreement shall not be assigned, by
operation of law or otherwise.
6.9 Governing Law. This Agreement shall be governed in all respects,
including without limitation its validity, interpretation and effect, by
the law of the Commonwealth of Pennsylvania applicable to contracts made
and to be performed therein.
6.10 Consent to Jurisdiction. Each of the parties hereto irrevocably
and unconditionally (a) agrees that any suit, action or other legal
proceeding ("Suit") arising out of this Agreement may be brought and
adjudicated in the United States District Court for the Eastern District of
Pennsylvania, or, if such court will not accept jurisdiction, in any court
of competent civil jurisdiction sitting in Xxxxxxxxxx County, Pennsylvania,
(b) submits to the non-exclusive jurisdiction of any such court for the
purposes of any such Suit and (c) waives and agrees not to assert by way of
motion, as a defense or otherwise in any such Suit, any claim that is not
subject to the jurisdiction of the above courts, that such Suit is brought
in an inconvenient forum or that the venue of such Suit is improper. Each
of the parties hereto also irrevocably and unconditionally consents to the
service of any process, pleadings, notices or other papers in a manner
permitted by the notice provisions of Section 6.1 hereof.
ARTICLE VII
CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
"Acquisition Transaction" has the meaning specified in Section 3.6.
"AEL" has the meaning specified in the Preamble hereto.
"AEL Common Stock" has the meaning specified in "Background" on page 1
of this Agreement.
"AEL Group" has the meaning specified in Section 2.1(a).
"AEL Stock Options" has the meaning specified in Section 3.3.
"AEL Subsidiaries" means a corporation or other entity of which 50% or
more of the voting power of the equity securities or equity interests is
owned, directly or indirectly, by AEL.
"AEL Welfare Plan" has the meaning specified in Section 2.1(k).
"Affiliate" means, with respect to any specified Person, any Person
that, directly or indirectly, controls, is controlled by, or is under
common control with, such specified Person, through one or more
intermediaries or otherwise.
"Agreement" has the meaning specified in the Preamble hereto.
"Allocation Agreement" has the meaning specified in "Background" on
page 1 of this Agreement.
"Balance Sheet Date" has the meaning specified in Section 2.1(g).
"BCL" has the meaning specified in Section 1.1.
"Benefit Arrangement" has the meaning specified in Section 2.1(k).
"Buyer" has the meaning specified in the Preamble hereto.
"Cashed Options" has the meaning specified in the Plan of Merger.
"CERCLA" has the meaning specified in Section 2.1(m).
"Class A Stock" has the meaning specified in "Background" on page 1
hereof.
"Class B Stock" has the meaning specified in "Background" on page 1
hereof.
"Closing" has the meaning specified in Section 1.3.
"Closing Date" has the meaning specified in Section 1.3.
"Commitment Letter" means the commitment from Bankers Trust Company to
Buyer, in the form of Schedule 4.1(l) attached hereto, to provide financing
to Buyer for payment of a portion of the Merger Consideration.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the letter agreement, dated May 12,
1995, between Buyer and AEL, in the Form attached hereto as Exhibit D.
"Contracts" has the meaning specified in Section 2.1(o).
"Credit Facilities" has the meaning specified in Section 2.1(o).
"DGCL" has the meaning specified in Section 1.1.
"Effective Time" has the meaning specified in Section 1.3.
"Employee Plans" has the meaning specified in Section 2.1(k).
"Employment Laws" has the meaning specified in Section 2.1(r).
"Environment" has the meaning specified in Section 2.1(m).
"Environmental, Health and Safety Liabilities" has the meaning
specified in Section 2.1(m).
"Environmental Laws" has the meaning specified in Section 2.1(m).
"ERISA" has the meaning specified in Section 2.1(k).
"ERISA Affiliate" has the meaning specified in Section 2.1(k).
"Evaluation Materials" means this Agreement (together with the
Schedules and Exhibits hereto) and, as to any party hereto, means all other
non-public information furnished or made available to such party by the
other parties hereto (the "disclosing party") in connection with the
transactions contemplated hereby relating to the disclosing party or the
disclosing party's Affiliates, whether furnished or made available orally
or in writing (whatever the form or data storage medium) or gathered by
inspection and regardless of whether specifically identified as
"confidential," together with analyses, compilations, studies or other
documents prepared by any party, or by such party's agents, representatives
(including attorneys, accountants and financial advisors) or employees,
which contain or otherwise reflect such information, provided that the term
Evaluation Materials shall not include information that (i) is or becomes
generally available to the public other than as a result of a disclosure in
violation of the terms hereof or the Confidentiality Agreement, (ii) was or
becomes available to a party hereto on a non-confidential basis from a
source other than any other party hereto or their representatives and
affiliates, provided that such source is not prohibited from disclosing
such information by a contractual, legal or fiduciary obligation to any
party hereto or any of their respective representatives, or (iii) has been
or is independently developed by the party to which such information was
furnished or made available and not derived from the Evaluation Materials.
"Exchange Act" has the meaning specified in Section 1.3.
"Exercisable Options" has the meaning specified in Section 3.3.
"Existing D&O Indemnification Provisions" has the meaning specified in
Section 3.10.
"Facilities" has the meaning specified in Section 2.1(m).
"Fairness Opinion" has the meaning specified in Section 4.2.
"FWPCA" has the meaning specified in Section 2.1(m).
"GAAP" has the meaning specified in Section 2.1(f).
"Government Contract" has the meaning specified in Section 2.1(p).
"Hazardous Materials" has the meaning specified in Section 2.1(m).
"HSR Act" has the meaning specified in Section 2.1(e).
"Indemnified Liabilities" has the meaning specified in Section 3.10.
"Indemnified Officers and Directors" has the meaning specified in
Section 3.10.
"Intellectual Property" has the meaning specified in Section 2.1(q).
"Knowledge" means the actual knowledge of senior management of AEL,
Buyer and Sub, respectively, after due inquiry.
"Liens" means any mortgages, deeds of trust, pledges, hypothecations,
encumbrances, security interests, or liens of any kind.
"Long Range Planning Committee" means the Long Range Planning
Committee of the Board of Directors of AEL, Xxxxxxx X. Xxxxxxxx, Chairman.
" Material Adverse Effect" has the meaning specified in Section
2.1(a).
" Material Contracts" has the meaning specified in Section 2.1(o).
" Merger" has the meaning specified in Section 1.1.
" Merger Consideration" has the meaning specified in Section 1.2.
" Merger Price" has the meaning specified in "Background" on page 1 of
this Agreement.
"Merger Transaction" has the meaning specified in Section 1.3.
"Multiemployer Plan" has the meaning specified in Section 2.1(k).
"Non-Exercisable Options" has the meaning specified in Section 3.3.
"Optionholder" means a holder of AEL Stock Options, including all
Exercisable Options and Unexercisable Options.
"Other Agreements" has the meaning specified in "Background" on page 1
of this Agreement.
"Owned Real Property" means all real property owned by AEL or any of
the AEL Subsidiaries.
"PBGC" has the meaning specified in Section 2.1(k).
"Pension Plan" has the meaning specified in Section 2.1(k).
"Permitted Liens" means (i) mechanics, materialmen's and similar
Liens with respect to any amounts not yet due and payable or which are
being contested in good faith through appropriate proceedings, (ii) Liens
for Taxes not yet due and payable or which are being contested in good
faith through appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, (iii) Liens on goods in transit
incurred pursuant to documentary letters of credit, (iv) Liens securing
rental payments under capital lease agreements, (v) Liens arising in favor
of the United States Government as a result of progress payment clauses
contained in any Contract, (vi) encumbrances and restrictions on real
property that do not materially interfere with the present uses of such
real property and (vii) other Liens imposed by law arising in the ordinary
course of business and not incurred in connection with the borrowing of
money and which do not in the aggregate materially detract from the value
of the encumbered property or materially impair the use thereof or which
are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or assets subject to such Lien during the pendency of such
proceeding.
"Person" means any individual, firm, corporation, partnership, limited
liability company, incorporated or unincorporated association, joint
venture, joint stock company, governmental agency or instrumentality or
other entity of any kind.
"Plan of Merger" has the meaning specified in "Background" on page 1
of this Agreement.
"Proposal" has the meaning specified in Section 1.3.
"Proprietary Rights" has the meaning specified in Section 2.1(q).
"Proxy Statement" has the meaning specified in Section 1.3.
"RCRA" has the meaning specified in Section 2.1(m).
"Reasonable Best Estimate" has the meaning specified in Section
2.1(g)(ii).
"Release" has the meaning specified in Section 2.1(m).
"Riebmans" has the meaning specified in "Background" on page 1 of this
Agreement.
"SEC" has the meaning specified in Section 1.3.
"SEC Filings" has the meaning specified in Section 2.1(f).
"Shareholder Approval" has the meaning specified in Section 1.3.
"Shareholders Meeting" has the meaning specified in Section 1.3.
"Significant Subsidiary" means, with respect to any Person, any
Subsidiary of that Person that is a "significant subsidiary" of such Person
within the meaning of Regulation S-X of the SEC.
"Spread" has the meaning specified in Section 3.3.
"Stockholder" means any holder of record of shares of AEL Common Stock
immediately prior to the Effective Time.
"Sub" has the meaning specified in the Preamble hereto.
"Superior Transaction" has the meaning specified in Section 3.6.
"Surviving Corporation" has the meaning specified in Section 1.1.
"Taxes" has the meaning specified in Section 2.1(t).
"Tax Returns" has the meaning specified in Section 2.1(t).
"Threat of Release" has the meaning specified in Section 2.1(m).
"Unexercisable Options" has the meaning specified in Section 3.3.
"Welfare Plan" has the meaning specified in Section 2.1(k).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
AEL INDUSTRIES INC.
By: /s/ Xxxx Xxxxxxx
Chairman and Chief Executive Officer
TRACOR, INC.
By: /s/ Xxxxx X. Xxxxxx
TRACOR AEL, INC.
By: /s/ Xxxxx X. Xxxxxx
TABLE OF SCHEDULES AND EXHIBITS
Schedule 2.1(a) Corporations, Partnerships, and Joint Ventures in which
AEL has an interest
Schedule 2.1(b) Outstanding Options, Warrants, Rights, and Securities
Schedule
2.1(g)(i) and (ii) Material Liabilities and Obligations Incurred
Since February 24, 1995
Schedule 2.1(h) Material Adverse Changes Since February 24, 1995
Schedule 2.1(j) Investigations, Judgments, and Injunctions
Schedule 2.1(k) Employee Benefit Plans
Schedule 2.1(m) Environmental Law Compliance
Schedule 2.1(n) Real Property Owned and Used
Schedule 2.1(o)(1) Material Contracts
Schedule 2.1(p) Government Contracts
Schedule 2.1(q) Intellectual Property
Schedule 2.1(r) Labor Relations, Contracts, Complaints, and Employment
Schedule 2.1(s) Legal Noncompliance
Schedule 2.1(t) Taxes
Schedule 2.1(u) Licenses, Permits, and Franchises
Schedule 2.1(w) Insurance
Schedule 3.3 Exercisable and Nonexercisable Stock Options
Schedule 4.1(j) AEL and AEL Subsidiary Customers
Schedule 4.1(l) Commitment Letter
Exhibit A Plan of Merger
Exhibit B Buyer Counsel Opinion
Exhibit C AEL Counsel Opinion
Exhibit D Confidentiality Agreement
Exhibit E Agreement between Buyer and Xx. Xxxxx
EXHIBIT A
PLAN OF MERGER
merging
TRACOR AEL, INC.
(a Delaware corporation)
with and into
AEL INDUSTRIES, INC.
(a Pennsylvania corporation)
Background
AEL Industries, Inc., a Pennsylvania corporation ("AEL"), Tracor, Inc., a
Delaware corporation ("Buyer") and Tracor AEL, Inc., a Delaware corporation
and a wholly-owned subsidiary of Buyer ("Sub"), are parties to an Agreement
and Plan of Reorganization, dated as of October 2, 1995 (the "Merger
Agreement"), providing for the merger (the "Merger") of Sub with and into
AEL upon the terms and conditions set forth in this Plan of Merger and
pursuant to the Delaware General Corporation Law ("DGCL") and the
Pennsylvania Business Corporation Law of 1988 (the "BCL"). AEL and Sub are
sometimes herein collectively referred to as the "Constituent
Corporations." Terms used but not defined herein shall have the meaning
ascribed thereto in the Merger Agreement.
Terms and Conditions
1. Merger. The Constituent Corporations shall effect the Merger
upon the terms and subject to the conditions set forth in this Plan of
Merger.
(a) The Merger. At the Effective Time (as hereinafter defined),
Sub shall be merged with and into AEL pursuant to this Plan of Merger,
the separate corporate existence of Sub shall cease (except as it may
be continued by operation of law) and AEL shall continue as the
surviving corporation under the corporate name set forth in Annex 1
(referred to in paragraph 2 of the Plan of Merger) all upon the terms
and subject to the conditions provided for in this Plan of Merger and
pursuant to the BCL. AEL, as it exists from and after the Effective
Time, is sometimes hereinafter referred to as the "Surviving
Corporation."
(b) Effect of the Merger. The Merger shall have the effect
provided in the DGCL and BCL; including, without limitation, that all
the property, real, personal and mixed, and franchises of each of the
Constituent Corporations, and all debts due on whatever account to
either of them, including subscriptions for shares and other choses in
action belonging to either of them, shall be deemed to be transferred
to and vested in the Surviving Corporation without further action; and
title to any real estate, or any interest therein, vested in either of
the Constituent Corporations shall not revert or be in any way
impaired by reason of the Merger; and the Surviving Corporation shall
thenceforth be responsible for all the liabilities of each of the
Constituent Corporations; but liens upon the property of the
Constituent Corporations shall not be impaired by the Merger and any
claim existing or action or proceeding pending by or against either of
the Constituent Corporations may be prosecuted to judgment as if the
Merger had not taken place or the Surviving Corporation may be
proceeded against or substituted in its place.
(c) Consummation of the Merger. On the Closing Date, a
Certificate of Merger meeting the requirements of Section 252 of the
DGCL, and Articles of Merger (containing this Plan of Merger) meeting
the requirements of Section 1926 of the BCL shall be filed with the
Secretary of State of the State of Delaware and the Secretary of the
Commonwealth of Pennsylvania, respectively, in accordance with the
provisions of the DGCL and the BCL, and the Merger shall become
effective upon such filings or at such later time as may be specified
in such filings as the effective time of the Merger (the "Effective
Time").
2. Articles of Incorporation; Bylaws; Directors and Officers. At
the Effective Time, the Articles of Incorporation of the Surviving
Corporation shall be amended and restated in their entirety in the manner
set forth in Annex 1 attached hereto and incorporated herein by reference.
The Bylaws of the Surviving Corporation from and after the Effective Time
shall be the Bylaws of Sub as in effect immediately prior to the Effective
Time, continuing until thereafter amended in accordance with their terms
and the Articles of Incorporation of the Surviving Corporation and as
provided by the BCL. The initial directors of the Surviving Corporation
shall be the directors of Sub immediately prior to the Effective Time, in
each case until their successors are elected and qualified, and the initial
officers of the Surviving Corporation shall be the officers of AEL
immediately prior to the Effective Time, in each case until their
successors are duly elected and qualified.
3. Conversion and Cancellation of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of Buyer,
Sub, AEL or any holder of any shares of capital stock of either Constituent
Corporation:
(a) Sub Common Stock. Each outstanding share of Common Stock,
par value $0.01 per share, of Sub shall be converted into one share of
common stock, $1.00 par value per share, of the Surviving Corporation.
(b) Cancellation of AEL Treasury Stock. Each share of AEL
Common Stock that may be held in the treasury of AEL shall be
cancelled and retired and no capital stock of the Surviving
Corporation, cash or other consideration shall be paid or delivered in
exchange therefor.
(c) Conversion of AEL Common Stock. Except for any Dissenting
Shares (as hereinafter defined), each remaining outstanding share of
AEL Common Stock shall be converted into the right to receive cash,
without interest, in the amount of $28.00 (the "Merger Price") per
share.
(d) Disposition of Stock Options. Immediately prior to the
Effective Time, the holder of each option to purchase shares of AEL
Common Stock (individually, an "AEL Stock Option" and collectively,
the "AEL Stock Options") issued pursuant to AEL's Nonqualified Stock
Option Plan (amended and restated as of May 15, 1991), Incentive Stock
Option Plan (effective January 1, 1992) or an agreement dated May 16,
1988 between AEL and Xxxxxx Xxxx, its Executive Vice President and
Chief Financial Officer (collectively, the "AEL Stock Option Plans"),
shall be entitled, immediately prior to the Effective Time, to receive
from AEL an amount equal to the excess, if any, of the Merger Price
over the exercise price of the AEL Stock Option ("the Spread")
multiplied by the number of shares of AEL Common Stock subject to the
AEL Stock Option (such options are called the "Cashed Options"). The
funds required to make such payments shall be made available to AEL by
Buyer on the Closing Date. Appropriate arrangements shall be made for
reduction of the amount to be paid to each holder of Cashed Options
for any applicable withholding taxes or other amounts required by law
to be paid or withheld, either through reducing the amount paid to, or
by obtaining a cash payment from, such holder.
(e) Dissenting Shares. Notwithstanding anything herein to the
contrary, shares of AEL Common Stock that are issued and outstanding
immediately prior to the Effective Time and that are held by AEL
shareholders who, immediately prior to the Effective Time, have the
status of a "Dissenter" (as defined in Sec.1572 of the BCL) ("Dissenting
Shares"), shall not be converted into the right to receive the Merger
Price unless, after the Effective Time, (a) any further action
required to be taken by any such AEL shareholders so as to maintain
such status as a Dissenter shall not have been taken in a timely
manner or (b) a court of competent jurisdiction shall determine that
any such AEL shareholder is not entitled to the rights set forth in Secs.
1571 through 1580 of the BCL, in either of which events the shares of
AEL Common Stock held by any such AEL shareholder shall thereupon be
deemed to have been converted into the right to receive the Merger
Price, as of the Effective Time, without any interest thereon. AEL
shall give Sub prompt notice of any written assertion of dissenters
rights received by AEL and, prior to the Effective Time, Sub shall
have the right to participate in all negotiations with respect
thereto. Prior to the Effective Time, AEL shall not, except with the
prior written approval of Sub, which shall not be unreasonably
withheld or delayed, make any payment with respect to, or settle or
offer to settle, any such written assertion of dissenters rights.
From and after the Effective Time, no stockholder of AEL who made a
written assertion of dissenters rights shall be entitled to vote such
holder's shares of AEL Common Stock for any purpose or to receive
payment of dividends or other distributions with respect to such
holder's shares (except dividends and other distributions payable to
shareholders of record at a date which is prior to the Effective
Time).
(f) No Convertible Securities. At the Effective Time, there
shall not be any securities, rights, warrants, options or other
instruments originally issued by AEL which, after consummation of the
Merger, would be convertible into or exercisable for securities of the
Surviving Corporation.
4. Merger Payment Procedure.
(a) Merger Paying Agent. Sub and AEL agree that bank or trust
company reasonably acceptable to Buyer and AEL shall be designated by
Sub as the paying agent for the Merger (the "Merger Paying Agent").
Buyer shall cause Sub to deposit with the Merger Paying Agent on the
Closing Date such funds as are required for the conversion of shares
of AEL Common Stock or Cashed Options into the right to receive the
Merger Price or the Spread, as the case may be, pursuant to Section 3
hereof (the "Payment Fund").
(b) Payment Procedure. As soon as practicable after the
Effective Time, the Surviving Corporation shall cause the Merger
Paying Agent to distribute to holders of (i) AEL Common Stock so
converted or (ii) Cashed Options, upon surrender to the Merger Paying
Agent of one or more certificates, respectively, representing shares
of AEL Common Stock or Cashed Options for cancellation and a properly
completed letter of transmittal, a bank check for the cash being paid
in respect to the aggregate number of shares of AEL Common Stock or
Cashed Options previously represented by the certificates so
surrendered. If for any reason (including without limitation losses),
the Payment Fund is inadequate to pay the amounts to which the holders
of shares of AEL Common Stock or the Cashed Options shall be entitled
under Section 3(c) or Section 3(d) hereof, Buyer shall be liable for
the payment thereof. In no event shall the holder of any surrendered
certificates for shares of AEL Common Stock or Cashed Options be
entitled to receive interest on any of the funds to be received in the
Merger. If a check is to be sent to a person other than the person in
whose name the certificates for shares of AEL Common Stock or Cashed
Options surrendered for conversion or exchange are registered, it
shall be a condition of the payment that the certificate or Cashed
Option so surrendered shall be properly endorsed and the signatures
thereon properly guaranteed and otherwise in proper form for transfer
and that the person requesting such payment shall pay to the Merger
Paying Agent any transfer or other taxes required by reason of the
delivery of such check to a person other than the registered holder of
the certificate surrendered, or shall establish to the satisfaction of
the Merger Paying Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Merger Paying
Agent nor either party to this Plan of Merger shall be liable to a
holder of shares of AEL Common Stock or Cashed Option for any amount
paid to a public official pursuant to any applicable abandoned
property, escheat or similar laws.
(c) No Further Ownership Rights. The cash paid, issued and
distributed upon the surrender of certificates representing shares of
AEL Common Stock or Cashed Option in accordance with the terms of this
Plan of Merger shall be deemed to have been paid in full satisfaction
of all rights pertaining to such shares of AEL Common Stock or Cashed
Options.
(d) Return of Payment Funds. Any cash delivered or made
available to the Merger Paying Agent pursuant to this Section 4, and not
exchanged pursuant to this Section 4 for certificates representing shares
of AEL Common Stock or Cashed Options within six months after the Effective
Time, shall be returned by the Merger Paying Agent to the Surviving
Corporation which shall thereafter act as paying agent subject to the
rights of holders of unsurrendered certificates representing shares of AEL
Common Stock or Cashed Options hereunder.
(e) Closing of Stock Transfer Books. At the Effective Time, the
stock transfer books of AEL shall be closed and no transfer of shares
of AEL Common Stock shall thereafter be made.
5. Termination. This Plan of Merger may be terminated at any time
on or before the Effective Time by agreement of the Long Range Planning
Committee of the Board of Directors of AEL and the Board of Directors of
Sub. This Plan of Merger shall be automatically terminated if AEL, Buyer
or Sub validly terminates the Merger Agreement.
6. Amendment. This Plan of Merger may not be amended except by an
instrument in writing signed on behalf of AEL and Sub; except that after
Shareholder Approval shall have been obtained, no amendment may be made
which decreases the amount of cash to which either the shareholders of AEL
or the holders of AEL Stock Options are entitled pursuant to this Plan of
Merger or otherwise materially adversely affects the shareholders of AEL
without the further approval of a majority of the votes cast by the holders
of Class A Stock and Class B Stock, each voting as a class, at a
shareholders meeting duly convened for this purpose.
7. Waiver. Any time prior to the Effective Time, (a) Sub may extend
the time for the performance of any of the obligations or other acts of AEL
or, subject to the provisions contained in Section 6 hereof, waive
compliance with any of the agreements of AEL or with any conditions to its
own obligations or (b) AEL may extend the time for the performance of any
of the obligations or other act of Sub or, subject to the provisions
contained in Section 6 hereof, waive compliance with any conditions to its
own obligations. Any agreement for any such extension or waiver shall be
valid only if set forth in any instrument in writing signed on behalf of
the party granting the extension or waiver by a duly authorized officer.
8. Further Assurances. If at any time the Surviving Corporation,
its successors or assigns, shall consider or be advised that any further
assignments or assurances in law or any other acts are necessary or
desirable to (a) vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its rights, title or interest in, to or under any of
the rights, properties or assets of the Constituent Corporations acquired
or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger, or (b) otherwise carry out the purposes of
this Plan of Merger, each Constituent Corporation and its proper officers
and directors shall be deemed to have granted to the Surviving Corporation
an irrevocable power of attorney to execute and deliver all such proper
deeds, assignments and assurances in law and to do all acts necessary or
proper to vest, perfect or confirm title to and possession of such rights,
properties or assets in the Surviving Corporation and otherwise to carry
out the purposes of this Plan; and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of each Constituent
Corporation or otherwise to take any and all such action.
EXHIBIT B
745-5255
_____________, 199___
AEL Industries, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Re: Agreement and Plan of Reorganization dated as of October 2, 1995,
by and among Tracor, Inc., Tracor AEL, Inc., and AEL Industries,
Inc. (the "Agreement")
Ladies and Gentlemen:
We have acted as special counsel to Tracor, Inc. ("Tracor") and Tracor
AEL, Inc. ("Newco") in connection with the Agreement and the transactions
contemplated thereby. This Opinion Letter is provided to you pursuant to
Section 4.2 of the Agreement. Except as otherwise indicated herein,
capitalized terms used in this Opinion Letter are defined as set forth in
the Agreement or the Accord (see below).
This Opinion Letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section
of Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this
Opinion Letter should be read in conjunction therewith. The law covered by
the opinions expressed herein is limited to the Federal Law of the United
States, the Law of the State of Texas and the Delaware General Corporation
Law ("DGCL"), and applicable provisions of the Pennsylvania Business
Corporation Law of 1988, as amended (the "BCL"). For purposes of this
Opinion, we have assumed the law of the Commonwealth of Pennsylvania (other
than the BCL) is the same as the law of Texas.
In connection with the opinions set forth below, we have examined
executed counterparts of the Agreement as well as executed counterparts of
all documents and instruments executed and delivered by Tracor and Newco
with respect to the transactions contemplated by the Agreement. We have
also examined originals or copies, certified or otherwise identified to our
satisfaction, of such other documents, corporate records and instruments as
we have deemed necessary for the purposes of this Opinion Letter. As to
questions of fact material to such opinions, we have, where relevant facts
were not independently verified or established, relied upon certifications
by officers of Tracor and Newco.
The provisions of Sections 1 through 9 and 19 through 21, inclusive,
of the Accord shall be applicable to those opinions expressed below that
are not specifically addressed by the Accord.
Based upon and subject to the foregoing and the other qualifications
and limitations stated in this Opinion Letter, we are of the opinion that:
[1] Each of Tracor and Newco is a corporation, validly existing and
in good standing under the laws of the State of Delaware.
[2] Each of Tracor and Newco has the corporate power and authority to
execute, deliver, and perform its obligations under the
Agreement. The Agreement has been duly authorized by all
necessary corporate action on the part of Tracor and Newco and
has been duly executed and delivered by Tracor and Newco.
[3] The Agreement has been duly executed and delivered by each of
Tracor and Newco. The Agreement is a valid and binding
obligation of Tracor and Newco, enforceable in accordance with
its terms against Tracor and Newco.
[4] Execution and delivery by each of Tracor and Newco of, and
performance of its agreements in, the Agreement do not (i)
violate the Constituent Documents of Tracor or Newco, breach, or
result in a default under, any existing obligation of Tracor
under the Other Agreements, or (ii) breach or otherwise violate
any existing obligation of Tracor or Newco under the Court
Orders, or (iii) violate applicable provisions of statutory law
or regulation.
[5] Except for the filing of (i) the Articles of Merger with the
Secretary of State of the Commonwealth of Pennsylvania, and (ii)
a Certificate of Merger with the Secretary of State of the State
of Delaware, no consent, approval, waiver, license or
authorization or other action by or filing with any governmental
authority is required under Texas or federal statutes or
regulations or the DGCL or BCL in connection with the execution
and delivery by Tracor and Newco of the Agreement, except for
those already obtained or completed.
[6] Upon the filing of both (i) the Articles of Merger with the
Secretary of State of the Commonwealth of Pennsylvania and (ii) a
Certificate of Merger with the Secretary of State of the State of
Delaware, each in accordance with the Plan of Merger, the Merger
shall become effective; and on the Effective Time each issued and
outstanding share of AEL Common Stock, except for any Dissenting
Shares, shall be converted into the right to receive the Merger
Price and each of the Cashed Options shall be cancelled in
exchange for the right to receive the Spread.
This Opinion is solely for your benefit and may not be relied on by
any other person or used for any other purpose without our prior written
consent.
Very truly yours,
XXXXXXXX XXXXXXXX & XXXXXX P.C.
By:
EXHIBIT C
______________, 199_
Tracor, Inc.
[Buyer Sub]
0000 Xxxxxx Xxxx
Xxxxxx, XX 00000-0000
Gentlemen:
We have acted as counsel to AEL Industries, Inc., a Pennsylvania
corporation ("AEL"), in connection with the Merger of [Buyer Sub], a
Delaware corporation ("Buyer Sub"), with and into AEL pursuant to an
Agreement and Plan of Reorganization dated as of October __, 1995, by and
among AEL, Buyer Sub and Tracor, Inc., a Delaware corporation ("Tracor")
and the parent corporation of Buyer Sub (the "Plan of Reorganization").
All capitalized terms used but not defined herein shall have the meanings
ascribed to them respectively in the Plan of Reorganization.
In our capacity as counsel to AEL, in order to render the opinions set
forth herein, we have examined the Plan of Reorganization (including the
Plan of Merger attached thereto as Exhibit A), the Articles of Merger, the
Articles of Incorporation and Bylaws of AEL, resolutions of the
shareholders of AEL and of the Long Range Planning Committee of the Board
of Directors of AEL (the "LRPC") and such other documents as we have deemed
necessary to render this opinion. As to questions of fact material to our
opinion, we have relied on certificates and representations of public
officials and officers of AEL, and on representations of AEL, including
those contained in the Plan of Reorganization, without having undertaken to
verify the same by independent investigation. As to certain legal matters,
with your permission, we have relied upon the opinion dated the date hereof
of Xxxx X. Xxx, General Counsel of AEL.
In rendering this opinion, we have assumed that:
1. Copies of documents, certificates and records examined by us
represent true and correct copies of actual originals thereof and are true,
correct and complete with respect to the factual matters contained therein.
2. The Plan of Reorganization and each other document relating
thereto to which either Tracor or Buyer Sub or both (the "Other Parties")
are parties has been duly executed by such Other Parties and such Other
Parties are obligated to fulfill their respective commitments thereunder.
Opinions expressed herein "to our knowledge" refer to our actual
knowledge obtained in the course of our document examination and
representation of AEL in connection with the Merger.
Based upon and subject to the foregoing and other qualifications and
limitations set forth herein, it is our opinion that:
1. AEL and each of the AEL Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own or lease and operate its properties and to carry on its
business as now conducted. AEL and the AEL Subsidiaries taken as a whole
are collectively called the "AEL Group". AEL and each AEL Subsidiary is
duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary,
except for such jurisdictions where the failure so to qualify would not
have a Material Adverse Effect. For the purposes of this Opinion, a
Material Adverse Effect means a material adverse effect on the business,
operations or financial condition of the AEL Group.
2. The authorized capital stock of AEL and the number of shares
outstanding as of the date hereof consists of (i) 20,000,000 shares of
Class A Stock of which 3,629,707 shares are issued and outstanding,
including 180,947 Contingent Shares (as defined in the Allocation
Agreement); (ii) 440,000 shares of Class B Stock of which 407,927 shares
are issued and outstanding; and (iii) 200,000 shares of Preferred Stock,
par xxxxx x0, xxxx of which are issued and outstanding. Except as set
forth on Schedule 2.1(b), (A) each AEL Subsidiary is wholly-owned of record
and beneficially by AEL or another wholly-owned Subsidiary of AEL, and (B)
the ownership interests of AEL in each such Subsidiary are owned of record
and beneficially by AEL (or another Subsidiary of AEL), free and clear of
any security interest, pledge, hypothecation, lien or other encumbrance of
any kind. Except as set forth on Schedule 2.1(b) or in any of the Other
Agreements, to our knowledge, there are no outstanding options, warrants,
rights or other securities exercisable or exchangeable for any capital
stock or other securities of AEL or any AEL Subsidiary, any other
commitments or agreements providing for the issuance of additional shares,
the sale of treasury shares, or for the repurchase or redemption of shares
of AEL or any AEL Subsidiary capital stock, or any agreements of any kind
which may obligate AEL or any AEL Subsidiary to issue, purchase, register
for sale, redeem or otherwise acquire any of its securities or other equity
interests.
3. AEL has all requisite corporate power and authority to execute
and deliver the Plan of Reorganization and to perform its obligations
thereunder. The Plan of Reorganization has been approved by the LRPC and
the AEL shareholders. The execution and delivery of the Plan of
Reorganization by AEL and the consummation by AEL of the transactions
contemplated thereby have been duly authorized by the LRPC and the AEL
shareholders and no other corporate proceedings on the part of AEL are
necessary to authorize the Merger. The Plan of Reorganization has been
duly executed and delivered by AEL and constitutes a valid and binding
obligation of AEL enforceable against AEL in accordance with its terms,
except as enforcement may be limited by bankruptcy, receivership,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws or equitable principles of general application relating to or
affecting the rights or remedies of creditors and except that the
availability of equitable remedies, including specific performance or
injunctive relief, is subject to the discretion of the court before which
any proceeding therefor is brought.
4. The execution and delivery of the Plan of Reorganization by AEL
and the consummation by AEL of the Merger do not (i) conflict with any
provision of the Articles of Incorporation or Bylaws, as amended, of AEL or
(ii) to our knowledge, except for the Credit Facilities, result in any
violation of or default under, or permit the acceleration of any obligation
under, any mortgage, indenture, lease, agreement or other instrument,
permit concession, grant, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to AEL, which
violation, default or acceleration would have a Material Adverse Effect.
5. Except for the filing of (i) the Articles of Merger with the
Secretary of State of the Commonwealth of Pennsylvania and (ii) a
Certificate of Merger with the Secretary of State of the State of Delaware,
to our knowledge no consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, state, local or
foreign governmental or regulatory authority is required to be obtained or
made by AEL in connection with the consummation by AEL of the Merger.
6. Upon the filing of both (i) the Articles of Merger with the
Secretary of State of the Commonwealth of Pennsylvania and (ii) a
Certificate of Merger with the Secretary of State of the State of Delaware,
each in accordance with the Plan of Merger, the Merger shall become
effective; and on the Effective Time each issued and outstanding share of
AEL Common Stock, except for any Dissenting Shares, shall be converted into
the right to receive the Merger Price and each of the Cashed Options shall
be cancelled in exchange for the right to receive the Spread.
7. Nothing has come to our attention which would lead us to believe
that, at the time that the definitive Proxy Statement was filed with the
SEC, on the date that the definitive Proxy Statement was mailed to AEL
shareholders, on the date of the Shareholders' Meeting and at the Effective
Time, the definitive Proxy Statement, as amended or supplemented, if
amended or supplemented (except for the financial statements and any other
financial or statistical data and any fairness opinion included therein and
any information contained therein furnished in writing by Tracor or Buyer
Sub to AEL expressly for use in the Definitive Proxy Statement, or any
amendment or supplement thereto, as to which we express no opinion),
contained any untrue statement of material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
We do not purport to be experts on the laws of states other than (i)
the Commonwealth of Pennsylvania and (ii) the State of Delaware but only
with respect to the Delaware General Corporation Law. Accordingly, we do
not herein express an opinion except as to the foregoing.
The opinions given herein are as of the date hereof. We assume no
obligation to update or supplement this opinion to reflect any facts or
circumstances which may hereafter come to our attention or any change in
laws which may hereafter occur.
This opinion has been issued solely for the benefit of Tracor and
Buyer Sub, which shall be entitled to rely thereon, and no other person or
entity shall be so entitled without the express written consent of a
partner of the undersigned.
Very truly yours,
DUANE, MORRIS & HECKSCHER
EXHIBIT D
CONFIDENTIALITY AGREEMENT
May 12, 1995
AEL Industries, Inc.
C/X Xxxxxx, Read & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx or Xxxxxxx X. Xxxxx
In connection with our consideration of a possible transaction with
AEL Industries, Inc. (Company), we have requested information concerning
the Company. As a condition to our being furnished such information, we
agree to treat any information concerning the Company (whether prepared by
the Company, its advisors, or otherwise) which is furnished to us by or on
behalf of the Company (herein collectively referred to as the "Evaluation
Material") in accordance with the provisions of this letter and to take or
refrain from taking certain other actions herein set forth. The term
"Evaluation Material" does not include information which (i) is already in
our possession, provided that such information is not subject to another
confidentiality agreement with or other obligation of secrecy to the
Company or another party, (ii) becomes generally available to the public
other than as a result of a disclosure by us or our directors, officers or
employees (Representatives) or advisors (Advisors), or (iii) becomes
available to us on a nonconfidential basis from a source other than the
Company or its advisors or representatives, provided that at the time we
acquired such Evaluation Material we had no knowledge that such source was
bound by a confidentiality agreement with or other obligation of secrecy to
the Company or another party.
We hereby agree that the Evaluation Material will be used solely for
the purposes of evaluating a possible transaction between the Company and
us, and that such information will be kept confidential by us, our
Representatives and Advisors and not disclosed to anyone except as
contemplated herein and except as required by law, provided, however, that
we will immediately notify the Company and Xxxxxx, Read & Co. Inc.
(Investment Banker) at any time we are served with any legal process
seeking, or we become obligated to disclose such information by law or by
court order, so that at its expense the Company may seek an appropriate
protective order. Furthermore, with regard to the Evaluation Material:
(i) any of such information may be disclosed to our Representatives and
Advisors who need to know such information for the purpose of evaluating
any such possible transaction between the Company and us (it being
understood that such Representatives and Advisors shall be informed by us
of the confidential nature of such information and shall be directed by us
to treat such information confidentially and we shall be responsible for
any unauthorized disclosure or use of the Evaluation Material by them in a
manner not contemplated by this Agreement) and (ii) any disclosure of such
information may be made to which the Company consents in writing in
advance. In addition, without prior written consent of the Company, we
will not, and will direct such Representatives and Advisors not to,
disclose to any other person either the fact that discussions or
negotiations are taking place concerning a possible transaction between the
Company and us or any of the terms, conditions or facts with respect to any
such possible transaction, including the status thereof.
We understand that, although the Company has endeavored to include in
the Evaluation Material information known to it which it believes to be
relevant for the purposes of our investigation, neither the Company nor any
of its representatives or advisors have made or make any representation or
warranty as to the accuracy or completeness of the Evaluation Material. We
agree that neither the Company nor its representatives or advisors shall
have any liability to us, our Representatives or Advisors resulting from
the use of the Evaluation Material.
We agree to advise our Representatives and Advisors who receive the
Evaluation Materials of the restrictions imposed by United States federal
and applicable state securities laws on the purchase or sale of securities
by any person who has received material non-public information about the
issuer of such securities and on the communication of such information to
any other person when it is reasonably foreseeable that such other person
is likely to purchase or sell such securities in reliance upon such
information.
Without limiting the other provisions of this Agreement, we agree that
for a period of eighteen (18) months from the Evaluation Termination Date
(as defined below) neither we nor our Representatives or Advisors will,
directly or indirectly, in any manner: (a) acquire, agree to acquire, or
make any proposal to acquire (by purchase or otherwise), any securities (or
direct or indirect rights to acquire any securities), indebtedness, assets,
property or contract rights, of, against or respecting the Company; (b)
make, or in any way participate in, any "solicitation" of "proxies" (as
such terms are used in the rules of the Securities Exchange Commission) to
vote, or seek to advise or influence any person or entity with respect to
the voting of, any securities of the Company; (c) make any public
announcement with respect to, or submit a proposal for, or offer of (with
or without conditions) any extraordinary transaction with the Company or
any of its securities, assets, indebtedness or contract rights; (d) form,
join in or participate in any way in a "group" (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended) in connection
with any of the foregoing; (e) assist, advise or encourage any other
persons in connection with any of the foregoing actions; or (f) request the
Company to amend or waive any provision of this paragraph.
We agree that unless and until a definitive agreement between the
Company and us with respect to a possible transaction has been executed and
delivered, neither the Company nor we will be under any legal obligation of
any kind whatsoever with respect to such a transaction by virtue of this
letter or any written or oral expression with respect to such a transaction
by the Company or any of its representatives or advisors except, in the
case of this letter, for the matters specifically agreed to herein. The
undertaking set forth in this paragraph may be modified or waived only by a
separate written agreement executed by the Company and us expressly
modifying or waiving such undertaking.
Unless we execute a definitive agreement regarding a transaction with
the Company, we agree not to (a) initiate or maintain contact (except for
those contacts made in the ordinary course of business) with any officer,
director or employee of the Company regarding its business, operations,
prospects or finances, except with the express prior written permission of
the Company subsequent to the date of this Agreement, or (b) solicit or
hire any officer or employee of the Company, or any senior technical
employee of the Company who became known to us in the course of our
evaluation of the Company, for two years following the Evaluation
Termination Date; provided it is understood that we can, if we so select,
and after the expiration of two years following the Evaluation Termination
Date, hire any such officer or employee who, on his or her own volition,
initiates contact with us regarding possible employment. It is understood
that the Investment Banker will arrange for appropriate contacts for due
diligence purposes. Unless otherwise agreed in writing beforehand by the
Company, all (i) communications regarding this possible transaction, (ii)
requests for additional information, (iii) requests for facility tours or
management meetings, and (iv) discussions or questions regarding
procedures, will be submitted or directed to the Investment Banker.
This Agreement shall be governed by the internal laws and not the law
of conflicts of the Commonwealth of Pennsylvania. For any action related
to the judicial enforcement or interpretation of this Agreement, we
expressly submit to the nonexclusive jurisdiction of the state courts
located in the Commonwealth of Pennsylvania or the federal court located in
Philadelphia, Pennsylvania, at the election of the Company, which election
may be made from time to time. We further irrevocably consent to the
service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to us at our address for notice, such
service to be effective six (6) days after such mailing. Nothing herein
shall affect the right to serve process in any other manner permitted by
law or the right of the Company to bring legal action or proceedings in any
other jurisdiction.
The Company shall be entitled to equitable relief including an
injunction and to such other remedies as may be available under applicable
law if we, our Representatives or Advisors breach this Agreement.
Upon the earlier to occur of (i) six months from the date hereof
unless extended in writing by the Company, or (ii) our determination that
we are no longer actively considering a potential transaction involving the
Company ("Evaluation Termination Date"), we will return and cause our
Representatives and Advisors to return all Evaluation Materials together
with all copies thereof.
Sincerely,
[Name of Buyer]
By: /s/ Xxxxxxx X. Xxxxxxx
Title: Vice President
ACKNOWLEDGED AND AGREED:
AEL Industries, Inc.
By: /s/ Xxxxxx Xxxx
Title: Executive Vice President
EXHIBIT E
October 4, 1995
Tracor, Inc.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
Re: Agreement and Plan of Reorganization By and Among AEL Industries,
Inc., Tracor, Inc. and Tracor AEL, Inc. dated October 2, 1995
("Agreement")
Gentlemen:
Intending to be legally bound hereby, pursuant to Section 4.1(j) of the
Agreement, I agree with Buyer that I shall vote all shares of AEL Common
Stock with respect to which I have voting power in favor of a Qualifying
Business Combination (as defined in that certain agreement, dated February
28, 1995, between AEL Industries, Inc. and Xx. Xxxx Xxxxxxx and Xxxxxx X.
Xxxxxxx, and hereinafter called the "Allocation Agreement") contained
within a Proposal recommended by the Long Range Planning Committee and for
which the Voting Trustees (under a Voting Trust Agreement dated February
28, 1995) have voted the shares of AEL Common Stock held by them.
Unless otherwise noted, all terms capitalized herein shall have the
same meaning as set forth in the Agreement or the Allocation Agreement.
________________________
Xxxxx Xxxxx
Accepted and Agreed:
TRACOR, INC.
By:___________________________________
Name:
Title:
