Exhibit 4
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
dated as of
February 15, 1999
among
ASA HOLDINGS, INC.,
DELTA AIR LINES, INC.
and
DELTA SUB, INC.
TABLE OF CONTENTS
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ARTICLE 1
The Offer
Section 1.01. The Offer.................................................... 1
Section 1.02. Company Action............................................... 2
Section 1.03. Directors.................................................... 3
ARTICLE 2
The Merger
Section 2.01. The Merger................................................... 4
Section 2.02. Conversion of Shares......................................... 5
Section 2.03. Surrender and Payment........................................ 5
Section 2.04. Dissenting Shares............................................ 6
Section 2.05. Stock Options................................................ 7
ARTICLE 3
The Surviving Company
Section 3.01. Articles of Incorporation.................................... 8
Section 3.02. Bylaws....................................................... 8
Section 3.03. Directors and Officers....................................... 8
ARTICLE 4
Representations and Warranties of the Company
Section 4.01. Corporate Existence and Power................................ 8
Section 4.02. Corporate Authorization...................................... 9
Section 4.03. Governmental Authorization................................... 9
Section 4.04. Non-Contravention............................................ 10
Section 4.05. Capitalization............................................... 10
Section 4.06. Subsidiaries................................................. 11
Section 4.07. SEC Filings.................................................. 12
Section 4.08. Permits; Compliance.......................................... 13
Section 4.09. Financial Statements......................................... 13
Section 4.10. Disclosure Documents......................................... 13
Section 4.11. Absence of Certain Changes................................... 14
Section 4.12. No Undisclosed Material Liabilities.......................... 16
Section 4.13. Litigation................................................... 16
Section 4.14. Taxes........................................................ 17
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Section 4.15. ERISA........................................................ 17
Section 4.16. Compliance with Laws......................................... 18
Section 4.17. Finders' Fees................................................ 19
Section 4.18. Environmental Matters........................................ 19
Section 4.19. Assets....................................................... 20
Section 4.20. Labor Matters................................................ 21
Section 4.21. Material Contracts........................................... 21
Section 4.22. Insurance.................................................... 22
Section 4.23. Year 2000 Compliance......................................... 23
Section 4.24. Anti-takeover Statutes....................................... 23
Section 4.25. No Other Representations or Warranties....................... 23
ARTICLE 5
Representations and Warranties of Buyer
Section 5.01. Corporate Existence and Power................................ 23
Section 5.02. Corporate Authorization...................................... 23
Section 5.03. Governmental Authorization................................... 24
Section 5.04. Non-contravention............................................ 24
Section 5.05. Disclosure Documents......................................... 24
Section 5.06. Finders' Fees................................................ 25
ARTICLE 6
Covenants of the Company
Section 6.01. Conduct of the Company....................................... 25
Section 6.02. Shareholder Meeting; Proxy Material.......................... 29
Section 6.03. Access to Information........................................ 29
Section 6.04. Other Offers................................................. 30
Section 6.05. Notices of Certain Events.................................... 33
ARTICLE 7
Covenants of Buyer
Section 7.01. Obligations of Merger Subsidiary............................. 33
Section 7.02. Voting of Shares............................................. 33
Section 7.03. Director and Officer Liability............................... 33
Section 7.04. Employee Benefits............................................ 34
Section 7.05. Notices of Certain Events.................................... 34
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ARTICLE 8
Covenants of Buyer and the Company
Section 8.01. Reasonable Best Efforts...................................... 35
Section 8.02. Certain Filings.............................................. 35
Section 8.03. Public Announcements......................................... 35
Section 8.04. Further Assurances........................................... 35
Section 8.05. Merger Without Meeting of Shareholders....................... 35
ARTICLE 9
Conditions to the Merger
Section 9.01. Conditions to the Obligations of Each Party.................. 36
ARTICLE 10
Termination
Section 10.01. Termination................................................. 36
Section 10.02. Effect of Termination....................................... 38
ARTICLE 11
Miscellaneous
Section 11.01. Notices..................................................... 38
Section 11.02. Survival of Representations and Warranties.................. 39
Section 11.03. Amendments; No Waivers...................................... 39
Section 11.04. Fees and Expenses........................................... 40
Section 11.05. Successors and Assigns...................................... 40
Section 11.06. Governing Law............................................... 40
Section 11.07. Jurisdiction................................................ 41
Section 11.08. Counterparts; Effectiveness................................. 41
Section 11.09. Entire Agreement; Third Party Beneficiaries................. 41
Section 11.10. Definitions................................................. 41
Annex I - Conditions to the Offer
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 15, 1999 among ASA
Holdings, Inc., a Georgia corporation (the "Company"), Delta Air Lines Inc., a
Delaware corporation ("Buyer"), and Delta Sub, Inc., a Georgia corporation and
an indirect, wholly-owned subsidiary of Buyer ("Merger Subsidiary").
WHEREAS, of the shares of common stock, $0.10 par value per share, of the
Company ("Shares") outstanding as of the date hereof, Buyer and its affiliates
own an aggregate of 7,995,000 Shares;
WHEREAS, Buyer and Merger Subsidiary wish to consummate the transactions
contemplated by this Agreement pursuant to which, subject to the terms and
conditions set forth in this Agreement, the Merger Subsidiary will merge with
and into the Company and the Company will become an indirect, wholly-owned
subsidiary of Buyer;
WHEREAS, the Board of Directors of the Company (the "Company's Board") has
unanimously approved this Agreement and the transactions contemplated hereby and
has unanimously determined that each of the Offer and the Merger (each as
defined herein) are fair to, and in the best interests of, the holders of Shares
and recommended the acceptance of the Offer and approval and adoption of this
Agreement by the shareholders of the Company; and
WHEREAS, the Board of Directors of Buyer (on its own behalf and as the
beneficial owner of all of the capital stock of Merger Subsidiary) has
unanimously approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
The Offer
Section 1.01. The Offer. (a) Provided that nothing shall have occurred
that would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, Merger Subsidiary shall, as promptly as practicable after the
date hereof, but in no event later than five business days following the public
announcement of the terms of this Agreement, commence an offer (the "Offer") to
purchase all of the outstanding Shares of the Company at a price of $34.00 per
Share, net to the seller in cash.
The Offer shall be subject to the condition that there shall have been
tendered a number of Shares which, together with the Shares then owned by Buyer
and its affiliates,
represents at least a majority of the Shares outstanding on a fully diluted
basis (the "Minimum Condition") and to the other conditions set forth in Annex I
hereto. Merger Subsidiary expressly reserves the right to waive any of the other
conditions to the Offer (other than the Minimum Condition) and to make any
change in the terms or conditions of the Offer; provided that no change may be
made which changes the form of consideration to be paid or decreases the price
per Share or the number of Shares sought in the Offer, which imposes conditions
to the Offer in addition to those set forth in Annex I, amends the terms and
conditions of the Offer in a manner adverse to the Company or, except as
provided in the next two sentences, extends the Offer. Notwithstanding the
foregoing, Merger Subsidiary may, without the consent of the Company (i) extend
the Offer beyond the scheduled expiration date, which shall be 20 business days
following the date of commencement of the Offer, if, at the scheduled expiration
of the Offer, any of the conditions to Merger Subsidiary's obligation to accept
for payment and to pay for the Shares shall not be satisfied or waived, or (ii)
extend the Offer for any period required by any rule, regulation or
interpretation of the Securities and Exchange Commission (the "SEC") or the
staff thereof applicable to the Offer. So long as this Agreement is in effect
and the condition of the Offer set forth in clause (y) of the first paragraph of
Annex I has not been satisfied or waived, Merger Subsidiary shall extend the
Offer from time to time for a period or successive periods not to exceed 10
business days each after the previously scheduled expiration date of the Offer.
(b) As soon as practicable on the date of commencement of the Offer,
Merger Subsidiary shall file with the Securities and Exchange Commission (the
"SEC") a Rule 13E-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-
3") and a Tender Offer Statement on schedule 14D-1 (the "Schedule 14D-1") with
respect to the Offer. The Schedule 13E-3, the Schedule 14D-1 and the related
offer to purchase and letter of transmittal, together with any supplements or
amendments thereto, are collectively referred to herein as the "Offer
Documents". Buyer and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false or misleading in any material respect. Merger
Subsidiary agrees to take all steps necessary to cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. The Company and its counsel shall be given an opportunity to review and
comment on the Schedule 14D-1 and Schedule 13E-3 prior to their being filed with
the SEC.
Section 1.02. Company Action. (a) The Company hereby consents to the
Offer and represents that the Company's Board, at a meeting duly called and
held, has
(i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (as defined in
Section 2.01), are fair to and in the best interest of the Company's
shareholders,
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(ii) unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, and
(iii) unanimously resolved to recommend acceptance of the Offer and
approval and adoption of this Agreement and the Merger by its shareholders.
The Company further represents that Xxxxxx Xxxxxxx & Co. Incorporated has
delivered to the Company's Board its written opinion that the consideration to
be paid in the Offer and the Merger is fair to the holders of Shares from a
financial point of view (other than Buyer and its affiliates). The Company has
been advised that all of its directors intend to tender their Shares (if any)
pursuant to the Offer and to vote in favor of the Merger.
The Company will promptly furnish Buyer with a list of its shareholders,
mailing labels and any available listing or computer file containing the names
and addresses of all record holders of Shares and lists of securities positions
of Shares held in stock depositories, in each case true and correct as of the
most recent practicable date, and will provide to Buyer such additional
information (including, without limitation, updated lists of shareholders,
mailing labels and lists of securities positions) and such other assistance as
Buyer may reasonably request in connection with the Offer. Buyer will return
such materials promptly if the Offer is not consummated.
(b) As soon as practicable on the day that the Offer is commenced, the
Company will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") and the Schedule 13E-3, which shall
reflect the recommendations of the Company's Board referred to above. The
Company and Buyer each agree promptly to correct any information provided by it
for use in the Schedule 14D-9 and the Schedule 13E-3 if and to the extent that
it shall have become false or misleading in any material respect. The Company
agrees to take all steps necessary to cause the Schedule 14D-9 or the Schedule
13E-3, as applicable, as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Buyer and its counsel shall be given an
opportunity to review and comment on the Schedule 14D-9 and Schedule 13E-3 prior
to its being filed with the SEC.
Section 1.03. Directors. (a) Effective upon the acceptance for payment
pursuant to the Offer of any Shares, Buyer shall be entitled to designate the
number of directors, rounded up to the next whole number, on the Company's Board
that equals the product of
(i) the total number of directors on the Company's Board (giving effect
to the election of any additional directors pursuant to this Section)
multiplied by
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(ii) the percentage that the number of Shares beneficially owned by
Buyer (including Shares accepted for payment) bears to the total number of
Shares outstanding;
and the Company shall take all action necessary to cause Buyer's designees
to be elected or appointed to the Company's Board, including, without
limitation, increasing the number of directors and seeking and accepting
resignations of incumbent directors. At such times, the Company will use its
best efforts to cause individuals designated by Buyer to constitute the same
percentage as such individuals represent on the Company's Board of (A) each
committee of the Board and (B) each board of directors (and committee thereof)
of each Subsidiary. Notwithstanding the foregoing, until the Effective Time (as
defined below), the Company shall use its reasonable best efforts to cause at
least two persons who are not employees of the Company or affiliated with Buyer
to be members of the Company's Board (the "Independent Directors") (and such
efforts shall include but not be limited to offering directors on the Company's
Board on the date hereof the opportunity to remain on the Company's Board). For
the purposes of this Agreement, "affiliate" of a specified person means a person
who directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified person.
(b) The Company's obligations to appoint designees to the Company's Board
shall be subject to Section 14(f) of the Exchange Act (as defined in Section
4.03) and Rule 14f-1 promulgated thereunder. The Company shall promptly take all
actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 to fulfill its obligations under
this Section. Buyer will supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
ARTICLE 2
The Merger
Section 2.01. The Merger. (a) At the Effective Time (as defined below),
Merger Subsidiary shall be merged (the "Merger") with and into the Company
pursuant to all applicable requirements of the Business Corporation Code of the
State of Georgia ("Georgia Law"), whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall be the surviving entity (the
"Surviving Company").
(b) As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, the Company and Merger
Subsidiary will file articles of merger ("Articles of Merger") with the
Secretary of State of the State
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of Georgia and make all other filings or recordings required by Georgia Law in
connection with the Merger. The Merger shall become effective at such time as
the Articles of Merger are duly filed with the Secretary of State of the State
of Georgia (the "Effective Time").
(c) From and after the Effective Time, the Surviving Company shall possess
all the rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities and duties of the Company and Merger Subsidiary, all
as provided under Section 14-2-1106 of Georgia Law.
Section 2.02. Conversion of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned by Buyer or
any subsidiary of Buyer immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto;
(b) each Share outstanding immediately prior to the Effective Time shall,
except as otherwise provided in paragraph (a) hereof or as provided in Section
204 with respect to Shares as to which appraisal rights have been exercised, be
converted into the right to receive $34.00 in cash, without interest (the
"Merger Consideration"); and
(c) each share of common stock of the Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock in the Surviving Company with the same rights, powers and
privileges as the shares so converted and shall constitute the only outstanding
equity of the Surviving Company.
Section 2.03. Surrender and Payment. (a) Prior to the Effective Time,
Buyer shall appoint an agent (the "Exchange Agent") for the purpose of
exchanging certificates representing Shares for the Merger Consideration. Buyer
will make available to the Exchange Agent, in such amounts as may be needed from
time to time, the Merger Consideration to be paid in respect of the Shares.
Promptly after the Effective Time, Buyer will send, or will cause the Exchange
Agent to send, to each holder of Shares at the Effective Time a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted into a right to receive
the Merger Consideration, upon surrender to the Exchange Agent of a certificate
or certificates representing such Shares, together with a properly completed
letter of transmittal covering such Shares, will be entitled to receive the
Merger Consideration payable in respect of such Shares. From and after the
Effective Time, all Shares which have been so converted shall no longer be
outstanding and shall automatically be
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canceled and retired, and each such certificate shall, after the Effective Time,
represent for all purposes, only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the registered holder of the Shares represented by the certificate or
certificates surrendered in exchange therefor, it shall be a condition to such
payment that the certificate or certificates so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Exchange Agent any transfer or other
taxes required as a result of such payment to a Person other than the registered
holder of such Shares or establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
For purposes of this Agreement, "Person" means an individual, a
corporation, a limited liability company, a partnership, an association, a trust
or any other entity or organization, including a government or political
subdivision or any agency or instrumentality thereof.
(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Company, they shall be canceled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article 2.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.03(a) that remains unclaimed by the holders of
Shares six months after the Effective Time shall be returned to Buyer, upon
demand, and any such holder who has not exchanged Shares for the Merger
Consideration in accordance with this Section 2.03 prior to that time shall
thereafter look only to Buyer for payment of the Merger Consideration in respect
of Shares. Notwithstanding the foregoing, Buyer shall not be liable to any
holder of Shares for any amount paid to a public official pursuant to applicable
abandoned property laws. Any amounts remaining unclaimed by holders of Shares
two years after the Effective Time (or such earlier date immediately prior to
such time as such amounts would otherwise escheat to or become property of any
governmental entity) shall, to the extent permitted by applicable law, become
the property of Buyer free and clear of any claims or interest of any Person
previously entitled thereto.
(f) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.03(a) to pay for Shares for which appraisal rights
have been perfected shall be returned to Buyer, upon demand.
Section 2.04. Dissenting Shares. (a) Notwithstanding Section 2.02,
Shares outstanding immediately prior to the Effective Time and that are held by
any shareholder who has delivered to the Company, prior to the Company
Shareholders Meeting (as defined below), a written notice in accordance with
Article 13 of the Georgia Law of such shareholder's intent to demand payment for
such shareholder's Shares if the Merger is
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effected and who shall not have voted such Shares in favor of the approval and
adoption of this Agreement (collectively, the "Dissenting Shares") shall not be
converted into the right to receive the Merger Consideration. Holders of such
Dissenting Shares shall be entitled to payment of the fair value of such
Dissenting Shares in accordance with the provisions of Article 13 of the Georgia
Law; provided, however, that if such shareholder waives such shareholder's right
to demand payment under Article 13 of the Georgia Law or a court of competent
jurisdiction determines that such shareholder is not entitled to the relief
provided by said Article 13, then the right of such holder of Dissenting Shares
to be paid the fair value of such shareholder's Dissenting Shares shall cease
and such Dissenting Shares shall thereupon be deemed to have been converted
into, as of the Effective Time, the right to receive the Merger Consideration,
without any interest thereon.
(b) The Company shall give Buyer and Merger Subsidiary (i) prompt notice
of any notices or other instruments received by the Company pursuant to Article
13 of the Georgia Law and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for payment for Dissenting Shares. The
Company shall not, except with the prior written consent of Buyer and Merger
Subsidiary, voluntarily offer to make or make any payment with respect to any
demands for payment for Dissenting Shares or settle or offer to settle any such
demands.
(c) Dissenting Shares, if any, shall be canceled after payments of fair
value in respect thereto have been made to dissenting shareholders of the
Company pursuant to the Georgia Law.
Section 2.05. Stock Options. (a) At the Effective Time, each option to
purchase Shares under each of (x) the ASA Holdings, Inc. 1997 Nonqualified Stock
Option Plan and (y) the ASA Holdings, Inc. 1998 Nonqualified Stock Option Plan
for Non-Employee Directors (the "Company Stock Option Plans") that is vested and
exercisable (including any option that becomes vested and exercisable by its
terms as a result of the transactions contemplated hereby) shall be canceled,
and Buyer shall pay each such holder in cash at the Effective Time for each such
option an amount determined by multiplying (A) the excess, if any, of the Merger
Consideration over the applicable exercise price per Share of such option by (B)
the number of Shares to which such option relates.
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the Company Stock Option
Plans) that are necessary to give effect to the transactions contemplated by
Sections 2.05(a).
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ARTICLE 3
The Surviving Company
Section 3.01. Articles of Incorporation. (a) The Articles of
Incorporation of the Surviving Company shall be amended pursuant to the
Certificate of Merger to read in its entirety as set forth in the Certificate of
Incorporation of Merger Subsidiary, except that the name of the Surviving
Company shall be "ASA Holdings, Inc."
(b) The Surviving Company shall initially be authorized to issue up to
1,000 shares of its common stock, par value $.01 per share.
Section 3.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Company until amended in
accordance with applicable law.
Section 3.03. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law, (a) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Company and (b) the officers of the
Company at the Effective Time shall be the officers of the Surviving Company.
ARTICLE 4
Representations and Warranties of the Company
The Company represents and warrants to Buyer that, except as set forth in a
correspondingly numbered schedule in the Disclosure Schedule to this Agreement
delivered to Buyer on the date hereof:
Section 4.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
Georgia and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted other than those that would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect. The Company
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary,
except for those jurisdictions where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
has heretofore delivered or made available to Buyer true and complete copies of
the Company's Articles of Incorporation and bylaws as currently in effect.
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For purposes of this Agreement, "Material Adverse Effect" means a material
adverse effect on the financial condition, business, operations, assets,
liabilities, results of operations or prospects of the Company and the
Subsidiaries taken as a whole, except that an effect resulting primarily from
either of the following shall not be considered when determining if a Material
Adverse Effect has occurred:
(x) any change in (i) economic, business, or financial market conditions
generally, (ii) the air transportation industry or market specifically,
(iii) the economic, business or financial market conditions with respect to
the Southeastern United States or (iv) any change affecting the commuter or
regional air transportation industry or market generally; provided that
nothing in clauses (i) through (iv) shall include any change which
disproportionately affects the Company, including any change that is
disproportionate as a result of the type of aircraft operated by the
Company; or
(y) any action or inaction on the part of Buyer or any affiliate thereof,
including in connection with the currently existing commercial arrangements
between such persons and the Company.
Section 4.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except as set forth in the following sentence, have been duly
authorized by all necessary corporate action. The affirmative vote of the
holders of a majority of the outstanding Shares, if necessary, is the only vote
of the holders of the Company's capital stock necessary to approve the
transactions contemplated by this Agreement. This Agreement constitutes a valid
and binding agreement of the Company.
Section 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the Merger
by the Company require no action by or in respect of, or filing with, or
procurement of any material permit, authorization, consent or approval of, any
governmental or regulatory body, agency, official or authority other than
(i) the filing of a Certificate of Merger in accordance with
Georgia Law;
(ii) compliance with any applicable requirements of the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx"); and
(iii) compliance with any applicable requirements of the
Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder (the "Exchange Act").
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Section 4.04. Non-Contravention. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not
(a) contravene or conflict with the Articles of Incorporation or bylaws
of the Company or any Subsidiary;
(b) assuming compliance with the matters referred to in Section 4.03,
contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company or any Subsidiary or any of their respective
properties or assets;
(c) result in a violation or a breach of, or (with or without due notice
or a lapse of time or both) constitute a default or require any consent
under or give rise to a right of termination, cancellation or acceleration
of any right or obligation of the Company or any Subsidiary or any of their
respective properties or assets or to a loss of any benefit to which the
Company or any Subsidiary is entitled under any provision of any note,
bond, mortgage, indenture, lease, agreement, contract, obligation or other
instrument to which the Company or any Subsidiary is bound, or by which any
of their respective properties or assets are bound, or any license,
franchise, permit or other similar authorization held by the Company or any
Subsidiary;
(d) assuming compliance with the matters referred to in Section 403,
require any consent or other action by any person under, or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of the Company or any of its Subsidiaries or to a loss of any
benefit to which the Company or any of its Subsidiaries is entitled under,
any Collective Bargaining Agreement binding upon the Company or any of its
Subsidiaries; or
(e) result in the creation or imposition of any Lien on any asset of the
Company or any Subsidiary
except, in the case of clauses (c) and (e), for such matters as would not,
individually or in the aggregate, have a Material Adverse Effect or materially
impair or delay the ability of the Company to consummate the transactions
contemplated by this Agreement.
For purposes of this Agreement, "Lien" means, with respect to any asset,
any mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset.
Section 4.05. Capitalization. The authorized capital stock of the Company
consists of 150,000,000 Shares. As of February 13, 1999, there were outstanding
28,523,177 Shares, and stock options to purchase an aggregate of 1,353,200
Shares (of
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which options to purchase an aggregate of 676,700 Shares were vested). All
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. All Shares issuable upon
exercise of outstanding stock options have been duly authorized and, upon
issuance following payment of the exercise price therefor, will have been
validly issued and will be fully paid and nonassessable. Except as set forth in
this Section and except for changes since February 13, 1999 resulting from the
exercise of stock options outstanding on such date, there are outstanding
(a) no shares of capital stock or other voting securities of the
Company,
(b) no securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company and
(c) no options or other rights to acquire from the Company, and no
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company
(the items in clauses (a), (b) and (c) being referred to collectively as the
"Company Securities"). There are no outstanding obligations of the Company or
any Subsidiary to repurchase, redeem or otherwise acquire any Company
Securities.
Section 4.06. Subsidiaries. (a) Each Subsidiary is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted other
than those that could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Each Subsidiary is duly qualified to do
business and is in good standing in each jurisdiction where the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where failure to be so
qualified would not, individually or in the aggregate, have a Material Adverse
Effect. All Subsidiaries and their respective jurisdictions of organization are
identified in the Company's annual report on Form 10-K for the fiscal year ended
December 31, 1997 (the "Company 1997 10-K").
For purposes of this Agreement, "Subsidiary" means any corporation or other
entity of which the Company owns, directly or indirectly, stock, securities or
other ownership interests having ordinary voting power sufficient to elect a
majority of the board of directors or other persons performing similar
functions.
(b) All of the outstanding capital stock of, or other voting securities or
ownership interests in, each Subsidiary, is owned by the Company, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any
11
restriction on the right to vote, sell or otherwise dispose of such stock or
other securities or ownership interests). There are no outstanding
(i) securities of the Company or any Subsidiary convertible into or
exchangeable for shares of capital stock or other voting securities or
ownership interests in any Subsidiary or
(ii) options or other rights to acquire from the Company or any
Subsidiary, or other obligation of the Company or any Subsidiary to issue,
any capital stock, voting securities or other ownership interests in, or
any securities convertible into or exchangeable for any capital stock,
voting securities or ownership interests in, any Subsidiary
(the items in clauses (i) and (ii) being referred to collectively as the
"Subsidiary Securities"). There are no outstanding obligations of the Company
or any Subsidiary to repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
Section 4.07. SEC Filings. (a) The Company has delivered or made
available to Buyer
(i) the Company's annual reports on Form 10-K for its fiscal years
ended December 31, 1997, 1996, and 1995 (each, a "Company 10-K");
(ii) its quarterly reports on Form 10-Q for its fiscal quarters ended
March 31, 1998, June 30, 1998 and September 30, 1998 (each, a "Company
10-Q");
(iii) its proxy or information statements relating to meetings of, or
actions taken without a meeting by, the shareholders of the Company held
since December 31, 1997; and
(iv) all of its other reports, statements, schedules and registration
statements filed with the SEC since December 31, 1997.
(b) As of its filing date, each such report or statement filed pursuant to
the Exchange Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(c) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act of 1933 as of the date such
statement or amendment became effective did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
12
Section 4.08. Permits; Compliance. (a) Except as would not individually
or in the aggregate, (x) have a Material Adverse Effect or (y) prevent or
materially delay the performance of this Agreement by the Company, the Company
and each of its Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals, takeoff and landing authorizations (including "slots"
at United States airports), clearances and orders of any governmental entity
necessary for the Company or such Subsidiary to operate scheduled domestic air
transportation, to own, lease and operate its properties and to carry on its
respective businesses substantially in the manner described in the Company 10-Ks
and as it is now being conducted (the "Company Permits").
(b) All of the Company Permits are valid, and in full force and effect,
except where the failure to have, or the suspension or cancellation of, any of
the Company Permits would neither, individually or in the aggregate, (a) have a
Material Adverse Effect nor (b) prevent or materially delay the performance of
this Agreement by the Company. As of the date hereof, no suspension or
cancellation of any of the Company Permits is pending or, to the knowledge of
the Company, threatened, except where the failure to have, or the suspension or
cancellation of, any of the Company Permits would neither, individually or in
the aggregate, (x) have a Material Adverse Effect nor (y) prevent or materially
delay the performance of this Agreement by the Company.
(c) Neither the Company nor any of its Subsidiaries is in default or
violation of, (i) any law applicable to the Company or any of its Subsidiaries
or by which any property, asset or operation of the Company or any of its
Subsidiaries is bound or affected or (ii) any Company Permits, except for any
such defaults or violations that would neither, individually or in the
aggregate, (x) have a Material Adverse Effect nor (y) prevent or materially
delay the performance of this Agreement by the Company.
Section 4.09. Financial Statements. (a) The audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company included in the Company 10-Ks and in each of the Company 10-Qs
fairly present, in conformity with generally accepted accounting principles
applied on a consistent basis (except as may be indicated in the notes thereto),
the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and their consolidated results of
operations and cash flows for the periods then ended (subject to normal year-end
adjustments in the case of any unaudited interim financial statements).
For purposes of this Agreement, "Balance Sheet" means the consolidated
balance sheet of the Company as of December 31, 1997 set forth in the Company
1997 10-K and "Balance Sheet Date" means December 31, 1997.
Section 4.10. Disclosure Documents. (a) Each document required to be
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"), including,
without limitation, the
13
Schedule 13E-3, the Schedule 14D-9, the proxy or information statement of the
Company (the "Company Proxy Statement"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.
(b) At the time the Company Proxy Statement, if one is required, or any
amendment or supplement thereto is first mailed to shareholders of the Company
and at the time such shareholders vote on adoption of this Agreement, the
Company Proxy Statement, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the
filing of any Company Disclosure Document other than the Company Proxy
Statement, at the time of any distribution thereof and at the time of
consummation of the Offer, such Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The representations and warranties
contained in this Subsection 410 will not apply to statements or omissions
included in the Company Disclosure Documents based upon information furnished to
the Company in writing by Buyer specifically for use therein.
(c) The information with respect to the Company or any Subsidiary that the
Company furnishes to Buyer in writing specifically for use in the Offer
Documents will not, at the time of the filing thereof, at the time of any
distribution thereof and at the time of the consummation of the Offer, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
Section 4.11. Absence of Certain Changes. Since the Balance Sheet Date,
the Company and Subsidiaries have conducted their business in the ordinary
course consistent with past practice and there has not been:
(a) any event, occurrence or development or state of circumstances or
facts which has had or could reasonably be expected to have a Material Adverse
Effect;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any Subsidiary of
any outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any Subsidiary, other than regular,
quarterly cash dividends on the Shares not in excess of $0.115 per Share per
quarter and having customary record and payment dates;
14
(c) any amendment of any material term of any outstanding security of the
Company or any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money, or any foreign currency,
hedging, financial derivative or similar transactions, other than in the
ordinary course of business and in amounts and on terms consistent with past
practices;
(e) any creation or assumption by the Company or any Subsidiary of any
Lien on any material asset other than in the ordinary course of business
consistent with past practices;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital contributions to
or investments in wholly-owned Subsidiaries made in the ordinary course of
business consistent with past practices or any amendment of the terms of any
loan to executive officers or directors;
(g) any damage, destruction or other casualty loss (whether or not covered
by insurance) affecting the business or assets of the Company or any Subsidiary
which, individually or in the aggregate, has had or could reasonably be expected
to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other right,
in either case, material to the Company and the Subsidiaries taken as a whole
(including any right relating to any gates at Xxxxxxxxxx Atlanta International
Airport), other than transactions and commitments in the ordinary course of
business consistent with past practice and those contemplated by this Agreement;
(i) any change in any method of accounting or accounting practice by the
Company or any Subsidiary, except for any such change required by reason of a
concurrent change in generally accepted accounting principles or in Regulation
S-X promulgated under the Exchange Act;
(j) any tax election, other than those consistent with past practice, not
required by law or any settlement or compromise of any tax liability in either
case that is material to the Company and the Subsidiaries;
(k) any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any Subsidiary, (ii) increase in benefits
payable under any existing severance or termination pay policies or employment
agreements, (iii) entering into of any employment, deferred compensation or
other similar agreement (or any
15
amendment to any such existing agreement) with any director, officer or employee
of the Company or any Subsidiary or (iv) increase in compensation, bonus or
other benefits payable to directors, officers or employees of the Company or any
Subsidiary, other than any such increases payable to employees other than
directors or officers in the ordinary course of business consistent with past
practice;
(l) any labor dispute that has not been resolved as of the date of this
Agreement, other than routine individual grievances, or any activity or
proceeding by a labor union or representative thereof to organize any employees
of the Company or any Subsidiary, which employees were not subject to a
Collective Bargaining Agreement at the Balance Sheet Date, or any lockouts,
strikes, slowdowns, labor actions, work stoppages or threats thereof by or with
respect to such employees; or
(m) any cancellation of any licenses, sublicenses, franchises, permits,
takeoff or landing authorization, "slots" or agreements to which the Company or
any Subsidiary is a party, or any notification to the Company or any Subsidiary
that any party to any such arrangements intends to cancel or not renew such
arrangements beyond their expiration date as in effect on the date hereof, which
cancellation or notification, individually or in the aggregate, has had or
reasonably could be expected to have a Material Adverse Effect.
Section 4.12. No Undisclosed Material Liabilities. There are no material
liabilities or obligations of the Company or any Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability or obligation,
other than:
(a) liabilities or obligations disclosed or provided for in the Balance
Sheet;
(b) liabilities or obligations incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date;
(c) liabilities or obligations under this Agreement. and
(d) liabilities or obligations which are not material.
Section 4.13. Litigation. Except as set forth in the Company 10-K, there
is no action, suit, investigation or proceeding pending, or to the knowledge of
the Company, threatened (and, to the knowledge of the Company, there are no
circumstances which are imminently likely to give rise to any such proceedings)
against or affecting the Company or any Subsidiary or any of their respective
properties or any of their respective officers or directors in their capacity as
officers or directors of the Company (or any basis therefor) before any court or
arbitrator or before or by any governmental body, agency or official (x) as of
the date hereof, and (y) which could reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
16
Section 4.14. Taxes. The Company has filed all material tax returns,
statements, reports and forms required to be filed with any tax authority when
due and in accordance with all applicable laws, and all taxes shown as due and
payable thereon have been timely paid, or withheld and remitted, to the
appropriate taxing authority. No deficiency in payment of any taxes for any
period has been asserted by any taxing authority which remains unsettled at the
date hereof except for deficiencies which would not have a Material Adverse
Effect. The Company and Subsidiaries do not own any interest in real property
in the State of New York or in any other jurisdiction in which a tax is imposed
on the transfer of a controlling interest in an entity that owns any interest in
real property.
Section 4.15. ERISA. (a) Schedule 4.15(a) contains a correct and complete
list identifying each "employee benefit plan", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), each employment,
severance or similar contract, plan, arrangement or policy and each other plan
or arrangement (written or oral) providing for compensation, bonuses, profit-
sharing, stock option or other stock related rights or other forms of incentive
or deferred compensation (whether or not such plan or arrangement is qualified
under Section 401(a) of the Code), vacation benefits, insurance coverage
(including any self-insured arrangements), health or medical benefits, employee
assistance program, disability or sick leave benefits, workers' compensation,
supplemental unemployment benefits, severance benefits and post-employment or
retirement benefits (including compensation, pension, health, medical or life
insurance benefits) which is maintained, administered or contributed to by the
Company or any of its employees or any ERISA Affiliate and covers any employee
or former employee of the Company or any Subsidiary, or with respect to which
the Company or any Subsidiary has any liability. Copies of such plans (and, if
applicable, related trust or funding agreements or insurance policies) and all
amendments thereto and written interpretations thereof have been furnished to
Buyer together with the most recent annual report (Form 5500 including, if
applicable, Schedule B thereto) and tax return (Form 990) prepared in connection
with any such plan or trust. Such plans are referred to collectively herein as
the "Employee Plans".
For purposes of this Section, "ERISA Affiliate" of any Person means any
other Person which, together with such Person, would be treated as a single
employer under Section 414 of the Code.
(b) Neither the Company nor any ERISA Affiliate nor any predecessor thereof
presently nor has in the past sponsored, maintained or contributed to, or agreed
to sponsor, maintain or contribute to, any Employee Plan subject to Title IV.
(c) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code or designated to qualify as tax exempt under Section
501(c)(9) of the Code is so qualified and has been so qualified during the
period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code. The Company has
furnished to the Buyer copies of the most recent Internal Revenue
17
Service determination or tax exemption letters with respect to each such Plan.
Each Employee Plan has been maintained in compliance in all material respects
with its terms and with the requirements prescribed by any and all statutes,
orders, rules and regulations, including but not limited to ERISA and the Code,
which are applicable to such Employee Plan. No events have occurred with respect
to any Employee Plan that could result in payment or assessment of any material
excise taxes under Sections 4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E or
5000 of the Code.
(d) The consummation of the transactions contemplated by this Agreement
will not (either alone or together with any other event) entitle any employee or
director of the Company or any Subsidiary to severance pay or accelerate the
time of payment or vesting or trigger any payment or funding (through a grantor
trust or otherwise) of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any Employee Plan.
There is no contract, agreement, plan or arrangement covering any employee or
former employee of the Company or any affiliate that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Sections 162(m) or 280G of the Code.
(e) Neither the Company nor any Subsidiary has any liability in respect of
post-retirement health, medical or life insurance benefits for retired, former
or current employees of the Company or its Subsidiaries except as required to
avoid excise tax under Section 4980B of the Code.
(f) There has been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its affiliates relating to, or
change in employee participation or coverage under, any Employee Plan which
would increase materially the expense of maintaining such Employee Plan above
the level of the expense incurred in respect thereof for the fiscal year ended
December 31, 1998.
(g) All contributions and payments accrued under each Employee Plan,
determined in accordance with prior funding and accrual practices, as adjusted
to include proportional accruals for the period ending prior to the date hereof,
have been discharged and paid on or prior to the date hereof except to the
extent reflected as a liability on the Company's financial statements.
(h) Except as could not reasonably be expected to have a Material Adverse
Effect, there is no action, suit, investigation, audit or proceeding pending
against or involving, or to the knowledge of the Company threatened against or
involving, any Employee Plan before any court or arbitrator or any state,
federal or local governmental body, agency or official.
Section 4.16. Compliance with Laws. Neither the Company nor any
Subsidiary is in violation of, or has violated, any applicable provisions of any
laws, statutes, ordinances or regulations, except for any such violation that,
individually or in the
18
aggregate, has not had since the Balance Sheet Date and could not reasonably be
expected to have a Material Adverse Effect.
Section 4.17. Finders' Fees. Except for Xxxxxx Xxxxxxx & Co.
Incorporated, the material terms of whose engagement agreement have been
disclosed to Buyer, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf, of
the Company or any Subsidiary who might be entitled to any fee or commission
from Buyer or any of its affiliates upon consummation of the transactions
contemplated by this Agreement.
Section 4.18. Environmental Matters. (a) Except as would not have a
Material Adverse Effect:
(i) no written notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed,
no penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of the Company or any
Subsidiary, is threatened by any governmental entity or other Person
against the Company or any Subsidiary and relating to any Environmental
Law;
(ii) the Company and its Subsidiaries are and have been in compliance
with all Environmental Laws and have obtained and are in compliance with
all permits, licenses, franchises, certificates, approvals and other
similar authorizations of governmental authorities required by
Environmental Laws and affecting the business of the Company or any of its
Subsidiaries;
(iii) there are no liabilities of or relating to the Company or any
Subsidiary, of any kind whatsoever, whether contingent or fixed, actual or
potential, known or unknown, arising under or relating to any Environmental
Law, and there are no facts, conditions, situations or set of circumstances
that would reasonably be expected to result in or be the basis for any such
liability; and
(iv) there has been no environmental investigation, study, or audit
conducted of which the Company has knowledge in relation to the current or
prior business of the Company or any Subsidiary or any property or facility
now or previously owned or leased by the Company or any Subsidiary.
(b) For purposes of this Section 4.18, the following terms shall have the
meanings set forth below:
"Company" and "Subsidiary" shall include any entity which is a legal
predecessor of the Company or any Subsidiary;
19
"Environmental Laws" means any and all federal, state, local and foreign
laws, judicial decisions, regulations, rules, judgments, orders, decrees,
injunctions, permits, licenses, agreements and governmental restrictions or
any agreement or contract with any governmental authority, relating to
human health as it relates to hazardous materials, the environment or
employee safety, or to pollutants, contaminants, wastes or chemicals or any
toxic, radioactive, ignitable, corrosive or reactive or otherwise hazardous
substances, wastes or materials.
Section 4.19. Assets. (a) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, the assets, properties, rights and
contracts, including (as applicable) title or leasehold thereto, of the Company
and its Subsidiaries, taken as a whole, are sufficient to permit the Company and
its Subsidiaries to conduct their business as currently being conducted. All
material real property owned or leased by the Company and its Subsidiaries is
owned or leased free and clear of all Liens, except for (i) Liens reflected or
reserved against in the Company Balance Sheet or disclosed in the notes thereto,
(ii) taxes and general and special assessments not in default and payable
without penalty or interest or (iii) Liens that do not materially adversely
interfere with any present use of such property.
(b) All aircraft, engines, spare engines and spare parts owned, leased or
in the possession or control of the Company or any of its Subsidiaries are in
sound operating condition, normal wear and tear excepted, except for those
engines, spare engines and spare parts under repair or overhaul pursuant to the
Company's FAA approved maintenance programs. A certificate of airworthiness for
each aircraft of the Company has been duly issued pursuant to relevant federal
aviation laws and is in full force and effect (except for the period of time any
aircraft may be out of service and such certificate is suspended in connection
therewith). Each aircraft owned by the Company is duly registered in the name
of the Company in accordance with federal aviation laws, and is not registered
under the laws of any other country. Each aircraft used by the Company but
owned by a third party is duly registered in the name of such third party in
accordance with all applicable federal aviation laws and the Company is
authorized to use such aircraft under all applicable federal aviation laws.
(c) Schedule 4.19 hereto sets forth a list of all owned and leased
aircraft, or aircraft under contract for future purchase or lease, a description
of the type and aircraft number of each such aircraft, the date the Company
placed such aircraft in service or proposes to place such aircraft in service,
the lease expiration date of such aircraft, and a notation as to whether the
aircraft (i) is owned or leased; (ii) complies with Stage 3 noise level
requirements of the Airport Noise and Capacity Act of 1990; and (iii) requires
refitting or repair to bring it into compliance with any outstanding FAA
aircraft requirements mandated by certain airworthiness directives promulgated
by the FAA.
20
Schedule 4.19 hereto also contains a list of all airline slots owned or
leased by the Company or any of its Subsidiaries. No event has occurred which
would subject any of such slots to recall by the FAA.
Section 4.20. Labor Matters. (a) Schedule 4.20(a) identifies all
collective bargaining agreements (including any side letter, supplemental
agreement or memorandum of understanding) covering employees of the Company or
its Subsidiaries (collectively, the "Collective Bargaining Agreements"). The
Company has made available to Buyer copies of all such Collective Bargaining
Agreements. The Company has informed Buyer of all material current proposals of
the Company or any of its Subsidiaries in all ongoing negotiations with
representatives of any unions representing pilots, flight attendants, or
dispatchers, and all matters on which any tentative agreements have been reached
in the course of such negotiations.
(b) (i) There are no controversies pending or, to the best knowledge of
the Company, threatened between the Company and any of its employees, which
controversies have or could have a Material Adverse Effect;
(ii) the Company has not breached or otherwise failed to comply in any
material respect with any provision of any Collective Bargaining Agreement
or other labor union contract applicable to persons employed by the
Company, and there are no material grievances outstanding against the
Company under any such agreement or contract;
(iii) to the best knowledge of the Company, there is no petition
pending before the National Mediation Board seeking certification of a
labor representative with respect to any craft or class of employees of the
Company of any of its Subsidiaries; and
(iv) there is no strike, slowdown, work stoppage, labor action or
lockout, or, to the best knowledge of the Company, threat thereof, by or
with respect to any employees of the Company.
(c) The consent of the labor unions which are a party to the Collective
Bargaining Agreements is not required to consummate the Offer or the Merger.
Section 4.21. Material Contracts. (a) From January 1, 1998 through the
date hereof neither the Company nor any of its Subsidiaries has entered into any
contract which, if entered into prior to January 1, 1998, would have been
required to be disclosed in the Company 1997 10-K and which is material to the
business or operations of the Company or its Subsidiaries or which has had a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries nor,
to the knowledge of the Company, any other party, is in breach of or default
under any such contract or any contract filed as an exhibit (or incorporated by
reference as an exhibit) to the Company 1997 10-K which is currently
21
in effect (the "Material Contracts"), except for such breaches and defaults
which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is a party to or bound
by any non-competition agreement or any other agreement or binding obligation
which purports to limit in any material respect the manner in which, or the
localities in which, the Company or any such Subsidiary is entitled to provide
scheduled air transportation service.
(c) As of the date hereof, the Company and its Subsidiaries have on firm
order 38 undelivered aircraft. Since entering into the contract dated April 27,
1997, as amended on September 3, 1998, between the Company and Bombardier, Inc.,
the Company and its Subsidiaries have not exercised any of the options to
acquire additional aircraft that are contained therein.
(d) The CPTC Lease between the City of Atlanta and the Company, as amended
by the letter agreement dated as of January 26, 1996, among the City of Atlanta,
the Company and Valujet Airlines, pursuant to which the Company leases, among
other things, thirteen gates on Concourse C at Xxxxxxxxxx Atlanta International
Airport for a term that does not expire before September 21, 2010 (x) is a valid
and binding agreement of the parties thereto and (y) has not been amended or
supplemented since January 26, 1996.
Section 4.22. Insurance. Schedule 4.22 sets forth a complete and correct
list of all material insurance policies (including premiums, policy limits,
deductibles, type of coverage and similar information) providing coverage in
favor of the Company or any of its Subsidiaries or any of their respective
properties (including "all risk" and hull insurance policies). Except as could
not reasonably be expected to have a Material Adverse Effect,
(i) all premiums (other than premiums paid or adjusted on a
retrospective basis) with respect to such policies covering all periods up
to and including the date hereof have been paid, no written notice of
termination, cancellation or reservation of rights has been received with
respect to any such policy and, to the knowledge of the Company, each such
policy is in full force and effect;
(ii) since the Balance Sheet Date, each of the Company and its
Subsidiaries, as the case may be, has timely filed claims under such
insurance policies with respect to all material matters and occurrences for
which it believes it has coverage thereunder; and
22
(iii) the Company and its Subsidiaries have complied with the terms of
such policies in all material respects.
Section 4.23. Year 2000 Compliance. The Company has conducted a review of
each System used in the conduct of its business and operations to determine
whether such System is Year 2000 Compliant, and is currently implementing a
compliance plan that is intended to result in each System being Year 2000
Compliant in all material respects no later than January 1, 2000. Each action
to have been taken prior to the date of this Agreement under such plan has been
substantially completed and, as of the date of this Agreement, the Company has
no knowledge indicating that any action to be taken under such plan after the
date of this Agreement will be materially delayed or will fail to accomplish its
purpose under the plan. "System" shall mean software, hardware, computers and
devices with embedded electronics. A system is "Year 2000 Compliant" if it is
able to accurately process date and time data from, into and between the years
1999 and 2000, and any other year in the 20th and 21st centuries.
Section 4.24. Anti-takeover Statutes. Neither Section 14-2-1132 nor
Section 14-2-1111 of the Georgia Law nor any other "fair price", "moratorium",
"control share acquisition", "interested shareholder" or other similar
antitakeover statute or regulation enacted under Georgia Law applicable to the
Company or any of its Subsidiaries is applicable to the Merger or the other
transactions contemplated hereby.
Section 4.25. No Other Representations or Warranties. Except for the
representations and warranties contained in this Article 4, neither the Company,
either of its Subsidiaries nor any other Person has made or makes any other
express or implied representation or warranty, either written or oral, on behalf
of the Company or either of its Subsidiaries.
ARTICLE 5
Representations and Warranties of Buyer
Buyer represents and warrants to the Company that:
Section 5.01. Corporate Existence and Power. Each of Buyer and Merger
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all powers
and all material governmental licenses, authorizations, consents and approvals
required to carry on its business in all material respects as now conducted.
Since the date of its organization, Merger Subsidiary has not engaged in any
activities other than in connection with or as contemplated by this Agreement or
in connection with arranging any financing required to consummate the
transactions contemplated hereby.
Section 5.02. Corporate Authorization. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation
23
by Buyer and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Buyer and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of each of Buyer and Merger
Subsidiary.
Section 5.03. Governmental Authorization. The execution, delivery and
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated by
this Agreement require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than
(i) the filing of a Certificate of Merger in accordance with Georgia
Law;
(ii) compliance with any applicable requirements of the HSR Act; and
(iii) compliance with any applicable requirements of the Exchange Act.
Section 5.04. Non-contravention. The execution, delivery and performance
by Buyer and Merger Subsidiary of this Agreement and the consummation by Buyer
and Merger Subsidiary of the transactions contemplated hereby do not and will
not
(a) contravene or conflict with the Certificate of Incorporation or
bylaws of Buyer or Merger Subsidiary,
(b) assuming compliance with the matters referred to in Section 503,
contravene or conflict with any provision of law, regulation, judgment,
order or decree binding upon Buyer or Merger Subsidiary, or
(c) constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of
Buyer or Merger Subsidiary or to a loss of any benefit to which Buyer or
Merger Subsidiary is entitled under any agreement, contract or other
instrument binding upon Buyer or Merger Subsidiary other than any such
termination, cancellation, acceleration or loss which, individually or in
the aggregate, would not reasonably be expected to have a material adverse
effect on Buyer or Merger Subsidiary.
Section 5.05. Disclosure Documents. (a) The information with respect to
Buyer and its subsidiaries that Buyer furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of the Company Proxy
Statement (if applicable), at the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to shareholders of the Company
and at the time the shareholders vote on adoption of this Agreement (if
24
applicable), and (ii) in the case of any Company Disclosure Document other than
the Company Proxy Statement, at the time of the filing thereof, at the time of
any distribution thereof, and at the time of consummation of the Offer.
(b) The Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the Exchange Act and will
not at the time of the filing thereof, at the time of any distribution thereof
or at the time of consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, provided, that this representation and warranty will not
apply to statements or omissions in the Offer Documents based upon information
furnished to Buyer or Merger Subsidiary in writing by the Company specifically
for use therein.
Section 5.06. Finders' Fees. Except for Xxxxxxx, Xxxxx & Co., whose fees
will be paid by Buyer, there is no investment banker, broker, finder or other
intermediary who might be entitled to any fee or commission from the Company or
any of its affiliates upon consummation of the transactions contemplated by this
Agreement.
ARTICLE 6
Covenants of the Company
Section 6.01. Conduct of the Company. From the date hereof until the
earlier of (x) the time designees of Buyer constitute a majority of the
Company's Board and (y) the Effective Time, the Company and the Subsidiaries
shall
(i) conduct their business in the ordinary course consistent with past
practice and shall use reasonable best efforts to preserve intact their
business organizations and relationships with third parties and to keep
available the services of their present officers and employees;
(ii) use all reasonable efforts to keep all material property and
equipment useful and necessary in their business in good working order and
condition,
(iii) continue, in respect of all aircraft, engines and spare parts
intended for use in its operations, their maintenance programs consistent
with past practice (except as required or permitted by applicable law),
including using reasonable best efforts to keep all such aircraft in such
condition as may be necessary to enable the airworthiness certification of
such aircraft under the Federal Aviation Act to be maintained in good
standing at all times, and
25
(iv) at all times up to and including the Effective Time, except to the
extent not available on commercially reasonable terms, maintain their
existing insurance coverage of all types, including (but not limited to)
"all risk", hull and property damage, in effect or procure substantially
similar substitute insurance policies with financially sound and reputable
insurance companies in at least such amounts and against such risks as are
currently covered by such policies.
Without limiting the generality of the foregoing, from the date hereof until the
earlier of (x) the time designees of Buyer constitute a majority of the
Company's Board and (y) the Effective Time, the Company will not, and will cause
its Subsidiaries not to, in either case without Buyer's prior written consent,
which consent shall not be unreasonably withheld:
(a) adopt or propose any change in their respective organizational
documents (including bylaws);
(b) except pursuant to existing agreements or arrangements
(i) acquire (by merger, consolidation or acquisition of stock or
assets) any material corporation, partnership or other business
organization or division thereof, or sell, lease or otherwise dispose of a
material subsidiary or a material amount of assets or securities;
(ii) other than in the ordinary course of business, consistent with
past practice, make any investment in an amount in excess of $250,000 in
the aggregate whether by purchase of stock or securities, contributions to
capital (other than contributions to capital of a wholly-owned Subsidiary)
or any property transfer, or purchase for an amount in excess of $250,000
in the aggregate, any property or assets of any other individual or entity;
(iii) waive, release, grant or transfer any rights of material value,
including any routes or slots to which the Company has a right on the date
hereof;
(iv) license (as licensor), dispose of, assign, transfer or encumber
any intellectual property;
(v) modify or change in any material respect any existing material
license, lease, contract, or other document;
(vi) enter into any material agreement;
(vii) except to refund or refinance commercial paper, incur, assume
or prepay an amount of long-term or short-term debt (including leases,
financings,
26
general airport revenue bonds, special revenue bonds and special facility
bonds) in excess of $2,000,000 in the aggregate;
(viii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person which are in excess of $250,000 in the
aggregate;
(ix) make any loans to any other person which are in excess of
$250,000 in the aggregate; or
(x) authorize any capital expenditures which individually are in
excess of $500,000 or in the aggregate are in excess of $10,000,000, in
either case other than ordinary course capital expenditures in connection
with (A) engine overhauls; (B) the Company's Xxxxxxxxxx Atlanta
International Airport Concourse C renovations, provided that
representatives of Buyer and the Company will meet as soon as practicable
after the date hereof (1) to review the status of the renovations and the
remaining work to be done in order to complete the renovations and (2) to
consider whether alterations to such renovations are appropriate, taking
into account the Company's operational needs and contractual obligations;
(C) increases in inventory in connection with additions to the Company's
regional jet fleet and (D) momentary acquisitions of equity interests in
regional jet aircraft pursuant to sale-leaseback transactions on terms
consistent with past practice;
(c) (i) acquire or lease any aircraft other than pursuant to contracts or
agreements in effect as of the date hereof, (ii) exercise any options to acquire
any additional aircraft under contracts and agreements in effect as of the date
hereof; (iii) enter into, or commit to enter into, any new contract or agreement
with respect to the acquisition or lease of additional aircraft, or (iv) except
as otherwise disclosed on Schedule 6.01(c)(iv), agree or commit to accelerate
the delivery of, or agree to materially delay or defer the delivery of, aircraft
for which contracts or commitments exist, or exercise any right of substitution
of different aircraft models under any contract or arrangement or (v) operate
any aircraft configured with in excess of 70 passenger seats;
(d) split, combine or reclassify any shares of its capital stock, declare,
set aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital stock (other than
(x) regular quarterly dividends not in excess of $0.115 per Share, and (y) cash
dividends and distributions by a wholly owned Subsidiary of the Company to the
Company or to a Subsidiary all of the capital stock which is owned directly or
indirectly by the Company) or redeem, repurchase or otherwise acquire or offer
to redeem, repurchase, or otherwise acquire any of its securities or any
securities of its Subsidiaries;
27
(e) enter into any agreement or arrangement that limits or otherwise
restricts the Company, any Subsidiary or any of their respective affiliates or
any successor thereto or that could, after the Effective Time, limit or restrict
the Surviving Company, any Subsidiary thereof or any of their affiliates, from
engaging or competing in any line of business or in any location, which
agreement or arrangement would be material to the business of the Company and
its Subsidiaries or the business of Buyer or any of Buyer's subsidiaries
(assuming the Merger had taken place), in either case taken as a whole;
(f) except as otherwise disclosed on Schedule 6.01(f), adopt or amend any
bonus, profit sharing, compensation, severance, termination, stock option,
pension, retirement, deferred compensation, employment or employee benefit plan,
agreement, trust, plan, fund or other arrangement for the benefit and welfare of
any director, officer or employee, or (except for normal increases in the
ordinary course of business that are consistent with past practices and that, in
the aggregate (excluding increases arising pursuant to the Collective Bargaining
Agreements) do not result in a material increase in benefits or compensation
expense to the Company) increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required by
any existing plan or arrangement (including, without limitation, the granting of
stock options or stock appreciation rights or the removal of existing
restrictions in any benefit plans or agreements);
(g) revalue in any material respect any of its assets, including, without
limitation, writing down the value of inventory in any material manner or write-
off of notes or accounts receivable in any material manner;
(h) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge or satisfaction in the ordinary
course of business, consistent with past practices, of liabilities reflected or
reserved against in the consolidated financial statements of the Company or
incurred in the ordinary course of business, consistent with past practices;
(i) make any federal or material state tax election or settle or
compromise any material income tax liability controversy;
(j) take any action other than in the ordinary course of business and
consistent with past practices with respect to accounting policies or procedures
or except as required by generally accepted accounting principles or Regulation
S-X under the Exchange Act;
(k) except as previously approved by the Buyer, enter into any new or
amended contract, agreement, side letter or memorandum of understanding with any
unions representing employees of the Company or its Subsidiaries;
(l) agree or commit to do any of the foregoing; or
28
(m) take or agree or commit to take any action that would make any
representation and warranty of the Company hereunder inaccurate in any material
respect at, or as of any time prior to, the Effective Time.
Section 6.02. Shareholder Meeting; Proxy Material. (a) Unless a vote
shall not be required under Georgia Law, the Company shall cause a meeting of
its shareholders (the "Company Shareholder Meeting") to be duly called and held
as soon as reasonably practicable following the consummation of the Offer for
the purpose of voting on the approval and adoption of this Agreement and the
Merger.
In connection with such meeting, the Company (i) will promptly prepare and
file with the SEC, will use its reasonable best efforts to have cleared by the
SEC and will thereafter mail to its shareholders as promptly as practicable the
Company Proxy Statement and all other proxy materials for such meeting, (ii)
will use its reasonable best efforts to obtain the necessary approvals by its
stockholders of this Agreement and the transactions contemplated hereby (subject
to fiduciary duties under applicable law) and (iii) will otherwise comply with
all legal requirements applicable to such meeting.
(b) The Company's Board shall recommend approval and adoption of this
Agreement and the Merger by the Company's shareholders (the "Recommendation"),
and neither the Company's Board nor any committee thereof shall amend, modify,
withdraw, condition or qualify the Recommendation in a manner adverse to Buyer
or take any action or make any statement inconsistent with the Recommendation
unless
(i) the Company's Board determines in good faith, after consultation
with outside legal counsel, that it must take such action(s) to comply with
its fiduciary duties under applicable law;
(ii) a Superior Proposal is pending at the time the Company's Board
determines to take any such action(s); and
(iii) the Company has provided reasonable prior notice advising Buyer
that it intends to take such action.
(c) Nothing contained in this Agreement shall prevent the Company's Board
from complying with Rule 14e-2 under the Exchange Act with respect to any
Acquisition Proposal.
Section 6.03. Access to Information. (a) From the date hereof until the
Effective Time, the Company will, upon reasonable advance notice and at
reasonable times, give Buyer, its counsel, financial advisors, auditors and
other authorized representatives full access to the offices, properties, books
and records of the Company and its Subsidiaries and such financial and operating
data and other information as such
29
Persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Buyer in its investigation of
the business of the Company and its Subsidiaries; provided that no investigation
pursuant to this Section 6.03, shall affect any representation or warranty given
by the Company to Buyer hereunder.
(b) Information obtained by Buyer pursuant to this Section 6.03 shall be
subject to the provisions of the confidentiality agreement between the Company
and Buyer, dated February 9, 1999 (the "Confidentiality Agreement"), which
remains in full force and effect, but shall terminate upon the acceptance by
Buyer for payment pursuant to the Offer of Shares in sufficient number to
satisfy the Minimum Condition.
Section 6.04. Other Offers. (a) Neither the Company nor any of its
Subsidiaries shall (whether directly or indirectly through advisors, agents or
other intermediaries), nor shall the Company or any of its Subsidiaries
authorize or permit any of its or their officers, directors, agents,
representatives, advisors or Subsidiaries to
(i) solicit, initiate or take any action knowingly to facilitate the
submission of inquiries, proposals or offers from any Third Party (as
defined below) which constitutes or could reasonably be expected to lead to
(A) any acquisition or purchase of 20% or more of the
consolidated assets of the Company and its Subsidiaries or of over 20%
of any class of equity securities of the Company or any of its
Subsidiaries,
(B) any tender offer (including a self tender offer) or exchange
offer that if consummated would result in any Third Party beneficially
owning 20% or more of any class of equity securities of the Company or
any of its Subsidiaries,
(C) any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its
Subsidiaries whose assets, individually or in the aggregate,
constitute more than 20% of the consolidated assets of the Company
other than the transactions contemplated by this Agreement, or
(D) any other transaction the consummation of which would or
could reasonably be expected to interfere with, prevent or materially
delay the Merger or which would or could reasonably be expected to
materially dilute the benefits to Buyer of the transactions
contemplated hereby
(collectively, "Acquisition Proposals");
30
(ii) enter into or participate in any discussions or negotiations
regarding any of the foregoing, or furnish to any Third Party in connection
with an Acquisition Proposal any information with respect to its business,
properties or assets or any of the foregoing, or otherwise cooperate in any
way with, or knowingly assist or participate in, facilitate or encourage,
any effort or attempt by any Third Party (other than Buyer) to do or seek
any of the foregoing;
(iii) grant any waiver or release under any standstill or similar
agreement with respect to any class of equity securities of the Company or
any of its Subsidiaries;
except that the foregoing shall not prohibit the Company (either directly or
indirectly through advisors, agents or other intermediaries) from
(x) furnishing information pursuant to an appropriate confidentiality
letter (which the Company shall use all reasonable efforts to ensure will
not be less favorable to the Company in any material respect than the
Confidentiality Agreement) concerning the Company and its businesses,
properties or assets to a Third Party who has made or is seeking to
initiate discussions with respect to an Acquisition Proposal, and/or
(y) engaging in discussions or negotiations with such a Third Party
who has made a bona fide Acquisition Proposal,
but, in either case, only to the extent the Company's Board reasonably believes
in good faith, after consultation with an investment bank of nationally
recognized reputation and outside legal counsel, that the Acquisition Proposal
is bona fide and could reasonably lead to the delivery of a Superior Proposal
and that such action by the Company's Board is required in order for it to
comply with its fiduciary duties under applicable law.
The Company will direct each of its officers, directors, investment
bankers, attorneys, accountants, agents and other advisors and representatives
and use its reasonable best efforts to cause them to comply with the terms of
this Section 6.04(a).
(b) The Company shall notify Buyer promptly (but in no event later than 24
hours) after receipt by the Company or any Subsidiary (or any of their
respective directors, officers, agents or advisors), of any Acquisition
Proposal, which notice shall be made orally and in writing, and shall indicate
the identity of the offeror and the material terms and conditions of such
Acquisition Proposal. The Company shall keep Buyer informed, on a reasonably
current basis, of the status and material terms of any such Acquisition Proposal
or request and the status of any negotiations or discussions.
(c) Subject to the conditions described below in this Section 6.04(c),
either the Company or Buyer may terminate this Agreement if the Company's Board
shall have
31
determined to approve or recommend an Acquisition Proposal after concluding
that such Acquisition Proposal constitutes a Superior Proposal.
However, the Company may not exercise its right to terminate under this
Section 6.04(c) (and may not enter into a binding written agreement with respect
to such an Acquisition Proposal) unless
(1) the Company shall have provided to Buyer at least two business days'
prior written notice that the Company's Board intends to terminate this
Agreement pursuant to this Section 6.04(c), specifying the material terms
and conditions of such Acquisition Proposal, and
(2) on or prior to such termination, the Company shall have paid to Buyer
the Termination Fee (as defined below).
Buyer may exercise its right to terminate under this Section 6.04(c) two
business days after receiving the notice contemplated by this Section 6.04(c).
In connection with the foregoing, the Company agrees that it will
(x) not enter into a binding agreement with respect to an Acquisition
Proposal until at least the third business day after it has provided the
notice to Buyer required hereby,
(y) consider in good faith any offer made by Buyer during that period and
(z) notify Buyer promptly if its intention to enter into such an agreement
shall change at any time after such notification.
(d) As used in this Section, the following terms have the following
meanings:
"Third Party" means any person, corporation, entity or "group," as defined
in Section 13(d) of the Exchange Act, other than Buyer or any of its
affiliates.
"Superior Proposal" means a bona fide, written Acquisition Proposal for at
least a majority of the outstanding Shares of the Company that is on terms
that a majority of the Company's Board determines in good faith, after
consulting with an investment bank of nationally recognized reputation and
its outside legal counsel, would result in a transaction, if consummated,
that is more favorable to the Company's shareholders (in their capacities
as shareholders) (other than Buyer and its affiliates), from a financial
point of view.
(e) The Company will immediately cease and cause its advisors, agents and
other intermediaries to cease any and all existing activities, discussions or
negotiations
32
with any parties conducted heretofore with respect to any of the foregoing, and
shall use its reasonable best efforts to cause any such parties in possession of
confidential information about the Company that was furnished by or on behalf of
the Company in connection with any of the foregoing to return or destroy all
such information in the possession of any such party or in the possession of any
agent or advisor of any such party.
Section 6.05. Notices of Certain Events. The Company shall promptly
notify Buyer of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement; and
(c) any actions, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge threatened against, relating to or involving or
otherwise affecting the Company or any Subsidiary which, if pending on the date
of this Agreement, would have been required to have been disclosed pursuant to
Section 4.13 or which relate to the consummation of the transactions
contemplated by this Agreement.
ARTICLE 7
Covenants of Buyer
Section 7.01. Obligations of Merger Subsidiary. Buyer will take all
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
Section 7.02. Voting of Shares. Buyer agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Shareholder Meeting.
Section 7.03. Director and Officer Liability. (a) For six years after the
Effective Time, and for so long thereafter as any claim asserted prior to such
date has not been fully adjudicated, Buyer will cause the Surviving Company to
indemnify and hold harmless the present and former officers and directors of the
Company in respect of acts or omissions occurring prior to the Effective Time to
the extent provided under the Articles of Incorporation and Bylaws of Merger
Subsidiary in effect on the date hereof (which shall become the Articles of
Incorporation
33
and Bylaws of the Surviving Corporation pursuant to the Merger) and Buyer agrees
to cause the provisions of such Articles of Incorporation and Bylaws, insofar as
they relate to such matters, to continue in full force and effect for such
period of time without any amendment thereof; provided that such indemnification
and such obligation shall be subject to any limitation imposed from time to time
under applicable law. Buyer guarantees irrevocably and unconditionally the
obligations of the Surviving Corporation under this paragraph (a) and such
Articles of Incorporation and Bylaws.
(b) For six years after the Effective Time, and for so long thereafter as
any claim asserted prior to such date has not been fully adjudicated, Buyer will
cause the Surviving Company to use its best efforts to provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to the Effective Time covering each such Person currently covered by the
Company's officers' and directors' liability insurance policies on terms with
respect to coverage and amount no less favorable than the aggregate coverage and
amounts of such policies in effect on the date hereof.
(c) In the event the Company or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Buyer's option, Buyer, shall
assume the obligations set forth in this Section 7.03 and all obligations under
indemnity agreements with directors and executive officers of the Company. If
such obligations are assumed by any such successors or assigns, Buyer will
guarantee irrevocably and unconditionally the obligations of such successors and
assigns under this Section 7.03 and such indemnity agreements.
Section 7.04. Employee Benefits. During the period commencing on the
Effective Time and ending on the second anniversary thereof, Buyer shall provide
or cause to be provided to employees of the Company and its Subsidiaries salary
and benefits no less favorable, in the aggregate, to the salary and benefits
provided such employees immediately prior to the Effective Time (disregarding
for this purpose any stock options or other equity-based compensation provided
such employees prior to the Effective Time).
Section 7.05. Notices of Certain Events. Buyer shall promptly notify the
Company of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the transactions
contemplated by this Agreement; and
(b) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement.
34
ARTICLE 8
Covenants of Buyer and the Company
Section 8.01. Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement; provided that
nothing in this Agreement shall oblige Buyer or the Company or any of its
affiliates to agree to dispose of, agree to cease operating or agree to hold
separate any business, properties or assets which are material to the business
or operations, as such business or operations are currently conducted, of the
Company and its Subsidiaries or of Buyer and its subsidiaries (including, in
either case, without limitation, any gates at Xxxxxxxxxx Atlanta International
Airport).
Section 8.02. Certain Filings. The Company and Buyer shall cooperate with
one another (a) in connection with the preparation of the Company Disclosure
Documents and the Offer Documents, (b) in determining whether any action by or
in respect of, or filing with, any governmental body, agency or official, or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement and (c)
in seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Disclosure Documents or the Offer Documents and seeking timely to obtain
any such actions, consents, approvals or waivers.
Section 8.03. Public Announcements. Buyer and the Company will consult
with each other before issuing any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby.
Section 8.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Company will be authorized to execute
and deliver, in the name and on behalf of the Company or Merger Subsidiary, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Subsidiary, any other actions and things
to vest, perfect or confirm of record or otherwise in the Surviving Company any
and all right, title and interest in, to and under any of the rights, properties
or assets of the Company acquired or to be acquired by the Surviving Company as
a result of, or in connection with, the Merger.
Section 8.05. Merger Without Meeting of Shareholders. If Buyer and its
affiliates acquire at least 90% of the outstanding Shares pursuant to the Offer
or otherwise, then the parties hereto agree, at the request of Buyer, if then
permitted under
35
Georgia Law, to take all necessary and appropriate action to cause the Merger to
be effective as soon as practicable after the acceptance for payment and
purchase of Shares by the Purchaser pursuant to the Offer without a meeting of
shareholders of the Company.
ARTICLE 9
Conditions to the Merger
Section 9.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Buyer and Merger Subsidiary to consummate the Merger
are subject to the satisfaction of the following conditions:
(a) if required by Georgia Law, this Agreement shall have been adopted by
the shareholders of the Company in accordance with such law;
(b) any applicable waiting period under the HSR Act relating to the Merger
shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger; and
(d) Buyer or its affiliates shall have purchased Shares pursuant to the
Offer in sufficient number to satisfy the Minimum Condition.
ARTICLE 10
Termination
Section 10.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the shareholders of the Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer,
(i) if Buyer shall not have purchased Shares pursuant to the Offer by
August 31, 1999 (the "Expiration Date"); provided that (x) the right to
terminate
36
this Agreement under this Section 10.01(b)(i) shall not be available to any
party whose breach of any provision of this Agreement has been the cause of, or
resulted in, the failure of such purchase to be made on or before the Expiration
Date or (y) if the waiting period (and any extension thereof) applicable to the
consummation of the Offer under the HSR Act shall expire or terminate less than
ten business days prior to the Expiration Date, the right to terminate this
Agreement pursuant to this Section 10.01(b)(i) shall not become effective until
the tenth business day following the Expiration Date; or
(ii) if there shall be any law or regulation that makes consummation
of the Offer or the Merger illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Buyer, Merger Subsidiary or the Company
from consummating the Offer or the Merger is entered and such judgment,
injunction, order or decree shall become final and unappealable;
(c) by Buyer,
(i) in accordance with Section 6.04(c);
(ii) if the Company's Board shall or shall resolve to (x) not recommend, or
withdraw its approval or recommendation of, the Offer, the Merger, this
Agreement or any of the transactions contemplated thereby, (y) modify such
approval or recommendation in a manner adverse to Buyer or Merger Subsidiary, or
(z) approve, recommend or fail to take a position that is adverse to any
proposed Acquisition Proposal;
(iii) if the Company shall breach any of its obligations under Section
6.04; or
(iv) if Buyer shall have terminated the Offer without purchasing any Shares
thereunder or failed to purchase any Shares prior to the Expiration Date in
accordance with the terms of this Agreement, in either case due to any event or
circumstance that would result in a failure to satisfy any of the Offer
conditions set forth in Annex I hereto; or
(d) by the Company,
(i) in accordance with Section 6.04(c);
(ii) if Buyer shall have failed to commence the Offer in accordance with
the terms of this Agreement; or
(iii) if Buyer shall have terminated the Offer without purchasing any Shares
due to any event or circumstance, unless such termination shall have been
37
caused by or resulted from the failure of the Company to perform in any
material respect any material obligation contained in this Agreement.
The party desiring to terminate this Agreement pursuant to clauses (b), (c) or
(d) shall give written notice of such termination to the other party in
accordance with Section 11.01.
Section 10.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, except that termination of
this Agreement shall be without prejudice to any rights any party may have
hereunder against any other party for wilful breach of this Agreement. The
agreements contained in Sections 6.03(b), 7.01, 7.03, 10.02, 11.04, 11.06, 11.07
and 11.09 shall survive the termination hereof.
ARTICLE 11
Miscellaneous
Section 11.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given,
if to Buyer or Merger
Subsidiary to: Delta Air Lines, Inc.
0000 Xxxxx Xxxxxxxxx
Xxxxxxxxxx Xxxxxxx International Airport
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Att: Xxxxxx X. Xxxxxx
with copies to: Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Att: Xxxxxx Xxxxxxx
if to the Company, to: ASA Holdings, Inc.
000 Xxxxxxxxxx Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000-0000
Facsimile: 000-000-0000
Att: Xxxxxx X. Xxxxxxx
38
with copies to: Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
X.X.X.
Facsimile: (000) 000-0000
Att: Xxxx Xxxxxxxxxxx
and Xxxxxx, Xxxxxxx & Xxxxxx, P.C.
0000 Xxxxxx Xxxxx Xxxx, X.X.
Xxxxx 000
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
Att: Xxxxx X. Xxxxxxx, Esq.
or such other address or telecopy number as such party may hereafter
specify for the purpose by notice to the other parties hereto. Each such
notice, request or other communication shall be effective (a) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and the appropriate telecopy confirmation is received or (b) if
given by any other means, when delivered at the address specified in this
Section.
Section 11.02. Survival of Representations and Warranties. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time.
Section 11.03. Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived prior to the Effective Time if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company, Buyer and Merger Subsidiary or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that (1) after such
time that designees of Buyer constitute a majority of the Company's Board, such
amendment or waiver shall be approved by a majority of the Independent Directors
(if any Independent Directors are on the Company's Board at such time) and (2)
after the adoption of this Agreement and approval of the Merger by the
shareholders of the Company, no such amendment or waiver shall, without the
further approval of such shareholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company, (ii) any term of the Articles of Incorporation of the Surviving Company
or (iii) any of the terms or conditions of this Agreement if such alteration or
change would adversely affect the holders of any shares of capital stock of the
Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or
39
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 11.04. Fees and Expenses. (a) Except as provided in this
Section, all costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.
(b) The Company agrees to pay Buyer in immediately available funds a
termination fee of $5,000,000 (the "Termination Fee") if:
(i) this Agreement is terminated by Buyer pursuant to clause
(i), (ii) or (iii) of Section 10.01(c);
(ii) this Agreement is terminated by the Company pursuant to
clause (i) of Section 10.01(d);
(iii) within 6 months after termination of this Agreement
pursuant to Section 10.01(b)(i), the Company enters into an agreement to
consummate an Acquisition Proposal with any Third Party and such
Acquisition Proposal shall subsequently be consummated.
(c) The Company acknowledges that the agreements contained in this
Section are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Buyer would not enter into this Agreement.
Accordingly, if the Company fails to promptly pay any amount due pursuant to
this Section and, in order to obtain such payment, the other party commences a
suit which results in a judgment against the Company for the fee or fees and
expenses set forth in this Section, the Company shall also pay to Buyer its
costs and expenses incurred in connection with such litigation.
Section 11.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto except that Buyer may transfer
or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase Shares pursuant to the Offer, but any such
transfer or assignment will not relieve Buyer of its obligations hereunder or
prejudice the rights of tendering shareholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer. Any other
purported assignment, delegation or transfer shall be null and void.
Section 11.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Georgia, except the
conflicts of laws provisions thereof.
40
Section 11.07. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought in
any federal court located in the State of Georgia or in any Georgia state court
located in Xxxxxx County, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient form. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing,
each party agrees that service of process on such party as provided in Section
11.01 shall be deemed effective service of process on such party.
Section 11.08. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 11.09. Entire Agreement; Third Party Beneficiaries. This Agreement
(including the Disclosure Schedules and the Confidentiality Agreement constitute
the entire agreement among Buyer, Merger Subsidiary and the Company with respect
to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among Buyer, Merger Subsidiary and the
Company with respect to the subject matter hereof. Except as set forth in
Section 703, no provision of this Agreement is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
Section 11.10. Definitions. Each of the following terms is defined in the
Section set forth opposite such term:
Term Section
Acquisition Proposal 6.04(a)
affiliate 1.03(a)
Articles of Merger 2.01(b)
Balance Sheet 4.09(a)
Balance Sheet Date 4.09(a)
Buyer Recitals
Collective Bargaining Agreements 4.20(a)
Company Recitals
41
Term Section
Company Disclosure Documents 4.10(a)
Company Permits 4.08(a)
Company Proxy Statement 4.10(a)
Company Securities 4.05
Company Shareholder Meeting 6.02(a)
Company Stock Option Plan 2.05(a)
Company 10-K 4.07(a)
Company 1997 10-K 4.06(a)
Company 10-Q 4.07(a)
Company's Board Recitals
Confidentiality Agreement 6.03(b)
Dissenting Shares 2.04(a)
Effective Time 2.01(b)
Employee Plans 4.15(a)
Environmental Laws 4.18(b)
ERISA Affiliate 4.15(a)
ERISA 4.15(a)
Exchange Act 4.03
Exchange Agent 2.03(a)
Expiration Date 10.01(b)
FAA 4.03
Georgia Law 2.01(a)
HSR Act 4.03
Independent Directors 1.03(a)
Lien 4.04(e)
Material Adverse Effect 4.01
Material Contracts 6.03
Merger 2.01(a)
Merger Consideration 2.02(b)
Merger Subsidiary Recitals
Minimum Condition 1.01(a)
Offer 1.01(a)
Offer Documents 1.01(b)
Person 2.03(c)
Recommendation 6.02(b)
Schedule 13E-3 1.01(b)
Schedule 14D-1 1.01(b)
Schedule 14D-9 1.02(b)
SEC 1.01(a)
Shares Recitals
Subsidiary 4.06(a)
Subsidiary Securities 4.06(b)
42
Term Section
Superior Proposal 6.04(c)
Surviving Company 2.01(a)
Termination Fee 11.04(b)
Third Party 6.04(c)
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ASA HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive Officer
DELTA AIR LINES, INC.
By: /s/ Xxxxxxx X. Worth
-----------------------------
Name: Xxxxxxx X. Worth
Title:
DELTA SUB, INC.
By: /s/ [NAME ILLEGIBLE]
-----------------------------
Name:
Title:
ANNEX I
Notwithstanding any other provision of the Offer, Buyer and Merger
Subsidiary shall not be required to accept for payment or pay for any Shares,
and may terminate the Offer, if
(x) the Minimum Condition (as defined in the Merger Agreement) has not been
satisfied by August 31, 1999,
(y) the applicable waiting period under the HSR Act shall not have expired
or been terminated by the expiration date of the Offer, or
(z) at any time on or after the date of the Merger Agreement and prior to
the acceptance for payment or payment of Shares, any of the following conditions
exist:
(a) there shall be instituted or pending any action, suit, investigation or
proceeding by any government or governmental authority or agency, domestic or
foreign, before any court or governmental authority or agency, domestic or
foreign,
(i) challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the making of the
Offer, the acceptance for payment of or payment for some of or all the
Shares pursuant to the Offer or the consummation of the Merger, seeking to
obtain material damages in connection with the transactions contemplated by
the Offer or the Merger,
(ii) seeking to restrain, prohibit or terminate the Company's or, as a
result of the transactions contemplated by this Agreement, Buyer's
ownership, operation or lease (or that of their respective subsidiaries or
affiliates) of any business, properties or assets which are material to the
business or operations, as such business or operations are currently
conducted, of the Company and its Subsidiaries or of Buyer and its
subsidiaries (including, in either case, without limitation, any gates at
Xxxxxxxxxx Atlanta International Airport), as the case may be, or to compel
the Company or, as a result of the transactions contemplated by this
Agreement, Buyer or any of their respective subsidiaries or affiliates to
dispose of, cease operating or hold separate any business, properties or
assets which are material to the business or operations, as such business
or operations are currently conducted, of the Company and the Subsidiaries
or of Buyer and its subsidiaries (including, in either case, without
limitation, any gates at Xxxxxxxxxx Atlanta International Airport), as the
case may be,
(iii) seeking to impose limitations on the ability of Buyer or any of
its subsidiaries or affiliates effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares acquired or
owned by Buyer or any of its subsidiaries or affiliates on all matters
properly presented to the Company's shareholders, or
(iv) seeking to require divestiture by Buyer or any of its
subsidiaries or affiliates of any Shares, or
(v) that otherwise, in the judgment of Buyer, is likely to have a
Material Adverse Effect (as defined in the Merger Agreement); or
(b) there shall be in effect any judgment, decree or order of any court or
governmental authority or agency, domestic or foreign, or any other legal
restraint,
(i) which makes illegal, delays materially or otherwise restrains or
prohibits the Offer, the acceptance for payment of or payment for some or all
of the Shares pursuant to the Offer or the consummation of the Merger, or
imposes material damages in connection with the transactions contemplated by
the Offer or the Merger,
(ii) which restrains, prohibits or terminates the Company's or, as a
result of the transactions contemplated by this Agreement, Buyer's ownership,
operation or lease (or that of their respective subsidiaries or affiliates) of
any business, properties or assets which are material to the business or
operations, as such business or operations are currently conducted, of the
Company and its Subsidiaries or of Buyer and its subsidiaries (including, in
either case, without limitation, any gates at Xxxxxxxxxx Atlanta International
Airport), as the case may be, or which compels the Company or, as a result of
the transactions contemplated by this Agreement, Buyer or any of their
respective subsidiaries or affiliates to dispose of, cease operating or hold
separate any business, properties or assets which are material to the business
or operations, as such business or operations are currently conducted, of the
Company and the Subsidiaries or of Buyer and its subsidiaries (including, in
either case, without limitation, any gates at Xxxxxxxxxx Atlanta International
Airport), as the case may be,
(iii) imposes limitations on the ability of Buyer or any of its
subsidiaries or affiliates effectively to exercise full rights of ownership of
the Shares, including, without limitation, the right to vote any Shares
acquired or owned by Buyer or any of its subsidiaries or affiliates on all
matters properly presented to the Company's shareholders,
(iv) requires divestiture by Buyer or any of its subsidiaries or
affiliates of any Shares,
(v) that otherwise, in the judgment of Buyer, is likely to have a
Material Adverse Effect; or
2
(c) there shall be any statute, rule, regulation, injunction, order or
decree enacted, enforced, promulgated, issued or deemed applicable to the
Offer or the Merger, by any court, government or governmental authority or
agency, domestic or foreign, other than the application of the waiting period
provisions of the HSR Act to the Offer or the Merger that, in the judgment of
Buyer, is reasonably likely, directly or indirectly, to result in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
or
(d) there has been any event, occurrence or development or state of
circumstances or facts which has had or could reasonably be expected to have a
Material Adverse Effect (as defined in the Merger Agreement); or
(e) the Company shall have breached or failed to perform or comply with in
any material respect any of its covenants or agreements under the Merger
Agreement, or any of the representations or warranties of the Company set
forth in the Merger Agreement shall not be true in any material respect when
made or at any time prior to consummation of the Offer as if made at and as of
such time (except as to any representation or warranty which speaks as of a
specific date, which must be untrue in any material respect as of such date);
or
(f) the Company shall have entered into, or shall have publicly announced
its intention to enter into, an agreement or an agreement in principle with
respect to any Acquisition Proposal; or
(g) the Company's Board shall or shall resolve to (x) not recommend, or
withdraw its approval or recommendation of, the Offer, the Merger, the Merger
Agreement or any of the transactions contemplated thereby, (y) modify such
approval or recommendation in a manner adverse to Buyer or Merger Subsidiary,
or (z) approve, recommend or fail to take a position that is adverse to any
proposed Acquisition Proposal; or
(h) a tender or exchange offer for more than 20% of the Shares shall have
been made by a Third Party, or it shall have been publicly disclosed or Buyer
shall have otherwise learned that
(i) any person or "group" (as defined in Section 13(d)(3) of the
Exchange Act) shall have acquired or made a bona fide proposal to acquire
beneficial ownership of more than 20% of any class or series of capital
stock of the Company (including the Shares), through the acquisition of
stock, the formation of a group or otherwise, or shall have been granted
any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 20% of any class or series of capital
stock of the Company (including the Shares) other than acquisitions for
bona fide arbitrage purposes only and other than as
3
disclosed in a Schedule 13D or 13G on file with the Commission on the
date of the Merger Agreement, or
(ii) any such person or group which, prior to the date of the Merger
Agreement, had filed such a Schedule with the Commission shall have
acquired or proposed to acquire beneficial ownership of additional shares
of any class or series of capital stock of the Company (including the
Shares), through the acquisition of stock, the formation of a group or
otherwise, constituting 10% or more of any such class or series, or shall
have been granted any option, right or warrant, conditional or otherwise,
to acquire beneficial ownership of additional shares of any class or series
of capital stock of the Company (including the Shares) constituting 10% or
more of any such class or series or
(iii) any person or group shall have entered into a definitive agreement
or an agreement in principle with respect to a merger, consolidation or
other business combination with the Company; or
(i) the Merger Agreement shall have been terminated in accordance with its
terms;
which, in the reasonable judgment of Buyer in any such case, and regardless of
the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Buyer and Merger
Subsidiary and may, subject to the terms of the Agreement, be waived by Buyer
and Merger Subsidiary in whole or in part at any time and from time to time in
their discretion. The failure by Buyer or Merger Subsidiary at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time prior to the Effective Time.
4
