EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Among
GENERAL ELECTRIC COMPANY,
GB MERGER CORP.
and
GREENWICH AIR SERVICES, INC.
Dated March 9, 1997
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TABLE OF CONTENTS
ARTICLE I
THE MERGER............................... 2
SECTION 1.01. The Merger............................................... 2
SECTION 1.02. Effective Time; Closing.................................. 2
SECTION 1.03. Effect of the Merger..................................... 2
SECTION 1.04. Certificate of Incorporation: By-laws.................... 2
SECTION 1.05. Directors and Officers................................... 3
ARTICLE II
CONVERSION OF SECURITIES: EXCHANGE OF CERTIFICATES........... 3
SECTION 2.01. Capital Stock of Merger Sub.............................. 3
SECTION 2.02. Cancellation of Treasury Stock and Parent Owned Stock.... 3
SECTION 2.03. Conversion of Company Common Stock....................... 3
SECTION 2.04. Exchange of Certificates................................. 6
SECTION 2.05. Stock Transfer Books..................................... 9
SECTION 2.06. Company Stock Options.................................... 9
ARTICLE III
REPRESENTATIONS AND WARRANT COMPANY.................. 9
SECTION 3.01. Organization and Qualification: Subsidiaries............. 10
SECTION 3.02. Certificate of Incorporation and By-laws................. 10
SECTION 3.03. Capitalization........................................... 10
SECTION 3.04. Authority Relative to this Agreement..................... 12
SECTION 3.05. No Conflict; Required Filings and Consents............... 12
SECTION 3.06. Compliance with Laws: Permits............................ 13
SECTION 3.07. SEC Filings; Financial Statements........................ 13
SECTION 3.08. Absence of Certain Changes or Events..................... 14
SECTION 3.09. Absence of Litigation.................................... 15
SECTION 3.10. Employee Benefit: ERISA.................................. 16
SECTION 3.11. Labor Matters............................................ 18
SECTION 3.12. Title to and Sufficiency of Assets....................... 19
SECTION 3.13. Intellectual Property.................................... 19
SECTION 3.14. Tax Matters.............................................. 20
SECTION 3.15. Environmental Matters.................................... 22
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SECTION 3.16. Material Contracts; Government Contracts................. 24
SECTION 3.17. Suppliers................................................ 26
SECTION 3.18. Tax Treatment............................................ 26
SECTION 3.19. Insurance................................................ 26
SECTION 3.20. Approval of Company Board and Independent Directors...... 26
SECTION 3.21. Stockholder Vote Required................................ 26
SECTION 3.22. Accuracy of Information.................................. 27
SECTION 3.23. Transactions with Affiliates............................. 27
SECTION 3.24. Opinion of Financial Advisor............................. 27
SECTION 3.25. Brokers.................................................. 28
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB............................. 28
SECTION 4.01. Organization and Qualification; Subsidiaries............. 28
SECTION 4.02. Certificate of Incorporation and By-laws................. 28
SECTION 4.03. Parent Common Stock to Be Issued in the Merger........... 28
SECTION 4.04. Authority Relative to This Agreement..................... 29
SECTION 4.05. No Conflict: Required Filings and Consents............... 29
SECTION 4.06. SEC Filings; Financial Statements........................ 30
SECTION 4.07. Absence of Certain Changes or Events..................... 30
SECTION 4.08. Brokers.................................................. 30
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER................. 30
SECTION 5.01. Conduct of Business by the Company Pending the Merger.... 30
ARTICLE VI
ADDITIONAL AGREEMENTS.................................... 33
SECTION 6.01. Registration Statement; Proxy Statement.................. 33
SECTION 6.02. Stockholders' Meeting.................................... 34
SECTION 6.03. Appropriate Action; Consents; Filings.................... 35
SECTION 6.04. Access to Information: Confidentiality................... 36
SECTION 6.05. No Solicitation of Competing Transactions................ 36
SECTION 6.06. Indemnification and Insurance............................ 38
SECTION 6.07. Notification of Certain Matters.......................... 39
SECTION 6.08. Stock Exchange Listing................................... 39
SECTION 6.09. Public Announcements..................................... 39
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SECTION 6.10. Plan of Reorganization................................... 40
SECTION 6.11. Affiliates: Tax Treatment................................ 40
SECTION 6.12. Company Employee Stock Purchase Plan..................... 40
SECTION 6.13. Consulting Agreement..................................... 40
SECTION 6.14. Supplemental Indenture................................... 40
SECTION 6.15. UNC Merger Agreement..................................... 40
SECTION 6.16. Clean Air Act Permit..................................... 41
ARTICLE VII
CONDITIONS TO THE MERGER........................ 41
SECTION 7.01. Conditions to the Obligations of Each Party.............. 41
SECTION 7.02. Conditions to the Obligations of Parent and Merger Sub... 42
SECTION 7.03. Conditions to the Obligations of the Company............. 43
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER................... 43
SECTION 8.01. Termination.............................................. 43
SECTION 8.02. Effect of Termination.................................... 45
SECTION 8.03. Fees and Expenses........................................ 45
SECTION 8.04. Amendment................................................ 47
SECTION 8.05. Waiver................................................... 47
ARTICLE IX
GENERAL PROVISIONS........................... 47
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements............................................... 47
SECTION 9.02. Notices.................................................. 47
SECTION 9.03. Certain Definitions...................................... 48
SECTION 9.04. Accounting Terms......................................... 50
SECTION 9.05. Severability............................................. 50
SECTION 9.06. Entire Agreement: Assignment............................. 51
SECTION 9.07. Parties in Interest...................................... 51
SECTION 9.08. Specific Performance..................................... 51
SECTION 9.09. Governing Law............................................ 51
SECTION 9.10. Headings................................................. 51
SECTION 9.11. Counterparts............................................. 51
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EXHIBITS
Exhibit 5.01(g) Form of Retention Agreements
Exhibit 6.11 Form of Company Affiliate Letter
Exhibit 6.13 Form of Consulting Agreement
Exhibit 7.02(a) Form of Parent Tax Opinion Representation Letter
Exhibit 7.02(b) Form of Company Tax Opinion Representation Letter
Exhibit 7.02(c) Form of Continuity of Interest Certificate
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Index of Defined Terms
Defined Term Location of Definition
Additional Payments Section 2.04(c)
affiliate Section 9.03(a)
Affiliated Person Section 3.23(a)
Agreement Recitals
American Stock Transfer and Trust Section 6.14
Average Parent Share Price Section 2.03(a)
beneficial owner Section 9.03(b)
Blue Sky Laws business day Section 3.05(b)
Cash Consideration Section 9.03(c)
Cash Election Section 2.03(a)
Cash Election Number Section 2.03(b)
Cash Election Shares Section 2.03(b)
Cash Fraction Section 2.03(b)
Certificate of Merger Section 2.03(b)
Certificates Section 1.02
Change of Control Section 2.04(b)
Closing Agreement Section 8.03(a)
Closing Date Section 3.14(a)(i)
Code Section 1.02
Combination Recitals
Commonly Controlled Entity Section 8.03(a)
Company Aeroderivative Business Section 3.10(a)
Company Benefit Plans Recitals
Company Businesses Section 9.03(d)
Company Class A Stock Section 3.10(a)
Company Class B Stock Section 9.03(e)
Company Commercial Aircraft Business Section 2.01
Company Common Stock Section 2.01
Company Disclosure Schedule Section 9.03(f)
Company Financial Advisor Section 2.01
Company Foreign Benefit Plan Article III
Company Government Business Section 3.24
Company Group Section 3.10
Company Indemnified Parties Section 9.03(g)
Company Intellectual Property Section 9.03(h)
Company Licenses Section 6.06(e)
Company Material Adverse Effect Section 3.13
Section 3.13
Section 3.01
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Defined Term Location of Definition
Company 1996 Balance Sheet Section 3.07(d)
Company Pension Plans Section 3.10(a)
Company Permits Section 3.06(c)
Company Preferred Stock Section 3.03
Company SEC Reports Section 3.07(a)
Company Stock Option Section 2.06(a)
Company Stock Option Plan Section 2.06(a)
Competing Transaction Section 6.05(a)
Confidentiality Agreement Section 6.04(a)
control Section 9.03(i)
controlled by Section 9.03(i)
Current Offering Section 6.12
Delaware Law Recitals
Effective Time Section 1.02
Election Deadline Section 2.03(e)
Election Form Record Date Section 2.03(d)
Environmental Law Section 3.15(a)(ii)
Environmental Permit Section 3.15(a)(iii)
ERISA Section 3.10(a)
ESPP Section 3.03
Exchange Act Section 3.05(b)
Exchange Agent Section 2.04(a)
Exchange Fund Section 2.04(a)
Form of Election Section 2.03(d)
Governmental Authority Section 9.03(j)
Government Contracts Section 3.16(c)
Greenberg, Traurig Section 2.03(c)
Hazardous Substances Section 3.15(a)(i)
HSR Act Section 3.05(b)
Indemnified Parties Section 6.06(e)
Knowledge Section 9.03(k)
Laws Section 3.05(a)
Liens Section 3.12(a)
Material Contracts Section 3.16(a)
Merger Recitals
Merger Consideration Section 2.03(a)
Merger Sub Recitals
NASD Section 3.05(b)
NASDAQ/NMS Section 3.03
Net Option Spread Section 2.06(a)
NYSE Section 2.03(a)
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Defined Term Location of Definition
Option and Voting Agreement Recitals
Option Spread Section 2.06(a)
Parent Recitals
Parent Break-Up Fee Section 8.03(a)
Parent Common Stock Section 2.03(a)
Parent Material Adverse Effect Section 4.01
Parent SEC Reports Section 4.06(a)
PBGC Section 3.10(g)
person Section 9.03
Proxy Statement Section 6.01(a)
Real Estate Section 9.03(m)
Registration Statement Section 6.01(a)
Representatives Section 6.04(b)
SEC Section 3.07(a)
Securities Act Section 3.05(b)
Stock Consideration Section 2.03(a)
Stockholders' Meeting Section 6.02(a)
subsidiaries Section 9.03(n)
subsidiary Section 9.03(n)
Subsidiary Section 3.01
Superior Proposal Section 6.05(b)
Superior Proposal Notice Section 6.05(b)
Surviving Corporation Section 1.01
Tax Return Section 3.14(a)(ii)
Tax Ruling Section 3.14(a)(iii)
Taxes Section 3.14(a)(iv)
Terminating Company Breach Section 8.01(e)
Terminating Parent Breach Section 8.01(d)
UNC Section 6.15
UNC Indemnified Parties Section 6.06(e)
UNC Merger Section 6.15
UNC Merger Agreement Section 6.15
under common control with Section 9.03(i)
Valuation Period Section 2.03(a)
Welfare Plans Section 3.10(a)
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AGREEMENT AND PLAN OF MERGER dated March 9, 1997 (this "Agreement")
among GENERAL ELECTRIC COMPANY, a New York corporation ("Parent"), GB MERGER
CORP., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), and GREENWICH AIR SERVICES, INC., a Delaware corporation (the "Company").
WHEREAS, the parties hereto desire to cause the Company, upon the
terms and subject to the conditions of this Agreement and in accordance with the
General Corporation Law of the State of Delaware ("Delaware Law"), to merge with
and into Merger Sub (the "Merger");
WHEREAS, the Board of Directors of the Company has (i) determined
that the Merger is fair to the holders of shares of Company Common Stock (as
such term is defined in Section 2.01) and is in the best interests of such
stockholders and (ii) approved this Agreement and the transactions contemplated
hereby and recommended unanimously that the holders of shares of Company Class A
Stock (as such term is defined in Section 2.01) approve and adopt this
Agreement;
WHEREAS, the Board of Directors of Parent has determined that the
Merger is in the best interests of Parent and its stockholders and, as sole
stockholder of Merger Sub, has approved and adopted this Agreement and the
transactions contemplated hereby;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, as a condition and inducement to Parent's and Merger Sub's
entering into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, Parent is
entering into a Stock Option and Voting Agreement with certain stockholders of
the Company, dated the date hereof (the "Option and Voting Agreement"), pursuant
to which, among other things, such stockholders have agreed, subject to the
terms and conditions contained therein, to vote all shares of Class A Common
Stock then owned by such stockholders to approve and adopt this Agreement, and
have granted to Parent an option to acquire their shares of Company Common Stock
upon the terms and subject to the conditions set forth therein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with Section 251 of
Delaware Law, at the Effective Time (as defined below), the Company shall be
merged with and into Merger Sub. As a result of the Merger the separate
corporate existence of the Company shall cease, and Merger Sub shall be the
surviving corporation of the Merger (the "Surviving Corporations").
SECTION 1.02. Effective Time; Closing. As promptly as practicable,
and in no event later than five business days after the satisfaction or, if
permissible, waiver of the conditions set forth in Article VII (other than those
conditions that can only be satisfied on the Closing Date (as defined below)),
the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in
accordance with, Section 251 of Delaware Law. The term "Effective Time" means
the date and time of the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware (or such later time as may be agreed by the
parties hereto and specified in the Certificate of Merger). Immediately prior to
the filing of the Certificate of Merger, a closing will be held at the offices
of Shearman & Sterling, 599 Lexington Avenue, New York, New York (or such other
place as the partial may agree) (the date on which such closing takes place
being the Closing Date.).
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities
and duties of each of the Company and Merger Sub shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
SECTION 1.04. Certificate of Incorporation: By-laws.
(a) Subject to the terms of Section 6.06, at the Effective Time, the
Certificate of Incorporation of the Surviving Corporation shall be the
Certificate of Incorporation of Merger Sub as in effect immediately prior to the
Effective Time, except that Article I thereof shall be amended as of the
Effective Time to read as follows: "the name of the Corporation is Greenwich Air
Services, Inc."
(b) Subject to the terms of Section 6.06, at the Effective Time, the
By-laws of Merger Sub, as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, the Certificate of Incorporation of the Surviving Corporation
and such By-laws.
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SECTION 1.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES: EXCHANGE OF CERTIFICATES
SECTION 2.01. Capital Stock of Merger Sub. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holder of any
shares of Company Class A Common Stock, par value $.01 per share (the "Company
Class A Stocks"), or Company Class B Common Stock, par value $.01 per share (the
"Company Class B Stocks" and, together with the Company Class A Stock, the
Company Common Stock.), or any shares of capital stock of Merger Sub, each share
of common stock, par value $.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
fully paid and nonassessable share of common stock, par value S.01 per share, of
the Surviving Corporation.
SECTION 2.02. Cancellation of Treasury Stock and Parent Owned Stock.
As of the Effective Time, by virtue of the Merger and without any action on the
part of the holder of any shares of Company Common Stock or any shares of
capital stock of Merger Sub, each share of Company Common Stock issued and held
immediately prior to the Effective Time in the Company's treasury or by any of
the Company's direct or indirect wholly owned subsidiaries and each share of
Company Common Stock that is owned by Parent, Merger Sub or any other
wholly-owned subsidiary of Parent shall automatically be cancelled and retired
and shall cease to exist, and no consideration shall be delivered in exchange
therefor.
SECTION 2.03. Conversion of Company Common Stock. (a) As of the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of Company Common Stock or any shares of capital stock
of Merger Sub, except as otherwise provided in this Section 2.03 and subject to
Section 2.04(f), each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares to be cancelled in
accordance with Section 2.02) shall be converted into the right to receive the
number of shares of common stock, par value $0.32 per share, of Parent ("Parent
Common Stock") determined by dividing $31.00 by the Average Parent Share Price
(as defined below) and rounding the result to the nearest one thousandth of a
share (the "Stock Consideration") or, in the event the holder thereof shall have
made the election provided for herein, such share of Company Common Stock shall
be converted into the right to receive in cash from Parent, without interest, an
amount equal to $31.00 (the "Cash Consideration") (or a combination of shares of
Parent Common Stock and cash determined in accordance with Section 2.03(b)) (the
"Merger Consideration"); provided, however, that, in any event, if,
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between the first day of the Valuation Period (as defined below) and the
Effective Time, the outstanding shares of Parent Common Stock shall have been
changed into a different number of shares or a different class, by reason of any
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Stock Consideration shall be
correspondingly adjusted to the extent appropriate to reflect such stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares. The "Average Parent Share Prices" means the average of the
last sales prices per share of Parent Common Stock on the New York Stock
Exchange, Inc. (the "NYSE") Composite Tape for the 10 consecutive trading days
ending on the trading day which is five days prior to the Closing Date (the
"Valuation Period"). As of the Effective Time, an such shares of Company Common
Stock shall no longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certificate representing
any such shares of Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration.
(b) Cash Election; Cash Election Adjustments. Each holder of record
of Company Common Stock as of the record date for the Stockholders' Meeting (as
defined in Section 6.02) win be entitled, with respect to each share of Company
Common Stock held by such holder, to elect to receive the Cash Consideration (a
"Cash Elections"); provided, however, that if the aggregate number of shares of
Company Common Stock covered by Cash Elections ("Cash Election Shares") exceeds
55% of the number of shares of Company Common Stock outstanding immediately
prior to the Effective Time (the "Cash Election Number"), the Cash Election
Shares shall be converted into the right to receive Parent Common Stock and cash
in the following manner:
each Cash Election Share shall be converted into the right to
receive (i) an amount in cash, without interest, equal to the
product of (x) the Cash Consideration and (y) a fraction (the Cash
Fraction.), the numerator of which shall be the Cash Election Number
and the denominator of which shall be the total number of Cash
Election Shares, and (ii) such number of shares of (rounded to the
nearest one thousandth of a share) Parent Common Stock equal to the
product of (a) the Cash Consideration divided by the Average Parent
Share Price and (y) a fraction equal to one minus the Cash Fraction.
(c) Adjustments Relating to Tax Opinions. If either (i) the tax
opinion of counsel to Parent referred to in Section 7.02(c) cannot be rendered
(as reasonably determined by counsel to Parent and concurred in by Greenberg,
Traurig, Hoffman, Rosen, Lipoff & Quentel ("Greenberg, Traurig")) or (ii) the
tax opinion of Greenberg, Traurig referred to in Section 7.03(b) cannot be
rendered (as reasonably determined by Greenberg, Traurig and concurred in by
counsel to Parent), in either case as a result of the Merger potentially failing
to satisfy continuity of interest requirements under applicable federal income
tax principles relating to reorganizations under Section 368(a) of the Code,
then Parent shall reduce to the minimum extent necessary to enable the relevant
tax opinion or opinions, as the case may be, to be rendered, the Cash Election
Number.
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(d) Exercise of Election. All Cash Elections shall be made on a form
designed for that purpose and mutually acceptable to the Company and Parent (a
"Form of Election") and mailed to holders of record of shares of Company Common
Stock as of the record date for the Stockholders' Meeting or such other date as
Parent and the Company shall mutually agree (the "Selection Form Record Date").
Parent and the Company shall make available one or more Forms of Election as may
be reasonably requested by an persons who become holders (or beneficial owners)
of Company Common Stock between the Election Form Record Date and the close of
business on the day prior to the Election Deadline (as defined below). Elections
shall be made by holders of Company Common Stock by mailing to the Exchange
Agent (as defined in Section 2.04) a Form of Election. To be effective, a Form
of Election must be properly completed, signed and submitted to the Exchange
Agent and accompanied by the Certificates (as defined in Section 2.04(b))
representing the shares of Company Common Stock as to which the election is
being made (or an appropriate guarantee of delivery by an appropriate trust
company in the United States or a member of a registered national securities
exchange or the National Association of Securities Dealers, Inc.). Parent win
have the discretion, which it may delegate in whole or in part to the Exchange
Agent, to reasonably determine whether Forms of Election have been properly
completed, signed and submitted or revoked and to disregard immaterial defects
in Forms of Election. The decision of Parent (or the Exchange Agent) in such
matters shall be conclusive and binding. The Exchange Agent shall make a good
faith effort to notify any person of any defect not waived by Parent in a Form
of Election submitted to the Exchange Agent. The Exchange Agent shall also make
an computations contemplated by this Section 2.03 and an such computations
shall, absent manifest error, be conclusive and binding on the holders of
Company Common Stock.
(e) Election Deadline. A Form of Election must be received by the
Exchange Agent (as defined below) by the close of business on the last business
day prior to the Closing Date (the "Election Deadlines") in order to be
effective. Any holder of Company Common Stock who has made an election by
submitting a Form of Election to the Exchange Agent may at any time prior to the
Election Deadline change such holder's election by submitting a revised Form of
Election, properly completed and signed, that is received by the Exchange Agent
prior to the Election Deadline. Any holder of Company Common Stock may at any
time prior to the Election Deadline revoke his election and withdraw his
Certificates deposited with the Exchange Agent by written notice to the Exchange
Agent received by the Election Deadline. As soon as practicable after the
Election Deadline, the Exchange Agent shall determine the avocation of the cash
portion of the Merger Consideration and the stack portion of the Merger
Consideration and shall notify Parent of its determination. Promptly after such
notification, Parent shall issue a press release announcing in reasonable detail
the results of the Exchange Agent's avocation of the Merger Consideration.
(f) Deemed Non-Election. For the purposes hereof, a holder of record
of Company Common Stock who does not submit a Form of Election which is received
and accepted as such by the Exchange Agent prior to the Election Deadline shall
be deemed not to have made a Cash Election.
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SECTION 2.04. Exchange of Certificates. (a) Exchange Agent. From and
after the Effective Time, (i) Parent shall make available to a bank or trust
company designated by Parent and reasonably satisfactory to the Company (the
reexchange Agent.), for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Article II through the Exchange
Agent, (i) certificates evidencing such number of shares of Parent Common Stock
issuable to holders of Company Common Stock in the Merger pursuant to Section
2.03 and (ii) cash in the amount required to be exchanged for shares of Company
Common Stock in the Merger pursuant to Section 2.03 (such certificates for
shares of Parent Common Stock, together with any dividends or distributions with
respect thereto, and such cash, being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shad, pursuant to written instructions jointly
furnished by Parent and the Company, deliver the cash and the Parent Common
Stock contemplated to be issued pursuant to Section 2.03 out of the Exchange
Fund. Except as contemplated by Section 2.04(g) hereof, the Exchange Fund shall
not be used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
a certificate or certificates (to the extent such certificates have not already
been submitted to the Exchange Agent with Forms of Election) which immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock (the "Certificates") (i) a letter of transmittal (which shall be in
customary form and shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration.
(c) Exchange of Certificates. Upon surrender to the Exchange Agent
of a Certificate for cancellation, together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and
such other documents as may be reasonably required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor (A) a certificate representing that number of whole shares of
Parent Common Stock, if any, to which such holder is entitled pursuant to this
Article II and (B) a check in the amount equal to the cash, if any, to which
such holder is entitled pursuant to the provisions of this Article II (including
any cash in lieu of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.04(f) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.04(d)
(together, the "Additional Payments")), and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of shares of
Company Common Stock which is not registered in the transfer records of the
Company, the applicable Merger Consideration and Additional Payments, if any,
may be issued to a transferee if the Certificate representing such shares of
Company Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.04, each Certificate shall be deemed at all times
after the Effective Time to represent only the right to receive upon
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such surrender the applicable Merger Consideration with respect to the shares of
Company Common Stock formerly represented thereby and Additional Payments, if
any.
(d) Distributions with Respect to Unsurrendered Certificates. No
dividends or other declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock the holder thereof is entitled to receive upon surrender thereof,
and no cash payment in lieu of any fractional shares shad be paid to any such
holder pursuant to Section 2.04(f), until the holder of such Certificate shall
surrender such Certificate. Subject to the effect of escheat, tax or other
applicable Laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificates representing whole shares of Parent
Common Stock issued in exchange therefor, without interest, (i) promptly, the
amount of any cash payable with respect to a fractional share of Parent Common
Stock to which such holder is entitled pursuant to Section 2.04(f) and the
amount of dividends or other distributions with a record date after the
Effective Time and theretofore paid with respect to such whole shares of Parent
Common Stock, and (ii) at the appropriate payment date, the amount of dividends
or other distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole shares of Parent Common Stock. After the Effective Time, each
outstanding Certificate which theretofore represented shares of Company Common
Stock shall, until surrendered for exchange in accordance with this Section
2.04, be deemed for all purposes to evidence ownership of the number of shares
of Parent Common Stock into which the shares of Company Common Stock (which,
prior to the Effective Time, were represented thereby) shall have been so
converted.
(e) No Further Rights in Company Common Stock. All shares of Parent
Common Stock issued or cash paid upon conversion of the shares of Company Common
Stock in accordance with the terms hereof (including any cash paid pursuant to
Section 2.04(d) or (f)) shall be deemed to have been issued in full satisfaction
of all rights pertaining to such shares of Company Common Stock.
(f) No Shares. No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of Parent. Each holder
of a fractional share interest shall be paid an amount in cash equal to the
product obtained by multiplying (i) such fractional share interest to which such
holder (after taking into account all fractional share interests then held by
such holder) would otherwise be entitled by (ii) the Average Parent Share Price.
As promptly as practicable after the determination of the amount of cash, if
any, to be paid to holders of fractional share interests, the Exchange Agent
shall so notify Parent, and Parent shall deposit such amount with the Exchange
Agent and shall cause the Exchange Agent to forward payments to such holders of
fractional interests subject to and in accordance with the terms of Sections
2.04(b), (c) and (d).
7
(g) Termination of Exchange Fund. Any portion of the Exchange Fund
(including any shares of Parent Common Stock) which remains undistributed to the
holders of Company Common Stock for six months after the Effective Time shall be
delivered to Parent, upon demand, and any holders of Company Common Stock who
have not theretofore complied with this Article II shall thereafter look only to
Parent for the applicable Merger Consideration and any Additional Payments to
which they are entitled. Any portion of the Exchange Fund remaining unclaimed by
holders of shares of Company Common Stock as of a date which is immediately
prior to such time as such amounts would otherwise escheat to or become property
of any government entity shall, to the extent permitted by applicable Law,
become the property of Parent free and clear of any claims or interest of any
person previously entitled thereto.
(h) No Liability. None of the Exchange Agent, Parent or the
Surviving Corporation shall be liable to any holder of Certificates for any
shares of Parent Common Stock (or dividends or distributions with respect
thereto), or cash delivered to a public official pursuant to any abandoned
property, escheat or similar law.
(i) Withholding Rights. Each of the Surviving Corporation and Parent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Certificates such amounts as
it is required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or foreign tax how. To the
extent that amounts are so withheld by the Surviving Corporation or Parent, as
the case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Certificates in respect of
which such deduction and withholding was made by the Surviving Corporation or
Parent, as the case may be.
(j) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the applicable Merger Consideration and Additional Payments, if any.
(k) Further Assurances. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Merger Sub or the Company acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of each of the Merger Sub and the Company or otherwise, an deeds,
bills of sale, assignments and assurances and to take and do, in such names and
on such behalves or otherwise, an such other actions and things as may be
8
necessary or desirable to vest, perfect or confirm any and an right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out the purposes of this Agreement.
SECTION 2.05. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to such share of
Company Common Stock, except as otherwise provided herein or by law. On or after
the Effective Time, any Certificates presented to the Exchange Agent or Parent
for any reason shall be converted into the applicable Merger Consideration and
Additional Payments, if any.
SECTION 2.06. Company Stock Options. (a) Each option (a "Company
Stock Options") outstanding, whether or not exercisable and whether or not
vested, at the Effective Time under the Company's 1992 Employee Incentive and
Non-Qualified Stock Option Plan or any other plans (the "Company Stock Option
Plans") shall be cancelled by the Company immediately prior to the Effective
Time, and each holder of a cancelled Company Stock Option shall be entitled to
receive at the Effective Time or as soon as practicable thereafter from the
Company in consideration for the cancellation of such Company Stock Option an
amount (the "Option Spreads") equal to the product of (i) the number of shares
of Company Common Stock previously subject to such Company Stock Option and (ii)
the excess, if any, of the Cash Consideration over the exercise price per share
of Company Common Stock previously subject to such Company Stock Option. The
Option Spread, after reduction for applicable tax withholding, if any (the "Net
Option Spread"), shall be paid in cash or, if a holder of Company Stock Options
so elects in writing at least 10 days prior to the Effective Time with resect to
any portion of such holder's Company Stock Options, in a number of shares of
Parent Common Stock determined by dividing (i) the aggregate Net Option Spread
payable to such holder by (ii) the Average Parent Share Price (subject to
adjustment in accordance with the proviso in the first sentence of Section
2.03(a) hereof).
(b) Not later than 40 days prior to the expected Effective Time, the
Company shall provide each holder of a Company Stock Option an election form
pursuant to which each holder may make the election specified in Section
2.06(a).
ARTICLE III
REPRESENTATIONS AND WARRANT COMPANY
Except as disclosed in a separate disclosure schedule referring to
the Sections contained in this Agreement, which has been delivered by the
Company to Parent prior to the execution of this Agreement (the Company
Disclosure Schedule.), the Company hereby represents and warrants to the Parent
and Merger Sub that:
9
SECTION 3.01. Organization and Qualification: Subsidiaries. Each of
the Company and each subsidiary of the Company (each, a "Subsidiary") is a
corporation duly incorporated, validly excising and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the lack of such power, authority and approval would
not, individually or in the aggregate, have a Company Material Adverse Effect
(as defined below). Each of the Company and each Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, have a
Company Material Adverse Effect. The term "Company Material Adverse Effect"
means any circumstances, change in, or effect on, the Company Group, when taken
as a consolidated whole, or affecting the Company Commercial Aircraft Business,
the Company Government Business or the Company Aeroderivative Business, whether
individually or collectively as to any one or more of such Company Businesses,
which is, or could reasonably be expected in the future to be, materially
adverse to the operations, assets or liabilities, employee relationships,
customer or supplier relationships, earnings or results of operations, financial
projections or forecasts, or the business prospects and condition (financial or
otherwise) of the Company Group or any one or more of the Company Businesses,
whether individually or taken as a consolidated whole with respect to the
Company Group. A true and complete list of all the Subsidiaries, together with
the jurisdiction of incorporation of each Subsidiary and the percentage of the
outstanding capital stock of each Subsidiary owned by the Company and each other
Subsidiary, is set forth in Section 3.01 of the Company Disclosure Schedule.
Except as set forth in Section 3.01 of the Company Disclosure Schedule, the
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for any equity
or similar interest in, any corporation, partnership, limited liability company,
joint venture or other business association or entity.
SECTION 3.02. Certificate of Incorporation and By-laws. The Company
has heretofore furnished to Parent complete and correct copies of the
Certificates of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company and each Subsidiary. Such
Certificates of Incorporation, By-laws and equivalent organizational documents
are in full force and effect. Neither the Company nor any Subsidiary is in
violation of any provision of its Certificate of Incorporation, By-laws or
equivalent organizational documents.
SECTION 3.03. Capitalization. The authorized capital stock of the
Company consists of (i) 25,000,000 shares of Company Class A Stock, (ii)
25,000,000 shares of Company Class B Stock, and (iii) 2,500,000 shares of
preferred stock, par value $.01 per share, issuable in such series and with such
rights and designations as the Board of Directors of the Company may from time
to time determine (the "Company Preferred Stock"). As of December 31, 1996, (a)
6,971,213 shares of Company Class A Stock were issued and outstanding, all of
which were
10
validly issued, fully paid and nonassessable, (b) 2,900 shares of Company Class
A Stock were held in the treasury of the Company or the Subsidiaries, (c)
154,975 shares of Company Class A Stock were reserved for future issuance
pursuant to the Company Stock Option Plans, (d) 9,778,176 shares of Company
Class B Stock were issued and outstanding, all of which were validly issued,
fully paid and nonassessable, (e) 47,231 shares of Company Class B Stock were
held in the treasury of the Company or the Subsidiaries, (f) 398,975 shares of
Company Class B Stock were reserved for future issuance pursuant to the Company
Stock Option Plan, (g) 185,531 shares of Company Class B Stock were reserved for
future issuance pursuant to the Company's 1995 Employee Stock Purchase Plan (the
"ESPP") and (h) no shares of Company Preferred Stock were issued and
outstanding. All publicly traded shares of Company Class A Stock and Company
Class B Stock have been approved for trading on the National Association of
Securities Dealers, Inc. Automated Quotation/National Market System
("NASDAQ/NMS"). Set forth in Section 3.03 of the Company Disclosure Schedule is
a summary setting forth the number of outstanding Company Options, stock
incentive rights or any other rights to acquire shares of Company Common Stock
pursuant to the Company Stock Option Plan and the exercise price therefor as of
December 31, 1996. From December 31, 1996 through the date of this Agreement,
the Company has not issued, sold, pledged, disposed of, granted, encumbered, or
authorized the issuance, sale, pledge, disposition, grant or encumbrance of any
shares of capital stock of any class of the Company or any Subsidiary or any
rights to acquire such shares or other equity interests in the Company or any
Subsidiary, except pursuant to the exercise of Company Options that were
outstanding as of December 31, 1996 and those additional Company Options granted
since December 31, 1996 that are set forth in Section 3.03 of the Company
Disclosure Schedule, and except for the authorization to issue shares of Company
Class B Stock pursuant to the UNC Merger Agreement, which authorization has been
conditionally revoked and rescinded in connection with the execution and
delivery of this Agreement. Except as set forth in this Section 3.03 or in
Section 3.03 of the Company Disclosure Schedule, and except for the
authorization to issue shares of Company Class B Stock pursuant to the UNC
Merger Agreement, which authorization has been conditionally revoked and
rescinded in connection with the execution and delivery of this Agreement, there
are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the Company or any Subsidiary or obligating the Company or any Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any Subsidiary. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. Except as disclosed in Section
3.03 of the Company Disclosure Schedule, there are no outstanding contractual
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any shares of Company Class A Stock or Company Class B Stock or any
capital stock of or any equity interests in any Subsidiary. Except as disclosed
in Section 3.03 of the Company Disclosure Schedule, each outstanding share of
capital stock of each Subsidiary is duly authorized, validly issued, fully paid
and nonassessable and each such share owned by the Company or any Subsidiary is
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on the Company's or such other
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever.
11
SECTION 3.04. Authority Relative to this Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the Merger.
The execution and delivery of this Agreement by the Company and the consummation
by the Company of the Merger have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the Merger
(other than, with respect to the Merger, the adoption of this Agreement by the
holders of a majority of the shares of Company Class A Stock and the filing and
recordation of appropriate merger documents as required by Delaware Law). This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and Merger Sub,
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, (i) conflict
with or violate the Certificate of Incorporation or By-laws or equivalent
organizational documents of the Company or any Subsidiary, as applicable, (ii)
conflict with or violate any domestic (federal, state or local) or foreign Law,
rule, regulation, order, judgment or decree (collectively, "Laws") applicable to
the Company or any Subsidiary or by which any property or asset of the Company
or any Subsidiary is bound or affected, except for such conflicts or violations
that, individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect, or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any Subsidiary pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any property
or asset of the Company or any Subsidiary is bound or affected, except as
disclosed in Section 3.05(a) of the Company Disclosure and except for any such
breaches, defaults or other occurrences that, individually or in the aggregate,
would not have a Company Material Adverse Effect and win not prevent or delay
the consummation of the transactions contemplated by this Agreement.
(b) Except as disclosed in Section 3.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company win not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic, foreign or
supranational, except (i) for applicable requirements, if any, of the Securities
Exchange Act of 1934, as amended (the "Exchange Act.), the Securities Act of
12
1933, as amended (the "Securities Acts), state securities or Blue Sky laws
(.Blue Sky Laws.), state takeover laws, the pre-merger notification requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the HER Act.), and filing and recordation of
appropriate merger documents as required by Delaware Law and the rules of the
National Association of Securities Dealers (.NASD.) and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect.
SECTION 3.06. Compliance with Laws: Permits. (a) Neither the Company
nor any Subsidiary is in conflict with, or in default or violation of, (i) any
Laws applicable to the Company or any Subsidiary or by which any property or
asset of the Company or any Subsidiary is bound or affected, or (ii) any of the
Company Permits (as defined below), except for any such conflicts, defaults or
violations that do not, individually or in the aggregate, have a Company
Material Adverse Effect.
(b) Except where non-compliance would not have a Company Material
Adverse Effect, the Company and the Subsidiaries have complied with an
applicable federal procurement laws and regulations including, without
limitation, the Truth in Negotiations Act, the Foreign Corrupt Practices Act,
the Office of Federal Procurement Policy Act Amendments of 1988 (procurement
Integrity. Amendments), the Cost Principles and Cost Accounting Standards, and
the Federal Acquisition Regulations and an supplements thereto, in connection
with the Government Contracts (as defined below), and to the Company's
Knowledge, no person has made any allegation that the Company or any Subsidiary
has not so complied.
(c) Each of the Company and the Subsidiaries is in possession of an
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders from an federal, state,
local and foreign authorities and agencies, including without limitation, the
Federal Aviation Administration, necessary for the Company or any of its
Subsidiaries, to own, lease and operate its properties or to carry on the
Company Businesses (as hereinafter defined) (the "Company Permits"), and no
suspension or cancellation of any of the Company Permits is pending or, to the
Company's Knowledge, threatened, except where the failure to have, or the
suspension or cancellation of, any of the Company Permits, individually or in
the aggregate, would not have a Company Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements.
(a) The Company has filed an forms, reports and documents required
to be filed by it with the Securities and Exchange Commission (the ~SEC-) since
September 30, 1993 and has made available to the Parent ad registration
statements filed by the Company with the SEC, including all exhibits filed in
connection therewith (on all forms applicable to the registration of securities)
since September 30, 1993 and prior to the date of this Agreement (collectively,
the "Company SEC Reports"), and has heretofore made available to Parent
13
complete (i.e., unredacted) copies of each exhibit (which is in effect as of the
date hereof) to the Company SEC Reports filed with the SEC. The Company SEC
Reports (i) were prepared in an material respects in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations thereunder and (ii) did not at the time they were
filed contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(b) Except as disclosed in the Company SEC Reports, no Subsidiary is
required to file any form, report or other document with the SEC.
(c) Each of the consolidated financial statements (including, in
each case, any notes and schedules thereto) contained in the Company SEC Reports
complied as to form with the applicable accounting requirements and rules and
regulations of the SEC and was prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto), and each fairly presented the consolidated financial position, results
of operations and cash flows of the Company and the consolidated Subsidiaries as
at the respective dates thereof and for the respective periods indicated therein
in accordance with United States generally accepted accounting principles
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or in the
aggregate, to have a Company Material Adverse Effect).
(d) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries as of September
30, 1996, including the notes thereto (the "Company 1996 Balance Sheet"),
neither the Company nor any Subsidiary has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with United States generally accepted accounting principles,
except for liabilities and obligations (i) disclosed in any Company SEC Report
filed since September 30, 1996 and prior to the date of this Agreement, (ii)
incurred since September 30, 1996 in the ordinary course of business which,
individually or in the aggregate, do not have a Company Material Adverse Effect,
or (iii) incurred pursuant to this Agreement.
(e) The Company has heretofore furnished to Parent complete and
correct copies of all material amendments and modifications that have not been
filed by the Company with the SEC to all agreements, documents and other
instruments that previously had been filed by the Company with the SEC and are
currently in effect.
SECTION 3.08. Absence of Certain Changes or Events. Since September
30, 1996, except as contemplated by this Agreement, disclosed in Section 3.08 of
the Company Disclosure Schedule, or disclosed in any Company SEC Report filed
since September 30, 1996, the Company and the Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since September 30, 1996, there has not been
14
(a) any event or events having, individually or in the aggregate, a Company
Material Adverse Effect, (b) any change by the Company in its accounting
methods, principles or practices, (c) any revaluation by the Company of any
material asset (including, without limitation, any writing down or writing up of
the value of inventory, writing off of notes or accounts receivable or reversing
of any accruals or reserves), other than in the ordinary course of business
consistent with past pracdee, (d) any entry by the Company or any Subsidiary
into any commitment or transaction material to the Company and the Subsidiaries
taken as a whole, except in the ordinary course of business and consistent in
all material respects with past practice, (e) other than regular dividends, of
which $.01 per share of Company Common Stock was paid in February 1996 and $.012
per share of Company Common Stock was paid in January 1997, any declaration,
setting aside or payment of any dividend or distribution in respect of any
capital stock of the Company or any redemption, purchase or other acquisition of
any of its securities, or (f) other than pursuant to the contracts referred to
in Section 3.10 or as expressly provided for in this Agreement, any increase in
or establishment of any bonus, insurance, severance, deferred compensation,
pension, recrement, profit sharing, stock option (including, without limitation,
the granting of stock options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee benefit plan, or any
other increase in the compensation payable or to become payable to any officers
or key employees of the Company or any Subsidiary, except in the ordinary course
of business consistent in all material respects with past practice. The results
of operations for the most recently completed fiscal quarter are not materially
lower than the results of operations for the immediately preceding fiscal
quarter, and there is no reason to believe that the results of operations for
the current fiscal quarter will be materially lower than the results of
operations for the Company's most recently completed fiscal quarter.
SECTION 3.09. Absence of Litigation.
(a) Except as disclosed in the Company SE C Reports or in Section
3.09 of the Company Disclosure Schedule, there is no claim, action, proceeding
or investigation pending or, to the Company's Knowledge, threatened against the
Company or any Subsidiary, or any property or asset of the Company or any
Subsidiary, before any court, arbitrator or Governmental Authority, which,
individually or when aggregated with other claims, actions, proceedings or
investigations or product liability claims, actions, proceedings or
investigations which are reasonably likely to result from facts and
circumstances that have given rise to such a claim, action, proceeding or
investigation, would have a Company Material Adverse Effect. As of the date
hereof, neither the Company nor any Subsidiary nor any property or asset of the
Company or any Subsidiary is subject to any order, writ, judgment, injunction,
decree, determination or award having, individually or in the aggregate, a
Company Material Adverse Effect.
(b) Neither the Company nor any Subsidiary has received notice from
any source that the Company or any Subsidiary may be liable with respect to
product liability or worker's compensation claims, except for such claims that,
if determined adversely to the
15
Company and the Subsidiaries, would not, individually or in the aggregate, have
a Company Material Adverse Effect.
SECTION 3.10. Employee Benefit: ERISA.
(a) 3.10(a) of the Company Disclosure Schedule contains a list of
all Employee pension benefit pansy (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes
referred to herein as Company Pension Plans.), Employee welfare benefit plans
(as defined in Section 3(1) of ERISA) (sometimes referred to herein as Welfare
Plans.), and each other plan, arrangement or policy (written or oral) relating
to stock options, stock purchases, compensation, deferred compensation,
severance, fringe benefits or other employee benefits, in each case maintained,
or contributed to, by the Company or any of the Subsidiaries or any other person
or entity that, together with the Company is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code (each, together with the Company, a
Commonly Controlled Entity.), for the benefit of any current or former employed,
officers, agents or directors of the Company or any of its subsidiaries (all of
the foregoing being herein called Company Benefit Plans). The Company has made
available to Parent true and complete copies of (w) each Company Benefit Plan
(or, in the case of any unwritten Company Benefit Pans, descriptions thereof),
('c) the most recent annual report on Form 5500 filed with the Internal Revenue
Service with resect to each Company Benefit Plan (if any such report was
required), (y) the most recent summary plan dacriphon (or similar document) for
each Company Benefit Plan for which a summary plan description is required or
was otherwise provided to plan participants or beneficiaries and (z) each trust
agreement and group annuity contract reladog to any Company Benefit Plan.
(b) Except as disclosed in Section 3.10(b) of the Company Disclosure
Schedule or where non-disclosure would not have a Company Material Adverse
Effect, all Company Pension Plans and related trusts that are intended to be
ta~c-qualified plans have been, since the effective date of the Tax Reform Act
of 1986, the subject of determination letters from the Internal Revenue Service
to the effect that such Company Pension Pens and refuted trusts are qualified
and exempt from federal income tuck under Sections 401(a) and 501(a),
respectively, of the Code, and no such determination has been revoked nor, to
the Knowledge of the Company, has revocation been threatened; no event has
occurred and no circumstances exist that would adversely affect the talc
qualification of such Company Pension Plan nor has any such Company Pension Plan
been amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs or require security under Section
302 of ERISA.
(c) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect: (i) each Company Benefit Plan has been
administered in accordance with its terms; (ii) the Company Benefit Plans are,
and have been administered, in compliance with the applicable provisions of
ERISA, the Code, and all other applicable laws; (iii) there are no
investigations by any governmental agency, termination proceedings or other
claims (except claims for benefits payable in the normal operation of the
Company Benefit Plans), suits or
16
proceedings against or involving any Company Benefit Plan or asserting any
rights to or claims for benefits under any Company Benefit Plan that could give
rise to any liability, and there are not any facts that would reasonably be
expected to give rise to any liability in the event of any such investigation,
claim, suit or proceeding.
(d) No Commonly Controlled Entity is required to contribute to any
multiemployer plan. as defined in Section 4001(a)(3) of ERISA or, except as set
forth in Section 3.10(d) of the Company Disclosure Schedule, has withdrawn from
any such multiemployer plan where such withdrawal has resulted or would result
in any material "withdrawal liability. (within the meaning of Section 4201 of
ERISA) that has not been fully paid. Except as set forth in Section 3.10(d) of
the Company Disclosure Schedule, no Commonly Controlled Entity would incur any
material withdrawal liability if it were to withdraw from a multiemployer plan
with respect to which it currently has a contribution obligation. No Commonly
Controlled Entity, nor any officer of any Commonly Controlled Entity, nor any of
the Company Benefit Plans which are subject to ERISA, including the Company
Pension Plans, any trusts created thereunder or any trustee or administrator
thereof, has engaged in a Prohibited transaction (as such term is defined in
Section 406 of ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility that could subject any Commonly Controlled Entity or
any officer of any Commonly Controlled Entity to any tax or penalty on
prohibited transactions imposed by such Section 4975 or to any material
liability under Section 502(i) or A of ERISA. Neither any of such Company
Benefit Plans nor any of such trusts has been terminated, nor has there been any
Reportable event. (as that term is defined in Section 4043 of ERISA) with
respect thereto, during the last five years.
(e) Except as set forth in Section 3.10(e) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to any
agreement, contract or arrangement that could result, separately or in the
aggregate, in the payment of any Excess parachute payments. within the meaning
of Section 280G of the Code.
(f) Except as set forth in Section 3.10(f) of the Company Disclosure
Schedule, to the Knowledge of the Company, the disallowance of a deduction under
Section 162(m) of the Code for employee remuneration will not apply to any
amount paid or payable by the Company or any Subsidiary.
(g) Except as would not have a Company Material Adverse Effect, no
liability under Title IV of ERISA has been incurred by any Commonly Controlled
Entity that has not been satisfied in full, and no condition exists that
presents a material risk to any Commonly Controlled Entity of incurring a
liability under such Title, other than liability for premiums due the Pension
Benefit Guaranty Corporation (~PBGC~) (which premiums have been paid when due).
To the extent this representation applies to sections 4064, 4069 or 4204 of
Title IV of ERISA, it is made not only with respect to each Company Pension Plan
but also with respect to any employee benefit plan, program, agreement or
arrangement subject to Title IV of ERISA to which the Company or any Commonly
Controlled Entity made, or was required to make, contributions during the five
(5) year period ending on the Closing Date. Except as would not
17
have a Company Material Adverse Effect, no Company Pension Plan or any trust
established thereunder has incurred any Accumulated funding deficiency. (as
defined in section 302 of ERISA and section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each Company
Pension Plan ended prior to the Closing Date; and all contributions required to
be made with respect thereto (whether pursuant to the terms of any Company
Pension Plan or otherwise) on or prior to the Closing Date have been timely
made.
(h) With respect to each Company Benefit Plan not subject to United
States Law (a "Company Foreign Benefit Plan"), except as would not have a
Company Material Adverse Effect, (i) the fair market value of the assets of each
funded Company Foreign Benefit Plan, the liability of each insurer for any
Company Foreign Benefit Plan funded through insurance or the book reserve
established for any Company Foreign Benefit Plan, together with any accrued
contributions, is sufficient to procure or provide for the accrued benefit
obligations, as of the Effective Time, with respect to all current and former
participants in such plan according to the actuarial assumptions and valuations
most recently used to determine employer contributions to such Company Foreign
Benefit Plan and no transaction contemplated by this Agreement shall cause such
assets or insurance obligations or book reserve to be less than such benefit
obligations; and (ii) each Company Foreign Benefit Plan required to be
registered has been registered and has been maintained in good standing with the
appropriate regulatory authorities.
(i) The Company and each of its Subsidiaries have not incurred any
liability under, and have complied in all respects with, the Worker Adjustment
and Retraining Notification Act of 1988 and the regulations promulgated
thereunder.
SECTION 3.11. Labor Matters.
(a) Except as set forth in Section 3.11(a) of the Company Disclosure
Schedule, with respect to employed of the Company: (i) to the Knowledge of the
Company, no senior executive or key employee has any plans to terminate
employment with the Company or any of its Subsidiaries; (ii) there is no unfair
labor practice or complaint against the Company or any of its Subsidiaries
pending or, to the Knowledge of the Company, threatened before the National
Labor Relations Board or any other comparable authority; (iii) there is no
demand for recognition made by any labor organization or petition for election
filed with the National Labor Relations Board or any other comparable authority
which, individually or in the aggregate, would have a Company Material Adverse
Effect; (iv) no grievance or any arbitration proceeding arising out of or under
collective bargaining agreements Is pending and, to the Knowledge of Company, no
claims therefor have been threatened other than grievances or arbitrations
incurred in the ordinary course of business which, individually or in the
aggregate, would not have a Company Material Adverse Effect; (v) the
consummation of the Merger and related transactions contemplated by this
Agreement will not give rise to termination of any excising collective
bargaining agreement or permit any labor organization to reopen negotiations in
respect of wages, hours or working conditions under any such existing collective
bargaining agreements; and (vi) there is no litigation, arbitration proceeding,
governmental investigation, administrative
18
charge, citation of action of any kind pending or, to the Knowledge of the
Company or any of its Subsidiaries, proposed or threatened against the Company
relating to employment, employment practices, terms and conditions of employment
or wages and hours which, individually or in the aggregate, would have a Company
Material Adverse Effect.
(b) Except as identified in Section 3.11(b) of the Company
Disclosure Schedule, none of the Company nor any of its Subsidiaries has any
collective bargaining relationship or duty to bargain with any Labor
Organization (as such term is defined in Section 2(5) of the National Labor
Relations Act, as amended), and none of the Company nor any of its Subsidiaries
has recognized any labor organization as the collective bargaining
representative of any of its employees.
SECTION 3.12. Title to and Sufficiency of Assets.
(a) As of the date hereof the Company and the Subsidiaries own, and
as of the Effective Time the Company and the Subsidiaries will own, good and
marketable title to all of their assets constituting personal property which is
material to their business (excluding, for purposes of this sentence, assets
held under leases), free and clear of any and all mortgages, liens,
encumbrances, charges, claims, restrictions, pledges, security interests or
impositions (collectively, "Liens"), except as set forth in the Company SEC
Reports or Section 3.12(a) of the Company Disclosure Schedule. Such assets,
together with all assets held by the Company and the Subsidiaries under leases,
include all tangible and intangible personal property, contracts and rights
necessary or required for the operation of the businesses of the Company
Businesses.
(b) As of the date hereof the Company and the Subsidiaries own, and
as of the Effective Time the Company and the Subsidiaries will own, good and
marketable title to all of their Real Estate which is material to such persons
(excluding, for purposes of this sentence, Real Estate leases), free and clear
of any and all Liens, except as set forth in the Company SEC Reports or in
Section.12(b) of the Company Disclosure Schedule or such other Liens on Real
Estate which would not, individually or in the aggregate, have a Company
Material Adverse Effect. Such Real Estate assets, together with an Real Estate
assets held by the Company and the Subsidiaries under leases, are adequate for
the operation of the Company Businesses as presently conducted. The leases to an
Real Estate occupied by the Company and the Subsidiaries which are material to
the operation of the Company Businesses are in fun force and effect and no event
has occurred which with the passage of time, the giving of notice, or both,
would constitute a default or event of default by the Company or any Subsidiary
or, to the Knowledge of the Company, any other person who is a party signatory
thereto, other than such defaults or events of default which, individually or in
the aggregate, would not have a Company Material Adverse Effect.
SECTION 3.13. Intellectual Property. "Company Intellectual Property"
means an trademarks, trademark registrations, trademark rights, trade names,
trade name rights, patents, patent rights, patent applications, industrial
models, inventions, invention disclosures, copyrights, copyright registrations,
servicemarks, servicemark registrations, servicemark rights,
19
trade secrets, applications for trademarks and for servicemarks, know-how and
other proprietary rights, data and information of any nature or form used or
held for use in connection with the businesses of the Company and the
Subsidiaries as currently conducted or as currently contemplated by the Company,
together with all applications currently pending for any of the foregoing.
Except as disclosed in the Company SEC Reports, the Company and the Subsidiaries
own or possess adequate licenses or other valid rights to use an of the Company
Intellectual Property that is necessary or appropriate for the conduct or
contemplated conduct of the Company's or Subsidiaries' businesses. Section
3.13(a) of the Company Disclosure Schedule lists each material license or other
agreement pursuant to which the Company has the right to use Company
Intellectual Property utilized in connection with any product of the Company and
the Subsidiaries, the cancellation or expiration of which would have a Company
Material Adverse Effect (the "Company Licenses"). There are no pending, and
between the date hereof and the Effective Time, there shad not be any pending,
or to the Company's Knowledge, threatened interferences, re-examinations,
oppositions or nullities involving any patents, patent rights or applications
therefor of the Company or any Subsidiary, except such as may be commenced by
Parent or any subsidiary of Parent and except such as would not, individually or
in the aggregate, have a Company Material Adverse Effect. There is no breach or
violation by the Company under, and, to the Company's Knowledge, there is no
breach by any other party to, any Company License that is reasonably likely to
give rise to any termination or any loss of rights thereunder. The Company has
put in place policies and procedures to maintain the confidentiality of, and
trade secret rights to, the processes and formulas, research and development
results and other know-how of the Company, the value of which to the Company is
dependent upon the maintenance of the confidentiality thereof and, to the
Knowledge of the Company, such policies and procedures have been complied with.
The conduct of the business of the Company and the Subsidiaries as currently
conducted or contemplated does not and win not infringe upon or conflict with,
in any way, any license, trademark, trademark right, trade name, trade name
right, patent, patent right, industrial model, invention, service mark, service
right, copyright or any other intellectual property rights of any third party
that, individually or in the aggregate, would have a Company Material Adverse
Effect. Except as disclosed in the Company SEC Reports, there are no
infringements of any Company Intellectual Property which, individually or in the
aggregate, would have a Company Material Adverse Effect. Except as set forth in
Section 3.13(b) of the Company Disclosure Schedule, neither the Company nor any
Subsidiary has licensed or otherwise permitted the use by any third party of any
proprietary information or Company Intellectual Property on terms or in a manner
which, individually or in the aggregate, would have a Company Material Adverse
Effect.
SECTION 3.14. Tax Matters. (a) Definitions. As used in this
Agreement:
(i) "Closing Agreement" means a written and legally binding
agreement with a taxing authority relating to Taxes.
(ii) "Tax Return" means any report, return, information statement,
payee statement or other information required to be provided to any federal,
state, local or foreign
20
Governmental Authority, or otherwise retained, with respect to Taxes or the
Company Benefit Plans.
(iii) "Tax Ruling" means a written ruling of a taxing authority
relating to
(iv) "Taxes" means any and all taxes, levies, imposts, dudes,
assessments, charges and withholdings imposed or required to be collected by or
paid over to any federal, state, local, supra-national or foreign Governmental
Authority or any political subdivision thereof, including without limitation
income, gross receipts, ad valorem, value added, minimum tax, franchise, sales,
use, excise, license, real or personal property, unemployment, disability, stock
transfer, mortgage recording, estimated, withholding or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, and including any
interest, penalties, fines, assessments or additions to talc imposed in respect
of the foregoing, or in respect of any failure to comply with any requirement
regarding Tax Returns.
(b) Representations. Except for representations and warranties made
with resect to federal and state income Taxes, all representations and
warranties made in this Section 3.14(b) with reject to Taxes are made to the
best Knowledge of the Company. Subject to the foregoing, and except as set forth
in Section 3.14(b) of the Company Disclosure Schedule or as would not,
individually or in the aggregate, have a Company Material Adverse Effect:
(i) Filing of Tax Returns. The Company and each of the Subsidiaries
have filed ad Tax Returns required to be filed by each of them and such Tan
Returns are in an material respects true, complete and correct and filed on a
timely basis.
(ii) Payment of Taxes. The Company and each of the Subsidiaries
have, within the time and in the manner prescribed by law, paid an Taxes that
are currently due and payable, except for those contested in good faith and for
which adequate reserves have been taken.
(iii) Tax Liens. There are no tax liens upon the assets of the
Company or of any of the Subsidiaries except for statutory liens for current
Taxes not yet due.
(iv) Withholding Taxes. The Company and each of the Subsidiaries
have complied in an material respects with the provisions of the Code relating
to the withholding of Taxes, as wed as similar provisions under any other Laws,
and have, within the time and in the manner prescribed by Law, withheld and paid
over to the proper governmental authorities all amounts required.
(v) Extensions of Time for Filing. Neither the Company nor any of
the Subsidiaries has requested any extension of time within which to file any
Tax Return, which Tax Return has not since been filed.
21
(vi) Waivers of Statute of Limitations. Neither the Company nor any
of the Subsidiaries has executed any outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Tax Returns.
(vii) No Deficiencies. The statute of limitations for the assessment
of any federal income Taxes has expired for all income Tax Returns of the
Company and of each of the Subsidiaries or such income Tax Returns have been
examined by the Internal Revenue Service for all periods. No deficiency for any
income Taxes has been proposed, asserted or assessed against the Company or any
of the Subsidiaries which has not been resolved and paid in full. There are no
deficiencies for state income Taxes which individually, or in the aggregate,
would have a Company Material Adverse Effect.
(viii) Audit, Administrative and Court Proceedings. No audits or
other administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the Company or any of the Subsidiaries.
(ix) Powers of Attorney. No power of attorney currently in force has
been granted by the Company or any of the Subsidiaries concerning any Taxes or
Tax Returns.
(x) Tax Rulings. Neither the Company nor any of the Subsidiaries has
received a Tax Ruling or entered into a Closing Agreement with any tracing
authority that would have a Company Material Adverse Effect.
(xi) Tax Sharing Agreements. Neither the Company nor any Subsidiary
is a party to any agreement relating to allocating or sharing of Taxes which has
not been disclosed on its Tax Returns.
SECTION 3.15. Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have
the following meanings: (i) "Hazardous Substances" means (A) petroleum and
petroleum products, by-products or breakdown products, radioactive materials,
asbestos containing materials and polychlorinated biphenyls, and (B) any other
chemicals, materials or substances regulated as toxic or hazardous or as a
pollutant, contaminant or waste under any applicable Environmental Law; (ii)
"Environmental Laws" means any law, past, present or future and as amended, and
any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, or common law, relating to
pollution or protection of the environment, health or safety or natural
resources, including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Substances; and (iii) "Environmental Permit" means any permit, approval,
identification number, license or other authorization required under any
applicable Environmental Law.
22
(b) Except as disclosed in Section 3.15(b) of the Company Disclosure
Schedule, the Company and the Subsidiaries are and have been in compliance with
all applicable Environmental Laws, have obtained an Environmental Permits and
are in compliance with their requirements, and have resolved all past
non-compliance with Environmental Laws and Environmental Permits without any
pending, on-going or future obligation, cost or liability, except in each case
for the notices set forth in Section 3. 15(b) of the Company Disclosure Schedule
or where such non-compliance would not, individually or in the aggregate, have a
Company Material Adverse Effect.
(c) Except as disclosed in Section 3.15(c) of the Company Disclosure
Schedule, neither the Company nor any of the Subsidiaries has (i) placed, held,
located, released, transported or disposed of any Hazardous Substances on,
under, from or at any of the Company's or any of the Subsidiaries' properties or
any other properties, other than in a manner that would not, in all such cases
taken individually or in the aggregate, result in a Company Material Adverse
Effect, (ii) any Knowledge or reason to know of the presence of any Hazardous
Substances on, under, emanating from, or at any of the Company's or any of the
Subsidiaries' properties or any other property but arising from the Company's or
any of the Subsidiaries' current or former properties or operations, other than
in a manner that would not result in a Company Material Adverse Effect, or (iii)
any Knowledge or reason to know, nor has it received any written notice (A) of
any violation of or liability under any Environmental Laws, (B) of the
institution or pendency of any suit, action, claim, proceeding or investigation
by any Governmental Entity or any third park in connection with any such
violation or liability, (C) requiring the response to or remediation of
Hazardous Substance at or arising from any of the Company's or any of the
Subsidiaries' current or former properties or operations or any other
properties, (D) alleging noncompliance by the Company or any of the Subsidiaries
with the terms of any Environmental Permit in any manner reasonably likely to
require material expenditures or to result in material liability or (E)
demanding payment for response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of the Subsidiaries' current or former
properties or operations or any other properties, except in each case for the
notice set forth in Section 3.15(c) of the Company Disclosure Schedule.
(d) Except as disclosed in Section 3.15(d) of the Company Disclosure
Schedule, no Environmental Law imposes any obligation upon the Company or any of
the Subsidiaries arising out of or as a condition to any transaction
contemplated by this Agreement, including any requirement to modify or to
transfer any permit or license, any requirement to file any notice or other
submission with any Governmental Authority, the placement of any notice,
acknowledgement or covenant in any land records, or the modification of or
provision of notice under any agreement, consent order or consent decree. Except
as disclosed in Section 3.15(d) of the Company Disclosure Schedule, no Lien has
been placed upon any of the Company's or the Subsidiaries' properties under any
Environmental Law.
(e) The Company and the Subsidiaries have provided Parent with
copies of any environmental assessment or audit report or other similar studies
or analyses currently in the possession of or available to the Company or any of
the Subsidiaries relating to any real
23
property currently or formerly owned, leased or occupied by the Company or any
of the Subsidiaries.
SECTION 3.16. Material Contracts; Government Contracts.
(a) The contracts and agreements listed in Section 3.05 of the
Disclosure Schedule and all other contracts, agreements and arrangements that
are material to the Company and the Subsidiaries or, although not so material,
are of unique value to the Company and the Subsidiaries are referred to herein
collectively as the "Material Contracts".
(b) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, each Company License and each Material Contract
is a legal, valid and binding agreement, neither the Company nor any of the
Subsidiaries (or to the Knowledge of the Company, any other party thereto) is in
default under any of the Company Licenses or Material Contracts, and none of the
Company Licenses or Material Contracts has been cancelled by the other party
thereto; each Material Contract and Company License is in full force and effect
and no event has occurred which, with the passage of time or the giving of
notice or both, would constitute a default, event of default or other breach by
the Company or applicable Subsidiary party thereto which would entitle the other
party to such Material Contract or Company License to terminate the same or
declare a default or event of default thereunder; the Company and the
Subsidiaries are not in receipt of any claim of default under any such
agreement; the Company or the applicable Subsidiary party to such Material
Contract or Company License maintains good business relationships with the other
party to such agreement. The Company has made available to Parent true and
complete copies of all Company Licenses and all Material Contracts. The Company
is not a party to any contracts or agreements that limit the ability of the
Company or any Subsidiary or, after the Effective Time, Parent or any of its
affiliates, to compete in any line of business or with any person or in any
geographic area or during any period of time, or to solicit any customer or
client.
(c) Section 3.16(c) of the Company Disclosure Schedule contains a
complete list of all material bids, quotations and proposals made by, all
contracts and agreements between, and all commitments or sale or purchase orders
by, the Company or any of the Subsidiaries ("Government Contracts") with or to
the United States government, a foreign government or a department or agency of
the United States government or a foreign government, including, without
limitation, all contracts to supply goods and services, and all subcontracts
awarded to the Company or any of the Subsidiaries.
(d) All of the Government Contracts have been legally awarded and
are binding on the parties thereto and, except as may be disclosed in Section
3.16(d) of the Company Disclosure Schedule or as would not have a Company
Material Adverse Effect, the Company and the Subsidiaries are in compliance in
all material respects with all terms and conditions in Government Contracts,
including all terms and conditions incorporated expressly by reference or by
operation of law therein.
24
(e) Except as set form in Section 3.16(e) of the Company Disclosure
Schedule, as of the date of this Agreement, to the Company's Knowledge the
Company and the Subsidiaries have not received any notice, written or, to the
Company's Knowledge, oral, of material performance or administrative
deficiencies relating to or involving any Government Contract, other than
routine contract management interchanges such as deficiency reports, waivers,
technical deficiencies, discrepancies and similar type actions.
(f) Except as set forth in Section 3.16(f) of the Company Disclosure
Schedule, neither the Company, any of the Company's affiliates nor any of their
respective directors, officers or employees is currently debarred or suspended
from participation in the award of Government Contracts or from otherwise
conducting business with the U.S. government or any agency thereof, nor, to the
Company's Knowledge, are there facts or circumstances reasonably likely to form
the basis of a debarment or suspension proceeding.
(g) As of the date of this Agreement, except as set forth in Section
3.16(g) of the Company Disclosure Schedule or as would not have a Company
Material Adverse Effect, the Company has not received any written notice of any
Stop orders., Cure notices., Show cause notices. or any Terminations for
convenience or defaults of any Government Contract and, as at the Closing Date,
the Company shall not have received any such notices under any material
Government Contract.
(h) Except as set forth in Section 3.16(h) of the Disclosure
Schedule, as of the date of this Agreement, there are no Government Contracts
for the sale of goods or services for which, at the time of the most recent
scheduled contract milestone, the work schedule was delinquent in any respect
which could have a Company Material Adverse Effect.
(i) Except as would not have a Company Material Adverse Effect, as
of the date of this Agreement there is no outstanding bid for a Government
Contract for the sale of goods or services where performance of contractual
effort will be begun prior to contract award without advance funding or customer
acknowledgment that pre-contract costs win be incorporated in the resultant
contract nor are there any existing letter contracts having no defined contract
value relating to or involving Government Contracts where performance will
continue while awaiting additional contractual funding.
(j) As of the date of this Agreement there is no cost type
Government Contract which is material to the Company Government Business with a
ceiling, cap or share ratio, which is or is likely to be exceeded.
(k) The Company's pricing, cost accounting, estimating, material
management and accounting, property and resource planning and procurement
systems have been properly disclosed in all material respects to and, to the
extent required by applicable regulations, approved by the United States
government and such disclosures are in an material respects in compliance with
applicable federal procurement law regulations, including the Cost Principles
and Cost Accounting Standards.
25
SECTION 3.17. Suppliers. Except as set forth in Section 3.17 of the
Company Disclosure Schedule, neither the Company nor any Subsidiary has received
any notice or has any reason to believe that any significant supplier win not
sell raw materials, supplies, merchandise and other goods to the Company or any
Subsidiary at any time after the Effective Time on terms and conditions
substantially similar to those used in its current sales to the Company and the
Subsidiaries, subject only to general and customary price increases, unless
comparable raw materials, supplies, merchandise or other goods are readily
available from other sources on comparable terms and conditions.
SECTION 3.18. Tax Treatment. Neither the Company nor, to the
Company's Knowledge, any of its affiliates has taken, agreed to take, or win
take any action that would prevent the Merger from constituting a transaction
qualifying under Section 368(a) of the Code. Neither the Company nor, to the
Company's Knowledge, any of its affiliates or agents is aware of any agreement,
plan or other circumstance that would prevent the Merger from qualifying under
Section 368(a) of the Code, and to the Company's Knowledge, the Merger win so
qualify.
SECTION 3.19. Insurance. All material fire and casuals, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by the Company or any of its Subsidiaries
are with reputable insurance carriers, provide full and adequate coverage for
all normal risks incident to the business of the Company and the Subsidiaries
and their respective properties and assets, and are in character and amount at
least equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards, except for any such failures
to maintain insurance policies that, individually or in the aggregate, would not
have a Company Material Adverse Effect. The Company and each Subsidiary have
made any and an payments required to maintain such policies in fun force and
effect. Except as set forth in Section 3.19 of the Company Disclosure Schedule,
neither the Company nor any Subsidiary has received notice of default under any
such policy, and has not received written notice or, to the Knowledge of the
Company, oral notice of any pending or threatened termination or cancellation,
coverage limitation or reduction or material premium increase with respect to
such policy.
SECTION 3.20. Approval of Company Board and Independent Directors.
The Board of Directors of the Company has approved unanimously the execution and
delivery of this Agreement and the Option and Voting Agreement for purposes of
Section 203 of Delaware Law and for purposes of Section 7 of Article VII of the
Company's By-Laws. A separate resolution approving the execution and delivery of
this Agreement and the Option and Voting Agreement for purposes of Section 203
of Delaware Law and for purposes of Section 7 of Article VII of the Company's
By-Laws has been adopted unanimously by the independent directors of the Company
pursuant to a separate vote. A separate resolution approving the execution and
delivery of the Consulting Agreement has been adopted unanimously by the
independent directors of the Company pursuant to a separate vote.
SECTION 3.21. Stockholder Vote Required. The affirmative vote of the
holders of a majority of the outstanding shares of Company Class A Stock is the
only vote of
26
the holders of any class or series of capital stock of the Company necessary to
approve the Merger.
SECTION 3.22. Accuracy of Information. Neither this Agreement nor
any other document provided by the Company or the Subsidiaries or any of their
respective employees or agents to Parent in connection with the transactions
contemplated herein contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained therein not
misleading.
SECTION 3.23. Transactions with Affiliates. (a) For purposes of this
Section 3.23, the term "Affiliated Person" means (i) any holder of 2% or more of
the Company Class A Stock, (ii) any director, officer or senior executive of the
Company or any Subsidiary, (iii) any person, firm or corporation that directly
or indirectly controls, is controlled by, or is under common control with, any
of the Company or any Subsidiary or (iv) any member of the immediate family or
any of such persons.
(b) Except as set forth in Section 3.23(b) of the Company Disclosure
Schedule or in the Company SEC Reports, since September 30, 1993, the Company
and the Subsidiaries have not, in the ordinary course of business or otherwise,
(i) purchased, leased or otherwise acquired any material property or assets or
obtained any material services from, (ii) sold, leased or otherwise disposed of
any material property or assets or provided any material services to (except
with respect to remuneration for services rendered in the ordinary course of
business as director, officer or employee of the Company or any Subsidiary),
(iii) entered into or modified in any manner any contract with, or (iv) borrowed
any money from, or made or forgiven any loan or other advance (other than
expenses or similar advances made in the ordinary course of business) to, any
Affiliated Person.
(c) Except as set forth in Section 3.23(c) of the Company Disclosure
Schedule or in the Company SEC Reports, (i) the contracts of the Company and the
Subsidiaries do not include any material obligation or commitment between the
Company or any Subsidiary and any Affiliated Person, (ii) the assets of the
Company or any Subsidiary do not include any receivable or other obligation or
commitment from an Affiliated Person to the Company or any Subsidiary and (iii)
the liabilities of the Company and the Subsidiaries do not include any payable
or other obligation or commitment from the Company or any Subsidiary to any
Affiliated Person.
(d) To the Knowledge of the Company and except as set forth in
Section 3.23(d) of the Company Disclosure Schedule or in the Company SEC
Reports, no Affiliated Person of any of the Company or any Subsidiary is a party
to any contract with any customer or supplier of the Company or any Subsidiary
that affects in any material manner the business, financial condition or results
of operation of the Company or any Subsidiary.
SECTION 3.24. Opinion of Financial Advisor. The Company has received
the opinion of Salomon Brothers Inc (the accompany Financial Advisor.), to the
effect that, as
27
of the date hereof, the Merger Consideration is fair to the Company stockholders
from a financial point of view.
SECTION 3.25. Brokers. No broker, finder or investment banker (other
than the Company Financial Advisor) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of the Company. The Company has heretofore furnished to
Parent a complete and correct copy of all agreements between the Company and the
Company Financial Advisor pursuant to which such firm would be entitled to any
payment relating to the Merger.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Except as specifically disclosed in Parent SEC Reports (as
hereinafter defined) filed subsequent to December 31, 1996, Parent and Merger
Sub hereby, jointly and severally, represent and warrant to the Company that:
SECTION 4.01. Organization and Qualification; Subsidiaries. Each of
Parent and Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite power and authority and all necessary governmental approvals to
own, lease and operate its properties and to carry on its business as it is now
being conducted. Each of Parent and Merger Sub is duly qualified or licensed as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so q 'edified or licensed and in good
standing that, individually or in the aggregate, would not have a Parent
Material Adverse Effect. The term "Parent Material Adverse Effect" means any
circumstances, change in, or effect on, Parent, when taken as a consolidated
whole, which is, or could reasonably be expected to in the future be, materially
adverse to the operations, assets or liabilities, employee relationships,
customer or supplier relationships, earnings or results of operations, financial
projections or forecasts, or the business prospects and condition (financial or
otherwise), of Parent taken as a consolidated whole.
SECTION 4.02. Certificate of Incorporation and By-laws. Parent has
heretofore furnished to the Company a complete and correct copy of the
Certificate of Incorporation and the By-laws, each as amended to date, of Parent
and Merger Sub. Such Certificates of Incorporation and By-laws are in full force
and effect. Neither Parent nor Merger Sub is in violation of any provision of
its respective Certificate of Incorporation or By-laws.
SECTION 4.03. Parent Common Stock to Be Issued in the Merger. The
shares of Parent Common Stock to be issued pursuant to the Merger will be duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by
28
statute, Parent's Certificate of Incorporation or By-laws or any agreement to
which Parent is a park or by which Parent is bound and will, when issued, be
registered under the Securities Act and the Exchange Act and registered or
exempt from registration under applicable Blue Sky Laws.
SECTION 4.04. Authority Relative to This Agreement. Each of Parent
and Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the Merger. The execution and delivery of this Agreement by Parent and Merger
Sub and the consummation by Parent and Merger Sub of the Merger have been duly
and validly authorized by all necessary corporate action and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement or to consummate the Merger (other than, with respect to the Merger,
the filing and recordation of appropriate merger documents as required by
Delaware Law). This Agreement has been duly and validly executed and delivered
by Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
each of Parent and Merger Sub enforceable against each of Parent and Merger Sub
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
SECTION 4.05. No Conflict: Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent and Merger
Sub will not, (i) conflict with or violate the Certificate of Incorporation or
By-laws of Parent or Merger Sub, (ii) conflict with or violate any Law
applicable to Parent or Merger Sub or by which any property or asset of Parent
or Merger Sub is bound or affected, except for such conflicts or violations
which would not, individually or in the aggregate, have a Parent Material
Adverse Effect, (iii) prevent or materially delay the consummation of the Merger
or (iv) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent or Merger Sub is a party or by
which Parent or Merger Sub or any property or asset of either of them is bound
or affected, except for any such breach or defaults which, individually or in
the aggregate, would not have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent and Merger
Sub will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority,
domestic, foreign or supranational, except (i) for applicable requirements, if
any, of the Exchange Act, the Securities Act, Blue Sky Laws, state takeover
laws, the HSR Act, and the filing and recordation of appropriate merger
documents as required by Delaware Law and the rules of the NYSE, and (ii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, is not reasonably
29
likely to prevent or maternally delay consummation of the Merger, and would not,
individually or in the aggregate, have a Parent Material Adverse Effect.
SECTION 4.06. SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents required to be
filed by it with the SEC since January 1, 1994 (collectively, the "Parent SEC
Reports"). The Parent SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations thereunder, (ii) did not at the time they were filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading and (iii) did not at the time they were filed omit any documents
required to be filed as exhibits thereto.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the Parent SEC Reports was prepared
in accordance with United States generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presented the consolidated
financial position, results of operations and cash flows of Parent and its
consolidated subsidiaries as at the respective dates thereof and for the
respective periods indicated therein in accordance with United States generally
accepted accounting principles (subject, in the case of unaudited statements, to
normal and recurring year-end adjustments that were not and are not expected,
individually or in the aggregate, to have a Parent Material Adverse Effect).
SECTION 4.07. Absence of Certain Changes or Events. Since December
31, 1996, except as disclosed in any Parent SEC Report filed since December 31,
1996, there has not been any event or events having, or reasonably likely to
have, individually or in the aggregate, a Parent Material Adverse Effect.
SECTION 4.08. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Merger based upon arrangements made by or on behalf of Parent or Merger
Sub.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees that, between the date of this Agreement and
the Effective Time, except as set forth in Section 5.01 of the Company
Disclosure Schedule or as otherwise expressly provided for in this Agreement,
unless Parent shall otherwise agree (which agreement shall not be unreasonably
withheld or delayed) in writing, the Company Businesses shall be conducted only
in, and the Company and the Subsidiaries shall not take any action except in,
30
the ordinary course of business and in a manner consistent in all material
respects with past practice; and the Company shall use its best efforts to
preserve intact its business organization, to keep available the services of the
current officers, employees and consultants of the Company and the Subsidiaries
and to preserve the current relationships of the Company and the Subsidiaries
with customers, distributors, suppliers, licensers, licensees, contractors and
other persons with which the Company or any Subsidiary has significant business
relations. By way of amplification and not limitation, except as contemplated by
this Agreement, or as set forth in Section 5.01 of the Company Disclosure
Schedule, neither the Company nor any of the Subsidiaries shall, between the
date of this Agreement and the Effective Time, directly or indirectly do, or
propose to do, any of the following without the prior written consent of Parent,
which consent shall not be unreasonably withheld or delayed:
(a) amend or otherwise change its Certificate of Incorporation or
By-laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant or encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any shares
of capital stock of any class of the Company or any Subsidiary, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or any Subsidiary or
(ii) any assets of the Company or any Subsidiary, except for sales in the
ordinary course of business and in a manner consistent in all material respects
with past practice and other asset sales for consideration or having a fair
market value aggregating not more than $1,000,000;
(c) other than regularly scheduled periodic cash dividends in
amounts not in excess of those previously declared, set aside, make or pay any
dividend or other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock, except that a United States Subsidiary
may, after consultation with Parent, declare and pay a dividend to the Company;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) except as contemplated by the UNC Merger Agreement, (i) acquire
(including, without limitation, by merger, consolidation or acquisition of stock
or assets) any corporation, partnership, limited liability company, other
business organization or any division thereof, or any material amount of assets;
(ii) enter into any contract or agreement that, if entered into prior to the
date of this Agreement, would have been required to be disclosed as a Material
Contract, other than in the ordinary course of business, consistent in all
material respects with past practice; or (iii) enter into or amend any Material
Contract with respect to any matter set forth in this subsection (e);
(f) (i) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for,
31
the obligations of any person, or make any loans or advances, except in the
ordinary course of business and consistent in all material respects with past
practice and in an amount not in excess of $250,000; (ii) authorize capital
expenditures which are, in the aggregate, in excess of $1,000,000 for the
Company and the Subsidiaries taken as a whole; or (iii) enter into or amend any
contract, agreement, commitment or arrangement with respect to any matter set
forth in this subsection (f);
(g) increase (except in the ordinary course of business and
consistent in all material respects with past practice) the compensation payable
or to become payable to its officers or employees generally or to any employee
with an annual salary in excess of $100,000, or grant any bonus, severance or
termination pay to, or enter into any employment or severance agreement with any
director, officer or other employee of the Company or any Subsidiary, or
establish, adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee; provide, however, that the Company and the
executive officers identified in Exhibit 5.01(g) hereto may enter into
agreements in a form substantially identical to, and in the amounts identified
on, Exhibit 5.01(g) hereto;
(h) acquire, sell, lease or dispose of any Real Estate or other
material assets, other than sales or leases of fixed assets (other than Real
Estate) or sales of inventory, in each case, in the ordinary course of business;
(i) accelerate the collection of accounts receivable, delay the
payment of accounts payable or take any action with respect to credit,
collection and fiscal policies and practices, other than in the ordinary course
of business and in a manner consistent with past practice with respect to
accounting policies or practices;
(j) make any material Tax election or settle or compromise any
material federal, state, local or foreign income Tax liability;
(k) take any action that would or is reasonably likely to result in
any of the covenants and agreements set forth in this Article V or in Article VI
or any of the conditions set forth in Article VII not being satisfied as of the
Closing Date;
(l) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent in all material respects with past
practice, with respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivable);
(m) knowingly take any action that could reasonably be expected to
prevent the Merger from constituting a transaction qualifying under Section
368(a) of the Code; or
32
(n) except for the payment of reasonable professional fees relating
to the Merger, the UNC Merger, or otherwise and reasonable fees to financial
advisors (which financial advisory fees have heretofore been disclosed or are
otherwise acceptable to Parent), pay, discharge or satisfy any claim, liability
or obligation (absolute, accrued, asserted or unassorted, contingent or
otherwise) in an amount in excess of $500,000 in the aggregate, other than the
payment, discharge or satisfaction, in the ordinary course of business and
consistent in all material respects with past practice, of liabilities reflected
or reserved against in the Company 1996 Balance Sheet or subsequently incurred
in the ordinary course of business and consistent in all material respects with
past practice.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this
Agreement, the Company and Parent shall prepare and file with the SEC
preliminary proxy materials relating to the meeting of the holders of shares of
Company Class A Stock to be held in connection with the Merger (together with
any amendments thereof or supplements thereto, the "Proxy Statement"). As
promptly as practicable after comments are received from the SEC on the
preliminary proxy materials and after the furnishing by the Company and Parent
of all information required to be contained therein, the Company and Parent
shall prepare and file with the SEC a registration statement on Form Sat
(together with all amendments thereto, the "Registration Statements"), in which
the Proxy Statement shall be included as a prospectus in connection with the
registration under the Securities Act of the shares of Parent Common Stock to be
issued to the holders of shares of Company Common Stock pursuant to the Merger.
Parent shall use all reasonable efforts to cause the Registration Statement to
become effective as promptly as practicable, and shall take all action required
under any applicable federal or state securities laws in connection with the
issuance of shares of Parent Common Stock pursuant to the Merger. The Company
shall furnish all information concerning the Company as Parent may reasonably
request in connection with such actions and the preparation of the Registration
Statement. As promptly as practicable after the Registration Statement shall
have become effective, the Company shall mail the Proxy Statement to its
stockholders. The Proxy Statement shall include the unanimous recommendation of
the Board of Directors of the Company in favor of the Merger, unless otherwise
necessary due to the applicable fiduciary duties of the directors of the
Company, as determined by such directors in good faith after consultation with
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel).
(b) The Registration Statement and the information supplied by
Parent for inclusion in the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective by the SEC; (ii) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the holders of shares of Company Class A Stock; (iii) the
33
time of the Stockholders' Meeting (as defined in Section 6.02); and (iv) the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein not misleading. If at any time prior to the Effective
Time any event or circumstance relating to Parent or any of its subsidiaries, or
their respective officers or directors, is discovered by Parent which should be
set forth in an amendment or a supplement to the Registration Statement or Proxy
Statement, Parent shall promptly inform the Company, and the Company shall make
appropriate amendments or supplements to the Proxy Statement. The Proxy
Statement shall comply in all material respects as to form and substance with
the requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by Parent or Merger Sub which is
contained in, or furnished in connection with the preparation of, any of the
foregoing documents.
(c) The Proxy Statement and the information supplied by the Company
for inclusion in the Registration Statement shall not, at (i) the time the
Registration Statement is declared effective by the SEC; (ii).the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the holders of shares of Company Class A Stock; (iii) the time of the
Stockholders' Meeting; and (iv) the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not misleading. If
at any time prior to the Effective Time any event or circumstance relating to
the Company or any of the Subsidiaries, or their respective officers or
directors, is discovered by the Company which should be set forth in an
amendment or a supplement to the Registration Statement or Proxy Statement, the
Company shall promptly inform Parent. The Registration Statement and the Proxy
Statement shall comply in all material respects as to form and substance with
the requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, Parent and Merger Sub
make no representations or warranties with respect to any information supplied
by the Company which is contained in, or furnished in connection with the
preparation of, any of the foregoing documents.
SECTION 6.02. Stockholders' Meeting.
(a) Subject to the provisions of Section 6.05 and Section 8.01(g),
the Company shall, consistent with applicable law, call and hold a meeting of
the holders of shares of Company Class A Stock (the "Stockholders' Meeting") as
promptly as practicable for the purpose of voting upon the approval and adoption
of this Agreement and the Company shall use its reasonable best efforts to hold
the Stockholders' Meeting as soon as practicable after the date on which the
Registration Statement becomes effective. The Company shall solicit from the
holders of shares of Company Class A Stock proxies in favor of the approval and
adoption of the Merger, and shall take all other action necessary or advisable
to secure the vote or consent of such holders required by Delaware Law.
34
(b) Parent shall vote (or consent with respect to) any shares of
Company Class A Stock beneficially owned by it, or with respect to which it has
the power (by agreement, proxy or otherwise) or cause to be voted (or to provide
a consent), in favor of the approval and adoption of this Agreement at any
meeting of the stockholders of the Company at which this Agreement shall be
submitted for approval and adoption and at all adjournments or postponements
thereof (or, if applicable, by any action of the stockholders of the Company by
consent in lieu of a meeting).
SECTION 6.03. Appropriate Action; Consents; Filings.
(a) The Company and Parent shall use their reasonable efforts to (i)
take, or cause to be taken, all appropriate action and do, or cause to be done,
all things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger as promptly as practicable, (ii) obtain
expeditiously from any Governmental Authorities waivers, approvals,
authorizations or orders required to be obtained or made by Parent or the
Company or any of their Subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the Merger, and
(iii) as promptly as practicable, make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement and the
Merger required under (A) the Securities Act and the Exchange Act, and any other
applicable federal or state securities Laws, (B) the HSR Act and any related
governmental request thereunder and (C) any other applicable Law; provided that
Parent and the Company shall cooperate with each other in connection with the
making of all such filings, including providing copies of all such documents to
the non-filing party and its advisors prior to filing and, if requested,
accepting all reasonable additions, deletions or changes suggested by the other
party in connection therewith. From the date of this Agreement until the
Effective Time, each park shall promptly notify the other party in writing of
any pending or, to the knowledge of the first park, threatened action,
proceeding or investigation by any Governmental Authority or any other person
(i) challenging or seeking material damages in connection with the Merger or the
conversion of the Company Common into Parent Common Stock or cash pursuant to
the Merger or (ii) seeking to restrain or prohibit the consummation of the
Merger or otherwise limit the right of Parent or Parent's subsidiaries to own or
operate all or any portion of the businesses or assets of the Company or its
Subsidiaries, which in either case would have a Company Material Adverse Effect
prior to or after the Effective Time, or a Parent Material Adverse Effect after
the Effective Time.
(b) The Company and Parent shall furnish to each other all
information required for any application or other filing to be made pursuant to
the rules and regulations of any applicable Law (including all information
required to be included in the Proxy Statement and the Registration Statement)
in connection with the transactions contemplated by this Agreement.
(c) (i) Each of Parent and the Company shall give (or shall cause
its respective subsidiaries to give) any notices to third parties and use, and
cause its respective subsidiaries to use, their reasonable efforts to obtain any
third party consents, (A) necessary, proper or advisable to consummate the
transactions contemplated in this Agreement, (B) disclosed or
35
required to be disclosed in the Company Disclosure Schedule or (C) required to
prevent a Company Material Adverse Effect from occurring prior to or after the
Effective Time or a Parent Material Adverse Effect from occurring after the
Effective Time; provided, however, that the failure by the Company to obtain any
one or more of such third party consents (including those disclosed in Section
3.05(a) and Section 3.05(b) of the Company Disclosure Schedule) shall not
constitute a condition precedent to Parent's obligation to consummate the Merger
pursuant to the terms of this Agreement or entitle Parent to delay the Effective
Time.
(ii) In the event that Parent or the Company shall fail to obtain
any third party consent described in subsection (c)(i) above, it shall use its
reasonable efforts, and shall take any such actions reasonably requested by the
other party, to minimize any adverse effect upon the Company and Parent, their
respective businesses resulting, or which could reasonably be expected to result
after the Effective Time, from the failure to obtain such consent.
SECTION 6.04. Access to Information: Confidentiality.
(a) The parties shall comply with, and shall cause their respective
Representatives (as defined below) to comply with, to the extent permitted by
applicable Law, all of their respective obligations under the Confidentiality
Agreement dated March 4, 1997 (the "Confidential Agreement") between the Company
and Parent.
(b) Subject to the Confidentiality Agreement, from the date hereof
to the Effective Time, the Company will provide to Parent (and its officers,
directors, employees, accountants, consultants, legal counsel, agents and other
representatives, collectively, "Representative") access to all information and
documents which Parent may reasonably request regarding the business, assets,
liabilities, employees and other aspects of the Company.
(c) From the date hereof to the Effective Time, the Company shall:
(i) provide to Parent and its Representatives access at reasonable times upon
prior notice to the officers, employees, agents, properties, offices and other
facilities of the Company and its Subsidiaries and to the books and records
thereof and (ii) furnish promptly such information concerning the business,
properties, contracts, assets, liabilities, personnel and other aspects of the
Company and its Subsidiaries as Parent or its Representatives may reasonably
request.
(d) No investigation by Parent or Merger Sub, whether prior to the
execution of this Agreement or pursuant to this Section 6.04, shall affect any
representation or warrant in this Agreement of any park hereto or any condition
to the obligations of the parties hereto.
SECTION 6.05. No Solicitation of Competing Transactions. (a) Neither
the Company nor any Subsidiary shall, directly or indirectly, through any
officer, director, agent or otherwise, initiate, solicit or knowingly encourage
(including by way of furnishing nonpublic information or assistance), or take
any other action to facilitate knowingly, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction (as defined below), or enter into or maintain or continue
discussions or
36
negotiate with any person or entity in furtherance of such inquires or to obtain
a Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of the officers, directors or employees of the Company
or any Subsidiary or any investment banker, financial advisor, attorney,
accountant or other agent or representative the Company or any Subsidiary to
take any such action, and the Company shall notify Parent orally (within three
business days) and in writing (as promptly as practicable) of all of the
relevant details relating to any inquiry or proposal which the Company or any
Subsidiary or any such officer, director, employee, investment banker, financial
advisor, attorney, accountant or other agent or representative may receive
relating to any of such matters and which the Company and any of its officers or
directors has knowledge of, and if such inquiry or proposal is in writing, the
Company shall deliver to Parent a copy of such inquiry or proposal; provided,
however, that nothing contained in this Section 6.05 shall prohibit the Company
or its Board of Directors from (i) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to a tender or exchange offer, (ii) referring any
third party to this Section 6.05 or making a copy of this Section 6.05 available
to any third party, or (iii) failing to make or withdrawing or modifying its
recommendation referred to in Section 6.01(a) following the making of a proposal
that constitutes, or may reasonably be expected to lead to, a Competing
Transaction if the Board of Directors of the Company, after consultation with
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that such action is
necessary for the directors of the Company to comply with their fiduciary duties
to the Company or its stockholders under applicable law, or (iv) terminating
this Agreement and the transactions contemplated hereby in accordance with
Section 8.01(g) hereof. The Company agrees not to release any third party from,
or waive any provision of, any confidentiality or standstill agreement to which
the Company is a park. For purposes of this Agreement, Competing Transaction.
shall mean any of the following involving the Company or any Subsidiary: (i) any
merger, consolidation, share exchange, recapitalization, business combination,
or other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 15% or more of the assets of the Company and
the Subsidiaries, taken as a whole, in a single transaction or series of related
transactions; (iii) any tender offer or exchange offer for 15% or more of the
shares of Company Class A Stock or Company Class B Stock or the filing of a
registration statement under the Securities Act in connection therewith; (iv)
any person having acquired beneficial ownership or the right to acquire
beneficial ownership of, or any group. (as such term is defined under Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder)
having been formed which beneficially owns or has the right to acquire
beneficial ownership of, 15% or more of the shares of Company Class A Stock or
Company Class B Stock; or (v) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
(b) Provided that there has been no breach of Section 6.05(a) which
materially and adversely affects the rights of Parent contained herein or in the
Option and Voting Agreement, if the Board of Directors of the Company determines
that it has received a Superior Proposal (as defined below), the Board of
Directors may cause the Company to give to Parent a notice (a "Superior Proposal
Notices") of its intent to accept such Superior Proposal and the giving of such
notice shall not be a breach of this Agreement. The Board of Directors of the
37
Company may withdraw such Superior Proposal Notice and, following such
withdrawal, may deliver to Parent another Superior Proposal Notice provided that
such subsequent notice relates to a different proposal. A "Superior Proposal"
shall mean any proposal made by a third party to acquire, directly or
indirectly, including pursuant to a merger, consolidation, share exchange,
recapitalization, business combination, liquidation, dissolution or other
similar transaction, for consideration consisting of cash and/or securities,
more than 50% of the aggregate voting power or capital stock of the Company then
outstanding or all or substantially all the assets of the Company and otherwise
on terms and conditions to closing which the Board of Directors of the Company
determines in its good faith judgment (based on the advice of a financial
advisor of nationally recognized reputation and independent counsel) to be more
favorable to the Company's stockholders than the Merger and for which financing,
to the extent required, is then committed or which, in the good faith judgment
of the Board of Directors of the Company, is reasonably capable of being
obtained by such third party.
SECTION 6.06. Indemnification and Insurance.
(a) Parent and the Surviving Corporation agree that, except as may
be limited by applicable Laws, for seven (7) years from and after the Effective
Time, the indemnification obligations set forth in the Company's Certificate of
Incorporation and the Company's By-Laws, in each case as of the date of this
Agreement, shall survive the Merger (and, prior to the Effective Time, Parent
shall cause the Certificate of Incorporation and Bylaws of Merger Sub to include
such provisions) and shall not be amended, repealed or otherwise modified after
the Effective Time in any manner that would adversely affect the rights
thereunder of the individuals who on or at any time prior to the Effective Time
were entitled to indemnification thereunder with respect to matters occurring
prior to the Effective Time.
(b) The Surviving Corporation shall maintain in effect, for three
(3) years from and after the Effective Time, directors' and officers' liability
insurance policies covering the persons who are currently covered in their
capacities as such directors and officers by the Company's current directors'
and officers' policies and on terms not materially less favorable than the
excising insurance coverage with respect to matters occurring prior to the
Effective Time.
(c) Parent hereby agrees that, effective upon the consummation of
the Merger, it will guarantee the Surviving Corporation's obligations under
Section 6.06(a) and (b) of this Agreement and under Section 6.9(c) of the UNC
Merger Agreement.
(d) Parent hereby agrees that, effective upon the consummation of
the Merger and the UNC Merger, it will guarantee the obligations of the
surviving corporation of the UNC Merger under Sections 6.9(a) and (b) of the UNC
Merger Agreement.
(e) In addition to, and not in lieu of the foregoing, Parent shall
indemnify, defend and hold harmless all officers and directors of the Company
(the "Company Indemnified Parties") and all officers and directors of UNC (the
"UNC Indemnified Parties" and, together
38
with the Company Indemnified Parties, the "Indemnified Parties") to the fullest
extent permitted by Delaware Law and in the Certificate of Incorporation and
By-laws of the Company and UNC, as currently in effect, from and against all
liabilities, costs, expenses and claims (including without limitation reasonable
legal fees and disbursements, which shall be paid, reimbursed or advanced by
Parent in a manner consistent with applicable provisions of Parent's By-laws)
related to the Merger and other transactions contemplated hereby, which may be
asserted against the Indemnified Parties from and after the date of this
Agreement, other than liabilities resulting from a breach of the fiduciary
duties of any of such Indemnified Parties; provided, however, that (i) Parent's
obligations to the Company Indemnified Parties under this Section 6.06(e) shall
not be effective until consummation of the Merger and (ii) Parent's obligations
to the UNC Indemnified Parties shall not be effective until the consummation of
both the UNC Merger and the Merger.
SECTION 6.07. Notification of Certain Matters. From and after the
date of this Agreement until the Effective Time, each party hereto shall
promptly notify the other parties hereto of (a) the occurrence, or non
occurrence, of any event the occurrence or non occurrence of which would be
reasonably likely to cause any condition to the obligations of any party to
effect the Merger or the UNC Merger not to be satisfied, (b) the failure of the
Company or Parent, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it pursuant to this
Agreement which would be reasonably likely to result in any condition to the
obligations of any party to effect the Merger not to be satisfied, or (c) the
failure of UNC to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it pursuant to the UNC Merger Agreement (as
defined below) which would be reasonably likely to result in any condition to
the obligations of the Company to effect the transactions contemplated by the
UNC Merger Agreement not to be satisfied; provided, however, that the delivery
of any notice pursuant to this Section 6.07 shall not be deemed to be an
amendment of this Agreement or any Section in the Company Disclosure Schedule
and shall not cure any breach of any representation or warranty requiring
disclosure of such matter prior to the date of this Agreement. No delivery of
any notice pursuant to this Section 6.07 shall limit or affect the remedies
available hereunder to the park receiving such notice, including the rights of
Parent under Section 7.02(a) and those of the Company under Section 7.03(a), in
the event that a representation or warrant made by the Company or Parent herein
shall not be true and correct (giving effect to any standards of materiality set
forth in such Sections) as of the date hereof or as of the date when made (if a
different date) and as of the Effective Time.
SECTION 6.08. Stock Exchange Listing. Parent shall as promptly as
reasonably practicable prepare and submit to the NYSE a listing application
covering the shares of Parent Common Stock to be issued in the Merger and shall
use its reasonable efforts to cause such shares to be approved for listing on
the NYSE prior to the Effective Time.
SECTION 6.09. Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any transaction contemplated
hereby. Parent and
39
the Company shall not issue any such press release or make any such public
statement without the prior consent of the other (which consent shall not be
unreasonably withheld), except as may be required by Law or any listing
agreement with the NYSE, the NASD or any national securities exchange to which
Parent or the Company is a party. The parties have agreed on the text of a joint
press release by which Parent and the Company will announce the execution of
this Agreement.
SECTION 6.10. Plan of Reorganization. This Agreement is intended to
constitute a "plan of reorganizations within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code.
SECTION 6.11. Affiliates: Tax Treatment. Within thirty (30) days
from the date hereof, the Company shall obtain from any person who may be deemed
to be an affiliate, as of the date of this Agreement, of the Company under Rule
145 of the Securities Act, a written agreement substantially in the appropriate
form attached hereto as Exhibit 6.11. The Company shall use its reasonable best
efforts to cause the Merger to qualify, and shall not take any actions which
could prevent the Merger from qualifying, as a reorganization qualifying under
the provisions of Section 368(a) of the Code.
SECTION 6.12. Company Employee Stock Purchase Plan. The Company
shall take all actions necessary pursuant to the terms of the ESPP in order to
shorten the offering period under such plan which includes the Effective Time
(the Current Offerings) such that a new purchase date shall occur prior to the
Effective Time and shares of Company Class B Stock shall be purchased by ESPP
participants prior to the Effective Time. The Current Offering shall expire
immediately following such new purchase date, and the ESPP shall terminate
immediately prior to the Effective Time. Subsequent to such new purchase date,
the Company shall take no action pursuant to the terms of the ESPP to commence
any new offering period.
SECTION 6.13. Consulting Agreement. Parent and Eugene P. Conese, Sr.
have entered into a Consulting Agreement as of the date hereof in the form of
Exhibit 6.13 hereto, which agreement shall become effective as of the Effective
Time.
SECTION 6.14. Supplemental Indenture. Immediately after the
Effective time, the Surviving Corporation will assume the Company's obligations
under the Indenture, dated as of June 10, 1996, among the Company, the
Subsidiaries and American Stock Transfer and Trust Company (. Stock Transfer and
Trusts) and, prior to the Effective Time, the Company will deliver such
certificates, opinions, agreements and other instruments as Parent or American
Stock Transfer and Trust may request in connection with the assumption of the
Company's obligations under such Indenture.
SECTION 6.15. UNC Merger Agreement. Simultaneously with the
execution and delivery of this Agreement, the Company and UNC Incorporated, a
Delaware corporation ("UNC"),have entered into an Amended and Restated Merger
Agreement, dated the date hereof (the "UNC Merger Agreements"), Company intends,
on the terms and conditions set forth
40
therein, to acquire UNC pursuant to a merger (the "UNC Merger"). Unless this
Agreement shall have been terminated in accordance with its terms by Company or
Parent, the Company will not amend, modify, give any consent or grant any waiver
under, nor will the Company finally determine that all conditions to closing of
the UNC Merger have been satisfied without the prior written consent of Parent.
The Company agrees to provide to Parent, as promptly as practicable, copies of
all notices given to or by the Company pursuant to or in connection with the UNC
Merger Agreement.
SECTION 6.16. Clean Air Act Permit. The Company covenants and agrees
that, between the date of this Agreement and the Effective Time, the Company
shall use its reasonable best efforts to obtain an operating permit under Title
V of the Clean Air Act, as amended, with respect to operations at the Company's
Miami International Airport Facility and in connection therewith to ensure
continuation of present operating levels of such facility pending the issuance
of such permit. Provided that the Company is using its reasonable best efforts
to obtain such permit, Parent hereby acknowledges that the failure to obtain
such permit shall not, in and of itself, be a breach of such covenant; provided
that Parent does not waive any breach that may result from the failure to have
such permit under any other provision of this Agreement and provided, further,
that, notwithstanding any disclosure of the failure to have such permit in this
Agreement, the Company Disclosure Schedule or otherwise, any adverse
consequences resulting or arising from the failure to have such permit may be
taken into account in determining whether a Company Material Adverse Effect has
occurred.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or, if permitted by applicable Law, waiver of the
following conditions:
(a) this Agreement and the transactions contemplated hereby shall
have been approved and adopted by the affirmative vote of the holders of a
majority of the outstanding shares of Company Class A Stock in accordance with
Delaware IN and the Company's Certificate of Incorporation;
(b) any applicable waiting period under the HER Act relating to the
Merger shall have expired or been terminated;
(c) no order, statute, rule, regulation, executive order, stay,
decree, judgment or injunction shall have been enacted, entered, issued,
promulgated or enforced by any Governmental Authority or a court of competent
jurisdiction which has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger;
41
(d) the Registration Statement shall have been declared effective,
stop order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the SEC;
(e) the shares of Parent Common Stock to be issued in the Merger
shall have been authorized for listing on the NYSE, subject to official notice
of issuance; and
(f) all other necessary and material governmental and regulatory
clearances, consents, or approvals shall have been received, other than the
consent to assignment of the Company's FAA Certificate which need not be
received prior to the Effective Time.
SECTION 7.02. Conditions to the Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to consummate the Merger are
subject to the satisfaction or, if permitted by applicable Law, waiver of the
following further conditions:
(a) (i) the Company shall have performed in all material respects an
of its obligations hereunder required to be performed by it at or prior to the
Effective Time; (ii) each of the representations and warranties of the Company
contained in this Agreement (disregarding for this purpose any qualifications
with respect to materiality or Company Material Adverse Effect) shall be true
and correct in an material respects, in each case as of the date hereof and at
and as of the Closing Date as if made at and as of such time, it being
understood and agreed by Parent and Merger Sub that this Section 7.02(a) shall
be deemed to have been satisfied unless any failure of performance or failure to
be so true and correct, individually or in the aggregate, would have a Company
Material Adverse Effect; and (iii) Parent shall have received a certificate
signed by an executive officer of the Company to the foregoing effect;
(b) Parent shall have received Cold comfort. letters of Deloitte &
Touche LLP and dated the date on which the Registration Statement shall become
effective and the Effective Time, respectively, and addressed to Parent, such
Cold comforts letters being in such form and substance as is reasonably
customary for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement;
(c) Parent shall have received the opinion of counsel to Parent,
based upon representation letters and stockholder certificates, dated on or
about the Closing Date, substantially in the forms of Exhibits 7.02(a), (b) and
(c) to this Agreement, and such other facts, representations and assumptions
concerning, among other things, the actions of the stockholders of the Company
as counsel may reasonably deem relevant, to the effect that the Merger win
income tax purposes as a reorganization qualifying under the provisions of
Section 368(a) of the Code and that each of Parent, Merger Sub and the Company
win be a party to the reorganization within the meaning of Section 368(b) of the
Code, dated on the Closing Date;
(d) Parent shad have received from any person who may be deemed to
have become an affiliate of the Company, as reasonably determined by the
Company, pursuant to
42
Rule 145 under the Securities Act, after the date of this Agreement and on or
prior to the Effective Time, a signed agreement substantially in the form of
Exhibit 6.11 hereto.
SECTION 7.03. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction or, if permitted by applicable Law, waiver of the following further
conditions:
(a) (i) Parent and Merger Sub shah have performed in all material
respects an of their respective obligations hereunder required to be performed
by them at or prior to the Effective Time; (ii) each of the representations and
warranties of Parent contained in this Agreement (disregarding for this purpose
any qualifications with respect to materiality or Parent Material Adverse
Effect) shad be true and correct in all material respects, in each case as of
the date hereof and at and as of the Closing Date as if made at and as of such
time; it being understood and agreed by the Company that this Section 7.03(a)
shall be deemed to have been satisfied unless any failure of performance or
failure to be so true and correct, individually or in the aggregate, would have
a Parent Material Adverse Effect; and (iii) the Company shall have received a
certificate signed by an executive officer of Parent to the foregoing effect;
and
(b) Tax Opinion. The Company shall have received the opinion of
Greenberg, Traurig, counsel to the Company, based upon representation letters
and stockholder certificates substantially in the forms of Exhibits 7.02(a), (b)
and (c) to this Agreement, dated on or about the Closing Date, and such other
facts, representations and assumptions concerning, among other things, the
actions of the stockholders of the Company as counsel may reasonably deem
relevant, to the effect that the Merger will be treated for federal income tax
purposes as a reorganization qualifying under the provisions of Section 368(a)
of the Code and that each of Parent, Merger Sub and the Company will be a park
to the reorganization within the meaning of Section 368(b) of the Code, dated on
the Closing Date.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. be terminated and the Merger may be
abandoned at any time prior to the Effective Time, notwithstanding any requisite
approval and adoption of this Agreement and the transactions contemplated hereby
by the stockholders of the Company:
(a) by written consent duly authorized by the Boards of Directors of
each of Parent and the Company;
(b) by either Parent or the Company if (i) the waiting period
applicable to the consummation of the Merger under the HSR Act shall not have
expired or been terminated prior to September 30, 1997, (ii) any court of
competent jurisdiction in the United States or other United States Governmental
Authority shall have issued an order (other than a temporary
43
restraining order), decree or ruling, or taken any other action, restraining,
enjoining or otherwise prohibiting the Merger (provided, however, that neither
party may terminate this Agreement pursuant to this Section 8.01(b)(ii) prior to
September 30, 1997 if the party subject to such order, decree or ruling is using
its reasonable best efforts to have such order, decree or ruling removed, unless
such order, decree or ruling shall have become final and non-appealable), or
(iii) the Effective Time shall not have occurred on or before September 30,
1997; provided that the right to terminate this Agreement under this Section
8.01(b) shall not be available to any party whose willful, deliberate or knowing
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such date;
(c) by either Parent or the Company, if the Stockholders' Meeting
shall have been held and the holders of outstanding shares of Company Class A
Stock shall have failed to approve and adopt this Agreement at such meeting
(including any adjournment or postponement thereof); provided, however, that if
the Company shall have delivered a Superior Proposal Notice to Parent, the
Company shall not have the right to terminate this Agreement pursuant to this
Section 8.01(c) until the Company would otherwise be permitted to do so pursuant
to Section 8.01(g);
(d) by the Company, upon a breach of any representation, warranty,
or agreement set forth in this Agreement such that the condition set forth in
Section 7.03(a) would not be satisfied (a "Terminating Parent Breach");
provided, however, that, if such Terminating Parent Breach is curable by Parent
through the exercise of its best efforts and Parent continues to exercise such
best efforts, the Company may not terminate this Agreement under this Section
8.01(d) for a period of 30 days from the date on which the Company delivers to
Parent written notice setting forth in reasonable detail the circumstances
giving rise to such Terminating Parent Breach; or
(e) by Parent, upon a breach of any representation, warranty, or
agreement set forth in this Agreement such that the condition set forth in
Section 7.02(a) would not be satisfied (a "Terminating Company Breach");
provided, however, that, if such Terminating Company Breach is curable by the
Company through the exercise of its best efforts and the Company continues to
exercise such best efforts, Parent may not terminate this Agreement under this
Section 8.01(e) for a period of 30 days from the date on which Parent delivers
to the Company written notice setting forth in reasonable detail the
circumstances giving rise to such Terminating Company Breach;
(f) by Parent, at any time after the Company shall have delivered a
Superior Proposal Notice to Parent; or
(g) by the Company if the Company shall have delivered to Parent a
Superior Notice Proposal in accordance with Section 6.05(b), (i) in the event
that any applicable waiting period under the HSR Act relating to the Merger
shall have expired or been terminated and at such time there shall be no order,
decree, ruling or stipulation entered into restraining, enjoining
44
or otherwise preventing the Merger or the purchase of Company Common Stock
pursuant to the Option and Voting Agreement, at any time after the 15th business
day following the date the Company shall have delivered such Notice or (ii) in
the event that any applicable waiting period under the HSR Act relating to the
Merger shall not have expired or been terminated or there shall be in effect any
order, decree, ruling or stipulation entered into or approved by any
Governmental Authority restraining, enjoining or otherwise preventing the Merger
or the purchase of Company Common Stock pursuant to the Voting and Option
Agreement, at any time after the later of June 30, 1997 and the 45th day
following the date that the Company shall have delivered such Notice, provided
that, in the case of each of (i) and (ii), (A) the Superior Proposal referred to
in such notice shall not have been withdrawn or changed in such a way that it
would no longer be a Superior Proposal. pursuant to the definition contained in
this Agreement and (B) the 15 business day period in (i) and the 45 day period
in (ii) shall each be extended by an amount of time equal to any period in which
a stockholder is in breach of such stockholder's obligations to deliver shares
of Company Common Stock pursuant to the Option and Voting Agreement and
provided, further, that, in the case of a Superior Proposal Notice delivered
when the circumstances described in clause (ii) existed and subsequent to such
delivery the applicable waiting period under the HSR Act relating to the Merger
shall have expired or been terminated and at such time there shall be no order,
decree, ruling or stipulation entered into restraining, enjoining or otherwise
preventing the Merger or the purchase of Company Common Stock pursuant to the
Option and Voting Agreement, the Company may terminate this Agreement at any
time after the 15th business day following the date of such expiration of
termination.
SECTION 8.02. Effect of Termination. Except as provided in Section
9.01, in the event of the termination of this Agreement pursuant to Section
8.01, this Agreement shall forthwith become void, there shall be no liability
under this Agreement on the part of Parent, Merger Sub or the Company or any of
their respective officers or directors and all rights and obligations of any
party hereto shall cease; provided, however, that nothing herein shall relieve
any party from liability for, or be deemed to waive any rights of specific
performance of this Agreement available to a party by reason of, any willful
breach by the other party or parties of its or their willful breach of any of
its representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 8.03. Fees and Expenses. (a) In the event that:
(i)(A) this Agreement is terminated pursuant to Section 8.01(b)(i)
and (B) the failure of the waiting period referred to in Section
8.01(b)(i) to expire or terminate prior to September 30, 1997 shall not
have been caused principally by, nor shall it have resulted
principally,,from, the Company's breach of any obligation under this
Agreement, or
(ii) any court of competent jurisdiction in the United States or
other United States Governmental Authority shall have issued an order
(other than a temporary restraining order which pall have been lifted on
or before September 30, 1997), decree or ruling, or taken any other
action, restraining, enjoining or otherwise prohibiting the Merger
45
pursuant to Section 7 of the Clayton Act of 1914, as amended, or the
Federal Trade Commission Act of 1914, as amended, and this Agreement shall
have been terminated pursuant to Section 8.01(b)(ii);
then, in either event, Parent shall pay the Company promptly a fee of $33.5
million (the "Parent Break-Up Fee"), which amount shall be payable in
immediately available funds; provided, however, that if, within 12 months after
this Agreement shall have been terminated in the circumstances described
infection 8.03(a)(i) or (ii), a transaction which results in a Change of Control
(as defined below) is consummated for aggregate consideration in excess of the
aggregate Merger Consideration, then the Company shall, promptly after the
consummation of such transaction., reimburse Parent in immediately available
funds for the full amount of the Parent Break-Up Fee paid by Parent to the
Company pursuant to this Section 8.03(a), exclusive of interest. For purposes of
this Agreement, the term Change of Control shall mean the occurrence of any of
the following events with respect to the Company: (i) there shall be consummated
(A) any merger, consolidation or combination (any, a "Combination") involving
the Company in which the Company is not the continuing or surviving corporation,
or pursuant to which shares of a majority of the Company's voting stock would be
converted in whole or in part into cash, other securities or other property,
other than a Combination involving the Company in which the holders of a
majority of the Company's voting stock immediately prior to the Combination
either have substantially the same proportionate ownership of voting stock of
the surviving corporation immediately after the Combination or a sufficient
percentage of the voting stock of the surviving corporation to enable such
holders to effectively cause a majority of the members of the surviving
corporation's board of directors to ie persons acceptable to such holders, or
(B) any sale, lease, exchange or transfer (in one transaction or a series
related transaction) of all or substantially all of the assets of the Company,
(ii) any person, other than the Company or a Subsidiary or any employee benefit
plan sponsored by the Company or a Subsidiary or a corporation owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions in their ownership of stock of the Company, shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company representing 50% or more of the combined voting power
of then outstanding securities ordinarily (and apart from rights accruing in
special circumstances) having the right to vote in the election of directors, as
a result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise.
(b) All expenses incurred by the parties hereto shall be borne
solely and entirely by the party which has incubated the same; provided,
however, that (a) Parent shall pay any New York State Real Estate Transfer Tax
and New York City Real Property Transfer Tax and any similar Taxes in any
jurisdiction (and any penalties and interest with respect to such Taxes), which
becomes payable in connection with the Merger, on behalf of the stockholders of
the Company without the offset, deduction, counterclaim or deferment of the
price to be paid for shares of Company Common Stock pursuant to the Merger and
(b) Parent and the Company shall bear equally all expenses related to printing,
filing and mailing the Registration Statement and the Proxy Statement and all
SEC and other regulatory filing fees incurred in connection with the
Registration Statement and the Proxy Statement.
46
SECTION 8.04. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided that, after the
approval and adoption of this Agreement by the stockholders of the Company, no
amendment may be made which would reduce the amount or change the type of
consideration to be received by the stockholders of the Company pursuant to the
Merger. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.05. Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties of the other party contained herein or in any
document delivered by the other party pursuant hereto and (c) waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
partial to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements.
The representations, warranties and agreements in this Agreement and any
certificate delivered pursuant hereto by any person shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
8.01, as the case may be, except that the agreements set forth in Articles I and
II and Sections 6.06 and 6.14 shall survive the Effective Time indefinitely, and
those set forth in Sections 6.09, 8.02, 8.03, 8.04, 8.05 and this Article IX
shall survive termination indefinitely.
SECTION 9.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) or by a nationally recognized overnight courier service to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
9.02):
if to Parent or Merger Sub:
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431 0001
Facsimile: (203) 373-3008
Attention: Vice President and
47
Senior Counsel-Transactions
with copies to:
General Electric Company
One Neumann Way
Mail Drop J104
Evendale, Ohio 45215-6301
Facsimile: (513) 243-5096
Attention: Vice President and General Counsel
and
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Facsimile: (212) 848-7666
Attention: Stephen R. Volk, Esq.
and John A. Marzulli, Jr., Esq.
if to the Company:
Greenwich Air Services, Inc.
4590 N.W.36th Street
Miami, Florida 33152
Facsimile: (305) 526-7005
Attention: Eugene P. Conese, Sr.,
Chairman and Chief Executive Officer
with a copy to:
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel
153 East 53rd Street
New York, NY 10022
Facsimile: (212) 223-7161
Attention: Stephen A. Weiss, Esq.
SECTION 9.03. Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person;
48
(b) "beneficial owner" with respect to any shares means a person who
shall be deemed to be the beneficial owner of such shares (i) which such person
or any of its affiliates or associates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) beneficially owns, directly or indirectly,
(ii) which such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or any person with whom such
person or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
such shares;
(c) "business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York, New York;
(d) "Company Aeroderivative Business" shall mean the overhaul,
maintenance and repair of gas turbine engines used for industrial and marine
applications, and the management, sale, installation and maintenance of power
stations;
(e) "Company Businesses" shall mean, as of the date specified, the
collective reference to the Company Commercial Aircraft Business, the Company
Government Business and the Company Aeroderivative Business, as presently
conducted by the entities in the Company Group and their respective business
operations;
(f) "Company Commercial Aircraft Business" shall mean the overhaul,
maintenance and repair of commercial gas turbine aircraft engines conducted at
the engine service centers of the Company Group located in Miami, Florida,
Dallas, Texas, Ft. Worth, Texas, McAllen, Texas, East Granby, Connecticut and
Prestwick, Scotland;
(g) "Company Government Business" shall mean the aircraft engine
maintenance and repair programs managed and operated by the Company Group for
domestic and foreign governments and military agencies;
(h) "Company Group" shall mean the Company, the Subsidiaries and any
partnerships in which the Company or any Subsidiary has an interest, when taken
as a whole;
(i) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
49
(j) "Governmental Authority" means any United States (federal, state
or local), foreign or supranational Government, or governmental, regulatory or
administrative authority, agency or commission;
(k) "Knowledge" means the actual knowledge of any of Eugene P.
Conese, Sr., Eugene P. Conese, Jr., Robert J. Vanaria and Michael A. Bucci,
together with the knowledge that (i) Eugene P. Conese, Sr. and Eugene P. Conese,
Jr. would have had after making due inquiry of the officers of the Company and
the Subsidiaries who have responsibility for the subject matter in question and
who report directly to them, including Mordechai Volevesky, Gerald Waltman, R.
Frank Leftwich, Richard Cardin, Graham Bell and John Korsborough and, (ii)
Robert J. Vanaria would have had after making due inquiry of Orlando Machado,
Guillermo Novarro and Ed Broadmeadow;
(l) "person" means an individual, corporation, limited liability
company, partnership, limited partnership, syndicate, person (including, without
limitation, a ~person. as defined in Section 13(d)(3) of the Exchange trust,
association or entity or government, political subdivision, agency or
instrumentality of a government;
(m) "Real Estates means, with respect to the Company or any
Subsidiary, as applicable, all of the fee or leasehold ownership right, title
and interest of such person, in and to an real estate and improvements owned or
leased by any such person and which is used by any such person in connection
with the operation of its business; and
(n) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either above or through or together with any other subsidiary, owns,
directly or indirectly, 50% or more of the stock or other equity interests, the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
SECTION 9.04. Accounting Terms. All accounting terms used herein
which are not expressly defined in this Agreement shad have the respective
meanings given to them in accordance with United States generally accepted
accounting principles.
SECTION 9.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law,
or public policy, all other conditions and provisions of this Agreement shad
nevertheless remain in fun force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to any
park. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shad negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
Merger be consummated as originally contemplated to the fullest extent possible.
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SECTION 9.06. Entire Agreement: Assignment. This Agreement
(including the Exhibits and the Company Disclosure Schedule, which are hereby
incorporated herein and made a part hereof for an purposes as if fully set forth
herein) and the Confidentiality Agreement constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of law or otherwise, except that Parent and Merger Sub may
assign an or any of their rights and obligations hereunder to any affiliate of
Parent provided that no such assignment shad change the amount or nature of the
Merger Consideration or relieve the assigning park of its obligations hereunder
if such assignee does not perform such obligations.
SECTION 9.07. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each park hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Section 6.06 (which is intended to be for the
benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.08. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shad be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equip.
SECTION 9.09. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware applicable
to contracts executed in and to be performed in that state. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined exclusively in the Court of Chancery for the State of Delaware in and
for the County of New Castle.
SECTION 9.10. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.11. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
GENERAL ELECTRIC COMPANY
By: /s/ William J. Vareschi
---------------------------------
Name: William J. Vareschi
Title: Vice President
GB MERGER CORP.
By:/s/ William J. Vareschi
---------------------------------
Name: William J. Vareschi
Title: Chief Executive Officer
and President
GREENWICH AIR SERVICES, INC.
By:/s/ Eugene P. Conese
---------------------------------
Name: Eugene P. Conese, Sr.
Title: Chief Executive Officer
52