EXHIBIT 99.2
EXECUTION COPY
AGREEMENT AND PLAN
OF MERGER
DATED AS OF
SEPTEMBER 22, 1997
AMONG
THE ▇.▇. ▇▇▇▇▇▇▇▇ COMPANY,
MIDWEST ACQUISITION CORPORATION
AND
▇▇▇▇, INC.
TABLE OF CONTENTS
ARTICLE I
THE MERGER
Section 1.1 The Merger................................................ 1
Section 1.2 Effective Date of the Merger.............................. 2
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation.............................. 2
Section 2.2 By-Laws................................................... 2
Section 2.3 Board of Directors; Officers.............................. 2
Section 2.4 Effects of Merger......................................... 2
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Exchange Ratio............................................ 2
Section 3.2 Parent to Make Certificates Available..................... 4
Section 3.3 Dividends; Transfer Taxes................................. 4
Section 3.4 No Fractional Shares...................................... 4
Section 3.5 Shareholders' Meetings.................................... 5
Section 3.6 Closing of the Company's Transfer Books................... 6
Section 3.7 Assistance in Consummation of the Merger.................. 6
Section 3.8 Closing................................................... 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 4.1 Organization and Qualification............................ 7
Section 4.2 Capitalization............................................ 7
Section 4.3 Subsidiaries.............................................. 7
Section 4.4 Authority Relative to this Merger Agreement............... 8
Section 4.5 Reports and Financial Statements.......................... 9
Section 4.6 Absence of Certain Changes or Events...................... 10
Section 4.7 Litigation................................................ 10
Section 4.8 Information in Disclosure Documents, Registration
Statements, Etc......................................... 10
Section 4.9 Employee Benefit Plans.................................... 11
Section 4.10 ERISA..................................................... 12
Section 4.11 Takeover Provisions Inapplicable.......................... 13
Section 4.12 Compliance with Applicable Laws........................... 13
Section 4.13 Liabilities............................................... 13
Section 4.14 Taxes..................................................... 14
Section 4.15 Certain Agreements........................................ 14
Section 4.16 Patents, Trademarks, Etc.................................. 15
Section 4.17 Product Liability; Airworthiness.......................... 15
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Section 4.18 Environment................................................. 15
Section 4.19 Title to Assets; Liens...................................... 16
Section 4.20 Accounting; Tax Matters..................................... 16
Section 4.21 Parent Action............................................... 16
Section 4.22 Financial Advisor........................................... 16
Section 4.23 Fairness Opinion............................................ 17
ARTICLE IV-A
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Section 4A.1 Organization................................................ 17
Section 4A.2 Capitalization.............................................. 17
Section 4A.3 Authority Relative to this Merger Agreement................. 17
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization and Qualification.............................. 18
Section 5.2 Capitalization.............................................. 18
Section 5.3 Subsidiaries................................................ 19
Section 5.4 Authority Relative to this Merger Agreement................. 20
Section 5.5 Reports and Financial Statements............................ 20
Section 5.6 Absence of Certain Changes or Events........................ 21
Section 5.7 Litigation.................................................. 22
Section 5.8 Information in Disclosure Documents......................... 22
Section 5.9 Employee Benefit Plans...................................... 22
Section 5.10 ERISA....................................................... 23
Section 5.11 Takeover Provisions Inapplicable............................ 24
Section 5.12 Company Action.............................................. 24
Section 5.13 Fairness Opinion............................................ 25
Section 5.14 Financial Advisor........................................... 25
Section 5.15 Compliance with Applicable Laws............................. 25
Section 5.16 Liabilities................................................. 25
Section 5.17 Taxes....................................................... 26
Section 5.18 Certain Agreements.......................................... 26
Section 5.19 Patents, Trademarks, Etc.................................... 27
Section 5.20 Product Liability; Airworthiness............................ 27
Section 5.21 Environment................................................. 28
Section 5.22 Title to Assets; Liens...................................... 28
Section 5.23 Accounting; Tax Matters..................................... 28
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company
Pending the Merger........................................ 28
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Section 6.2 Conduct of Business by Parent and Sub
Pending the Merger......................................... 31
Section 6.3 Notice of Breach............................................. 32
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information....................................... 32
Section 7.2 Registration Statement/Proxy Statement....................... 33
Section 7.3 Compliance with the Securities Act........................... 33
Section 7.4 Stock Exchange Listing....................................... 34
Section 7.5 Employment Arrangements...................................... 34
Section 7.6 Indemnification.............................................. 35
Section 7.7 Consents..................................................... 36
Section 7.8 Additional Agreements........................................ 37
Section 7.9 No Solicitation.............................................. 37
Section 7.10 Takeover Provisions Inapplicable............................. 39
Section 7.11 Board Composition............................................ 39
Section 7.12 Certain Company Indebtedness................................. 39
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger... 40
Section 8.2 Conditions to Obligation of the Company to Effect the Merger. 41
Section 8.3 Conditions to Obligations of Parent and Sub to Effect the
Merger..................................................... 42
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination.................................................. 42
Section 9.2 Effect of Termination........................................ 44
Section 9.3 Amendment.................................................... 45
Section 9.4 Waiver....................................................... 45
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and Agreements.. 45
Section 10.2 Notices..................................................... 45
Section 10.3 Fees and Expenses........................................... 46
Section 10.4 Publicity................................................... 47
Section 10.5 Specific Performance........................................ 47
Section 10.6 Interpretation.............................................. 47
Section 10.7 Third Party Beneficiaries................................... 48
Section 10.8 Miscellaneous............................................... 48
Section 10.9 Cure Period................................................. 48
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"), dated as of
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September 22, 1997, by and among The ▇.▇.▇▇▇▇▇▇▇▇ Company, a New York
corporation ("Parent"), Midwest Acquisition Corporation, a Delaware corporation
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and a wholly owned subsidiary of Parent ("Sub"), and ▇▇▇▇, Inc., a Delaware
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corporation (the "Company"):
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W I T N E S S E T H:
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WHEREAS, the Boards of Directors of Parent and the Company believe it is in
the long-term strategic interests of Parent, the Company and their respective
stockholders to combine their businesses;
WHEREAS, the Boards of Directors of Parent, Sub and the Company have
approved the acquisition of the Company by Parent;
WHEREAS, the Boards of Directors of Parent, Sub and the Company have
approved the merger of Sub into the Company (the "Merger"), upon the terms and
subject to the conditions set forth herein;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that this Agreement
----
shall constitute a plan of reorganization for purposes of Section 368 of the
Code;
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a "pooling of interests";
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
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hereof, on the Effective Date (as defined below in Section 1.2), Sub shall be
merged into the Company and the separate existence of Sub shall thereupon cease,
and the name of the Company, as the surviving corporation in the Merger
(the "Surviving Corporation"), shall by virtue of the Merger remain "▇▇▇▇, Inc."
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Section 1.2 Effective Date of the Merger. The Merger shall become
----------------------------
effective when a properly executed Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, which filing shall be made as soon
as practicable after the closing of the transactions contemplated by this Merger
Agreement in accordance with Section 3.8. When used in this Merger Agreement,
the term "Effective Date" shall mean the date and time at which such filing
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shall have been made.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The Surviving Corporation shall
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adopt the Certificate of Incorporation of Sub in effect immediately prior to the
Merger as the Certificate of Incorporation of the Surviving Corporation until
amended in accordance with its terms and as provided by law and this Merger
Agreement.
Section 2.2 By-Laws. The Surviving Corporation shall adopt the By-laws of
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Sub as in effect on the Effective Date as the By-laws of the Surviving
Corporation.
Section 2.3 Board of Directors; Officers. The directors of Sub
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immediately prior to the Effective Date shall be the directors of the Surviving
Corporation and the officers of the Company immediately prior to the Effective
Date shall be the officers of the Surviving Corporation, in each case until
their respective successors are duly elected and qualified.
Section 2.4 Effects of Merger. The Merger shall have the effects set
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forth in Section 259 of the Delaware General Corporation Law (the "DGCL").
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ARTICLE III
CONVERSION OF SHARES
Section 3.1 Exchange Ratio. As of the Effective Date, by virtue of the
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Merger and without any action on the part of any holder of any capital stock of
the Company:
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(a) All shares of capital stock of the Company which are held by the
Company or any subsidiary of the Company, and any shares of capital stock of the
Company owned by Parent, Sub or any other subsidiary of Parent, shall be
cancelled.
(b) Subject to Section 3.4, each remaining outstanding share of common
stock, $1 par value per share, of the Company ("Company Common Stock") issued
--------------------
and outstanding immediately prior to the Effective Date shall be converted into
.7 of a share (the "Exchange Ratio") of the common stock, par value $5 per
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share, of Parent ("Parent Common Stock"). One preferred share purchase right
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issuable pursuant to the Rights Agreement dated as of June 2, 1997 between
Parent and The Bank of New York or any other purchase right issued in
substitution thereof (the "Parent Rights") shall be issued together with and
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shall attach to each share of Parent Common Stock issued pursuant to this
Section 3.1(b).
(c) In the event of any stock dividend, stock split, reclassification,
recapitalization, combination or exchange of shares with respect to, or rights
issued in respect of, Parent Common Stock after the date of this Merger
Agreement and prior to the Effective Date, the Exchange Ratio shall be adjusted
accordingly.
(d) Each issued and outstanding share of capital stock of Sub shall be
converted into and become one fully paid and nonassessable share of common
stock, $1 par value per share, of the Surviving Corporation.
(e) Each of the outstanding rights to purchase Company Common Stock
pursuant to stock options ("Company Stock Options") granted under the Company
---------------------
Benefit Plans (as defined herein) shall be converted into and become the right
to purchase a number of shares of Parent Common Stock equal to the product of
(i) the number of shares of Company Common Stock subject to such Company Stock
Option and (ii) the Exchange Ratio, rounded to the nearest whole number. The
exercise price per share of Parent Common Stock for all such converted options
bearing the same exercise price prior to such conversion ("Same Price Options")
shall be determined by subtracting from the closing sale price for a share of
Parent Common Stock on the Effective Date an amount equal to (i)(A) the
difference between (I) such closing sale price multiplied by the Exchange Ratio
and (II) the exercise price of the Same Price Options prior to the conversion
multiplied by (B) the total number of shares of Company Common Stock subject to
such Same Price Options divided by (ii) the number of shares of Parent Common
Stock into which all such Same Price Options are exercisable upon such
conversion.
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Section 3.2 Parent to Make Certificates Available. Prior to the
-------------------------------------
Effective Date, Parent shall select The Bank of New York or such other person or
persons reasonably satisfactory to the Company to act as Exchange Agent for the
Merger (the "Exchange Agent"). As soon as practicable after the Effective Date,
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Parent shall make available, and each holder of Company Common Stock to be
converted pursuant to Section 3.1 (each, a "Company Holder") will be entitled to
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receive, upon surrender to the Exchange Agent of one or more certificates
representing such stock ("Certificates") for cancellation, certificates
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representing the number of shares of Parent Common Stock into which such shares
are converted in the Merger and cash in consideration of fractional shares as
provided in Section 3.4. Such shares of Parent Common Stock issued in the
Merger shall each be deemed to have been issued at the Effective Date.
Section 3.3 Dividends; Transfer Taxes. No dividends or other
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distributions that are declared or made on Parent Common Stock will be paid to
persons entitled to receive certificates representing Parent Common Stock
pursuant to this Merger Agreement until such persons surrender their
Certificates representing Company Common Stock. Upon such surrender, there
shall be paid to the person in whose name the certificates representing such
Parent Common Stock shall be issued any dividends or other distributions which
shall have become payable with respect to such Parent Common Stock in respect of
a record date after the Effective Date. In no event shall the person entitled
to receive such dividends be entitled to receive interest on such dividends. In
the event that any certificates for any shares of Parent Common Stock are to be
issued in a name other than that in which the Certificates representing shares
of Company Common Stock surrendered in exchange therefor are registered, it
shall be a condition of such exchange that the person requesting such exchange
shall pay to the Exchange Agent any transfer or other taxes required by reason
of the issuance of certificates for such shares of Parent Common Stock in a name
other than that of the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Exchange Agent that such tax has been
paid or is not applicable. Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to a Company Holder for any shares of
Parent Common Stock or dividends thereon delivered to a public official pursuant
to any applicable escheat laws.
Section 3.4 No Fractional Shares. No certificates or scrip representing
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less than one full share of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates representing Company Common Stock
pursuant to
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Section 3.1(b). In lieu of any such fractional share, each Company Holder who
would otherwise have been entitled to a fraction of a share of Parent Common
Stock upon surrender of Certificates for exchange pursuant to Section 3.1(b)
shall be paid upon such surrender cash (without interest) in an amount equal to
such holder's proportionate interest in the net proceeds from the sale or sales
in the open market by the Exchange Agent, on behalf of all such holders, of the
aggregate fractional Parent Common Stock issued pursuant to this Section 3.4. As
soon as practicable following the Effective Date, the Exchange Agent shall
determine the excess of (i) the number of full shares of Parent Common Stock
delivered to the Exchange Agent by Parent over (ii) the aggregate number of full
shares of Parent Common Stock to be distributed to holders of Company Common
Stock (such excess being herein called the "Excess Shares"), and the Exchange
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Agent, as agent for the former Company Holders, shall sell the Excess Shares at
the prevailing prices on the New York Stock Exchange (the "NYSE"). The sale of
the Excess Shares by the Exchange Agent shall be executed on the NYSE through
one or more member firms of the NYSE and shall be executed in round lots to the
extent practicable. Parent shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and compensation of the
Exchange Agent, incurred in connection with such sale of Excess Shares. Until
the net proceeds of such sale have been distributed to the former Company
Holders, the Exchange Agent will hold such proceeds in trust for such former
stockholders (the "Fractional Securities Fund"). As soon as practicable after
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the determination of the amount of cash to be paid to former Company Holders in
lieu of any fractional interests, the Exchange Agent shall make available in
accordance with this Merger Agreement such amounts to such former stockholders.
The fractional Parent Common Stock interests of each Company Holder will be
aggregated, and no Company Holder will receive cash in an amount equal to or
greater than the value of one full share of Parent Common Stock.
Section 3.5 Shareholders' Meetings. (a) The Company shall take all
----------------------
action necessary, in accordance with applicable law and its certificate of
incorporation and by?laws, to convene a meeting of the holders of Company Common
Stock (the "Company Meeting") as promptly as practicable for the purpose of
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considering and taking action upon this Merger Agreement. Subject to its
fiduciary duties under applicable law, the Board of Directors of the Company
will recommend that holders of Company Common Stock vote in favor of and approve
the Merger and the adoption of the Merger Agreement at the Company Meeting. At
the Company Meeting, all of the shares of Company Common Stock then owned by
Parent, Sub, or any other
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subsidiary of Parent, or with respect to which Parent, Sub, or any other
subsidiary of Parent holds the power to direct the voting, will be voted in
favor of approval of the Merger and adoption of this Merger Agreement.
(b) Parent shall take all action necessary, in accordance with law and its
certificate of incorporation and bylaws to convene a meeting of the holders of
Parent Common Stock (the "Parent Meeting") as promptly as practicable for the
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purpose of considering and acting upon a proposal (the "Stock Issuance
--------------
Proposal") to approve the issuance of shares of Parent Common Stock as provided
--------
by this Agreement. Subject to its fiduciary duties under applicable law, the
Board of Directors of Parent will recommend that holders of Parent Common Stock
vote in favor of and approve the Stock Issuance Proposal at the Parent Meeting.
Section 3.6 Closing of the Company's Transfer Books. At the Effective
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Date, the stock transfer books of the Company shall be closed and no transfer of
any shares of Company Common Stock shall be made thereafter. In the event that,
after the Effective Date, Certificates are presented to the Surviving
Corporation, they shall be cancelled and exchanged for the securities of Parent
and/or cash as provided in Sections 3.1(b) and 3.4.
Section 3.7 Assistance in Consummation of the Merger. Each of Parent, Sub
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and the Company shall provide all reasonable assistance to, and shall cooperate
with, each other to bring about the consummation of the Merger as soon as
possible in accordance with the terms and conditions of this Merger Agreement.
Parent shall cause Sub to perform all of its obligations in connection with this
Merger Agreement.
Section 3.8 Closing. The closing of the transactions contemplated by this
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Merger Agreement shall take place (i) at the offices of Wachtell, Lipton, ▇▇▇▇▇
& ▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 9:00 A.M. local time
on the second business day after the day on which the last of the conditions set
forth in Article VIII is fulfilled or waived or (ii) at such other time and
place as Parent and the Company shall agree in writing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company, except as set forth in a
disclosure schedule delivered by Parent
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concurrently herewith (the "Parent Disclosure Schedule"), (i) as set forth in
--------------------------
the first sentence of Section 4.1, the first four sentences of Section 4.4, and
Sections 4.2, 4.6, and 4.7, and, (ii) except for circumstances that, taken in
the aggregate, would not have a Parent Material Adverse Effect (as defined in
Section 10.6), in the case of all other representations and warranties herein,
as follows:
Section 4.1 Organization and Qualification. Parent is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State of
New York and has the corporate power to carry on its business as it is now being
conducted or currently proposed to be conducted. Parent is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities make such qualification necessary.
Section 4.2 Capitalization. The authorized capital stock of Parent
--------------
consists of 100,000,000 shares of Parent Common Stock and 10,000,000 shares of
Series Preferred Stock, par value $1 per share ("Parent Preferred Stock"). As
----------------------
of September 9, 1997, 54,126,895 shares of Parent Common Stock were validly
issued and outstanding, fully paid and nonassessable and 1,193,030 shares of
Parent Common Stock were held in treasury. As of September 9, 1997, no shares
of Parent Preferred Stock were issued and outstanding. As of September 9, 1997,
except for employee stock options to acquire 2,765,508 shares of Parent Common
Stock at a weighted average exercise price of $29.6594 per share and the Parent
Rights and, except as set forth on Schedule 4.2 and as provided herein, there
are no options, warrants, calls or other rights, agreements or commitments
presently outstanding obligating Parent to issue, deliver or sell shares of its
capital stock or debt securities, or obligating Parent to grant, extend or enter
into any such option, warrant, call or other such right, agreement or
commitment. All of the shares of Parent Common Stock issuable in accordance
with this Merger Agreement in exchange for Company Common Stock at the Effective
Date will be, when so issued, duly authorized, validly issued, fully paid and
nonassessable.
Section 4.3 Subsidiaries. The only "Significant Subsidiaries" (as such
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term is defined in Rule 1-02 of Regulation S-X of the Securities and Exchange
Commission (the "Commission")) ("Significant Subsidiaries") of Parent are those
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set forth on Schedule 4.3. Each Significant Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power to carry on its
business as it is
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now being conducted or currently proposed to be conducted. Each Significant
Subsidiary is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities makes such qualification
necessary. All the outstanding shares of capital stock of each Significant
Subsidiary are validly issued, fully paid and nonassessable and those owned by
Parent or by a Significant Subsidiary of Parent are owned free and clear of any
liens, claims or encumbrances. There are no existing options, warrants, calls or
other rights, agreements or commitments of any character relating to the issued
or unissued capital stock or other securities of any of the Significant
Subsidiaries of Parent. Except as set forth in Parent's Annual Report on Form
10?K for the fiscal year ended December 31, 1996 and except for wholly owned
subsidiaries which are formed after the date hereof in the ordinary course of
business, Parent does not directly or indirectly own any interests in any other
corporation, partnership, joint venture or other business association or entity
which are material to Parent and its subsidiaries taken as a whole.
Section 4.4 Authority Relative to this Merger Agreement. Parent has the
-------------------------------------------
corporate power to enter into this Merger Agreement and to carry out its
obligations hereunder. The execution and delivery of this Merger Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by Parent's Board of Directors. This Merger Agreement constitutes a
valid and binding obligation of Parent enforceable in accordance with its terms
except as enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought. No other corporate proceedings on the part of Parent are necessary
to authorize the Merger Agreement and the transactions contemplated hereby,
other than the approval of the Stock Issuance Proposal by the holders of Parent
Common Stock. Parent is not subject to or obligated under (i) any charter,
by?law, indenture or other loan document provision or (ii) any other contract,
license, franchise, permit, order, decree, concession, lease, instrument,
judgment, statute, law, ordinance, rule or regulation applicable to Parent or
any of its subsidiaries or their respective properties or assets, which would be
breached or violated, or under which there would be a default (with or without
notice or lapse of time, or both), or under which there would arise a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit, by its executing and carrying out this Merger
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Agreement other than, in the case of clause (ii) only, the laws and regulations
referred to in the next sentence. Except as referred to herein or in connection,
or in compliance, with the provisions of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Securities Act of
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1933, as amended (the "Securities Act"), the Securities Exchange Act of 1934, as
--------------
amended (the "Exchange Act"), and other governmental approvals required under
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the applicable laws of any foreign jurisdiction ("Foreign Laws") and the
------------
environmental, corporation, securities or blue sky laws or regulations of the
various states ("State Laws") (all of which required consents and approvals
----------
under Foreign Laws and State Laws are identified in Schedule 4.4 to the Parent
Disclosure Schedule), no filing by Parent or registration by Parent with any
public body or authority is necessary for, nor is any authorization, consent or
approval of any public body or authority required to be obtained by Parent for,
the consummation of the Merger or the other transactions contemplated by this
Merger Agreement.
Section 4.5 Reports and Financial Statements. Parent has, to the extent
--------------------------------
such documents were requested by the Company, previously furnished the Company
with true and complete copies of its (i) Annual Reports on Form 10-K for the
three fiscal years ended December 31, 1994, 1995 and 1996, as filed with the
Commission, (ii) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997 and June 30, 1997, as filed with the Commission, (iii) proxy statements
related to all meetings of its shareholders (whether annual or special) since
December 31, 1994, and (iv) all other reports or registration statements filed
by Parent with the Commission since December 31, 1994, except registration
statements on Form S-8 relating to employee benefit plans, which are all the
documents (other than preliminary material) that Parent was required to file
with the Commission since that date (clauses (i) through (iv) being referred to
herein collectively as the "Parent SEC Reports"). As of their respective dates,
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the Parent SEC Reports complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission thereunder applicable to such Parent SEC Reports.
As of their respective dates, the Parent SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements of
Parent included in the Parent SEC Reports comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of
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the Commission with respect thereto, and the financial statements included in
the Parent SEC Reports have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
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(except as may be indicated therein or in the notes thereto) and fairly present
the financial position of Parent and its subsidiaries as at the dates thereof
and the results of their operations and changes in financial position for the
periods then ended subject, in the case of the unaudited interim financial
statements, to normal year-end audit adjustments and any other adjustments
described therein.
Section 4.6 Absence of Certain Changes or Events. Except as disclosed in
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the Parent SEC Reports, since June 30, 1997, there has not been (i) any event,
condition, transaction, commitment, dispute or other circumstance (financial or
otherwise) of any character (whether or not in the ordinary course of business),
individually or in the aggregate, having a Parent Material Adverse Effect; (ii)
any damage, destruction or loss, whether or not covered by insurance, which,
insofar as reasonably can be foreseen, in the future would have a Parent
Material Adverse Effect; (iii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to the capital stock of Parent (except for regularly scheduled cash dividends
out of current earnings at a rate not greater than the rate in effect on June
30, 1997); or (iv) any entry into any commitment or transaction material to
Parent and its subsidiaries taken as a whole (including, without limitation, any
borrowing or sale of assets) except in the ordinary course of business
consistent with past practice.
Section 4.7 Litigation. There is no suit, action or proceeding pending
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or, to the knowledge of Parent, threatened against or affecting Parent or any of
its subsidiaries which, alone or in the aggregate, has, or is reasonably likely
to have, a Parent Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against Parent or any of its
subsidiaries having, or reasonably likely to have, either alone or in the
aggregate, any such Parent Material Adverse Effect.
Section 4.8 Information in Disclosure Documents, Registration Statements,
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Etc. None of the information with respect to Parent or Sub to be included or
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incorporated by reference in (i) the Registration Statement to be filed with the
Commission by Parent on Form S-4 under the Securities Act for the purpose of
registering the shares of Parent Common Stock to be issued in the Merger (the
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"Registration Statement")
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and (ii) the joint proxy statement of the Company and Parent (the "Proxy
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Statement") required to be mailed to the shareholders of the Company and Parent
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in connection with the Merger will, in the case of the Proxy Statement or any
amendments or supplements thereto, at the time of the mailing of the Proxy
Statement and any amendments or supplements thereto, and at the time of the
Company Meeting to be held in connection with the Merger, or, in the case of the
Registration Statement, at the time it becomes effective and at the Effective
Date, 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, in light of the circumstances under which they are made, not
misleading. The Registration Statement will comply as to form in all material
respects with the provisions of the Securities Act, and the rules and
regulations promulgated thereunder.
Section 4.9 Employee Benefit Plans. Except as disclosed in the Parent SEC
----------------------
Reports, there are no employee benefit, compensation or severance plans,
agreements or arrangements, including "employee benefit plans," as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and including, but not limited to, plans, agreements or arrangements
-----
relating to former employees, including, but not limited, to retiree medical
plans, maintained by Parent or any of its subsidiaries or collective bargaining
agreements to which Parent or any of its subsidiaries is a party (together, the
"Benefit Plans"). To the knowledge of Parent, no default exists with respect to
-------------
the obligations of Parent or any of its subsidiaries under any such Benefit
Plan. Since January 1, 1996, there have been no disputes or grievances subject
to any grievance procedure, unfair labor practice proceedings, arbitration or
litigation under such Benefit Plans, which have not been finally resolved,
settled or otherwise disposed of, nor is there any default, or any condition
which, with notice or lapse of time or both, would constitute such a default,
under any such Benefit Plans, by Parent or its subsidiaries or, to the knowledge
of Parent and its subsidiaries, any other party thereto. Since January 1, 1996,
there have been no strikes, lockouts or work stoppages or slowdowns, or to the
knowledge of Parent and its subsidiaries, jurisdictional disputes or organizing
activity occurring or threatened with respect to the business or operations of
Parent or its subsidiaries. Neither the execution of the Merger Agreement nor
the consummation of the transactions contemplated hereby will (either alone or
upon the occurrence of additional events or acts) result in, cause the
accelerated vesting or delivery of, or increase the amount or value of, any
payment or benefit to any employee of Parent or any of its subsidiaries.
Without limiting the generality of
-11-
the foregoing, no amount paid or payable by Parent or any of itssubsidiaries
(other than the Company) in connection with the transactions contemplated hereby
(either solely as a result thereof or as a result of any such transactions in
conjunction with any other event) will be an "excess parachute payment" within
the meaning of Section 280G of the Code.
Section 4.10 ERISA. All Benefit Plans have been administered in
-----
accordance, and are in compliance with the applicable provisions of ERISA. Each
of the Benefit Plans which is intended to meet the requirements of Section
401(a) of the Code has been determined by the Internal Revenue Service to be
"qualified," within the meaning of such section of the Code, and Parent knows of
no fact which is likely to have an adverse effect on the qualified status of
such plans. None of the Benefit Plans which are defined benefit pension plans
have incurred any "accumulated funding deficiency" (whether or not waived) as
that term is defined in Section 412 of the Code and under Financial Accounting
Standard 87, the fair market value of the assets of each such plan equals or
exceeds the accrued benefit obligations of such plan. To the knowledge of
Parent, there are not now nor have there been any non-exempt "prohibited
transactions," as such term is defined in Section 4975 of the Code or Section
406 of ERISA, involving Parent's Benefit Plans which could subject Parent or its
subsidiaries to the penalty or tax imposed under Section 502(i) of ERISA or
Section 4975 of the Code. No Benefit Plan which is subject to Title IV of ERISA
has been completely or partially terminated; no proceedings to completely or
partially terminate any Benefit Plan have been instituted within the meaning of
Subtitle C of said Title IV of ERISA; and no reportable event, within the
meaning of Section 4043(c) of said Subtitle C for which the 30?day notice
requirement of ERISA has not been waived, has occurred with respect to any
Benefit Plan. Neither Parent nor any of its subsidiaries has made a complete or
partial withdrawal, within the meaning of Section 4201 of ERISA, from any
multiemployer plan which has resulted in, or is reasonably expected to result
in, any withdrawal liability to Parent or any of its subsidiaries. Neither
Parent nor any of its subsidiaries has engaged in any transaction described in
Section 4069 of ERISA within the last five years. There does not now exist, nor
do any circumstances exist that could result in, any liability of Parent or any
of its subsidiaries (or any entity, trade or business that is or was at any time
required to be aggregated with Parent or any of its subsidiaries under Section
414(b), (c), (m) or (o) of the Code) under Title IV of ERISA, Section 302 of
ERISA, Sections 412 and 4971 of the Code, to the knowledge of Parent, the
continuation coverage requirements of Section 601 et seq. of ERISA and Section
------
4980B of the Code, and similar provisions of foreign laws or
-12-
regulations, other than such liabilities that arise solely out of, or relate
solely to, the Benefit Plans, that would be a liability of Parent or its
subsidiaries following the Effective Date.
Section 4.11 Takeover Provisions Inapplicable. As of the date hereof and
--------------------------------
at all times thereafter, until and including the Effective Date, Section 912 of
the New York Business Corporation Law (the "NYBCL") and the Parent Rights are,
and shall be, inapplicable to the Merger and the transactions contemplated by
this Merger Agreement.
Section 4.12 Compliance with Applicable Laws. (i) Parent and its
-------------------------------
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals (the "Parent Permits") of all courts, administrative agencies or
--------------
commissions or other governmental authorities or instrumentalities, domestic or
foreign (each, a "Governmental Entity") necessary for the operation of the
-------------------
businesses of Parent and its subsidiaries; (ii) to the knowledge of Parent,
Parent and its subsidiaries are in compliance with the terms of the Parent
Permits; (iii) to the knowledge of Parent, except as disclosed in the Parent SEC
Reports filed prior to the date of this Merger Agreement, the businesses of
Parent and its subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any Governmental Entity; and (iv) to the knowledge of
Parent, except as disclosed in the Parent SEC Reports, no investigation or
review by any Governmental Entity with respect to Parent or any of its
subsidiaries is pending, or, to the knowledge of Parent, threatened, nor has any
Governmental Entity indicated an intention to conduct the same provided,
--------
however, that the foregoing representations are made as to ERISA and
-------
environmental matters, only as to Parent's knowledge, to the extent contemplated
by Sections 4.10 and 4.18.
Section 4.13 Liabilities. As of June 30, 1997, neither Parent nor any of
-----------
its subsidiaries has any liabilities or obligations (absolute, accrued,
contingent or otherwise) of a nature required to be disclosed on a balance sheet
or in the related notes to the consolidated financial statements prepared in
accordance with GAAP which are not disclosed or provided for in the most recent
Parent SEC Reports. To the knowledge of Parent, there was no basis, as of June
30, 1997, for any claim or liability (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet or in the
related notes to the consolidated financial statements prepared in accordance
with GAAP which is not reflected in the Parent SEC Reports.
-13-
Section 4.14 Taxes. Each of Parent and its subsidiaries has filed all tax
-----
returns required to be filed by any of them and has paid (or Parent has paid on
its behalf), or has set up an adequate reserve for the payment of, all taxes
required to be paid in respect of the periods covered by such returns. The
information contained in such tax returns is true, complete and accurate in all
respects. Neither Parent nor any subsidiary of Parent is delinquent in the
payment of any tax, assessment or governmental charge. No deficiencies for any
taxes have been proposed, asserted or assessed against Parent or any of its
subsidiaries that have not been finally settled or paid in full and no requests
for waivers of the time to assess any such tax are pending and there are no
outstanding audits, examinations, deficiency litigations or refund litigations
with respect to Parent or any of its subsidiaries. The federal income tax
returns of Parent and each of its subsidiaries consolidated in such returns have
been examined by and settled with the Internal Revenue Service for all years
through December 31, 1989. For the purposes of this Merger Agreement, the term
"tax" shall include all federal, state, local and foreign income, profits,
---
franchise, gross receipts, payroll, sales, employment, use, property,
withholding, excise and other taxes, duties and assessments of any nature
whatsoever together with all interest, penalties and additions imposed with
respect to such amounts.
Section 4.15 Certain Agreements. Except as disclosed in the Parent SEC
------------------
Reports filed prior to the date of this Merger Agreement, neither Parent nor any
of its subsidiaries is a party to any oral or written (i) agreement, contract,
indenture or other instrument relating to Indebtedness (as defined below) in an
amount exceeding $10,000,000 or (ii) other contract, agreement or commitment
(except those entered into in the ordinary course of business) having a Parent
Material Adverse Effect. "Indebtedness" means any liability in respect of (A)
------------
borrowed money, (B) capitalized lease obligations, (C) the deferred purchase
price of property or services (other than trade payables in the ordinary course
of business) and (D) guarantees of any of the foregoing incurred by any person
other than Parent, as appropriate, or any of their respective subsidiaries,
except that Indebtedness shall not include short term credit facilities entered
into in the ordinary course of business. Neither Parent nor any of its
subsidiaries is in default (with or without notice or lapse of time, or both)
under any contract, indenture, note, credit agreement, loan document, lease,
license or other agreement including, but not limited to, any Benefit Plan,
whether or not such default has been waived.
-14-
Section 4.16 Patents, Trademarks, Etc. To the knowledge of Parent, Parent
------------------------
and its subsidiaries have all patents, trademarks, trade names, service marks,
trade secrets, copyrights and other proprietary intellectual property rights and
licenses as are necessary in connection with the businesses of Parent and its
subsidiaries, and Parent does not have any knowledge of any conflict with the
rights of Parent and its subsidiaries therein or any knowledge of any conflict
by them with the rights of others therein.
Section 4.17 Product Liability; Airworthiness. (a) Parent has no
--------------------------------
knowledge of any claim, or the basis of any claim, against Parent or any of its
subsidiaries for injury to person or property of employees or any third parties
suffered as a result of the sale of any product or performance of any service by
Parent or any of its subsidiaries, including claims arising out of the defective
or unsafe nature of its products or services. Parent and its subsidiaries have,
and on the Effective Date will have, full and adequate insurance coverage for
potential product liability claims against it.
(b) To the knowledge of Parent, all goods and services designed,
manufactured or sold by Parent or any of its subsidiaries comply with all laws,
requirements, specifications, rules and regulations of all applicable government
airworthiness agencies or authorities (whether foreign or domestic, national or
local) and none of such products or services contain any material defects in
manufacturing, design or performance or other material defect which renders such
products or services or any component thereof defective, deficient,
nonconforming or unsuitable for their intended use. To the knowledge of Parent,
there is no publicly and formally announced rule or regulation by any
governmental authority of the United States or any state thereof that could
reasonably be expected to affect the various airworthiness approvals, licenses,
permits or certifications applicable to the goods, services, assets, facilities
or operations of Parent and its subsidiaries.
Section 4.18 Environment. (i) As used herein, the term "Environmental
-----------
Laws" means all federal, state, local or Foreign Laws relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata),
including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants, contaminants, or industrial,
toxic or hazardous substances or wastes into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or
-15-
handling of chemicals, pollutants, contaminants, or industrial, toxic or
hazardous substances or wastes, as well as all authorizations, codes, decrees,
demands or demand letters, injunctions, judgments, licenses, notices or notice
letters, orders, permits, plans or regulations issued, entered, promulgated or
approved thereunder.
(ii) To the knowledge of Parent, except as set forth in the Parent SEC
Reports, there are, with respect to Parent or any of its subsidiaries, no past
or present violations of Environmental Laws, releases of any material into the
environment, actions, activities, circumstances, conditions, events, incidents,
or contractual obligations which may reasonably be expected to give rise to any
common law environmental liability or any liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") or
------
similar state or local laws.
Section 4.19 Title to Assets; Liens. Parent and its subsidiaries have
----------------------
(i) good and marketable title to all of their inventory, accounts receivable,
property, equipment and other assets, and such assets are free and clear of any
mortgages, liens, charges, encumbrances, or title defects of any nature
whatsoever and (ii) valid and enforceable leases for the premises and the
equipment, furniture and fixtures purported to be leased by them.
Section 4.20 Accounting; Tax Matters. Neither Parent nor, to its
-----------------------
knowledge, any of its affiliates, has through the date hereof, taken or agreed
to take any action nor do they have any knowledge of any circumstances which
currently exist that would prevent (i) Parent from accounting for the business
combination to be effected by the Merger as a "pooling of interests" or (ii) the
Merger from qualifying for federal income tax purposes as a "reorganization"
within the meaning of Section 368(a) of the Code.
Section 4.21 Parent Action. The Board of Directors of Parent (at a
-------------
meeting duly called and held) has by the requisite vote of directors recommended
the approval of the Stock Issuance Proposal by the holders of Parent Common
Stock and directed that the Stock Issuance Proposal be submitted for
consideration by Parent's shareholders entitled to vote thereon at the Parent
Meeting.
Section 4.22 Financial Advisor. Except for ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
-----------------
financial advisor to Parent, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
Merger or the
-16-
transactions contemplated by this Merger Agreement based upon arrangements made
by or on behalf of Parent, and the fees and other amounts payable to ▇▇▇▇▇▇▇,
Sachs & Co. as contemplated by this Section will be as provided in that certain
letter agreement, dated September 8, 1997, from ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. to Parent.
Section 4.23 Fairness Opinion. Parent has received the opinion of
----------------
▇▇▇▇▇▇▇, Sachs & Co., financial advisor to Parent, dated the date hereof, to the
effect that, as of the date hereof, the Exchange Ratio pursuant to the Merger
Agreement is fair from a financial point of view to Parent.
ARTICLE IV-A
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Parent and Sub jointly and severally represent and warrant to the Company
as follows:
Section 4A.1 Organization. Sub is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware. Sub has
not engaged in any business (other than certain organizational matters) since it
was incorporated.
Section 4A.2 Capitalization. The authorized capital stock of Sub consists
--------------
of 1,000 shares of common stock, par value $1.00 per share, 1,000 shares of
which are validly issued and outstanding, fully paid and nonassessable and are
owned by Parent free and clear of all liens, claims and encumbrances.
Section 4A.3 Authority Relative to this Merger Agreement. Sub has the
-------------------------------------------
corporate power to enter into this Merger Agreement and to carry out its
obligations hereunder. The execution and delivery of this Merger Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by its Board of Directors and sole shareholder, and no other
corporate proceedings on the part of Sub are necessary to authorize this Merger
Agreement and the transactions contemplated hereby. Except as referred to
herein or in connection, or in compliance, with the provisions of the HSR Act,
the Securities Act, the Exchange Act, the Foreign Laws and the environmental,
corporation, securities or blue sky laws or regulations of the various states,
no filing or registration with, or authorization, consent or approval of, any
public body or authority is necessary for the consummation by Sub of the Merger
or the transactions contemplated by this Merger Agreement, other than filings,
registrations, authorizations,
-17-
consents or approvals the failure to make or obtain would not prevent the
consummation of the transactions contemplated hereby. The Merger Agreement
constitutes a valid and binding obligation of Sub enforceable in accordance with
its terms except as enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent, except as set forth in a
disclosure schedule delivered by the Company concurrently herewith (the "Company
-------
Disclosure Schedule"), (i) as set forth in the first sentence of Section 5.1,
-------------------
the first four sentences of Section 5.4, and Sections 5.2, 5.6, and 5.7, and,
(ii) except for circumstances that, taken in the aggregate, would not have a
Company Material Adverse Effect (as defined in Section 10.6), in the case of all
other representations and warranties herein, as follows:
Section 5.1 Organization and Qualification. The Company is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power to carry on its business as it is
now being conducted or currently proposed to be conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary.
Complete and correct copies as of the date hereof of the certificate of
incorporation and by-laws of the Company and each of its Significant
Subsidiaries have, to the extent requested, been delivered to Parent as part of
the Company Disclosure Schedule.
Section 5.2 Capitalization. The authorized capital stock of the Company
--------------
consists of 50,000,000 shares of Company Common Stock and 10,000,000 shares of
Preferred Stock, $1 par value per share ("Company Preferred Stock"). As of July
-----------------------
31, 1997, 25,329,725 (25,365,002 as of August 31, 1997) shares of Company Common
Stock were validly issued and outstanding, fully paid and nonassessable, 218,796
(279,151 as of August 31, 1997) shares of Company Common Stock were held in
treasury and no shares of Company Preferred Stock were issued, and there have
-18-
been no material changes in such numbers of shares through the date hereof. As
of August 31, 1997, except for (i) employee and non-employee director stock
options to acquire 3,099,996 shares of Company Common Stock at a weighted
average exercise price of $17.297 per share, (ii) the rights (the "Company
-------
Rights") issued pursuant to the Amended and Restated Rights Agreement dated as
------
of April 6, 1990, as amended, between the Company and The First National Bank of
Chicago, as Rights Agent, as amended, (the "Company Rights Agreement"), (iii)
------------------------
1,902,898 shares of Company Common Stock issuable upon conversion of the
Company's 7.75% Convertible Subordinated Notes due May 2004 and 2,674,418 shares
of Company Common Stock issuable upon conversion of the Company's 7.00%
Convertible Subordinated Debentures due October 2012 (collectively, the
"Convertible Debt") and (iv) 600,000 shares issuable, at an exercise price of
----------------
$9.00 per share, upon exercise of warrants issued by the Company to certain
lenders in 1993 and 1995 (the "Warrants"), there are no options, warrants, calls
--------
or other rights, agreements or commitments presently outstanding obligating the
Company to issue, deliver or sell shares of its capital stock or debt
securities, or obligating the Company to grant, extend or enter into any such
option, warrant, call or other such right, agreement or commitment, and there
have been no material changes in such numbers through the date hereof.
Section 5.3 Subsidiaries. The only Significant Subsidiaries of the
------------
Company are those named in the Company SEC Reports. Each Significant Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has the corporate power to carry
on its business as it is now being conducted or currently proposed to be
conducted. Each Significant Subsidiary is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary. All the outstanding shares of
capital stock of each Significant Subsidiary are validly issued, fully paid and
nonassessable and those owned by the Company or by a subsidiary of the Company
are owned free and clear of any liens, claims or encumbrances. There are no
existing options, warrants, calls or other rights, agreements or commitments of
any character relating to the issued or unissued capital stock or other
securities of any of the Significant Subsidiaries of the Company. Except as set
forth in the Company's Annual Report on Form 10?K for the year ended July 31,
1996 and except for wholly owned subsidiaries which are formed after the date
hereof in the ordinary course of business, the Company does not directly or
indirectly own any interest in any other
-19-
corporation, partnership, joint venture or other business association or entity.
Section 5.4 Authority Relative to this Merger Agreement. The Company has
-------------------------------------------
the corporate power to enter into this Merger Agreement, subject to the
requisite approval of this Merger Agreement by the holders of Company Common
Stock, and to carry out its obligations hereunder. The execution and delivery
of this Merger Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the Company's Board of Directors. This
Merger Agreement constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought. Except for the
requisite approval of the holders of Company Common Stock, no other corporate
proceedings on the part of the Company are necessary to authorize this Merger
Agreement and the transactions contemplated hereby. The Company is not subject
to or obligated under (i) any charter, by-law, indenture or other loan document
provision or (ii) any other contract, license, franchise, permit, order, decree,
concession, lease, instrument, judgment, statute, law, ordinance, rule or
regulation applicable to the Company or any of its subsidiaries or their
respective properties or assets which would be breached or violated, or under
which there would be a default (with or without notice or lapse of time, or
both), or under which there would arise a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit, by its
executing and carrying out this Merger Agreement, other than, in the case of
clause (ii) only, the laws and regulations referred to in the next sentence.
Except as referred to herein or, with respect to the Merger or the transactions
contemplated thereby, in connection, or in compliance, with the provisions of
the HSR Act, the Securities Act, the Exchange Act, the Foreign Laws and the
State Laws (all of which required consents and approvals under Foreign Laws and
State Laws are identified in Schedule 5.4 to the Company Disclosure Schedule),
no filing by the Company or registration by the Company with any public body or
authority is necessary for, nor is any authorization, consent or approval of any
public body or authority required to be obtained by the Company for, the
consummation of the Merger or the other transactions contemplated hereby.
Section 5.5 Reports and Financial Statements. The Company has previously
--------------------------------
furnished Parent with true and complete
-20-
copies of its (i) Annual Reports on Form 10?K for the three years ended July 31,
1994, 1995, and 1996, as filed with the Commission, (ii) Quarterly Reports on
Form 10-Q for the quarters ended November 3, 1996, February 2, 1997 and May 4,
1997, as filed with the Commission, (iii) proxy statements related to all
meetings of its shareholders (whether annual or special) since July 31, 1994 and
(iv) all other reports or registration statements filed by the Company with the
Commission since July 31, 1994, except registration statements on Form S-8
relating to employee benefit plans, which are all the documents (other than
preliminary material) that the Company was required to file with the Commission
since that date (clauses (i) through (iv) being referred to herein collectively
as the "Company SEC Reports"). As of their respective dates, the Company SEC
-------------------
Reports complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission thereunder applicable to such Company SEC Reports.
As of their respective dates, the Company SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements of
the Company included in the Company SEC Reports comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto, and the financial
statements included in the Company SEC Reports, have been prepared in accordance
with GAAP applied on a consistent basis (except as may be indicated therein or
in the notes thereto) and fairly present the financial position of the Company
and its subsidiaries as at the dates thereof and the results of their operations
and changes in financial position for the periods then ended subject, in the
case of the unaudited interim financial statements, to normal year-end audit
adjustments and any other adjustments described therein.
Section 5.6 Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
the Company SEC Reports, since May 4, 1997, there has not been (i) any event,
condition, transaction, commitment, dispute or other circumstance (financial or
otherwise) of any character (whether or not in the ordinary course of business)
individually or in the aggregate having a Company Material Adverse Effect; (ii)
any damage, destruction or loss, whether or not covered by insurance, which,
insofar as reasonably can be foreseen, in the future would have a Company
Material Adverse Effect; (iii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to the capital stock of
-21-
the Company, or (iv) any entry into any commitment or transaction material to
the Company and its subsidiaries taken as a whole (including, without
limitation, any borrowing or sale of assets) except in the ordinary course of
business consistent with past practice.
Section 5.7 Litigation. There is no suit, action or proceeding pending
----------
or, to the knowledge of the Company, threatened against or affecting the Company
or any of its subsidiaries which, either alone or in the aggregate, has, or is
reasonably likely to have, a Company Material Adverse Effect, nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against the Company or any of its subsidiaries having, or reasonably likely to
have, either alone or in the aggregate, any such Company Material Adverse
Effect.
Section 5.8 Information in Disclosure Documents. None of the information
-----------------------------------
with respect to the Company or its subsidiaries to be included or incorporated
by reference in the Proxy Statement or the Registration Statement will, in the
case of the Proxy Statement or any amendments or supplements thereto, at the
time of the mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the Company Meeting to be held in connection with
the Merger, or, in the case of the Registration Statement, at the time it
becomes effective and at the Effective Date, 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, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
Section 5.9 Employee Benefit Plans. Except as disclosed in the Company
----------------------
SEC Reports or as set forth in Section 5.9 of the Company Disclosure Schedule,
there are no employee benefit, compensation or severance plans, agreements or
arrangements, including "employee benefit plans," as defined in Section 3(3) of
ERISA, and including, but not limited to, plans, agreements or arrangements
relating to former employees, including, but not limited to, retiree medical
plans, maintained by the Company or any of its subsidiaries or collective
bargaining agreements to which the Company or any of its subsidiaries is a party
(together, the "Company Benefit Plans"). To the knowledge of the Company, no
---------------------
default exists with respect to the obligations of the Company or any of its
subsidiaries under such Company Benefit Plan. Since August 1, 1995, there have
been no disputes or grievances subject to any
-22-
grievance procedure, unfair labor practice proceedings, arbitration or
litigation under such Company Benefit Plans, which have not been finally
resolved, settled or otherwise disposed of, nor is there any default, or any
condition which, with notice or lapse of time or both, would constitute such a
default, under any such Company Benefit Plans, by the Company or its
subsidiaries or, to the knowledge of the Company and its subsidiaries, any other
party thereto. Since August 1, 1995, there have been no strikes, lockouts or
work stoppages or slowdowns, or to the knowledge of the Company and its
subsidiaries, jurisdictional disputes or organizing activity occurring or
threatened with respect to the business or operations of the Company or its
subsidiaries. Neither the execution of the Merger Agreement nor the consummation
of the transactions contemplated hereby will (either alone or upon the
occurrence of additional events or acts) result in, cause the accelerated
vesting or delivery of, or increase the amount or value of, any payment
orlbenefit to any employee of the Company or any of its subsidiaries. Without
limiting the generality of the foregoing, no amount paid or payable by the
Company or any of its subsidiaries in connection with the transactions
contemplated hereby (either solely as a result thereof or as a result of such
transactions in conjunction with any other event) will be an "excess parachute
payment" within the meaning of Section 280G of the Code.
Section 5.10 ERISA. All Company Benefit Plans have been administered in
-----
accordance, and are in compliance, with the applicable provisions of ERISA.
Each of the Company Benefit Plans which is intended to meet the requirements of
Section 401(a) of the Code has been determined by the Internal Revenue Service
to be "qualified," within the meaning of such section of the Code, and the
Company knows of no fact which is likely to have an adverse effect on the
qualified status of such plans. None of the Company Benefit Plans which are
defined benefit pension plans have incurred any "accumulated funding deficiency"
(whether or not waived) as that term is defined in Section 412 of the Code and
under Financial Accounting Standard 87, the fair market value of the assets of
each such plan equals or exceeds the accrued benefit obligations of such plan.
To the knowledge of the Company, there are not now nor have there been any non-
exempt "prohibited transactions," as such term is defined in Section 4975 of the
Code or Section 406 of ERISA, involving the Company's Benefit Plans which could
subject the Company, its subsidiaries or Parent to the penalty or tax imposed
under Section 502(i) of ERISA or Section 4975 of the Code. No Company Benefit
Plan which is subject to Title IV of ERISA has been completely or partially
terminated; no proceedings to completely or partially terminate any Company
Benefit Plan have
-23-
been instituted within the meaning of Subtitle C of said Title IV of ERISA; and
no reportable event, within the meaning of Section 4043(c) of said Subtitle C
for which the 30-day notice requirement of ERISA has not been waived, has
occurred with respect to any Company Benefit Plan. Neither the Company nor any
of its subsidiaries has made a complete or partial withdrawal, within the
meaning of Section 4201 of ERISA, from any multiemployer plan which has resulted
in, or is reasonably expected to result in, any withdrawal liability to the
Company or any of its subsidiaries. Neither the Company nor any of its
subsidiaries has engaged in any transaction described in Section 4069 of ERISA
within the last five years. There does not now exist, nor do any circumstances
exist that could result in, any liability of the Company or any of its
subsidiaries (or any entity, trade or business that is or was at any time
required to be aggregated with the Company or any of its subsidiaries under
Section 414(b), (c), (m) or (o) of the Code) under Title IV of ERISA, Section
302 of ERISA, Sections 412 and 4971 of the Code, to the knowledge of the
Company, the continuation coverage requirements of Section 601 et seq. of ERISA
and Section 4980B of the Code, and similar provisions of foreign laws or
regulations, other than such liabilities that arise solely out of, or relate
solely to, the Company Benefit Plans, that would be a liability of the Company,
its subsidiaries or Parent following the Effective Date.
Section 5.11 Takeover Provisions Inapplicable. As of the date hereof and
--------------------------------
at all times thereafter, until and including the Effective Date, Section 203 of
the DGCL, the Company Rights Agreement and Article Sixteenth of the Company's
Restated Certificate of Incorporation are, and shall be, inapplicable to the
Merger and the transactions contemplated by this Merger Agreement.
Section 5.12 Company Action. The Board of Directors of the Company (at a
--------------
meeting duly called and held) has by the requisite vote of directors (a)
determined that the Merger is advisable and fair and in the best interests of
the Company and its shareholders, (b) approved the Merger in accordance with the
provisions of Section 251 of the DGCL, (c) recommended the approval of this
Merger Agreement and the Merger by the holders of the Company Common Stock and
directed that the Merger be submitted for consideration by the Company's
shareholders entitled to vote thereon at the Company Meeting, (d) taken all
necessary steps to render Article Sixteenth of the Company's Restated
Certificate of Incorporation inapplicable to the Merger and the transactions
contemplated by this Merger Agreement, (e) taken all necessary steps to render
the Company Rights Agreement inapplicable to the Merger and the transactions
contemplated by this Merger Agreement and (f)
-24-
adopted any necessary resolution having the effect of causing the Company not to
be subject, to the extent permitted by applicable law, to any state takeover law
that may purport to be applicable to the Merger and the transactions
contemplated by this Merger Agreement.
Section 5.13 Fairness Opinion. The Company has received the opinion of
----------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), financial advisor to the
--------------
Company, dated the date hereof, to the effect that the Exchange Ratio is fair
from a financial point of view to the holders of shares of Company Common Stock.
Section 5.14 Financial Advisor. Except for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, no broker,
-----------------
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or the transactions contemplated by
this Merger Agreement based upon arrangements made by or on behalf of the
Company, and the fees and commissions payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as contemplated
by this Section will be the amount set forth in that certain letter, dated
December 20, 1995, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to the Company.
Section 5.15 Compliance with Applicable Laws. (i) The Company and its
-------------------------------
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals (the "Company Permits") of all Governmental Entities necessary for the
---------------
operation of the businesses of the Company and its subsidiaries; (ii) to the
knowledge of the Company, the Company and its subsidiaries are in compliance
with the terms of the Company Permits; (iii) to the knowledge of the Company,
except as disclosed in the Company SEC Reports filed prior to the date of this
Merger Agreement, the businesses of the Company and its subsidiaries are not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity; and (iv) to the knowledge of the Company, no investigation
or review by any Governmental Entity with respect to the Company or any of its
subsidiaries is pending, or, to the knowledge of the Company, threatened, nor
has any Governmental Entity indicated an intention to conduct the same provided,
--------
however, that the foregoing representations are made as to ERISA and
-------
environmental matters, only as to the Company's knowledge, to the extent
contemplated by Sections 5.10 and 5.21.
Section 5.16 Liabilities. As of May 4, 1997, neither the Company nor any
-----------
of its subsidiaries has any liabilities or obligations (absolute, accrued,
contingent or otherwise) of a nature required to be disclosed on a balance sheet
or in the related notes to the consolidated financial statements prepared in
accordance with GAAP which are not
-25-
disclosed or provided for in the most recent Company SEC Reports. To the
knowledge of the Company, there was no basis, as of May 4, 1997, for any claim
or liability (absolute, accrued, contingent or otherwise) of a nature required
to be disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which is not reflected in
the Company SEC Reports.
Section 5.17 Taxes. Each of the Company and its subsidiaries has filed
-----
all tax returns required to be filed by any of them and has paid (or the Company
has paid on its behalf), or has set up an adequate reserve for the payment of,
all taxes required to be paid in respect of the periods covered by such returns.
The information contained in such tax returns is true, complete and accurate.
Neither the Company nor any subsidiary of the Company is delinquent in the
payment of any tax, assessment or governmental charge. No deficiencies for any
taxes have been proposed, asserted or assessed against the Company or any of its
subsidiaries that have not been finally settled or paid in full and no requests
for waivers of the time to assess any such tax are pending and there are no
outstanding audits, examinations, deficiency litigations or refund litigations
with respect to Parent or any of its subsidiaries. The federal income tax
returns of the Company and each of its subsidiaries consolidated in such returns
have been examined by and settled with the Internal Revenue Service for all
years through December 31, 1985.
Section 5.18 Certain Agreements. Except as disclosed in the Company SEC
------------------
Reports filed prior to the date of this Merger Agreement, neither the Company
nor any of its subsidiaries is a party to any oral or written (i) agreement,
contract, indenture or other instrument relating to Indebtedness in an amount
exceeding $2,000,000, (ii) agreement which, after giving effect to the
transactions contemplated by this Merger Agreement, purports to restrict or bind
Parent or any of its subsidiaries other than the Surviving Corporation and its
subsidiaries in any respect that could have a Parent Material Adverse Effect,
(iii) contract, agreement or commitment (except those entered into in the
ordinary course of business) having a Company Material Adverse Effect, (iv)
contract, agreement or commitment, whether or not in the ordinary course of
business, that provides for payments by the Company in fiscal 1997 in excess of
$5 million or (v) contract, agreement or commitment, whether or not in the
ordinary course of business, that provides for payments to the Company in one
year in fiscal 1997, or reasonably expected in fiscal 1998, in excess of $25
million. Neither the Company nor any of its subsidiaries is in default (or
would be in default with notice or lapse of time, or both) under any contract,
indenture, note,
-26-
credit agreement, loan document, lease, license or other agreement including,
but not limited to, any Company Benefit Plan, whether or not such default has
been waived. Except as set forth in Section 5.18 of the Company Disclosure
Schedule, none of the Company or any of its subsidiaries is a party to and bound
by any contract, agreement, commitment, plan, arrangement or other understanding
which upon execution of this Merger Agreement or consummation of the
transactions contemplated hereby will (either alone or upon the occurrence of
additional acts or events) result in any payment becoming due from the Company
or Parent or any of their subsidiaries.
Section 5.19 Patents, Trademark, Etc. To the knowledge of the Company,
-----------------------
the Company and its subsidiaries have all patents, trademarks, trade names,
service marks, trade secrets, copyrights and licenses and other proprietary
intellectual property rights and licenses as are necessary in connection with
the businesses of the Company and its subsidiaries, and the Company does not
have any knowledge of any conflict with the rights of the Company and its
subsidiaries therein or any knowledge of any conflict by them with the rights of
others therein.
Section 5.20 Product Liability; Airworthiness. (a) The Company has no
--------------------------------
knowledge of any claim, or the basis of any claim, against the Company or any of
its subsidiaries for injury to person or property of employees or any third
parties suffered as a result of the sale of any product or performance of any
service by the Company or any of its subsidiaries, including claims arising out
of the defective or unsafe nature of its products or services. The Company and
its subsidiaries have, and on the Effective Date will have, full and adequate
insurance coverage for potential product liability claims against it.
(b) To the knowledge of the Company, all goods and services designed,
manufactured or sold by the Company or any of its subsidiaries comply with all
laws, requirements, specifications, rules and regulations of all applicable
government airworthiness agencies or authorities (whether foreign or domestic,
national or local) and none of such products or services contain any material
defects in manufacturing, design or performance or other material defect which
renders such products or services or any component thereof defective, deficient,
nonconforming or unsuitable for their intended use. To the knowledge of the
Company, there is no publicly and formally announced rule or regulation by any
governmental authority of the United States or any state thereof that could
reasonably be expected to affect the various airworthiness approvals, licenses,
permits or certifications
-27-
applicable to the goods, services, assets, facilities or operations of the
Company and its subsidiaries.
Section 5.21 Environment. To the knowledge of the Company, there are,
-----------
except as set forth in the Company SEC Reports, with respect to the Company or
any of its subsidiaries, no past or present violations of Environmental Laws,
releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual obligations which
reasonably may be expected to give rise to any common law liability or any
liability under CERCLA or similar state or local laws.
Section 5.22 Title to Assets; Liens. The Company has good and marketable
----------------------
title to all of its inventory, accounts receivable, property, equipment and
other assets, and except as disclosed in the Company's SEC Reports such assets
are free and clear of any mortgages, liens, charges, encumbrances, or title
defects of any nature whatsoever. The Company and its subsidiaries have valid
and enforceable leases for the premises and the equipment, furniture and
fixtures purported to be leased by them.
Section 5.23 Accounting; Tax Matters. Neither the Company nor, to its
-----------------------
knowledge, any of its affiliates, has through the date hereof, taken or agreed
to take any action nor do they have knowledge of any circumstances which
currently exist that would prevent Parent from accounting for the business
combination to be effected by the Merger as a "pooling of interests."
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the Merger. Prior
-----------------------------------------------------
to the Effective Date, unless Parent shall otherwise agree in writing:
(i) the Company shall, and shall cause its subsidiaries to, carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, and shall, and shall
cause its subsidiaries to, use their diligent efforts to preserve intact
their present business organizations, keep available the services of their
present officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with them to the
end that their goodwill
-28-
and ongoing businesses shall be unimpaired at the Effective Date. The
Company shall, and shall cause its subsidiaries to, (A) maintain insurance
coverages and its books, accounts and records in the usual manner
consistent with prior practices; (B) comply in all material respects with
all laws, ordinances and regulations of Governmental Entities applicable to
the Company and its subsidiaries; (C) maintain and keep its properties and
equipment in good repair, working order and condition, ordinary wear and
tear excepted; and (D) perform in all material respects its obligations
under all contracts and commitments to which it is a party or by which it
is bound, in each case other than where the failure to so maintain, comply
or perform, either individually or in the aggregate, would not reasonably
be expected to result in a Company Material Adverse Effect;
(ii) the Company shall not and shall not propose to (A) sell or
pledge or agree to sell or pledge any capital stock owned by it in any of
its subsidiaries, (B) amend its Restated Certificate of Incorporation or
Bylaws, (C) split, combine or reclassify its outstanding capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of
the Company, or declare, set aside or pay any dividend or other
distribution payable in cash, stock or property (other than Regular Company
Dividends), or (D) directly or indirectly redeem, purchase or otherwise
acquire or agree to redeem, purchase or otherwise acquire any shares of
Company capital stock;
(iii) the Company shall not, nor shall it permit any of its
subsidiaries to, (A) except as required or permitted by this Merger
Agreement, issue, deliver or sell or agree to issue, deliver or sell any
additional shares of, or rights of any kind to acquire any shares of, its
capital stock of any class, or any option, rights or warrants to acquire,
or securities convertible into, shares of capital stock other than
issuances of Company Common Stock pursuant to the exercise of employee and
non-employee director stock options or the Warrants or upon conversion of
the Convertible Debt; (B) acquire (other than a transaction involving TOLO,
Inc., in the amount of approximately $30 million), lease or dispose or
agree to acquire, lease or dispose of any capital assets or any other
assets other than in the ordinary course of business, (C) incur additional
Indebtedness (except in the ordinary course of business, pursuant to
arrangements currently in place and except for the incurrence of $85
million in Indebtedness for a term of less than one year
-29-
to replace the current accounts receivable sales program and to provide for
the acquisition of TOLO, Inc.) or encumber or grant a security interest in
any asset or enter into any other material transaction other than in each
case in the ordinary course of business; (D) acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial equity
interest in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, except that the Company may create new wholly owned subsidiaries
in the ordinary course of business; or (E) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing
which is binding;
(iv) except as set forth in Schedule 6.1 of the Company Disclosure
Schedule, the Company shall not, nor shall it permit, any of its
subsidiaries to, except as required to comply with applicable law and
except as provided in Section 7.5 hereof, (A) adopt, enter into, terminate,
expand the applicability of or amend any bonus, profit sharing,
compensation, severance, termination, stock option, pension, retirement,
deferred compensation, employment or other Company Benefit Plan, agreement,
trust, fund or other arrangement for the benefit or welfare of any
director, officer or current or former employee, (B) increase in any manner
the compensation or fringe benefit of any director, officer or employee
(except for normal increases in the ordinary course of business that are
consistent with past practice and that, in the aggregate, do not result in
a material increase in benefits or compensation expense to the Company and
its subsidiaries relative to the level in effect prior to such amendment),
(C) pay any benefit not provided under any existing plan or arrangement,
(D) grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Company Benefit Plan (including,
without limitation, the grant of stock options, stock appreciation rights,
stock based or stock related awards, performance units or restricted stock,
or the removal of existing restrictions in any benefit plans or agreements
or awards made thereunder), (E) take any action to fund or in any other way
secure the payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Company Benefit Plan other than in
the ordinary course of business consistent with past practice, or (F)
adopt, enter into, amend or terminate any contract, agreement, commitment
or arrangement to do any of the foregoing which is binding;
-30-
(v) the Company shall not, nor shall it permit any of its
subsidiaries to, make any investments in non-investment grade securities
provided, however, that the Company will be permitted to create new wholly
owned subsidiaries in the ordinary course of business; and
(vi) the Company shall not, nor shall it permit any of its
subsidiaries to, take or cause to be taken any action, whether before or
after the Effective Date, which would disqualify the Merger as a "pooling
of interests" for accounting purposes or as a "reorganization" within the
meaning of Section 368(a) of the Code.
Section 6.2 Conduct of Business by Parent and Sub Pending the Merger.
--------------------------------------------------------
(a) Parent. Prior to the Effective Date, unless the Company shall otherwise
------
agree in writing or except as otherwise required by this Merger Agreement: (i)
Parent shall, and shall cause its subsidiaries to, carry on their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, and shall, and shall cause its material
subsidiaries to, use their best efforts to preserve intact their present
business organizations, keep available the services of their present officers
and employees and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that their goodwill and
ongoing businesses shall be unimpaired at the Effective Date, provided, however,
-------- -------
that nothing contained herein shall prevent Parent from creating new wholly
owned subsidiaries in the ordinary course of business as long as the creation of
such subsidiaries (either alone or in the aggregate) will not reasonably be
expected to have a Parent Material Adverse Effect; (ii)lParent shall not, nor
shall it permit any of its subsidiaries to, take or cause to be taken any
action, whether before or after the Effective Date, which would disqualify the
Merger as a "pooling of interests" for accounting purposes or as a
"reorganization" within the meaning of Section 368(a) of the Code and (iii)
Parent shall not (A) except as required or permitted by this Merger Agreement,
issue, deliver or sell or agree to issue, deliver or sell any additional shares
of, or rights of any kind to acquire any shares of, (1) Parent Common Stock or
(2) any option, rights or warrants to acquire, or securities convertible into,
shares of Parent Common Stock (collectively, "Parent Common Stock Equivalents")
(other than (x) issuances of, deliverances of or sales of or agreements to
issue, deliver or sell Parent Common Stock or Parent Common Stock Equivalents
representing, in the aggregate, less than 12% of the outstanding Parent Common
Stock as of the date hereof, (y) issuances of Parent Common Stock pursuant to
the exercise of employee stock options and other options, warrants and rights
-31-
outstanding on the date hereof and (z) the grant of additional employee stock
options between the date hereof and the Effective Date in the ordinary course of
business and in amounts and on terms which are customary for Parent during the
fiscal periods occurring during such period), (B) acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial equity interest
in, or by any other manner, any business or any corporation, partnership,
association, or other business organization or division thereof involving cash
consideration in excess of $250 million in the aggregate for all such
transactions (excluding the acquisition of the company set forth in Section 6.2
of the Parent Disclosure Schedule), or (C) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing which is binding.
(b) Sub. During the period from the date of this Merger Agreement to the
---
Effective Date, Sub shall not engage in any activities of any nature except as
provided in or contemplated by this Merger Agreement.
Section 6.3 Notice of Breach. Each party shall promptly give written
----------------
notice to the other party upon becoming aware of the occurrence or, to its
knowledge, impending or threatened occurrence, of any event which would cause or
constitute a breach of any of its representations, warranties or covenants
contained or referenced in this Merger Agreement and will use its best efforts
to prevent or promptly remedy the same. Any such notification shall not be
deemed an amendment of the Company Disclosure Schedule or the Parent Disclosure
Schedule.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. Each of the Company and Parent and
----------------------
their respective subsidiaries shall afford to the other and to the other's
accountants, counsel and other representatives full access during normal
business hours (and at such other times as the parties may mutually agree)
throughout the period prior to the Effective Date to all of its properties,
books, contracts, commitments, records and personnel and, during such period,
each shall furnish promptly to the other (i) a copy of each report, schedule and
other document filed or received by it pursuant to the requirements of federal
or state securities laws, and (ii) all other information concerning its
business, properties and personnel as the other may reasonably request. Each of
the Company and Parent shall hold, and shall cause their respective employees
-32-
and agents to hold, in confidence all such information in accordance with the
terms of the Confidentiality Agreements dated as of August 1, 1997 between
Parent and the Company (the "Confidentiality Agreements").
--------------------------
Section 7.2 Registration Statement/Proxy Statement. (a) As promptly as
--------------------------------------
practicable after the execution of this Merger Agreement, the Company and Parent
shall prepare and file with the Commission preliminary proxy materials for use
at the Company Meeting and the Parent Meeting. As promptly as practicable after
comments are received from the Commission with respect to 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 file with the
Commission the definitive proxy statements for use at their respective
shareholder meetings, and Parent shall file with the Commission the Registration
Statement and Parent and the Company shall use all reasonable efforts to cause
the Registration Statement to become effective as soon thereafter as
practicable.
(b) Parent and the Company shall make all necessary filings with respect
to the Merger, under the Securities Act and the Exchange Act and the rules and
regulations thereunder, under applicable blue sky or similar securities laws and
shall use all reasonable efforts to obtain required approvals and clearances
with respect thereto.
Section 7.3 Compliance with the Securities Act. (a) Prior to the
----------------------------------
Effective Date the Company shall cause to be delivered to Parent an opinion
(reasonably satisfactory to counsel for Parent) of the general counsel of the
Company or such law firm as may be reasonably satisfactory to Parent,
identifying all persons who were, in his or its opinion, at the time the Company
Meeting convened in accordance with Section 3.5, "affiliates" of the Company as
that term is used in paragraphs (c) and (d) of Rule 145 under the Securities Act
(the "Affiliates").
----------
(b) The Company shall use its diligent efforts to cause each person who is
identified as a possible Affiliate in the opinion referred to in clause (a)
above to deliver to Parent not less than 30 days prior to the Effective Date, a
written agreement substantially in the form attached hereto as Exhibit 7.3(b)-1.
(c) Parent shall use its best efforts to publish as promptly as
practicable financial information (including combined sales and net income)
covering at least 30 days of post-merger operations, as contemplated by FRR No.
1; provided,
-33-
however, that if the Effective Date occurs in the second month of a calendar
quarter, the requirement of this paragraph (c) shall be satisfied by Parent's
customary announcement, in accordance with its past practice, of its quarterly
financial results.
Section 7.4 Stock Exchange Listing. Parent shall use its best efforts to
----------------------
list on the NYSE, upon official notice of issuance, the shares of Parent Common
Stock to be issued pursuant to the Merger.
Section 7.5 Employment Arrangements. (a) After the Effective Date,
-----------------------
Parent shall, or shall cause the Surviving Corporation to, honor in accordance
with their terms, all employment, severance, consulting and other compensation
contracts between the Company or any of its subsidiaries and any current or
former director, officer or employee thereof, and all provisions for vested
benefits or other vested amounts earned or accrued through the Effective Date
under any Company Benefit Plan, each as of the date hereof except for changes
thereto which are (i) not material, (ii) permitted by this Merger Agreement,
(iii) set forth on Schedule 7.5 hereto, or (iv) otherwise agreed to by the
parties hereto.
(b) Until December 31, 1998, Parent shall provide, or shall cause the
Surviving Corporation to provide, generally to the officers and employees of the
Surviving Corporation and its subsidiaries, employee benefits, including,
without limitation, pension benefits, health and welfare benefits, severance
arrangements, stock option plans and other executive compensation arrangements,
on terms and conditions in the aggregate that are comparable to those provided
under the Company Benefit Plans as of the date hereof. In the event that
employees of the Surviving Corporation are permitted to participate in Parent
Benefit Plans, these employees will be given credit for all years of service
with the Company for the purposes of eligibility, vesting and vacation accruals,
but not for any other purposes.
(c) With regards to the Company's Supplemental Retirement Plan (Restated,
1997) (the "SERP"), the parties agree, over and above the provisions of
----
paragraph (a) hereof, which, to the extent not inconsistent herewith, shall be
applicable to the SERP, as follows:
(i) The execution of this Merger Agreement shall constitute an amendment by
the Company to the SERP, effective as of one day prior to the date of
this Merger Agreement, to provide that paragraph 2.07 shall not apply to
any active
-34-
employee participant until six months after the Effective Date (the "Post
Closing Date"). The Company and Parent agree that during the period prior
to the Post Closing Date they will negotiate with each active employee
participant to structure alternative arrangements with a goal of
maintaining for the participants a competitive retirement and benefits
program. If alternative arrangements are not mutually agreed to by the
Company, Parent and any individual participant by the Post Closing Date,
the provision of paragraph 2.07 will become applicable on the Post
Closing Date with respect to such participant.
(ii) Parent will cause the Surviving Corporation to continue the SERP and to
continue benefit accruals thereunder, with provisions no less favorable
than those existing on the date of this Agreement, until the close of
business on December 31, 1998.
(d) With regards to the special incentive program authorized by the
Compensation and Benefits Committee of the Company's Board of Directors in
relation to the Company's F-14 claim against the U.S. Navy, Parent will cause
the Surviving Corporation to preserve such program and make no changes or
modifications which would make its benefits less favorable than the program
currently provides.
Section 7.6 Indemnification. (a) From and after the Effective Date,
---------------
Parent shall indemnify, defend and hold harmless the officers, directors and
employees of the Company (the "Indemnified Parties") against all losses,
-------------------
expenses, claims, damages or liabilities (i) arising out of the transactions
contemplated by this Merger Agreement or arising as a result thereof or (ii)
otherwise arising prior to the Effective Date to the fullest extent, in the case
of (i) or (ii), permitted or required under (A) applicable law, (B) any
indemnification agreements between the Company and any such person and (C) the
Company's Certificate of Incorporation and By-Laws as filed in the Company SEC
Reports. Parent agrees to cause Surviving Corporation to maintain in effect for
not less than four years after the Effective Date coverage no less favorable
than the current policies of directors' and officers' liability insurance
maintained by the Company with respect to matters occurring prior to the
Effective Date; provided, however, that Surviving Corporation shall not be
required to pay an annual premium for such insurance in excess of $859,500,
-35-
but in such case shall purchase as much coverage as possible for such amount.
(b) In the event that any action, suit, proceeding or investigation
relating hereto or to the transactions contemplated by this Merger Agreement is
commenced, whether before or after the Effective Date, the parties hereto agree
to cooperate and use their respective reasonable efforts to vigorously defend
against and respond thereto.
Section 7.7 Consents. (a) Each of the parties will use its reasonable
--------
best efforts to obtain as promptly as practicable all consents of any
governmental entity or any other person required in connection with, and waivers
of any violations or rights of termination that may be caused by, the
consummation of the transactions contemplated by this Agreement.
(b) In furtherance and not in limitation of the foregoing, Parent shall
use its reasonable best efforts to resolve such objections, if any, as may be
asserted with respect to the transactions contemplated by this Agreement under
any antitrust, competition or trade regulatory laws, rules or regulations of any
domestic or foreign government or governmental authority or any multinational
authority; provided however, that nothing in this Agreement shall require Parent
-------- -------
to agree to hold separate or to divest any of the businesses, product lines or
assets of Parent or the Company or any of their respective subsidiaries or
affiliates or take any other action, if such holding separate, divestiture or
other action would have a Parent Material Adverse Effect or a Company Material
Adverse Effect.
(c) Any party hereto shall promptly inform the others of any material
communication from the United States Federal Trade Commission, the Department of
Justice, the European Economic Area or any other domestic or foreign government
or governmental or multinational authority regarding any of the transactions
contemplated by this Agreement. If any party or any affiliate thereof receives
a request for additional information or documentary material from any such
government or authority with respect to the transactions contemplated by this
Agreement, then such party will endeavor in good faith to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
party, an appropriate response in compliance with such request. Parent and the
Company will consult and cooperate with one another with respect to (and prior
to) any understandings, undertakings or agreements (oral or written) which are
proposed to be made or entered into with the Federal Trade Commission,
-36-
the Department of Justice, the European Economic Area or any other domestic or
foreign government or governmental or multinational authority in connection with
the transactions contemplated by this Agreement, and no such understanding,
undertaking or agreement shall be made or entered into without the consent of
Parent.
Section 7.8 Additional Agreements. (a) Subject to the terms and
---------------------
conditions herein provided (including, without limitation, Section 7.7), each of
the parties hereto agrees to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Merger Agreement, including
using all reasonable efforts to obtain all necessary waivers, consents and
approvals, to effect all necessary registrations and filings (including, but not
limited to, filings with all applicable Governmental Entities) and to lift any
injunction or other legal bar to the Merger (and, in such case, to proceed with
the Merger as expeditiously as possible), subject to the appropriate vote of the
shareholders of the Company. Notwithstanding the foregoing, but subject to
Section 7.7, there shall be no action required to be taken and no action will be
taken in order to consummate and make effective the transactions contemplated by
this Merger Agreement if such action, either alone or together with another
action, would be reasonably likely to result in a Company Material Adverse
Effect or a Parent Material Adverse Effect.
(b) In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Merger Agreement, the
proper officers and/or directors of Parent, the Company and the Surviving
Corporation shall take all such necessary action.
(c) Following the Effective Date, (i) Parent shall use its best efforts to
conduct its business, and shall cause the Surviving Corporation to use its best
efforts to conduct its business, except as otherwise contemplated by this Merger
Agreement, in a manner which would not jeopardize the characterization of the
Merger as a reorganization within the meaning of Section 368(a) of the Code, and
(ii) Parent shall not take, and shall not permit the Surviving Corporation to
take, any action that would cause the Merger to fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code.
Section 7.9 No Solicitation. (a) Neither the Company nor any of its
---------------
subsidiaries shall, directly or
-37-
indirectly, take (nor shall the Company authorize or permit its subsidiaries,
officers, directors, employees, representatives, investment bankers, attorneys,
accountants or other agents or affiliates, to take) any action to (i) encourage,
solicit or initiate the submission of any Acquisition Proposal, (ii) enter into
any agreement with respect to any Acquisition Proposal or (iii) participate in
any way in discussions or negotiations with, or furnish any information to, any
person in connection with, or take any other action to facilitate any inquiries
or the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal. The Company will promptly communicate to
Parent that such a solicitation has been received by the Company, or that any
such information has been requested from it or that such negotiations or
discussions have been sought to be initiated with it. "Acquisition Proposal"
--------------------
shall mean any proposed (A) merger, consolidation or similar transaction
involving the Company, (B) sale, lease or other disposition directly or
indirectly by merger, consolidation, share exchange or otherwise of assets of
the Company or its subsidiaries representing 30% or more of the consolidated
assets of the Company and its subsidiaries, (C) issue, sale, or other
disposition of (including by way of merger, consolidation, share exchange or any
similar transaction) securities (or options, rights or warrants to purchase, or
securities convertible into, such securities) representing 30% or more of the
voting power of the Company or (D) transaction in which any person shall acquire
beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange
Act), or the right to acquire beneficial ownership or any "group" (as such term
is defined under the Exchange Act) shall have been formed which beneficially
owns or has the right to acquire beneficial ownership of 15% or more of the
outstanding Company Common Stock.
(b) Notwithstanding anything in this Agreement to the contrary (including
without limitation clause (a) of this Section 7.9), to the extent the Company's
Board of Directors receives a communication with respect to an Acquisition
Proposal, which the Board of Directors determines, after consultation with its
financial advisors, may be reasonably likely to result in a transaction (an
"Alternative Transaction") that is more favorable to the shareholders of the
Company than the transactions contemplated by the Merger and this Merger
Agreement (taking into account the nature of the proposed transaction, the
nature and amount of the consideration, the likelihood of completion and any
other factors deemed appropriate by the Board of Directors), the Board of
Directors may engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Alternative
-38-
Transaction, or otherwise facilitate any effort or attempt to make or implement
an Alternative Transaction; provided, however, that upon engaging in such
negotiations or discussions, providing such information or otherwise
facilitating any effort or attempt to make or implement an Alternative
Transaction, the Company shall give notice to Parent of the Company's engagement
in such activities ("Alternative Transaction Notice"). Prior to furnishing
------------------------------
nonpublic information to, or entering into discussions or negotiations with, any
other persons or entities, the Company shall obtain from such person or entity
an executed confidentiality agreement with terms no less favorable, taken as a
whole, to the Company than those contained in the Confidentiality Agreements,
but which confidentiality agreement shall not include any provision calling for
an exclusive right to negotiate with the Company, and the Company shall advise
Parent of the nature of such nonpublic information delivered to such person
reasonably promptly following its delivery to the requesting party.
Section 7.10 Takeover Provisions Inapplicable. The Company shall (a) take
--------------------------------
all action (including, if required, redeeming all of the outstanding Company
Rights or amending or terminating the Company Rights Agreement) so that the
entering into of this Agreement and the consummation of the transactions
contemplated hereby will not result in the grant of any rights to any person
under the Company Rights Agreement to purchase or receive additional shares of
capital stock of the Company or enable or require the Company Rights to be
exercised, distributed or triggered in any way and (b) take all action as may be
necessary to render Article Sixteenth of the Company's Restated Certificate of
Incorporation inapplicable to this Merger Agreement and the transactions
contemplated hereby.
Section 7.11 Board Composition. Parent shall take all necessary action
-----------------
(including, without limitation, increasing the size of its Board of Directors),
such that, on or immediately after the Effective Date, three members of the
current Board of Directors of the Company, who shall be selected by the Board of
Directors of Parent, shall be appointed to the Board of Directors of Parent.
Section 7.12 Certain Company Indebtedness. (a) At or prior to the
----------------------------
Effective Date, the Company shall cause to be redeemed all outstanding 9.35%
Series A Senior Notes Due January 29, 2000, 9.35% Series B Senior Notes Due
January 29, 2000 and 9.33% Series C Senior Notes Due December 15, 2001, which
are each governed by the Amended and Restated Note Agreement dated as of January
1, 1996.
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(b) Parent and the Company agree to cooperate and use their best efforts to
obtain any necessary consents, waivers or other modifications of the indenture
dated as of May 15, 1994, between the Company and IBJ ▇▇▇▇▇▇▇▇ Bank & Trust
Company, as trustee, governing the 11 5/8% Senior Notes due 2003 issued by the
Company; provided that in connection with obtaining such consents, waivers or
modifications neither Parent nor the Company will be required to make any
payment or take any other action which is not commercially reasonable.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Date of the following
conditions:
(a) This Merger Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the holders of the
Company Common Stock.
(b) The Stock Issuance Proposal shall have been approved by the requisite
vote of the holders of Parent Common Stock.
(c) The Parent Common Stock issuable in the Merger shall have been
authorized for listing on the NYSE upon official notice of issuance.
(d) The waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated and any authorization, consent
or approval required under any Antitrust Law shall have been obtained or any
waiting period applicable to the review of the transactions contemplated hereby
shall have expired or been terminated.
(e) The Registration Statement shall have become effective in accordance
with the provisions of the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
Commission and remain in effect.
(f) No preliminary or permanent injunction or other order by any court or
other judicial or administrative body of competent jurisdiction which prohibits
or prevents the consummation of the Merger shall have been issued and remain in
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effect (each party, subject to Section 7.7, agreeing to use its best efforts to
have any such injunction lifted).
(g) Parent and the Company shall have received letters from Ernst & Young
LLP and Deloitte & Touche LLP, respectively, to the effect that the Merger
qualifies for "pooling of interests" accounting treatment if consummated in
accordance with this Merger Agreement.
Section 8.2 Conditions to Obligation of the Company to Effect the Merger.
------------------------------------------------------------
The obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Date of the additional following
conditions, unless waived by the Company:
(a) (i) Parent and Sub shall have performed in all material respects their
agreements contained in this Merger Agreement required to be performed on or
prior to the Effective Date and (ii) the representations and warranties of
Parent and Sub contained in this Merger Agreement shall be true in all material
respects when made and on and as of the Effective Date as if made on and as of
such date, except for representations and warranties which are by their express
provisions made as of a specific date or dates, which were or will be true in
all material respects at such time or times as stated therein, and the Company
shall have received a certificate of the President or Chief Executive Officer or
a Vice President of Parent to that effect.
(b) The Company shall have received a favorable opinion of Fried, Frank,
Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, based upon certain factual representations of the
Company, Parent and Sub reasonably requested by such counsel, dated the
Effective Date, to the effect that the Merger will constitute a "reorganization"
for federal income tax purposes within the meaning of Section 368(a) of the
Code.
(c) The consummation of the Merger and the other transactions contemplated
hereby shall not give rise to any Parent Rights becoming exercisable for any
security or asset of any person.
(d) Parent shall have obtained all consents, approvals, releases or
authorizations from, and shall have made all filings and registrations
("Consents") to or with, any person, including but not limited to any
--------
Governmental Entity, necessary to be obtained or made in order to consummate the
transactions contemplated by this Merger Agreement, unless the failure to obtain
such Consents would not, individually or in the aggregate, have a Parent
Material Adverse Effect.
-41-
Section 8.3 Conditions to Obligations of Parent and Sub to Effect the
---------------------------------------------------------
Merger. The obligations of Parent and Sub to effect the Merger shall be subject
------
to the fulfillment at or prior to the Effective Date of the additional following
conditions, unless waived by Parent:
(a) (i) The Company shall have performed in all material respects its
agreements contained in this Merger Agreement required to be performed on or
prior to the Effective Date and (ii) the representations and warranties of the
Company contained in this Merger Agreement shall be true in all material
respects when made and on and as of the Effective Date as if made on and as of
such date, except for representations and warranties which are by their express
provisions made as of a specific date or dates which were or will be true in all
material respects at such date or dates, and Parent and Sub shall have received
a certificate of the President or Chief Executive Officer or a Vice President of
the Company to that effect.
(b) Parent shall have received a letter of Deloitte & Touche LLP, the
Company's independent auditors, dated a date within two business days before the
date on which the Registration Statement shall become effective and addressed to
Parent, in form and substance reasonably satisfactory to Parent and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
(c) Company shall have obtained all Consents to or with, any person,
including but not limited to any Governmental Entity necessary to be obtained or
made in order to consummate the transactions contemplated by this Agreement,
unless the failure to obtain such Consents would not, individually or in the
aggregate, have a Company Material Adverse Effect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Merger Agreement may be terminated at any
-----------
time prior to the Effective Date, whether before or after approval by the
shareholders of the Company:
(a) by mutual consent of the Board of Directors of Parent and the Board of
Directors of the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated on or before June 30,
-42-
1998; provided, that the terminating party is not otherwise in material breach
--------
of its representations, warranties or obligations under this Merger Agreement;
(c) by the Company if any of the conditions specified in Sections 8.1 and
8.2 have not been met or waived by the Company at such time as such condition is
no longer capable of satisfaction;
(d) by Parent if any of the conditions specified in Sections 8.1 and 8.3
have not been met or waived by Parent at such time as such condition is no
longer capable of satisfaction;
(e) by Parent if the Company's Board of Directors shall have withdrawn,
modified in a manner adverse to Parent, or refrained from making its
recommendation concerning the Merger referred to in Section 3.5(a) hereof, or
shall have disclosed its intention to change such recommendation;
(f) by Parent if any requirements or conditions are imposed, or proposed
to be imposed, upon either Parent or the Company or any of their respective
affiliates by any Governmental Entity in connection with the authorization,
consent or approval of such Governmental Entity (or the expiration or
termination of any waiting period applicable to such Governmental Entity's
review of the transactions contemplated by this Merger Agreement) under any
Antitrust Law in connection with the consummation of the transactions
contemplated hereby, or by any domestic or foreign court or similar tribunal in
any suit brought by a private party or Government Entity challenging the
transactions contemplated hereby as violative of any Antitrust Law, which, in
the reasonable opinion of Parent, would require Parent to agree to hold separate
or to divest any of the businesses, product lines or assets of Parent or the
Company or any of their respective subsidiaries or affiliates or take any other
action, if such holding separate, divestiture or other action would have a
Parent Material Adverse Effect or a Company Material Adverse Effect. For
purposes of this paragraph, the term "Governmental Entity" shall not include any
foreign governmental entity other than those of Canada and the European
Community.
(g) by the Company, if Parent's Board of Directors shall have withdrawn,
modified in a manner adverse to the Company, or refrained from making its
recommendation concerning the Stock Issuance Proposal referred to in
-43-
Section 3.5(b) hereof, or shall have disclosed its intention to change such
recommendation.
(h) by Parent, upon becoming aware that the Company has entered into a
definitive agreement (other than a confidentiality agreement) providing for an
Alternative Transaction; or
(i) by the Company, simultaneously with the Company entering into a
definitive agreement (other than a confidentiality agreement) providing for an
Alternative Transaction.
Section 9.2 Effect of Termination. (a) In the event of termination of
---------------------
this Merger Agreement by either Parent or the Company, as provided above, this
Merger Agreement shall forthwith become void and (except for the willful breach
of this Merger Agreement by any party hereto) there shall be no liability on the
part of either the Company, Parent or Sub or their respective officers or
directors; provided that Sections 9.2, 10.3 and 10.8 shall survive the
--------
termination.
(b) The Company shall make a payment to Parent (by wire transfer or
cashiers check) of a breakup fee in the amount of $15,000,000 in the event this
Merger Agreement is terminated pursuant to Section 9.1(h) or 9.1(i) and if at
the time of such termination Parent is not in material breach of any
representation, warranty or material covenant contained herein. The Company
shall make a payment to Parent (by wire transfer or cashiers check) of a breakup
fee in the amount of $6,000,000 in the event this Merger Agreement is terminated
by Parent following the Company Meeting if the stockholders of the Company fail
to approve the Merger at the Company Meeting and there is no Acquisition
Proposal then pending.
(c) Parent shall make a payment to the Company (by wire transfer or
cashiers check) of a breakup fee in the amount of $15,000,000 in the event this
Merger Agreement is terminated by either party as a result of Parent having
entered into a definitive agreement with a third party the performance of which
would preclude consummation of the Merger by Parent and if at the time of such
termination the Company is not in material breach of any representation,
warranty or material covenant contained herein. Parent shall make a payment to
the Company (by wire transfer or cashiers check) of a breakup fee in the amount
of $6,000,000 in the event this Merger Agreement is terminated by the Company
following the Parent Meeting if the stockholders of Parent fail to approve the
Stock Issuance Proposal at the Parent Meeting and if at the time of such
-44-
termination the Company is not in material breach of any representation,
warranty or material covenant contained herein.
Section 9.3 Amendment. This Merger Agreement may be amended by the
---------
parties hereto, by or pursuant to action taken by their respective Boards of
Directors, at any time before or after approval hereof by the shareholders of
the Company, but, after such approval, no amendment shall be made which changes
the ratios at which any class of capital stock of the Company is to be converted
into capital stock of Parent as provided in Section 3.1 or which in any way
materially adversely affects the rights of such shareholders, without the
further approval of such shareholders. This Merger Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 9.4 Waiver. At any time prior to the Effective Date, the parties
------
hereto, by or pursuant to action taken by their respective Boards of Directors,
may (i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any documents delivered
pursuant hereto and (iii) waive compliance with any of the agreements or
conditions contained herein provided, however, that no such waiver shall
--------- -------
materially adversely affect the rights the shareholders of the Company and
Parent. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed on behalf
of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and Agreements.
----------------------------------------------------------
No representations, warranties or agreements in this Merger Agreement shall
survive the Merger, except for the agreements contained in Sections 3.1, 3.2,
3.3, 3.4, 3.6, 3.7, 4.20, 7.5, 7.6, 7.7, 7.8, 10.1, 10.3 and 10.7 and in the
last sentence of Section 7.3(b).
Section 10.2 Notices. All notices or other communications under this
-------
Merger Agreement shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by cable, telegram,
telex, telecopy or other standard form of telecommunications, or by registered
or certified mail, postage prepaid, return receipt requested, addressed as
follows:
-45-
If to the Company:
▇▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent or Sub:
The ▇.▇.▇▇▇▇▇▇▇▇ Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Secretary
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
Section 10.3 Fees and Expenses. Whether or not the Merger is consummated,
-----------------
all costs and expenses incurred in connection with this Merger Agreement and the
transactions contemplated by this Merger Agreement shall be paid by the party
incurring such expenses, except that Parent and Company
-46-
agree to each pay 50% of all printing expenses incurred by the parties hereto.
Section 10.4 Publicity. So long as this Merger Agreement is in effect,
---------
Parent, Sub and the Company agree to consult with each other in issuing any
press release or otherwise making any public statement with respect to the
transactions contemplated by this Merger Agreement, and none of them shall issue
any press release or make any public statement prior to such consultation,
except as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchange. The commencement of litigation
relating to this Merger Agreement or the transactions contemplated hereby or any
proceedings in connection therewith shall not be deemed a violation of this
Section 10.4.
Section 10.5 Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event that any of the provisions of this
Merger Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Merger
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
Section 10.6 Interpretation. (a) When a reference is made in this Merger
--------------
Agreement to subsidiaries of Parent or the Company, the word "subsidiaries"
means corporations more than 50% of whose outstanding voting securities are
directly or indirectly owned by Parent or the Company, as the case may be. The
headings contained in this Merger Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Merger
Agreement.
(b) As used in this Agreement, "Parent Material Adverse Effect" shall mean
------------------------------
a material adverse effect on the business, properties, assets, financial
condition, or results of operations of Parent and its subsidiaries taken as a
whole (excluding the effect of a change in general economic conditions).
(c) As used in this Agreement, "Company Material Adverse Effect" shall
-------------------------------
mean a material adverse effect on the business, properties, assets, financial
condition, or results of operations of the Company and its subsidiaries taken as
a whole (excluding (i) the effect of a change in general economic conditions and
(ii) the effect of any failure to obtain a
-47-
contract from Airbus Industries with respect to the A340-500/600 or to obtain
any particular level of orders from The Boeing Company with respect to out-of-
production spares or the offloading of current production contracts or, if such
a contract or any such orders are obtained by the Company, the effect of the
terms thereof).
(d) As used in this Merger Agreement, "knowledge" shall mean, with respect
---------
to the matter in question, the actual knowledge of such matter by an executive
officer of Parent or the Company, as applicable.
(e) The inclusion of an item on any schedule to this Agreement shall not
be deemed to be indicative of the materiality of such item.
Section 10.7 Third Party Beneficiaries. Except as specifically provided
-------------------------
in Section 7.6(a), this Merger Agreement is not intended to confer upon any
other person any rights or remedies hereunder.
Section 10.8 Miscellaneous. This Merger Agreement (including the
-------------
documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof (other than as provided in the Confidentiality Agreements, as the
same may be amended); (b) shall not be assigned by operation of law or
otherwise, except that Sub shall have the right to assign to Parent or any
direct wholly owned subsidiary of Parent any and all rights and obligations of
Sub under this Merger Agreement; and (c) shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware (without giving effect to the provisions thereof relating to conflicts
of law). This Merger Agreement may be executed in two or more counterparts which
together shall constitute a single agreement.
Section 10.9 Cure Period. No party shall have any rights under this
-----------
Merger Agreement (other than pursuant to Sections 8.2(a) and 8.3(a)) for any
actual or threatened breach of a representation, warranty, covenant or agreement
contained herein, if such breach is capable of being cured, until (i) the non-
breaching party has notified the breaching party of its determination of the
existence (or threatened existence) of a basis for termination, and (ii) the
breaching party shall have a reasonable time (considering the nature of the
breach and the actions required for cure, but in no event longer than 30 days)
to cure such breach.
-48-
IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement to
be signed by their respective officers thereunder duly authorized all as of the
date first written above.
THE ▇.▇.▇▇▇▇▇▇▇▇ COMPANY
By /s/ ▇▇▇▇▇ ▇. Burner
-------------------
Name: ▇▇▇▇▇ ▇. Burner
Title: Chairman of the
Board, President
and Chief Executive
Officer
MIDWEST ACQUISITION CORPORATION
By /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
-----------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and
Treasurer
▇▇▇▇, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
-----------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: President and Chief
Executive Officer
-49-
