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EXECUTION COPY
EXHIBIT 10.40
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AGREEMENT AND PLAN OF MERGER
AMONG
GENERAL DYNAMICS CORPORATION,
XXXX ACQUISITION CORPORATION
AND
GULFSTREAM AEROSPACE CORPORATION
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MAY 16, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE 1 THE MERGER..........................................................................................................1
Section 1.1 The Merger....................................................................................................1
Section 1.2 The Closing...................................................................................................1
Section 1.3 Effective Time................................................................................................2
Section 1.4 Effects of the Merger.........................................................................................2
Section 1.5 Certificate of Incorporation and Bylaws.......................................................................2
Section 1.6 Directors.....................................................................................................2
Section 1.7 Officers......................................................................................................2
Section 1.8 Conversion of Company Common Stock............................................................................2
Section 1.9 Stock Options.................................................................................................3
Section 1.10 Conversion of Acquisition Corporation Common Stock............................................................5
ARTICLE 2 STOCKHOLDER APPROVAL................................................................................................5
Section 2.1 Company Actions...............................................................................................5
Section 2.2 Parent Corporation Actions....................................................................................6
Section 2.3 Cooperation...................................................................................................6
ARTICLE 3 EXCHANGE OF CERTIFICATES............................................................................................7
Section 3.1 Exchange of Certificates......................................................................................7
Section 3.2 Exchange Agent; Exchange Procedures...........................................................................7
Section 3.3 Transfer Books................................................................................................8
Section 3.4 Termination of Exchange Fund..................................................................................8
Section 3.5 Lost Certificates.............................................................................................8
Section 3.6 No Rights as Stockholder......................................................................................8
Section 3.7 Withholding...................................................................................................9
Section 3.8 Escheat.......................................................................................................9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................................9
Section 4.1 Organization..................................................................................................9
Section 4.2 Authorization of Transaction; Enforceability..................................................................9
Section 4.3 Noncontravention; Consents...................................................................................10
Section 4.4 Capitalization...............................................................................................11
Section 4.5 Company Reports; Joint Proxy Statement.......................................................................11
Section 4.6 No Undisclosed Liabilities...................................................................................12
Section 4.7 Absence of Material Adverse Change...........................................................................12
Section 4.8 Litigation and Legal Compliance..............................................................................13
Section 4.9 Contract Matters.............................................................................................13
Section 4.10 Tax Matters..................................................................................................13
Section 4.11 Employee Benefit Matters.....................................................................................14
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Section 4.12 Environmental Matters........................................................................................17
Section 4.13 Title........................................................................................................18
Section 4.14 Intellectual Property Matters................................................................................19
Section 4.15 Year 2000 Compliance Matters.................................................................................19
Section 4.16 Labor Matters................................................................................................20
Section 4.17 State Takeover Laws..........................................................................................20
Section 4.18 Parent Common Stock Ownership................................................................................20
Section 4.19 Accounting and Tax Matters...................................................................................20
Section 4.20 Brokers' Fees................................................................................................20
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE
PARENT CORPORATION.................................................................................................21
Section 5.1 Organization.................................................................................................21
Section 5.2 Authorization of Transaction; Enforceability.................................................................21
Section 5.3 Noncontravention; Consents...................................................................................22
Section 5.4 Capitalization...............................................................................................22
Section 5.5 Parent Corporation Reports; Joint Proxy
and Registration Statements..................................................................................23
Section 5.6 No Undisclosed Liabilities...................................................................................24
Section 5.7 Absence of Material Adverse Change...........................................................................25
Section 5.8 Litigation and Legal Compliance..............................................................................25
Section 5.9 Contract Matters.............................................................................................25
Section 5.10 Tax Matters..................................................................................................25
Section 5.11 Employee Benefit Matters.....................................................................................26
Section 5.12 Environmental Matters........................................................................................29
Section 5.13 Title........................................................................................................29
Section 5.14 Intellectual Property Matters................................................................................29
Section 5.15 Year 2000 Compliance Matters.................................................................................30
Section 5.16 Labor Matters................................................................................................30
Section 5.17 Company Common Stock Ownership...............................................................................30
Section 5.18 Accounting and Tax Matters...................................................................................31
ARTICLE 6 COVENANTS..........................................................................................................31
Section 6.1 General......................................................................................................31
Section 6.2 Notices and Consents.........................................................................................31
Section 6.3 Interim Conduct of the Company...............................................................................31
Section 6.4 Interim Conduct of the Parent Corporation....................................................................33
Section 6.5 Preservation of Organization.................................................................................33
Section 6.6 Full Access..................................................................................................34
Section 6.7 Notice of Developments.......................................................................................34
Section 6.8 Acquisition Proposals........................................................................................34
Section 6.9 Indemnification..............................................................................................36
Section 6.10 Public Announcements.........................................................................................38
Section 6.11 Preservation of Programs and Agreements.....................................................................38
Section 6.12 Actions Regarding Antitakeover Statutes......................................................................38
Section 6.13 Standstill Provisions........................................................................................39
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Section 6.14 Defense of Orders and Injunctions............................................................................39
Section 6.15 Affiliate Letters............................................................................................39
Section 6.16 Preservation of Accounting and Tax Treatment.................................................................39
Section 6.17 Accountant's Comfort Letters.................................................................................39
Section 6.18 Registration Agreement.......................................................................................40
Section 6.19 New York Stock Exchange Quotation............................................................................40
Section 6.20 Publishing Financial Results.................................................................................40
Section 6.21 Employee Benefit Matters.....................................................................................40
Section 6.22 Directors of the Surviving Corporation.......................................................................41
ARTICLE 7 CONDITIONS TO THE CONSUMMATION OF THE MERGER.......................................................................41
Section 7.1 Conditions to the Obligations of Each Party..................................................................41
Section 7.2 Conditions to the Obligation of the Company..................................................................42
Section 7.3 Conditions to the Obligation of the Parent Corporation
and the Acquisition Corporation..............................................................................43
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER..................................................................................44
Section 8.1 Termination..................................................................................................44
Section 8.2 Effect of Termination........................................................................................45
Section 8.3 Termination Fee..............................................................................................45
ARTICLE 9 MISCELLANEOUS......................................................................................................46
Section 9.1 Nonsurvival of Representations...............................................................................46
Section 9.2 Remedies.....................................................................................................47
Section 9.3 Successors and Assigns.......................................................................................47
Section 9.4 Amendment....................................................................................................47
Section 9.5 Extension and Waiver.........................................................................................47
Section 9.6 Severability.................................................................................................47
Section 9.7 Counterparts.................................................................................................47
Section 9.8 Descriptive Headings.........................................................................................47
Section 9.9 Notices......................................................................................................47
Section 9.10 No Third Party Beneficiaries.................................................................................49
Section 9.11 Entire Agreement.............................................................................................49
Section 9.12 Construction.................................................................................................49
Section 9.13 Submission to Jurisdiction...................................................................................49
Section 9.14 Governing Law................................................................................................49
EXHIBITS
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Exhibit A-1 - Form of Company Affiliate Letter
Exhibit A-2 - Form of Parent Corporation Affiliate Letter
Exhibit B-1 - Form of Company Tax Representations
Exhibit B-2 - Form of Parent Corporation Tax Representations
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TABLE OF DEFINED TERMS
Acquisition Corporation Preamble
Acquisition Proposal Section 6.8(g)
Applicable Period Section 6.8(b)
Average Stock Price Section 8.1(f)
Certificate Section 3.1(a)
Charter Amendment Section 2.2(a)
Closing Section 1.2
Closing Date Section 1.2
Code Section 4.10(f)
Company Preamble
Company Common Stock Section 1.8(a)
Company Disclosure Letter Section 4
Company Form 10-Q Section 4
Company Material Adverse Effect Section 4.1
Company Plans Section 4.11(a)
Company SEC Documents Section 4.5(a)
Company Stockholder Approval Section 2.1(a)
Company Stockholders Meeting Section 2.1(a)
Confidentiality Agreement Section 6.6
Continuing Employees Section 6.21(a)
Daily Per Share Price Section 8.1(f)
Delaware Act Section 1.1
Effective Time Section 1.3
Employee Pension Benefit Plan Section 4.11(a)
Employee Welfare Benefit Plan Section 4.11(a)
Environmental Law Section 4.12(b)
ERISA Section 4.11(a)
Exchange Agent Section 3.1
Exchange Fund Section 3.2(a)
Hazardous Materials Section 4.12(c)
HSR Act Section 4.3
Indemnified Parties Section 6.9(a)
Intellectual Property Section 4.14(b)
Joint Proxy Statement Section 2.1(b)
Lien Section 4.3
Merger Section 1.1
Merger Consideration Section 1.8(c)
Multiemployer Plan Section 4.11(a)
Parent Common Stock Section 1.8(a)
Parent Corporation Preamble
Parent Corporation Disclosure Letter Section 5
Parent Corporation Form 10-Q Section 5
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Parent Corporation Material Adverse Effect Section 5.1
Parent Corporation Plans Section 5.11(a)
Parent Corporation Stockholder Approval Section 2.2(a)
Parent Corporation Stockholders Meeting Section 2.2(a)
Permitted Liens Section 4.13
Registration Statement Section 2.2(b)
SEC Section 2.1(b)
Securities Act Section 2.1(b)
Securities Exchange Act Section 1.9(d)
Standstill Provisions Section 6.8(e)
Stock Options Section 1.9(a)
Stock Plans Section 1.9(a)
Subsidiary Section 1.8(d)
Superior Acquisition Proposal Section 6.8(h)
Surviving Corporation Section 1.1
Taxes Section 4.10(a)
Tax Returns Section 4.10(a)
Termination Fee Section 8.3(a)
Third Party Acquisition Section 8.3(b)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of May 16, 1999 among General
Dynamics Corporation, a Delaware corporation (the "Parent Corporation"), Xxxx
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of
the Parent Corporation (the "Acquisition Corporation"), and Gulfstream Aerospace
Corporation, a Delaware corporation (the "Company").
The Boards of Directors of the Parent Corporation and the Company
have each determined that a business combination between the Parent Corporation
and the Company is desirable and in the best interests of the Parent Corporation
and the Company and their respective stockholders. The Boards of Directors of
the Parent Corporation and the Company accordingly have each duly adopted
resolutions approving this Agreement and the transactions contemplated hereby.
It is intended that the merger provided for in this Agreement will
qualify as a reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended, and that for financial accounting purposes the
merger will be accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the value, receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time (as defined in Section 1.3)
the Acquisition Corporation will be merged (the "Merger") with and into the
Company in accordance with the provisions of the Delaware General Corporation
Law (the "Delaware Act"). Following the Merger, the Company will continue as the
surviving corporation (the "Surviving Corporation") and the separate corporate
existence of the Acquisition Corporation will cease.
Section 1.2 The Closing. Upon the terms and subject to the conditions
set forth in this Agreement, the consummation of the Merger and the other
transactions contemplated by this Agreement (the "Closing") will take place at
the offices of Jenner & Block, 000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, at
10:00 a.m., local time, on the first business day following the satisfaction or
waiver of the conditions set forth in Article 7 (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
satisfaction
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or, where permitted, waiver of those conditions), or at such other date, time or
place as the Parent Corporation and the Company may agree. The date upon which
the Closing occurs is referred to in this Agreement as the "Closing Date."
Section 1.3 Effective Time. The Merger will be consummated by the
filing of a certificate of merger with the Secretary of State of the State of
Delaware in accordance with Section 251(c) of the Delaware Act. The time the
Merger becomes effective in accordance with Sections 103 and 251 of the Delaware
Act is referred to in this Agreement as the "Effective Time."
Section 1.4 Effects of the Merger. The Merger will have the effects
set forth in the Delaware Act. Without limiting the generality of the foregoing,
as of the Effective Time, all properties, rights, privileges, powers and
franchises of the Company and the Acquisition Corporation will vest in the
Surviving Corporation and all debts, liabilities and duties of the Company and
the Acquisition Corporation will become debts, liabilities and duties of the
Surviving Corporation.
Section 1.5 Certificate of Incorporation and Bylaws. At the Effective
Time, the Certificate of Incorporation and Bylaws of the Acquisition Corporation
in the respective forms delivered by the Parent Corporation to the Company prior
to the date of this Agreement will be amended and restated to change the name of
the Acquisition Corporation to "Gulfstream Aerospace Corporation" or such other
name as the Parent Corporation may determine. The Certificate of Incorporation
and Bylaws of the Acquisition Corporation, as so amended and restated, will be
the Certificate of Incorporation and Bylaws of the Surviving Corporation.
Section 1.6 Directors. Subject to the provisions of Section 6.22, the
directors of the Acquisition Corporation at the Effective Time will be the
initial directors of the Surviving Corporation and will hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualified in the manner provided in the Certificate of Incorporation and
Bylaws of the Surviving Corporation or as otherwise provided by law.
Section 1.7 Officers. The officers of the Company at the Effective
Time will be the initial officers of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation or as otherwise provided
by law.
Section 1.8 Conversion of Company Common Stock.
(a) Subject to the provisions of Section 1.8(b), each share of the
Company's Common Stock, par value $.01 per share (the "Company Common
Stock"), issued and outstanding immediately prior to the Effective Time
(other than shares of Company Common Stock held in the treasury of the
Company, held by any Subsidiary (as defined in Section 1.8(d)) of the
Company or held by the Parent Corporation or any Subsidiary of the Parent
Corporation) will, by virtue of the Merger and without any action on the
part of the holder thereof, be canceled and converted into the right to
receive, upon the
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surrender of the certificate formerly representing such share, one share
of the Parent Corporation's Common Stock, par value $1.00 per share (the
"Parent Common Stock"). In the event that, subsequent to the date of this
Agreement but prior to the Effective Time, the outstanding shares of
Parent Common Stock or Company Common Stock are changed into a different
number of shares or a different class as a result of a stock split,
reverse stock split, stock dividend, subdivision, reclassification,
combination, exchange, recapitalization or similar transaction, the
number of shares of Parent Common Stock into which each share of Company
Common Stock will be converted as a result of the Merger will be adjusted
appropriately and provisions will be made for appropriate payments of
cash in lieu of the issuance of fractional shares of Parent Common Stock.
(b) Each share of Company Common Stock held in the treasury of the
Company, held by any Subsidiary of the Company or held by the Parent
Corporation or any Subsidiary of the Parent Corporation immediately prior
to the Effective Time will, by virtue of the Merger and without any
action on the part of the holder thereof, be canceled and retired and
will cease to exist. For purposes of this Section 1.8(b), shares of
Company Common Stock owned beneficially or held of record by any plan,
program or arrangement sponsored or maintained for the benefit of any
current or former employee of the Company, the Parent Corporation or any
of their respective Subsidiaries will not be deemed to be held by the
Company, the Parent Corporation or any such Subsidiary, regardless of
whether the Company, the Parent Corporation or any such Subsidiary has
the power, directly or indirectly, to vote or control the disposition of
such shares.
(c) The shares of Parent Common Stock to be issued upon the
conversion of shares of Company Common Stock pursuant to Section 1.8(a)
and any cash to be paid in lieu of fractional shares of Parent Common
Stock pursuant to Section 1.8(a) are referred to in this Agreement
collectively as the "Merger Consideration."
(d) The term "Subsidiary" as used in this Agreement means any
corporation, partnership, limited liability company or other business
entity 50 percent or more of the outstanding voting equity securities of
which are owned, directly or indirectly, by the Company or the Parent
Corporation, as applicable.
Section 1.9 Stock Options.
(a) The Parent Corporation and the Company will take all necessary
actions to cause each option to purchase shares of Company Common Stock
(a "Stock Option") granted under any stock option plan, program,
agreement or arrangement of the Company or any of its Subsidiaries
(collectively, the "Stock Plans") which is outstanding and unexercised
immediately prior to the Effective Time to be converted at the Effective
Time into an option to purchase the same number of shares of Parent
Common Stock that could have been obtained upon the exercise of such
Stock Option immediately prior to the Effective Time and the conversion
and exchange of the shares of Company Common Stock issued upon such
exercise for shares of Parent Common
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Stock as provided in Section 1.8(a). The exercise price per share
applicable to each such converted stock option will be the same as was
applicable to such Stock Option immediately prior to the Effective Time
(subject to adjustment pursuant to the last sentence of Section 1.8(a)).
Upon and following the conversion of the Stock Options pursuant to this
Section 1.9(a), each converted stock option will be subject to the same
terms and conditions as in effect immediately prior to the Effective
Time; provided that (i) if a form of agreement evidencing the Stock
Option provides for acceleration of vesting of the Stock Option upon the
Merger, the converted stock option will be so vested following the Merger
and (ii) consistent with the forms of stockholder's agreements in use by
the Company prior to the date hereof, upon exercise of any converted
stock option, there will be no obligation that the holder thereof execute
a stockholder's agreement.
(b) The Company and the Parent Corporation acknowledge that,
consistent with the terms of such stockholder's agreements, any
stockholder's agreement entered into prior to the Effective Time by
reason of the exercise of a Stock Option or otherwise will cease to be of
any force or effect upon and following the Effective Time.
(c) The Parent Corporation will take all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent
Common Stock for delivery upon exercise of all of the Stock Options
converted into options to purchase Parent Common Stock pursuant to
Section 1.9(a). Not later than one day following the Effective Time, the
Parent Corporation will file a registration statement on Form S-8 (or any
successor or other appropriate form) with respect to the shares of Parent
Common Stock subject to the converted stock options and will deliver
prospectuses to the holders of such stock options. Following the
Effective Time, the Parent Corporation will use all reasonable efforts to
maintain the effectiveness of the foregoing registration statement (and
maintain the current status of the prospectus or prospectuses contained
therein) for so long as any of the converted stock options remain
outstanding and unexercised.
(d) At the Effective Time, the Parent Corporation will assume the
obligations of the Company under the Stock Plans as in effect at the
Effective Time. No additional Stock Options will be granted pursuant to
the Stock Plans after the Effective Time.
(e) The Board of Directors or Compensation Committee of the
Company and the Parent Corporation will each grant all approvals and take
all other actions required pursuant to Rules 16b-3(d) and 16b-3(e) under
the Securities Exchange Act of 1934, as amended (together with the rules
and regulations of the SEC thereunder, the "Securities Exchange Act"), to
cause the disposition in the Merger of Company Common Stock and Stock
Options and the acquisition in the Merger of Parent Common Stock and
options to acquire Parent Common Stock to be exempt from the provisions
of Section 16(b) of the Securities Exchange Act.
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Section 1.10 Conversion of Acquisition Corporation Common Stock.
Each share of the Common Stock, par value $1.00 per share, of the
Acquisition Corporation issued and outstanding immediately prior to the
Effective Time will, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into one share of the Common
Stock, par value $1.00 per share, of the Surviving Corporation.
ARTICLE 2
STOCKHOLDER APPROVAL
Section 2.1 Company Actions. The Company, acting through its Board of
Directors, in accordance with applicable law, its Certificate of Incorporation
and Bylaws and the rules of the New York Stock Exchange, will:
(a) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "Company Stockholders Meeting"), to be held as
soon as practicable after the date of this Agreement, for the purpose of
submitting this Agreement for adoption and approval by the holders of a
majority of the outstanding shares of Company Common Stock (the "Company
Stockholder Approval");
(b) cooperate with the Parent Corporation in preparing and filing
with the Securities and Exchange Commission (the "SEC") as promptly as
practicable after the date of this Agreement a Joint Proxy
Statement/Prospectus and related materials (the "Joint Proxy Statement")
with respect to the Company Stockholders Meeting satisfying the
requirements of the Securities Act of 1933, as amended (together with the
rules and regulations of the SEC thereunder, the "Securities Act"), and
the Securities Exchange Act, respond promptly to any comments raised by
the SEC with respect to the preliminary version of the Joint Proxy
Statement, and cause the definitive version of the Joint Proxy Statement
to be mailed to its stockholders as soon as it is legally permitted to do
so;
(c) subject to the provisions of Section 6.8, include in the Joint
Proxy Statement (i) the recommendation of the Board of Directors of the
Company that the stockholders of the Company vote in favor of the
adoption and approval of this Agreement and the transactions contemplated
hereby and (ii) the written opinion dated as of the date of this
Agreement of Xxxxxxx Xxxxx & Co., financial advisor to the Board of
Directors of the Company, to the effect that as of the date of this
Agreement the Merger Consideration is fair to the stockholders of the
Company, other than the Parent Corporation and its affiliates, from a
financial point of view; and
(d) provide the Parent Corporation with the information concerning
the Company required to be included in the Joint Proxy Statement and the
Registration Statement (as defined in Section 2.2(b)).
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Section 2.2 Parent Corporation Actions. The Parent Corporation,
acting through its Board of Directors, in accordance with applicable law, its
Certificate of Incorporation and Bylaws and the rules of the New York Stock
Exchange, will:
(a) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "Parent Corporation Stockholders Meeting"), to
be held as soon as practicable after the date of this Agreement, for the
purpose of submitting for the approval of the holders of a majority of
the outstanding shares of Parent Common Stock (the "Parent Corporation
Stockholder Approval") the proposals adopted by the Board of Directors of
the Parent Corporation to (i) amend and restate the Certificate of
Incorporation of the Parent Corporation to increase the number of shares
of Parent Common Stock the Parent Corporation is authorized to issue to
300,000,000 shares (the "Charter Amendment") and (ii) issue shares of
Parent Common Stock pursuant to the Merger;
(b) file with the SEC as promptly as practicable after the date of
this Agreement a Registration Statement on Form S-4 (which will include
the Joint Proxy Statement) complying in all material respects with the
Securities Act and the Securities Exchange Act registering the issuance
of the Parent Common Stock proposed to be issued by the Parent
Corporation pursuant to the Merger (the "Registration Statement"),
respond promptly to any comments raised by the SEC with respect to the
preliminary version of the Joint Proxy Statement or the Registration
Statement, use its best efforts to cause the Registration Statement to be
declared effective by the SEC as promptly as practicable and cause the
definitive version of the Joint Proxy Statement to be mailed to its
stockholders as soon as it is legally permitted to do so;
(c) provide the Company with the information concerning the Parent
Corporation and the Acquisition Corporation required to be included in
the Joint Proxy Statement; and
(d) include in the Joint Proxy Statement (i) the recommendation of
the Board of Directors of the Parent Corporation that the stockholders of
the Parent Corporation vote in favor of the Charter Amendment and the
issuance of shares of Parent Common Stock pursuant to the Merger and (ii)
the written opinion dated as of May 13, 1999 of Bear Xxxxxxx & Co.,
financial advisor to the Board of Directors of the Parent Corporation, to
the effect that the Merger is fair, from a financial point of view, to
the Parent Corporation and its stockholders.
Section 2.3 Cooperation. Each party will promptly advise the other of its
receipt of, and will promptly furnish the other party with copies of, all
comments received from the SEC with respect to the Registration Statement and
the Joint Proxy Statement and will consult with the other party in responding to
such comments.
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ARTICLE 3
EXCHANGE OF CERTIFICATES
Section 3.1 Exchange of Certificates. From and after the Effective
Time, each holder of a certificate that immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (a "Certificate") will be
entitled to receive in exchange therefor, upon surrender thereof to an exchange
agent to be designated by the parties (the "Exchange Agent"), the Merger
Consideration into which the shares of Company Common Stock evidenced by such
Certificate were converted pursuant to the Merger. No interest will be payable
on the Merger Consideration to be paid to any holder of a Certificate
irrespective of the time at which such Certificate is surrendered for exchange.
Certificates surrendered for exchange by any holder that is an "affiliate" of
the Company for purposes of Rule 145(c) under the Securities Act will not be
exchanged until the Parent Corporation has received a letter from such holder as
provided in Section 6.15.
Section 3.2 Exchange Agent; Exchange Procedures.
(a) As soon as reasonably practicable following the Effective
Time, the Parent Corporation will deposit, or cause to be deposited, with
the Exchange Agent, in trust for the benefit of holders of Certificates,
certificates representing the Merger Consideration and the amount of any
dividends or distributions payable in accordance with the provisions of
Section 3.2(b) (the "Exchange Fund").
(b) As soon as reasonably practicable after the Effective Time,
the Parent Corporation will instruct the Exchange Agent to mail to each
record holder of a Certificate (i) a letter of transmittal (which will
specify that delivery will be effected, and risk of loss and title to
such Certificates will pass, only upon delivery of the Certificate to the
Exchange Agent and will be in such form and have such other provisions as
the Parent Corporation will reasonably specify) and (ii) instructions for
use in effecting the surrender of Certificates for certificates
representing shares of Parent Common Stock. Commencing immediately after
the Effective Time, upon the surrender to the Exchange Agent of such
Certificate or Certificates, together with a duly executed and completed
letter of transmittal and all other documents and other materials
required by the Exchange Agent to be delivered in connection therewith,
the holder will be entitled to receive a certificate or certificates
representing the number of shares of Parent Common Stock into which the
Certificate or Certificates so surrendered have been converted in
accordance with the provisions of Section 1.8. Unless and until any
Certificate or Certificates are so surrendered, no dividend or other
distribution, if any, payable to the holders of record of shares of
Parent Common Stock as of any date subsequent to the Effective Time will
be paid to the holders of such Certificate or Certificates in respect of
the shares of Parent Common Stock into which such Certificates are
convertible. Upon the surrender of any Certificate or Certificates, the
record holder of the certificate or certificates representing shares of
Parent Common Stock issued in exchange therefor will be entitled to
receive (i) at the time of surrender, the amount of any dividends or
other distributions (net of any applicable tax
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withholdings) having a record date after the Effective Time and a payment
date prior to the surrender date, payable in respect of such shares of
Parent Common Stock and (ii) at the appropriate payment date, the amount
of dividends or other distributions (net of any applicable tax
withholdings) having a record date after the Effective Time and a payment
date subsequent to the date of such surrender, payable in respect of such
shares of Parent Common Stock.
Section 3.3 Transfer Books. The stock transfer books of the Company
will be closed at the Effective Time and no transfer of any shares of Company
Common Stock will thereafter be recorded on any of the stock transfer books. In
the event of a transfer of ownership of any Company Common Stock prior to the
Effective Time that is not registered in the stock transfer records of the
Company at the Effective Time, a certificate or certificates representing the
number of shares of Parent Common Stock into which such Company Common Stock has
been converted in the Merger will be issued to the transferee together with a
cash payment in respect of dividends and distributions, if any, in accordance
with the provisions of Section 3.2(b), only if the Certificate is surrendered as
provided in Section 3.1, accompanied by all documents required to evidence and
effect such transfer and by evidence of payment of any applicable stock transfer
taxes.
Section 3.4 Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed one year after the Effective Time will be
delivered to the Parent Corporation upon demand, and each holder of Company
Common Stock who has not theretofore surrendered Certificates in accordance with
the provisions of this Article 3 will thereafter look only to the Parent
Corporation for satisfaction of such holder's claims for shares of Parent Common
Stock and any dividends or distributions payable in accordance with the
provisions of Section 3.2(b).
Section 3.5 Lost Certificates. If any Certificate has been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will deliver in exchange for such lost, stolen or destroyed
certificate the shares of Parent Common Stock issuable pursuant to Section 1.8,
and unpaid dividends and distributions, if any, on shares of Parent Common Stock
deliverable in respect thereof, pursuant to this Agreement.
Section 3.6 No Rights as Stockholder. From and after the Effective
Time, the holders of Certificates will cease to have any rights as a stockholder
of the Surviving Corporation except as otherwise provided in this Agreement or
by applicable law and the Parent Corporation will be entitled to treat each
Certificate that has not yet been surrendered for exchange solely as evidence of
the right to receive the Merger Consideration into which the shares of Company
Common Stock evidenced by such Certificate have been converted pursuant to the
Merger and the right to receive dividends and distributions, if any, in
accordance with the provisions of Section 3.2(b).
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Section 3.7 Withholding. The Parent Corporation will be entitled to
deduct and withhold from the Merger Consideration otherwise payable to any
former holder of Company Common Stock all amounts required by law to be deducted
or withheld therefrom.
Section 3.8 Escheat. Neither the Parent Corporation, the Acquisition
Corporation nor the Company will be liable to any former holder of Company
Common Stock for any portion of the Merger Consideration delivered to any public
official pursuant to any applicable abandoned property, escheat or similar law.
In the event any Certificate has not been surrendered for exchange prior to the
sixth anniversary of the Closing Date, or prior to such earlier date as of which
such Certificate or the Merger Consideration payable upon the surrender thereof
would otherwise escheat to or become the property of any governmental entity,
then the Merger Consideration otherwise payable upon the surrender of such
Certificate will, to the extent permitted by applicable law, become the property
of the Surviving Corporation, free and clear of all rights, interests and
adverse claims of any person.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent Corporation and the
Acquisition Corporation that except as disclosed in the reports, schedules,
forms, statements and other documents filed by the Company with the SEC and
publicly available prior to the date of this Agreement, as disclosed in the
draft of the Quarterly Statement on Form 10-Q for the Company's fiscal quarter
ended March 31, 1999 (the "Company Form 10-Q") delivered to the Parent
Corporation prior to the date of this Agreement or as disclosed in the letter
dated as of the date of this Agreement from the Company to the Parent
Corporation (the "Company Disclosure Letter"):
Section 4.1 Organization. The Company and each of its Subsidiaries is
a corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as presently
being conducted. The Company and each of its Subsidiaries is in good standing
under the laws of the jurisdiction of its incorporation and is duly qualified to
conduct business as a foreign corporation in each other jurisdiction where such
qualification is required, except where the failure to be so qualified and in
good standing would not have a material adverse effect on the business,
financial condition, operations or results of operations of the Company and its
Subsidiaries taken as a whole or the ability of the Company to consummate the
Merger and to perform its obligations under this Agreement (a "Company Material
Adverse Effect"). The Company has delivered to the Parent Corporation correct
and complete copies of its charter and bylaws, as presently in effect, and will
make available to the Parent Corporation after the date of this Agreement
correct and complete copies of the charter and bylaws, as presently in effect,
of each of its Subsidiaries.
Section 4.2 Authorization of Transaction; Enforceability. Subject to
obtaining the Company Stockholder Approval, the Company has full corporate power
and authority and has taken all requisite corporate action to enable it to
execute and deliver this Agreement, to
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consummate the Merger and the other transactions contemplated hereby and to
perform its obligations hereunder. The Board of Directors of the Company, at a
meeting thereof duly called and held, has duly adopted resolutions by the
requisite majority vote approving this Agreement, the Merger and the other
transactions contemplated hereby, determining that the terms and conditions of
this Agreement, the Merger and the other transactions contemplated hereby are
fair to and in the best interests of the Company and its stockholders and
recommending that the Company's stockholders adopt and approve this Agreement.
The foregoing resolutions of the Board of Directors of the Company have not been
modified, supplemented or rescinded and remain in full force and effect as of
the date of this Agreement. In connection with its adoption of the foregoing
resolutions, the Board of Directors of the Company received the written opinion
of Xxxxxxx Xxxxx & Co., financial advisor to the Board of Directors of the
Company, dated as of the date of this Agreement to the effect that, as of such
date, the Merger Consideration is fair to the stockholders of the Company, other
than the Parent Corporation and its affiliates, from a financial point of view.
The foregoing opinion has not been modified, supplemented or rescinded prior to
the date of this Agreement. The Company will deliver to the Parent Corporation
promptly after the date of this Agreement correct and complete copies of the
foregoing resolutions and opinion. This Agreement constitutes the valid and
legally binding obligation of the Company, enforceable against the Company in
accordance with its terms and conditions.
Section 4.3 Noncontravention; Consents. Except for (a) certain
filings and approvals necessary to comply with the applicable requirements of
the Securities Act, the Securities Exchange Act and the "blue sky" laws and
regulations of various states, (b) certain filings and approvals necessary to
comply with the requirements of the New York Stock Exchange with respect to the
delisting of the Company Common Stock, (c) the filing of a Notification and
Report Form and related material with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice under the
Xxxx-Xxxxx-Xxxxxx Act of 1976, as amended (the "HSR Act"), (d) certain filings
and approvals which may be necessary to comply with the rules and regulations of
the Federal Aviation Administration and (e) the filing of a certificate of
merger pursuant to the Delaware Act, neither the execution and delivery of this
Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby, will constitute a violation of, be in conflict
with, constitute or create (with or without notice or lapse of time or both) a
default under, give rise to any right of termination, cancellation, amendment or
acceleration with respect to, or result in the creation or imposition of any
lien, encumbrance, security interest or other claim (a "Lien") upon any property
of the Company or any of its Subsidiaries pursuant to (i) the charter or bylaws
of the Company or any of its Subsidiaries, (ii) any constitutional provision,
law, rule, regulation, permit, order, writ, injunction, judgment or decree to
which the Company or any of its Subsidiaries is subject or (iii) any agreement
or commitment to which the Company or any of its Subsidiaries is a party or by
which the Company, any of its Subsidiaries or any of their respective properties
is bound or subject, except, in the case of clauses (ii) and (iii) above, for
such matters which, individually or in the aggregate, would not have a Company
Material Adverse Effect.
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Section 4.4 Capitalization.
(a) As of the date of this Agreement, the authorized capital stock
of the Company consists of 300,000,000 shares of Company Common Stock. As
of May 2, 1999, 71,607,043 shares of Company Common Stock were issued and
outstanding, 18,212,231 shares were held by the Company as treasury
shares and 4,715,946 shares were reserved for issuance upon the exercise
of outstanding Stock Options. All of the issued and outstanding shares of
capital stock of the Company have been duly authorized and are validly
issued, fully paid and nonassessable.
(b) Other than Stock Options to acquire an aggregate of 4,715,946
shares of Company Common Stock granted by the Company to current and
former directors, officers, employees and advisors of the Company and its
Subsidiaries pursuant to the Stock Plans, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights or other contracts or commitments that
could require the Company or any of its Subsidiaries to issue, sell or
otherwise cause to become outstanding any of its capital stock. There are
no outstanding stock appreciation, phantom stock, profit participation or
similar rights with respect to the Company or any of its Subsidiaries.
(c) Neither the Company nor any of its Subsidiaries is a party to
any voting trust, proxy or other agreement or understanding with respect
to the voting of any capital stock of the Company or any of its
Subsidiaries.
(d) The Board of Directors of the Company has not declared any
dividend or distribution with respect to the Company Common Stock the
record or payment date for which is on or after the date of this
Agreement.
(e) All of the outstanding shares of the capital stock of each of
the Company's Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or one of its Subsidiaries,
free and clear of any Lien. Except for its Subsidiaries set forth in the
Company Disclosure Letter, the Company does not control directly or
indirectly or have any direct or indirect equity participation in any
corporation, partnership, limited liability company, joint venture or
other entity.
Section 4.5 Company Reports; Joint Proxy Statement.
(a) The Company has since October 9, 1996 filed all reports,
forms, statements and other documents (collectively, together with all
financial statements included or incorporated by reference therein and
the Company Form 10-Q, the "Company SEC Documents") required to be filed
by the Company with the SEC pursuant to the provisions of the Securities
Act or the Securities Exchange Act. Each of the Company SEC Documents, as
of its filing date, complied in all material respects with the applicable
requirements of the Securities Act and the Securities Exchange Act. None
of the Company SEC Documents, as of their respective filing dates,
contained any untrue statement of a material fact or omitted to state a
material fact required to
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be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
No Subsidiary of the Company is required to file any reports, forms,
statements or other documents pursuant to the Securities Act or the
Securities Exchange Act.
(b) Each of the consolidated financial statements (including
related notes) included in the Company SEC Documents presented fairly in
all material respects the consolidated financial condition, cash flows
and results of operations of the Company and its Subsidiaries for the
respective periods or as of the respective dates set forth therein. Each
of the financial statements (including related notes) included in the
Company SEC Documents has been prepared in accordance with United States
generally accepted accounting principles, consistently applied during the
periods involved, except (i) as noted therein, (ii) to the extent
required by changes in United States generally accepted accounting
principles or (iii) in the case of unaudited interim financial
statements, normal recurring year-end audit adjustments.
(c) The Company has delivered to the Parent Corporation correct
and complete copies of any proposed or contemplated amendments or
modifications to the Company SEC Documents (including any exhibit
documents included therein) that have not yet been filed by the Company
with the SEC. The Company has delivered to the Parent Corporation a
correct and complete copy of the most recent draft of the Company Form
10-Q.
(d) The Joint Proxy Statement will comply in all material respects
with the applicable requirements of the Securities Exchange Act and will
not, at the time the definitive Joint Proxy Statement is filed with the
SEC and mailed to the stockholders of the Company, contain any untrue
statement of 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 were made, not misleading.
No representation or warranty is made herein by the Company with respect
to any information supplied by the Parent Corporation for inclusion in
the Joint Proxy Statement. For purposes of this Section 4.5(d), all
information included in the Joint Proxy Statement concerning or related
to the Parent Corporation and its Subsidiaries, including the Acquisition
Corporation, will be deemed to have been supplied by the Parent
Corporation.
Section 4.6 No Undisclosed Liabilities. The Company and its
Subsidiaries have no liabilities or obligations (whether absolute or contingent,
liquidated or unliquidated, or due or to become due) except for (a) liabilities
and obligations reflected in the Company SEC Documents and (b) other liabilities
and obligations which, individually or in the aggregate, would not have a
Company Material Adverse Effect.
Section 4.7 Absence of Material Adverse Change. Since December 31,
1998, there has not occurred any event, change, effect or development which,
individually or in the aggregate, would have a Company Material Adverse Effect.
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Section 4.8 Litigation and Legal Compliance.
(a) The Company Disclosure Letter sets forth each instance in
which the Company or any of its Subsidiaries is (i) subject to any
material unsatisfied judgment order, decree, stipulation, injunction or
charge or (ii) a party to or, to the Company's knowledge, threatened to
be made a party to any material charge, complaint, action, suit,
proceeding, hearing or, to the Company's knowledge, investigation of or
in any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction, except for judgments, orders,
decrees, stipulations, injunctions, charges, complaints, actions, suits,
proceedings, hearings and investigations which, individually or in the
aggregate, would not have a Company Material Adverse Effect. There are no
judicial or administrative actions, proceedings or, to the Company's
knowledge, investigations pending or, to the Company's knowledge,
threatened that question the validity of this Agreement or any action
taken or to be taken by the Company in connection with this Agreement
which would have a Company Material Adverse Effect.
(b) Except for instances of noncompliance which, individually or
in the aggregate, would not have a Company Material Adverse Effect, the
Company and its Subsidiaries have complied with each constitutional
provision, law, rule, regulation, permit, order, writ, injunction,
judgment or decree to which the Company or any of its Subsidiaries is
subject.
Section 4.9 Contract Matters.
(a) Neither the Company nor any of its Subsidiaries is in default
or violation of (and no event has occurred which with notice or the lapse
of time or both would constitute a default or violation) of any term,
condition or provision of any note, mortgage, indenture, loan agreement,
other evidence of indebtedness, guarantee, license, lease, agreement or
other contract, instrument or contractual obligation to which the Company
or any of its Subsidiaries is a party or by which any of their respective
assets is bound or subject, except for defaults and violations which,
individually or in the aggregate, would not have a Company Material
Adverse Effect.
Section 4.10 Tax Matters.
(a) The Company and each of its Subsidiaries have timely filed all
required returns, declarations, reports, claims for refund or information
returns and statements, including any schedule or attachment thereto
(collectively "Tax Returns"), relating to any federal, state, local or
foreign net income, gross income, gross receipts, sales, use, ad valorem,
transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other tax, fee,
assessment or charge, including any interest, penalty or addition thereto
and including any liability for the taxes of any other person or entity
under Treasury Regulation Section 1.1502-6 (or any similar state, local
or foreign law, rule or regulation), and any liability in respect of any
tax as a transferee
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or successor, by law, contract or otherwise (collectively "Taxes"), and
all such Tax Returns are accurate and complete in all respects, except to
the extent any such failure to file or any such inaccuracy in any filed
Tax Return, individually or in the aggregate, would not have a Company
Material Adverse Effect. All Taxes owed by the Company or any of its
Subsidiaries (whether or not shown on any Tax Return) have been paid or
adequately reserved for in accordance with generally accepted accounting
principles in the financial statements of the Company, except to the
extent any such failure to pay or reserve, individually or in the
aggregate, would not have a Company Material Adverse Effect.
(b) The most recent financial statements contained in the Company
SEC Documents reflect adequate reserves in accordance with generally
accepted accounting principles for all Taxes payable by the Company and
its Subsidiaries for all Tax periods and portions thereof through the
date of such financial statements, except to the extent that any failure
to so reserve, individually or in the aggregate, would not have a Company
Material Adverse Effect. No deficiency with respect to Taxes has been
proposed, asserted or assessed against the Company or any of its
Subsidiaries and no requests for waivers of the time to assess any such
Taxes are pending, except to the extent any such deficiency or request
for waiver, individually or in the aggregate, would not have a Company
Material Adverse Effect.
(c) None of the federal income Tax Returns of the Company or any
of its Subsidiaries consolidated in such Tax Returns have been examined
by and settled with the Internal Revenue Service.
(d) Except for Liens for current Taxes not yet due and payable or
which are being contested in good faith, there is no Lien affecting any
of the assets or properties of the Company or any of its Subsidiaries
that arose in connection with any failure or alleged failure to pay any
Tax, except for Liens which, individually or in the aggregate, would not
have a Company Material Adverse Effect.
(e) Neither the Company nor any of its Subsidiaries is a party to
any Tax allocation or Tax sharing agreement.
(f) Neither the Company nor any of its Subsidiaries has made any
payments, is obligated to make any payments or is a party to any
agreement that under any circumstances could obligate it to make any
payments that will not be fully deductible under Sections 280G or 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code").
Section 4.11 Employee Benefit Matters.
(a) The Company Disclosure Letter lists each plan, program or
arrangement constituting a material employee welfare benefit plan (an
"Employee Welfare Benefit Plan") as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
a material employee pension benefit plan (an
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"Employee Pension Benefit Plan") as defined in Section 3(2) of ERISA, and
each other material employee benefit plan, program or arrangement or
employment practice maintained by the Company or any of its Subsidiaries
with respect to any of its current or former employees or to which the
Company or any of the Company Subsidiaries contributes or is required to
contribute with respect to any of its current or former employees
(collectively, the "Company Plans"). With respect to each Company Plan:
(i) such Company Plan (and each related trust, insurance
contract or fund) has been administered in a manner consistent in all
respects with its written terms and complies in form and operation
with the applicable requirements of ERISA, the Code and other
applicable laws, except for failures of administration or compliance
that would not have a Company Material Adverse Effect;
(ii) all required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, PBGC-1's and Summary
Plan Descriptions) have been filed or distributed appropriately with
respect to such Company Plan, except for failures of filing or
distribution that would not have a Company Material Adverse Effect;
(iii) the requirements of Part 6 of Subtitle B of Title I
of ERISA and Section 4980B of the Code have been met with respect to
each such Company Plan which is an Employee Welfare Benefit Plan,
except for failures that would not have a Company Material Adverse
Effect;
(iv) all material contributions, premiums or other
payments (including all employer contributions and employee salary
reduction contributions) that are due have been paid to each such
Company Plan;
(v) each such Company Plan which is an Employee Pension
Benefit Plan intended to be a "qualified plan" under Section 401(a)
of the Code has received a favorable determination letter from the
Internal Revenue Service and no event has occurred which could
reasonably be expected to cause the loss or denial of such
qualification under Section 401(a) of the Code;
(vi) the Company has made available or prior to the
Closing Date will make available to the Parent Corporation, upon its
request, correct and complete copies of the plan documents and
summary plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent Form 5500
Annual Report, the most recent actuarial report, the most recent
audited financial statements, and all related trust agreements,
insurance contracts and other funding agreements that implement such
Company Plan (but excluding the failure to make available any such
document which is not material). The valuation summaries provided by
the Company to the Parent Corporation reasonably represent the assets
and liabilities attributable to Company Plans calculated in
accordance with the Company's past practices,
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but excluding any failure that would not have a Company Material
Adverse Effect;
(vii) no Company Plan which is an Employee Pension Benefit
Plan has been amended in any manner which would require the posting
of security under Section 401(a)(29) of the Code or Section 307 of
ERISA; and
(viii) neither the Company nor any of its Subsidiaries has
communicated to any employee (excluding internal memoranda to
management) any plan or commitment, whether or not legally binding,
to create any additional material employee benefit plan or to
materially modify or change any Company Plan affecting any employee
or terminated employee of the Company or any of its Subsidiaries, but
excluding any such action that does not materially increase the
liability of the Company or its Subsidiaries.
(b) With respect to each Employee Welfare Benefit Plan or Employee
Pension Benefit Plan that the Company or any of its Subsidiaries
maintains or ever has maintained, or to which any of them contributes,
ever has contributed or ever has been required to contribute:
(i) no such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been completely or partially terminated
(other than any termination that would not have a Company Material
Adverse Effect), no reportable event (as defined in Section 4043 of
ERISA) as to which notices would be required to be filed with the
Pension Benefit Guaranty Corporation has occurred but has not yet
been so reported (but excluding any failure to report which would not
have a Company Material Adverse Effect), and no proceeding by the
Pension Benefit Guaranty Corporation to terminate such Employee
Pension Benefit Plan (other than any Multiemployer Plan) has been
instituted; and
(ii) there have been no non-exempt prohibited transactions
(as defined in Section 406 of ERISA and Section 4975 of the Code)
with respect to such plan, no fiduciary has any liability for breach
of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of such plan, and
no action, suit, proceeding, hearing or, to the Company's knowledge,
investigation with respect to the administration or the investment of
the assets of such plan (other than routine claims for benefits) is
pending or, to the Company's knowledge, threatened, but excluding,
from each of the foregoing, events or circumstances that would not
have a Company Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries contributes to
or has any liability (including withdrawal liability) under any
Multiemployer Plan, which liability would have a Company Material Adverse
Effect. None of the transactions contemplated by this Agreement will
trigger any withdrawal or termination liability
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under any Multiemployer Plan set forth in the Company Disclosure Letter,
which liability would have a Company Material Adverse Effect.
(d) Other than pursuant to a Company Plan, neither the Company nor
any of its Subsidiaries has any obligation to provide medical, health,
life insurance or other welfare benefits for current or future retired or
terminated employees, their spouses or their dependents (other than in
accordance with Section 4980B of the Code), except for obligations that
would not have a Company Material Adverse Effect.
(e) No Company Plan contains any provision that would prohibit the
transactions contemplated by this Agreement, would give rise to any
severance, termination or other payments as a result of the transactions
contemplated by this Agreement (alone or together with the occurrence of
any other event), or would cause any payment, acceleration or increase in
benefits provided by any Company Plan as a result of the transactions
contemplated by this Agreement (alone or together with the occurrence of
any other event), but excluding from this paragraph (e) any payment,
acceleration or increase which is not material.
(f) Any individual who is classified as a non-employee for
purposes of receiving benefits (such as an independent contractor, leased
employee, consultant or special consultant) regardless of treatment for
other purposes, is not unintentionally eligible to participate in any
Company Plan, except where such treatment would not have a Company
Material Adverse Effect.
Section 4.12 Environmental Matters.
(a) With respect to the current and former operations and
properties of the Company and its Subsidiaries, and in each case except
for matters which, individually or in the aggregate, would not have a
Company Material Adverse Effect, (i) the Company and its Subsidiaries
have complied in all respects with all Environmental Laws (as defined in
Section 4.12(b)) in connection with the ownership, use, maintenance and
operation of all real property owned or leased by them and otherwise in
connection with their operations, (ii) neither the Company nor any of its
Subsidiaries has any liability, whether contingent or otherwise, under
any Environmental Law, (iii) no notices of any violation or alleged
violation of, non-compliance or alleged noncompliance with or any
liability under, any Environmental Law have been received by the Company
or any of its Subsidiaries since January 1, 1994, (iv) there are no
administrative, civil or criminal writs, injunctions, decrees, orders or
judgments outstanding or any administrative, civil or criminal actions,
suits, claims, proceedings or, to the Company's knowledge, investigations
pending or, to the Company's knowledge, threatened, relating to
compliance with or liability under any Environmental Law affecting the
Company or any of its Subsidiaries and (v) to the knowledge of the
Company, no material changes or alterations in the practices or
operations of the Company or any of its Subsidiaries as presently
conducted are anticipated to be required in the future in order to permit
the Company and its
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Subsidiaries to continue to comply in all material respects with all
applicable Environmental Laws.
(b) The term "Environmental Law" as used in this Agreement means
any law, rule, regulation, permit, order, writ, injunction, judgment or
decree with respect to the preservation of the environment or the
promotion of worker health and safety, including any law, rule,
regulation, permit, order, writ, injunction, judgment or decree relating
to Hazardous Materials (as defined in Section 4.12(c)), drinking water,
surface water, groundwater, wetlands, landfills, open dumps, storage
tanks, underground storage tanks, solid waste, waste water, storm water
run-off, noises, odors, air emissions, waste emissions or xxxxx. Without
limiting the generality of the foregoing, the term will encompass each of
the following statutes and the regulations promulgated thereunder, and
any similar applicable state, local or foreign law, rule or regulation,
each as amended (i) the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, (ii) the Solid Waste Disposal
Act, (iii) the Hazardous Materials Transportation Act, (iv) the Toxic
Substances Control Act, (v) the Clean Water Act, (vi) the Clean Air Act,
(vii) the Safe Drinking Water Act, (viii) the National Environmental
Policy Act of 1969, (ix) the Superfund Amendments and Reauthorization Act
of 1986, (x) Title III of the Superfund Amendments and Reauthorization
Act, (xi) the Federal Insecticide, Fungicide and Rodenticide Act and
(xii) the provisions of the Occupational Safety and Health Act of 1970
relating to the handling of and exposure to Hazardous Materials and
similar substances.
(c) The term "Hazardous Materials" as used in this Agreement means
each and every element, compound, chemical mixture, contaminant,
pollutant, material, waste or other substance that is defined, determined
or identified as hazardous or toxic under any Environmental Law or the
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, storing, escaping, leaching, dumping, discarding, burying,
abandoning or disposing into the environment of which is prohibited under
any Environmental Law. Without limiting the generality of the foregoing,
the term will include (i) "hazardous substances" as defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, the Superfund Amendments and Reauthorization Act of 1986, or Title
III of the Superfund Amendments and Reauthorization Act and regulations
promulgated thereunder, each as amended, (ii) "hazardous waste" as
defined in the Solid Waste Disposal Act and regulations promulgated
thereunder, each as amended, (iii) "hazardous materials" as defined in
the Hazardous Materials Transportation Act and the regulations
promulgated thereunder, each as amended, (iv) "chemical substance or
mixture" as defined in the Toxic Substances Control Act and regulation
promulgated thereunder, each as amended, (v) petroleum and petroleum
products and byproducts and (vi) asbestos.
Section 4.13 Title. The Company and its Subsidiaries now have and at
the Effective Time will have good and, in the case of real property, marketable
title to all the properties and assets purported to be owned by them, free and
clear of all Liens except (a) Liens for current Taxes or assessments not
delinquent, (b) builder, mechanic, warehousemen, materialmen, contractor,
workmen, repairmen, carrier or other similar Liens arising and
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continuing in the ordinary course of business for obligations that are not
delinquent, (c) the rights, if any, of vendors having possession of tooling of
the Company and its Subsidiaries, (d) liens arising from the receipt by the
Company and its Subsidiaries of progress payments by the United States
government, (e) Liens securing rental payments under capital lease arrangements
and (f) other Liens which, individually or in the aggregate, would not have a
Company Material Adverse Effect (collectively, "Permitted Liens").
Section 4.14 Intellectual Property Matters.
(a) The Company and its Subsidiaries own or have the right to use
pursuant to valid license, sublicense, agreement or permission all items
of Intellectual Property (as defined in Section 4.14(b)) necessary for
their operations as presently conducted and as presently proposed to be
conducted, except where the failure to have such rights, individually or
in the aggregate, would not have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has received any charge,
complaint, claim, demand or notice alleging any interference,
infringement, misappropriation or violation of the Intellectual Property
rights of any third party, except for interferences, infringements,
misappropriations and violations which, individually or in the aggregate,
would not have a Company Material Adverse Effect. To the Company's
knowledge, no third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual
Property rights of the Company or any of its Subsidiaries, except for
misappropriations and violations which, individually or in the aggregate,
would not have a Company Material Adverse Effect.
(b) The term "Intellectual Property" as used in this Agreement
means, collectively, patents, patent disclosures, trademarks, service
marks, trade dress, logos, trade names, copyrights and mask works, and
all registrations, applications, reissuances, continuations,
continuations-in-part, revisions, extensions, reexaminations and
associated good will with respect to each of the foregoing, computer
software (including source and object codes), computer programs, computer
data bases and related documentation and materials, data, documentation,
trade secrets, confidential business information (including ideas,
formulas, compositions, inventions, know-how, manufacturing and
production processes and techniques, research and development
information, drawings, designs, plans, proposals and technical data,
financial, marketing and business data and pricing and cost information)
and other intellectual property rights (in whatever form or medium).
Section 4.15 Year 2000 Compliance Matters. Except for matters which,
individually and in the aggregate, would not have a Company Material Adverse
Effect, all computer systems and computer software used by the Company and its
Subsidiaries and all computer systems and computer software incorporated in
products manufactured by the Company and its Subsidiaries (a) recognize, or are
being adapted so that, prior to December 31, 1999, they will recognize, the
advent of the year 2000 without any material adverse change in operation
associated with such recognition, (b) can correctly recognize and manipulate, or
are being adapted so that, prior to December 31, 1999, they can recognize and
manipulate, date information relating to dates prior to, on and after January 1,
2000 and (c) to the Company's
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knowledge, can suitably interact with other year 2000 compliant computer systems
and computer software in a way that does not compromise their ability to
correctly recognize the advent of the year 2000 or to recognize and manipulate
date information relating to dates prior to, on or after January 1, 2000. The
costs of the adaptations to computer systems and computer software being made by
the Company and its Subsidiaries in order to achieve year 2000 compliance are
not presently expected to have a Company Material Adverse Effect.
Section 4.16 Labor Matters. There are no controversies pending or, to
the Company's knowledge, threatened between the Company or any of its
Subsidiaries and any of their current or former employees or any labor or other
collective bargaining unit representing any such employee that could reasonably
be expected to result in a material labor strike, dispute, slow-down or work
stoppage or otherwise which, individually or in the aggregate, would have a
Company Material Adverse Effect. The Company is not aware of any organizational
effort presently being made or threatened by or on behalf of any labor union
with respect to employees of the Company or any of its Subsidiaries. To the
Company's knowledge, as of the date of this Agreement no executive, key employee
or group of employees of the Company or any of its Subsidiaries has any plan to
terminate employment with the Company and its Subsidiaries, which termination
would have a Company Material Adverse Effect.
Section 4.17 State Takeover Laws. The resolutions adopted by the
Board of Directors of the Company approving this Agreement are sufficient to
cause the provisions of Section 203 of the Delaware Act to be inapplicable to
this Agreement, the Merger and the other transactions contemplated hereby. To
the Company's knowledge, no other fair price, moratorium, control share
acquisition or other form of antitakeover statute, rule or regulation of any
state or jurisdiction applies or purports to apply to this Agreement, the Merger
or the other transactions contemplated hereby.
Section 4.18 Parent Common Stock Ownership. Neither the Company nor
any of its Subsidiaries owns any shares of Parent Common Stock or any securities
exercisable or exchangeable for or convertible into shares of Parent Common
Stock.
Section 4.19 Accounting and Tax Matters. Neither the Company nor any
of its Subsidiaries has taken or agreed to take any action that would prevent
accounting for the Merger in accordance with the pooling of interests method of
accounting under the requirements of XXX Xx. 00 or prevent the Merger from
constituting a reorganization within the meaning of Section 368(a) of the Code.
Section 4.20 Brokers' Fees. Except for the fees and expenses payable
by the Company to Xxxxxxx Xxxxx & Co. and Xxxxxxx Sachs & Co., neither the
Company nor any of its Subsidiaries has any liability or obligation to pay any
fees or commissions to any financial advisor, broker, finder or agent with
respect to the transactions contemplated by this Agreement. The Company has
delivered to the Parent Corporation a correct and complete copy of the
engagement letter between the Company and Xxxxxxx Xxxxx & Co. relating to the
transactions contemplated by this Agreement. The Company Disclosure Letter sets
forth the
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fees payable to Xxxxxxx Xxxxx & Co. and Xxxxxxx Sachs & Co. in connection with
this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PARENT CORPORATION
The Parent Corporation represents and warrants to the Company that
except as disclosed in the reports, schedules, forms, statements and other
documents filed by the Parent Corporation with the SEC and publicly available
prior to the date of this Agreement, as disclosed in the draft of the Quarterly
Statement on Form 10-Q for the Parent Corporation's fiscal quarter ended March
31, 1999 (the "Parent Corporation Form 10-Q") delivered to the Parent
Corporation prior to the date of this Agreement or as disclosed in the letter
dated as of the date of this Agreement from the Parent Corporation to the
Company (the "Parent Corporation Disclosure Letter"):
Section 5.1 Organization. The Parent Corporation and each of its
Subsidiaries is a corporation duly organized and validly existing under the laws
of the jurisdiction of its incorporation and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as presently being conducted. The Parent Corporation and each of its
Subsidiaries is in good standing under the laws of the jurisdiction of its
incorporation and is duly qualified to conduct business as a foreign corporation
in each other jurisdiction where such qualification is required, except where
the failure to be so qualified and in good standing would not have a material
adverse effect on the business, financial condition, operations or results of
operations of the Parent Corporation and its Subsidiaries taken as a whole or
the ability of the Parent Corporation to consummate the Merger and to perform
its obligations under this Agreement (a "Parent Corporation Material Adverse
Effect"). The Parent Corporation has delivered to the Company correct and
complete copies of its charter and bylaws, as presently in effect, and will make
available to the Company after the date of this Agreement correct and complete
copies of the charter and bylaws, as presently in effect, of each of its
Subsidiaries.
Section 5.2 Authorization of Transaction; Enforceability. Subject to
obtaining the Parent Corporation Stockholder Approval, each of the Parent
Corporation and the Acquisition Corporation has full corporate power and
authority and has taken all requisite corporate action to enable it to execute
and deliver this Agreement, to consummate the Merger and the other transactions
contemplated hereby and to perform its obligations hereunder. The Parent
Corporation has executed a written consent in lieu of a special meeting of the
sole stockholder of the Acquisition Corporation in accordance with Section 228
of the Delaware Act adopting and approving this Agreement. The Board of
Directors of the Parent Corporation, at a meeting thereof duly called and held,
has duly adopted resolutions by the requisite majority vote approving this
Agreement, the Merger and the other transactions contemplated hereby,
determining that the terms and conditions of this Agreement, the Merger and the
other transactions contemplated hereby are fair to and in the best interests of
the Parent Corporation and its stockholders, approving and setting forth the
Charter Amendment and declaring its advisability, and recommending that the
Parent Corporation's stockholders approve and adopt
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the Charter Amendment and the issuance of the Parent Common Stock in the Merger.
The foregoing resolutions of the Board of Directors of the Company have not been
modified, supplemented or rescinded and remain in full force and effect as of
the date of this Agreement. In connection with its adoption of the foregoing
resolutions, the Board of Directors of the Parent Corporation received the
written opinion of Bear Xxxxxxx & Co. Inc., financial advisor to the Board of
Directors of the Parent Corporation, that the Merger is fair, from a financial
point of view, to the Parent Corporation and its stockholders. The foregoing
opinion has not been modified, supplemented or rescinded prior to the date of
this Agreement. The Parent Corporation will deliver to the Company promptly
after the date of this Agreement correct and complete copies of the foregoing
resolutions and opinion. This Agreement constitutes the valid and legally
binding obligation of each of the Parent Corporation and the Acquisition
Corporation, enforceable against the Parent Corporation and the Acquisition
Corporation in accordance with its terms and conditions.
Section 5.3 Noncontravention; Consents. Except for (a) certain
filings and approvals necessary to comply with the applicable requirements of
the Securities Act, the Securities Exchange Act and the "blue sky" laws and
regulations of various states, (b) the approval by the New York Stock Exchange
of the listing, upon official notice of issuance, of the shares of Parent Common
Stock proposed to be issued pursuant to the Merger, (c) the filing of a
Notification and Report Form and related material with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the HSR Act, (d) certain filings and approvals which may be necessary to
comply with the rules and regulations of the Federal Aviation Administration and
(e) the filing of a certificate of merger pursuant to the Delaware Act, neither
the execution and delivery of this Agreement by the Parent Corporation or the
Acquisition Corporation, nor the consummation by the Parent Corporation or the
Acquisition Corporation of the transactions contemplated hereby, will constitute
a violation of, be in conflict with, constitute or create (with or without
notice or lapse of time or both) a default under, give rise to any right of
termination, cancellation, amendment or acceleration with respect to, or result
in the creation or imposition of any Lien upon any property of the Parent
Corporation or any of its Subsidiaries pursuant to (i) the charter or bylaws of
the Parent Corporation or any of its Subsidiaries, (ii) any constitutional
provision, law, rule, regulation, permit, order, writ, injunction, judgment or
decree to which the Parent Corporation or any of its Subsidiaries is subject or
(iii) any agreement or commitment to which the Parent Corporation or any of its
Subsidiaries is a party or by which the Parent Corporation, any of its
Subsidiaries or any of their respective properties is bound or subject, except,
in the case of clauses (ii) and (iii) above, for such matters which,
individually or in the aggregate, would not have a Parent Corporation Material
Adverse Effect.
Section 5.4 Capitalization.
(a) As of the date of this Agreement, the authorized capital stock
of the Parent Corporation consists of 250,000,000 shares divided into
200,000,000 shares of Parent Common Stock and 50,000,000 shares of
Preferred Stock, par value $1.00 per share. As of May 11, 1999,
127,569,456 shares of Parent Common Stock were issued and outstanding,
41,205,216 shares were held by the Parent Corporation as treasury shares
and 4,926,641 shares were reserved for issuance upon the exercise of
options
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or other rights to purchase or otherwise acquire shares of Parent Common
Stock granted by the Parent Corporation to current and former directors,
officers and employees of the Parent Corporation and its Subsidiaries. No
shares of the Parent Corporation's Preferred Stock are issued or
outstanding. All of the issued and outstanding shares of capital stock of
the Parent Corporation have been duly authorized and are validly issued,
fully paid and nonassessable.
(b) Other than options and other rights to purchase or otherwise
acquire an aggregate of 4,926,641 shares of Parent Common Stock granted
by the Parent Corporation to current and former directors, officers and
employees of the Parent Corporation and its Subsidiaries pursuant to
various stock option, restricted stock and similar plans, programs and
arrangements of the Parent Corporation and its Subsidiaries, there are no
outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights or other
contracts or commitments that could require the Parent Corporation or any
of its Subsidiaries to issue, sell or otherwise cause to become
outstanding any of its capital stock. There are no outstanding stock
appreciation, phantom stock, profit participation or similar rights with
respect to the Parent Corporation or any of its Subsidiaries.
(c) Neither the Parent Corporation nor any of its Subsidiaries is
a party to any voting trust, proxy or other agreement or understanding
with respect to the voting of any capital stock of the Parent Corporation
or any of its Subsidiaries.
(d) All of the outstanding shares of the capital stock of each of
the Parent Corporation's Subsidiaries have been validly issued, are fully
paid and nonassessable and are owned by the Parent Corporation or one of
its Subsidiaries, free and clear of any Lien. Except for its Subsidiaries
set forth in the Parent Corporation Disclosure Letter, the Company does
not control directly or indirectly or have any direct or indirect equity
participation in any corporation, partnership, limited liability company,
joint venture or other entity. The Acquisition Corporation has been
formed solely for purposes of the transactions contemplated by this
Agreement and has not conducted any business or engaged in any activities
prior to the date of this Agreement.
Section 5.5 Parent Corporation Reports; Joint Proxy and Registration
Statements.
(a) The Parent Corporation has since January 1, 1994 filed all
reports, forms, statements and other documents (collectively, together
with all financial statements included or incorporated by reference
therein and the Parent Corporation Form 10-Q, the "Parent Corporation SEC
Documents") required to be filed by the Parent Corporation with the SEC
pursuant to the provisions of the Securities Act or the Securities
Exchange Act. Each of the Parent Corporation SEC Documents, as of its
filing date, complied in all material respects with the applicable
requirements of the Securities Act and the Securities Exchange Act. None
of the Parent Corporation SEC Documents, as of their respective filing
dates, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary
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in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. No Subsidiary of the Parent
Corporation is required to file any reports, forms, statements or other
documents pursuant to the Securities Act of the Securities Exchange Act.
(b) Each of the consolidated financial statements (including
related notes) included in the Parent Corporation SEC Documents presented
fairly in all material respects the consolidated financial condition,
cash flows and results of operations of the Parent Corporation and its
Subsidiaries for the respective periods or as of the respective dates set
forth therein. Each of the financial statements (including related notes)
included in the Parent Corporation SEC Documents has been prepared in
accordance with United States generally accepted accounting principles,
consistently applied during the periods involved, except (i) as noted
therein, (ii) to the extent required by changes in United States
generally accepted accounting principles or (iii) in the case of
unaudited interim financial statements, normal recurring year-end audit
adjustments.
(c) The Parent Corporation has delivered to the Company correct
and complete copies of any proposed or contemplated amendments or
modifications to the Parent Corporation SEC Documents (including any
exhibit documents included therein) that have not yet been filed by the
Parent Corporation with the SEC. The Parent Corporation has delivered to
the Company a correct and complete copy of the most recent draft of the
Parent Corporation Form 10-Q.
(d) The Joint Proxy Statement and the Registration Statement will
comply in all material respects with the applicable requirements of the
Securities Act and the Securities Exchange Act and will not, at the time
the definitive Joint Proxy Statement is filed with the SEC and mailed to
the stockholders of the Parent Corporation and at the time the
Registration Statement is declared effective by the SEC, contain any
untrue statement of 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 were
made, not misleading. No representation or warranty is made herein by the
Parent Corporation with respect to any information supplied by the
Company for inclusion in the Joint Proxy Statement or the Registration
Statement. For purposes of this Section 5.5(d), all information included
in the Joint Proxy Statement and the Registration Statement concerning or
related to the Company and its Subsidiaries will be deemed to have been
supplied by the Company.
Section 5.6 No Undisclosed Liabilities. The Parent Corporation and
its Subsidiaries have no liabilities or obligations (whether absolute or
contingent, liquidated or unliquidated, or due or to become due) except for (a)
liabilities and obligations reflected in the Parent Corporation SEC Documents
and (b)other liabilities and obligations which, individually or in the
aggregate, would not have a Parent Corporation Material Adverse Effect.
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Section 5.7 Absence of Material Adverse Change. Since December 31,
1998, there has not occurred any event, change, effect or development which,
individually or in the aggregate, would have a Parent Corporation Material
Adverse Effect.
Section 5.8 Litigation and Legal Compliance.
(a) The Parent Corporation Disclosure Letter sets forth each
instance in which the Parent Corporation or any of its Subsidiaries is
(i) subject to any material unsatisfied judgment order, decree,
stipulation, injunction or charge or (ii) a party to or, to the Parent
Corporation's knowledge, threatened to be made a party to any material
charge, complaint, action, suit, proceeding, hearing or, to the Parent
Corporation's knowledge, investigation of or in any court or
quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction, except for judgments, orders, decrees,
stipulations, injunctions, charges, complaints, actions, suits,
proceedings, hearings and investigations which, individually or in the
aggregate, would not have a Parent Corporation Material Adverse Effect.
There are no judicial or administrative actions, proceedings or, to the
Parent Corporation's knowledge, investigations pending or, to the Parent
Corporation's knowledge, threatened that question the validity of this
Agreement or any action taken or to be taken by the Parent Corporation in
connection with this Agreement which would have a Parent Corporation
Material Adverse Effect.
(b) Except for instances of noncompliance which, individually or
in the aggregate, would not have a Parent Corporation Material Adverse
Effect, the Parent Corporation and its Subsidiaries have complied with
each constitutional provision, law, rule, regulation, permit, order,
writ, injunction, judgment or decree to which the Parent Corporation or
any of its Subsidiaries is subject.
Section 5.9 Contract Matters.
(a) Neither the Parent Corporation nor any of its Subsidiaries is
in default or violation of (and no event has occurred which with notice
or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of any note, mortgage, indenture, loan
agreement, other evidence of indebtedness, guarantee, license, lease,
agreement or other contract, instrument or contractual obligation to
which the Parent Corporation or any of its Subsidiaries is a party or by
which any of their respective assets is bound or subject, except for
defaults and violations which, individually or in the aggregate, would
not have a Parent Corporation Material Adverse Effect.
Section 5.10 Tax Matters.
(a) The Parent Corporation and each of its Subsidiaries have
timely filed all required Tax Returns and all such Tax Returns are
accurate and complete in all respects, except to the extent any such
failure to file or any such inaccuracy in any filed Tax Return,
individually or in the aggregate, would not have a Parent Corporation
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Material Adverse Effect. All Taxes owed by the Parent Corporation or any
of its Subsidiaries (whether or not shown on any Tax Return) have been
paid or adequately reserved for in accordance with generally accepted
accounting principles in the financial statements of the Parent
Corporation, except to the extent any such failure to pay or reserve,
individually or in the aggregate, would not have a Parent Corporation
Material Adverse Effect.
(b) The most recent financial statements contained in the Parent
Corporation SEC Documents reflect adequate reserves in accordance with
generally accepted accounting principles for all Taxes payable by the
Parent Corporation and its Subsidiaries for all Tax periods and portions
thereof through the date of such financial statements, except to the
extent that any failure to so reserve, individually or in the aggregate,
would not have a Parent Corporation Material Adverse Effect. No
deficiency with respect to Taxes has been proposed, asserted or assessed
against the Parent Corporation or any of its Subsidiaries and no requests
for waivers of the time to assess any such Taxes are pending, except to
the extent any such deficiency or request for waiver, individually or in
the aggregate, would not have a Parent Corporation Material Adverse
Effect.
(c) The federal income Tax Returns of the Parent Corporation and
each of its Subsidiaries consolidated in such Tax Returns have been
examined by and settled with the Internal Revenue Service for all Tax
years through 1989.
(d) Except for Liens for current Taxes not yet due and payable or
which are being contested in good faith, there is no Lien affecting any
of the assets or properties of the Parent Corporation or any of its
Subsidiaries that arose in connection with any failure or alleged failure
to pay any Tax, except for Liens which, individually or in the aggregate,
would not have a Parent Corporation Material Adverse Effect.
(e) Neither the Parent Corporation nor any of its Subsidiaries is
a party to any Tax allocation or Tax sharing agreement.
Section 5.11 Employee Benefit Matters.
(a) The Parent Corporation Disclosure Letter lists each plan,
program or arrangement constituting a material Employee Welfare Benefit
Plan or a material Employee Pension Benefit Plan and each other material
employee benefit plan, program or arrangement or employment practice
maintained by the Parent Corporation or any of its Subsidiaries with
respect to any of its current or former employees or to which the Parent
Corporation or any of the Parent Corporation Subsidiaries contributes or
is required to contribute with respect to any of its current or former
employees (collectively, the "Parent Corporation Plans"). With respect to
each Parent Corporation Plan:
(i) such Parent Corporation Plan (and each related trust,
insurance contract or fund) has been administered in a manner
consistent in all respects
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with its written terms and complies in form and operation with the
applicable requirements of ERISA, the Code and other applicable laws,
except for failures of administration or compliance that would not
have a Parent Corporation Material Adverse Effect;
(ii) all required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports, PBGC-1's and Summary
Plan Descriptions) have been filed or distributed appropriately with
respect to such Parent Corporation Plan, except for failures of
filing or distribution that would not have a Parent Corporation
Material Adverse Effect;
(iii) the requirements of Part 6 of Subtitle B of Title I
of ERISA and Section 4980B of the Code have been met with respect to
each such Parent Corporation Plan which is an Employee Welfare
Benefit Plan, except for failures that would not have a Parent
Corporation Material Adverse Effect;
(iv) all material contributions, premiums or other
payments (including all employer contributions and employee salary
reduction contributions) that are due have been paid to each such
Parent Corporation Plan;
(v) each such Parent Corporation Plan which is an Employee
Pension Benefit Plan intended to be a "qualified plan" under Section
401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service and no event has occurred which could
reasonably be expected to cause the loss or denial of such
qualification under Section 401(a) of the Code;
(vi) the Parent Corporation has made available or prior to
the Closing Date will make available to the Company, upon its
request, correct and complete copies of the plan documents and
summary plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent Form 5500
Annual Report, the most recent actuarial report, the most recent
audited financial statements, and all related trust agreements,
insurance contracts and other funding agreements that implement such
Parent Corporation Plan (but excluding the failure to make available
any such document which is not material). The valuation summaries
provided by the Parent Corporation to the Company reasonably
represent the assets and liabilities attributable to the Parent
Corporation Plans calculated in accordance with the Parent
Corporation's past practices, but excluding any failure that would
not have a Parent Corporation Material Adverse Effect;
(vii) no Parent Corporation Plan which is an Employee
Pension Benefit Plan has been amended in any manner which would
require the posting of security under Section 401(a)(29) of the Code
or Section 307 of ERISA; and
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(viii) neither the Parent Corporation nor any of its
Subsidiaries has communicated to any employee (excluding internal
memoranda to management) any plan or commitment, whether or not
legally binding, to create any additional material employee benefit
plan or to materially modify or change any Parent Corporation Plan
affecting any employee or terminated employee of the Parent
Corporation or any of its Subsidiaries, but excluding any such action
that does not materially increase the liability of the Parent
Corporation or its Subsidiaries.
(b) With respect to each Employee Welfare Benefit Plan or Employee
Pension Benefit Plan that the Parent Corporation or any of its
Subsidiaries maintains or ever has maintained, or to which any of them
contributes, ever has contributed or ever has been required to
contribute:
(i) no such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been completely or partially terminated
(other than any termination that would not have a Parent Corporation
Material Adverse Effect, no reportable event (as defined in Section
4043 of ERISA) as to which notices would be required to be filed with
the Pension Benefit Guaranty Corporation has occurred but has not yet
been so reported (excluding any such failure to report which would
not have a Parent Corporation Material Adverse Effect), and no
proceeding by the Pension Benefit Guaranty Corporation to terminate
such Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been instituted; and
(ii) there have been no non-exempt prohibited transactions
(as defined in Section 406 of ERISA and Section 4975 of the Code)
with respect to such plan, no fiduciary has any liability for breach
of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of such plan, and
no action, suit, proceeding, hearing or, to the Parent Corporation's
knowledge, investigation with respect to the administration or the
investment of the assets of such plan (other than routine claims for
benefits) is pending or, to the Parent Corporation's knowledge,
threatened, but excluding, from each of the foregoing, events or
circumstances that would not have a Parent Corporation Material
Adverse Effect.
(c) None of the transactions contemplated by this Agreement will
trigger any withdrawal or termination liability under any Multiemployer
Plan set forth in the Parent Corporation Disclosure Letter, which
liability would have a Parent Corporation Material Adverse Effect.
(d) Other than pursuant to a Parent Corporation Plan, neither the
Parent Corporation nor any of its Subsidiaries has any obligation to
provide medical, health, life insurance or other welfare benefits for
current or future retired or terminated employees, their spouses or their
dependents (other than in accordance with Section
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4980B of the Code), except for obligations that would not have a Parent
Corporation Material Adverse Effect.
(e) No Parent Corporation Plan contains any provision that would
prohibit the transactions contemplated by this Agreement, would give rise
to any severance, termination or other payments as a result of the
transactions contemplated by this Agreement (alone or together with the
occurrence of any other event), or would cause any payment, acceleration
or increase in benefits provided by any Parent Corporation Plan as a
result of the transactions contemplated by this Agreement (alone or
together with the occurrence of any other event), but excluding from this
paragraph (e) any payment, acceleration or increase which is not
material.
(f) Any individual who is classified as a non-employee for
purposes of receiving benefits (such as an independent contractor, leased
employee, consultant or special consultant) regardless of treatment for
other purposes, is not unintentionally eligible to participate in any
Parent Corporation Plan, except where such treatment would not have a
Parent Corporation Material Adverse Effect.
Section 5.12 Environmental Matters. With respect to the current and
former operations and properties of the Parent Corporation and its Subsidiaries,
and in each case except for matters which, individually or in the aggregate,
would not have a Parent Corporation Material Adverse Effect, (a) the Parent
Corporation and its Subsidiaries have complied in all respects with all
Environmental Laws in connection with the ownership, use, maintenance and
operation of all real property owned or leased by them and otherwise in
connection with their operations, (b) neither the Parent Corporation nor any of
its Subsidiaries has any liability, whether contingent or otherwise, under any
Environmental Law, (c) no notices of any violation or alleged violation of,
non-compliance or alleged noncompliance with or any liability under, any
Environmental Law have been received by the Parent Corporation or any of its
Subsidiaries since January 1, 1994, (d) there are no administrative, civil or
criminal writs, injunctions, decrees, orders or judgments outstanding or any
administrative, civil or criminal actions, suits, claims, proceedings or, to the
Parent Corporation's knowledge, investigations pending or, to the Parent
Corporation's knowledge, threatened, relating to compliance with or liability
under any Environmental Law affecting the Parent Corporation or any of its
Subsidiaries and (e) to the knowledge of the Parent Corporation, no material
changes or alterations in the practices or operations of the Parent Corporation
or any of its Subsidiaries as presently conducted are anticipated to be required
in the future in order to permit the Parent Corporation and its Subsidiaries to
continue to comply in all material respects with all applicable Environmental
Laws.
Section 5.13 Title. The Parent Corporation and its Subsidiaries now
have and at the Effective Time will have good and, in the case of real property,
marketable title to all the properties and assets purported to be owned by them,
free and clear of all Liens except Permitted Liens.
Section 5.14 Intellectual Property Matters. The Parent Corporation
and its Subsidiaries own or have the right to use pursuant to valid license,
sublicense, agreement or
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permission all items of Intellectual Property necessary for their operations as
presently conducted and as presently proposed to be conducted, except where the
failure to have such rights, individually or in the aggregate, would not have a
Parent Corporation Material Adverse Effect. Neither the Parent Corporation nor
any of its Subsidiaries has received any charge, complaint, claim, demand or
notice alleging any interference, infringement, misappropriation or violation of
the Intellectual Property rights of any third party, except for interferences,
infringements, misappropriations and violations which, individually or in the
aggregate, would not have a Parent Corporation Material Adverse Effect. To the
Parent Corporation's knowledge, no third party has interfered with, infringed
upon, misappropriated or otherwise come into conflict with any Intellectual
Property rights of the Parent Corporation or any of its Subsidiaries, except for
misappropriations and violations which, individually or in the aggregate, would
not have a Parent Corporation Material Adverse Effect..
Section 5.15 Year 2000 Compliance Matters. Except for matters which,
individually and in the aggregate, would not have a Parent Corporation Material
Adverse Effect, all computer systems and computer software used by the Parent
Corporation and its Subsidiaries and all computer systems and computer software
incorporated in products manufactured by the Parent Corporation and its
Subsidiaries (a) recognize, or are being adapted so that, prior to December 31,
1999, they will recognize, the advent of the year 2000 without any material
adverse change in operation associated with such recognition, (b) can correctly
recognize and manipulate, or are being adapted so that, prior to December 31,
1999, they can recognize and manipulate, date information relating to dates
prior to, on and after January 1, 2000 and (c) to the Parent Corporation's
knowledge, can suitably interact with other year 2000 compliant computer systems
and computer software in a way that does not compromise their ability to
correctly recognize the advent of the year 2000 or to recognize and manipulate
date information relating to dates prior to, on or after January 1, 2000. The
costs of the adaptations to computer systems and computer software being made by
the Parent Corporation and its Subsidiaries in order to achieve year 2000
compliance are not presently expected to have a Parent Corporation Material
Adverse Effect.
Section 5.16 Labor Matters. There are no controversies pending or, to
the Parent Corporation's knowledge, threatened between the Parent Corporation or
any of its Subsidiaries and any of their current or former employees or any
labor or other collective bargaining unit representing any such employee that
could reasonably be expected to result in a material labor strike, dispute,
slow-down or work stoppage or otherwise which, individually or in the aggregate,
would have a Parent Corporation Material Adverse Effect. The Parent Corporation
is not aware of any organizational effort presently being made or threatened by
or on behalf of any labor union with respect to employees of the Parent
Corporation or any of its Subsidiaries. To the Parent Corporation's knowledge,
as of the date of this Agreement no executive, key employee or group of
employees of the Parent Corporation or any of its Subsidiaries has any plan to
terminate employment with the Parent Corporation and its Subsidiaries, which
termination would have a Parent Corporation Material Adverse Effect.
Section 5.17 Company Common Stock Ownership. Neither the Parent
Corporation nor any of its Subsidiaries owns any shares of Company Common Stock
or any
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securities exercisable or exchangeable for or convertible into shares of Company
Common Stock.
Section 5.18 Accounting and Tax Matters. Neither the Parent
Corporation nor any of its Subsidiaries has taken or agreed to take any action
that would prevent accounting for the Merger in accordance with the pooling of
interests method of accounting under the requirements of XXX Xx. 00 or prevent
the Merger from constituting a reorganization within the meaning of Section
368(a) of the Code.
ARTICLE 6
COVENANTS
Section 6.1 General. Each of the parties will use its respective best
efforts to take all action and to do all things necessary, proper or advisable
to consummate and make effective the transactions contemplated by this
Agreement.
Section 6.2 Notices and Consents. Each of the parties prior to the
Closing Date will give all notices to third parties and governmental entities
and will use its respective best efforts to obtain all third party and
governmental consents and approvals that are required in connection with the
transactions contemplated by this Agreement. Within five business days following
the execution and delivery of this Agreement, each of the parties will file a
Notification and Report Form and related material with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the HSR Act, will use its respective best efforts to obtain early
termination of the applicable waiting period and will make all further filings
pursuant thereto that may be necessary, proper or advisable. The foregoing will
not be deemed to require the Parent Corporation to enter into any agreement,
consent decree or other commitment requiring the Parent Corporation or any of
its Subsidiaries to divest or hold separate any assets (including any assets of
the Company or any of its Subsidiaries) or to take any other action that would
have a Parent Corporation Material Adverse Effect.
Section 6.3 Interim Conduct of the Company. Except as expressly
contemplated by this Agreement, as set forth in the Company Disclosure Letter,
as required by law or by the terms of any contract in effect on the date of this
Agreement or as the Parent Corporation may approve, which approval will not be
unreasonably withheld, from and after the date of this Agreement through the
Closing Date, the Company will, and will cause each of its Subsidiaries to,
conduct its operations in accordance with its ordinary course of business,
consistent with past practice, and in accordance with such covenant will not,
and will not cause or permit any of its Subsidiaries to:
(a) amend its charter or bylaws or file any certificate of
designation or similar instrument with respect to any shares of its
authorized but unissued capital stock;
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(b) authorize or effect any stock split or combination or
reclassification of shares of its capital stock;
(c) declare or pay any dividend or distribution with respect to
its capital stock (other than dividends payable by a Subsidiary of the
Company to the Company or another Subsidiary), issue or authorize the
issuance of any shares of its capital stock (other than in connection
with the exercise of currently outstanding Stock Options and any other
Stock Options issued in accordance with this Agreement) or any other
securities exercisable or exchangeable for or convertible into shares of
its capital stock, or repurchase, redeem or otherwise acquire for value
any shares of its capital stock or any other securities exercisable or
exchangeable for or convertible into shares of its capital stock;
(d) merge or consolidate with any entity;
(e) sell, lease or otherwise dispose of any of its capital assets,
including any shares of the capital stock of any of its Subsidiaries,
other than sales, leases or other dispositions of machinery, equipment,
tools, vehicles and other operating assets no longer required in its
operations made in the ordinary course of business, consistent with past
practice;
(f) liquidate, dissolve or effect any recapitalization or
reorganization in any form;
(g) acquire any interest in any business (whether by purchase of
assets, purchase of stock, merger or otherwise) or enter into any joint
venture;
(h) create, incur, assume or suffer to exist any indebtedness for
borrowed money (including capital lease obligations), other than
indebtedness existing as of the date of this Agreement, borrowings under
existing credit lines in the ordinary course of business, consistent with
past practice, and intercompany indebtedness among the Company and its
Subsidiaries arising in the ordinary course of business, consistent with
past practice;
(i) create, incur, assume or suffer to exist any Lien (other than
Permitted Liens) affecting any of its material assets or properties;
(j) except as required as the result of changes in United States
generally accepted accounting principles, change any of the accounting
principles or practices used by it or revalue in any material respect any
of its assets or properties, other than write-downs of inventory or
accounts receivable in the ordinary course of business, consistent with
past practice;
(k) except as required under the terms of any collective
bargaining agreement in effect as of the date of this Agreement, grant
any general or uniform
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increase in the rates of pay of its employees or grant any general or
uniform increase in the benefits under any bonus or pension plan or other
contract or commitment;
(l) except for any increase required under the terms of any
collective bargaining agreement or consulting or employment agreement in
effect on the date of this Agreement, increase the compensation payable
or to become payable to officers and salaried employees with a base
salary in excess of $75,000 per year or increase any bonus, insurance,
pension or other benefit plan, payment or arrangement made to, for or
with any such officers or salaried employees;
(m) enter into any material contract or commitment or engage in
any material transaction with any affiliated person or entity (other than
the Company or its Subsidiaries) or enter into any material contract or
commitment or engage in any material transaction with any unaffiliated
person or entity which, to the Company's knowledge, is reasonably likely
to result in a material financial loss to the Company and its
Subsidiaries taken as a whole;
(n) make any material Tax election or settle or compromise any
material Tax liability;
(o) pay, discharge or satisfy any claims, liabilities or
obligations other than the payment, discharge and satisfaction in the
ordinary course of business of liabilities reflected or reserved for in
the consolidated financial statements of the Company or otherwise
incurred in the ordinary course of business, consistent with past
practice;
(p) settle or compromise any material pending or threatened suit,
action or proceeding; or
(q) commit to do any of the foregoing.
Section 6.4 Interim Conduct of the Parent Corporation. Except as the
Company may approve, which approval will not be unreasonably withheld, from and
after the date of this Agreement through the Closing Date, the Parent
Corporation will not declare or pay any dividend or distribution with respect to
its capital stock (other than the declaration and payment of regular quarterly
cash dividends in amounts consistent with past practice).
Section 6.5 Preservation of Organization. Subject to compliance with
the provisions of Section 6.3, the Company will, and will cause each of its
Subsidiaries to, use its best efforts to preserve its business organization
intact in all material respects, to keep available to the Company and its
Subsidiaries after the Closing Date the present officers and employees of the
Company and its Subsidiaries as a group and to preserve the present
relationships of the Company and its Subsidiaries with suppliers and customers
and others having business relations with the Company and its Subsidiaries, in
each case so that there will not be a Company Material Adverse Effect.
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Section 6.6 Full Access. Each party will, and will cause its
Subsidiaries and its and their representatives to, afford the other party and
the representatives of the other party reasonable access, upon reasonable notice
at all reasonable times to all premises, properties, books, records, contracts
and documents of or pertaining to such party and its Subsidiaries. Without
limiting the generality of the foregoing, the Company acknowledges and agrees
that the Parent Corporation and its representatives and agents may, with prior
notice to the Company and subject to the prior approval of the Company (which
will not be unreasonably withheld or delayed), conduct customary environmental
assessments of the real property and facilities owned or leased by the Company
and its Subsidiaries. Notwithstanding the foregoing, neither party will be
required to provide access or to disclose information where such access or
disclosure would contravene any law or contract or would result in the waiver of
any legal privilege or work-product protection. Any information disclosed will
be subject to the provisions of the Confidentiality Agreement between the
Company and the Parent Corporation (the "Confidentiality Agreement").
Section 6.7 Notice of Developments. Each party will give prompt
written notice to the other party of any material development affecting such
party or any of its Subsidiaries. Each party will give prompt written notice to
the other of any material development affecting the ability of the parties to
consummate the transactions contemplated by this Agreement. No such written
notice of a material development will be deemed to have amended any of the
disclosures set forth in the Company Disclosure Letter or the Parent Disclosure
Letter, to have qualified the representations and warranties contained herein
and to have cured any misrepresentation or breach of warranty that otherwise
might have existed hereunder by reason of such material development.
Section 6.8 Acquisition Proposals.
(a) The Company and each of its Subsidiaries, and each of their
respective directors, officers, employees, agents and representatives,
will immediately cease any discussions or negotiations presently being
conducted with respect to any Acquisition Proposal (as defined in Section
6.8(g)). The Company and its Subsidiaries will not and will use their
best efforts to cause their respective directors, officers, employees,
agents and representatives not to (i) initiate or solicit, directly or
indirectly, any inquiries with respect to, or the making of, any
Acquisition Proposal or (ii) except as expressly permitted in accordance
with Section 6.8(b), engage in any negotiations or discussions with,
furnish any information or data to or enter into any letter of intent,
agreement in principle, acquisition agreement or similar agreement with
any party relating to any Acquisition Proposal. The Company will be
responsible for any breach of the provisions of this Section 6.8 by any
director, officer, employee, agent or representative of the Company or
any of its Subsidiaries.
(b) Notwithstanding the provisions of Section 6.8(a) but subject
to the other provisions of this Section 6.8, the Company may engage in
discussions or negotiations with, furnish information and data to,
withdraw, modify or amend its recommendation and approval of the Merger
and enter into a letter of intent, agreement in principle, acquisition
agreement or similar agreement with any party that submits an Acquisition
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Proposal to the Company after the date of this Agreement and on or prior
to June 30, 1999 (the "Applicable Period") which the Board of Directors
of the Company by majority vote determines in its good faith judgment
could reasonably be expected to result in a Superior Acquisition Proposal
(as defined in Section 6.8(h)).
(c) Nothing in this Section 6.8 will prevent the Board of
Directors of the Company from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Securities Exchange Act with respect to any
publicly announced unsolicited tender offer or otherwise from making any
disclosure to its stockholders if, in its good faith judgment based on
the opinion of outside legal counsel, failure to so disclose would be
inconsistent with its obligations under applicable law; provided that the
Board of Directors will not recommend that the stockholders of the
Company tender their shares of Company Common Stock in connection with
any such tender offer unless (i) such tender offer is determined to be a
Superior Acquisition Proposal in accordance with the provisions of
Section 6.8(h) and (ii) the Company has provided the Parent Corporation
with not less than five business days prior written notice of any such
action.
(d) The Company will within 24 hours after its receipt of any
Acquisition Proposal provide the Parent Corporation with a copy of such
Acquisition Proposal or, in connection with any non-written Acquisition
Proposal, a written statement setting forth in reasonable detail the
terms and conditions of such Acquisition Proposal, including the identity
of the acquiring party. The Company will promptly inform the Parent
Corporation of the status and content of any discussions or negotiations
involving any Acquisition Proposal. In connection with any determination
by the Board of Directors of the Company that an Acquisition Proposal is
a Superior Acquisition Proposal, the Company will within 24 hours after
the making of such determination provide the Parent Corporation with a
written summary in reasonable detail of the reasons for such
determination.
(e) In no event will the Company provide any non-public
information regarding the Company or any of its Subsidiaries to any party
making an Acquisition Proposal unless such party enters into a written
confidentiality agreement containing confidentiality provisions
substantially similar to those contained in the Confidentiality
Agreement. In the event the Company enters into any confidentiality
agreement with a party pursuant to the provisions of this Section 6.8(e)
that does not include terms and conditions that are substantially similar
to those contained in the sixth paragraph of the Confidentiality
Agreement (the "Standstill Provisions"), then the Parent Corporation and
its Subsidiaries will be released from their obligations under the
Standstill Provisions to the same extent as such party.
(f) The Company will not enter into any letter of intent,
agreement in principle, acquisition agreement or similar agreement with
respect to any Superior Acquisition Proposal unless (i) the Company has
provided the Parent Corporation with not less than five business days
prior written notice of such action and (ii) such action
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is taken by the Company concurrently with or after the termination of
this Agreement in accordance with the provisions of Section 8.1(e).
(g) The term "Acquisition Proposal" as used in this Agreement
means any bona fide proposal, whether or not in writing, made by a party
to acquire beneficial ownership (as defined under Rule 13(d) promulgated
under the Securities Exchange Act) of all or a material portion of the
assets of, or any material equity interest in, the Company and
Subsidiaries taken as a whole pursuant to a merger, consolidation or
other business combination, sale of shares of capital stock, sale of
assets, tender or exchange offer or similar transaction involving the
Company or any of its Subsidiaries, including any single or multi-step
transaction or series of related transactions that is structured to
permit such party to acquire such beneficial ownership.
(h) The term "Superior Acquisition Proposal" as used in this
Agreement means an unsolicited written Acquisition Proposal that the
Board of Directors of the Company by majority vote determines in its good
faith judgment after consulting with the Company's outside financial and
legal advisors (i) is reasonably capable of being completed, taking into
account all legal, financial, regulatory and other aspects of such
proposal, and (ii) presents to the Company and its stockholders more
favorable financial and other terms, taken as a whole, than the Merger.
(i) No action taken in respect of an Acquisition Proposal or a
Superior Acquisition Proposal which is permitted by the provisions of
this Section 6.8, including any withdrawal, modification or amendment of
the recommendation and approval of the Merger by the Board of Directors
of the Company and the public announcement thereof permitted by the
provisions of this Section 6.8, will constitute a breach of any other
provision of this Agreement.
Section 6.9 Indemnification.
(a) From and after the Closing Date, the Parent Corporation will
cause the Surviving Corporation to indemnify, defend and hold harmless
each person who is now, or has been at any time prior to the Effective
Time, an officer or director of the Company or any of its present or
former Subsidiaries or corporate parents (collectively, the "Indemnified
Parties") from and against all losses, claims, damages and expenses
(including reasonable attorney's fees and expenses) arising out of or
relating to actions or omissions, or alleged actions or omissions,
occurring at or prior to the Effective Time to the fullest extent
permitted from time to time by the Delaware Act or any other applicable
laws as presently or hereafter in effect.
(b) Any determination required to be made with respect to whether
any Indemnified Party may be entitled to indemnification will, if
requested by such Indemnified Party, be made by independent legal counsel
selected by the Indemnified Party and reasonably satisfactory to the
Surviving Corporation.
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(c) For a period of six years after the Closing Date, the Parent
Corporation will cause to be maintained in effect the policies of
directors and officers liability insurance and fiduciary liability
insurance currently maintained by the Company with respect to claims
arising from or relating to actions or omissions, or alleged actions or
omissions, occurring on or prior to the Closing Date. The Parent
Corporation may at its discretion substitute for such policies currently
maintained by the Company directors and officers liability insurance and
fiduciary liability insurance policies with reputable and financially
sound carriers providing for no less favorable coverage. Notwithstanding
the provisions of this Section 6.9(c), the Parent Corporation will not be
obligated to make annual premium payments with respect to such policies
of insurance to the extent such premiums exceed 200 percent of the annual
premiums paid by the Company as of the date of this Agreement. If the
annual premium costs necessary to maintain such insurance coverage exceed
the foregoing amount, the Parent Corporation will maintain the most
advantageous policies of directors and officers liability insurance and
fiduciary liability insurance obtainable for an annual premium equal to
the foregoing amount.
(d) To the fullest extent permitted from time to time under the
law of the State of Delaware, the Parent Corporation will cause the
Surviving Corporation to pay on an as-incurred basis the reasonable fees
and expenses of each Indemnified Party (including reasonable fees and
expenses of counsel) in advance of the final disposition of any action,
suit, proceeding or investigation that is the subject of the right to
indemnification, subject to reimbursement in the event such Indemnified
Party is not entitled to indemnification.
(e) The certificate of incorporation and bylaws of the Surviving
Corporation will contain the same provisions providing for exculpation of
director and officer liability and indemnification on the same basis as
set forth in the certificate of incorporation and bylaws of the Company
in effect on the date of this Agreement. For a period of six years after
the Closing Date, the Parent Corporation will cause the Surviving
Corporation to maintain in effect such provisions in the certificate of
incorporation and bylaws of the Surviving Corporation providing for
exculpation of director and officer liability and indemnification to the
fullest extent permitted from time to time under the law of the State of
Delaware, which provisions will not be amended, except as required by
applicable law or except to make changes permitted by applicable law that
would enlarge the scope of the Indemnified Parties' indemnification
rights thereunder. The foregoing will not be deemed to restrict the right
of the Surviving Corporation to modify the provisions of its certificate
of incorporation or bylaws relating to exculpation of director and
officer liability or indemnification with respect to events or
occurrences after the Closing Date so long as such modifications do not
adversely affect the rights of the Indemnified Parties hereunder.
(f) In the event of any action, suit, investigation or proceeding,
the Indemnified Party will be entitled to control the defense thereof
with counsel of its own choosing reasonably acceptable to the Parent
Corporation, and the Parent Corporation
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and the Surviving Corporation will cooperate in the defense thereof;
provided that neither the Parent Corporation nor the Surviving
Corporation will be liable for the fees of more than one counsel for all
Indemnified Parties, other than local counsel, unless the use of a single
counsel would present conflict of interest issues which would make it
impracticable for all Indemnified Parties to be represented by a single
counsel, and provided further that neither the Parent Corporation nor the
Surviving Corporation will be liable for any settlement effected without
its written consent (which consent will not be unreasonably withheld).
(g) The rights of each Indemnified Party hereunder will be in
addition to any other rights such Indemnified Party may have under the
certificate of incorporation or bylaws of the Surviving Corporation or
any of their respective Subsidiaries, under the law of the State of
Delaware or otherwise. Notwithstanding anything to the contrary contained
in this Agreement or otherwise, the provisions of this Section 6.9 will
survive the consummation of the Merger, and each Indemnified Party will,
for all purposes, be a third party beneficiary of the covenants and
agreements contained in this Section 6.9 and, accordingly, will be
treated as a party to this Agreement for purposes of the rights and
remedies relating to enforcement of such covenants and agreements and
will be entitled to enforce any such rights and exercise any such
remedies directly against the Parent Corporation and the Surviving
Corporation. The Parent Corporation will cause the Surviving Corporation
to pay all reasonable expenses, including reasonable attorneys' fees,
that may be incurred by an Indemnified Party in enforcing the indemnity
and other obligations provided for in this Section 6.9.
Section 6.10 Public Announcements. The initial press release
announcing the transactions contemplated by this Agreement will be a joint press
release. Thereafter, the Parent Corporation and the Company will consult with
one another before issuing any press releases or otherwise making any public
announcements with respect to the transactions contemplated by this Agreement
and, except as may be required by applicable law or by the rules and regulations
of the New York Stock Exchange, will not issue any such press release or make
any such announcement prior to such consultation.
Section 6.11 Preservation of Programs and Agreements. From and after
the date of this Agreement through the Closing Date, neither party nor any of
its Subsidiaries will enter into any agreement which such party knows or has
reason to know is reasonably likely to cause a major customer of the other party
or any of its Subsidiaries to terminate any material program or agreement.
Section 6.12 Actions Regarding Antitakeover Statutes. If any fair
price, moratorium, control share acquisition or other form of antitakeover
statute, rule or regulation is or becomes applicable to the transactions
contemplated by this Agreement, the Board of Directors of the Company will grant
such approvals and take such other actions as may be required so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms and conditions set forth in this Agreement.
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Section 6.13 Standstill Provisions. The restrictions on the Parent
Corporation and the Acquisition Corporation contained in the Standstill
Provisions are hereby waived by the Company to the extent reasonably required to
permit the Parent Corporation and the Acquisition Corporation to comply with
their obligations or enforce their rights under this Agreement.
Section 6.14 Defense of Orders and Injunctions. In the event either
party becomes subject to any order or injunction of a court of competent
jurisdiction which prohibits the consummation of the transactions contemplated
by this Agreement, each party will use its best efforts to overturn or lift such
order or injunction. The foregoing will not be deemed to require the Parent
Corporation to enter into any agreement, consent decree or other commitment
requiring the Parent Corporation or any of its Subsidiaries to divest or hold
separate any assets or to take any other action that would have a Parent
Corporation Material Adverse Effect.
Section 6.15 Affiliate Letters. Promptly following the date of this
Agreement, the Company will deliver to the Parent Corporation a list of the
names and addresses of those persons who were, or will be, in the Company's
reasonable judgment, "affiliates" of the Company within the meaning of Rule
145(c) under the Securities Act as of the record date for the Company
Stockholders Meeting. The Company will use its best efforts to deliver to the
Parent Corporation a letter, in substantially the form of Exhibit A-1 attached
to this Agreement, from each person identified in the foregoing list. Promptly
following the date of this Agreement, the Parent Corporation will deliver to the
Company a list of the names and addresses of those persons who were or will be,
in the Parent Corporation's reasonable judgment, "affiliates" of the Parent
Corporation within the meaning of Rule 145(c) under the Securities Act as of the
record date for the Parent Corporation Stockholders Meeting. The Parent
Corporation will use its best efforts to deliver to the Company a letter, in
substantially the form of Exhibit A-2 attached to this Agreement, from each
person identified in the foregoing list. The Parent Corporation will be entitled
to place appropriate legends on the certificates evidencing the Parent Common
Stock held by or issued to persons delivering such letters and to issue stop
transfer instructions to the transfer agent for the Parent Common Stock
consistent with the terms of such letters.
Section 6.16 Preservation of Accounting and Tax Treatment. From and
after the date of this Agreement (a) the Parent Corporation and the Company and
their respective Subsidiaries will use their best efforts to cause the Merger to
be accounted for as a pooling of interests in accordance with XXX Xx. 00 and to
constitute a reorganization within the meaning of Section 368(a) of the Code and
(b) neither the Parent Corporation nor the Company, nor any of their respective
Subsidiaries, will knowingly take or omit to take any action that would prevent
the accounting for the Merger in accordance with the pooling of interests method
of accounting under the requirements of XXX Xx. 00 or prevent the Merger from
constituting a reorganization within the meaning of Section 368(a) of the Code.
Section 6.17 Accountant's Comfort Letters. Each party will use its
best efforts to cause to be delivered to the other party two letters from its
independent public accountants, one dated a date within two business days before
the date on which the Registration Statement becomes effective and one dated the
Closing Date, in form and substance reasonably
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satisfactory to the recipient and customary in scope and substance for comfort
letters delivered by independent accountants in connection with registration
statements similar to the Registration Statement.
Section 6.18 Registration Agreement. On or prior to the Closing Date,
the Parent Corporation will enter into an agreement, in the form of the
Registration Agreement attached to the Company Disclosure Letter, with certain
stockholders of the Company to provide such stockholders with registration
rights with respect to the Parent Common Stock to be received in the Merger and
will have complied with the provisions thereof referring to actions to be taken
prior to the date of such Registration Agreement.
Section 6.19 New York Stock Exchange Quotation. The Parent
Corporation will use its best efforts to cause the Parent Common Stock issuable
in the Merger or otherwise pursuant to the terms of this Agreement to be
approved for listing on the New York Stock Exchange, subject to official notice
of issuance, as promptly as practicable after the date of this Agreement and in
any event prior to the Closing Date.
Section 6.20 Publishing Financial Results. The Parent Corporation
will prepare and publicly release, as soon as practicable and in any event
within 10 business days following the end of the first accounting month ending
at least 30 days after the Closing Date, a report filed with the SEC on Form 8-K
or any other public filing, statement or announcement which includes the
combined financial results (including combined sales and net income) of the
Parent Corporation and the Company for a period of at least 30 days of combined
operations of the Parent Corporation and the Company following the Closing Date.
Section 6.21 Employee Benefit Matters.
(a) Subject to the provisions of any collective bargaining
agreement to which the Company or any of its Subsidiaries is a party as
of the date of this Agreement, until (or in respect of the period ending
on) December 31, 2000, the Parent Corporation will cause to be maintained
for the employees of the Company and its Subsidiaries as of the Closing
Date (collectively, the "Continuing Employees") salary levels not less
than the salary levels provided by the Company and its Subsidiaries as of
the Closing Date and benefits and benefit levels (including cash
incentive compensation benefits and benefit levels) which are
substantially comparable to the benefits and benefit levels provided by
the Company and its Subsidiaries through the Company Plans as of the
Closing Date. The foregoing covenant will not apply to any equity-based
compensation plan or arrangement.
(b) The Continuing Employees will be credited with their years of
service with the Company and its Subsidiaries for purposes of determining
eligibility and vesting (but not benefit accrual) under any employee
benefit plans, programs, arrangements and employment practices of the
Parent Corporation and its Subsidiaries in which the Continuing Employees
participate following the Closing Date. To the extent that any such
employee benefit plan, program, arrangement or employment practice in
which a Continuing Employee participates following the Closing Date
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provides medical, dental, vision or other welfare benefits, the Parent
Corporation will cause all pre-existing condition exclusions, waiting
periods and actively at work requirements thereunder to be waived for
such Continuing Employee and his or her covered dependents and the Parent
Corporation will cause any eligible expenses incurred by such Continuing
Employee on or before the Closing Date to be taken into account
thereunder for purposes of satisfying any deductible, coinsurance and
maximum out-of-pocket requirements applicable to such Continuing Employee
and his or her covered dependents for the applicable plan year.
(c) The Company agrees that an independent trustee, either a bank
or a trust company, will act with respect to the Merger on behalf of each
Company Plan (and its participants) that holds Company Common Stock in
accordance with the terms and conditions of such Plan.
Section 6.22 Directors of the Surviving Corporation. Until at least
the first anniversary of the Closing Date, the Parent Corporation will, and will
cause the Surviving Corporation to, take all actions necessary to cause Xxxxxxxx
X. Xxxxxxxxx to be elected as a director and the non-executive Chairman of the
Board of Directors of the Surviving Corporation and to cause Xxxxxx X. Xxxxxxx
to be elected as a member of the Board of Directors of the Surviving Corporation
effective as of the Effective Time. Notwithstanding that they will be directors
of the Surviving Corporation and not directors of the Parent Corporation, the
foregoing individuals will be entitled as directors of the Surviving Corporation
after the Effective Time to exculpation, indemnification and reimbursement of
expenses pursuant to terms and conditions identical to the terms and conditions
applicable to the directors of the Parent Corporation included in the
Certificate of Incorporation and Bylaws of the Parent Corporation and will be
entitled to coverage under the directors and officers liability and fiduciary
liability insurance policies and any indemnification agreements maintained or
entered into by the Parent Corporation on the same terms as applicable to the
directors of the Parent Corporation.
ARTICLE 7
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Section 7.1 Conditions to the Obligations of Each Party. The
respective obligation of each party to effect the Merger is subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions:
(a) the Company will have obtained the Company Stockholder
Approval;
(b) the Parent Corporation will have obtained the Parent
Corporation Stockholder Approval;
(c) the Registration Statement will have been declared effective
in accordance with the provisions of the Securities Act, and no stop
order suspending such
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effectiveness will have been issued and remain in effect, and the Parent
Corporation will have received all state securities law authorizations
necessary to issue the Parent Common Stock pursuant to the Merger;
(d) the Parent Common Stock to be issued to the stockholders of
the Company pursuant to the Merger will have been approved for listing on
the New York Stock Exchange, subject only to official notice of issuance;
(e) all applicable waiting periods under the HSR Act will have
terminated or expired;
(f) all other consents, authorizations, orders and approvals of or
filings with any governmental commission, board or other regulatory
authority (other than in its capacity as a customer of the Company or its
Subsidiaries) required in connection with the consummation of the
transactions contemplated by this Agreement will have been obtained or
made, except where the failure to obtain or make such consents,
authorizations, orders, approvals or filings would not, from and after
the Closing Date, individually or in the aggregate have a Company
Material Adverse Effect; and
(g) neither party will be subject to any order or injunction of a
court of competent jurisdiction in the United States which prohibits the
consummation of the transactions contemplated by this Agreement.
Section 7.2 Conditions to the Obligation of the Company. The
obligation of the Company to effect the Merger is subject to the satisfaction at
or prior to the Closing Date of each of the following conditions:
(a) the representations and warranties of the Parent Corporation
set forth in Section 5 will be true and correct in all material respects
at and as of the Closing Date as though then made, except as contemplated
by this Agreement and except that any representation or warranty made as
of a date other than the date of this Agreement will continue on the
Closing Date to be true and correct in all material respects as of the
specified date;
(b) each of the Parent Corporation and the Acquisition Corporation
will have in all material respects performed and complied with all of its
obligations under this Agreement required to be performed by it at or
prior to the Closing Date;
(c) the Company will have received a written opinion, dated as of
the Closing Date, from Deloitte & Touche LLP, the Company's independent
public accountants, to the effect that they concur with the Company's
conclusion that no conditions exist that would preclude the Company's
ability to be a party to a business combination with the Parent
Corporation to be accounted for using the pooling of interests method of
accounting in accordance with the requirements of XXX Xx. 00; and
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(d) the Company will have received a written opinion, dated as of
the Closing Date, from Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, counsel
to the Company, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code. In rendering the foregoing opinion, counsel will be
permitted to rely upon and assume the accuracy of representations
provided by the parties in substantially the forms attached as Exhibits
B-1 and B-2 to this Agreement.
The Parent Corporation and the Acquisition Corporation will furnish
the Company with a customary bring down certificate with respect to the
satisfaction of the conditions set forth in Sections 7.2(a) and (b).
Section 7.3 Conditions to the Obligation of the Parent Corporation
and the Acquisition Corporation. The obligation of the Parent Corporation and
the Acquisition Corporation to effect the Merger is subject to the satisfaction
at or prior to the Closing Date of each of the following conditions:
(a) the representations and warranties of the Company set forth in
Section 4 will be true and correct in all material respects at and as of
the Closing Date as though then made, except as contemplated by this
Agreement and except that any representation or warranty made as of a
date other than the date of this Agreement will continue on the Closing
Date to be true and correct in all material respects as of the specified
date;
(b) the Company will have in all material respects performed and
complied with all of its obligations under this Agreement required to be
performed by it at or prior to the Closing Date;
(c) the Parent Corporation will have received a written opinion,
dated as of the Closing Date, from Xxxxxx Xxxxxxxx LLP, the Parent
Corporation's independent public accountants, to the effect that the
business combination between the Parent Corporation and the Company
contemplated by this Agreement should be treated as a "pooling of
interests" in conformity with generally accepted accounting principles as
described in XXX Xx. 00; and
(d) the Parent Corporation will have received a written opinion,
dated as of the Closing Date, from Jenner & Block, counsel to the Parent
Corporation, to the effect that the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section
368(a) of the Code. In rendering the foregoing opinion, counsel will be
permitted to rely upon and assume the accuracy of representations
provided by the parties in substantially the forms attached as Exhibits
B-1 and B-2 to this Agreement.
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The Company will furnish the Parent Corporation with a customary
bring down certificate with respect to the satisfaction of the conditions set
forth in Sections 7.3(a) and (b).
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
the receipt of the Company Stockholder Approval or the Parent Corporation
Stockholder Approval):
(a) with the written consent of the Parent Corporation and the
Company;
(b) by the Parent Corporation or the Company if any court of
competent jurisdiction or other governmental agency has issued a final
order, decree or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the consummation of the Merger, and
such order, decree, ruling or other action is or has become
nonappealable;
(c) by the Parent Corporation if (i) the Company has materially
breached any of its representations or warranties set forth in this
Agreement and such breach is not cured within 45 days after the date
written notice of such breach is given by the Parent Corporation to the
Company, (ii) the Company has materially breached any of its covenants or
agreements contained in this Agreement and such breach is not cured
within 45 days after the date written notice of such breach is given by
the Parent Corporation to the Company, (iii) the Board of Directors of
the Company has withdrawn or amended in any manner adverse to the Parent
Corporation and the Acquisition Corporation its recommendation and
approval of the Merger, (iv) the Company Stockholder Approval has not
been obtained at a meeting duly called for such purpose or (v) the Merger
has not been consummated on or before December 31, 1999 (unless the
failure of the Merger to have been consummated results primarily from the
Parent Corporation or the Acquisition Corporation breaching any
representation, warranty, covenant or agreement contained in this
Agreement);
(d) by the Company if (i) the Parent Corporation has materially
breached any of its representations or warranties set forth in this
Agreement and such breach is not cured within 45 days after the date
written notice of such breach is given by the Company to the Parent
Corporation, (ii) the Parent Corporation or the Acquisition Corporation
has materially breached any of its covenants or agreements contained in
this Agreement and such breach is not cured within 45 days after the date
written notice of such breach is given by the Company to the Parent
Corporation, (iii) the Parent Stockholder Approval has not been obtained
at a meeting duly called for such purpose or (iv) the Merger has not been
consummated on or before December 31, 1999 (unless the failure of the
Merger to have been consummated results primarily from the Company
breaching any representation, warranty, covenant or agreement contained
in this Agreement); or
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(e) by the Company if a party has made a Superior Acquisition
Proposal and the Company enters into any letter of intent, agreement in
principle, acquisition agreement or other agreement with respect to such
Superior Acquisition Proposal in accordance with the provisions of
Section 6.8; provided that termination of this Agreement pursuant to this
Section 8.1(e) will not become effective until the payment by the Company
to the Parent Corporation of the termination fee provided in Section 8.3.
(f) by the Parent Corporation or the Company prior to the third
trading day preceding the Company Stockholders Meeting if the Average
Stock Price of the Parent Common Stock is less than $63 per share. The
"Average Stock Price" means the average of the Daily Per Share Prices (as
hereinafter defined) for the fifteen consecutive trading days ending on
the fifth trading day prior to the Company Stockholders Meeting. The
"Daily Per Share Price" for any trading day means the weighted average of
the per share selling prices (as reported on the New York Stock Exchange
Composite Transaction Tape) for that day.
Section 8.2 Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 8.1, this Agreement will
forthwith become void and will be deemed to have terminated without liability to
any party (except for any liability of any party then in wilful breach of any
covenant or agreement); provided that the provisions of the Confidentiality
Agreement and Section 8.3 of this Agreement will continue in full force and
effect notwithstanding such termination and abandonment.
Section 8.3 Termination Fee.
(a) If (i) the Parent Corporation terminates this Agreement
pursuant to the provisions of Section 8.1(c)(iii) or Section 8.1(c)(iv)
and the Company enters into an agreement with respect to a Third Party
Acquisition (as defined in Section 8.3(b)), or a Third Party Acquisition
occurs within 12 months after the date of such termination, and such
agreement was entered into, or such Third Party Acquisition was publicly
announced, concurrently with or prior to the date of the termination of
this Agreement or (ii) the Company terminates this Agreement pursuant to
the provisions of Section 8.1(e), then, in each case, the Company will
pay to the Parent Corporation, within one business day following the
occurrence of such event (in the case of a termination under clause (i)
above) or the delivery of notice of such termination (in the case of a
termination under clause (ii) above), a termination fee equal to $150
million (the "Termination Fee"), payable by wire transfer of immediately
available funds to an account designated by the Parent Corporation.
(b) The term "Third Party Acquisition" as used in this Agreement
means (i) the acquisition of the Company by merger or otherwise by any
person (including for purposes of this Section 8.3(b) any "person" or
"group" as defined in Section 13(d)(3) of the Securities Exchange Act) or
entity other than the Parent Corporation or the Acquisition Corporation,
(ii) the acquisition by any person or entity other than the Parent
Corporation or the Acquisition Corporation of more than 50 percent of the
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consolidated assets (determined based on book or fair market value) of
the Company and its Subsidiaries, (iii) the acquisition by any person or
entity other than the Parent Corporation or the Acquisition Corporation
of more than 50 percent of the outstanding shares of Company Common
Stock, (iv) the adoption by the Company of any plan of liquidation or the
declaration by the Company of any extraordinary dividend or distribution
(including any distribution of any shares of the capital stock of any
material Subsidiary) of cash or property constituting more than 50
percent of the consolidated assets (determined based on book or fair
market value) of the Company and its Subsidiaries or (v) the purchase by
the Company or any of its Subsidiaries of more than 50 percent of the
outstanding shares of Company Common Stock.
(c) Except as specifically provided in this Section 8.3, each
party will bear its own expenses incurred in connection with the
transactions contemplated by this Agreement, whether or not such
transactions are consummated.
(d) In the event of any breach of the covenants set forth in
Section 6.8, nothing contained in this Section 8.3 will prevent the
Parent Corporation or the Acquisition Corporation from challenging, by
injunction or otherwise, the termination or attempted termination of this
Agreement pursuant to the provisions of Section 8.1 (e), but acceptance
by the Parent Corporation of the payment of the Termination Fee will
constitute a full and complete waiver by the Parent Corporation of all of
its rights under this Section 8.3(d) or otherwise.
(e) The Company acknowledges that the agreements regarding the
payment of fees contained in this Section 8.3 are an integral part of the
transactions contemplated by this Agreement and that, in the absence of
such agreements, the Parent Corporation and the Acquisition Subsidiary
would not have entered into this Agreement. The Company accordingly
agrees that in the event the Company fails to pay the Termination Fee
promptly, the Company will in addition to the payment of such amount also
pay to the Parent Corporation all of the reasonable costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the
Parent Corporation in the enforcement of its rights under this Section
8.3, together with interest on such amount at a rate of 10 percent per
annum from the date upon which such payment was due, to and including the
date of payment. Provided that the Company was not in breach of the
provisions of Section 6.8, payment of the Termination Fee will constitute
full and complete satisfaction, and will constitute the Parent
Corporation's sole and exclusive remedy for any loss, liability, damage
or claim arising out of or in connection with any such termination of
this Agreement or the facts and circumstances resulting in or related to
this Agreement.
ARTICLE 9
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations. The representations and
warranties contained in this Agreement will not survive the Merger or the
termination of this Agreement.
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Section 9.2 Remedies. The parties agree that irreparable damage would
occur in the event that the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
will be entitled to specific performance of the terms of this Agreement, without
posting a bond or other security, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 9.3 Successors and Assigns. No party hereto may assign or
delegate any of such party's rights or obligations under or in connection with
this Agreement without the written consent of the other party hereto. Except as
otherwise expressly provided herein, all covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto or thereto will be
binding upon and enforceable against the respective successors and assigns of
such party and will be enforceable by and will inure to the benefit of the
respective successors and permitted assigns of such party.
Section 9.4 Amendment. This Agreement may be amended by the execution
and delivery of an written instrument by or on behalf of the Parent Corporation,
the Acquisition Corporation and the Company at any time before or after the
Company Stockholder Approval and the Parent Corporation Stockholder Approval;
provided that after the date of the Company Stockholder Approval, no amendment
to this Agreement will be made without the approval of stockholders of the
Company to the extent such approval is required under the Delaware Act.
Section 9.5 Extension and Waiver. At any time prior to the Effective
Time, the parties may extend the time for performance of or waive compliance
with any of the covenants or agreements of the other parties to this Agreement
and may waive any breach of the representations or warranties of such other
parties. No agreement extending or waiving any provision of this Agreement will
be valid or binding unless it is in writing and is executed and delivered by or
on behalf of the party against which it is sought to be enforced.
Section 9.6 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
Section 9.7 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but all such counterparts taken together
will constitute one and the same Agreement.
Section 9.8 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
Section 9.9 Notices. All notices, demands or other communications to
be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given when delivered
personally to the recipient or when sent to the
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recipient by telecopy (receipt confirmed), one business day after the date when
sent to the recipient by reputable express courier service (charges prepaid) or
three business days after the date when mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications will be sent to the Parent Corporation and the
Company at the addresses indicated below:
If to the Parent
Corporation: General Dynamics Corporation
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Senior Vice President and
General Counsel
Facsimile No: (000) 000-0000
With a copy (which
will not constitute
notice) to: Jenner & Block
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No: (000) 000-0000
If to the Company: Gulfstream Aerospace Corporation
000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxx, Esq.
Senior Vice President and
General Counsel
Facsimile No: (000) 000-0000
With a copy (which
will not constitute
notice) to: Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, P.C.
Xxxxx Xxxxxxx, Esq.
Facsimile No: (000) 000-0000
or to such other address or to the attention of such other party as the
recipient party has specified by prior written notice to the sending party.
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55
Section 9.10 No Third Party Beneficiaries. This Agreement will not
confer any rights or remedies upon any person or entity other than the Parent
Corporation, the Acquisition Corporation and the Company and their respective
successors and permitted assigns, except that the respective beneficiaries of
the provisions of Sections 1.9, 6.9, 6.18, 6.20 and 6.22 will, for all purposes,
be third party beneficiaries of the covenants and agreements contained therein
and, accordingly, will be treated as a party to this Agreement for purposes of
the rights and remedies relating to enforcement of such covenants and agreements
and will be entitled to enforce any such rights and exercise any such remedies
directly against the Parent Corporation and the Surviving Corporation.
Section 9.11 Entire Agreement. This Agreement (including the
Confidentiality Agreement and the other documents referred to herein)
constitutes the entire agreement among the parties and supersedes any prior
understandings, agreements or representations by or among the parties, written
or oral, that may have related in any way to the subject matter hereof.
Section 9.12 Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent and no rule of strict construction will be applied against any party. The
use of the word "including" in this Agreement means "including without
limitation" and is intended by the parties to be by way of example rather than
limitation.
Section 9.13 Submission to Jurisdiction. Each of the parties to this
Agreement submits to the jurisdiction of any state or federal court sitting in
Wilmington, Delaware, in any action or proceeding arising out of or relating to
this Agreement, agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court, and agrees not to bring any
action or proceeding arising out of or relating to this Agreement in any other
court. Each of the parties to this Agreement waives any defense of inconvenient
forum to the maintenance of any action or proceeding so brought and waives any
bond, surety or other security that might be required of any other party with
respect thereto.
Section 9.14 GOVERNING LAW. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE SCHEDULES
HERETO WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF
THE STATE OF DELAWARE.
* * * * *
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* * * * *
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement on the date first written above.
GENERAL DYNAMICS CORPORATION,
By /s/ XXXXXXXX X. XXXXXXXX
--------------------------------------
Xxxxxxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
XXXX ACQUISITION CORPORATION
By /s/ XXXXX X. XXXXXX
--------------------------------------
Xxxxx X. Xxxxxx
President
GULFSTREAM AEROSPACE CORPORATION
By /s/ XXXXXXXX X. XXXXXXXXX
--------------------------------------
Xxxxxxxx X. Xxxxxxxxx
Chairman and Chief Executive Officer
57
EXHIBIT A-1
FORM OF COMPANY AFFILIATE LETTER
General Dynamics Corporation
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Ladies and Gentlemen:
General Dynamics Corporation, a Delaware corporation, Xxxx
Acquisition Corporation, a Delaware corporation, and Gulfstream Aerospace
Corporation, a Delaware corporation, are parties to an Agreement and Plan of
Merger dated as of May 16, 1999 (the "Merger Agreement"). All capitalized terms
used but not defined in this letter will have the respective meanings give such
terms in the Merger Agreement.
The undersigned, a record holder and beneficial owner of shares of
Company Common Stock, is entitled to receive shares of Parent Common Stock in
connection with the Merger. The undersigned acknowledges that the undersigned
may be deemed an "affiliate" of the Company within the meaning of Rule 145
("Rule 145") promulgated under the Securities Act or Accounting Series Releases
130 and 135, as amended, of the SEC (the "Releases"). Nothing contained in this
letter, however, is intended or should be construed as an admission that the
undersigned is an affiliate of the Company or as a waiver of any rights that the
undersigned may have to object to any claim that the undersigned is such an
affiliate on or after the date of this letter.
If in fact the undersigned were an affiliate of the Company under the
Securities Act, the undersigned's ability to sell, assign or transfer the Parent
Common Stock received by the undersigned pursuant to the Merger may be
restricted unless such transaction is registered under the Securities Act or an
exemption from such registration is available. The undersigned (i) understands
that such exemptions are limited and that, except as provided for in the Merger
Agreement and the registration agreement referred to in the Merger Agreement,
the Parent Corporation is not under any obligation to effect any such
registration and (ii) has obtained advice of counsel to the extent the
undersigned has felt necessary as to the nature and conditions of such
exemptions, including information with respect to the applicability to the sale
of such securities of Rules 144 and 145(d) promulgated under the Securities Act.
The undersigned agrees with the Parent Corporation that the
undersigned will not sell, assign or transfer any shares of Parent Common Stock
received by the undersigned in exchange for shares of Company Common Stock
pursuant to the Merger except (i) pursuant to an effective registration
statement under the Securities Act, (ii) in conformity with Rule 145
58
promulgated under the Securities Act or (iii) in a transaction that, in the
opinion of counsel reasonably satisfactory to Parent or as described in a
"no-action" or interpretive letter from the staff of the SEC, is not required to
be registered under the Securities Act.
The undersigned further agrees with Parent Corporation that, until
after such time as a report including results covering at least 30 days of
combined operations of the Company and the Parent Corporation has been published
by the Parent Corporation or the Merger Agreement has been terminated in
accordance with its terms, the undersigned will not reduce its risk (within the
meaning of the Releases) with respect to (i) any shares of Company Common Stock
held by it or (ii) any shares of Parent Common Stock received by it in the
Merger. The Parent Corporation will promptly notify the undersigned when such
report has been published by the Parent Corporation.
The Parent Corporation will prepare and publicly release, as soon as
practicable and in any event within 10 business days following the end of the
first accounting month ending at least 30 days after the Closing Date, a report
filed with the SEC on Form 8-K or any other public filing, statement or
announcement which includes the combined financial results (including combined
sales and net income) of the Parent Corporation and the Company for a period of
at least 30 days of combined operations of the Parent Corporation and the
Company following the Closing Date.
In the event of a sale or other disposition pursuant to Rule 145 of
Parent Common Stock received by the undersigned in the Merger, the undersigned
will supply the Parent Corporation with evidence of its compliance with Rule 145
by delivering to the Parent Corporation a letter in the form of Annex I hereto.
The undersigned understands that the Parent Corporation may instruct its
transfer agent to withhold the transfer of any Parent Common Stock disposed of
by the undersigned, but that upon receipt of such evidence of compliance the
transfer agent will effectuate the transfer of the Parent Common Stock sold as
indicated in the letter.
The undersigned acknowledges and agrees that the Parent Common Stock
issued to the undersigned will all be in certificated form and that appropriate
legends will be placed on certificates representing Parent Common Stock received
by the undersigned in the Merger or held by a transferee thereof, which legends
will be removed by delivery of substitute certificates upon receipt of an
opinion in form and substance reasonably satisfactory to the Parent Corporation
or a "no action" or interpretive letter from the staff of the SEC to the effect
that such legends are no longer required for purposes of the Securities Act or
upon the receipt of the letters referred to in the preceding paragraph.
The Parent Corporation covenants that for so long and to the extent
necessary to permit the undersigned to sell the shares of Parent Common Stock
pursuant to Rule 145 and, to the extent applicable, Rule 144 under the
Securities Act, the Parent Corporation will (i) use its best efforts to file, on
a timely basis, all reports and data required to be filed by it with the SEC
pursuant to Section 13 of the Securities Exchange Act and to furnish to the
undersigned upon request a written statement as to whether the Parent
Corporation has complied with such reporting requirements during the 12 months
preceding any proposed sale of shares of Parent
A-1-2
59
Common Stock by the undersigned under Rule 145 and (ii) otherwise take such
action as may be reasonably available to permit the sale or other disposition of
the Parent Common Stock by the undersigned under Rule 145 in accordance with the
terms thereof..
The undersigned acknowledges that the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of Parent Common
Stock and that the receipt by the Parent Corporation of this letter is a
material inducement and a condition to the Parent Corporation's obligation to
consummate the Merger.
Very truly yours,
Dated:
A-1-3
60
ANNEX I
TO EXHIBIT A-1
General Dynamics Corporation
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Ladies and Gentlemen:
On ___________, the undersigned sold the shares of the Common Stock,
par value $1.00 per share , of General Dynamics Corporation (the "Parent
Corporation") described below (the "Shares"). The Shares were received by the
undersigned in connection with the merger of Xxxx Acquisition Corporation, a
subsidiary of the Parent Corporation, with and into Gulfstream Aerospace
Corporation.
Based upon the most recent report or statement filed by the Parent
Corporation with the Securities and Exchange Commission, the Shares sold by the
undersigned were within the prescribed limitations set forth in Rule 144(e)
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
The undersigned hereby represents that the Shares were sold in
"brokers' transactions" within the meaning of Section 4(4) of the Securities Act
or in transactions directly with a "market maker" as that term is defined in
Section 3(a)(38) of the Securities Exchange Act of 1934, as amended. The
undersigned further represents that the undersigned has not solicited or
arranged for the solicitation of orders to buy the Shares, and that the
undersigned has not made any payment in connection with the offer or sale of the
Shares to any person other than to the broker who executed the order in respect
of such sale.
Very truly yours,
Dated:
A-1-4
61
EXHIBIT A-2
FORM OF PARENT CORPORATION AFFILIATE LETTER
Gulfstream Aerospace Corporation
000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000-0000
General Dynamics Corporation
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Ladies and Gentlemen:
General Dynamics Corporation, a Delaware corporation, Xxxx
Acquisition Corporation, a Delaware corporation, and Gulfstream Aerospace
Corporation, a Delaware corporation, are parties to an Agreement and Plan of
Merger dated as of May 16 , 1999 (the "Merger Agreement"). All capitalized terms
used but not defined in this letter will have the respective meanings give such
terms in the Merger Agreement.
The undersigned is the record holder and beneficial owner of shares
of Parent Common Stock. The undersigned acknowledges that the undersigned may be
deemed an "affiliate" of the Parent Corporation within the meaning of Accounting
Series Releases 130 and 135, as amended, of the SEC (the "Releases"). Nothing
contained in this letter, however, is intended or should be construed as an
admission that the undersigned is an affiliate of the Parent Corporation or as a
waiver of any rights that the undersigned may have to object to any claim that
the undersigned is such an affiliate on or after the date of this letter.
The undersigned agrees with Parent Corporation that, until after such
time as a report including results covering at least 30 days of combined
operations of the Company and the Parent Corporation has been published by the
Parent Corporation or the Merger Agreement has been terminated in accordance
with its terms, the undersigned will not reduce its risk (within the meaning of
the Releases) with respect to any shares of Parent Common Stock held of record
or owned beneficially by the undersigned. The Parent Corporation will promptly
notify the undersigned when such report has been published by the Parent
Corporation.
62
The undersigned acknowledges that the undersigned has carefully read
this letter and understands the requirements hereof and the limitations imposed
upon the distribution, sale, transfer or other disposition of Parent Common
Stock and that the receipt by the Parent Corporation of this letter is a
material inducement and a condition to the Company's obligation to consummate
the Merger.
Very truly yours,
Dated:
A-2-2
63
EXHIBIT B-1
FORM OF COMPANY TAX REPRESENTATIONS
[Letterhead of the Company]
[ ], 1999
Jenner & Block
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In connection with the legal opinions to be delivered pursuant to
Sections 7.2(d) and 7.3(d)of the Agreement and Plan of Merger (the "Merger
Agreement") dated as of May 16, 1999, by and among General Dynamics Corporation,
a Delaware corporation (the "Parent Corporation"), Xxxx Acquisition Corporation,
a Delaware corporation and a wholly owned subsidiary of the Parent Corporation
(the "Acquisition Corporation"), and Gulfstream Aerospace Corporation, a
Delaware corporation (the "Company"), and in connection with the filing with the
Securities Exchange Commission (the "SEC") of the registration statement on Form
S-4 (the "Registration Statement") relating to the Merger Agreement, which
includes the joint proxy statement/prospectus of the Parent Corporation and the
Company, the undersigned certifies and represents on behalf of the Parent
Corporation and the Acquisition Corporation, after due inquiry and
investigation, as follows (any capitalized term used but not defined herein
having the meaning given to such term in the Merger Agreement):
1. The facts relating to the contemplated merger (the "Merger") of
the Acquisition Corporation with and into the Company as described in the
Registration Statement and the documents described in the Registration
Statement, as amended through the date hereof, are, insofar as such facts
pertain to the Company, true, correct and complete in all material respects. The
Merger will be consummated in accordance with the Merger Agreement.
2. The formula set forth in the Merger Agreement pursuant to which
each issued and outstanding share of common stock of the Company, par value $.01
per share ("Company Common Stock") will be converted into the right to receive
Common Stock, par value $1.00 per share, of the Parent Corporation ("Parent
Common Stock") is the result of arm's length bargaining and such formula was
designed to result in the fair market value of the Parent Common Stock
64
received by the stockholders of the Company approximately equaling the aggregate
fair market value of the Company Common Stock surrendered in the exchange..
3. Cash payments, if any, to be made to stockholders of the Company
in lieu of fractional shares of Parent Common Stock that would otherwise be
issued to such stockholders in the Merger represent a mere mechanical rounding
off and will be made solely for the purpose of saving the Parent Corporation the
expense and inconvenience of issuing and transferring fractional shares of
Parent Common Stock, and do not represent separately bargained for
consideration. The total cash consideration that will be paid in the Merger to
stockholders of the Company in lieu of fractional shares of Parent Common Stock
will not exceed one percent of the total consideration that will be issued in
the Merger to stockholders of the Company in exchange for their shares of
Company Common Stock. The fractional share interests of each stockholder of the
Company will be aggregated, and no stockholder of the Company, with the possible
exception of stockholders whose holdings are in separate accounts or with
different brokers, will receive cash in lieu of fractional shares in an amount
greater than one full share of Parent Common Stock.
4. Neither the Company nor any corporation related to the Company has
acquired or redeemed or has any present plan or intention to acquire or redeem
any Company Common Stock in contemplation of the Merger, after the Merger, or
otherwise as part of a plan of which the Merger is a part. To the best knowledge
of the management of the Company, neither the Parent Corporation nor any
corporation that is related to the Parent Corporation has a present plan or
intention to purchase Company Common Stock or any Parent Common Stock. For
purposes of this representation letter, two corporations will be treated as
related to one another if immediately prior to or immediately after the Merger
(a) the corporations are members of the same affiliated group (within the
meaning of Section 1504 of the Internal revenue Code of 1986, as amended (the
"Code"), but determined without regard to Section 1504(b) of the Code) or (b)
one corporation owns 50 percent or more of the total combined voting power of
all classes of stock of the other corporation that are entitled to vote or 50
percent or more of the total value of shares of all classes of stock of the
other corporation (applying the attribution rules of Section 318 of the Code, as
modified pursuant to Section 304(c)(3)(B) of the Code).
5. The Company has not made, and does not have any present plan or
intention to make, any distributions (other than regular, normal dividends made
in the ordinary course of business) prior to, in contemplation of or otherwise
in connection with, the Merger.
6. The Parent Corporation, the Acquisition Corporation, the Company
and holders of Company Common Stock will each pay their respective expenses, if
any, incurred in connection with the Merger.
7. Immediately following the Merger, the Company will hold (a) at
least 90 percent of the fair market value of the net assets and at least 70
percent of the fair market value of the gross assets that were held by the
Company immediately prior to the Merger and (b) at least 90 percent of the fair
market value of the net assets and at least 70 percent of the fair market value
of the gross assets that were held by the Acquisition Corporation immediately
prior to the Merger. For purposes of this representation, amounts paid to
stockholders who receive cash or other property
B-1-2
65
(including cash in lieu of fractional shares of Parent Common Stock) in
connection with the Merger, assets of the Company used to pay its reorganization
expenses and all redemptions and distributions made by the Company (other than
regular, normal dividends made in the ordinary course of business) immediately
preceding, or in contemplation of, the Merger will be included as assets held by
the Company immediately prior to the Merger.
8. At the Effective Time, the Company will not have outstanding any
warrants, options, convertible securities or any other type of right pursuant to
which any person could acquire Company Common Stock that, if exercised or
converted, would affect Parent Corporation's acquisition or retention of control
of the Company as defined in Section 368(c) of the Code.
9. In connection with the Merger, Company Common Stock will be
converted solely into Parent Common Stock (except for cash paid in lieu of
fractional shares of Parent Common Stock).
10. The Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
11. The Company will not take any position on any federal, state or
local income or franchise tax return, or take any other tax reporting position,
that is inconsistent with the treatment of the Merger as a reorganization within
the meaning of Section 368(a) of the Code, unless otherwise required by a
"determination" (as defined in Section 1313(a)(1) of the Code) or by applicable
state or local tax law (and then only to the extent required by such applicable
state or local tax law).
12. None of the compensation received by any stockholder-employee of
the Company in respect of periods at or prior to the Effective Time represents
separate consideration for, or is allocable to, any of its Company Common Stock.
None of the Parent Common Stock that will be received by stockholder-employees
in the Merger represents separately bargained for consideration or is allocable
to any employment agreement or arrangement. The compensation paid to any
stockholder-employees will be commensurate with amounts paid to third parties.
13. There is no intercorporate indebtedness existing between the
Parent Corporation (or any of its subsidiaries, including the Acquisition
Corporation) and the Company (or any of its subsidiaries) that was issued or
acquired, or will be settled, at a discount.
14. The Company is not under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
15. It is the Company's present intention to pay all transfer taxes
attributable to the Merger out of the Company's own funds (and not out of funds
provided, directly or indirectly, by the Parent Corporation).
16. The Merger Agreement, the Registration Statement and the other
documents described in the Registration Statement, all as amended through the
date hereof, represent the entire understanding of the Company with respect to
the Merger.
X-0-0
00
00. No assets of the Company have been sold, transferred or otherwise
disposed of which would prevent the Parent Corporation from continuing the
"historic business" of the Company or from using a significant portion of the
"historic business assets" of the Company in a business following the Merger (as
such terms are defined in Treasury Regulations Section 1.368-1(d)).
18. Neither the Company nor any of its subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code and subject to
355(e) of the Code (a) in the two years prior to the date of the Merger
Agreement or (b) in a distribution which could otherwise constitute part of a
"plan" or "series of related transactions" (within the meaning of Section 355(e)
of the Code) in conjunction with the Merger.
19. As of the time of the Merger, the fair market value of the assets
of the Company will equal or exceed the sum of its liabilities, plus the amount
of liabilities, if any, to which such assets are subject.
20. The undersigned is authorized to make all the representations set
forth herein.
The undersigned acknowledges that (a) the opinions to be delivered
pursuant to Sections 7.2(d) and 7.3(d) of the Merger Agreement will be based on
the accuracy of the representations set forth herein and on the accuracy of the
representations and warranties and the satisfaction of the covenants and
obligations contained in the Merger Agreement and the various other documents
related thereto and (b) such opinions will be subject to certain limitations and
qualifications including that it may not be relied upon if any such
representations or warranties are not accurate or if any such covenants or
obligations are not satisfied in all material respects.
B-1-4
67
The undersigned acknowledges that such opinions will not address any
tax consequences of the Merger or any action taken in connection therewith
except as expressly set forth in such opinions.
Very truly yours,
GULFSTREAM AEROSPACE CORPORATION
By
--------------------------
[Name and Title]
B-1-5
68
EXHIBIT B-2
FORM OF PARENT CORPORATION TAX REPRESENTATIONS
[Letterhead of the Parent Corporation]
[ ], 1999
Jenner & Block
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
In connection with the legal opinions to be delivered pursuant to
Sections 7.2(d) and 7.3(d) of the Agreement and Plan of Merger (the "Merger
Agreement") dated as of May 16, 1999, by and among General Dynamics Corporation,
a Delaware corporation (the "Parent Corporation"), Xxxx Acquisition Corporation,
a Delaware corporation and a wholly owned subsidiary of the Parent Corporation
(the "Acquisition Corporation"), and Gulfstream Aerospace Corporation, a
Delaware corporation (the "Company"), and in connection with the filing with the
Securities Exchange Commission (the "SEC") of the registration statement on Form
S-4 (the "Registration Statement") relating to the Merger Agreement, which
includes the joint proxy statement/prospectus of the Parent Corporation and the
Company, the undersigned certifies and represents on behalf of the Parent
Corporation and the Acquisition Corporation, after due inquiry and
investigation, as follows (any capitalized term used but not defined herein
having the meaning given to such term in the Merger Agreement):
1. The facts relating to the contemplated merger (the "Merger") of
the Acquisition Corporation with and into the Company as described in the
Registration Statement and the documents described in the Registration
Statement, as amended through the date hereof, are, insofar as such facts
pertain to the Parent Corporation and the Acquisition Corporation, true, correct
and complete in all material respects. The Merger will be consummated in
accordance with the Merger Agreement.
2. The formula set forth in the Merger Agreement pursuant to which
each issued and outstanding share of common stock of the Company, par value $.01
per share ("Company
69
Common Stock") will be converted into the right to receive Common Stock, par
value $1.00 per share, of the Parent Corporation ("Parent Common Stock") is the
result of arm's length bargaining and such formula was designed to result in the
fair market value of the Parent Common Stock received by the stockholders of the
Company approximately equaling the aggregate fair market value of the Company
Common Stock surrendered in the exchange.
3. Cash payments, if any, to be made to stockholders of the Company
in lieu of fractional shares of Parent Common Stock that would otherwise be
issued to such stockholders in the Merger represent a mere mechanical rounding
off and will be made solely for the purpose of saving the Parent Corporation the
expense and inconvenience of issuing and transferring fractional shares of
Parent Common Stock, and do not represent separately bargained for
consideration. The total cash consideration that will be paid in the Merger to
stockholders of the Company in lieu of fractional shares of Parent Common Stock
will not exceed one percent of the total consideration that will be issued in
the Merger to stockholders of the Company in exchange for their shares of
Company Common Stock. The fractional share interests of each stockholder of the
Company will be aggregated, and no stockholder of the Company, with the possible
exception of stockholders whose holdings are in separate accounts or with
different brokers, will receive cash in lieu of fractional shares in an amount
greater than one full share of Parent Common Stock.
4. The Parent Corporation has no present plan or intention, following
the Merger, to reacquire, or to cause any corporation that is related to the
Parent Corporation to acquire, any Parent Common Stock. To the best knowledge of
the management of the Parent Corporation, no corporation that is related to the
Parent Corporation has a present plan or intention to purchase any Parent Common
Stock. For purposes of this representation letter, two corporations will be
treated as related to one another if immediately prior to or immediately after
the Merger (a) the corporations are members of the same affiliated group (within
the meaning of Section 1504 of the Internal Revenue Code of 1986, as amended
(the "Code"), but determined without regard to Section 1504(b) of the Code) or
(b) one corporation owns 50 percent or more of the total combined voting power
of all classes of stock of the other corporation that are entitled to vote or 50
percent or more of the total value of shares of all classes of stock of the
other corporation (applying the attribution rules of Section 318 of the Code, as
modified pursuant to Section 304(c)(3)(B) of the Code).
5. The Parent Corporation has no present plan or intention to make
any distributions after the Merger to holders of Parent Common Stock (other than
regular, normal dividends made in the ordinary course of business).
6. The Parent Corporation has no present plan or intention to cause
distributions with respect to the Company Common Stock (other than regular,
normal dividends made in the ordinary course of business.)
7. Neither the Parent Corporation nor the Acquisition Corporation
(nor any other subsidiary of the Parent Corporation) has acquired, or, except as
a result of the Merger, will acquire, or has owned in the past five years, any
Company Common Stock.
X-0-0
00
0. Prior to the Merger, the Parent Corporation will own all the
capital stock of the Acquisition Corporation and will be in control of
Acquisition Corporation within the meaning of Section 368(c) of the Code. The
Parent Corporation has no present plan or intention to cause the Company to
issue additional shares of its stock that would result in the Parent Corporation
owning less than all the capital stock of the Company after the Merger.
9. The Parent Corporation has no present plan or intention, following
the Merger, to liquidate the Company, to merge the Company with and into another
corporation, to sell or otherwise dispose of any of the stock of the Company, to
cause the Company to distribute to the Parent Corporation or any of its
subsidiaries any assets of the Company or the proceeds of any borrowings
incurred by the Company, or to cause the Company to sell or otherwise dispose of
any of the assets held by the Company at the time of the Merger, except for
dispositions of such assets in the ordinary course of business and transfers
described in Section 368(a)(2)(C) of the Code or Treasury Regulations Section
1.368-1(d).
10. Immediately following the Merger, the Company will hold (a) at
least 90 percent of the fair market value of the net assets and at least 70
percent of the fair market value of the gross assets that were held by the
Company immediately prior to the Merger and (b) at least 90 percent of the fair
market value of the net assets and at least 70 percent of the fair market value
of the gross assets that were held by the Acquisition Corporation immediately
prior to the Merger. For purposes of this representation, amounts paid to
stockholders who receive cash or other property (including cash in lieu of
fractional shares of Parent Common Stock) in connection with the Merger, assets
of the Company used to pay its reorganization expenses and all redemptions and
distributions made by the Company (other than regular, normal dividends made in
the ordinary course of business) immediately preceding, or in contemplation of,
the Merger will be included as assets held by the Company immediately prior to
the Merger.
11. The Parent Corporation, the Acquisition Corporation, the Company
and holders of Company Common Stock will each pay their respective expenses, if
any, incurred in connection with the Merger.
12. Following the Merger, the Parent Corporation will cause the
Company to continue its "historic business" or to use a significant portion of
its "historic business assets" in a business (as such terms are defined in
Treasury Regulations Section 1.368-1(d)).
13. Neither the Parent Corporation nor the Acquisition Corporation is
an investment company as defined in Section 368(a)(2)(F)(iii) and (iv) of the
Code.
14. Neither the Parent Corporation nor the Acquisition Corporation
will take any position on any federal, state or local income or franchise tax
return, or take any other tax reporting position, that is inconsistent with the
treatment of the Merger as a reorganization within the meaning of Section 368(a)
of the Code, unless otherwise required by a "determination" (as defined in
Section
B-2-3
71
1313(a)(1) of the Code) or by applicable state or local tax law (and then only
to the extent required by such applicable state or local tax law).
15. None of the compensation received by any stockholder-employee of
the Company in respect of periods after the Effective Time represents separate
consideration for, or is allocable to, any of their Company Common Stock. None
of the Parent Common Stock that will be received by any stockholder-employee in
the Merger represents separately bargained for consideration or is allocable to
any employment agreement or arrangement. The compensation paid to any
stockholder-employees will be for services actually rendered and will be
commensurate with amounts paid to third parties.
16. There is no intercorporate indebtedness existing between The
Parent Corporation (or any of its subsidiaries, including the Acquisition
Corporation) and the Company (or any of its subsidiaries) that was issued or
acquired, or will be settled, at a discount.
17. Neither the Parent Corporation nor the Acquisition Corporation is
under the jurisdiction of a court in a Title 11 or similar case within the
meaning of Section 368(a)(3)(A) of the Code.
18. Neither the Parent Corporation nor the Acquisition Corporation
(nor any other subsidiary of the Parent Corporation) has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code and subject to Section 355(e)
of the Code (a) in the two years prior to the date of the Merger Agreement or
(b) in a distribution which could otherwise constitute part of a "plan" or
"series of related transactions" (within the meaning of Section 355(e) of the
Code) in conjunction with the Merger.
19. In connection with the Merger, Company Common Stock will be
converted solely into Parent Common Stock (except for cash paid in lieu of
fractional shares of Parent Common Stock). For purposes of this representation,
Company Common Stock redeemed for cash or other property furnished directly or
indirectly by the Parent Corporation will be considered as acquired by the
Parent Corporation for other than Parent Common Stock. Further, no liabilities
of the Company or any holders of Company Common Stock will be assumed by the
Parent Corporation, nor will any of the Company Common Stock acquired by the
Parent Corporation in connection with the Merger be subject to any liabilities.
20. The Merger Agreement, the Registration Statement and the other
documents described in the Registration Statement all as amended through the
date hereof represent the entire understanding of the Parent Corporation and the
Acquisition Corporation with respect to the Merger.
21. The Acquisition Corporation is a corporation newly formed for the
purpose of participating in the Merger and at no time prior to the Merger has
had assets or liabilities (other than nominal assets contributed upon the
formation of the Acquisition Corporation, which assets are
B-2-4
72
not subject to any liabilities and will be held by Company as the surviving
corporation following the Merger) or business operations.
22. The Merger is being undertaken for purposes of enhancing the
business of the Parent Corporation and for other good and valid business
purposes of the Parent Corporation.
23. The undersigned is authorized to make all the representations set
forth herein on behalf of the Parent Corporation and the Acquisition
Corporation.
The undersigned acknowledges that (a) the opinions to be delivered
pursuant to Sections 7.2(d) and 7.3(d) of the Merger Agreement will be based on
the accuracy of the representations set forth herein and on the accuracy of the
representations and warranties and the satisfaction of the covenants and
obligations contained in the Merger Agreement and the various other documents
related thereto and (b) such opinions will be subject to certain limitations and
qualifications including that it may not be relied upon if any such
representations or warranties are not accurate or if any such covenants or
obligations are not satisfied in all material respects.
The undersigned acknowledges that such opinions will not address any
tax consequences of the Merger or any action taken in connection therewith
except as expressly set forth in such opinions.
Very truly yours,
GENERAL DYNAMICS CORPORATION
By
-------------------------
[Name and Title]
B-2-5
