SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OCTOBER 14, 1996
(Date of earliest event reported)
FLIGHTSAFETY INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 1-6222 11-1671001
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
MARINE AIR TERMINAL, LAGUARDIA AIRPORT
FLUSHING, NEW YORK 11371
(Address of principal executive offices, including zip code)
(718) 565-4100
(Registrant's telephone number, including area code)
Item 5. Other Events
On October 14, 1996, FlightSafety
International, Inc. ("FlightSafety"), Berkshire Hathaway
Inc. ("Berkshire") and NY Acquisition Sub Inc., a wholly
owned subsidiary of Berkshire, executed an Agreement and
Plan of Merger, dated as of October 14, 1996 (the "Merger
Agreement"), pursuant to which FlightSafety will be
acquired by Berkshire through a merger into NY
Acquisition Sub Inc. The Merger Agreement provides that
FlightSafety shareholders can elect to receive for each
of their shares of FlightSafety either $50 in cash or $48
in Class A or Class B Common Stock of Berkshire for a
total value of approximately $1.5 billion, subject to a
limitation that the amount of cash to be issued in the
merger will not exceed 58% of the total value of the
consideration to be received in the merger.
Consummation of the merger is subject to the
approval of two-thirds of the outstanding shares of
FlightSafety and certain other customary conditions. It
is anticipated that the merger will close by the end of
1996 or early 1997.
The foregoing description of the Berkshire
acquisition of FlightSafety does not purport to be
complete and is qualified in its entirety by reference to
the Merger Agreement, a copy of which is attached as
Exhibit 1 hereto and is incorporated by reference herein
in its entirety.
Item 7. Exhibits
The following exhibits are filed herewith:
Exhibit 1 - Agreement and Plan of Merger, dated as
of October 14, 1996, among
FlightSafety International, Inc.,
Berkshire Hathaway Inc. and NY Acqui-
sition Sub Inc.
Exhibit 2 - Joint Press Release of FlightSafety
International, Inc. and Berkshire
Hathaway Inc. issued on October 15,
1996 announcing the execution of the
Agreement and Plan of Merger.
Exhibit 3 - Letter, dated as of October 14, 1996,
among Mr. Albert L. Ueltschi,
Berkshire Hathaway Inc. and NY Acqui-
sition Sub Inc.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
FLIGHTSAFETY INTERNATIONAL, INC.
BY: /s/ Kenneth W. Motschwiller
Name: Kenneth W. Motschwiller
Title: Vice President - Treasurer
Date: October 16, 1996
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
1 Agreement and Plan of Merger,
dated as of October 14, 1996,
among FlightSafety
International, Inc., Berkshire
Hathaway Inc. and NY Acquisition
Sub Inc.
2 Joint Press Release of
FlightSafety International, Inc.
and Berkshire Hathaway Inc.
issued on October 15, 1996.
3 Letter, dated as of October 14,
1996, among Mr. Albert L.
Ueltschi, Berkshire Hathaway
Inc. and NY Acquisition Sub Inc.
Exhibit 1
AGREEMENT AND PLAN OF MERGER
Dated as of October 14, 1996
Among
BERKSHIRE HATHAWAY INC.
NY ACQUISITION SUB INC.
AND
FLIGHTSAFETY INTERNATIONAL INC.
TABLE OF CONTENTS
ARTICLE 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . 2
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time of the Merger . . . . . . . . . . . . 2
1.4 Effects of the Merger . . . . . . . . . . . . . . . . 2
1.5 Certificate of Incorporation; Bylaws . . . . . . . . 2
1.6 Directors . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Officers . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS . . . . . . . . . . . . . . 3
2.1 Effect on Capital Stock . . . . . . . . . . . . . . . 3
(a) Common Stock of Sub . . . . . . . . . . . . . 3
(b) Cancellation of Treasury Stock and Parent-
Owned Company Common Stock . . . . . . . . . 3
(c) Conversion of Company Common Stock . . . . . 3
(d) Shares of Dissenting Stockholders . . . . . . 4
(e) Cancellation and Retirement of Company Com-
mon Stock . . . . . . . . . . . . . . . . . . 4
2.2 Company Common Stock Elections . . . . . . . . . . . 4
2.3 Issuance of Stock Consideration and Payment of Cash
Election Price . . . . . . . . . . . . . . . . . . . 6
2.4 Stock Plans . . . . . . . . . . . . . . . . . . . . . 8
2.5 Exchange of Certificates . . . . . . . . . . . . . . 9
(a) Exchange Agent . . . . . . . . . . . . . . . 9
(b) Exchange Procedures . . . . . . . . . . . . . 9
(c) Distributions with Respect to Unexchanged
Shares . . . . . . . . . . . . . . . . . . 10
(d) No Further Ownership Rights in Company Com-
mon Stock . . . . . . . . . . . . . . . . . 10
(e) No Fractional Shares . . . . . . . . . . . 10
(f) Termination of Exchange Fund . . . . . . . 11
(g) No Liability . . . . . . . . . . . . . . . 11
(h) Investment of Exchange Fund . . . . . . . . 11
ARTICLE 3 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 12
3.1 Representations and Warranties of the Company . . . 12
(a) Organization, Standing and Corporate Power 12
(b) Subsidiaries . . . . . . . . . . . . . . . 12
(c) Capital Structure . . . . . . . . . . . . . 12
(d) Authority; Noncontravention . . . . . . . . 13
(e) SEC Documents; Undisclosed Liabilities . . 14
(f) Information Supplied . . . . . . . . . . . 15
(g) Absence of Certain Changes or Events . . . 15
(h) Litigation; Labor Matters; Compliance with
Laws . . . . . . . . . . . . . . . . . . . 15
(i) Employee Matters . . . . . . . . . . . . . 16
(j) Tax Returns and Tax Payments . . . . . . . 17
(k) State Antitakeover Laws Not Applicable . . 17
(l) Environmental Matters . . . . . . . . . . . 18
(m) Properties . . . . . . . . . . . . . . . . 18
(n) Brokers . . . . . . . . . . . . . . . . . . 18
(o) Opinion of Financial Advisor . . . . . . . 19
(p) Board Recommendation . . . . . . . . . . . 19
(q) Required Company Vote . . . . . . . . . . . 19
3.2 Representations and Warranties of Parent . . . . . 19
(a) Organization, Standing and Corporate Power 19
(b) Subsidiaries . . . . . . . . . . . . . . . 19
(c) Capital Structure . . . . . . . . . . . . . 20
(d) Authority; Noncontravention . . . . . . . . 20
(e) SEC Documents; Undisclosed Liabilities . . 21
(f) Information Supplied . . . . . . . . . . . 22
(g) Absence of Certain Changes or Events . . . 22
(h) Interim Operations of Sub . . . . . . . . . 22
(i) Brokers . . . . . . . . . . . . . . . . . . 22
ARTICLE 4 COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO
MERGER . . . . . . . . . . . . . . . . . . . . . . 23
4.1 Conduct of Business of the Company . . . . . . . . 23
ARTICLE 5 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . 25
5.1 Preparation of Form S-4 and the Proxy Statement;
Stockholder Meetings . . . . . . . . . . . . . . . 25
5.2 Letter of the Company's Accountants . . . . . . . . 26
5.3 Parent Access to Information . . . . . . . . . . . 26
5.4 Best Efforts . . . . . . . . . . . . . . . . . . . 26
5.5 Employee Benefits . . . . . . . . . . . . . . . . . 27
5.6 Indemnification . . . . . . . . . . . . . . . . . . 27
5.7 Expenses . . . . . . . . . . . . . . . . . . . . . 28
5.8 Public Announcements . . . . . . . . . . . . . . . 29
5.9 Affiliates . . . . . . . . . . . . . . . . . . . . 29
5.10 Stock Exchange Listing . . . . . . . . . . . . . . 29
5.11 Takeover Statutes . . . . . . . . . . . . . . . . . 29
5.12 No Solicitation . . . . . . . . . . . . . . . . . . 29
5.13 Certain Agreements . . . . . . . . . . . . . . . . 30
5.14 Company Access to Information . . . . . . . . . . . 30
ARTICLE 6 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 31
6.1 Conditions to Each Party's Obligation To Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . 31
(a) Company Stockholder Approval . . . . . . . 31
(b) NYSE Listing . . . . . . . . . . . . . . . 31
(c) HSR Act. . . . . . . . . . . . . . . . . . 31
(d) No Injunctions or Restraints . . . . . . . 31
(e) Form S-4 . . . . . . . . . . . . . . . . . 31
6.2 Conditions to Obligation of Parent and Sub . . . . 31
(a) Representations and Warranties . . . . . . 32
(b) Performance of Obligations of the Company . 32
(c) Tax Opinion . . . . . . . . . . . . . . . . 32
(d) Consents, etc . . . . . . . . . . . . . . . 32
(e) Affiliate Letters . . . . . . . . . . . . . 32
(f) Continuity of Interest Agreement . . . . . 32
6.3 Conditions to Obligation of the Company . . . . . . 33
(a) Representations and Warranties . . . . . . 33
(b) Performance of Obligations of Parent and
Sub . . . . . . . . . . . . . . . . . . . . 33
(c) Tax Opinion . . . . . . . . . . . . . . . . 33
ARTICLE 7 TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . 33
7.1 Termination . . . . . . . . . . . . . . . . . . . . 33
7.2 Effect of Termination . . . . . . . . . . . . . . . 34
7.3 Amendment . . . . . . . . . . . . . . . . . . . . . 34
7.4 Extension; Waiver . . . . . . . . . . . . . . . . . 35
ARTICLE 8 GENERAL PROVISIONS . . . . . . . . . . . . . . . . 35
8.1 Nonsurvival of Representations and Warranties . . . 35
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . 35
8.3 Definitions . . . . . . . . . . . . . . . . . . . . 36
8.4 Interpretation . . . . . . . . . . . . . . . . . . 36
8.5 Counterparts . . . . . . . . . . . . . . . . . . . 36
8.6 Entire Agreement; No Third-party Beneficiaries . . 37
8.7 Governing Law . . . . . . . . . . . . . . . . . . . 37
8.8 Assignment . . . . . . . . . . . . . . . . . . . . 37
8.9 Enforcement . . . . . . . . . . . . . . . . . . . . 37
8.10 Severability . . . . . . . . . . . . . . . . . . . 37
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is
entered into as of October 14, 1996, by and among Berkshire
Hathaway Inc., a Delaware corporation ("Parent"), NY Acquisition
Sub Inc., a New York corporation and a direct wholly owned
subsidiary of Parent ("Sub"), and FlightSafety International
Inc., a New York corporation formed under the name Flight Safety,
Inc. (the "Company").
RECITALS
WHEREAS, the Boards of Directors of Parent and the
Company have approved, and deem it advisable and in the best
interests of their respective companies and stockholders to
consummate, a merger of the Company with and into Sub (the
"Merger"), with Sub as the surviving corporation in the Merger,
upon the terms and subject to the conditions set forth in this
Agreement, pursuant to which (a) the shares of Common Stock, $.10
par value per share, of the Company ("Company Common Stock")
issued and outstanding immediately prior to the Effective Time
(as defined in Section 1.3) other than (i) shares of Company
Common Stock owned, directly or indirectly, by the Company or any
subsidiary (as defined in Section 8.3) of the Company or by
Parent, Sub or any other subsidiary of Parent and (ii) Dissenting
Shares (as defined in Section 2.1(d)), will be converted into the
right to receive, at the elections of the holders of Company
Common Stock, subject to the terms hereof, shares of Class A
Common Stock, $5.00 par value per share, of Parent ("Class A
Stock"), or shares of Class B Common Stock, $.1667 par value per
share, of Parent ("Class B Stock," and together with Class A
Stock, "Parent Stock"), or cash;
WHEREAS, the Merger and this Agreement require the vote
of two-thirds of the outstanding shares of the Company Common
Stock entitled to vote thereon for the approval thereof (the
"Company Stockholder Approval"); and
WHEREAS, for United States Federal income tax purposes,
it is intended that the Merger shall qualify as a reorganization
under the provisions of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code") and this Agreement is intended
to be and is adopted as a plan of reorganization within the
meaning of Section 368 of the Code.
NOW, THEREFORE, in consideration of the representa-
tions, warranties, covenants and agreements contained in this
Agreement, the parties agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the condi-
tions set forth in this Agreement, and in accordance with the New
York Business Corporation Law (the "NYBCL"), the Company shall be
merged with and into Sub at the Effective Time. Upon the Effec-
tive Time, the separate existence of the Company shall cease, and
Sub shall continue as the surviving corporation (the "Surviving
Corporation") having the name FlightSafety International Inc..
1.2 Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have
been abandoned pursuant to Section 7.1, and subject to the
satisfaction or waiver of the conditions set forth in Article 6,
the closing of the Merger (the "Closing") will take place at
10:00 a.m. Eastern time on the second business day after satis-
faction of the conditions set forth in Section 6.1 (or, if not
satisfied or waived at that time, as soon as practicable thereaf-
ter following satisfaction or waiver of the conditions set forth
in Sections 6.2 and 6.3) (the "Closing Date"), at the offices of
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York,
New York, unless another date, time or place is agreed to in
writing by the parties hereto.
1.3 Effective Time of the Merger. On the Closing Date,
the parties shall file a certificate of merger or other appropri-
ate documents (in any such case, the "Certificate of Merger")
executed in accordance with the relevant provisions of the NYBCL
and shall make all other filings or recordings required under the
NYBCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Department of State
of the State of New York, or at such other time as is permissible
in accordance with the NYBCL and as Parent and the Company shall
agree should be specified in the Certificate of Merger (the time
the Merger becomes effective being the "Effective Time").
1.4 Effects of the Merger. The Merger shall have the
effects set forth in the NYBCL.
1.5 Certificate of Incorporation; Bylaws.
(a) The Certificate of Incorporation of Sub as in
effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applica-
ble law; provided that it shall be amended by virtue of the
Merger to change the name of the Surviving Corporation to the
name stated in Section 1.1.
(b) The Bylaws of Sub as in effect at the Effective
Time shall be the Bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applica-
ble law.
1.6 Directors. The directors of Sub at the Effective Time
shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
1.7 Officers. The officers of the Company at the Effec-
tive Time shall be the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their
respective successors are duly appointed and qualified, as the
case may be.
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the
holder of any shares of Company Common Stock or any shares of
capital stock of Sub:
(a) Common Stock of Sub. Each share of common stock
of Sub issued and outstanding immediately prior to the Effective
Time shall remain outstanding as a share of the Surviving Corpo-
ration and shall be the issued and outstanding capital stock of
the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned
Company Common Stock. Each share of the Company Common Stock
that is owned by the Company or by any subsidiary of the Company,
and each share of Company Common Stock that is owned by Parent,
Sub or any other subsidiary of Parent shall automatically be
cancelled and retired and shall cease to exist, and no cash,
Parent Stock or other consideration shall be delivered or deliv-
erable in exchange therefor.
(c) Conversion of Company Common Stock. Except as
otherwise provided herein and subject to Sections 2.3 and 2.5,
each issued and outstanding share of Company Common Stock shall
be converted into the following (the consideration described in
(i), (ii), and (iii) below being the "Merger Consideration" and
the consideration described in (ii) and (iii) below being the
"Stock Consideration"):
(i) for each such share of Company Common Stock
with respect to which an election to receive cash has been
effectively made and not revoked pursuant to Sections
2.2(c), (d) and (e) ("Cash Electing Shares"), the right to
receive in cash from Parent an amount equal to $50 (the
"Cash Election Price"); or
(ii) for each share of Company Common Stock with
respect to which an election to receive Class A Stock has
been effectively made and not revoked pursuant to Sections
2.2(c), (d) and (e) ("Class A Electing Shares"), the right
to receive from Parent the portion of a fully paid and
nonassessable share of Class A Stock determined by dividing
$48.00 by the Average Class A Stock Price (as defined below)
and rounding to nine decimal places (the "Class A Exchange
Ratio"); or
(iii) for each such share of Company Common Stock
other than Cash Electing Shares and Class A Electing Shares,
the right to receive from Parent the portion of a fully paid
and nonassessable share of Class B Stock determined by
dividing $48.00 by the quotient of the Average Class A Stock
Price divided by 30 and rounding to nine decimal places (the
"Class B Exchange Ratio").
The "Average Class A Stock Price" means the average of the high
and low trading prices of the Class A Stock on the New York Stock
Exchange ("NYSE") Composite Tape for each of the five consecutive
trading days ending on the trading day which is the last business
day prior to the Stockholders Meeting (as defined in Section
5.1(b)).
(d) Shares of Dissenting Stockholders. Notwithstand-
ing anything in this Agreement to the contrary, any issued and
outstanding shares of Company Common Stock held by a person (a
"Dissenting Stockholder") who duly demands appraisal of his
shares of Company Common Stock pursuant to Section 623 of the
NYBCL and complies with all the provisions of the NYBCL concern-
ing the right of holders of Company Common Stock to demand
appraisal of their shares in connection with the Merger ("Dis-
senting Shares") shall not be converted as described in Section
2.1(c) but shall become the right to receive such cash consider-
ation as may be determined to be due to such Dissenting Stock-
holder as provided in the NYBCL. If, however, such Dissenting
Stockholder withdraws his demand for appraisal or fails to
perfect or otherwise loses his right of appraisal, in any case
pursuant to the NYBCL, his shares shall be deemed to be converted
as of the Effective Time into the right to receive Class B Stock,
without interest, pursuant to Section 2.1(c)(iii). The Company
shall give Parent (i) prompt notice of any demands for appraisal
of shares received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with
respect to any such demands. The Company shall not, without the
prior written consent of Parent, make any payment with respect
to, or settle, offer to settle or otherwise negotiate, any such
demands.
(e) Cancellation and Retirement of Company Common
Stock. As of the Effective Time, all shares of Company Common
Stock (other than shares referred to in Section 2.1(b)) issued
and outstanding immediately prior to the Effective Time, shall no
longer be outstanding and shall automatically be cancelled and
retired and shall cease to exist, and each holder of a certifi-
cate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except (subject to
Section 2.1(d)) the right to receive the applicable Merger
Consideration in accordance with Section 2.1(c) and any cash in
lieu of fractional shares of Parent Stock to be issued or paid in
consideration therefor upon surrender of such certificate in
accordance with Section 2.5.
2.2 Company Common Stock Elections.
(a) Subject to Sections 2.3 and 2.5(e), each person
who, on or prior to the Election Date referred to in (c) below,
is a record holder of shares of Company Common Stock (and remains
a record holder of such stock until the Effective Time) will be
entitled, with respect to all or any portion of his shares, to
make an unconditional election (a "Cash Election" or a "Class A
Election," as the case may be) on or prior to such Election Date
to receive the Cash Election Price or the Class A Exchange Ratio,
on the basis hereinafter set forth.
(b) Prior to the mailing of the Proxy Statement (as
defined in Section 3.1(d)), Parent shall appoint a bank or trust
company designated by Parent and reasonably satisfactory to the
Company to act as exchange agent (the "Exchange Agent") for the
payment of the Merger Consideration.
(c) Parent shall prepare and mail a form of election
(the "Form of Election") with the Proxy Statement to the record
holders of Company Common Stock as of the record date for the
Stockholders Meeting (as defined in Section 5.1(b)). The Form of
Election shall be used by each record holder of shares of Company
Common Stock who wishes to elect to receive the Cash Election
Price or the Class A Exchange Ratio for any or all shares of
Company Common Stock held by such holder. On such Form of
Election, such a holder may indicate his election. The Company
will use its best efforts to make the Form of Election and the
Proxy Statement available to all persons who become holders of
Company Common Stock during the period between such record date
and the Election Date referred to below. Any such holder's
election to receive the Cash Election Price or the Class A
Exchange Ratio shall have been properly made only if the Exchange
Agent shall have received at its designated office, by 5:00 p.m.,
New York City time on the last business day (the "Election Date")
prior to the date of the Stockholders Meeting, a Form of Election
properly completed and signed and accompanied by certificates for
the shares of Company Common Stock to which such Form of Election
relates, duly endorsed in blank or otherwise in form acceptable
for transfer on the books of the Company (or by an appropriate
guarantee of delivery of such certificates as set forth in such
Form of Election from a firm which is a member of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States, provided
such certificates are in fact delivered to the Exchange Agent
within five NYSE trading days after the date of execution of such
guarantee of delivery).
(d) Any Form of Election may be revoked only by duly
executed written notice received by the Exchange Agent prior to
5:00 p.m., New York City time on the Election Date. In addition,
all Forms of Election shall automatically be revoked if the
Exchange Agent is notified in writing by Parent and the Company
that the Merger has been abandoned. If a Form of Election is
revoked, the shares of Company Common Stock to which such Form of
Election relates shall be treated as shares as to which no
election has been made.
(e) The determination of the Exchange Agent shall be
binding as to whether or not elections to receive the Cash
Election Price or the Class A Exchange Ratio have been properly
made or revoked pursuant to this Section 2.2 with respect to
shares of Company Common Stock, and as to the time when elections
and revocations were received by it. If the Exchange Agent
determines that any election to receive the Cash Election Price
or the Class A Exchange Ratio was not properly made with respect
to shares of Company Common Stock, such shares shall be treated
by the Exchange Agent as shares which were not Cash Electing
Shares or Class A Electing Shares at the Effective Time, and such
shares shall be exchanged in the Merger for shares of Class B
Stock pursuant to Section 2.1(c)(iii). The Exchange Agent shall
also make all computations contemplated by Section 2.3, and any
such computation shall be conclusive and binding on the holders
of shares of Company Common Stock. Parent and the Company shall
make such rules as are consistent with this Section 2.2 and
Section 2.3 for the implementation of the elections and computa-
tions provided for herein and therein as shall be necessary or
desirable fully to effect such elections and computations.
2.3 Issuance of Stock Consideration and Payment of Cash
Election Price. The manner in which each share of Company Common
Stock (other than shares of Company Common Stock to be cancelled
as set forth in Section 2.1(b) and Dissenting Shares) shall be
converted as of the Effective Time into the right to receive the
Stock Consideration or the Cash Election Price shall be as set
forth in this Section 2.3. All references to "outstanding shares
of Company Common Stock" in this Section 2.3 shall mean all
shares of Company Common Stock outstanding immediately prior to
the Effective Time.
(a) In the event that, between the date of this
Agreement and the Effective Time, the issued and outstanding
shares of Class A Stock or Class B Stock, as the case may be,
shall have been changed into a different number or class of
shares as a result of a stock split, reverse stock split, stock
dividend, spin-off, extraordinary dividend, recapitalization,
reclassification or other similar transaction with a record date
within such period, the Merger Consideration shall be appropri-
ately adjusted.
(b) As is more fully set forth below, the Total Cash
Consideration (as defined below) in the Merger pursuant to this
Agreement shall not be more than 58 percent of the sum of (i) the
Total Cash Consideration, and (ii) the Total Class A Merger
Consideration, and (iii) the Total Class B Merger Consideration;
such amount is referred to herein as the "Cash Limitation".
"Total Class A Merger Consideration" means the product of (i) the
Class A Exchange Ratio and (ii) the number of shares of Company
Common Stock converted into Class A Stock, after the application,
if and to the extent necessary, of Section 2.5(e) and (iii) the
average of the high and low trading prices of the Class A Stock
on the NYSE Composite Tape on the date on which the Effective
Time occurs. "Total Class B Merger Consideration" means the
product of (i) the Class B Exchange Ratio and (ii) the number of
shares of Company Common Stock converted into Class B Stock,
after the application, if and to the extent necessary, of Sec-
tions 2.3(e) and 2.5(e), and (iii) the average of the high and
low trading prices of the Class B Stock on the NYSE Composite
Tape on the date on which the Effective Time occurs. "Total Cash
Consideration" means the sum (after the application, if and to
the extent necessary, of Sections 2.3(e) and 2.5(e)) of (i) cash
paid in connection with Cash Elections, (ii) cash paid in lieu of
fractional shares, and (iii) cash paid for Dissenting Shares.
For this purpose, cash paid for Dissenting Shares shall be
computed as if holders of Dissenting Shares had made Cash Elec-
tions with respect to all of their Dissenting Shares.
(c) Each share of Company Common Stock that is a
Class A Electing Share shall be converted into the right to
receive Class A Stock pursuant to Section 2.1(c)(ii) and each
share of Company Common Stock that is neither a Class A Electing
Share nor a Cash Electing Share (a "Non-Electing Class B Share")
shall be converted into the right to receive Class B Stock
pursuant to Section 2.1(c)(iii).
(d) If the Total Cash Consideration is equal to or
less than the Cash Limitation, each share of Company Common Stock
that is a Cash Electing Share shall be converted into the right
to receive the Cash Election Price pursuant to Section 2.1(c)(i).
(e) If the Total Cash Consideration is more than the
Cash Limitation, the number of Cash Electing Shares shall be
reduced, and the following shareholders of the Company who have
made a Cash Election (a "Cash Electing Shareholder") shall
instead receive one or more shares of Class B Stock to the extent
and in the order described below until the Total Cash Consider-
ation is equal to or less than the Cash Limitation:
(i) Each Cash Electing Shareholder who holds a
sufficient number of shares of Company Common Stock covered
by a Cash Election to receive as part of the Merger Consid-
eration at least one whole share of Class B Stock pursuant
to Section 2.1(c)(iii) if such shares are treated as Non-
Electing Class B Shares, shall receive such one whole share
of Class B Stock for such shares of Company Common Stock, at
the Class B Exchange Ratio pursuant to Section 2.1(c)(iii),
in lieu of receiving the Cash Election Price for such shares
pursuant to Section 2.1(c)(i);
(ii) If the application of Section 2.3(e)(i) is
not sufficient to reduce the Total Cash Consideration to an
amount equal to or less than the Cash Limitation, then, in
addition to the application of Section 2.3(e)(i), each Cash
Electing Shareholder who holds a sufficient number of shares
of Company Common Stock covered by a Cash Election to re-
ceive as part of the Merger Consideration at least two whole
shares of Class B Stock pursuant to Section 2.1(c)(iii) if
such shares are treated as Non-Electing Class B Shares,
shall receive such two whole shares of Class B Stock for
such shares of Company Common Stock, at the Class B Exchange
Ratio pursuant to Section 2.1(c)(iii), in lieu of receiving
the Cash Election Price for such shares pursuant to Section
2.1(c)(i); and
(iii) If the application of Section 2.3(e)(ii) is
not sufficient to reduce the Total Cash Consideration to an
amount equal to or less than the Cash Limitation, under the
principles of Section 2.3(e)(i) and (ii), the Cash Electing
Shares shall continue to be reduced, and each Cash Electing
Shareholder who holds a sufficient number of shares of
Company Common Stock covered by a Cash Election to receive
as part of the Merger Consideration at least three whole
shares and, to the extent necessary, greater than three
whole shares, of Class B Stock pursuant to Section
2.1(c)(iii) if such shares are treated as Non-Electing Class
B Shares, shall receive such three or more whole shares of
Class B Stock for such shares of Company Common Stock, at
the Class B Exchange Ratio pursuant to Section 2.1(c)(iii),
in lieu of receiving the Cash Election Price for such shares
pursuant to Section 2.1(c)(i), until the Total Cash Consid-
eration is equal to or less than the Cash Limitation.
(f) If the Exchange Agent shall determine that any
Cash Election was not effectively made or was revoked, the shares
of Company Common Stock covered by such Cash Election shall, for
purposes hereof, be deemed to be Non-Electing Class B Shares.
(g) If, due to the existence of Dissenting Shares,
the amount of cash paid in cancellation of Company Stock Options
(as defined in Section 2.4(a)), or any other uncertainty in the
calculation of the Cash Limitation, it reasonably appears to
Parent or Company that the Merger may potentially fail to satisfy
continuity of interest requirements under applicable principles
relating to reorganizations under Section 368(a) of the Code, the
number of Cash Electing Shares shall be reduced, and Cash Elect-
ing Shareholders shall instead receive one or more shares of
Class B Stock in the order described in Section 2.3(e), to the
extent necessary to enable the Merger to satisfy such require-
ments.
2.4 Stock Plans. Prior to the mailing of the Proxy
Statement, the Board of Directors of Parent and the Board of
Directors of the Company (or, if appropriate, any committee
administering the Stock Plans (as defined below)) shall adopt
such resolutions or take such other actions as may be required to
effect the following:
(a) Adjust the terms of all outstanding employee
stock options to purchase shares of Company Common Stock ("Compa-
ny Stock Options") granted under any of the Company's 1979 Non-
Qualified Stock Option Plan, as amended, 1982 Incentive Stock
Option Plan, as amended, and 1992 Stock Option Plan (collective-
ly, the "Option Plans"), to provide that, at the Effective Time,
each Company Stock Option outstanding immediately prior to the
Effective Time shall (except to the extent that Parent and the
holder of a Company Stock Option otherwise agree in writing prior
to the Effective Time): (i) if such Company Stock Option is
vested before the Merger and exercisable and has an exercise
price of less than $50, and the holder of such Company Stock
Option shall have elected by written notice to Parent prior to
the date 15 business days prior to the Effective Time to receive
the payment contemplated by this clause (i), be cancelled in
exchange for a payment from the Surviving Corporation (subject to
any applicable withholding taxes) equal to the product of (1) the
total number of shares of Company Common Stock subject to such
Company Stock Option and (2) the excess of $50 over the exercise
price per share of Company Common Stock subject to such Company
Stock Option, payable in cash immediately following the Effective
Time; provided, however, that, at the request of any person
subject to Section 16(a) of the Securities Exchange Act of 1934,
as amended ("Exchange Act"), any such amount to be paid shall be
paid as soon as practicable after the first date payment can be
made without liability for such person under Section 16(b) of the
Exchange Act; or (ii) with respect to any Company Stock Option
not cancelled pursuant to clause (i) above, be deemed to consti-
tute an option to acquire, on the same terms and conditions as
were applicable under such Company Stock Option, the number of
shares of Class B Stock equal to the product of (1) the number of
shares of Company Common Stock issuable upon exercise of such
Option and (2) the Class B Exchange Ratio, provided that any
fractional shares of Class B Stock resulting from such multipli-
cation shall be rounded up or down to the nearest whole share, at
a price per share equal to (1) the exercise price for the shares
of Company Common Stock otherwise purchasable pursuant to such
Company Stock Option divided by (2) the Class B Exchange Ratio,
provided that such exercise price shall be rounded up or down to
the nearest cent.
(b) Adjust the terms of the Company's 1984 Restricted
Stock Compensation Plan, as amended (the "Restricted Stock
Plan"), which (or a plan substantially identical thereto) the
Surviving Corporation shall adopt, to provide (i) that, at the
Effective Time, the Merger Consideration into which each share of
Company Common Stock subject at such time to the Restricted Stock
Plan is converted shall thereafter be free of the requirement
under the Restricted Stock Plan that such shares be held in
escrow for the periods set forth therein, and (ii) that, after
the Effective Time, no further grants of Company Common Stock or
any other interest in the capital stock of the Company shall be
made under the Restricted Stock Plan.
(c) Except as provided herein or as otherwise agreed
to in writing by the parties, the Option Plans, the Restricted
Stock Plan, the Company's Employee Stock Purchase Plan, as
amended (the "Stock Purchase Plan") and the Nonemployee Directors
Stock Plan, and any other plan, program or arrangement providing
for the issuance or grant of any interest in respect of the
capital stock of the Company or any subsidiary (collectively, the
"Stock Plans") shall terminate as of the Effective Time, and the
Company shall ensure that following the Effective Time no holder
of a Company Stock Option nor any participant in any of the Stock
Plans shall have any right thereunder to acquire equity securi-
ties of the Company or the Surviving Corporation.
2.5 Exchange of Certificates.
(a) Exchange Agent. As soon as reasonably practica-
ble as of or after the Effective Time of the Merger, Parent shall
deposit with the Exchange Agent, for the benefit of the holders
of shares of Company Common Stock, for exchange in accordance
with this Article 2, the Merger Consideration.
(b) Exchange Procedures. As soon as practicable
after the Effective Time of the Merger, the Exchange Agent shall
mail to each holder of an outstanding certificate or certificates
which prior thereto represented shares of Company Common Stock
(i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to such certificate
shall pass, only upon delivery of such certificates to such
Exchange Agent), and (ii) instructions for use in effecting the
surrender of the certificates for the Merger Consideration. Upon
surrender to the Exchange Agent of such certificate for cancella-
tion, together with such letter of transmittal, the holder of
such certificate shall be entitled to a certificate or certifi-
cates representing the number of full shares of Parent Stock and
the amount of cash, if any, into which the aggregate number of
shares of Company Common Stock previously represented by such
certificate or certificates surrendered shall have been converted
pursuant to this Agreement. The Exchange Agent shall accept such
certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly
exchange thereof in accordance with normal exchange practices.
After the Effective Time of the Merger, there shall be no further
transfer on the records of the Company or its transfer agent of
certificates representing shares of Company Common Stock and if
such certificates are presented to the Company for transfer, they
shall be cancelled against delivery of certificates for Parent
Stock and cash as hereinabove provided. If any certificate for
such Parent Stock is to be issued in, or if cash is to be remit-
ted to, a name other than that in which the certificate for
Company Common Stock surrendered for exchange is registered, it
shall be a condition of such exchange that the certificate so
surrendered shall be properly endorsed, with signature guaran-
teed, or otherwise in proper form for transfer and that the
person requesting such exchange shall pay to Parent or its
transfer agent any transfer or other taxes required by reason of
the issuance of certificates for such Parent Stock in a name
other than that of the registered holder of the certificate
surrendered, or establish to the satisfaction of Parent or its
transfer agent that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.5(b), each
certificate for shares of Company Common Stock shall be deemed at
any time after the Effective Time of the Merger to represent only
the right to receive upon such surrender the Merger Consider-
ation. No interest will be paid or will accrue on any cash
payable as Merger Consideration or in lieu of any fractional
shares of Parent Stock.
(c) Distributions with Respect to Unexchanged Shares.
No dividends or other distributions with respect to Parent Stock
with a record date after the Effective Time of the Merger shall
be paid to the holder of any unsurrendered certificate for shares
of Company Common Stock with respect to the shares of Parent
Stock represented thereby and no cash payment in lieu of frac-
tional shares shall be paid to any such holder pursuant to
Section 2.5(e) until the surrender of such certificate in accor-
dance with this Article 2. Subject to the effect of applicable
laws, following surrender of any such certificate, there shall be
paid to the holder of the certificate representing whole shares
of Parent Stock issued in exchange therefor, without interest,
(i) at the time of such surrender the amount of any cash payable
in lieu of a fractional share of Parent Stock to which such
holder is entitled pursuant to Section 2.5(e) and the amount of
dividends or other distributions with a record date after the
Effective Time of the Merger theretofore paid with respect to
such whole shares of Parent Stock, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with
a record date after the Effective Time of the Merger but prior to
such surrender and a payment date subsequent to such surrender
payable with respect to such whole shares of Parent Stock.
(d) No Further Ownership Rights in Company Common
Stock. All shares of Parent Stock issued and cash paid upon the
surrender for exchange of certificates representing shares of
Company Common Stock in accordance with the terms of this Article
2 (including any cash paid pursuant to Section 2.5(e)) shall be
deemed to have been issued (and paid) in full satisfaction of all
rights pertaining to the shares of Company Common Stock thereto-
fore represented by such certificates.
(e) No Fractional Shares.
(i) No certificates or scrip representing
fractional shares of Parent Stock shall be issued upon the
surrender for exchange of certificates representing shares
of Company Common Stock, and such fractional share interests
will not entitle the owner thereof to vote or to any rights
of a stockholder of Parent; and
(ii) Notwithstanding any other provision of this
Agreement, (A) each holder of shares of Company Common Stock
exchanged pursuant to the Merger who would have otherwise
been entitled to receive a fraction of a share of Class A
Stock (after taking into account all Class A Electing Shares
delivered by such holder or, as to a holder of record who
holds shares of Company Common Stock as nominee or in a
similar representative capacity, after taking into account
all Class A Electing Shares delivered by such a representa-
tive holder on behalf of a particular beneficial owner)
shall receive, in lieu thereof, the number of shares of
Class B Stock determined by dividing (x) the product of such
fraction and the Average Class A Stock Price by (y) the
quotient of the Average Class A Stock Price divided by 30,
and (B) after application of Section 2.5(e)(ii)(A), each
holder of shares of Company Common Stock exchanged pursuant
to the Merger who would have otherwise been entitled to
receive a fraction of a share of Class B Stock (after taking
into account all shares of Company Common Stock delivered by
such holder, or by such a representative holder on behalf of
a particular beneficial owner, other than Class A Electing
Shares and Cash Electing Shares) shall receive, in lieu
thereof, a cash payment (without interest) equal to the
product of (x) such fraction and (y) the quotient of the
Average Class A Stock Price divided by 30.
(f) Termination of Exchange Fund. Any portion of the
Merger Consideration deposited with the Exchange Agent pursuant
to this Section 2.5 (the "Exchange Fund") which remains undis-
tributed to the holders of the certificates representing shares
of Company Common Stock for nine months after the Effective Time
of the Merger shall be delivered to Parent, upon demand, and any
holders of shares of Company Common Stock who have not thereto-
fore complied with this Article 2 shall thereafter look only to
Parent and only as general creditors thereof for payment of their
claim for cash, Parent Stock, any cash in lieu of fractional
shares of Parent Stock and any dividends or distributions with
respect to Parent Stock to which such holders may be entitled.
(g) No Liability. None of Parent, Sub, the Company
or the Exchange Agent shall be liable to any person in respect of
any shares of Parent Stock (or dividends or distributions with
respect thereto) or cash from the Exchange Fund delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar law. If any certificates representing shares
of Company Common Stock shall not have been surrendered prior to
five years after the Effective Time of the Merger (or immediately
prior to such earlier date on which any cash, shares of Parent
Stock, any cash in lieu of fractional shares of Parent Stock or
any dividends or distributions with respect to Parent Stock in
respect of such certificate would otherwise escheat to or become
the property of any Governmental Entity (as defined in Section
3.1(d)), any such shares, cash dividends or distributions in
respect of such certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously
entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund, as directed
by Parent, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Parent.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Corporate Power. Each
of the Company and each of its Subsidiaries (as defined in
Section 3.1(b)) is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority
to carry on its business as now being conducted. Each of the
Company and each of its Subsidiaries is duly qualified or li-
censed to do business and is in good standing in each jurisdic-
tion in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to
be so qualified or licensed (individually or in the aggregate)
would not have a material adverse effect (as defined in Section
8.3) with respect to the Company. Attached as Section 3.1(a) of
the disclosure schedule ("Disclosure Schedule") delivered to
Parent by the Company at the time of execution of this Agreement
are complete and correct copies of the Certificate of Incorpora-
tion and Bylaws of the Company. The Company has delivered to
Parent complete and correct copies of the certificate or articles
of incorporation (or other organizational documents) and bylaws
of each of its Subsidiaries, in each case as amended to the date
of this Agreement.
(b) Subsidiaries. The only direct or indirect
subsidiaries of the Company (other than subsidiaries of the
Company that would not constitute in the aggregate a "Significant
Subsidiary" within the meaning of Rule 1-02 of Regulation S-X of
the Securities and Exchange Commission (the "SEC")) (the "Subsid-
iaries") and other ownership interests held by the Company in any
other person are those listed in Section 3.1(b) of the Disclosure
Schedule. Except as set forth in Section 3.1(b) of the Disclo-
sure Schedule, all the outstanding shares of capital stock of
each such Subsidiary which is a corporation have been validly
issued and are fully paid and nonassessable and are owned (of
record and beneficially) by the Company, by another Subsidiary
(wholly owned) of the Company or by the Company and another such
Subsidiary (wholly owned), free and clear of all pledges, claims,
liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "Liens"). Except as set
forth in Section 3.1(b) of the Disclosure Schedule, the Company
does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, business
association, joint venture or other entity.
(c) Capital Structure. The authorized capital stock
of the Company consists of 100,000,000 shares of Company Common
Stock. Subject to any Permitted Changes (as defined in Section
4.1(b)) following the date of this Agreement, there are
(i) 30,174,081 shares of Company Common Stock issued and out-
standing, (ii) 118,000 shares of Company Common Stock held in the
treasury of the Company or held by any subsidiary of the Company;
(iii) 791,580 shares of Company Common Stock reserved for issu-
ance upon exercise of authorized but unissued Company Stock
Options pursuant to the Option Plans; (iv) 545,358 shares of
Company Common Stock issuable upon exercise of outstanding
Company Stock Options, (v) 99,510 shares of Company Common Stock
issued and outstanding (and included in the number stated in
clause (i) above) subject to restrictions under the Restricted
Stock Plan, and (vi) an aggregate of 400 shares of Company Common
Stock issuable under the Nonemployee Directors Stock Plan. As of
September 30, 1996, there were $582,000 withheld from the
Company's employees' salaries to purchase shares of Company
Common Stock pursuant to and issuable under the Stock Purchase
Plan. Except as set forth above, no shares of capital stock or
other equity securities of the Company are issued, reserved for
issuance or outstanding. All outstanding shares of capital stock
of the Company are, and all shares which may be issued pursuant
to the Stock Plans will be when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemp-
tive rights. There are no outstanding bonds, debentures, notes
or other indebtedness or other securities of the Company having
the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except as set forth above,
there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of
any kind to which the Company or any of its subsidiaries is a
party or by which any of them is bound obligating the Company or
any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or
other equity or voting securities of the Company or of any of its
subsidiaries or obligating the Company or any of its subsidiaries
to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or
undertaking. Other than the Company Stock Options, (i) there are
no outstanding contractual obligations, commitments, understand-
ings or arrangements of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire or make any payment in
respect of or measured or determined based on the value or market
price of any shares of capital stock of the Company or any of its
subsidiaries and (ii) to the knowledge of the Company, there are
no irrevocable proxies with respect to shares of capital stock of
the Company or any subsidiary of the Company. There are no
agreements or arrangements pursuant to which the Company is or
could be required to register shares of Company Common Stock or
other securities under the Securities Act of 1933, as amended
(the "Securities Act").
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this
Agreement and, subject to the Company Stockholder Approval with
respect to the consummation of the Merger, to consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to the Company Stockholder
Approval. This Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms. Except as disclosed in Section 3.1(d) of the Disclosure
Schedule, the execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or
result in any breach or violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of or "put" right
with respect to any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its subsidiaries
under, (i) the Certificate of Incorporation or Bylaws of the
Company or the comparable charter or organizational documents of
any of its subsidiaries, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to the
Company or any of its subsidiaries or their respective properties
or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule, regulation or
arbitration award applicable to the Company or any of its subsid-
iaries or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, breaches,
violations, defaults, rights, losses or Liens that individually
or in the aggregate could not have a material adverse effect with
respect to the Company or could not prevent, hinder or materially
delay the ability of the Company to consummate the transactions
contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, or
notice to, any Federal, state or local government or any court,
administrative agency or commission or other governmental author-
ity or agency, domestic or foreign (a "Governmental Entity"), is
required by or with respect to the Company or any of its subsid-
iaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for (i) the filing
of a premerger notification and report form by the Company under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (ii) the filing with the SEC of (y) a
proxy statement relating to the Company Stockholder Approval
(such proxy statement as amended or supplemented from time to
time, the "Proxy Statement"), and (z) such reports under the
Exchange Act as may be required in connection with this Agreement
and the transactions contemplated by this Agreement, (iii) the
filing of the Certificate of Merger with the Department of State
of the State of New York, and appropriate documents with the
relevant authorities of other states in which the Company is
qualified to do business and (iv) such other consents, approvals,
orders, authorizations, registrations, declarations, filings or
notices as are set forth in Section 3.1(d) of the Disclosure
Schedule.
(e) SEC Documents; Undisclosed Liabilities. The
Company has filed all required reports, schedules, forms, state-
ments and other documents with the SEC since January 1, 1994,
(collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference there-
in, the "SEC Documents"). As of their respective dates, the SEC
Documents complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents
(including any and all financial statements included therein) as
of such dates contained any untrue statement of a material fact
or omitted to state a 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.
The consolidated financial statements of the Company included in
the SEC Documents (the "SEC Financial Statements") comply as to
form in all material respects with applicable accounting require-
ments and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the periods in-
volved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of the Company
and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments). Since Decem-
ber 31, 1995, neither the Company nor any of its subsidiaries,
has incurred any liabilities or obligations of any nature (wheth-
er accrued, absolute, contingent or otherwise) except (i) as and
to the extent set forth on the audited balance sheet of the
Company and its subsidiaries as of December 31, 1995 (including
the notes thereto), (ii) as incurred in connection with the
transactions contemplated by this Agreement, (iii) as incurred
after December 31, 1995 in the ordinary course of business and
consistent with past practice, (iv) as described in the SEC
Documents filed since December 31, 1995 (the "Recent SEC Docu-
ments"), or (v) as would not, individually or in the aggregate,
have a material adverse effect with respect to the Company.
(f) Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or
incorporation by reference in (i) the registration statement on
Form S-4 to be filed with the SEC by Parent in connection with
the issuance of Parent Stock in the Merger (the "Form S-4") will,
at the time the Form S-4 is filed with the SEC, and at any time
it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, and (ii) the Proxy Statement will, at the date it is
first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not mis-
leading. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder, except that no
representation is made by the Company with respect to statements
made or incorporated by reference therein based on information
supplied by Parent for inclusion or incorporation by reference
therein.
(g) Absence of Certain Changes or Events. Except as
disclosed in the Recent SEC Documents or in Section 3.1(g) of the
Disclosure Schedule, since the date of the most recent audited
financial statements included in such Recent SEC Documents, the
Company has conducted its business only in the ordinary course
consistent with past practice, and there is not and has not been:
(i) any material adverse change with respect to the Company; (ii)
any condition, event or occurrence which, individually or in the
aggregate, could reasonably be expected to have a material
adverse effect or give rise to a material adverse change with
respect to the Company; (iii) any event which, if it had taken
place following the execution of this Agreement, would not have
been permitted by Section 4.1 without the prior consent of
Parent; or (iv) any condition, event or occurrence which would
prevent, hinder or materially delay the ability of the Company to
consummate the transactions contemplated by this Agreement.
(h) Litigation; Labor Matters; Compliance with Laws.
(i) Except as disclosed in the Recent SEC
Documents, there is no suit, action or proceeding or inves-
tigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its
subsidiaries or any basis for any such suit, action, pro-
ceeding or investigation that, individually or in the aggre-
gate, could reasonably be expected to have a material ad-
verse effect with respect to the Company or prevent, hinder
or materially delay the ability of the Company to consummate
the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the
Company or any of its subsidiaries having, or which, insofar
as reasonably could be foreseen by the Company, in the
future could have, any such effect.
(ii) Neither the Company nor any of its subsid-
iaries is a party to, or bound by, any collective bargaining
agreement, contract or other agreement or understanding with
a labor union or labor organization, nor is it or any of its
subsidiaries the subject of any proceeding asserting that it
or any subsidiary has committed an unfair labor practice or
seeking to compel it to bargain with any labor organization
as to wages or conditions of employment nor is there any
strike, work stoppage or other labor dispute involving it or
any of its subsidiaries pending or, to its knowledge,
threatened, any of which could have a material adverse
effect with respect to the Company.
(iii) The conduct of the business of each of the
Company and each of its subsidiaries complies with all
statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees or arbitration awards applicable thereto,
except for violations or failures so to comply, if any,
that, individually or in the aggregate, could not reasonably
be expected to have a material adverse effect with respect
to the Company.
(i) Employee Matters. The Company has delivered or
made available to Parent full and complete copies or descriptions
of each material employment, severance, bonus, profit sharing,
compensation, termination, stock option, stock appreciation
right, restricted stock, phantom stock, performance unit, pen-
sion, retirement, deferred compensation, welfare or other employ-
ee benefit agreement, trust fund or other arrangement and any
union, guild or collective bargaining agreement maintained or
contributed to or required to be contributed to by the Company or
any of its ERISA Affiliates, for the benefit or welfare of any
director, officer, employee or former employee of the Company or
any of its ERISA Affiliates (such plans and arrangements being
collectively the "Company Benefit Plans"). Each of the Company
Benefit Plans is in material compliance with all applicable laws
including ERISA and the Code. The Internal Revenue Service has
determined that each Company Benefit Plan that is intended to be
a qualified plan under Section 401(a) of the Code is so qualified
and the Company is aware of no event occurring after the date of
such determination that would adversely affect such determina-
tion. The liabilities accrued under each such plan are reflected
on the latest balance sheet of the Company included in the Recent
SEC Reports in accordance with generally accepted accounting
principles applied on a consistent basis. No condition exists
that is reasonably likely to subject the Company or any of its
subsidiaries to any direct or indirect liability under Title IV
of ERISA or to a civil penalty under Section 502(j) of ERISA or
liability under Section 4069 of ERISA or 4975, 4976, or 4980B of
the Code or the loss of a federal tax deduction under Section
280G of the Code or other liability with respect to the Company
Benefit Plans that would have a material adverse effect on the
Company and that is not reflected on such balance sheet. No
Company Benefit Plan (other than any Company Benefit Plan that is
a "multiemployer plan" as such term is defined in Section
4001(a)(3) of ERISA) is subject to Title IV of ERISA. There are
no pending, threatened, or anticipated claims (other than routine
claims for benefits or immaterial claims) by, on behalf of or
against any of the Company Benefit Plans or any trusts related
thereto. "ERISA Affiliate" means, with respect to any person,
any trade or business, whether or not incorporated, that together
with such person would be deemed a "single employer" within the
meaning of Section 4001(a)(15) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
(j) Tax Returns and Tax Payments. The Company and
each of its subsidiaries has timely filed (or, as to subsidiar-
ies, the Company has filed on its behalf) all Tax Returns (as
defined below) required to be filed by it, has paid (or, as to
subsidiaries, the Company has paid on its behalf) all Taxes (as
defined below) shown thereon to be due and has provided (or, as
to subsidiaries, the Company has made provision on its behalf of)
adequate reserves in its financial statements for any Taxes that
have not been paid, whether or not shown as being due on any Tax
Returns. Except as set forth in Section 3.1(j) of the Disclosure
Schedule: (i) no material claim for unpaid Taxes has been
asserted by a Tax authority or has become a lien (except for
liens not yet due and payable) against the property of the
Company or any of its subsidiaries or is being asserted against
the Company or any of its subsidiaries, (ii) no audit of any Tax
Return of the Company or any of its subsidiaries is being con-
ducted by a Tax authority, and (iii) no extension of the statute
of limitations on the assessment of any Taxes has been granted by
the Company or any of its subsidiaries and is currently in
effect. Neither the Company nor any of its Subsidiaries is or
has been a member of any consolidated, combined, unitary or
aggregate group for Tax purposes except such a group consisting
only of the Company and its subsidiaries. As used herein,
"Taxes" shall mean all taxes of any kind, including, without
limitation, those on or measured by or referred to as income,
gross receipts, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance,
stamp, occupation, premium, value added, property or windfall
profits taxes, customs, duties or similar fees, assessments or
charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by
any governmental authority, domestic or foreign. As used herein,
"Tax Return" shall mean any return, report or statement required
to be filed with any governmental authority with respect to
Taxes.
(k) State Antitakeover Laws Not Applicable. No state
takeover statute or similar statute or regulation of the State of
New York (and, to the knowledge of the Company after due inquiry,
of any other state or jurisdiction) applies or purports to apply
to this Agreement or the transactions contemplated hereby and no
provision of the Certificate of Incorporation, Bylaws or other
governing instruments of the Company or any of its subsidiaries
or the terms of any rights plan or agreement of the Company
would, directly or indirectly, restrict or impair the ability of
Parent to vote, or otherwise to exercise the rights of a stock-
holder with respect to, securities of the Company and its subsid-
iaries that may be acquired or controlled by Parent or permit any
stockholder to acquire securities of the Company or of Parent or
any of its subsidiaries on a basis not available to Parent in the
event that Parent were to acquire securities of the Company.
(l) Environmental Matters. There are no legal,
administrative, arbitral or other proceedings, claims, actions,
causes of action, private environmental investigations or
remediation activities or governmental investigations of any
nature seeking to impose, or that reasonably could be expected to
result in the imposition, on the Company or any of its subsidiar-
ies of any liability or obligations arising under common law
standards relating to environmental protection, human health or
safety, or under any local, state, federal, national or superna-
tional environmental statute, regulation or ordinance, including
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (collectively, "Environmental
Laws"), pending or, to the knowledge of the Company, threatened,
against the Company or any of its subsidiaries, which liability
or obligation would have or would reasonably be expected to have
a material adverse effect on the Company or any of its subsidiar-
ies. To the knowledge of the Company or any of its subsidiaries,
there is no reasonable basis for any such proceeding, claim,
action or governmental investigation that would impose any
liability or obligation that would have or would reasonably be
expected to have a material adverse effect on the Company or any
of its subsidiaries. To the knowledge of the Company, during or
prior to the period of (i) its or any of its subsidiaries'
ownership or operation of any of their respective current proper-
ties, (ii) its or any of its subsidiaries' participation in the
management of any property, or (iii) its or any of its
subsidiaries' holding of a security interest or other interest in
any property, there was no release or threatened release of
hazardous, toxic, radioactive or dangerous materials or other
materials regulated under Environmental Laws in, on, under or
affecting any such property which would reasonably be expected to
have a material adverse effect on the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries is
subject to any agreement, order, judgment, decree, letter or
memorandum by or with any court, governmental authority, regula-
tory agency or third party imposing any material liability or
obligations pursuant to or under any Environmental Law that would
have or would reasonably be expected to have a material adverse
effect on the Company or any of its subsidiaries.
(m) Properties. Except as disclosed in the Recent
SEC Documents, each of the Company and its subsidiaries (i) has
good, clear and marketable title to all the properties and assets
reflected in the latest audited balance sheet included in such
Recent SEC Documents as being owned by the Company or one of its
subsidiaries or acquired after the date thereof which are,
individually or in the aggregate, material to the Company's
business on a consolidated basis (except properties sold or
otherwise disposed of since the date thereof in the ordinary
course of business), free and clear of (A) all Liens except (1)
statutory liens securing payments not yet due and (2) such
imperfections or irregularities of title or other Liens (other
than real property mortgages or deeds of trust) as do not materi-
ally affect the use of the properties or assets subject thereto
or affected thereby or otherwise materially impair business
operations at such properties, and (B) all real property mortgag-
es and deeds of trust and (ii) is the lessee of all leasehold
estates reflected in the latest audited financial statements
included in such Recent SEC Documents or acquired after the date
thereof which are material to its business on a consolidated
basis and is in possession of the properties purported to be
leased thereunder, and each such lease is valid without default
thereunder by the lessee or, to the Company's knowledge, the
lessor.
(n) Brokers. No broker, investment banker, financial
advisor or other person, other than Merrill Lynch & Co. and
Morgan Lewis Githens & Ahn, Inc., the fees and expenses of each
of which will be paid by the Company (pursuant to fee agreements,
copies of which have been provided to Parent), is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of
the Company.
(o) Opinion of Financial Advisor. The Company has
received the opinion of Merrill Lynch & Co., dated the date of
this Agreement, to the effect that the Merger Consideration to be
received in the Merger by the Company's stockholders is fair to
the holders of the Company Common Stock from a financial point of
view, a signed copy of which opinion has been delivered to
Parent.
(p) Board Recommendation. The Board of Directors of
the Company, at a meeting duly called and held, has by unanimous
vote of those directors present (who constituted 100% of the
directors then in office) (i) determined that this Agreement and
the transactions contemplated hereby, including the Merger, are
fair to and in the best interests of the stockholders of the
Company, and (ii) resolved to recommend that the holders of the
shares of Company Common Stock approve this Agreement and the
transactions contemplated herein, including the Merger.
(q) Required Company Vote. The Company Stockholder
Approval, being the affirmative vote of two-thirds of the out-
standing shares of the Company Common Stock voting separately as
a class, is the only vote of the holders of any class or series
of the Company's securities necessary to approve this Agreement,
the Merger and the other transactions contemplated hereby.
3.2 Representations and Warranties of Parent. Parent
represents and warrants to the Company as follows:
(a) Organization, Standing and Corporate Power. Each
of Parent, Sub and the other Parent Subsidiaries (as defined in
Section 3.2(b)) is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority
to carry on its business as now being conducted. Each of Parent,
Sub and the other Parent Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdic-
tion in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to
be so qualified or licensed (individually or in the aggregate)
would not have a material adverse effect with respect to Parent.
Parent has delivered to the Company complete and correct copies
of its Restated Certificate of Incorporation and Bylaws and the
certificate of incorporation (or other organizational documents)
and bylaws of Sub, in each case as amended to the date hereof.
(b) Subsidiaries. The only direct or indirect
subsidiaries of Parent (other than such subsidiaries that would
not constitute in the aggregate a Significant Subsidiary) are
listed in Section 3.2(b) of the disclosure schedule (the "Parent
Disclosure Schedule") delivered to the Company by Parent at the
time of execution of this Agreement (together with Sub, the
"Parent Subsidiaries"). All the outstanding shares of capital
stock of each such Parent Subsidiary which is a corporation have
been validly issued and are fully paid and nonassessable and,
except as set forth in Section 3.2(b) of the Parent Disclosure
Schedule, are owned (of record and beneficially) by Parent, by
another Parent Subsidiary (wholly owned) or by Parent and another
such Parent Subsidiary (wholly owned), free and clear of all
Liens.
(c) Capital Structure. The authorized capital stock
of Parent consists of 1,500,000 shares of Class A Stock,
50,000,000 shares of Class B Stock, and 1,000,000 shares of
preferred stock, no par value per share ("Parent Preferred
Stock"). Subject to such changes as may occur after Septem-
ber 30, 1996, and subject in the case of clauses (i) and (iii) to
adjustment as a result of conversions of Class A Stock into Class
B Stock, there were, as of September 30, 1996: (i) 1,189,074
shares of Class A Stock, 650,640 shares of Class B Stock, and no
shares of Parent Preferred Stock issued and outstanding;
(ii) 187,796 shares of Class A Stock held by Parent in its
treasury; and (iii) 35,672,220 shares of Class B Stock reserved
for issuance upon conversion of Class A Stock. Except as set
forth above, no shares of capital stock or other equity securi-
ties of Parent are issued, reserved for issuance or outstanding.
All outstanding shares of capital stock of Parent are, and all
shares of Parent Stock which may be issued pursuant to this
Agreement will be, when issued, duly authorized, validly issued,
fully paid and nonassessable and not subject to preemptive
rights. All shares of Parent Stock issued pursuant to this
Agreement will, when so issued, be registered under the Securi-
ties Act for such issuance and registered under the Exchange Act,
be registered or exempt from registration under any applicable
state securities laws, and be listed on the NYSE, subject to
official notice of issuance. There are no outstanding bonds,
debentures, notes or other indebtedness or other securities of
Parent having the right to vote (or convertible into, or ex-
changeable for, securities having the right to vote) on any
matters on which stockholders of Parent may vote. Except as set
forth above or as contemplated by Section 2.4, there are no
outstanding securities, options, warrants, calls, or rights
obligating Parent or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other equity securities of Parent or any of
its subsidiaries or obligating Parent or any of its subsidiaries
to issue, grant, extend or enter into any such security, option,
warrant, call, or right. The authorized capital stock of Sub
consists of 100 shares of common stock, $.01 par value per share,
all of which have been validly issued, are fully paid and nonas-
sessable and are owned directly by Parent, free and clear of any
Lien.
(d) Authority; Noncontravention. Parent and Sub have
all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by
Parent and Sub and the consummation by Parent and Sub of the
transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of
Parent and Sub. No vote or consent of the stockholders of Parent
or Sub, which has not been obtained, is required under applicable
law or rule of the NYSE to approve the Merger, this Agreement or
the transactions contemplated hereby. This Agreement has been
duly executed and delivered by and constitutes a valid and
binding obligation of each of Parent and Sub, enforceable against
such party in accordance with its terms. The execution and
delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with
the provisions of this Agreement will not, conflict with, or
result in any breach or violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of or "put" right
with respect to any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of Parent or any of its subsidiaries under,
(i) the certificate of incorporation or by-laws of Parent or Sub
or the comparable charter or organizational documents of any
other subsidiary of Parent, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable
to Parent, Sub or any other subsidiary of Parent or their respec-
tive properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule,
regulation or arbitration award applicable to Parent, Sub or any
other subsidiary of Parent or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, breaches, violations, defaults, rights, losses or
Liens that individually or in the aggregate could not have a
material adverse effect with respect to Parent or could not
prevent, hinder or materially delay the ability of Parent to
consummate the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any Governmental Entity
is required by or with respect to Parent, Sub or any other
subsidiary of Parent in connection with the execution and deliv-
ery of this Agreement by Parent or Sub or the consummation by
Parent or Sub, as the case may be, of any of the transactions
contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form under the HSR Act, (ii)
the filing with the SEC of (y) the Form S-4 and (z) such reports
under the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby, (iii) the
filing of the Certificate of Merger with the Department of State
of the State of New York and appropriate documents with the
relevant authorities of other states in which the Company is
qualified to do business, and (iv) such other consents, approv-
als, orders, authorizations, registrations, declarations, filings
or notices as may be required under the "takeover" or "blue sky"
laws of various states.
(e) SEC Documents; Undisclosed Liabilities. Parent
has filed all required reports, schedules, forms, statements and
other documents with the SEC since January 1, 1994 (collectively,
and in each case, including all exhibits and schedules thereto
and documents incorporated by reference therein, the "Parent SEC
Documents"). As of their respective dates, the Parent SEC
Documents complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of the Parent
SEC Documents (including any and all financial statements includ-
ed therein) as of such date contained any untrue statement of a
material fact or omitted to state a 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. The consolidated financial statements of
Parent included in the Parent SEC Documents comply as to form in
all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited consoli-
dated quarterly statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present the
consolidated financial position of Parent and its consolidated
subsidiaries as of the dates thereof and the consolidated results
of operations and changes in cash flows for the periods then
ended (subject, in the case of unaudited quarterly statements, to
normal year-end audit adjustments). Since December 31, 1995,
neither Parent nor any of its subsidiaries has incurred any
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) except (i) as and to the
extent set forth on the audited balance sheet of Parent and its
subsidiaries as of December 31, 1995 (including the notes there-
to), (ii) as incurred in connection with the transactions contem-
plated by this Agreement, (iii) as incurred after December 31,
1995 in the ordinary course of business and consistent with past
practice, (iv) as described in the SEC Documents filed since
December 31, 1995 (the "Recent Parent SEC Documents"), or (v) as
would not, individually or in the aggregate, have a material
adverse effect with respect to Parent.
(f) Information Supplied. None of the information
supplied or to be supplied by Parent or Sub for inclusion or
incorporation by reference in (i) the Form S-4 will, at the time
the Form S-4 is filed with the SEC, and at any time it is amended
or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and
(ii) the Proxy Statement will, at the date the Proxy Statement is
first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not mis-
leading. The Form S-4 will comply as to form in all material
respects with the requirements of the Securities Act and the
rules and regulations promulgated thereunder, except that no
representation or warranty is made by Parent or Sub with respect
to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorpora-
tion by reference in the Form S-4.
(g) Absence of Certain Changes or Events. Except as
disclosed in the Recent Parent SEC Documents, since the date of
the most recent financial statements included in the Recent
Parent SEC Documents, Parent has conducted its business only in
the ordinary course consistent with past practice, and there is
not and has not been (i) any material adverse change with respect
to Parent; (ii) any condition, event or occurrence which, indi-
vidually or in the aggregate, could reasonably be expected to
have a material adverse effect or give rise to a material adverse
change with respect to Parent; or (iii) any condition, event or
occurrence which could reasonably be expected to prevent, hinder
or materially delay the ability of Parent to consummate the
transactions contemplated by this Agreement.
(h) Interim Operations of Sub. Sub was formed on
October 11, 1996 solely for the purposes of engaging in the
transactions contemplated hereby, has engaged in no other busi-
ness activities and has conducted its operations only as contem-
plated hereby.
(i) Brokers. No broker, investment banker, financial
advisor or other person, other than Salomon Brothers Inc, the
fees and expenses of which will be paid by Parent, and a certain
Parent shareholder, is entitled to or may be paid any broker's,
finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agree-
ment based upon arrangements made by or on behalf of Parent.
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF
BUSINESS PRIOR TO MERGER
4.1 Conduct of Business of the Company. From the date of
this Agreement to the Effective Time (except as otherwise specif-
ically required by the terms of this Agreement), the Company
shall, and shall cause its subsidiaries to, act and carry on
their respective businesses in the usual, regular and ordinary
course of business consistent with past practice and, to the
extent consistent therewith, use its best efforts to preserve
intact their current business organizations, keep available the
services of their current officers and employees and preserve
their relationships with customers, suppliers, licensors, licens-
ees, advertisers, distributors and others having business deal-
ings with them to the end that their goodwill and ongoing busi-
nesses shall not be impaired in any material respect at the
Effective Time. Without limiting the generality of the forego-
ing, from the date of this Agreement to the Effective Time, the
Company shall not, and shall not permit any of its subsidiaries
to, without the prior consent of the Parent:
(a) (i) declare, set aside or pay any dividends on,
or make any other distributions in respect of, any of its
capital stock, other than dividends and distributions by a
direct or indirect wholly owned subsidiary of the Company to
its parent and the declaration and payment by the Company of
regular quarterly cash dividends in an amount not in excess
of $.16 per share of Company Common Stock, with usual record
and payment dates for such dividends in accordance with the
Company's past dividend practices, (ii) split, combine or
reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or
(iii) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries or
any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities,
except, in the case of clause (iii), for the acquisition of
shares of Company Common Stock from holders of Company Stock
Options in full or partial payment of the exercise price
payable by such holder or tax liability arising in connec-
tion therewith, upon exercise of Company Stock Options
outstanding on the date of this Agreement in accordance with
their present terms;
(b) authorize for issuance, issue, deliver, sell,
pledge or otherwise encumber any shares of its capital stock
or the capital stock of any of its subsidiaries, any other
voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares,
voting securities or convertible securities or any other
securities or equity equivalents (including without limita-
tion stock appreciation rights), or contractual obligation
valued or measured by the value or market price of Company
Common Stock (other than the issuance of Company Common
Stock upon the exercise of Company Stock Options outstanding
on the date of this Agreement and in accordance with their
present terms, such issuance, together with the acquisitions
of shares of Company Common Stock permitted under clause (a)
above, being referred to herein as "Permitted Changes");
(c) amend its certificate of incorporation, by-laws
or other comparable charter or organizational documents;
(d) acquire or agree to acquire by merging or consol-
idating with, or by purchasing a substantial portion of the
stock or assets of, or by any other manner, any business or
any corporation, partnership, joint venture, association, or
other business organization or division thereof;
(e) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any
of its properties or assets that are material, individually
or in the aggregate, to the Company and its subsidiaries
taken as a whole, except sales of inventory and equipment in
the ordinary course of business consistent with past prac-
tice;
(f) (i) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or
sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person
or enter into any arrangement having the economic effect of
any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with
past practice, or (ii) make any loans, advances or capital
contributions to, or investments in, any other person, other
than to the Company or any direct or indirect wholly owned
subsidiary of the Company;
(g) acquire or agree to acquire any assets that are
material, individually or in the aggregate, to the Company
and its subsidiaries taken as a whole, or make or agree to
make any capital expenditures except in the ordinary course
of business consistent with past practice;
(h) pay, discharge or satisfy any claims (including
claims of stockholders), liabilities or obligations (abso-
lute, accrued, asserted or unasserted, contingent or other-
wise), except for the payment, discharge or satisfaction, of
(i) liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with
their terms as in effect on the date hereof, (ii) liabili-
ties reflected or reserved against in, or contemplated by,
the most recent consolidated audited financial statements
(or the notes thereof) of the Company included in the Recent
SEC Documents, or waive, release, grant, or transfer any
rights of material value or modify or change in any material
respect any existing license, lease, contract or other
document, other than in the ordinary course of business
consistent with past practice;
(i) adopt or amend in any material respect (except
as may be required by law or by this Agreement) any bonus,
profit sharing, compensation, stock option, pension, retire-
ment, deferred compensation, employment or other employee
benefit plan, agreement, trust, fund or other arrangement
(including any Company Benefit Plan) for the benefit or
welfare of any employee, director or former director or
employee or, other than increases for individuals (other
than officers and directors) in the ordinary course of
business consistent with past practice, increase the compen-
sation or fringe benefits of any director, employee or
former director or employee; pay any benefit not required by
any existing plan, arrangement or agreement, grant any new
or modified severance or termination arrangement or increase
or accelerate any benefits payable under its severance or
termination pay policies in effect on the date hereof, other
than any such increase or acceleration provided for under
such policies as in effect on the date of this Agreement;
(j) change any material accounting principle used
by it, except for such changes as may be required to be
implemented following the date of this Agreement pursuant to
generally accepted accounting principles or rules and regu-
lations of the SEC promulgated following the date hereof;
(k) take any action that would, or is reasonably
likely to, result in any of its representations and warran-
ties in this Agreement becoming untrue, or in any of the
conditions to the Merger set forth in Article 6 not being
satisfied;
(l) except in the ordinary course of business and
consistent with past practice, make any tax election or
settle or compromise any federal, state, local or foreign
income tax liability; and
(m) authorize any of, or commit or agree to take
any of, the foregoing actions.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 Preparation of Form S-4 and the Proxy Statement;
Stockholder Meetings.
(a) Promptly following the date of this Agreement,
the Company shall prepare and file with the SEC the Proxy State-
ment, and Parent shall prepare and file with the SEC the Form S-
4, in which the Proxy Statement will be included as a prospectus.
Each of the Company and Parent shall use its reasonable best
efforts as promptly as practicable to have the Form S-4 declared
effective under the Securities Act as promptly as practicable
after such filing. The Company will use its reasonable best
efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after the Form
S-4 is declared effective under the Securities Act. Parent shall
also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified) required to be
taken under any applicable state securities laws in connection
with the issuance of Parent Stock in the Merger, and the Company
shall furnish all information concerning the Company and the
holders of the Company Common Stock and rights to acquire Company
Common Stock pursuant to the Stock Plans as may be reasonably
requested in connection with any such action.
(b) The Company will, as promptly as practicable
following the date of this Agreement, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Stockholders
Meeting") for the purpose of approving this Agreement and the
transactions contemplated by this Agreement. The Company will,
through its Board of Directors, recommend to its stockholders
approval of the foregoing matters, as set forth in Section
3.1(p). Such recommendation, together with a copy of the opinion
referred to in Section 3.1(o), shall be included in the Proxy
Statement. The Company will use reasonable efforts to hold such
meeting as soon as practicable after the date hereof.
(c) The Company will cause its transfer agent to make
stock transfer records relating to the Company available to the
extent reasonably necessary to effectuate the intent of this
Agreement.
5.2 Letter of the Company's Accountants. The Company
shall use its best efforts to cause to be delivered to Parent a
letter of Price Waterhouse LLP, the Company's independent public
accountants, dated a date within two business days before the
date on which the Form S-4 shall become effective and addressed
to Parent, in form and substance reasonably satisfactory to
Parent and customary in scope and substance for letters delivered
by independent public accountants in connection with registration
statements similar to the Form S-4.
5.3 Parent Access to Information.
(a) The Company shall, and shall cause its subsidiar-
ies, officers, employees, counsel, financial advisors and other
representatives to, afford to Parent and its representatives
reasonable access during normal business hours during the period
prior to the Effective Time to its properties, books, contracts,
commitments, personnel and records and, during such period,
shall, and shall cause its subsidiaries, officers, employees and
representatives to, furnish promptly to Parent (i) a copy of each
report, schedule, registration statement and other document filed
by it during such period pursuant to the requirements of Federal
or state securities laws and (ii) all other information concern-
ing its business, properties, financial condition, operations and
personnel as Parent may from time to time reasonably request. No
investigation pursuant to this Section 5.3 shall affect any
representations or warranties of the Company herein or the
conditions to the obligations of the parties hereto.
(b) The Company shall report on operational matters
and promptly advise Parent orally and in writing of any change or
event having, or which, insofar as can reasonably be foreseen,
could have, a material adverse effect on the Company and its
Subsidiaries taken as a whole.
5.4 Best Efforts. Each of the parties agrees to use its
best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable
to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated
by this Agreement. Parent, Sub and the Company will use their
best efforts and cooperate with one another (i) in promptly
determining whether any filings are required to be made or
consents, approvals, waivers, permits or authorizations are
required to be obtained under any applicable law or regulation or
from any governmental authorities or third parties in connection
with the transactions contemplated by this Agreement and (ii) in
promptly making any such filings, in furnishing information
required in connection therewith and in timely seeking to obtain
any such consents, approvals, waivers, permits or authorizations.
5.5 Employee Benefits.
(a) Parent and the Company agree that the Company
Benefit Plans shall, to the extent practicable and except as
otherwise provided in Section 2.4 hereof, remain in effect
without amendment until the Effective Time and that thereafter
the Surviving Corporation will maintain, subject to such changes
and modifications as may be necessary or desirable to facilitate
compliance by Parent and its subsidiaries (including the Surviv-
ing Corporation) with applicable statutory and regulatory re-
quirements, for a period of at least three years after the
Effective Time, the Company Benefit Plans (other than the Stock
Plans).
(b) Parent will, and will cause the Surviving Corpo-
ration to, honor without modification for a period of at least
three years after the Effective Time all employee severance plans
(or policies) and employment and severance agreements of the
Company or any of its subsidiaries in existence on the date
hereof as such plans, policies and agreements shall be in effect
in accordance with the terms of this Agreement at the Effective
Time.
(c) Parent and Company will use their best efforts to
agree on compensation plans for the officers and employees of the
Company after the Effective Time to provide them incentive
compensation that in the aggregate is reasonably comparable
(without giving effect to any payments to them resulting from the
Merger) to that historically provided by the Stock Plans, except
that neither Parent nor the Surviving Corporation shall be
required to issue any shares of its equity securities in connec-
tion with such compensation plans.
5.6 Indemnification.
(a) The Company shall, and from and after the Effec-
tive Time Parent and the Surviving Corporation shall, indemnify,
defend and hold harmless each person who is now, or has been at
any time prior to the date of this Agreement or who becomes such
prior to the Effective Time, an officer, director or employee of
the Company or any of its subsidiaries (the "Indemnified Par-
ties") against (i) all losses, claims, damages, costs, expenses,
liabilities or judgments or amounts that are paid in settlement
with the approval of the indemnifying party (which approval shall
not be unreasonably withheld) of or in connection with any claim,
action, suit, proceeding or investigation based in whole or in
part on or arising in whole or in part out of the fact that such
person is or was a director, officer or employee of the Company
or any of its subsidiaries (the "Indemnified Parties") against
(i) all losses, claims, damages, costs, expenses, liabilities or
judgments or amounts that are paid in settlement with the approv-
al of the indemnifying party (which approval shall not be unrea-
sonably withheld) of or in connection with any claim, action,
suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is
or was a director, officer or employee of the Company or any of
its subsidiaries, whether pertaining to any matter existing or
occurring at or prior to the Effective Time and whether asserted
or claimed prior to, or at or after, the Effective Time ("Indem-
nified Liabilities") and (ii) all Indemnified Liabilities based
in whole or in part on, or arising in whole or in part out of, or
pertaining to this Agreement or the transactions contemplated
hereby; provided, however, that, in the case of the Company and
the Surviving Corporation such indemnification shall only be to
the fullest extent a corporation is permitted under the NYBCL to
indemnify its own directors, officers and employees, and in the
case of Parent, such indemnification shall not be limited by the
NYBCL but such indemnification shall not be applicable to any
claims made against the Indemnified Parties if a judgment or
other final adjudication established that (A) their acts or
omissions were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause
of action so deliberated or (B) arising out of, based upon or
attributable to the gaining in fact of any financial profit or
other advantage to which they were not legally entitled; and the
Company, Parent and the Surviving Corporation, as the case may
be, will pay all expenses of each Indemnified Party in advance of
the final disposition of any such action or proceeding, in the
case of the Company and the Surviving Corporation only to the
fullest extent permitted by law upon receipt of any undertaking
contemplated by Section 723(c) of the NYBCL. Without limiting
the foregoing, in the event any such claim, action, suit, pro-
ceeding or investigation is brought against any Indemnified Party
(whether arising before or after the Effective Time), (i) the
Indemnified Parties may retain counsel satisfactory to them and
the Company (or them and Parent and the Surviving Corporation
after the Effective Time), (ii) the Company (or after the Effec-
tive Time, the Surviving Corporation) shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received, and (iii) the
Company (or after the Effective Time, Parent and the Surviving
Corporation) will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that none of the
Company, Parent or the Surviving Corporation shall be liable for
any settlement of any claim effected without its written consent,
which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this
Section 5.6, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify the Company, Parent or
the Surviving Corporation (but the failure so to notify an
indemnifying party shall not relieve it from any liability which
it may have under this Section 5.6 except to the extent such
failure prejudices such party), and shall deliver to the Company
(or after the Effective Time, the Surviving Corporation (but not
Parent)) the undertaking contemplated by Section 723(c) of the
NYBCL. The Indemnified Parties as a group may retain only one
law firm to represent them with respect to each such matter
unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the posi-
tions of any two or more Indemnified Parties.
(b) The provisions of this Section 5.6 are intended
to be for the benefit of, and shall be enforceable by, each
Indemnified Party, his or her heirs and representatives.
5.7 Expenses. Whether or not the Merger is consummated,
all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the
party incurring such expenses, except that the expenses in
connection with printing and mailing the Proxy Statement and the
Form S-4, as well as all SEC filing fees relating to the transac-
tions contemplated herein, shall be shared equally between Parent
and the Company.
5.8 Public Announcements. Parent and Sub, on the one
hand, and the Company, on the other hand, will consult with each
other before issuing, and provide each other the opportunity to
review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such
press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court
process or by obligations pursuant to any listing agreement with
any national securities exchange. The parties agree that the
initial press release or releases to be issued with respect to
the transactions contemplated by this Agreement shall be mutually
agreed upon prior to the issuance thereof.
5.9 Affiliates. Prior to the Closing Date, the Company
shall deliver to Parent a letter identifying all persons who are,
at the time this Agreement is submitted for approval to the
stockholders of the Company, "affiliates" of the Company for
purposes of Rule 145 under the Securities Act. The Company shall
use its best efforts to cause each such person to deliver to
Parent on or prior to the Closing Date a written agreement
substantially in the form attached as Exhibit A hereto.
5.10 Stock Exchange Listing. Parent shall use its best
efforts to cause the shares of Parent Stock to be issued in the
Merger and under the Stock Plans to be approved for listing on
the New York Stock Exchange, subject to notice of issuance, prior
to the Closing Date.
5.11 Takeover Statutes. If any "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute
or regulation shall become applicable to the transactions contem-
plated hereby, the Company and the members of the Board of
Directors of the Company shall grant such approvals and take such
actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate
or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
5.12 No Solicitation. Neither the Company nor any of its
subsidiaries shall, nor shall the Company or any of its subsid-
iaries authorize or permit any of its or their officers, direc-
tors, agents, representatives, advisors or subsidiaries to, (a)
solicit, initiate or encourage (including by way of furnishing
information), or take any other action to facilitate the submis-
sion of inquiries, proposals or offers from any person relating
to any acquisition or purchase of a substantial amount of assets
of the Company or any of its subsidiaries (other than in the
ordinary course of business) or of over 20% of any class of
equity securities of the Company or any of its subsidiaries or
any tender offer (including a self tender offer) or exchange
offer that if consummated would result in any person beneficially
owning 20% or more of any class of equity securities of the
Company or any of its subsidiaries, or any merger, consolidation,
business combination, sale of substantially all assets, recapi-
talization, liquidation, dissolution or similar transaction
involving the Company or any of its subsidiaries, other than the
transactions contemplated by this Agreement, or any other trans-
action the consummation of which would or could reasonably be
expected to impede, interfere with, prevent or materially delay
the Merger or which would or could reasonably be expected to
materially dilute the benefits to Parent of the transactions
contemplated hereby (collectively, "Transaction Proposals") or
agree to or endorse any Transaction Proposal, or (b) enter into
or participate in any discussions or negotiations regarding any
of the foregoing, or furnish to any other person any information
with respect to its business, properties or assets or any of the
foregoing, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by
any other person to do or seek any of the foregoing; provided,
however, that the foregoing shall not prohibit the Company from
(i) furnishing information concerning the Company and its busi-
nesses, properties or assets pursuant to an appropriate confiden-
tiality agreement substantially similar to the Confidentiality
Agreement dated October 4, 1996 between the Company and Parent to
a third party who has made an unsolicited Transaction Proposal,
(ii) engaging in discussions or negotiations with a third party
who has made an unsolicited Transaction Proposal, (iii) following
receipt of an unsolicited Transaction Proposal, taking and
disclosing to its stockholders a position contemplated by Rule
14e-2(a) under the Exchange Act or otherwise making disclosure to
its stockholders, and/or (iv) following receipt of an unsolicited
Transaction Proposal, failing to make or withdrawing or modifying
its recommendation referred to in Section 3.1(p), but in each
case referred to in the foregoing clauses (i) through (iv) only
if and to the extent that the Board of Directors of the Company
shall have concluded in good faith, after consulting with and
considering the advice of outside counsel, that such action is
required by the Board of Directors of the Company in the exercise
of its fiduciary duties to the stockholders of the Company;
provided, further, that the Board of Directors of the Company
shall not take any of the foregoing actions referred to in
clauses (i) through (iv) until after giving at least one business
day's advance notice to Parent with respect to the actions
specified in the foregoing clauses (i) through (iv) that it shall
take. In addition, if the Board of Directors of the Company
receives a Transaction Proposal, then the Company shall promptly
inform Parent in writing of the material terms of such proposal
and the identity of the person (or group) making it. The Company
will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conduct-
ed heretofore with respect to any of the foregoing. Without
limiting the foregoing, it is understood that any violation of
the restrictions set forth in this Section by any director or
executive officer of the Company or any of its subsidiaries or by
any investment banker, financial adviser, attorney, accountant,
or other representative of the Company or any of its subsidiaries
shall be deemed to be a breach of this Section by the Company.
5.13 Certain Agreements. Neither the Company nor any
subsidiary of the Company will waive or fail to enforce any
provision of any confidentiality or standstill or similar agree-
ment to which it is a party without the prior written consent of
Parent.
5.14 Company Access to Information.
(a) The Parent shall, and shall cause its officers,
employees, counsel, financial advisors and other representatives
to, afford to the Company and its representatives reasonable
access during normal business hours during the period prior to
the Effective Time to its books, personnel and records and,
during such period, shall, and shall cause its subsidiaries,
officers, employees and representatives to, furnish promptly to
the Company (i) a copy of each report, schedule, registration
statement and other document filed by it during such period
pursuant to the requirements of Federal or state securities laws
and (ii) all other information concerning its business, financial
condition and operations as the Company may from time to time
reasonably request; provided, however, that the foregoing shall
not create any obligation to disclose to any person any nonpublic
information respecting securities holdings of Parent or any of
its subsidiaries. No investigation pursuant to this Section 5.14
shall affect any representations or warranties of the Parent
herein or the conditions to the obligations of the parties
hereto.
(b) Parent shall promptly advise the Company orally
and in writing of any change or event having, or which, insofar
as can reasonably be foreseen, could have, a material adverse
effect on the Parent and its Subsidiaries taken as a whole.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the
Merger is subject to the satisfaction or waiver on or prior to
the Closing Date of the following conditions:
(a) Company Stockholder Approval. The Company
Stockholder Approval shall have been obtained.
(b) NYSE Listing. The shares of Parent Stock issu-
able to the Company's stockholders pursuant to this Agreement
shall have been approved for listing on the NYSE, subject to
notice of issuance.
(c) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have
been terminated or shall have expired.
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
Merger shall be in effect; provided, however, that the parties
hereto shall use their best efforts to have any such injunction,
order, restraint or prohibition vacated.
(e) Form S-4. The Form S-4 shall have become effec-
tive under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order, and any material
"blue sky" and other state securities laws applicable to the
issuance of the Parent Stock shall have been complied with.
6.2 Conditions to Obligation of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further
subject to the following conditions:
(a) Representations and Warranties. The representa-
tions and warranties of the Company set forth in this Agreement
shall be true and correct in all material respects, in each case
as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing Date. Parent shall have
received a certificate signed on behalf of the Company by the
chief executive officer and the chief financial officer of the
Company to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed the obligations required to be
performed by it under this Agreement at or prior to the Closing
Date (except for such failures to perform as have not had or
could not reasonably be expected, either individually or in the
aggregate, to have a material adverse effect with respect to the
Company or adversely affect the ability of the Company to consum-
mate the transactions herein contemplated or perform its obliga-
tions hereunder), and Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer
and the chief financial officer of the Company to such effect.
(c) Tax Opinion. Parent shall have received the
opinion of Munger, Tolles & Olson, counsel to Parent, dated the
Closing Date, based on appropriate representations of the Compa-
ny, its affiliates, and Parent, and such other facts, representa-
tions, assumptions, and agreements as counsel may reasonably deem
relevant, to the effect that for United States Federal income tax
purposes the Merger will qualify as a reorganization within the
meaning of Section 368 of the Code and that each of Parent, Sub
and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code.
(d) Consents, etc. Parent shall have received
evidence, in form and substance reasonably satisfactory to it,
that such licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and other
third parties as are necessary in connection with the transac-
tions contemplated hereby have been obtained, except such licens-
es, permits, consents, approvals, authorizations, qualifications
and orders which are not, individually or in the aggregate,
material to Parent or the Company or the failure of which to have
been received would not (as compared to the situation in which
such license, permit, consent, approval, authorization, qualifi-
cation or order had been obtained) materially dilute the aggre-
gate benefits to Parent of the Merger.
(e) Affiliate Letters. Parent shall have received
the agreements referred to in Section 5.9.
(f) Continuity of Interest Agreement. Mr. Albert L.
Ueltschi shall have executed and delivered, and shall have used
his best efforts to cause the specified members of his family to
have executed and delivered, a Continuity of Interest Agreement
in substantially the form attached as Exhibit B hereto.
6.3 Conditions to Obligation of the Company. The obliga-
tion of the Company to effect the Merger is further subjected to
the following conditions:
(a) Representations and Warranties. The representa-
tions and warranties of Parent and Sub set forth in this Agree-
ment shall be true and correct in all material respects, in each
case as of the date of this Agreement and as of the Closing Date
as though made on and as of the Closing Date. The Company shall
have received a certificate signed on behalf of Parent by the
chief executive officer and the chief financial officer of Parent
to such effect.
(b) Performance of Obligations of Parent and Sub.
Parent and Sub shall have performed the obligations required to
be performed by them under this Agreement at or prior to the
Closing Date (except for such failures to perform as have not had
or could not reasonably be expected, either individually or in
the aggregate, to have a material adverse effect with respect to
Parent or adversely affect the ability of Parent to consummate
the transactions herein contemplated or perform its obligations
hereunder), and the Company shall have received a certificate
signed on behalf of Parent by the chief executive officer and the
chief financial officer of Parent to such effect.
(c) Tax Opinion. The Company shall have received the
opinion of Skadden, Arps, Slate, Meagher & Flom, counsel to the
Company, dated the Closing Date, based on appropriate representa-
tions of the Company, its affiliates, and Parent and such other
facts, representations, assumptions, and agreements as counsel
may reasonably deem relevant, to the effect that for United
States Federal income tax purposes the Merger will qualify as a
reorganization within the meaning of Section 368 of the Code and
that each of Parent, Sub and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and
abandoned at any time prior to the Effective Time of the Merger,
whether before or after approval of the Merger by the stockhold-
ers of the Company:
(a) by mutual written consent of Parent and the
Company; or
(b) by either Parent or the Company if any Governmen-
tal Entity shall have issued an order, decree or ruling or taken
any other action permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; or
(c) by either Parent or the Company if the Merger
shall not have been consummated on or before March 31, 1997
(other than due to the failure of the party seeking to terminate
this Agreement to perform its obligations under this Agreement
required to be performed at or prior to the Effective Time of the
Merger); or
(d) by Parent, if any required approval of the
stockholders of the Company shall not have been obtained by
reason of the failure to obtain the required vote upon a vote
held at a duly held meeting of stockholders or at any adjournment
thereof; or
(e) by Parent, (1) if the Company shall have (i)
withdrawn, modified or amended in any respect adverse to Parent
or Sub its approval or recommendation of this Agreement or the
Merger, (ii) failed as soon as practicable to mail the Proxy
Statement to its stockholders or failed to include in such
statement such recommendation, (iii) recommended any Transaction
Proposal from a person other than Parent or (iv) resolved to do
any of the foregoing, or (2) if (i) the Company shall have
exercised a right specified in the first proviso to Section 5.12
with respect to any Transaction Proposal and shall, directly or
through agents or representatives, continue discussions with any
third party concerning such Transaction Proposal for more than 10
business days after the date of receipt of such Transaction
Proposal; or (ii) (A) a Transaction Proposal that is publicly
disclosed shall have been commenced, publicly proposed or commu-
nicated to the Company which contains a proposal as to price
(without regard to whether such proposal specifies a specific
price or a range of potential prices) and (B) the Company shall
not have rejected such proposal within 10 business days of its
receipt or, if sooner, the date its existence first becomes
publicly disclosed; or
(f) by the Company, if the Company exercises, pursu-
ant to Section 5.12, the right specified in clause (iv) of the
first proviso to Section 5.12; or
(g) by Parent, if the Company fails to perform any of
its material obligations under this Agreement; or
(h) by the Company, if Parent or Sub fails to perform
any of their respective material obligations under this Agree-
ment.
7.2 Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in
Section 7.1, this Agreement shall forthwith become void and have
no effect, without any liability or obligation on the part of
Parent, Sub or the Company, other than pursuant to the provisions
of Section 5.7 and this Section 7.2. Nothing contained in this
Section shall relieve any party for any breach of the representa-
tions, warranties, covenants or agreements set forth in this
Agreement.
7.3 Amendment. This Agreement may be amended by the
parties at any time before or after required approval of the
Merger by the stockholders of the Company; provided, however,
that after such approval, there shall be made no amendment that
by law requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of
each of the parties.
7.4 Extension; Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b)
waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant
to this Agreement or (c) subject to the proviso of Section 7.3,
waive compliance with any of the agreements or conditions con-
tained in this Agreement. Any agreement on the part of a party
to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party. The
failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a
waiver of such rights.
ARTICLE 8
GENERAL PROVISIONS
8.1 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the
Effective Time. This Section 8.1 shall not limit any covenant or
agreement of the parties which by its terms contemplates perfor-
mance after the Effective Time.
8.2 Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and
shall be deemed given if delivered personally or sent by over-
night courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Parent or Sub, to:
Berkshire Hathaway Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131
Attention: Chairman of the Board
with a copy to:
Munger, Tolles & Olson
355 South Grand Avenue, 35th Floor
Los Angeles, California 90071-1560
Attention: R. Gregory Morgan
(b) if to the Company, to:
FlightSafety International Inc.
Marina Air Terminal
LaGuardia Airport
Flushing, New York 11371
Attention: Chairman of the Board
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Peter P. Mullen
8.3 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person
that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
first person;
(b) "material adverse change" or "material adverse
effect" means, when used in connection with the Company or
Parent, any change or effect that either individually or in the
aggregate with all other such changes or effects is materially
adverse to the business, assets, properties, condition (financial
or otherwise) or results of operations of such party and its
subsidiaries taken as a whole; provided, however, that, (i) a
decline in general economic conditions affecting the Company or
Parent shall not be deemed to be a "material adverse change" or
to have a "material adverse effect" with respect to either such
party or its subsidiaries; and (ii) for purposes of Sections
3.2(g) and 6.3(a), in no event shall changes in the market prices
of portfolio securities owned by Parent or its subsidiaries be
deemed to be a "material adverse change" or to have a "material
adverse effect" with respect to Parent or its subsidiaries;
(c) "person" means an individual, corporation,
partnership, joint venture, association, trust, unincorporated
organization or other entity; and
(d) a "subsidiary" of any person means another
person, an amount of the voting securities, other voting owner-
ship or voting partnership interests of which is sufficient to
elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, 50% or
more of the equity interest of which) is owned directly or
indirectly by such first person.
8.4 Interpretation. A reference made in this Agreement to
a Section, Exhibit or Schedule, shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicat-
ed. The table of contents and headings contained in this Agree-
ment are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation."
8.5 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and deliv-
ered to the other parties.
8.6 Entire Agreement; No Third-party Beneficiaries. This
Agreement constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement,
other than the Confidentiality Agreement dated October 4, 1996
between Parent and the Company. Except as provided in Section
5.6(b), this Agreement is not intended to confer upon any person
other than the parties any rights or remedies.
8.7 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Delaware regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
8.8 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be
assigned, in whole or in part, by operation of law or otherwise,
by any of the parties without the prior written consent of the
other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
8.9 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any
court of the State of Delaware or of the United States located in
the State of Delaware in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agree-
ment, and each party (a) it will not attempt to deny or defeat
personal jurisdiction or venue in any such court by motion or
other request for leave from any such court and (b) it will not
bring any action relating to this Agreement or any of the trans-
actions contemplated by this Agreement in any court other than
any such court.
8.10 Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law but
if any provision or portion of any provision of this Agreement is
held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provi-
sion or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provi-
sion or portion of any provision had never been contained herein,
so long as the economic and legal substance of the transactions
contemplated hereby are not affected in a manner materially
adverse to any party hereto.
IN WITNESS WHEREOF, Parent, Sub, and the Company have
caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first written above.
Berkshire Hathaway Inc.
By: /s/Warren E. Buffett
Its: Chairman of the Board
NY Acquisition Sub Inc.
By: /s/Warren E. Buffett
Its: Chairman of the Board
FlightSafety International Inc.
By: /s/Albert L. Ueltschi
Its: President and Chairman of the Board
Exhibit 2
Berkshire Hathaway Inc. FlightSafety International, Inc.
1440 Kiewit Plaza Marine Air Terminal
Omaha, Nebraska 18131 LaGuardia Airport
Flushing, New York 11371
BERKSHIRE HATHAWAY TO ACQUIRE FLIGHTSAFETY
Omaha, Nebraska and Flushing, New York, October 15, 1996
-- Berkshire Hathaway Inc. (NYSE: BRK) and FlightSafety
International, Inc. (NYSE: FSI) announced today that they
have executed a definitive merger agreement pursuant to
which FlightSafety will be acquired by Berkshire through
a merger into a wholly owned subsidiary of Berkshire. In
the merger, FlightSafety shareholders can elect to
receive for each of their shares of FlightSafety either
$50 in cash or $48 in Class A or Class B Common Stock of
Berkshire for a total value of approximately $1.5
billion, subject to a limitation that the amount of cash
to be issued in the merger will not exceed 58% of the
total value of the consideration to be received in the
merger. The number of shares of Berkshire to be received
under the stock election will be determined based on the
market price for Berkshire shares during a 5-day trading
period ending the day prior to the FlightSafety
shareholders' meeting to approve the merger.
Consummation of the merger is subject to the approval of
two thirds of the outstanding shares of FlightSafety and
certain other customary conditions. Shareholders
representing in excess of 37% of FlightSafety's Common
Stock have stated that they intend to vote in favor of
the transaction.
It is anticipated that the merger will qualify under
the Internal Revenue Code as a tax-free reorganization
for those FlightSafety shareholders electing to receive
Berkshire Common Stock.
The Board of Directors of FlightSafety has
unanimously approved the merger agreement and recommends
it to the shareholders for approval. It is anticipated
that the merger will close near the end of 1996 or early
1997.
Mr. Albert L. Ueltschi, Chairman and Chief Executive
Officer of FlightSafety, and its largest shareholder,
said "I believe that this merger is in the best interests
of FlightSafety, its customers, employees and
shareholders. My family and I will vote our entire 37%
holding in FlightSafety in favor of the merger. Further,
I will elect to receive Berkshire Common Stock for all
the FlightSafety shares owned by me. I personally
consider Berkshire shares to be one of the finest
investments that I could make and anticipate holding the
shares indefinitely. I look forward to continuing to run
FlightSafety as part of Berkshire, and working with
Warren Buffett."
Mr. Warren E. Buffett, Chairman of the Board of
Berkshire stated, "FlightSafety is a business that I
like, run by a man I like and admire. Al Ueltschi and
FlightSafety will fit perfectly in the Berkshire family."
FlightSafety provides high-technology training to
operators of aircraft and ships throughout the world.
Berkshire and its subsidiaries engage in a number of
diverse business activities.
FlightSafety was represented in this transaction by
Merrill Lynch & Co. and Morgan Lewis Githens & Ahn, Inc.,
while Berkshire was represented by Salomon Brothers Inc.
For information, contact Marc Hamburg at Berkshire
(402-346-1400) and Kenneth Motschwiller at FlightSafety
(718-565-4140).
Exhibit 3
October 14, 1996
Berkshire Hathaway Inc.
NY Acquisition Sub Inc.
1440 Kiewit Plaza
Omaha, Nebraska 68131
Gentlemen:
In connection with the execution and delivery of the
Agreement and Plan of Merger (the "Agreement") dated as of October
14, 1996 among Berkshire Hathaway Inc., NY Acquisition Sub Inc.
("Sub"), and FlightSafety International Inc., and as a material
inducement to Berkshire Hathaway Inc. and Sub to enter into the
Agreement, this will confirm that at the request of Parent or Sub I
will (i) execute and delivery the Continuity of Interest Agreement
attached to the Agreement as Exhibit B at or prior to the
anticipated closing of the merger, (ii) use my best efforts to cause
the members of my family specified in the Continuity of Interest
Agreement to execute and deliver that agreement at that time, and
(iii) in all other respects use my best efforts to ensure the
satisfaction of all conditions within my control to the merger
contemplated by the Agreement.
Very truly yours,
/s/Albert L. Ueltschi
Albert L. Ueltschi
Receipt Acknowledged:
Berkshire Hathaway Inc.
By: _______________________
Its: Chief Financial Officer
NY Acquisition Sub Inc.
By: _______________________
Its: Chief Financial Officer
