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
Date of Report (Date of earliest event reported) September 22, 1997
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THE B.F.GOODRICH COMPANY
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(Exact name of registrant as specified in charter)
New York 1-892 34-0252680
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
4020 Kinross Lakes Parkway, Richfield, Ohio 44286-9368
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 330-659-7600
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Not Applicable
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(Former name or former address, if changed since last report.)
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Item 5. Other Events
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On September 22, 1997, The B.F.Goodrich Company ("BFGoodrich") issued a
press release announcing that BFGoodrich and Rohr, Inc. ("Rohr") have signed a
definitive agreement for Rohr to merge with BFGoodrich in a tax-free
stock-for-stock transaction. Reference is made to Exhibit 99.1 hereto which is a
copy of the press release and to Exhibit 99.2 which is a copy of the definitive
agreement.
SIGNATURE
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.
THE B.F.GOODRICH COMPANY
By /s/Nicholas J. Calise
-----------------------------
Nicholas J. Calise, Secretary
Dated: September 25, 1997
Exhibit 99.1
BFGOODRICH
For further information:
The BFGoodrich Company
Media Contact: Rob Jewell (330) 659-7999
Investor Contact: John Atkinson (330) 659-7788
Rohr, Inc.
Contact: Bob Rau (619) 691-2057
Laurence Chapman (619) 691-3002
BF GOODRICH AND ROHR ANNOUNCE AGREEMENT TO MERGE
RICHFIELD, Ohio, September 22 -- The BFGoodrich Company and Rohr, Inc.
jointly announced today that the companies have signed a definitive agreement
for Rohr to merge with BFGoodrich in a tax-free stock-for-stock transaction. The
combined company will have a significant presence throughout the world as a
leading provider of aircraft systems and services and specialty chemicals.
David L. Burner, chairman and chief executive officer of The BFGoodrich
Company, said: "By combining our two outstanding companies, we will expand our
capabilities to provide customers with integrated aircraft systems and services.
As a larger company in an industry that continues to consolidate and become more
highly focused, we will become an even stronger competitor with the resources to
take advantage of opportunities with original-equipment manufacturers and as a
supplier of replacement parts and services. Our common strengths are in
technology, in our ability to work creatively with customers to benefit their
businesses, and in designing, manufacturing and integrating complex systems."
While the merger is expected to result in some cost savings, Burner
said the transaction will result in enhanced profitability primarily because of
the ability the company will have to take advantage of opportunities for growth.
"Rohr is a company with excellent management and talented and dedicated
employees. In 1998, excluding transaction costs, we expect the merger will add
about 20 to 25 cents a share to BFGoodrich earnings."
Robert H. Rau, president and chief executive officer of Rohr, Inc., said:
"We are extremely enthusiastic about this merger, and we are confident that it
will benefit our shareholders, customers and employees. It represents an
opportunity for Rohr to join with a company that has the financial strength and
a long-term commitment to build on its current excellent position and reputation
as a systems integrator."
Following the completion of the merger, Rau will continue as president
of Rohr reporting to Marshall O. Larsen, executive vice president of The
BFGoodrich Company and president of BFGoodrich Aerospace. Rohr will be operated
as one of four business groups of BFGoodrich Aerospace.
Under terms of the agreement, Rohr shareholders will receive 0.7 shares
of BFGoodrich common stock for each share of Rohr common stock. Based on the
closing price of BFGoodrich common stock ($44.56 a share) on September 22, 1997,
the value of the merger is estimated at approximately $1.3 billion, including
the assumption of Rohr debt by BFGoodrich. The merger is subject to shareholder
approval of both companies and review by certain regulatory agencies. It is
expected to be completed in late 1997 or early 1998. Following the completion of
the merger, three current members of the Rohr Board of Directors will join the
BFGoodrich Board.
Rohr, headquartered in Chula Vista, Calif., primarily designs, develops
and integrates nacelle and pylon systems and provides support services. Nacelles
are the aerodynamic structures that surround an aircraft's engines. The company
employs about 4,500 and had sales for its fiscal year ending July 31, 1997 of
$944.4 million.
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BFGoodrich, headquartered in Richfield, Ohio, and employing about 14,000,
provides aircraft systems and services and manufactures specialty chemicals.
Total company sales in 1996 were $2.2 billion, of which $1.2 billion was from
its Aerospace businesses.
To provide more detail about the merger and to answer questions,
BFGoodrich management will hold a telephone conference call tomorrow (Tuesday,
September 23) morning at 10 a.m. (eastern time) for portfolio managers,
securities analysts and members of the news media. The telephone number is
800-289-0438. To participate in the conference call, persons should call
800-289-0438 ten or fifteen minutes before 10 a.m.
Forward-Looking Information Is Subject to Risk and Uncertainty
This document includes forward-looking statements, as defined in the Private
Securities Litigation Reform Act of 1995, that involve risk and uncertainty. The
projected additional earnings per share for The BFGoodrich Company attributable
to the merger with Rohr, Inc. is dependent upon Rohr's estimated 15 percent
increase in sales in its 1998 fiscal year. Actual sales and operating margins of
Rohr, Inc. in fiscal year 1998 may be materially less than projected in the
forwardlooking statement if Rohr's customers cancel or delay current orders or
reduce the rate at which Rohr, Inc. is building or expects to build products for
such customers. Such cancellations, delays or reductions may occur if there is a
substantial change in the health of the airline industry or in the general
economy, or if a customer were to experience major financial difficulties.
September 22, 1997
2
Exhibit 99.2
EXECUTION COPY
AGREEMENT AND PLAN
OF MERGER
DATED AS OF
SEPTEMBER 22, 1997
AMONG
THE B.F.GOODRICH COMPANY,
MIDWEST ACQUISITION CORPORATION
AND
ROHR, INC.
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
Section 1.1 The Merger................................. 1
Section 1.2 Effective Date of the Merger............... 2
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation................ 2
Section 2.2 By-Laws..................................... 2
Section 2.3 Board of Directors; Officers................ 2
Section 2.4 Effects of Merger........................... 2
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Exchange Ratio.............................. 2
Section 3.2 Parent to Make Certificates Available....... 4
Section 3.3 Dividends; Transfer Taxes................... 4
Section 3.4 No Fractional Shares........................ 4
Section 3.5 Shareholders' Meetings...................... 5
Section 3.6 Closing of the Company's Transfer Books..... 6
Section 3.7 Assistance in Consummation of the Merger.... 6
Section 3.8 Closing..................................... 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 4.1 Organization and Qualification.............. 7
Section 4.2 Capitalization.............................. 7
Section 4.3 Subsidiaries................................ 7
Section 4.4 Authority Relative to this Merger
Agreement................................. 8
Section 4.5 Reports and Financial Statements............ 9
Section 4.6 Absence of Certain Changes or Events........ 10
Section 4.7 Litigation.................................. 10
Section 4.8 Information in Disclosure Documents,
Registration Statements, Etc.............. 10
Section 4.9 Employee Benefit Plans...................... 11
Section 4.10 ERISA....................................... 12
Section 4.11 Takeover Provisions Inapplicable............ 13
Section 4.12 Compliance with Applicable Laws............. 13
Section 4.13 Liabilities................................. 13
Section 4.14 Taxes....................................... 14
Section 4.15 Certain Agreements.......................... 14
Section 4.16 Patents, Trademarks, Etc.................... 15
Section 4.17 Product Liability; Airworthiness............ 15
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Section 4.18 Environment................................. 15
Section 4.19 Title to Assets; Liens...................... 16
Section 4.20 Accounting; Tax Matters..................... 16
Section 4.21 Parent Action............................... 16
Section 4.22 Financial Advisor........................... 16
Section 4.23 Fairness Opinion............................ 17
ARTICLE IV-A
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Section 4A.1 Organization................................ 17
Section 4A.2 Capitalization.............................. 17
Section 4A.3 Authority Relative to this Merger
Agreement................................. 17
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization and Qualification.............. 18
Section 5.2 Capitalization.............................. 18
Section 5.3 Subsidiaries................................ 19
Section 5.4 Authority Relative to this Merger
Agreement................................. 20
Section 5.5 Reports and Financial Statements............ 20
Section 5.6 Absence of Certain Changes or Events........ 21
Section 5.7 Litigation.................................. 22
Section 5.8 Information in Disclosure Documents......... 22
Section 5.9 Employee Benefit Plans...................... 22
Section 5.10 ERISA....................................... 23
Section 5.11 Takeover Provisions Inapplicable............ 24
Section 5.12 Company Action.............................. 24
Section 5.13 Fairness Opinion............................ 25
Section 5.14 Financial Advisor........................... 25
Section 5.15 Compliance with Applicable Laws............. 25
Section 5.16 Liabilities................................. 25
Section 5.17 Taxes....................................... 26
Section 5.18 Certain Agreements.......................... 26
Section 5.19 Patents, Trademarks, Etc.................... 27
Section 5.20 Product Liability; Airworthiness............ 27
Section 5.21 Environment................................. 28
Section 5.22 Title to Assets; Liens...................... 28
Section 5.23 Accounting; Tax Matters..................... 28
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company
Pending the Merger........................ 28
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Section 6.2 Conduct of Business by Parent and Sub
Pending the Merger........................ 31
Section 6.3 Notice of Breach............................ 32
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information...................... 32
Section 7.2 Registration Statement/Proxy Statement...... 33
Section 7.3 Compliance with the Securities Act.......... 33
Section 7.4 Stock Exchange Listing...................... 34
Section 7.5 Employment Arrangements..................... 34
Section 7.6 Indemnification............................. 35
Section 7.7 Consents.................................... 36
Section 7.8 Additional Agreements....................... 37
Section 7.9 No Solicitation............................. 37
Section 7.10 Takeover Provisions Inapplicable............ 39
Section 7.11 Board Composition........................... 39
Section 7.12 Certain Company Indebtedness................ 39
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to
Effect the Merger......................... 40
Section 8.2 Conditions to Obligation of the Company
to Effect the Merger...................... 41
Section 8.3 Conditions to Obligations of Parent
and Sub to Effect the Merger.............. 42
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination................................. 42
Section 9.2 Effect of Termination....................... 44
Section 9.3 Amendment................................... 45
Section 9.4 Waiver...................................... 45
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations,
Warranties and Agreements................. 45
Section 10.2 Notices..................................... 45
Section 10.3 Fees and Expenses........................... 46
Section 10.4 Publicity................................... 47
Section 10.5 Specific Performance........................ 47
Section 10.6 Interpretation.............................. 47
Section 10.7 Third Party Beneficiaries................... 48
Section 10.8 Miscellaneous............................... 48
Section 10.9 Cure Period................................. 48
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Merger Agreement"),
dated as of September 22, 1997, by and among The B.F.Goodrich Company,
a New York corporation ("Parent"), Midwest Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of Parent ("Sub"),
and Rohr, Inc., a Delaware corporation (the "Company"):
W I T N E S S E T H:
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WHEREAS, the Boards of Directors of Parent and the Company
believe it is in the long-term strategic interests of Parent, the
Company and their respective stockholders to combine their businesses;
WHEREAS, the Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by
Parent;
WHEREAS, the Boards of Directors of Parent, Sub and the
Company have approved the merger of Sub into the Company (the
"Merger"), upon the terms and subject to the conditions set forth
herein;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and that this Agreement shall constitute a plan of
reorganization for purposes of Section 368 of the Code;
WHEREAS, for accounting purposes, it is intended that
the Merger shall be accounted for as a "pooling of interests";
NOW, THEREFORE, in consideration of the foregoing premises
and the representations, warranties and agreements contained herein,
the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the
conditions hereof, on the Effective Date (as defined below in Section
1.2), Sub shall be merged into the Company and the separate existence
of Sub shall thereupon cease, and the name of the Company, as the
surviving corporation in the Merger
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(the "Surviving Corporation"), shall by virtue of the Merger
remain "Rohr, Inc."
Section 1.2 Effective Date of the Merger. The Merger shall
become effective when a properly executed Certificate of Merger is duly
filed with the Secretary of State of the State of Delaware, which
filing shall be made as soon as practicable after the closing of the
transactions contemplated by this Merger Agreement in accordance with
Section 3.8. When used in this Merger Agreement, the term "Effective
Date" shall mean the date and time at which such filing shall have been
made.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The Surviving
Corporation shall adopt the Certificate of Incorporation of Sub in
effect immediately prior to the Merger as the Certificate of
Incorporation of the Surviving Corporation until amended in accordance
with its terms and as provided by law and this Merger Agreement.
Section 2.2 By-Laws. The Surviving Corporation shall adopt
the By-laws of Sub as in effect on the Effective Date as the By-laws of
the Surviving Corporation.
Section 2.3 Board of Directors; Officers. The directors of
Sub immediately prior to the Effective Date shall be the directors of
the Surviving Corporation and the officers of the Company immediately
prior to the Effective Date shall be the officers of the Surviving
Corporation, in each case until their respective successors are duly
elected and qualified.
Section 2.4 Effects of Merger. The Merger shall have the
effects set forth in Section 259 of the Delaware General Corporation
Law (the "DGCL").
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Exchange Ratio. As of the Effective Date, by
virtue of the Merger and without any action on the part of any holder
of any capital stock of the Company:
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(a) All shares of capital stock of the Company which are held
by the Company or any subsidiary of the Company, and any shares of
capital stock of the Company owned by Parent, Sub or any other
subsidiary of Parent, shall be cancelled.
(b) Subject to Section 3.4, each remaining outstanding share
of common stock, $1 par value per share, of the Company ("Company
Common Stock") issued and outstanding immediately prior to the
Effective Date shall be converted into .7 of a share (the "Exchange
Ratio") of the common stock, par value $5 per share, of Parent ("Parent
Common Stock"). One preferred share purchase right issuable pursuant to
the Rights Agreement dated as of June 2, 1997 between Parent and The
Bank of New York or any other purchase right issued in substitution
thereof (the "Parent Rights") shall be issued together with and shall
attach to each share of Parent Common Stock issued pursuant to this
Section 3.1(b).
(c) In the event of any stock dividend, stock split,
reclassification, recapitalization, combination or exchange of shares
with respect to, or rights issued in respect of, Parent Common Stock
after the date of this Merger Agreement and prior to the Effective
Date, the Exchange Ratio shall be adjusted accordingly.
(d) Each issued and outstanding share of capital stock of Sub
shall be converted into and become one fully paid and nonassessable
share of common stock, $1 par value per share, of the Surviving
Corporation.
(e) Each of the outstanding rights to purchase Company Common
Stock pursuant to stock options ("Company Stock Options") granted under
the Company Benefit Plans (as defined herein) shall be converted into
and become the right to purchase a number of shares of Parent Common
Stock equal to the product of (i) the number of shares of Company
Common Stock subject to such Company Stock Option and (ii) the Exchange
Ratio, rounded to the nearest whole number. The exercise price per
share of Parent Common Stock for all such converted options bearing the
same exercise price prior to such conversion ("Same Price Options")
shall be determined by subtracting from the closing sale price for a
share of Parent Common Stock on the Effective Date an amount equal to
(i)(A) the difference between (I) such closing sale price multiplied by
the Exchange Ratio and (II) the exercise price of the Same Price
Options prior to the conversion multiplied by (B) the total number of
shares of Company Common Stock subject to such Same Price Options
divided by (ii) the number of shares of Parent Common Stock into which
all such Same Price Options are exercisable upon such conversion.
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Section 3.2 Parent to Make Certificates Available. Prior to
the Effective Date, Parent shall select The Bank of New York or such
other person or persons reasonably satisfactory to the Company to act
as Exchange Agent for the Merger (the "Exchange Agent"). As soon as
practicable after the Effective Date, Parent shall make available, and
each holder of Company Common Stock to be converted pursuant to Section
3.1 (each, a "Company Holder") will be entitled to receive, upon
surrender to the Exchange Agent of one or more certificates
representing such stock ("Certificates") for cancellation, certificates
representing the number of shares of Parent Common Stock into which
such shares are converted in the Merger and cash in consideration of
fractional shares as provided in Section 3.4. Such shares of Parent
Common Stock issued in the Merger shall each be deemed to have been
issued at the Effective Date.
Section 3.3 Dividends; Transfer Taxes. No dividends or other
distributions that are declared or made on Parent Common Stock will be
paid to persons entitled to receive certificates representing Parent
Common Stock pursuant to this Merger Agreement until such persons
surrender their Certificates representing Company Common Stock. Upon
such surrender, there shall be paid to the person in whose name the
certificates representing such Parent Common Stock shall be issued any
dividends or other distributions which shall have become payable with
respect to such Parent Common Stock in respect of a record date after
the Effective Date. In no event shall the person entitled to receive
such dividends be entitled to receive interest on such dividends. In
the event that any certificates for any shares of Parent Common Stock
are to be issued in a name other than that in which the Certificates
representing shares of Company Common Stock surrendered in exchange
therefor are registered, it shall be a condition of such exchange that
the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of
certificates for such shares of Parent Common Stock in a name other
than that of the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not applicable. Notwithstanding the foregoing,
neither the Exchange Agent nor any party hereto shall be liable to a
Company Holder for any shares of Parent Common Stock or dividends
thereon delivered to a public official pursuant to any applicable
escheat laws.
Section 3.4 No Fractional Shares. No certificates or scrip
representing less than one full share of Parent Common Stock shall be
issued upon the surrender for exchange of Certificates representing
Company Common Stock pursuant to
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Section 3.1(b). In lieu of any such fractional share, each Company
Holder who would otherwise have been entitled to a fraction of a share
of Parent Common Stock upon surrender of Certificates for exchange
pursuant to Section 3.1(b) shall be paid upon such surrender cash
(without interest) in an amount equal to such holder's proportionate
interest in the net proceeds from the sale or sales in the open market
by the Exchange Agent, on behalf of all such holders, of the aggregate
fractional Parent Common Stock issued pursuant to this Section 3.4. As
soon as practicable following the Effective Date, the Exchange Agent
shall determine the excess of (i) the number of full shares of Parent
Common Stock delivered to the Exchange Agent by Parent over (ii) the
aggregate number of full shares of Parent Common Stock to be
distributed to holders of Company Common Stock (such excess being
herein called the "Excess Shares"), and the Exchange Agent, as agent
for the former Company Holders, shall sell the Excess Shares at the
prevailing prices on the New York Stock Exchange (the "NYSE"). The sale
of the Excess Shares by the Exchange Agent shall be executed on the
NYSE through one or more member firms of the NYSE and shall be executed
in round lots to the extent practicable. Parent shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred
in connection with such sale of Excess Shares. Until the net proceeds
of such sale have been distributed to the former Company Holders, the
Exchange Agent will hold such proceeds in trust for such former
stockholders (the "Fractional Securities Fund"). As soon as practicable
after the determination of the amount of cash to be paid to former
Company Holders in lieu of any fractional interests, the Exchange Agent
shall make available in accordance with this Merger Agreement such
amounts to such former stockholders. The fractional Parent Common Stock
interests of each Company Holder will be aggregated, and no Company
Holder will receive cash in an amount equal to or greater than the
value of one full share of Parent Common Stock.
Section 3.5 Shareholders' Meetings. (a) The Company shall
take all action necessary, in accordance with applicable law and its
certificate of incorporation and by-laws, to convene a meeting of the
holders of Company Common Stock (the "Company Meeting") as promptly as
practicable for the purpose of considering and taking action upon this
Merger Agreement. Subject to its fiduciary duties under applicable law,
the Board of Directors of the Company will recommend that holders of
Company Common Stock vote in favor of and approve the Merger and the
adoption of the Merger Agreement at the Company Meeting. At the Company
Meeting, all of the shares of Company Common Stock then owned by
Parent, Sub, or any other
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subsidiary of Parent, or with respect to which Parent, Sub, or any
other subsidiary of Parent holds the power to direct the voting, will
be voted in favor of approval of the Merger and adoption of this Merger
Agreement.
(b) Parent shall take all action necessary, in accordance
with law and its certificate of incorporation and bylaws to convene a
meeting of the holders of Parent Common Stock (the "Parent Meeting") as
promptly as practicable for the purpose of considering and acting upon
a proposal (the "Stock Issuance Proposal") to approve the issuance of
shares of Parent Common Stock as provided by this Agreement. Subject to
its fiduciary duties under applicable law, the Board of Directors of
Parent will recommend that holders of Parent Common Stock vote in favor
of and approve the Stock Issuance Proposal at the Parent Meeting.
Section 3.6 Closing of the Company's Transfer Books. At the
Effective Date, the stock transfer books of the Company shall be closed
and no transfer of any shares of Company Common Stock shall be made
thereafter. In the event that, after the Effective Date, Certificates
are presented to the Surviving Corporation, they shall be cancelled and
exchanged for the securities of Parent and/or cash as provided in
Sections 3.1(b) and 3.4.
Section 3.7 Assistance in Consummation of the Merger. Each of
Parent, Sub and the Company shall provide all reasonable assistance to,
and shall cooperate with, each other to bring about the consummation of
the Merger as soon as possible in accordance with the terms and
conditions of this Merger Agreement. Parent shall cause Sub to perform
all of its obligations in connection with this Merger Agreement.
Section 3.8 Closing. The closing of the transactions
contemplated by this Merger Agreement shall take place (i) at the
offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019, at 9:00 A.M. local time on the second business
day after the day on which the last of the conditions set forth in
Article VIII is fulfilled or waived or (ii) at such other time and
place as Parent and the Company shall agree in writing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company, except
as set forth in a disclosure schedule delivered by Parent
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concurrently herewith (the "Parent Disclosure Schedule"), (i) as set
forth in the first sentence of Section 4.1, the first four sentences of
Section 4.4, and Sections 4.2, 4.6, and 4.7, and, (ii) except for
circumstances that, taken in the aggregate, would not have a Parent
Material Adverse Effect (as defined in Section 10.6), in the case of
all other representations and warranties herein, as follows:
Section 4.1 Organization and Qualification. Parent is a
corporation duly organized, validly existing and in good standing under
the laws of the State of New York and has the corporate power to carry
on its business as it is now being conducted or currently proposed to
be conducted. Parent is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of
its activities make such qualification necessary.
Section 4.2 Capitalization. The authorized capital stock of
Parent consists of 100,000,000 shares of Parent Common Stock and
10,000,000 shares of Series Preferred Stock, par value $1 per share
("Parent Preferred Stock"). As of September 9, 1997, 54,126,895 shares
of Parent Common Stock were validly issued and outstanding, fully paid
and nonassessable and 1,193,030 shares of Parent Common Stock were held
in treasury. As of September 9, 1997, no shares of Parent Preferred
Stock were issued and outstanding. As of September 9, 1997, except for
employee stock options to acquire 2,765,508 shares of Parent Common
Stock at a weighted average exercise price of $29.6594 per share and
the Parent Rights and, except as set forth on Schedule 4.2 and as
provided herein, there are no options, warrants, calls or other rights,
agreements or commitments presently outstanding obligating Parent to
issue, deliver or sell shares of its capital stock or debt securities,
or obligating Parent to grant, extend or enter into any such option,
warrant, call or other such right, agreement or commitment. All of the
shares of Parent Common Stock issuable in accordance with this Merger
Agreement in exchange for Company Common Stock at the Effective Date
will be, when so issued, duly authorized, validly issued, fully paid
and nonassessable.
Section 4.3 Subsidiaries. The only "Significant Subsidiaries"
(as such term is defined in Rule 1-02 of Regulation S-X of the
Securities and Exchange Commission (the "Commission")) ("Significant
Subsidiaries") of Parent are those set forth on Schedule 4.3. Each
Significant Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the corporate power to carry on its business as
it is
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now being conducted or currently proposed to be conducted. Each
Significant Subsidiary is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of
its activities makes such qualification necessary. All the outstanding
shares of capital stock of each Significant Subsidiary are validly
issued, fully paid and nonassessable and those owned by Parent or by a
Significant Subsidiary of Parent are owned free and clear of any liens,
claims or encumbrances. There are no existing options, warrants, calls
or other rights, agreements or commitments of any character relating to
the issued or unissued capital stock or other securities of any of the
Significant Subsidiaries of Parent. Except as set forth in Parent's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996
and except for wholly owned subsidiaries which are formed after the
date hereof in the ordinary course of business, Parent does not
directly or indirectly own any interests in any other corporation,
partnership, joint venture or other business association or entity
which are material to Parent and its subsidiaries taken as a whole.
Section 4.4 Authority Relative to this Merger Agreement.
Parent has the corporate power to enter into this Merger Agreement and
to carry out its obligations hereunder. The execution and delivery of
this Merger Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by Parent's Board of
Directors. This Merger Agreement constitutes a valid and binding
obligation of Parent enforceable in accordance with its terms except as
enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. No other corporate proceedings on
the part of Parent are necessary to authorize the Merger Agreement and
the transactions contemplated hereby, other than the approval of the
Stock Issuance Proposal by the holders of Parent Common Stock. Parent
is not subject to or obligated under (i) any charter, by-law, indenture
or other loan document provision or (ii) any other contract, license,
franchise, permit, order, decree, concession, lease, instrument,
judgment, statute, law, ordinance, rule or regulation applicable to
Parent or any of its subsidiaries or their respective properties or
assets, which would be breached or violated, or under which there would
be a default (with or without notice or lapse of time, or both), or
under which there would arise a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit, by
its executing and carrying out this Merger
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Agreement other than, in the case of clause (ii) only, the laws and
regulations referred to in the next sentence. Except as referred to
herein or in connection, or in compliance, with the provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), the Securities Act of 1933, as amended (the "Securities
Act"), the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and other governmental approvals required under the applicable
laws of any foreign jurisdiction ("Foreign Laws") and the
environmental, corporation, securities or blue sky laws or regulations
of the various states ("State Laws") (all of which required consents
and approvals under Foreign Laws and State Laws are identified in
Schedule 4.4 to the Parent Disclosure Schedule), no filing by Parent or
registration by Parent with any public body or authority is necessary
for, nor is any authorization, consent or approval of any public body
or authority required to be obtained by Parent for, the consummation of
the Merger or the other transactions contemplated by this Merger
Agreement.
Section 4.5 Reports and Financial Statements. Parent has, to
the extent such documents were requested by the Company, previously
furnished the Company with true and complete copies of its (i) Annual
Reports on Form 10-K for the three fiscal years ended December 31,
1994, 1995 and 1996, as filed with the Commission, (ii) Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997 and June 30,
1997, as filed with the Commission, (iii) proxy statements related to
all meetings of its shareholders (whether annual or special) since
December 31, 1994, and (iv) all other reports or registration
statements filed by Parent with the Commission since December 31, 1994,
except registration statements on Form S-8 relating to employee benefit
plans, which are all the documents (other than preliminary material)
that Parent was required to file with the Commission since that date
(clauses (i) through (iv) being referred to herein collectively as the
"Parent SEC Reports"). As of their respective dates, the Parent SEC
Reports complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules
and regulations of the Commission thereunder applicable to such Parent
SEC Reports. As of their respective dates, the Parent SEC Reports did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of Parent included in the Parent
SEC Reports comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of
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the Commission with respect thereto, and the financial statements
included in the Parent SEC Reports have been prepared in accordance
with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis (except as may be indicated therein or in
the notes thereto) and fairly present the financial position of Parent
and its subsidiaries as at the dates thereof and the results of their
operations and changes in financial position for the periods then ended
subject, in the case of the unaudited interim financial statements, to
normal year-end audit adjustments and any other adjustments described
therein.
Section 4.6 Absence of Certain Changes or Events. Except as
disclosed in the Parent SEC Reports, since June 30, 1997, there has not
been (i) any event, condition, transaction, commitment, dispute or
other circumstance (financial or otherwise) of any character (whether
or not in the ordinary course of business), individually or in the
aggregate, having a Parent Material Adverse Effect; (ii) any damage,
destruction or loss, whether or not covered by insurance, which,
insofar as reasonably can be foreseen, in the future would have a
Parent Material Adverse Effect; (iii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock
or property) with respect to the capital stock of Parent (except for
regularly scheduled cash dividends out of current earnings at a rate
not greater than the rate in effect on June 30, 1997); or (iv) any
entry into any commitment or transaction material to Parent and its
subsidiaries taken as a whole (including, without limitation, any
borrowing or sale of assets) except in the ordinary course of business
consistent with past practice.
Section 4.7 Litigation. There is no suit, action or
proceeding pending or, to the knowledge of Parent, threatened against
or affecting Parent or any of its subsidiaries which, alone or in the
aggregate, has, or is reasonably likely to have, a Parent Material
Adverse Effect, nor is there any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against Parent or any of its
subsidiaries having, or reasonably likely to have, either alone or in
the aggregate, any such Parent Material Adverse Effect.
Section 4.8 Information in Disclosure Documents, Registration
Statements, Etc. None of the information with respect to Parent or Sub
to be included or incorporated by reference in (i) the Registration
Statement to be filed with the Commission by Parent on Form S-4 under
the Securities Act for the purpose of registering the shares of Parent
Common Stock to be issued in the Merger (the "Registration Statement")
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and (ii) the joint proxy statement of the Company and Parent (the
"Proxy Statement") required to be mailed to the shareholders of the
Company and Parent in connection with the Merger will, in the case of
the Proxy Statement or any amendments or supplements thereto, at the
time of the mailing of the Proxy Statement and any amendments or
supplements thereto, and at the time of the Company Meeting to be held
in connection with the Merger, or, in the case of the Registration
Statement, at the time it becomes effective and at the Effective Date,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading. The Registration Statement will comply
as to form in all material respects with the provisions of the
Securities Act, and the rules and regulations promulgated thereunder.
Section 4.9 Employee Benefit Plans. Except as disclosed in
the Parent SEC Reports, there are no employee benefit, compensation or
severance plans, agreements or arrangements, including "employee
benefit plans," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and including, but
not limited to, plans, agreements or arrangements relating to former
employees, including, but not limited, to retiree medical plans,
maintained by Parent or any of its subsidiaries or collective
bargaining agreements to which Parent or any of its subsidiaries is a
party (together, the "Benefit Plans"). To the knowledge of Parent, no
default exists with respect to the obligations of Parent or any of its
subsidiaries under any such Benefit Plan. Since January 1, 1996, there
have been no disputes or grievances subject to any grievance procedure,
unfair labor practice proceedings, arbitration or litigation under such
Benefit Plans, which have not been finally resolved, settled or
otherwise disposed of, nor is there any default, or any condition
which, with notice or lapse of time or both, would constitute such a
default, under any such Benefit Plans, by Parent or its subsidiaries
or, to the knowledge of Parent and its subsidiaries, any other party
thereto. Since January 1, 1996, there have been no strikes, lockouts or
work stoppages or slowdowns, or to the knowledge of Parent and its
subsidiaries, jurisdictional disputes or organizing activity occurring
or threatened with respect to the business or operations of Parent or
its subsidiaries. Neither the execution of the Merger Agreement nor the
consummation of the transactions contemplated hereby will (either alone
or upon the occurrence of additional events or acts) result in, cause
the accelerated vesting or delivery of, or increase the amount or value
of, any payment or benefit to any employee of Parent or any of its
subsidiaries. Without limiting the generality of
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the foregoing, no amount paid or payable by Parent or any of its
subsidiaries (other than the Company) in connection with the
transactions contemplated hereby (either solely as a result thereof or
as a result of any such transactions in conjunction with any other
event) will be an "excess parachute payment" within the meaning of
Section 280G of the Code.
Section 4.10 ERISA. All Benefit Plans have been administered
in accordance, and are in compliance with the applicable provisions of
ERISA. Each of the Benefit Plans which is intended to meet the
requirements of Section 401(a) of the Code has been determined by the
Internal Revenue Service to be "qualified," within the meaning of such
section of the Code, and Parent knows of no fact which is likely to
have an adverse effect on the qualified status of such plans. None of
the Benefit Plans which are defined benefit pension plans have incurred
any "accumulated funding deficiency" (whether or not waived) as that
term is defined in Section 412 of the Code and under Financial
Accounting Standard 87, the fair market value of the assets of each
such plan equals or exceeds the accrued benefit obligations of such
plan. To the knowledge of Parent, there are not now nor have there been
any non-exempt "prohibited transactions," as such term is defined in
Section 4975 of the Code or Section 406 of ERISA, involving Parent's
Benefit Plans which could subject Parent or its subsidiaries to the
penalty or tax imposed under Section 502(i) of ERISA or Section 4975 of
the Code. No Benefit Plan which is subject to Title IV of ERISA has
been completely or partially terminated; no proceedings to completely
or partially terminate any Benefit Plan have been instituted within the
meaning of Subtitle C of said Title IV of ERISA; and no reportable
event, within the meaning of Section 4043(c) of said Subtitle C for
which the 30-day notice requirement of ERISA has not been waived, has
occurred with respect to any Benefit Plan. Neither Parent nor any of
its subsidiaries has made a complete or partial withdrawal, within the
meaning of Section 4201 of ERISA, from any multiemployer plan which has
resulted in, or is reasonably expected to result in, any withdrawal
liability to Parent or any of its subsidiaries. Neither Parent nor any
of its subsidiaries has engaged in any transaction described in Section
4069 of ERISA within the last five years. There does not now exist, nor
do any circumstances exist that could result in, any liability of
Parent or any of its subsidiaries (or any entity, trade or business
that is or was at any time required to be aggregated with Parent or any
of its subsidiaries under Section 414(b), (c), (m) or (o) of the Code)
under Title IV of ERISA, Section 302 of ERISA, Sections 412 and 4971 of
the Code, to the knowledge of Parent, the continuation coverage
requirements of Section 601 et seq. of ERISA and Section 4980B of the
Code, and similar provisions of foreign laws or
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regulations, other than such liabilities that arise solely out of, or
relate solely to, the Benefit Plans, that would be a liability of
Parent or its subsidiaries following the Effective Date.
Section 4.11 Takeover Provisions Inapplicable. As of the date
hereof and at all times thereafter, until and including the Effective
Date, Section 912 of the New York Business Corporation Law (the
"NYBCL") and the Parent Rights are, and shall be, inapplicable to the
Merger and the transactions contemplated by this Merger Agreement.
Section 4.12 Compliance with Applicable Laws. (i) Parent and
its subsidiaries hold all permits, licenses, variances, exemptions,
orders and approvals (the "Parent Permits") of all courts,
administrative agencies or commissions or other governmental
authorities or instrumentalities, domestic or foreign (each, a
"Governmental Entity") necessary for the operation of the businesses of
Parent and its subsidiaries; (ii) to the knowledge of Parent, Parent
and its subsidiaries are in compliance with the terms of the Parent
Permits; (iii) to the knowledge of Parent, except as disclosed in the
Parent SEC Reports filed prior to the date of this Merger Agreement,
the businesses of Parent and its subsidiaries are not being conducted
in violation of any law, ordinance or regulation of any Governmental
Entity; and (iv) to the knowledge of Parent, except as disclosed in the
Parent SEC Reports, no investigation or review by any Governmental
Entity with respect to Parent or any of its subsidiaries is pending,
or, to the knowledge of Parent, threatened, nor has any Governmental
Entity indicated an intention to conduct the same provided, however,
that the foregoing representations are made as to ERISA and
environmental matters, only as to Parent's knowledge, to the extent
contemplated by Sections 4.10 and 4.18.
Section 4.13 Liabilities. As of June 30, 1997, neither Parent
nor any of its subsidiaries has any liabilities or obligations
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the
consolidated financial statements prepared in accordance with GAAP
which are not disclosed or provided for in the most recent Parent SEC
Reports. To the knowledge of Parent, there was no basis, as of June 30,
1997, for any claim or liability (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet or
in the related notes to the consolidated financial statements prepared
in accordance with GAAP which is not reflected in the Parent SEC
Reports.
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Section 4.14 Taxes. Each of Parent and its subsidiaries has
filed all tax returns required to be filed by any of them and has paid
(or Parent has paid on its behalf), or has set up an adequate reserve
for the payment of, all taxes required to be paid in respect of the
periods covered by such returns. The information contained in such tax
returns is true, complete and accurate in all respects. Neither Parent
nor any subsidiary of Parent is delinquent in the payment of any tax,
assessment or governmental charge. No deficiencies for any taxes have
been proposed, asserted or assessed against Parent or any of its
subsidiaries that have not been finally settled or paid in full and no
requests for waivers of the time to assess any such tax are pending and
there are no outstanding audits, examinations, deficiency litigations
or refund litigations with respect to Parent or any of its
subsidiaries. The federal income tax returns of Parent and each of its
subsidiaries consolidated in such returns have been examined by and
settled with the Internal Revenue Service for all years through
December 31, 1989. For the purposes of this Merger Agreement, the term
"tax" shall include all federal, state, local and foreign income,
profits, franchise, gross receipts, payroll, sales, employment, use,
property, withholding, excise and other taxes, duties and assessments
of any nature whatsoever together with all interest, penalties and
additions imposed with respect to such amounts.
Section 4.15 Certain Agreements. Except as disclosed in the
Parent SEC Reports filed prior to the date of this Merger Agreement,
neither Parent nor any of its subsidiaries is a party to any oral or
written (i) agreement, contract, indenture or other instrument relating
to Indebtedness (as defined below) in an amount exceeding $10,000,000
or (ii) other contract, agreement or commitment (except those entered
into in the ordinary course of business) having a Parent Material
Adverse Effect. "Indebtedness" means any liability in respect of (A)
borrowed money, (B) capitalized lease obligations, (C) the deferred
purchase price of property or services (other than trade payables in
the ordinary course of business) and (D) guarantees of any of the
foregoing incurred by any person other than Parent, as appropriate, or
any of their respective subsidiaries, except that Indebtedness shall
not include short term credit facilities entered into in the ordinary
course of business. Neither Parent nor any of its subsidiaries is in
default (with or without notice or lapse of time, or both) under any
contract, indenture, note, credit agreement, loan document, lease,
license or other agreement including, but not limited to, any Benefit
Plan, whether or not such default has been waived.
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Section 4.16 Patents, Trademarks, Etc. To the knowledge of
Parent, Parent and its subsidiaries have all patents, trademarks, trade
names, service marks, trade secrets, copyrights and other proprietary
intellectual property rights and licenses as are necessary in
connection with the businesses of Parent and its subsidiaries, and
Parent does not have any knowledge of any conflict with the rights of
Parent and its subsidiaries therein or any knowledge of any conflict by
them with the rights of others therein.
Section 4.17 Product Liability; Airworthiness. (a) Parent has
no knowledge of any claim, or the basis of any claim, against Parent or
any of its subsidiaries for injury to person or property of employees
or any third parties suffered as a result of the sale of any product or
performance of any service by Parent or any of its subsidiaries,
including claims arising out of the defective or unsafe nature of its
products or services. Parent and its subsidiaries have, and on the
Effective Date will have, full and adequate insurance coverage for
potential product liability claims against it.
(b) To the knowledge of Parent, all goods and services
designed, manufactured or sold by Parent or any of its subsidiaries
comply with all laws, requirements, specifications, rules and
regulations of all applicable government airworthiness agencies or
authorities (whether foreign or domestic, national or local) and none
of such products or services contain any material defects in
manufacturing, design or performance or other material defect which
renders such products or services or any component thereof defective,
deficient, nonconforming or unsuitable for their intended use. To the
knowledge of Parent, there is no publicly and formally announced rule
or regulation by any governmental authority of the United States or any
state thereof that could reasonably be expected to affect the various
airworthiness approvals, licenses, permits or certifications applicable
to the goods, services, assets, facilities or operations of Parent and
its subsidiaries.
Section 4.18 Environment. (i) As used herein, the term
"Environmental Laws" means all federal, state, local or Foreign Laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, or
industrial, toxic or hazardous substances or wastes into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
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handling of chemicals, pollutants, contaminants, or industrial, toxic
or hazardous substances or wastes, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.
(ii) To the knowledge of Parent, except as set forth in the
Parent SEC Reports, there are, with respect to Parent or any of its
subsidiaries, no past or present violations of Environmental Laws,
releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual
obligations which may reasonably be expected to give rise to any common
law environmental liability or any liability under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
("CERCLA") or similar state or local laws.
Section 4.19 Title to Assets; Liens. Parent and its
subsidiaries have (i) good and marketable title to all of their
inventory, accounts receivable, property, equipment and other assets,
and such assets are free and clear of any mortgages, liens, charges,
encumbrances, or title defects of any nature whatsoever and (ii) valid
and enforceable leases for the premises and the equipment, furniture
and fixtures purported to be leased by them.
Section 4.20 Accounting; Tax Matters. Neither Parent nor, to
its knowledge, any of its affiliates, has through the date hereof,
taken or agreed to take any action nor do they have any knowledge of
any circumstances which currently exist that would prevent (i) Parent
from accounting for the business combination to be effected by the
Merger as a "pooling of interests" or (ii) the Merger from qualifying
for federal income tax purposes as a "reorganization" within the
meaning of Section 368(a) of the Code.
Section 4.21 Parent Action. The Board of Directors of Parent
(at a meeting duly called and held) has by the requisite vote of
directors recommended the approval of the Stock Issuance Proposal by
the holders of Parent Common Stock and directed that the Stock Issuance
Proposal be submitted for consideration by Parent's shareholders
entitled to vote thereon at the Parent Meeting.
Section 4.22 Financial Advisor. Except for Goldman, Sachs &
Co., financial advisor to Parent, no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the
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transactions contemplated by this Merger Agreement based upon
arrangements made by or on behalf of Parent, and the fees and other
amounts payable to Goldman, Sachs & Co. as contemplated by this Section
will be as provided in that certain letter agreement, dated September
8, 1997, from Goldman, Sachs & Co. to Parent.
Section 4.23 Fairness Opinion. Parent has received the
opinion of Goldman, Sachs & Co., financial advisor to Parent, dated the
date hereof, to the effect that, as of the date hereof, the Exchange
Ratio pursuant to the Merger Agreement is fair from a financial point
of view to Parent.
ARTICLE IV-A
REPRESENTATIONS AND WARRANTIES REGARDING SUB
Parent and Sub jointly and severally represent and warrant to
the Company as follows:
Section 4A.1 Organization. Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. Sub has not engaged in any business (other than
certain organizational matters) since it was incorporated.
Section 4A.2 Capitalization. The authorized capital stock of
Sub consists of 1,000 shares of common stock, par value $1.00 per
share, 1,000 shares of which are validly issued and outstanding, fully
paid and nonassessable and are owned by Parent free and clear of all
liens, claims and encumbrances.
Section 4A.3 Authority Relative to this Merger Agreement. Sub
has the corporate power to enter into this Merger Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Merger Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by its Board of Directors and sole
shareholder, and no other corporate proceedings on the part of Sub are
necessary to authorize this Merger Agreement and the transactions
contemplated hereby. Except as referred to herein or in connection, or
in compliance, with the provisions of the HSR Act, the Securities Act,
the Exchange Act, the Foreign Laws and the environmental, corporation,
securities or blue sky laws or regulations of the various states, no
filing or registration with, or authorization, consent or approval of,
any public body or authority is necessary for the consummation by Sub
of the Merger or the transactions contemplated by this Merger
Agreement, other than filings, registrations, authorizations,
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consents or approvals the failure to make or obtain would not prevent
the consummation of the transactions contemplated hereby. The Merger
Agreement constitutes a valid and binding obligation of Sub enforceable
in accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors' rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor may be
brought.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent, except as set
forth in a disclosure schedule delivered by the Company concurrently
herewith (the "Company Disclosure Schedule"), (i) as set forth in the
first sentence of Section 5.1, the first four sentences of Section 5.4,
and Sections 5.2, 5.6, and 5.7, and, (ii) except for circumstances
that, taken in the aggregate, would not have a Company Material Adverse
Effect (as defined in Section 10.6), in the case of all other
representations and warranties herein, as follows:
Section 5.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the corporate power to carry
on its business as it is now being conducted or currently proposed to
be conducted. The Company is duly qualified as a foreign corporation to
do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of
its activities makes such qualification necessary. Complete and correct
copies as of the date hereof of the certificate of incorporation and
by-laws of the Company and each of its Significant Subsidiaries have,
to the extent requested, been delivered to Parent as part of the
Company Disclosure Schedule.
Section 5.2 Capitalization. The authorized capital stock of
the Company consists of 50,000,000 shares of Company Common Stock and
10,000,000 shares of Preferred Stock, $1 par value per share ("Company
Preferred Stock"). As of July 31, 1997, 25,329,725 (25,365,002 as of
August 31, 1997) shares of Company Common Stock were validly issued and
outstanding, fully paid and nonassessable, 218,796 (279,151 as of
August 31, 1997) shares of Company Common Stock were held in treasury
and no shares of Company Preferred Stock were issued, and there have
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been no material changes in such numbers of shares through the date
hereof. As of August 31, 1997, except for (i) employee and non-employee
director stock options to acquire 3,099,996 shares of Company Common
Stock at a weighted average exercise price of $17.297 per share, (ii)
the rights (the "Company Rights") issued pursuant to the Amended and
Restated Rights Agreement dated as of April 6, 1990, as amended,
between the Company and The First National Bank of Chicago, as Rights
Agent, as amended, (the "Company Rights Agreement"), (iii) 1,902,898
shares of Company Common Stock issuable upon conversion of the
Company's 7.75% Convertible Subordinated Notes due May 2004 and
2,674,418 shares of Company Common Stock issuable upon conversion of
the Company's 7.00% Convertible Subordinated Debentures due October
2012 (collectively, the "Convertible Debt") and (iv) 600,000 shares
issuable, at an exercise price of $9.00 per share, upon exercise of
warrants issued by the Company to certain lenders in 1993 and 1995 (the
"Warrants"), there are no options, warrants, calls or other rights,
agreements or commitments presently outstanding obligating the Company
to issue, deliver or sell shares of its capital stock or debt
securities, or obligating the Company to grant, extend or enter into
any such option, warrant, call or other such right, agreement or
commitment, and there have been no material changes in such numbers
through the date hereof.
Section 5.3 Subsidiaries. The only Significant Subsidiaries
of the Company are those named in the Company SEC Reports. Each
Significant Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the corporate power to carry on its business as
it is now being conducted or currently proposed to be conducted. Each
Significant Subsidiary is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of
its activities makes such qualification necessary. All the outstanding
shares of capital stock of each Significant Subsidiary are validly
issued, fully paid and nonassessable and those owned by the Company or
by a subsidiary of the Company are owned free and clear of any liens,
claims or encumbrances. There are no existing options, warrants, calls
or other rights, agreements or commitments of any character relating to
the issued or unissued capital stock or other securities of any of the
Significant Subsidiaries of the Company. Except as set forth in the
Company's Annual Report on Form 10-K for the year ended July 31, 1996
and except for wholly owned subsidiaries which are formed after the
date hereof in the ordinary course of business, the Company does not
directly or indirectly own any interest in any other
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corporation, partnership, joint venture or other business
association or entity.
Section 5.4 Authority Relative to this Merger Agreement. The
Company has the corporate power to enter into this Merger Agreement,
subject to the requisite approval of this Merger Agreement by the
holders of Company Common Stock, and to carry out its obligations
hereunder. The execution and delivery of this Merger Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Company's Board of Directors. This Merger Agreement
constitutes a valid and binding obligation of the Company enforceable
in accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors' rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor may be
brought. Except for the requisite approval of the holders of Company
Common Stock, no other corporate proceedings on the part of the Company
are necessary to authorize this Merger Agreement and the transactions
contemplated hereby. The Company is not subject to or obligated under
(i) any charter, by-law, indenture or other loan document provision or
(ii) any other contract, license, franchise, permit, order, decree,
concession, lease, instrument, judgment, statute, law, ordinance, rule
or regulation applicable to the Company or any of its subsidiaries or
their respective properties or assets which would be breached or
violated, or under which there would be a default (with or without
notice or lapse of time, or both), or under which there would arise a
right of termination, cancellation or acceleration of any obligation or
the loss of a material benefit, by its executing and carrying out this
Merger Agreement, other than, in the case of clause (ii) only, the laws
and regulations referred to in the next sentence. Except as referred to
herein or, with respect to the Merger or the transactions contemplated
thereby, in connection, or in compliance, with the provisions of the
HSR Act, the Securities Act, the Exchange Act, the Foreign Laws and the
State Laws (all of which required consents and approvals under Foreign
Laws and State Laws are identified in Schedule 5.4 to the Company
Disclosure Schedule), no filing by the Company or registration by the
Company with any public body or authority is necessary for, nor is any
authorization, consent or approval of any public body or authority
required to be obtained by the Company for, the consummation of the
Merger or the other transactions contemplated hereby.
Section 5.5 Reports and Financial Statements. The
Company has previously furnished Parent with true and complete
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copies of its (i) Annual Reports on Form 10-K for the three years ended
July 31, 1994, 1995, and 1996, as filed with the Commission, (ii)
Quarterly Reports on Form 10-Q for the quarters ended November 3, 1996,
February 2, 1997 and May 4, 1997, as filed with the Commission, (iii)
proxy statements related to all meetings of its shareholders (whether
annual or special) since July 31, 1994 and (iv) all other reports or
registration statements filed by the Company with the Commission since
July 31, 1994, except registration statements on Form S-8 relating to
employee benefit plans, which are all the documents (other than
preliminary material) that the Company was required to file with the
Commission since that date (clauses (i) through (iv) being referred to
herein collectively as the "Company SEC Reports"). As of their
respective dates, the Company SEC Reports complied in all material
respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the
Commission thereunder applicable to such Company SEC Reports. As of
their respective dates, the Company SEC Reports did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited
interim financial statements of the Company included in the Company SEC
Reports comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of
the Commission with respect thereto, and the financial statements
included in the Company SEC Reports, have been prepared in accordance
with GAAP applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial
position of the Company and its subsidiaries as at the dates thereof
and the results of their operations and changes in financial position
for the periods then ended subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments and
any other adjustments described therein.
Section 5.6 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports, since May 4, 1997, there has not
been (i) any event, condition, transaction, commitment, dispute or
other circumstance (financial or otherwise) of any character (whether
or not in the ordinary course of business) individually or in the
aggregate having a Company Material Adverse Effect; (ii) any damage,
destruction or loss, whether or not covered by insurance, which,
insofar as reasonably can be foreseen, in the future would have a
Company Material Adverse Effect; (iii) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to the capital stock of
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the Company, or (iv) any entry into any commitment or transaction
material to the Company and its subsidiaries taken as a whole
(including, without limitation, any borrowing or sale of assets) except
in the ordinary course of business consistent with past practice.
Section 5.7 Litigation. There is no suit, action or
proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries which,
either alone or in the aggregate, has, or is reasonably likely to have,
a Company Material Adverse Effect, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against
the Company or any of its subsidiaries having, or reasonably likely to
have, either alone or in the aggregate, any such Company Material
Adverse Effect.
Section 5.8 Information in Disclosure Documents. None of the
information with respect to the Company or its subsidiaries to be
included or incorporated by reference in the Proxy Statement or the
Registration Statement will, in the case of the Proxy Statement or any
amendments or supplements thereto, at the time of the mailing of the
Proxy Statement and any amendments or supplements thereto, and at the
time of the Company Meeting to be held in connection with the Merger,
or, in the case of the Registration Statement, at the time it becomes
effective and at the Effective Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they are made, not misleading. The
Proxy Statement will comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations
thereunder.
Section 5.9 Employee Benefit Plans. Except as disclosed in
the Company SEC Reports or as set forth in Section 5.9 of the Company
Disclosure Schedule, there are no employee benefit, compensation or
severance plans, agreements or arrangements, including "employee
benefit plans," as defined in Section 3(3) of ERISA, and including, but
not limited to, plans, agreements or arrangements relating to former
employees, including, but not limited to, retiree medical plans,
maintained by the Company or any of its subsidiaries or collective
bargaining agreements to which the Company or any of its subsidiaries
is a party (together, the "Company Benefit Plans"). To the knowledge of
the Company, no default exists with respect to the obligations of the
Company or any of its subsidiaries under such Company Benefit Plan.
Since August 1, 1995, there have been no disputes or grievances subject
to any
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grievance procedure, unfair labor practice proceedings, arbitration or
litigation under such Company Benefit Plans, which have not been
finally resolved, settled or otherwise disposed of, nor is there any
default, or any condition which, with notice or lapse of time or both,
would constitute such a default, under any such Company Benefit Plans,
by the Company or its subsidiaries or, to the knowledge of the Company
and its subsidiaries, any other party thereto. Since August 1, 1995,
there have been no strikes, lockouts or work stoppages or slowdowns, or
to the knowledge of the Company and its subsidiaries, jurisdictional
disputes or organizing activity occurring or threatened with respect to
the business or operations of the Company or its subsidiaries. Neither
the execution of the Merger Agreement nor the consummation of the
transactions contemplated hereby will (either alone or upon the
occurrence of additional events or acts) result in, cause the
accelerated vesting or delivery of, or increase the amount or value of,
any payment or benefit to any employee of the Company or any of its
subsidiaries. Without limiting the generality of the foregoing, no
amount paid or payable by the Company or any of its subsidiaries in
connection with the transactions contemplated hereby (either solely as
a result thereof or as a result of such transactions in conjunction
with any other event) will be an "excess parachute payment" within the
meaning of Section 280G of the Code.
Section 5.10 ERISA. All Company Benefit Plans have been
administered in accordance, and are in compliance, with the applicable
provisions of ERISA. Each of the Company Benefit Plans which is
intended to meet the requirements of Section 401(a) of the Code has
been determined by the Internal Revenue Service to be "qualified,"
within the meaning of such section of the Code, and the Company knows
of no fact which is likely to have an adverse effect on the qualified
status of such plans. None of the Company Benefit Plans which are
defined benefit pension plans have incurred any "accumulated funding
deficiency" (whether or not waived) as that term is defined in Section
412 of the Code and under Financial Accounting Standard 87, the fair
market value of the assets of each such plan equals or exceeds the
accrued benefit obligations of such plan. To the knowledge of the
Company, there are not now nor have there been any non-exempt
"prohibited transactions," as such term is defined in Section 4975 of
the Code or Section 406 of ERISA, involving the Company's Benefit Plans
which could subject the Company, its subsidiaries or Parent to the
penalty or tax imposed under Section 502(i) of ERISA or Section 4975 of
the Code. No Company Benefit Plan which is subject to Title IV of ERISA
has been completely or partially terminated; no proceedings to
completely or partially terminate any Company Benefit Plan have
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been instituted within the meaning of Subtitle C of said Title IV of
ERISA; and no reportable event, within the meaning of Section 4043(c)
of said Subtitle C for which the 30-day notice requirement of ERISA has
not been waived, has occurred with respect to any Company Benefit Plan.
Neither the Company nor any of its subsidiaries has made a complete or
partial withdrawal, within the meaning of Section 4201 of ERISA, from
any multiemployer plan which has resulted in, or is reasonably expected
to result in, any withdrawal liability to the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries has
engaged in any transaction described in Section 4069 of ERISA within
the last five years. There does not now exist, nor do any circumstances
exist that could result in, any liability of the Company or any of its
subsidiaries (or any entity, trade or business that is or was at any
time required to be aggregated with the Company or any of its
subsidiaries under Section 414(b), (c), (m) or (o) of the Code) under
Title IV of ERISA, Section 302 of ERISA, Sections 412 and 4971 of the
Code, to the knowledge of the Company, the continuation coverage
requirements of Section 601 et seq. of ERISA and Section 4980B of the
Code, and similar provisions of foreign laws or regulations, other than
such liabilities that arise solely out of, or relate solely to, the
Company Benefit Plans, that would be a liability of the Company, its
subsidiaries or Parent following the Effective Date.
Section 5.11 Takeover Provisions Inapplicable. As of the date
hereof and at all times thereafter, until and including the Effective
Date, Section 203 of the DGCL, the Company Rights Agreement and Article
Sixteenth of the Company's Restated Certificate of Incorporation are,
and shall be, inapplicable to the Merger and the transactions
contemplated by this Merger Agreement.
Section 5.12 Company Action. The Board of Directors of the
Company (at a meeting duly called and held) has by the requisite vote
of directors (a) determined that the Merger is advisable and fair and
in the best interests of the Company and its shareholders, (b) approved
the Merger in accordance with the provisions of Section 251 of the
DGCL, (c) recommended the approval of this Merger Agreement and the
Merger by the holders of the Company Common Stock and directed that the
Merger be submitted for consideration by the Company's shareholders
entitled to vote thereon at the Company Meeting, (d) taken all
necessary steps to render Article Sixteenth of the Company's Restated
Certificate of Incorporation inapplicable to the Merger and the
transactions contemplated by this Merger Agreement, (e) taken all
necessary steps to render the Company Rights Agreement inapplicable to
the Merger and the transactions contemplated by this Merger Agreement
and (f)
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adopted any necessary resolution having the effect of causing the
Company not to be subject, to the extent permitted by applicable law,
to any state takeover law that may purport to be applicable to the
Merger and the transactions contemplated by this Merger Agreement.
Section 5.13 Fairness Opinion. The Company has received the
opinion of Morgan Stanley & Co. Incorporated ("Morgan Stanley"),
financial advisor to the Company, dated the date hereof, to the effect
that the Exchange Ratio is fair from a financial point of view to the
holders of shares of Company Common Stock.
Section 5.14 Financial Advisor. Except for Morgan Stanley, no
broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this Merger Agreement based upon
arrangements made by or on behalf of the Company, and the fees and
commissions payable to Morgan Stanley as contemplated by this Section
will be the amount set forth in that certain letter, dated December 20,
1995, from Morgan Stanley to the Company.
Section 5.15 Compliance with Applicable Laws. (i) The Company
and its subsidiaries hold all permits, licenses, variances, exemptions,
orders and approvals (the "Company Permits") of all Governmental
Entities necessary for the operation of the businesses of the Company
and its subsidiaries; (ii) to the knowledge of the Company, the Company
and its subsidiaries are in compliance with the terms of the Company
Permits; (iii) to the knowledge of the Company, except as disclosed in
the Company SEC Reports filed prior to the date of this Merger
Agreement, the businesses of the Company and its subsidiaries are not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity; and (iv) to the knowledge of the Company, no
investigation or review by any Governmental Entity with respect to the
Company or any of its subsidiaries is pending, or, to the knowledge of
the Company, threatened, nor has any Governmental Entity indicated an
intention to conduct the same provided, however, that the foregoing
representations are made as to ERISA and environmental matters, only as
to the Company's knowledge, to the extent contemplated by Sections 5.10
and 5.21.
Section 5.16 Liabilities. As of May 4, 1997, neither the
Company nor any of its subsidiaries has any liabilities or obligations
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the
consolidated financial statements prepared in accordance with GAAP
which are not
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disclosed or provided for in the most recent Company SEC Reports. To
the knowledge of the Company, there was no basis, as of May 4, 1997,
for any claim or liability (absolute, accrued, contingent or otherwise)
of a nature required to be disclosed on a balance sheet or in the
related notes to the consolidated financial statements prepared in
accordance with GAAP which is not reflected in the Company SEC Reports.
Section 5.17 Taxes. Each of the Company and its subsidiaries
has filed all tax returns required to be filed by any of them and has
paid (or the Company has paid on its behalf), or has set up an adequate
reserve for the payment of, all taxes required to be paid in respect of
the periods covered by such returns. The information contained in such
tax returns is true, complete and accurate. Neither the Company nor any
subsidiary of the Company is delinquent in the payment of any tax,
assessment or governmental charge. No deficiencies for any taxes have
been proposed, asserted or assessed against the Company or any of its
subsidiaries that have not been finally settled or paid in full and no
requests for waivers of the time to assess any such tax are pending and
there are no outstanding audits, examinations, deficiency litigations
or refund litigations with respect to Parent or any of its
subsidiaries. The federal income tax returns of the Company and each of
its subsidiaries consolidated in such returns have been examined by and
settled with the Internal Revenue Service for all years through
December 31, 1985.
Section 5.18 Certain Agreements. Except as disclosed in the
Company SEC Reports filed prior to the date of this Merger Agreement,
neither the Company nor any of its subsidiaries is a party to any oral
or written (i) agreement, contract, indenture or other instrument
relating to Indebtedness in an amount exceeding $2,000,000, (ii)
agreement which, after giving effect to the transactions contemplated
by this Merger Agreement, purports to restrict or bind Parent or any of
its subsidiaries other than the Surviving Corporation and its
subsidiaries in any respect that could have a Parent Material Adverse
Effect, (iii) contract, agreement or commitment (except those entered
into in the ordinary course of business) having a Company Material
Adverse Effect, (iv) contract, agreement or commitment, whether or not
in the ordinary course of business, that provides for payments by the
Company in fiscal 1997 in excess of $5 million or (v) contract,
agreement or commitment, whether or not in the ordinary course of
business, that provides for payments to the Company in one year in
fiscal 1997, or reasonably expected in fiscal 1998, in excess of $25
million. Neither the Company nor any of its subsidiaries is in default
(or would be in default with notice or lapse of time, or both) under
any contract, indenture, note,
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credit agreement, loan document, lease, license or other agreement
including, but not limited to, any Company Benefit Plan, whether or not
such default has been waived. Except as set forth in Section 5.18 of
the Company Disclosure Schedule, none of the Company or any of its
subsidiaries is a party to and bound by any contract, agreement,
commitment, plan, arrangement or other understanding which upon
execution of this Merger Agreement or consummation of the transactions
contemplated hereby will (either alone or upon the occurrence of
additional acts or events) result in any payment becoming due from the
Company or Parent or any of their subsidiaries.
Section 5.19 Patents, Trademark, Etc. To the knowledge of the
Company, the Company and its subsidiaries have all patents, trademarks,
trade names, service marks, trade secrets, copyrights and licenses and
other proprietary intellectual property rights and licenses as are
necessary in connection with the businesses of the Company and its
subsidiaries, and the Company does not have any knowledge of any
conflict with the rights of the Company and its subsidiaries therein or
any knowledge of any conflict by them with the rights of others
therein.
Section 5.20 Product Liability; Airworthiness. (a) The
Company has no knowledge of any claim, or the basis of any claim,
against the Company or any of its subsidiaries for injury to person or
property of employees or any third parties suffered as a result of the
sale of any product or performance of any service by the Company or any
of its subsidiaries, including claims arising out of the defective or
unsafe nature of its products or services. The Company and its
subsidiaries have, and on the Effective Date will have, full and
adequate insurance coverage for potential product liability claims
against it.
(b) To the knowledge of the Company, all goods and services
designed, manufactured or sold by the Company or any of its
subsidiaries comply with all laws, requirements, specifications, rules
and regulations of all applicable government airworthiness agencies or
authorities (whether foreign or domestic, national or local) and none
of such products or services contain any material defects in
manufacturing, design or performance or other material defect which
renders such products or services or any component thereof defective,
deficient, nonconforming or unsuitable for their intended use. To the
knowledge of the Company, there is no publicly and formally announced
rule or regulation by any governmental authority of the United States
or any state thereof that could reasonably be expected to affect the
various airworthiness approvals, licenses, permits or certifications
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applicable to the goods, services, assets, facilities or operations of
the Company and its subsidiaries.
Section 5.21 Environment. To the knowledge of the Company,
there are, except as set forth in the Company SEC Reports, with respect
to the Company or any of its subsidiaries, no past or present
violations of Environmental Laws, releases of any material into the
environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which reasonably may be expected
to give rise to any common law liability or any liability under CERCLA
or similar state or local laws.
Section 5.22 Title to Assets; Liens. The Company has good and
marketable title to all of its inventory, accounts receivable,
property, equipment and other assets, and except as disclosed in the
Company's SEC Reports such assets are free and clear of any mortgages,
liens, charges, encumbrances, or title defects of any nature
whatsoever. The Company and its subsidiaries have valid and enforceable
leases for the premises and the equipment, furniture and fixtures
purported to be leased by them.
Section 5.23 Accounting; Tax Matters. Neither the Company
nor, to its knowledge, any of its affiliates, has through the date
hereof, taken or agreed to take any action nor do they have knowledge
of any circumstances which currently exist that would prevent Parent
from accounting for the business combination to be effected by the
Merger as a "pooling of interests."
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the
Merger. Prior to the Effective Date, unless Parent shall otherwise
agree in writing:
(i) the Company shall, and shall cause its subsidiaries to,
carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore
conducted, and shall, and shall cause its subsidiaries to, use
their diligent efforts to preserve intact their present business
organizations, keep available the services of their present
officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with them
to the end that their goodwill
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and ongoing businesses shall be unimpaired at the Effective Date.
The Company shall, and shall cause its subsidiaries to, (A)
maintain insurance coverages and its books, accounts and records
in the usual manner consistent with prior practices; (B) comply in
all material respects with all laws, ordinances and regulations of
Governmental Entities applicable to the Company and its
subsidiaries; (C) maintain and keep its properties and equipment
in good repair, working order and condition, ordinary wear and
tear excepted; and (D) perform in all material respects its
obligations under all contracts and commitments to which it is a
party or by which it is bound, in each case other than where the
failure to so maintain, comply or perform, either individually or
in the aggregate, would not reasonably be expected to result in a
Company Material Adverse Effect;
(ii) the Company shall not and shall not propose to (A) sell
or pledge or agree to sell or pledge any capital stock owned by it
in any of its subsidiaries, (B) amend its Restated Certificate of
Incorporation or Bylaws, (C) split, combine or reclassify its
outstanding capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of the Company, or
declare, set aside or pay any dividend or other distribution
payable in cash, stock or property (other than Regular Company
Dividends), or (D) directly or indirectly redeem, purchase or
otherwise acquire or agree to redeem, purchase or otherwise
acquire any shares of Company capital stock;
(iii) the Company shall not, nor shall it permit any of its
subsidiaries to, (A) except as required or permitted by this
Merger Agreement, issue, deliver or sell or agree to issue,
deliver or sell any additional shares of, or rights of any kind to
acquire any shares of, its capital stock of any class, or any
option, rights or warrants to acquire, or securities convertible
into, shares of capital stock other than issuances of Company
Common Stock pursuant to the exercise of employee and non-employee
director stock options or the Warrants or upon conversion of the
Convertible Debt; (B) acquire (other than a transaction involving
TOLO, Inc., in the amount of approximately $30 million), lease or
dispose or agree to acquire, lease or dispose of any capital
assets or any other assets other than in the ordinary course of
business, (C) incur additional Indebtedness (except in the
ordinary course of business, pursuant to arrangements currently in
place and except for the incurrence of $85 million in Indebtedness
for a term of less than one year
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to replace the current accounts receivable sales program and to
provide for the acquisition of TOLO, Inc.) or encumber or grant a
security interest in any asset or enter into any other material
transaction other than in each case in the ordinary course of
business; (D) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest
in, or by any other manner, any business or any corporation,
partnership, association or other business organization or
division thereof, except that the Company may create new wholly
owned subsidiaries in the ordinary course of business; or (E)
enter into any contract, agreement, commitment or arrangement with
respect to any of the foregoing which is binding;
(iv) except as set forth in Schedule 6.1 of the Company
Disclosure Schedule, the Company shall not, nor shall it permit,
any of its subsidiaries to, except as required to comply with
applicable law and except as provided in Section 7.5 hereof, (A)
adopt, enter into, terminate, expand the applicability of or amend
any bonus, profit sharing, compensation, severance, termination,
stock option, pension, retirement, deferred compensation,
employment or other Company Benefit Plan, agreement, trust, fund
or other arrangement for the benefit or welfare of any director,
officer or current or former employee, (B) increase in any manner
the compensation or fringe benefit of any director, officer or
employee (except for normal increases in the ordinary course of
business that are consistent with past practice and that, in the
aggregate, do not result in a material increase in benefits or
compensation expense to the Company and its subsidiaries relative
to the level in effect prior to such amendment), (C) pay any
benefit not provided under any existing plan or arrangement, (D)
grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Company Benefit Plan
(including, without limitation, the grant of stock options, stock
appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of existing
restrictions in any benefit plans or agreements or awards made
thereunder), (E) take any action to fund or in any other way
secure the payment of compensation or benefits under any employee
plan, agreement, contract or arrangement or Company Benefit Plan
other than in the ordinary course of business consistent with past
practice, or (F) adopt, enter into, amend or terminate any
contract, agreement, commitment or arrangement to do any of the
foregoing which is binding;
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(v) the Company shall not, nor shall it permit any of its
subsidiaries to, make any investments in non-investment grade
securities provided, however, that the Company will be permitted
to create new wholly owned subsidiaries in the ordinary course of
business; and
(vi) the Company shall not, nor shall it permit any of its
subsidiaries to, take or cause to be taken any action, whether
before or after the Effective Date, which would disqualify the
Merger as a "pooling of interests" for accounting purposes or as a
"reorganization" within the meaning of Section 368(a) of the Code.
Section 6.2 Conduct of Business by Parent and Sub Pending the
Merger. (a) Parent. Prior to the Effective Date, unless the Company
shall otherwise agree in writing or except as otherwise required by
this Merger Agreement: (i) Parent shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as
heretofore conducted, and shall, and shall cause its material
subsidiaries to, use their best efforts to preserve intact their
present business organizations, keep available the services of their
present officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with them to
the end that their goodwill and ongoing businesses shall be unimpaired
at the Effective Date, provided, however, that nothing contained herein
shall prevent Parent from creating new wholly owned subsidiaries in the
ordinary course of business as long as the creation of such
subsidiaries (either alone or in the aggregate) will not reasonably be
expected to have a Parent Material Adverse Effect; (ii) Parent shall
not, nor shall it permit any of its subsidiaries to, take or cause to
be taken any action, whether before or after the Effective Date, which
would disqualify the Merger as a "pooling of interests" for accounting
purposes or as a "reorganization" within the meaning of Section 368(a)
of the Code and (iii) Parent shall not (A) except as required or
permitted by this Merger Agreement, issue, deliver or sell or agree to
issue, deliver or sell any additional shares of, or rights of any kind
to acquire any shares of, (1) Parent Common Stock or (2) any option,
rights or warrants to acquire, or securities convertible into, shares
of Parent Common Stock (collectively, "Parent Common Stock
Equivalents") (other than (x) issuances of, deliverances of or sales of
or agreements to issue, deliver or sell Parent Common Stock or Parent
Common Stock Equivalents representing, in the aggregate, less than 12%
of the outstanding Parent Common Stock as of the date hereof, (y)
issuances of Parent Common Stock pursuant to the exercise of employee
stock options and other options, warrants and rights
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outstanding on the date hereof and (z) the grant of additional employee
stock options between the date hereof and the Effective Date in the
ordinary course of business and in amounts and on terms which are
customary for Parent during the fiscal periods occurring during such
period), (B) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in, or by any
other manner, any business or any corporation, partnership,
association, or other business organization or division thereof
involving cash consideration in excess of $250 million in the aggregate
for all such transactions (excluding the acquisition of the company set
forth in Section 6.2 of the Parent Disclosure Schedule), or (C) enter
into any contract, agreement, commitment or arrangement with respect to
any of the foregoing which is binding.
(b) Sub. During the period from the date of this Merger
Agreement to the Effective Date, Sub shall not engage in any activities
of any nature except as provided in or contemplated by this Merger
Agreement.
Section 6.3 Notice of Breach. Each party shall promptly give
written notice to the other party upon becoming aware of the occurrence
or, to its knowledge, impending or threatened occurrence, of any event
which would cause or constitute a breach of any of its representations,
warranties or covenants contained or referenced in this Merger
Agreement and will use its best efforts to prevent or promptly remedy
the same. Any such notification shall not be deemed an amendment of the
Company Disclosure Schedule or the Parent Disclosure Schedule.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. Each of the Company and
Parent and their respective subsidiaries shall afford to the other and
to the other's accountants, counsel and other representatives full
access during normal business hours (and at such other times as the
parties may mutually agree) throughout the period prior to the
Effective Date to all of its properties, books, contracts, commitments,
records and personnel and, during such period, each shall furnish
promptly to the other (i) a copy of each report, schedule and other
document filed or received by it pursuant to the requirements of
federal or state securities laws, and (ii) all other information
concerning its business, properties and personnel as the other may
reasonably request. Each of the Company and Parent shall hold, and
shall cause their respective employees
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and agents to hold, in confidence all such information in accordance
with the terms of the Confidentiality Agreements dated as of August 1,
1997 between Parent and the Company (the "Confidentiality Agreements").
Section 7.2 Registration Statement/Proxy Statement. (a) As
promptly as practicable after the execution of this Merger Agreement,
the Company and Parent shall prepare and file with the Commission
preliminary proxy materials for use at the Company Meeting and the
Parent Meeting. As promptly as practicable after comments are received
from the Commission with respect to the preliminary proxy materials and
after the furnishing by the Company and Parent of all information
required to be contained therein, the Company and Parent shall file
with the Commission the definitive proxy statements for use at their
respective shareholder meetings, and Parent shall file with the
Commission the Registration Statement and Parent and the Company shall
use all reasonable efforts to cause the Registration Statement to
become effective as soon thereafter as practicable.
(b) Parent and the Company shall make all necessary filings
with respect to the Merger, under the Securities Act and the Exchange
Act and the rules and regulations thereunder, under applicable blue sky
or similar securities laws and shall use all reasonable efforts to
obtain required approvals and clearances with respect thereto.
Section 7.3 Compliance with the Securities Act. (a) Prior to
the Effective Date the Company shall cause to be delivered to Parent an
opinion (reasonably satisfactory to counsel for Parent) of the general
counsel of the Company or such law firm as may be reasonably
satisfactory to Parent, identifying all persons who were, in his or its
opinion, at the time the Company Meeting convened in accordance with
Section 3.5, "affiliates" of the Company as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act (the
"Affiliates").
(b) The Company shall use its diligent efforts to cause each
person who is identified as a possible Affiliate in the opinion
referred to in clause (a) above to deliver to Parent not less than 30
days prior to the Effective Date, a written agreement substantially in
the form attached hereto as Exhibit 7.3(b)-1.
(c) Parent shall use its best efforts to publish as promptly
as practicable financial information (including combined sales and net
income) covering at least 30 days of post-merger operations, as
contemplated by FRR No. 1; provided,
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however, that if the Effective Date occurs in the second month of a
calendar quarter, the requirement of this paragraph (c) shall be
satisfied by Parent's customary announcement, in accordance with its
past practice, of its quarterly financial results.
Section 7.4 Stock Exchange Listing. Parent shall use its best
efforts to list on the NYSE, upon official notice of issuance, the
shares of Parent Common Stock to be issued pursuant to the Merger.
Section 7.5 Employment Arrangements. (a) After the Effective
Date, Parent shall, or shall cause the Surviving Corporation to, honor
in accordance with their terms, all employment, severance, consulting
and other compensation contracts between the Company or any of its
subsidiaries and any current or former director, officer or employee
thereof, and all provisions for vested benefits or other vested amounts
earned or accrued through the Effective Date under any Company Benefit
Plan, each as of the date hereof except for changes thereto which are
(i) not material, (ii) permitted by this Merger Agreement, (iii) set
forth on Schedule 7.5 hereto, or (iv) otherwise agreed to by the
parties hereto.
(b) Until December 31, 1998, Parent shall provide, or shall
cause the Surviving Corporation to provide, generally to the officers
and employees of the Surviving Corporation and its subsidiaries,
employee benefits, including, without limitation, pension benefits,
health and welfare benefits, severance arrangements, stock option plans
and other executive compensation arrangements, on terms and conditions
in the aggregate that are comparable to those provided under the
Company Benefit Plans as of the date hereof. In the event that
employees of the Surviving Corporation are permitted to participate in
Parent Benefit Plans, these employees will be given credit for all
years of service with the Company for the purposes of eligibility,
vesting and vacation accruals, but not for any other purposes.
(c) With regards to the Company's Supplemental Retirement
Plan (Restated, 1997) (the "SERP"), the parties agree, over and above
the provisions of paragraph (a) hereof, which, to the extent not
inconsistent herewith, shall be applicable to the SERP, as follows:
(i) The execution of this Merger Agreement shall constitute an
amendment by the Company to the SERP, effective as of one
day prior to the date of this Merger Agreement, to provide
that paragraph 2.07 shall not apply to any active
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employee participant until six months after the Effective
Date (the "Post Closing Date"). The Company and Parent
agree that during the period prior to the Post Closing Date
they will negotiate with each active employee participant
to structure alternative arrangements with a goal of
maintaining for the participants a competitive retirement
and benefits program. If alternative arrangements are not
mutually agreed to by the Company, Parent and any
individual participant by the Post Closing Date, the
provision of paragraph 2.07 will become applicable on the
Post Closing Date with respect to such participant.
(ii) Parent will cause the Surviving Corporation to continue the
SERP and to continue benefit accruals thereunder, with
provisions no less favorable than those existing on the
date of this Agreement, until the close of business on
December 31, 1998.
(d) With regards to the special incentive program authorized
by the Compensation and Benefits Committee of the Company's Board of
Directors in relation to the Company's F-14 claim against the U.S.
Navy, Parent will cause the Surviving Corporation to preserve such
program and make no changes or modifications which would make its
benefits less favorable than the program currently provides.
Section 7.6 Indemnification. (a) From and after the Effective
Date, Parent shall indemnify, defend and hold harmless the officers,
directors and employees of the Company (the "Indemnified Parties")
against all losses, expenses, claims, damages or liabilities (i)
arising out of the transactions contemplated by this Merger Agreement
or arising as a result thereof or (ii) otherwise arising prior to the
Effective Date to the fullest extent, in the case of (i) or (ii),
permitted or required under (A) applicable law, (B) any indemnification
agreements between the Company and any such person and (C) the
Company's Certificate of Incorporation and By-Laws as filed in the
Company SEC Reports. Parent agrees to cause Surviving Corporation to
maintain in effect for not less than four years after the Effective
Date coverage no less favorable than the current policies of directors'
and officers' liability insurance maintained by the Company with
respect to matters occurring prior to the Effective Date; provided,
however, that Surviving Corporation shall not be required to pay an
annual premium for such insurance in excess of $859,500,
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but in such case shall purchase as much coverage as possible for such
amount.
(b) In the event that any action, suit, proceeding or
investigation relating hereto or to the transactions contemplated by
this Merger Agreement is commenced, whether before or after the
Effective Date, the parties hereto agree to cooperate and use their
respective reasonable efforts to vigorously defend against and respond
thereto.
Section 7.7 Consents. (a) Each of the parties will use its
reasonable best efforts to obtain as promptly as practicable all
consents of any governmental entity or any other person required in
connection with, and waivers of any violations or rights of termination
that may be caused by, the consummation of the transactions
contemplated by this Agreement.
(b) In furtherance and not in limitation of the foregoing,
Parent shall use its reasonable best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any antitrust, competition or
trade regulatory laws, rules or regulations of any domestic or foreign
government or governmental authority or any multinational authority;
provided however, that nothing in this Agreement shall require Parent
to agree to hold separate or to divest any of the businesses, product
lines or assets of Parent or the Company or any of their respective
subsidiaries or affiliates or take any other action, if such holding
separate, divestiture or other action would have a Parent Material
Adverse Effect or a Company Material Adverse Effect.
(c) Any party hereto shall promptly inform the others of any
material communication from the United States Federal Trade Commission,
the Department of Justice, the European Economic Area or any other
domestic or foreign government or governmental or multinational
authority regarding any of the transactions contemplated by this
Agreement. If any party or any affiliate thereof receives a request for
additional information or documentary material from any such government
or authority with respect to the transactions contemplated by this
Agreement, then such party will endeavor in good faith to make, or
cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response in
compliance with such request. Parent and the Company will consult and
cooperate with one another with respect to (and prior to) any
understandings, undertakings or agreements (oral or written) which are
proposed to be made or entered into with the Federal Trade Commission,
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the Department of Justice, the European Economic Area or any other
domestic or foreign government or governmental or multinational
authority in connection with the transactions contemplated by this
Agreement, and no such understanding, undertaking or agreement shall be
made or entered into without the consent of Parent.
Section 7.8 Additional Agreements. (a) Subject to the terms
and conditions herein provided (including, without limitation, Section
7.7), each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions
contemplated by this Merger Agreement, including using all reasonable
efforts to obtain all necessary waivers, consents and approvals, to
effect all necessary registrations and filings (including, but not
limited to, filings with all applicable Governmental Entities) and to
lift any injunction or other legal bar to the Merger (and, in such
case, to proceed with the Merger as expeditiously as possible), subject
to the appropriate vote of the shareholders of the Company.
Notwithstanding the foregoing, but subject to Section 7.7, there shall
be no action required to be taken and no action will be taken in order
to consummate and make effective the transactions contemplated by this
Merger Agreement if such action, either alone or together with another
action, would be reasonably likely to result in a Company Material
Adverse Effect or a Parent Material Adverse Effect.
(b) In case at any time after the Effective Date any further
action is necessary or desirable to carry out the purposes of this
Merger Agreement, the proper officers and/or directors of Parent, the
Company and the Surviving Corporation shall take all such necessary
action.
(c) Following the Effective Date, (i) Parent shall use its
best efforts to conduct its business, and shall cause the Surviving
Corporation to use its best efforts to conduct its business, except as
otherwise contemplated by this Merger Agreement, in a manner which
would not jeopardize the characterization of the Merger as a
reorganization within the meaning of Section 368(a) of the Code, and
(ii) Parent shall not take, and shall not permit the Surviving
Corporation to take, any action that would cause the Merger to fail to
qualify as a reorganization within the meaning of Section 368(a) of the
Code.
Section 7.9 No Solicitation. (a) Neither the Company nor any
of its subsidiaries shall, directly or
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indirectly, take (nor shall the Company authorize or permit its
subsidiaries, officers, directors, employees, representatives,
investment bankers, attorneys, accountants or other agents or
affiliates, to take) any action to (i) encourage, solicit or initiate
the submission of any Acquisition Proposal, (ii) enter into any
agreement with respect to any Acquisition Proposal or (iii) participate
in any way in discussions or negotiations with, or furnish any
information to, any person in connection with, or take any other action
to facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal. The Company will promptly communicate to Parent that such a
solicitation has been received by the Company, or that any such
information has been requested from it or that such negotiations or
discussions have been sought to be initiated with it. "Acquisition
Proposal" shall mean any proposed (A) merger, consolidation or similar
transaction involving the Company, (B) sale, lease or other disposition
directly or indirectly by merger, consolidation, share exchange or
otherwise of assets of the Company or its subsidiaries representing 30%
or more of the consolidated assets of the Company and its subsidiaries,
(C) issue, sale, or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
(or options, rights or warrants to purchase, or securities convertible
into, such securities) representing 30% or more of the voting power of
the Company or (D) transaction in which any person shall acquire
beneficial ownership (as such term is defined in Rule 13d-3 under the
Exchange Act), or the right to acquire beneficial ownership or any
"group" (as such term is defined under the Exchange Act) shall have
been formed which beneficially owns or has the right to acquire
beneficial ownership of 15% or more of the outstanding Company Common
Stock.
(b) Notwithstanding anything in this Agreement to the contrary
(including without limitation clause (a) of this Section 7.9), to the
extent the Company's Board of Directors receives a communication with
respect to an Acquisition Proposal, which the Board of Directors
determines, after consultation with its financial advisors, may be
reasonably likely to result in a transaction (an "Alternative
Transaction") that is more favorable to the shareholders of the Company
than the transactions contemplated by the Merger and this Merger
Agreement (taking into account the nature of the proposed transaction,
the nature and amount of the consideration, the likelihood of
completion and any other factors deemed appropriate by the Board of
Directors), the Board of Directors may engage in any negotiations
concerning, or provide any confidential information or data to, or have
any discussions with, any person relating to an Alternative
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Transaction, or otherwise facilitate any effort or attempt to make or
implement an Alternative Transaction; provided, however, that upon
engaging in such negotiations or discussions, providing such
information or otherwise facilitating any effort or attempt to make or
implement an Alternative Transaction, the Company shall give notice to
Parent of the Company's engagement in such activities ("Alternative
Transaction Notice"). Prior to furnishing nonpublic information to, or
entering into discussions or negotiations with, any other persons or
entities, the Company shall obtain from such person or entity an
executed confidentiality agreement with terms no less favorable, taken
as a whole, to the Company than those contained in the Confidentiality
Agreements, but which confidentiality agreement shall not include any
provision calling for an exclusive right to negotiate with the Company,
and the Company shall advise Parent of the nature of such nonpublic
information delivered to such person reasonably promptly following its
delivery to the requesting party.
Section 7.10 Takeover Provisions Inapplicable. The Company
shall (a) take all action (including, if required, redeeming all of the
outstanding Company Rights or amending or terminating the Company
Rights Agreement) so that the entering into of this Agreement and the
consummation of the transactions contemplated hereby will not result in
the grant of any rights to any person under the Company Rights
Agreement to purchase or receive additional shares of capital stock of
the Company or enable or require the Company Rights to be exercised,
distributed or triggered in any way and (b) take all action as may be
necessary to render Article Sixteenth of the Company's Restated
Certificate of Incorporation inapplicable to this Merger Agreement and
the transactions contemplated hereby.
Section 7.11 Board Composition. Parent shall take all
necessary action (including, without limitation, increasing the size of
its Board of Directors), such that, on or immediately after the
Effective Date, three members of the current Board of Directors of the
Company, who shall be selected by the Board of Directors of Parent,
shall be appointed to the Board of Directors of Parent.
Section 7.12 Certain Company Indebtedness. (a) At or prior to
the Effective Date, the Company shall cause to be redeemed all
outstanding 9.35% Series A Senior Notes Due January 29, 2000, 9.35%
Series B Senior Notes Due January 29, 2000 and 9.33% Series C Senior
Notes Due December 15, 2001, which are each governed by the Amended and
Restated Note Agreement dated as of January 1, 1996.
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(b) Parent and the Company agree to cooperate and use their best
efforts to obtain any necessary consents, waivers or other
modifications of the indenture dated as of May 15, 1994, between the
Company and IBJ Schroder Bank & Trust Company, as trustee, governing
the 11 5/8% Senior Notes due 2003 issued by the Company; provided that
in connection with obtaining such consents, waivers or modifications
neither Parent nor the Company will be required to make any payment or
take any other action which is not commercially reasonable.
ARTICLE VIII
CONDITIONS PRECEDENT
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the
Merger shall be subject to the fulfillment at or prior to the Effective
Date of the following conditions:
(a) This Merger Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote of
the holders of the Company Common Stock.
(b) The Stock Issuance Proposal shall have been approved by
the requisite vote of the holders of Parent Common Stock.
(c) The Parent Common Stock issuable in the Merger shall have
been authorized for listing on the NYSE upon official notice of
issuance.
(d) The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated and any
authorization, consent or approval required under any Antitrust Law
shall have been obtained or any waiting period applicable to the review
of the transactions contemplated hereby shall have expired or been
terminated.
(e) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the Commission and remain in effect.
(f) No preliminary or permanent injunction or other order by
any court or other judicial or administrative body of competent
jurisdiction which prohibits or prevents the consummation of the Merger
shall have been issued and remain in
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effect (each party, subject to Section 7.7, agreeing to use its best
efforts to have any such injunction lifted).
(g) Parent and the Company shall have received letters from
Ernst & Young LLP and Deloitte & Touche LLP, respectively, to the
effect that the Merger qualifies for "pooling of interests" accounting
treatment if consummated in accordance with this Merger Agreement.
Section 8.2 Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Date of the
additional following conditions, unless waived by the Company:
(a) (i) Parent and Sub shall have performed in all material
respects their agreements contained in this Merger Agreement required
to be performed on or prior to the Effective Date and (ii) the
representations and warranties of Parent and Sub contained in this
Merger Agreement shall be true in all material respects when made and
on and as of the Effective Date as if made on and as of such date,
except for representations and warranties which are by their express
provisions made as of a specific date or dates, which were or will be
true in all material respects at such time or times as stated therein,
and the Company shall have received a certificate of the President or
Chief Executive Officer or a Vice President of Parent to that effect.
(b) The Company shall have received a favorable opinion of
Fried, Frank, Harris, Shriver & Jacobson, based upon certain factual
representations of the Company, Parent and Sub reasonably requested by
such counsel, dated the Effective Date, to the effect that the Merger
will constitute a "reorganization" for federal income tax purposes
within the meaning of Section 368(a) of the Code.
(c) The consummation of the Merger and the other transactions
contemplated hereby shall not give rise to any Parent Rights becoming
exercisable for any security or asset of any person.
(d) Parent shall have obtained all consents, approvals,
releases or authorizations from, and shall have made all filings and
registrations ("Consents") to or with, any person, including but not
limited to any Governmental Entity, necessary to be obtained or made in
order to consummate the transactions contemplated by this Merger
Agreement, unless the failure to obtain such Consents would not,
individually or in the aggregate, have a Parent Material Adverse
Effect.
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Section 8.3 Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the
Merger shall be subject to the fulfillment at or prior to the Effective
Date of the additional following conditions, unless waived by Parent:
(a) (i) The Company shall have performed in all material
respects its agreements contained in this Merger Agreement required to
be performed on or prior to the Effective Date and (ii) the
representations and warranties of the Company contained in this Merger
Agreement shall be true in all material respects when made and on and
as of the Effective Date as if made on and as of such date, except for
representations and warranties which are by their express provisions
made as of a specific date or dates which were or will be true in all
material respects at such date or dates, and Parent and Sub shall have
received a certificate of the President or Chief Executive Officer or a
Vice President of the Company to that effect.
(b) Parent shall have received a letter of Deloitte & Touche
LLP, the Company's independent auditors, dated a date within two
business days before the date on which the Registration Statement shall
become effective and addressed to Parent, in form and substance
reasonably satisfactory to Parent and customary in scope and substance
for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
(c) Company shall have obtained all Consents to or with, any
person, including but not limited to any Governmental Entity necessary
to be obtained or made in order to consummate the transactions
contemplated by this Agreement, unless the failure to obtain such
Consents would not, individually or in the aggregate, have a Company
Material Adverse Effect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Merger Agreement may be
terminated at any time prior to the Effective Date, whether before or
after approval by the shareholders of the Company:
(a) by mutual consent of the Board of Directors of Parent
and the Board of Directors of the Company;
(b) by either Parent or the Company if the Merger shall not
have been consummated on or before June 30,
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1998; provided, that the terminating party is not otherwise in
material breach of its representations, warranties or obligations
under this Merger Agreement;
(c) by the Company if any of the conditions specified in
Sections 8.1 and 8.2 have not been met or waived by the Company at
such time as such condition is no longer capable of satisfaction;
(d) by Parent if any of the conditions specified in Sections
8.1 and 8.3 have not been met or waived by Parent at such time as
such condition is no longer capable of satisfaction;
(e) by Parent if the Company's Board of Directors shall have
withdrawn, modified in a manner adverse to Parent, or refrained
from making its recommendation concerning the Merger referred to
in Section 3.5(a) hereof, or shall have disclosed its intention to
change such recommendation;
(f) by Parent if any requirements or conditions are imposed,
or proposed to be imposed, upon either Parent or the Company or
any of their respective affiliates by any Governmental Entity in
connection with the authorization, consent or approval of such
Governmental Entity (or the expiration or termination of any
waiting period applicable to such Governmental Entity's review of
the transactions contemplated by this Merger Agreement) under any
Antitrust Law in connection with the consummation of the
transactions contemplated hereby, or by any domestic or foreign
court or similar tribunal in any suit brought by a private party
or Government Entity challenging the transactions contemplated
hereby as violative of any Antitrust Law, which, in the reasonable
opinion of Parent, would require Parent to agree to hold separate
or to divest any of the businesses, product lines or assets of
Parent or the Company or any of their respective subsidiaries or
affiliates or take any other action, if such holding separate,
divestiture or other action would have a Parent Material Adverse
Effect or a Company Material Adverse Effect. For purposes of this
paragraph, the term "Governmental Entity" shall not include any
foreign governmental entity other than those of Canada and the
European Community.
(g) by the Company, if Parent's Board of Directors shall have
withdrawn, modified in a manner adverse to the Company, or
refrained from making its recommendation concerning the Stock
Issuance Proposal referred to in
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Section 3.5(b) hereof, or shall have disclosed its intention to
change such recommendation.
(h) by Parent, upon becoming aware that the Company has
entered into a definitive agreement (other than a confidentiality
agreement) providing for an Alternative Transaction; or
(i) by the Company, simultaneously with the Company entering
into a definitive agreement (other than a confidentiality
agreement) providing for an Alternative Transaction.
Section 9.2 Effect of Termination. (a) In the event of
termination of this Merger Agreement by either Parent or the Company,
as provided above, this Merger Agreement shall forthwith become void
and (except for the willful breach of this Merger Agreement by any
party hereto) there shall be no liability on the part of either the
Company, Parent or Sub or their respective officers or directors;
provided that Sections 9.2, 10.3 and 10.8 shall survive the
termination.
(b) The Company shall make a payment to Parent (by wire
transfer or cashiers check) of a breakup fee in the amount of
$15,000,000 in the event this Merger Agreement is terminated pursuant
to Section 9.1(h) or 9.1(i) and if at the time of such termination
Parent is not in material breach of any representation, warranty or
material covenant contained herein. The Company shall make a payment to
Parent (by wire transfer or cashiers check) of a breakup fee in the
amount of $6,000,000 in the event this Merger Agreement is terminated
by Parent following the Company Meeting if the stockholders of the
Company fail to approve the Merger at the Company Meeting and there is
no Acquisition Proposal then pending.
(c) Parent shall make a payment to the Company (by wire transfer
or cashiers check) of a breakup fee in the amount of $15,000,000 in the
event this Merger Agreement is terminated by either party as a result
of Parent having entered into a definitive agreement with a third party
the performance of which would preclude consummation of the Merger by
Parent and if at the time of such termination the Company is not in
material breach of any representation, warranty or material covenant
contained herein. Parent shall make a payment to the Company (by wire
transfer or cashiers check) of a breakup fee in the amount of
$6,000,000 in the event this Merger Agreement is terminated by the
Company following the Parent Meeting if the stockholders of Parent fail
to approve the Stock Issuance Proposal at the Parent Meeting and if at
the time of such
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termination the Company is not in material breach of any
representation, warranty or material covenant contained herein.
Section 9.3 Amendment. This Merger Agreement may be amended
by the parties hereto, by or pursuant to action taken by their
respective Boards of Directors, at any time before or after approval
hereof by the shareholders of the Company, but, after such approval, no
amendment shall be made which changes the ratios at which any class of
capital stock of the Company is to be converted into capital stock of
Parent as provided in Section 3.1 or which in any way materially
adversely affects the rights of such shareholders, without the further
approval of such shareholders. This Merger Agreement may not be amended
except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 9.4 Waiver. At any time prior to the Effective Date,
the parties hereto, by or pursuant to action taken by their respective
Boards of Directors, may (i) extend the time for the performance of any
of the obligations or other acts of the other parties hereto, (ii)
waive any inaccuracies in the representations and warranties contained
herein or in any documents delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein
provided, however, that no such waiver shall materially adversely
affect the rights the shareholders of the Company and Parent. Any
agreement on the part of a party hereto to any such extension or waiver
shall be valid if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations, Warranties and
Agreements. No representations, warranties or agreements in this Merger
Agreement shall survive the Merger, except for the agreements contained
in Sections 3.1, 3.2, 3.3, 3.4, 3.6, 3.7, 4.20, 7.5, 7.6, 7.7, 7.8,
10.1, 10.3 and 10.7 and in the last sentence of Section 7.3(b).
Section 10.2 Notices. All notices or other communications
under this Merger Agreement shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in
person, by cable, telegram, telex, telecopy or other standard form of
telecommunications, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
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If to the Company:
Rohr, Inc.
850 Lagoon Drive
Chula Vista, California 91910
Attention: General Counsel
Telecopy No.: (619) 691-4222
With copies to:
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue
32nd Floor
Los Angeles, California 90017
Attention: Edward S. Rosenthal
Telecopy No.: (213) 473-2222
and
Gibson, Dunn & Crutcher
333 S. Grand Avenue
Los Angeles, California 90071
Attention: Andrew Bogen
Telecopy No.: (213) 617-3693
If to Parent or Sub:
The B.F.Goodrich Company
4020 Kinross Lakes Parkway
Richfield, Ohio 44286
Attention: Secretary
Telecopy No.: (330) 659-7727
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Elliott V. Stein
Telecopy No.: (212) 403-2000
or to such other address as any party may have furnished to the other
parties in writing in accordance with this Section.
Section 10.3 Fees and Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this
Merger Agreement and the transactions contemplated by this Merger
Agreement shall be paid by the party incurring such expenses, except
that Parent and Company
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agree to each pay 50% of all printing expenses incurred by the parties
hereto.
Section 10.4 Publicity. So long as this Merger Agreement is
in effect, Parent, Sub and the Company agree to consult with each other
in issuing any press release or otherwise making any public statement
with respect to the transactions contemplated by this Merger Agreement,
and none of them shall issue any press release or make any public
statement prior to such consultation, except as may be required by law
or by obligations pursuant to any listing agreement with any national
securities exchange. The commencement of litigation relating to this
Merger Agreement or the transactions contemplated hereby or any
proceedings in connection therewith shall not be deemed a violation of
this Section 10.4.
Section 10.5 Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any of the
provisions of this Merger Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Merger Agreement and to enforce
specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
Section 10.6 Interpretation. (a) When a reference is made in
this Merger Agreement to subsidiaries of Parent or the Company, the
word "subsidiaries" means corporations more than 50% of whose
outstanding voting securities are directly or indirectly owned by
Parent or the Company, as the case may be. The headings contained in
this Merger Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Merger
Agreement.
(b) As used in this Agreement, "Parent Material Adverse
Effect" shall mean a material adverse effect on the business,
properties, assets, financial condition, or results of operations of
Parent and its subsidiaries taken as a whole (excluding the effect of a
change in general economic conditions).
(c) As used in this Agreement, "Company Material Adverse
Effect" shall mean a material adverse effect on the business,
properties, assets, financial condition, or results of operations of
the Company and its subsidiaries taken as a whole (excluding (i) the
effect of a change in general economic conditions and (ii) the effect
of any failure to obtain a
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contract from Airbus Industries with respect to the A340-500/ 600 or to
obtain any particular level of orders from The Boeing Company with
respect to out-of-production spares or the offloading of current
production contracts or, if such a contract or any such orders are
obtained by the Company, the effect of the terms thereof).
(d) As used in this Merger Agreement, "knowledge" shall mean,
with respect to the matter in question, the actual knowledge of such
matter by an executive officer of Parent or the Company, as applicable.
(e) The inclusion of an item on any schedule to this
Agreement shall not be deemed to be indicative of the materiality of
such item.
Section 10.7 Third Party Beneficiaries. Except as
specifically provided in Section 7.6(a), this Merger Agreement is not
intended to confer upon any other person any rights or remedies
hereunder.
Section 10.8 Miscellaneous. This Merger Agreement (including
the documents and instruments referred to herein) (a) constitutes the
entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof (other than as provided
in the Confidentiality Agreements, as the same may be amended); (b)
shall not be assigned by operation of law or otherwise, except that Sub
shall have the right to assign to Parent or any direct wholly owned
subsidiary of Parent any and all rights and obligations of Sub under
this Merger Agreement; and (c) shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State
of Delaware (without giving effect to the provisions thereof relating
to conflicts of law). This Merger Agreement may be executed in two or
more counterparts which together shall constitute a single agreement.
Section 10.9 Cure Period. No party shall have any rights
under this Merger Agreement (other than pursuant to Sections 8.2(a) and
8.3(a)) for any actual or threatened breach of a representation,
warranty, covenant or agreement contained herein, if such breach is
capable of being cured, until (i) the non-breaching party has notified
the breaching party of its determination of the existence (or
threatened existence) of a basis for termination, and (ii) the
breaching party shall have a reasonable time (considering the nature of
the breach and the actions required for cure, but in no event longer
than 30 days) to cure such breach.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Merger Agreement to be signed by their respective officers thereunder
duly authorized all as of the date first written above.
THE B.F.GOODRICH COMPANY
By /s/ David L. Burner
-------------------------
Name: David L. Burner
Title: Chairman of the Board,
President and Chief
Executive Officer
MIDWEST ACQUISITION CORPORATION
By /s/ Les C. Vinney
-------------------------
Name: Les C. Vinney
Title: President and Treasurer
ROHR, INC.
By /s/ Robert H. Rau
-------------------------
Name: Robert H. Rau
Title: President and Chief
Executive Officer
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