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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
FEBRUARY 27, 1996
Date of Report (Date of earliest event reported)
HUDSON GENERAL CORPORATION
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-5896 13-1947395
(State or other jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
111 GREAT NECK ROAD, GREAT NECK, NEW YORK 11021
(Address of Principal Executive Offices) (Zip Code)
(516) 487-8610
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On February 27, 1996, Hudson General Corporation, a Delaware
corporation (the "Company"), and Lufthansa Airport and Ground Services GmbH, a
German corporation ("LAGS"), executed a Unit Purchase and Option Agreement (the
"Purchase Agreement") pursuant to which LAGS will acquire a 26% interest in the
Company's aviation services business (the "Aviation Services Business"). LAGS is
a wholly owned subsidiary of Deutsche Lufthansa AG ("Lufthansa"). The
transaction, which is expected to close on or about July 1, 1996, is subject to
certain conditions, including, without limitation, the prior approval of the
holders of a majority of the Company's outstanding stock.
The Purchase Agreement and the press release issued by the
Company in connection therewith are filed as exhibits to this report and are
incorporated herein by reference. The description herein of the Purchase
Agreement does not purport to be complete and is qualified in its entirety by
the provisions of the Purchase Agreement.
The Purchase Agreement provides, among other things, for the
transfer by the Company to a new subsidiary, Hudson General LLC, a limited
liability company to be formed in the state of Delaware ("Hudson LLC"), of
substantially all the assets of the Company's Aviation Services Business and the
assumption by Hudson LLC, as a co-obligor with the Company, of the obligations
of the Company under its 7% Convertible Subordinated Debentures due 2011. Hudson
LLC also will assume other obligations relating to the Aviation Services
Business.
The Purchase Agreement provides that LAGS will acquire its 26%
interest in Hudson LLC, which will conduct the Aviation Services Business
effective as of the closing, for a purchase price of approximately $23.8 million
in cash. Approximately $16 million of the purchase price will be paid at the
closing. The balance of the purchase price of approximately $7.8 million, which
is subject to downward adjustment based on future earnings of the Aviation
Services Business, is payable in three annual installments in September 1996,
1997 and 1998.
The Purchase Agreement also provides that LAGS will have an
option, exercisable on October 1 of each year from 1996 through 2000, effective
as of the preceding July 1, to increase its interest in Hudson LLC from 26% to a
maximum of 49%. The option may be exercised on no more than two occasions, and
the first exercise must be for at least an additional 12% interest in Hudson
LLC. The option price is based on a formula related to the average earnings of
the Aviation Services Business over the preceding four fiscal years, subject to
certain minimum and maximum amounts.
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Following the closing, the Company will own a 74% interest in
Hudson LLC, which interest may be reduced to 51% if LAGS exercises its option in
full to increase its interest in Hudson LLC to 49%. Neither LAGS nor Lufthansa
is acquiring any securities of the Company, and the Purchase Agreement contains
certain standstill provisions pursuant to which, among other things, LAGS,
Lufthansa and their affiliates will not acquire any of the Company's voting
securities, seek to acquire control of, or engage in a business combination
with, the Company, until the later of (i) the third anniversary of the date of
the Purchase Agreement or (ii) the first anniversary of the date on which LAGS
and its affiliates or the Company and its affiliates cease to beneficially own
an interest in Hudson LLC.
At the closing, the Company, LAGS and Hudson LLC will enter
into a Limited Liability Company Agreement. The Company will continue to manage
the Aviation Services Business conducted by Hudson LLC.
The Aviation Services Business constitutes approximately 70%
of the Company's assets and virtually all of its revenues. The Company is not
transferring to Hudson LLC its interest in the Kohala Joint Venture, a joint
venture in which Hudson Kohala, Inc., a wholly-owned subsidiary of the Company,
is a 50% participant.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
99.1 Unit Purchase and Option Agreement, dated Febru-
ary 27, 1996, between Hudson General Corporation
and Lufthansa Airport and Ground Services GmbH.
99.2 Press Release dated February 28, 1996.
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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.
Dated: March 6, 1996
HUDSON GENERAL CORPORATION
By: /s/ Michael Rubin
-----------------------
Michael Rubin
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
99.1 Unit Purchase and Option Agreement, dated February
27, 1996, between Hudson General Corporation and
Lufthansa Airport and Ground Services GmbH.
99.2 Press Release dated February 28, 1996.
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UNIT PURCHASE AND OPTION AGREEMENT
DATED
FEBRUARY 27, 1996
BETWEEN
LUFTHANSA AIRPORT AND GROUND SERVICES GmbH
AND
HUDSON GENERAL CORPORATION
RELATING TO UNITS OF
HUDSON GENERAL LLC
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TABLE OF CONTENTS
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ARTICLE I
PURCHASE OF UNITS
1.1 Purchase of Purchased Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Payment and Adjustment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
THE CLOSING
2.1 Time and Place of Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Hudson's Actions at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Buyer's Actions at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III
PURCHASE OPTION
3.1 The Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Manner of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Exercise Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4 Effect of Option Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.5 Transfer of Sale Obligation to the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Hudson's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Buyer's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 Changes Prior to Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.4 Remedy for Breaches of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE V
ACTIONS PRIOR TO THE CLOSING
5.1 Activities Until Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.2 Formation of Company and Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.3 Hudson Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.4 HSR Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.5 Hudson's Efforts to Fulfill Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.6 Buyer's Efforts to Fulfill Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.7 Communications with Regard to Consents to Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions to Buyer's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.2 Conditions to Hudson's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
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ARTICLE VII
TERMINATION
<TABLE>
<S> <C> <C>
7.1 Right to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification Against Loss Due to Inaccuracies in Hudson's Representations and Warranties . . . . . . . . . . 44
8.2 Indemnification Against Loss Due to Inaccuracies in Buyer's Representations and Warranties . . . . . . . . . . . 44
8.3 Limit on Claims Regarding Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.4 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.5 Indemnification Against Results of Certain Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE IX
ACQUISITION PROPOSALS
9.1 Other Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE X
AVIATION SERVICES COOPERATION
10.1 Cooperation In Expanding Presence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
10.2 Steering Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.3 Option if the Buyer Creates a Passenger Handling Services Subsidiary . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XI
AGREEMENT NOT TO COMPETE
11.1 Agreement by the Buyer not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XII
ABSENCE OF BROKERS
12.1 Representations and Warranties Regarding Brokers and Others . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE XIII
CERTAIN COVENANTS OF BUYER
13.1 Restrictions on Buyer's Activities Regarding Hudson and Its Stock . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
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ARTICLE XIV
GENERAL
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14.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.2 Access to Properties, Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.3 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
14.4 No Impediment to Sales of Hudson Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
14.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
14.6 Effect of Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
14.7 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
14.8 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
14.9 Notices and Other Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.10 Governing Law; Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
14.11 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
14.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
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UNIT PURCHASE AND OPTION AGREEMENT
This is an agreement dated February 27, 1996, effective as of
January 1, 1996, between Lufthansa Airport and Ground Services GmbH (the
"Buyer"), a German corporation, and Hudson General Corporation ("Hudson"), a
Delaware corporation, relating to the purchase by the Buyer from Hudson General
LLC (the "Company"), a Delaware limited liability company to be formed, of 260
Class B Units (the "Purchased Units") of the Company, and the grant to the
Buyer of an option to purchase additional Class B Units from Hudson (or, at
Hudson's election, from the Company), which agreement is as follows:
ARTICLE I
PURCHASE OF UNITS
1.1 Purchase of Purchased Units. At the Closing
described in Paragraph 2.1, the Buyer will purchase the Purchased Units from
the Company and the Company will sell the Purchased Units to the Buyer.
1.2 Purchase Price. The purchase price to be paid by the
Buyer for all the Purchased Units will be $24,538,000, to be paid, and subject
to adjustment, as provided in Paragraph 1.3.
1.3 Payment and Adjustment of Purchase Price.
(a) The purchase price for the Purchased Units
will be paid as follows:
(i) At the Closing described in
Paragraph 2.1, (x) $16,700,000 minus (y) a sum (the
"Sum") equal to 26% of (A) the pro forma net income
(before all income taxes) of the Company and its
<PAGE> 6
subsidiaries for the six-month period commencing on
January 1, 1996 and ending on June 30, 1996
(calculated as if the transactions contemplated by
this Agreement closed as of January 1, 1996), but in
no event shall such amount exceed $7,405,000, minus
(B) provision for United States federal, state and
local income taxes at a rate of 48%, and minus (C)
any income (before all income taxes) of Hudson
General Aviation Services, Inc., Hudson's Canadian
subsidiary ("Hudson Canada"), except to the extent of
dividends paid to Hudson from January 1, 1996 until
June 30, 1996. An estimate of the Sum will be made
based upon actual results for the period commencing
on January 1, 1996 and ending on May 31, 1996, with
any adjustment (plus or minus) being added to, or
subtracted from, the payment contemplated in
Paragraph 1.3(a)(ii). The pro forma net income of
the Company and its subsidiaries for the six month
period commencing on January 1, 1996 and ending on
June 30, 1996 will be calculated on the same basis as
the pro forma net income was calculated in preparing
the Pro Forma Financial Statements (defined below),
except that (I) no principal reduction of Hudson's 7%
Convertible Subordinated Debentures due 2011
("Convertible Debentures") will be deemed to have
been made as of the beginning of or during such
period, (II) any interest income earned on the
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deferred purchase price contemplated by subparagraphs
(ii) through (iv), or interest expense incurred as
contemplated by subparagraph (v), of this Paragraph
1.3(a) will be excluded, and (III) if any advances
are made during such period from Hudson to, or to
Hudson from, the Aviation Services Business (defined
below), those advances will be deemed to bear
interest at a rate of 7% per annum based on the month
end balance thereof. If any portion of the Sum shall
arise from earnings generated by Hudson Canada, and
such earnings are not distributed to Hudson by Hudson
Canada, the amount of such earnings will not be
included in the Sum, but will be distributed to Buyer
at the time that Hudson receives its portion of such
distribution from Hudson Canada. If the Closing
occurs after July 1, 1996, the Purchase Price will be
increased by $3,836 for each day starting July 2,
1996 through and including the Closing Date (defined
below).
(ii) On or before the tenth day after the
day on which the Company delivers to the Buyer
consolidated financial statements of the Company and
its subsidiaries for the fiscal year ending June 30,
1996, (x) $2,650,000, or (y) if the Pre-Tax Earnings
(defined below) for the fiscal year ending June 30,
1996 are less than $9,070,000, the sum equal to (A)
$530,000, plus (B) the same
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percentage of $2,650,000 that the Pre-Tax Earnings
for the fiscal year ending June 30, 1996 are of
$11,337,500 (but not less than zero), minus (C) if
the Pre-Tax Earnings for the fiscal year ending June
30, 1996 are negative (i.e., there is a pre-tax
loss), the sum which is the same percentage of
$2,650,000 that the negative Pre-Tax Earnings are
(i.e., the pre-tax loss is) of $11,337,500, up to a
maximum of $530,000, plus (z) interest on the sum
described in the applicable one of clause (x) or (y)
from January 1, 1996 to the date the payment is made
at 11% per annum, compounded annually on each January
1.
(iii) On or before the tenth day after the
day on which the Company delivers to the Buyer
consolidated financial statements of the Company and
its subsidiaries for the fiscal year ending June 30,
1997, (x) $2,650,000, or (y) if the Pre-Tax Earnings
for the fiscal year ending June 30, 1997 are less
than $9,793,000, the sum which is (A) $530,000, plus
(B) the same percentage of $2,650,000 that the
Pre-Tax Earnings for the fiscal year ending June 30,
1997 are of $12,241,250 (but not less than zero),
minus (C) if the Pre-Tax Earnings for the fiscal year
ending June 30, 1997 are negative, the sum which is
the same percentage of $2,650,000 that the negative
Pre-Tax Earnings are of $12,241,250, up to a maximum
of $530,000,
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plus (z) interest on the sum described in the
applicable one of clause (x) or (y) from January 1,
1996 to the date the payment is made at 11% per
annum, compounded annually on each January 1.
(iv) On or before the tenth day after the
day on which the Company delivers to the Buyer (x)
consolidated financial statements of the Company and
its subsidiaries for the fiscal year ending June 30,
1998, and (y) a schedule showing the total Pre-Tax
Earnings for the three fiscal year period ending June
30, 1998, at the election of Hudson (made in writing
when the Company delivers to the Buyer the
consolidated financial statements for the fiscal year
ending June 30, 1998 and the schedule showing the
total Pre-Tax Earnings for the three fiscal year
period ending June 30, 1998) either the sum described
in subparagraph (A) or the sum described in
subparagraph (B), those sums being:
(A) (I) $2,538,000 or (II) if the
Pre-Tax Earnings for the fiscal year ending
June 30, 1998 are less than $10,575,200, the
sum which is (X) $507,600, plus (Y) the same
percentage of $2,538,000 that the Pre-Tax
Earnings for the fiscal year ending June 30,
1998 are of $13,219,000 (but not less than
zero), minus (Z) if the Pre-Tax Earnings for
the fiscal year ending June 30, 1998 are
negative, the same percentage of $2,538,000
5
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that the negative Pre-Tax Earnings are of
$13,219,000, up to a maximum of $507,600,
plus (III) interest on the sum described in
the applicable one of clause (I) or (II) from
January 1, 1996 to the date the payment is
made at 11% per annum, compounded annually on
each January 1, or
(B) (I) $7,838,000 or (II) if the
cumulative Pre-Tax Earnings for the three
fiscal year period ending June 30, 1998 are
less than $29,438,200, the sum which is (X)
$1,567,600, plus (Y) the same percentage of
$7,838,000 that the cumulative Pre-Tax
Earnings for the three fiscal year period
ending June 30, 1998 are of $36,797,750 (but
not less than zero), minus (Z) if the
cumulative Pre-Tax Earnings for the three
fiscal year period ending June 30, 1998 are
negative, the sum which is the same
percentage of $7,838,000 that the negative
Pre-Tax Earnings are of $36,797,750, up to a
maximum of $1,567,600, minus (III) the sums
paid under clause (x) or (y) of subparagraphs
(ii) and (iii) of this Paragraph 1.3(a), plus
(IV) interest on the excess of the sum
described in the applicable one of clause (I)
or (II), over the sum described in clause
(III), from January 1, 1996 to the date the
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payment is made at 11% per annum, compounded
annually on each January 1.
(v) If (i) the cumulative Pre-Tax Earnings
for the three fiscal year period ending June 30, 1998
are less than $29,438,200, (ii) Hudson elects to use
the computation in subparagraph (iv)(B) of this
paragraph and (iii) the sum described in clause (II)
of subparagraph (iv)(B) of this paragraph minus the
sum described in clause (III) of that subparagraph is
a negative number, on the date specified in that
subparagraph, the Company will pay to the Buyer the
sum equal to that negative number plus interest on
that sum from January 1, 1996 to the date the payment
is made at 11% per annum, compounded annually on each
January 1.
(b) For the purposes of this Agreement, the term
"Pre-Tax Earnings" means the consolidated net income of the Company and its
subsidiaries before provision for income taxes and the cumulative effect of any
changes in accounting principles, computed in accordance with United States
generally accepted accounting principles ("GAAP") (and, if Hudson files reports
with the Securities and Exchange Commission ("SEC"), applied in the same manner
they are applied in preparing the financial statements included in those
filings), except that Pre-Tax Earnings will not include (i) any income as a
result of interest received under this Agreement, (ii) any charge for interest
with regard to a principal amount of Convertible Debentures equal to the amount
of the
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purchase price for the Purchased Units which is deferred as contemplated by
Paragraph 1.3(a), (iii) any charge for interest on indebtedness to Hudson
resulting from conversion of Convertible Debentures, or (iv) any charge for
expenses of forming the Company or issuing Units as contemplated by this
Agreement. Notwithstanding the foregoing, if (x) any agreements between Hudson
and a customer (including an Airport Authority (defined below) in its capacity
as a purchaser of Aviation Services) are terminated because the customer will
not consent to the transfer or assignment of the agreements from Hudson to the
Company, (y) the Company is not able to render to a customer services which
Hudson is rendering at the date of this Agreement because governmental or
quasi- governmental authorities ("Airport Authorities") which have issued to
Hudson licenses, permits, facilities leases or other authorizations to render
services at airports ("Airport Authorizations") fail to consent to Hudson's
transferring those Airport Authorizations to the Company or to issue similar
Airport Authorizations to the Company, or (z) any customer ceases using
services of Hudson (or after the Closing, the Company) and Hudson can
demonstrate to the reasonable satisfaction of the Buyer that the customer did
so because of the transactions which are the subject of this Agreement, then,
in calculating Pre-Tax Earnings for purposes of Paragraph 1.3(a) or 3.3(b) for
any fiscal year, Pre-Tax Earnings for that fiscal year will be increased by an
amount equal to 50% of the pre-tax operating earnings from such customer during
the four full fiscal quarters preceding the later of (A) July 1, 1996 or (B)
the date on which the Company is informed that the customer will cease doing
business with it, but
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not to exceed 50% of the operating earnings the Company would have received
during that fiscal year (based upon those historical operating earnings for
four fiscal quarter periods) if the agreements between Hudson and the customer
in effect at the date of this Agreement had terminated at the expiration of
their terms. The consolidated financial statements of the Company and its
subsidiaries referred to in subparagraphs (ii), (iii) and (iv) of Paragraph
1.3(a) may be unaudited, except that, if not later than April 30 of a year, the
Buyer agrees in writing to pay the amount by which the cost of auditing the
financial statements of Hudson and its subsidiaries for the fiscal year ending
on the following June 30 will be increased if it includes providing audited
consolidated financial statements of the Company and its subsidiaries, the
consolidated financial statements of the Company and its subsidiaries for that
fiscal year referred to in subparagraph (ii), (iii) or (iv) of Paragraph 1.3(a)
must be audited. If consolidated financial statements of the Company and its
subsidiaries delivered to the Buyer in accordance with subparagraph (ii), (iii)
or (iv) of Paragraph 1.3(a) are not audited, those financial statements will be
accompanied by audited consolidated financial statements of Hudson and its
subsidiaries.
(c) If the total sum (other than interest)
required to be paid under Paragraph 1.3(a) is more or less than $24,538,000,
the purchase price of the Purchased Units will be deemed to be that total sum.
(d) The Buyer may at any time after the Closing
Date prepay the entire balance of the purchase price of the Purchased Units by
paying (i) $7,838,000, minus (ii) any amounts
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previously paid under clause (x) or (y) of subparagraphs (ii) and (iii) of
Paragraph 1.3(a), plus interest on the sum being prepaid from January 1, 1996
to the date of the prepayment at 11% per annum, compounded annually on each
January 1. If the Buyer prepays the entire balance of the purchase price of
the Purchased Units, there will be no reduction of that purchase price
regardless of the Pre-Tax Earnings during the three fiscal year period ending
June 30, 1998 or any fiscal year during that period.
ARTICLE II
THE CLOSING
2.1 Time and Place of Closing. The closing (the
"Closing") of the purchase of the Purchased Units will take place at the
offices of Rogers & Wells, 200 Park Avenue, New York, New York, at 10:00 a.m.
New York City time, on the day (the "Closing Date") which is the later of (i)
July 1, 1996 or (ii) the third business day after the day on which all the
conditions in Paragraphs 6.1 and 6.2 have been fulfilled or waived in writing,
or at such other time and place as may be agreed upon by the Buyer and Hudson.
2.2 Hudson's Actions at Closing. At the Closing, Hudson
will, or will cause the Company to, deliver to the Buyer the following:
(a) Evidence that, effective upon the Closing,
all the Purchased Units have been issued to, and are registered in the name of,
the Buyer. If Units are represented by certificates, this evidence will be
certificates representing all the Purchased Units, registered in the name of
the Buyer. Those certificates will bear
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a legend to the effect that the Units represented by them (i) have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or registered or qualified under any state securities laws and may only be sold
or transferred in a transaction which, in the opinion of counsel to the holder
provided, and in form reasonably satisfactory, to the Company, is registered
under the Securities Act or is exempt from the registration requirements of the
Securities Act and is registered or qualified under, or exempt from the
registration or qualification requirements of, any applicable state securities
laws, and (ii) are subject to restrictions on sale or transfer, and to a
purchase option, under the LLC Agreement (defined below).
(b) A copy, executed by the Company and by
Hudson, of a Limited Liability Company Agreement (the "LLC Agreement")
substantially in the form of Exhibit 2.2-B.
2.3 Buyer's Actions at Closing. At the Closing, the
Buyer will deliver to the Company the following:
(a) A certified or bank cashier's check, or, if
Hudson so elects, evidence of a wire transfer of immediately available funds to
a Company account specified by Hudson at least 24 hours before the Closing, in
the amount described in Paragraph 1.3(a)(i).
(b) A letter in form and substance reasonably
satisfactory to Hudson acknowledging that the Buyer will be acquiring the
Purchased Units for investment, and not with a view to their resale or
distribution.
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(c) A copy, executed by the Buyer, of the LLC
Agreement.
ARTICLE III
PURCHASE OPTION
3.1 The Option. The Buyer will have the option (the
"Option"), exercisable on October 1, 1996, 1997, 1998, 1999 and 2000 (each of
those being an "Option Date"), to purchase from Hudson (or, as provided in
Paragraph 3.5, to purchase from the Company) Class B Units ("Option Units")
which will increase the total outstanding Class B Units to up to 49% of all the
Class A Units and Class B Units (together, "Units") of the Company which are
outstanding on the Option Date on which the Option is exercised (each Option
Date on which the Option is exercised being an "Exercise Date"). The Option
may be exercised on no more than two occasions, but the first exercise must be
with regard to Class B Units which will increase the total outstanding Class B
Units to at least 38% of the Units which are outstanding on the Exercise Date,
and the second exercise must be with regard to Class B Units which will
increase the total outstanding Class B Units to 49% of the Units which are
outstanding on the Exercise Date. For the purposes of this Paragraph and
Paragraphs 3.2 and 3.3, the Units which are or will be outstanding on a day
will include (x) all the Units which are actually outstanding on that day and
(y) the Option Units as to which the Option is being exercised on that day.
3.2 Manner of Exercise. In order to exercise the Option,
the Buyer will deliver to Hudson on or before the Option Date on which the
Option is being exercised (i.e., the Exercise
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Date) a notice of exercise (the "Notice of Exercise"), which will state the
percentage of all the outstanding Units which the Class B Units will constitute
after the exercise of the Option and the date on which that purchase will take
place, which date will be not less than twenty nor more than forty days after
the Exercise Date. When the Buyer delivers a Notice of Exercise, the Buyer
will become irrevocably obligated to purchase from Hudson or the Company, and
Hudson or, as provided in Paragraph 3.5, the Company, will become irrevocably
obligated to sell to the Buyer, the Option Units described in the Notice of
Exercise for the price determined as provided in Paragraph 3.3.
3.3 Exercise Price.
(a) The exercise price of the Option on an Option
Date will be the amount which is equal to (i) the percentage which the Option
Units as to which the Option is being exercised will be on the Option Date of
all the outstanding Units of the Company on the Option Date (computed as
described in Paragraph 3.1), multiplied by (ii) the greater of (x) the Computed
Value of the Company on the Option Date or (y) $73,348,000 if the Option Date
is October 1, 1996, $77,932,250 if the Option Date is October 1, 1997,
$82,516,500 if the Option Date is October 1, 1998, $87,100,750 if the Option
Date is October 1, 1999 and $91,685,000 if the Option Date is October 1, 2000,
but in no event more than (z) $102,687,000 if the Option Date is October 1,
1996, $115,010,000 if the Option Date is October 1, 1997, $128,811,000 if the
Option Date is October 1, 1998, $144,268,000 if the Option Date is October 1,
1999, and $161,580,000 if the Option date is October 1, 2000.
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(b) The "Computed Value" of the Company on an
Option Date will be (i) (x) the average of the Pre-Tax Earnings (after
allocations of interest and other indirect expenses) of the Company and its
subsidiaries during each of the four fiscal years prior to the fiscal year in
which the Option Date falls from all aspects of its Aviation Services Business
(defined below), other than snow removal services, divided by (y) 0.12, plus
(ii) (A) the average of the Pre-Tax Earnings (after allocations of interest and
other indirect expenses) of the Company and its subsidiaries during each of the
four fiscal years prior to the fiscal year in which the Option Date falls from
snow removal services, divided by (B) 0.135. As an example of how the Computed
Value would be computed, if (I) during the four fiscal years prior to the
fiscal year in which an Option Date falls, the Company and its subsidiaries had
Pre-Tax Earnings (after allocations of interest and other indirect expenses)
from Aviation Services Business activities other than snow removal services of
$4,918,000, $8,067,000, $12,551,000 and $10,631,000, and had Pre-Tax Earnings
(after allocations of interest and other indirect expenses) from snow removal
services of $651,000, $2,650,000 and $5,845,000 and a loss of $324,000, the
Computed Value of the Company on that Option Date would be $9,041,750 (the
average of $4,918,000, $8,067,000, $12,551,000 and $10,631,000) divided by
0.12, plus $2,205,500 (the average of $651,000, $2,650,000 and $5,845,000 and a
loss of $324,000) divided by 0.135, and therefore would be $91,684,954. If on
that Option Date, the Buyer exercised the Option to purchase Option Units which
would constitute 15% of the outstanding Units, the exercise price for those
Option Units would be $13,752,743. For the purposes of
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this Paragraph 3.3(b), (A) in determining the Pre-Tax Earnings from the various
aspects of the Aviation Services Business, interest and other indirect expenses
of the Aviation Services Business will be allocated among the aspects of the
Aviation Services Business based upon the respective percentages of the
Aviation Services Business revenues generated by each of them, and (B) it is
stipulated that the Pre-Tax Earnings (after allocations of interest and other
indirect expenses) from all aspects of the Aviation Services Business other
than snow removal services during the fiscal years ended June 30, 1992, 1993,
1994 and 1995 were $4,918,000, $8,067,000, $12,551,000 and $10,631,000,
respectively, and the Pre-Tax Earnings (after allocations of interest and other
indirect expenses) from snow removal services during those years were $651,000,
$2,650,000, $5,845,000 and a loss of $324,000, respectively.
3.4 Effect of Option Exercise. Each purchase of Option
Units will be effective as of the July 1 immediately preceding the Option Date
on which the Option is exercised with regard to those Option Units and the
Buyer will be entitled to all earnings, gains, losses and other financial
incidents allocable to those Option Units as though they had been issued on
that July 1.
3.5 Transfer of Sale Obligation to the Company. In each
instance in which the Buyer exercises the Option, Hudson may, at its election,
either (i) sell to the Buyer the Option Units as to which the Option is being
exercised or (ii) cause the Company to sell those Option Units to the Buyer, in
which case (x) the number of Option Units will be computed on the basis of a
sale of Units from the Company instead of a sale of Units from Hudson, (y) the
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Company will be irrevocably obligated to sell those Option Units to the Buyer,
and (z) the proceeds of the sale will be paid to the Company instead of to
Hudson. The Buyer will cooperate with Hudson to maximize Hudson's economic
benefit from the exercise of the Option so long as there is no economic impact
or cost to the Buyer from doing so.
3.6 Closings of Option Sales.
(a) The closing of each sale of Option Units (an
"Option Closing") to the Buyer will take place at the principal office of the
Company at 10:00 a.m. New York City time on the latest of (i) the date
specified in the Notice of Exercise or (ii) if filings are required under the
Hart-Scott-Rodino Antitrust Act of 1976 ("HSR Act"), the third business day
after the day on which the waiting periods under the HSR Act expire or are
terminated.
(b) At each Option Closing, the Buyer will
deliver to Hudson or to the Company, as the case may be, the following:
(i) A certified or bank cashier's check
or, if Hudson (or, if applicable, the Company) so elects,
evidence of a wire transfer of immediately available funds to
an account specified by Hudson or the Company, as the case may
be, at least twenty-four hours before the Option Closing, in
the amount of (x) the exercise price of the Option plus (y)
interest on the exercise price of the Option at the rate of
11% per annum from the July 1 next preceding the date of the
Option Closing to the date of the Option Closing.
(ii) A letter, in form and substance
reasonably satisfactory to Hudson, acknowledging that the
Buyer will
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be acquiring the Option Units for investment, and not with a
view to their resale or distribution.
(c) At each Option Closing, Hudson or the
Company, as the case may be, will deliver to the Buyer evidence that, effective
upon the Option Closing, all the Option Units being purchased by the Buyer have
been transferred or issued to, and (except with regard to certificated Units
being sold by Hudson) registered in the name of, the Buyer, which evidence will
be, if Units are represented by certificates, certificates representing the
Option Units being purchased by the Buyer, (A) if they are being sold by
Hudson, endorsed or accompanied by documents of assignment which comply with
the requirements of Section 8-401 of the Uniform Commercial Code as in effect
in the State of New York, or (B) if they are being sold by the Company,
registered in the name of the Buyer. If Unit certificates are delivered to the
Buyer by the Company, those certificates will bear a legend to the effect that
the Units represented by them (i) have not been registered under the Securities
Act or registered or qualified under any state securities laws and may only be
sold or transferred in a transaction which, in the opinion of counsel to the
holder provided, and in form reasonably satisfactory, to the Company, is
registered under the Securities Act or is exempt from the registration
requirements of the Securities Act and is registered or qualified under, or
exempt from the registration or qualification requirements of, any applicable
state securities laws and (ii) are subject to restrictions on sale or transfer,
and to a purchase option, under the LLC Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Hudson's Representations and Warranties. Hudson
represents and warrants to the Buyer as follows:
(a) Hudson is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Hudson has all corporate power and authority necessary to enable it to enter
into this Agreement and carry out the transactions contemplated by this
Agreement. All corporate actions, other than the stockholder approval referred
to in Paragraph 6.2(e), necessary to authorize Hudson to enter into this
Agreement and the LLC Agreement and carry out the transactions contemplated by
each of them have been taken. This Agreement has been duly executed by Hudson
and is a valid and binding agreement of Hudson, enforceable against Hudson in
accordance with its terms. When executed and delivered as contemplated by this
Agreement, the LLC Agreement will be a valid and binding agreement of Hudson,
enforceable against Hudson in accordance with its terms.
(b) Except with regard to Customer Consents
(defined below) and Airport Consents (defined below) (it being expressly
understood and agreed that Hudson makes no representation, warranty or covenant
as to its ability to obtain Customer Consents or Airport Consents and that if
Hudson uses reasonable efforts to obtain such consents (which reasonable
efforts shall not be required to include modification of current or future
terms of agreements or offering or agreeing to any economic considerations),
Hudson's failure to obtain Customer Consents or Airport Consents will not
constitute a violation or breach of any
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representation, warranty or covenant), and except as set forth on Exhibit
4.1-B, neither the execution or delivery of this Agreement, the LLC Agreement
or any other document required to be delivered in accordance with this
Agreement nor the consummation of the transactions contemplated by this
Agreement or by the LLC Agreement will violate, result in a breach of, or
constitute a default (or an event which, with notice or lapse of time or both
would constitute a default) under, the Certificate of Incorporation or by-laws
of Hudson, any agreement or instrument to which Hudson or any subsidiary of
Hudson is a party or by which any of them is bound, any law, or any order, rule
or regulation of any court or governmental agency or other regulatory
organization having jurisdiction over Hudson or any of its subsidiaries, except
for violations, breaches or defaults which would not individually or in
aggregate have a Material Adverse Effect. As used in this Agreement, the term
"Material Adverse Effect" means a material adverse effect, upon (i) the
consolidated financial position of the Company and its subsidiaries taken as a
whole, (ii) the consolidated results of operations of the Company and its
subsidiaries taken as a whole, (iii) the ability of the Company and its
subsidiaries to carry on the Aviation Services Business substantially in the
manner in which it is being conducted at the date of this Agreement or (iv) the
transactions which are the subject of this Agreement. As used in this
Agreement, the term "Customer Consent" means any consent (other than an Airport
Consent) from any customer of Hudson (including an Airport Authority in its
capacity as a purchaser of Aviation Services) to Hudson's transfer or
assignment to the Company of an agreement
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relating to its business with Hudson in connection with the transactions
contemplated by this Agreement. As used in this Agreement, the term "Airport
Consent" means any consent from any Airport Authority that has granted to
Hudson an Airport Authorization to Hudson's transfer or assignment to the
Company of that Airport Authorization (which may be in the form of a transfer
or assignment of the Airport Authorization or may be in the form of an issuance
of a similar Airport Authorization to the Company or a subsidiary) in
connection with the transactions contemplated by this Agreement.
(c) On the Closing Date, Hudson will own 740
Class A Units (the "Hudson Units"). If the stockholders of Hudson approve the
transactions contemplated by this Agreement, Hudson will have full authority to
grant the Option and to sell upon exercise of the Option all the Option Units
it may be required to sell, as contemplated by this Agreement, and all action
necessary to enable Hudson to grant the Option and to sell upon exercise of the
Option all the Option Units it may be required to sell, as contemplated by this
Agreement, will have been taken. If Hudson sells Option Units to the Buyer, at
the time of that sale Hudson will own and have the right to sell to the Buyer
all the Option Units it is selling to the Buyer. Hudson has not granted any
option or right, and is not a party to any other agreement (except this
Agreement and the LLC Agreement), which requires, or upon the passage of time,
the payment of money, or the occurrence of any other event, may require Hudson
to transfer any Units to anyone other than the Buyer.
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(d) When the Buyer acquires Purchased Units or
Option Units as contemplated by this Agreement, the Buyer will receive them
free and clear of any liens, encumbrances or claims of other persons, except
(i) any which may arise under this Agreement or the LLC Agreement, (ii) any
which may result from acts of the Buyer or any affiliate of the Buyer (as the
term "affiliate" is defined in Rule 12b-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) or (iii) any restrictions on transfer
which may arise under applicable securities laws.
(e) On the Closing Date, the Company will be a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware. On the Closing Date, the Certificate
of Formation of the Company will be in the form of Exhibit 4.1-E and the LLC
Agreement will be in the form of Exhibit 2.2-B. On the Closing Date, the
Company will have all power and authority necessary to enable it to carry out
the transactions contemplated by this Agreement. By the Closing Date, the
Company will have taken all actions necessary to enable the Company to carry
out the transactions contemplated by this Agreement insofar as they must be
taken by the Company.
(f) On the Closing Date, each subsidiary of the
Company will be a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation. On the Closing
Date, the Company and each of its subsidiaries will be qualified to do business
as a foreign limited liability company or a foreign corporation in each state
in which it is required to be qualified, except states in which the failure to
qualify, in the aggregate, would not have a Material Adverse Effect. For the
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purposes of this Agreement, a "subsidiary" of an entity means any corporation,
limited liability company, partnership, association, joint stock company,
business trust or other similar organization of whose voting stock or voting
interests the entity owns or controls, directly or indirectly, more than 50%
(except that when the term "subsidiary" is used with regard to consolidated
financial statements or consolidated financial information, it means entities
the individual financial statements of which are, in accordance with GAAP,
included, subject to consolidating adjustments, in the applicable consolidated
financial statements).
(g) On the Closing Date, the only outstanding
Units will be the 260 Purchased Units and the 740 Hudson Units. On the Closing
Date, each of the Purchased Units and each of the Hudson Units will be, and if
the Company issues Option Units upon exercise of the Option, when they are
issued those Option Units will be, duly authorized and issued, fully paid and
nonassessable. On the Closing Date, the Company will not have issued any
options, warrants or convertible or exchangeable securities, and will not be a
party to any other agreements (except the LLC Agreement), which require, or
upon the passage of time, the payment of money or the occurrence of any other
event may require, the Company to sell or issue any Units of any class.
(h) Other than (i) the termination or expiration
of waiting periods under the HSR Act, if filings under the HSR Act are
required, (ii) filings under the Exchange Act, and the rules and regulations
under the Exchange Act, (iii) as may be necessary to obtain Customer Consents,
and (iv) as may be necessary to obtain Airport Consents, no governmental
filings, authorizations,
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approvals, or consents, or other governmental action, are required to permit
Hudson to fulfill all its obligations under this Agreement, except where
failure to make or obtain any such filings, authorizations, approvals, consents
or other governmental action would not individually or in aggregate (x) have a
Material Adverse Effect, or (y) prevent the consummation of the transactions
contemplated by this Agreement.
(i) Hudson's Report on Form 10-K for the year
ended June 30, 1995 (the "1995 10-K"), Report on Form 10-Q for the period ended
September 30, 1995 (the "September 30 10-Q") and definitive proxy statement
used in connection with its annual meeting of stockholders held on November 17,
1995 (the "Proxy Statement") as filed with the SEC (the 1995 10-K, the
September 30 10-Q and the Proxy Statement as filed with the SEC, including all
documents or portions of documents incorporated by reference in each of them,
being, together, the "SEC Filings") each complied in all material respects with
the requirements of the SEC form on which it was filed and none of the SEC
Filings, when it was filed, contained a misstatement of a material fact or
omitted to state a material fact necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
(j) All the audited financial statements in, or
incorporated by reference into, the 1995 10-K, and all the unaudited financial
statements from which financial information in the September 30 10-Q was
derived, were prepared in accordance with GAAP (except as indicated in the
notes thereto and, in the case of unaudited financial statements, as permitted
by Form 10-Q) and fairly present (subject, in the case of the unaudited
financial
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statements, to normal, recurring adjustments) the financial condition and
results of operations of Hudson and its subsidiaries, or of the Kohala Joint
Venture and its subsidiary, at the dates, and for the periods, to which they
relate.
(k) The only business in which the Company or any
of its subsidiaries will be actively engaged at the Closing Date will be
rendering the services described on pages 3 through 7 of Hudson's 1995 Annual
Report to Shareholders which was filed as Exhibit 13 to the 1995 10-K (the
"Aviation Services Business"). Substantially all the assets, revenues and
income of Hudson and its subsidiaries reflected in the consolidated financial
statements of Hudson and its subsidiaries incorporated by reference in the 1995
10-K and the September 30 10-Q were (i) assets used in connection with, and
revenues and income derived from, the Aviation Services Business, (ii) the
interest of Hudson Kohala, Inc. ("Hudson Kohala"), a wholly owned subsidiary of
Hudson, in Kohala Joint Venture, a joint venture between Hudson and a
subsidiary of Oxford First Corporation, and in the income of the Kohala Joint
Venture, accounted for by the equity method, and (iii) cash, cash equivalents,
accounts receivable and similar current items.
(l) The assets Hudson will transfer to the
Company as contemplated by Paragraph 5.2, directly or by transferring to the
Company stock of subsidiaries, will be all the assets (other than cash, cash
equivalents, accounts receivable and similar current items) used by Hudson and
its subsidiaries at the date of the transfer in connection with the Aviation
Services Business (it being understood that as to certain items leased by
Hudson to
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subsidiaries, the leasehold interests may be transferred to the Company in lieu
of the ownership interests).
(m) On the Closing Date, the Company and its
subsidiaries will have, or have access to, everything they need to be able to
conduct the Aviation Services Business substantially as it was being conducted
by Hudson and its subsidiaries before the transfer of assets contemplated by
Paragraph 5.2.
(n) On the Closing Date, the Company will not
have assumed or otherwise become obligated with regard to any indebtedness of
Hudson other than (i) trade accounts payable, accrued expenses or other
liabilities incurred by Hudson in the ordinary course of conducting the
Aviation Services Business, (ii) deferred taxes related to the Aviation
Services Business, (iii) borrowings or letters of credit under the Revolving
Credit and Term Loan Agreement among Hudson, the various banks referred to
therein, and First National Bank of Boston, as agent, dated as of November 25,
1992, as amended, or the Revolving Credit Agreement among Hudson General
Aviation Services Inc., the various banks referred to therein, and Bank of
Boston Canada (succeeded by Chase Manhattan Bank of Canada), as agent, dated as
of November 25, 1992, as amended (such credit agreements, together with any
amendments, restatements, replacements, refinancings or extensions thereof,
being hereinafter referred to as the "Hudson Revolving Credit Agreements"), and
(iv) not more than $29,000,000 principal amount of Convertible Debentures.
(o) Exhibit 4.1-O is a complete list of all the
subsidiaries of Hudson which are actively engaged in the Aviation Services
Business (the "Aviation Services Subsidiaries"). None of
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the Aviation Services Subsidiaries is engaged in any activities other than the
Aviation Services Business. Except as shown on Exhibit 4.1-O, Hudson owns all
the outstanding shares of, or other equity interests in, each of the Aviation
Services Subsidiaries. On the Closing Date, the Company will own all the
shares of, or other equity interests in, the Aviation Services Subsidiaries
which are owned by Hudson at the date of this Agreement (other than Aviation
Services Subsidiaries which have been liquidated or the assets of which
otherwise have been transferred to the Company, except as otherwise
contemplated by Paragraph 4.1(l)) and none of Hudson, the Company or any of the
Aviation Services Subsidiaries of which the Company owns shares will have
issued any options, warrants or convertible or exchangeable securities, or will
be a party to any other agreements, which require, or upon the passage of time,
the payment of money or the occurrence of any other event may require, Hudson,
the Company or any of those Aviation Services Subsidiaries to transfer to
anyone or issue any stock of, or other equity interest in, any of those
Aviation Services Subsidiaries (other than this Agreement and the LLC
Agreement). On the Closing Date, the Company will not own any stock of, or
other equity interests in, any companies other than the Aviation Services
Subsidiaries.
(p) The pro forma consolidated financial
statements of the Company and the Aviation Services Subsidiaries for the fiscal
year ended June 30, 1995, and at December 31, 1995, and for the six month
period ended on that date, (together, the "Pro Forma Financial Statements")
copies of which are included in Exhibit 4.1-P, were prepared on the basis
described in the notes to them,
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were prepared in accordance with GAAP and present fairly the pro forma
consolidated assets and liabilities of the Company and the Aviation Services
Subsidiaries and the consolidated results of operations of the Company and the
Aviation Services Subsidiaries, at the dates, and for the periods, to which
they relate. All the financial information in the Pro Forma Financial
Statements is consistent (taking account of the pro forma adjustments described
in the Pro Forma Financial Statements) with the financial statements or
financial information at the same dates and for the same periods which were
included in the SEC Filings.
(q) Since December 31, 1995, there has not been
any material adverse change in the Aviation Services Business or the
consolidated financial condition or results of operations of the Aviation
Services Business taken as a whole.
(r) Hudson and the Aviation Services Subsidiaries
have, and on the Closing Date, the Company and its subsidiaries will have
(except to the extent they have not received Customer Consents, Airport
Consents or Airport Authorizations), all licenses and permits from all
governmental authorities which are necessary or useful to permit the Company
and its subsidiaries to conduct the Aviation Services Business as that business
is being conducted at the date of this Agreement, other than licenses and
permits from governmental authorities the lack of which would not in aggregate
have a Material Adverse Effect insofar as the executive officers of Hudson are
aware. Except as stated on Exhibit 4.1-R, insofar as the executive officers of
Hudson are aware, Hudson and the Aviation Services Subsidiaries are, and on the
Closing Date, the Company and its subsidiaries will be, operating the Aviation
Services Business
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in accordance with applicable law in all respects which are material to the
Aviation Services Business or to the financial condition of the Company and its
subsidiaries taken as a whole.
(s) Except as shown on Exhibit 4.1-S, neither
Hudson nor any subsidiary is, and on the Closing Date, neither the Company nor
any of its subsidiaries will be, a party to any suit or proceeding in any
court, or by or before any governmental agency, nor has any executive officer
of Hudson been notified that any suit or proceeding is threatened against any
of those entities, which if decided adversely to Hudson (or the Company) or the
Aviation Services Subsidiaries, could reasonably be expected to have a Material
Adverse Effect, after taking into account applicable insurance coverage.
4.2 Buyer's Representations and Warranties. The Buyer
represents and warrants to Hudson as follows:
(a) The Buyer is a GmbH duly organized and
validly existing under the laws of the Federal Republic of Germany.
(b) The Buyer has all corporate power and
authority necessary to enable it to enter into this Agreement and carry out the
transactions contemplated by this Agreement. All corporate actions necessary
to authorize the Buyer to enter into this Agreement and the LLC Agreement and
carry out the transactions contemplated by each of them have been taken. This
Agreement has been duly executed by the Buyer and is a valid and binding
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agreement of the Buyer, enforceable against the Buyer in accordance with its
terms.
(c) Neither the execution and delivery of this
Agreement, the LLC Agreement or any other document required to be delivered in
accordance with this Agreement nor the consummation of the transactions
contemplated by this Agreement or the LLC Agreement will violate, result in a
breach of, or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, the Articles of Association or
by-laws of the Buyer, any agreement or instrument to which the Buyer or any
subsidiary of the Buyer is a party or by which any of them is bound, any law,
or any order, rule or regulation of any court or governmental agency or other
regulatory organization having jurisdiction over the Buyer or any of its
subsidiaries.
(d) No governmental filings, authorizations,
approvals or consents, or other governmental action, are required to enable the
Buyer to fulfill all its obligations under this Agreement.
(e) The Buyer is acquiring the Purchased Units
for its own account for investment purposes only and not with a view to, or
with any present intention of, resale, distribution or other disposition
thereof.
(f) The Buyer has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Purchased Units and any future
investment in the Option Units, and the Buyer is capable of bearing the
economic risks of such investment, including a complete loss of its investment.
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(g) Neither the Buyer nor any of its affiliates
owns an interest in any entity which is engaged in a business competitive with
the Aviation Services Business in the United States of America or Canada,
except interests in consortiums which operate airport terminal facilities.
4.3 Changes Prior to Closing Date. If (i) as a result of
occurrences after the date of this Agreement any facts which are as represented
or warranted in Paragraph 4.1 or 4.2 on the date of this Agreement cease by the
Closing Date to be as represented or warranted, or any state of facts which is
represented or warranted in Paragraph 4.1 or 4.2 to exist at the Closing Date
does not exist at the Closing Date and (ii) the facts as they exist on the
Closing Date are correctly set forth in the certificate delivered by Hudson as
contemplated by Paragraph 6.1(a) or the certificate delivered by the Buyer as
contemplated by Paragraph 6.2(a), as the case may be, then, whether or not the
other of Hudson or the Buyer, as the case may be, completes the transactions
which are to take place at the Closing even though the facts described in the
certificate differ from those represented or warranted in Paragraph 4.1 or 4.2,
as the case may be, the representations and warranties in Paragraph 4.1 or 4.2
will be deemed modified to be as set forth in the certificate delivered as
contemplated by Paragraph 6.1 (a) or 6.2(a), as the case may be, and whichever
of Hudson or the Buyer made the representations or warranties as to which facts
changed, or were not as contemplated in Paragraph 4.1 or 4.2, as described in
the certificate will have no liability under Paragraph 8.1 or 8.2, or
otherwise, because the facts were as described in the certificate, and not as
represented and warranted in, or contemplated by,
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Paragraph 4.1 or 4.2. This Paragraph 4.3 will not relieve Hudson or the Buyer
from liability because it failed to fulfill an obligation under Article V or
under any other provision of this Agreement, except liability for breach of a
representation or warranty contained in Paragraph 4.1 or 4.2 or a related
obligation to indemnify under Paragraph 8.1 or 8.2.
4.4 Remedy for Breaches of Representations and
Warranties. The indemnification in Article VIII will be the only remedy
available to the Buyer, Hudson or the Company for breaches of representations
or warranties contained in Paragraph 4.1 or 4.2. Any claim for that
indemnification must be made as provided in Paragraph 8.3.
ARTICLE V
ACTIONS PRIOR TO THE CLOSING
5.1 Activities Until Closing Date. From the date of this
Agreement to the Closing Date, Hudson will, except as contemplated by Paragraph
5.2 or other provisions of this Agreement, and will ensure that the Company
(after it is formed), the Aviation Services Subsidiaries and any other
subsidiaries of Hudson or the Company will, except with the written consent of
the Buyer:
(a) Operate the Aviation Services Business
(including making contractual commitments involving capital expenditures, loans
or advances, and including voluntarily incurring contingent liabilities, which
will become commitments or contingent liabilities of the Company or its
subsidiaries) in, and only in, the ordinary course and in, and only in, a
manner
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consistent with the manner in which they are being operated at the date of this
Agreement.
(b) Take all reasonable steps available to them
to maintain the goodwill of the Aviation Services Business.
(c) Maintain all their assets used in connection
with the Aviation Services Business in good repair and condition, except to the
extent of reasonable wear and use and damage by fire or other unavoidable
casualty.
(d) Not make any borrowings which will be
obligations of the Company or its subsidiaries on the Closing Date, other than
borrowings (i) not under the Hudson Revolving Credit Agreements in a single
transaction or series of related transactions of a sum equal to 10% or more of
the total assets which are at the time of the borrowing, or on the Closing Date
will be, owned by the Company and its subsidiaries, or (ii) under the Hudson
Revolving Credit Agreements.
(e) Maintain their books of account and records
in the usual manner, in accordance with GAAP, subject to normal adjustments and
accruals.
(f) Not sell, dispose of or encumber any property
or assets which individually or in aggregate are material to the Aviation
Services Business, except in each case in the ordinary course of business.
(g) Not declare any dividends or take any other
steps which will cause the consolidated stockholders equity of the Company and
its subsidiaries on the Closing Date to be less than the pro forma stockholders
equity of the Company and its subsidiaries on December 31, 1995, which is
described in Paragraph
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6.1(e), unless caused by a loss incurred in the operations of the Aviation
Services Business between January 1, 1996 and the Closing Date.
(h) By the Closing Date, take all steps which are
necessary (including, if necessary, amending or terminating applicable
agreements) so the distributions required by the LLC Agreement will not violate
the Hudson Revolving Credit Agreements.
5.2 Formation of Company and Transfer of Assets. Hudson
will, at or before the time of the Closing, (a) cause the Company to be formed,
(b) cause the Company to execute the LLC Agreement, (c) transfer to the Company
directly or by transferring to the Company stock of the Aviation Services
Subsidiaries, all the assets (other than cash, cash equivalents, accounts
receivable and similar current items or as contemplated by Paragraph 4.1(l))
used by Hudson or its subsidiaries in connection with the Aviation Services
Business, in exchange for (i) the Hudson Units and (ii) the assumption by the
Company, as a co-obligor, of the obligations of Hudson with regard to the
Convertible Debentures, (d) cause the Company to sell the Purchased Units to
the Buyer as contemplated by this Agreement, and (e) do all other things so the
representations and warranties regarding the Company and its subsidiaries in
Paragraphs 4.1(d), (e), (g), (m) and the first sentence of Paragraph 4.1(k)
will be true and correct in all material respects on the Closing Date.
5.3 Hudson Stockholders Meeting. Hudson will, as
promptly as practicable, hold a meeting of its stockholders for the purpose of
voting upon a proposal to approve the transactions which
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are the subject of this Agreement (the "Stockholders Meeting"). In connection
with that meeting, Hudson will do the following:
(a) File with the SEC a preliminary proxy
statement and a definitive proxy statement (the latter being the "Transaction
Proxy Statement") relating to the Stockholders Meeting, and a related form of
proxy (together, the "Soliciting Materials").
(b) Subject to the fiduciary duties of Hudson's
Board of Directors, acting upon the advice of counsel, recommend in the
Transaction Proxy Statement that the stockholders of Hudson approve the
transactions which are the subject of this Agreement.
(c) Respond to all comments by the staff of the
SEC regarding the Soliciting Materials.
(d) Cause the Stockholders Meeting to be held not
later than forty days after the day on which Hudson is permitted to mail the
Soliciting Materials to its stockholders.
(e) Use all reasonable efforts to solicit proxies
from its stockholders in support of the transactions which are the subject of
this Agreement.
5.4 HSR Act Filings. If at any time Hudson or the Buyer
is informed by its counsel that a filing under the HSR Act is required in
connection with the Buyer's purchase of the Purchased Units or of Option Units,
Hudson and the Buyer each will, and if applicable will cause the Company to,
make as promptly as practicable the filing it is required to make under the HSR
Act with regard to the applicable transaction and each of them will take all
reasonable steps within its control (including providing information to the
Federal Trade Commission and the Department of Justice) to cause the waiting
periods required by the HSR Act to be
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terminated or to expire as promptly as practicable. Hudson and the Buyer each
will, and will cause the Company to, provide information and cooperate in all
other respects to assist the other of them in making its filing under the HSR
Act.
5.5 Hudson's Efforts to Fulfill Conditions. Hudson will
use its best efforts (which best efforts shall not be required to include
modification of current or future terms of agreements or offering or agreeing
to any economic consideration) to cause all the conditions set forth in
Paragraphs 6.1 (a), (b), (c), (e), (f) and (g) and 6.2(f) to be fulfilled prior
to or at the Closing.
5.6 Buyer's Efforts to Fulfill Conditions. The Buyer
will use its best efforts (which best efforts shall not be required to include
modification of current or future terms of agreements or offering or agreeing
to any economic consideration) to cause all the conditions contained in
Paragraphs 6.2 (a), (b), (c), (f) and (g) to be fulfilled prior to or at the
Closing.
5.7 Communications with Regard to Consents to Assignment.
Hudson and the Buyer will each keep the other of them fully informed of all
communications it or any of its subsidiaries (including, after it is formed,
the Company as a subsidiary of Hudson) has with parties from whom Customer
Consents or Airport Consents are being sought, regarding whether those parties
or issuers will grant Customer Consents or Airport Consents. If Hudson or the
Buyer notifies the other of them that it appears that the number of parties
specified on Exhibit 6.1-D will not grant Customer Consents or Airport
Consents, Hudson and the Buyer will consult with each other about whether (i)
there are further steps which are reasonably acceptable to both of them which
should be
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taken in an effort to obtain Customer Consents or Airport Consents from at
least some of the parties which it appears will not grant Customer Consents or
Airport Consents, or (ii) the Buyer and Hudson should waive the conditions in
Paragraphs 6.1(d) and 6.2(d) (it being understood and agreed that Buyer shall
have no obligation to waive the condition in Paragraph 6.1(d) and that Hudson
shall have no obligation to waive the condition in Paragraph 6.2(d)). If the
Closing Date was scheduled to have occurred within 15 days after the day on
which the notice described in the previous sentence is given, then unless the
conditions in Paragraphs 6.1(d) and 6.2(d) will be satisfied or waived at the
Closing, the Closing Date will be postponed until the 15th day after the day on
which that notice is given (or, if that 15th day is not a day on which banks
are required to be open for banking business in New York City and Frankfurt am
Main, until the next following day on which banks are required to be open for
banking business in both those cities).
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions to Buyer's Obligations. The obligations
of the Buyer at the Closing are subject to satisfaction of the following
conditions (any or all of which may be waived in writing by the Buyer):
(a) The representations and warranties of Hudson
contained in this Agreement will, except as contemplated by this Agreement, be
true and correct in all material respects at the Closing Date with the same
effect as though made on that date (except where the failure of such
representations or warranties to
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be true and correct, individually and in the aggregate, do not have and could
not reasonably be expected to have a Material Adverse Effect or to subject the
Buyer or any of its affiliates to significant liability), and Hudson will have
delivered to the Buyer a certificate dated that date and signed by the
President or a Vice President of Hudson to that effect.
(b) Hudson will have fulfilled in all material
respects all its obligations under this Agreement required to have been
fulfilled prior to or at the Closing.
(c) No order will have been entered by any court
or governmental authority and be in force which invalidates this Agreement or
restrains the Buyer, Hudson or the Company from completing the transactions
which are the subject of this Agreement.
(d) Hudson, the Buyer or any of their respective
subsidiaries (including, after it is formed, the Company as a subsidiary of
Hudson) will not have been told or otherwise been given substantial reason to
believe that a specified number of parties to contracts, or Airport
Authorities, as set forth on Exhibit 6.1-D will not grant Customer Consents or
Airport Consents.
(e) At December 31, 1995, the Company and its
subsidiaries will have had a pro forma (on the pro forma basis reflected in the
Pro-Forma Financial Statements) consolidated ratio of stockholders equity to
total assets of at least 27% after adjusting pro forma stockholders equity by
adding back subscriptions receivable of $7,838,000 to pro forma stockholders
equity.
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(f) Hudson will have obtained all consents,
approvals and authorizations required to be obtained under the agreements set
forth in Exhibit 4.1-B, except for the items identified in paragraphs 1 and 2
thereof and except for such consents, approvals and authorizations, the failure
of which to obtain would not and could not reasonably be expected to have a
Material Adverse Effect or to subject the Buyer or any of its affiliates to
significant liability.
(g) The Closing Date will be not later than July
31, 1996.
6.2 Conditions to Hudson's Obligations. The obligations
of Hudson at the Closing are subject to satisfaction of the following
conditions (any or all of which may be waived in writing by Hudson):
(a) The representations and warranties of the
Buyer contained in this Agreement will, except as contemplated by this
Agreement, be true and correct in all material respects at the Closing Date
with the same effect as though made on that date (except where the failure of
such representations or warranties to be true and correct, individually and in
the aggregate, do not have and could not reasonably be expected to have a
material adverse effect on the Company or on the Buyer's ability to consummate
the transactions contemplated hereby or to subject Hudson or any of its
affiliates to significant liability), and the Buyer will have delivered to
Hudson a certificate dated that date and signed by the Managing Director of the
Buyer or his authorized designee to that effect.
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(b) The Buyer will have fulfilled in all material
respects all its obligations under this Agreement required to have been
fulfilled prior to or at the Closing.
(c) No order will have been entered by any court
or governmental authority and be in force which invalidates this Agreement or
restrains Hudson, the Company or the Buyer from completing the transactions
which are the subject of this Agreement.
(d) Hudson, the Buyer or any of their respective
subsidiaries (including, after it is formed, the Company as a subsidiary of
Hudson) will not have been told or otherwise been given substantial reason to
believe that a specified number of parties to contracts, or Airport
Authorities, as set forth on Exhibit 6.1-D will not grant Customer Consents or
Airport Consents.
(e) The stockholders of Hudson will have
approved the transactions which are the subject of this Agreement.
(f) Hudson will have obtained all consents,
approvals and authorizations required to be obtained under the agreements set
forth in Exhibit 4.1-B, except for the items identified in paragraphs 1 and 2
thereof and except for such consents, approvals and authorizations the failure
of which to obtain would not and could not reasonably be expected to have a
Material Adverse Effect or to subject Hudson or any of its affiliates to
significant liability.
(g) The Closing Date will be not later than July
31, 1996.
ARTICLE VII
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TERMINATION
7.1 Right to Terminate. This Agreement may be terminated
at any time prior to the Closing:
(a) By mutual consent of the Buyer and Hudson.
(b) By either the Buyer or Hudson if, without
fault of the terminating party, the Closing does not occur on or before July
31, 1996.
(c) By the Buyer if (i) it is determined that any
of the representations or warranties of Hudson contained in this Agreement was
not complete and accurate in all material respects on the date of this
Agreement (except where the failure of such representations or warranties to be
true and correct, individually and in the aggregate, do not have and could not
reasonably be expected to have a Material Adverse Effect or to subject the
Buyer or any of its affiliates to significant liability), or (ii) any event
occurs which makes it impossible for all the conditions in Paragraph 6.1 to be
fulfilled.
(d) By Hudson if (i) it is determined that any of
the representations or warranties of the Buyer contained in this Agreement was
not complete and accurate in all material respects on the date of this
Agreement (except where the failure of such representations or warranties to be
true and correct, individually and in the aggregate, do not have and could not
reasonably be expected to have a material adverse effect on the Company or on
the Buyer's ability to consummate the transactions contemplated hereby or to
subject Hudson or any of its affiliates to significant liability) or (ii) any
event occurs which makes it impossible for all the conditions in Paragraph 6.2
to be fulfilled.
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(e) By either the Buyer or Hudson if (i) Hudson's
Board of Directors fails to include in the Transaction Proxy Statement an
unqualified recommendation that Hudson's stockholders vote to approve the
transactions which are the subject of this Agreement, or (ii) that
recommendation is withdrawn or qualified prior to the Stockholders Meeting.
(f) By Hudson, within three business days after
the date of the certification of the vote taken at the Stockholders Meeting
(which certification Hudson will cause to occur as soon as possible after the
Stockholders Meetings), or by the Buyer within 15 days after the date on which
Hudson notifies the Buyer of the results of the voting at the Stockholders
Meeting, if the transactions which are the subject of this Agreement and which
are being voted upon at the Stockholders Meeting are not approved by the
holders of a majority of the outstanding stock of Hudson entitled to vote
thereon.
(g) By either the Buyer or Hudson, if Hudson
notifies the Buyer that Chemical Bank Delaware (the "Trustee"), as trustee
under the Indenture dated as of July 1, 1986, relating to the Convertible
Debentures (the "Indenture"), has informed Hudson that the Trustee will not
sign a supplemental indenture substantially in the form of Exhibit 7.1-G.
(h) By either the Buyer or Hudson, by a notice
given to the other of them not later than April 10, 1996, if on or before April
1, 1996, Hudson notifies the Buyer that Hudson has received adverse reactions
to the transactions contemplated by this Agreement from customers of the
Aviation Services Business or from issuers of Airport Authorizations which lead
Hudson to have a good
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faith belief that the transactions contemplated by this Agreement would
negatively affect the Aviation Services Business in a significant manner.
7.2 Effect of Termination. If this Agreement is
terminated pursuant to Paragraph 7.1, after this Agreement is terminated,
neither party will have any further rights, obligations or liabilities under
this Agreement or otherwise, except that Paragraphs 14.1, 14.2, 14.9 and 14.10
will remain in effect after the termination of this Agreement. Nothing
contained in this Paragraph will relieve either party of liability for any
intentional breach of this Agreement which occurs before this Agreement is
terminated. However, the only sum for which Hudson or the Buyer will be liable
to the other of them for any breach of this Agreement (other than a breach of
Paragraph 9.1) which takes place before the Closing will be the out-of-pocket
costs (including costs incurred by, but not charges for time of, employees and
with legal fees billed at not more than counsels standard hourly billing rates)
incurred by the non-breaching party, up to a maximum of $650,000.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification Against Loss Due to Inaccuracies in
Hudson's Representations and Warranties. Hudson indemnifies the Buyer against,
and agrees to hold the Buyer harmless from, all losses, liabilities and
expenses suffered or incurred by the Buyer (including, but not limited to,
reasonable fees and expenses of counsel in defending against claims asserted
against the Buyer and
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excluding any fees and expenses of investigating potential claims by or against
the Buyer) because any matter which is the subject of a representation or
warranty contained in Paragraph 4.1 is not as represented or warranted (except
as provided in Paragraph 4.3 and except that indemnification because any
matters are not as represented or warranted is limited to the aggregate amount
by which the resulting losses, liabilities and expenses exceed in total
$1,000,000, such $1,000,000 amount being deemed an "aggregate deductible" which
will be borne by the Buyer).
8.2 Indemnification Against Loss Due to Inaccuracies in
Buyer's Representations and Warranties. The Buyer indemnifies Hudson against,
and agrees to hold Hudson harmless from, all losses, liabilities and expenses
suffered or incurred by Hudson (including, but not limited to, reasonable fees
and expenses of counsel in defending against claims asserted against Hudson and
excluding any fees and expenses of investigating potential claims by or against
Hudson) because any matter which is the subject of a representation or warranty
contained in Paragraph 4.2 is not as represented or warranted (except as
provided in Paragraph 4.3 and except that indemnification because any matters
are not as represented or warranted is limited to the aggregate amount by which
the resulting losses, liabilities and expenses exceed in total $1,000,000, such
$1,000,000 amount being deemed an "aggregate deductible" which will be borne by
Hudson).
8.3 Limit on Claims Regarding Representations and
Warranties. The indemnification in Paragraph 8.1 or 8.2, as the case may be,
will be the sole remedy of the Buyer or Hudson because any matter which is the
subject of a representation or warranty
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contained in Paragraph 4.1 or 4.2 is not as represented or warranted. Any
claim for that indemnification, other than a claim by the Buyer for
indemnification because a matter which is the subject of a representation or
warranty in Paragraph 4.1(d) is not correct, must be made not later than 45
days after the Company delivers to the Buyer a copy of the Company's
consolidated financial statements for the year ending June 30, 1997 (which,
under the circumstances described in Paragraph 1.3(b) and at Buyer's expense as
provided in Paragraph 1.3(b), will be audited financial statements) in a
written notification to the party from which indemnification is sought which
describes in reasonable detail the claim and the facts on which it is based. A
claim by the Buyer for indemnification because a matter which is the subject of
a representation or warranty in Paragraph 4.1(d) is not correct must be made in
a notification of the type described in the preceding sentence which is given
to the Company not later than six months after the Company notifies the Buyer
of the facts which were not as represented or warranted in a notification which
states that it is intended to start a six month period under this Paragraph.
Neither Hudson nor the Buyer will have any liability because any matter which
is the subject of a representation or warranty contained in Paragraph 4.1 or
4.2 is not as represented or warranted unless it is described in a notification
given as provided in this Paragraph.
8.4 Payment of Taxes.
(a) Hudson will (i) pay all Income Taxes related
to the Aviation Services Business with regard to all periods ended on or before
the Closing Date and (ii) indemnify and reimburse the
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Company, each of the Company's subsidiaries and each holder of Units (a
"Member") of the Company (other than Hudson) for all Income Taxes payable by
the Company, any of its subsidiaries or any of its Members (other than Hudson)
to the extent, but only to the extent, that the Income Taxes of such Member are
payable as a result of taxable income attributable to the Aviation Services
Business that accrued in any periods that ended on or before the Closing Date.
As used in this Agreement, the term "Income Taxes" means all income, gains,
franchise and similar taxes measured by income or gains of an entity and all
interest and penalties computed on the basis of the amount of such taxes, and
the term "Income Tax Return" means a form that (1) is required to be filed with
a taxing authority and (2) contains a computation of the liability for Income
Taxes of the entity that is required to file the form (or, in the case of an
Income Tax Return filed by a passthrough entity, the liability for Income Taxes
of the partners, shareholders, or other owners of such entity). Hudson and the
Buyer will cause the Company and its subsidiaries to pay over to Hudson all
refunds that the Company or any subsidiary receives of Income Taxes relating to
periods ended on or before the Closing Date (whether such Income Taxes were
paid before, on, or after the Closing Date).
(b) If there is an audit adjustment to any item
reported on any Income Tax Return pertaining to Income Taxes subject to
indemnification under Section 8.4(a) of this Agreement, which adjustment
results in an increase in the Income Taxes payable by Hudson, and results in a
corresponding adjustment to items reported on an Income Tax Return of the
Company, a Member or a
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subsidiary relating to a taxable period ending after the Closing Date with the
result that Income Taxes payable by a Member (other than Hudson), the Company,
or any subsidiary are reduced, or a refund of Income Taxes to a Member (other
than Hudson), the Company or a subsidiary for a period ending after the Closing
Date is increased, then, within 30 days after the Company, the Member or the
subsidiary (a) files the income tax return or amended income tax return which
reflects the reduced Income Taxes, or (b) receives the refund, the Company, the
subsidiary, or the Member will pay Hudson the amount by which its Income Taxes
are reduced or the refunds of Income Taxes are increased.
8.5 Indemnification Against Results of Certain
Litigation.
(a) Hudson indemnifies the Company, each subsidiary of
the Company (including, but not limited to, Hudson Canada), the Buyer and each
affiliate of the Buyer against, and agrees to hold each of them harmless from,
all losses, liabilities and expenses suffered or incurred by any of them
(including, but not limited to, reasonable fees and expenses of counsel) with
regard to the suit entitled Texaco Canada Inc. (now McColl-Frontenac Inc.) v.
Petrocanada Inc., Hudson General Aviation Services Inc. and Hudson General
Corporation or with regard to any other claim relating to any of the
occurrences, events or conditions which are the subject of that suit; provided,
however, upon payment by Hudson of the indemnification amounts to the Company
and its subsidiaries which may be required by this Paragraph 8.5, the Buyer and
its affiliates shall not be deemed to have suffered any losses or liabilities,
and shall not have any claim against Hudson, by reason of losses or
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liabilities suffered by the Company or its subsidiaries; and further provided,
however, that Hudson shall have no obligation to indemnify the Company or its
subsidiaries to the extent that amounts had been accrued and reserves
established on the books of Hudson or the Aviation Services Subsidiaries as of
December 31, 1995. Any amounts received by the Company or its subsidiaries or by
the Buyer or its affiliates as a result of third party indemnifications in
connection with such litigation shall be promptly remitted to Hudson.
ARTICLE IX
ACQUISITION PROPOSALS
9.1 Other Offers.
(a) From the date of execution of this Agreement until
the earlier of (x) the Closing Date or (y) the date on which this Agreement
terminates for any reason whatsoever (whether in accordance with Article VII
hereof or otherwise), neither Hudson nor any of its subsidiaries (including the
Company after it is formed) will, and Hudson will use its best efforts to cause
its directors, officers, employees or other agents (including, but not limited
to, investment bankers) not to, (i) initiate or solicit any Aviation Services
Acquisition Proposal or (ii) subject to the fiduciary duties of Hudson's Board
of Directors, acting upon the advice of counsel, engage in negotiations with, or
disclose non-public information relating to the Aviation Services Business to,
anyone other than the Buyer (a "Third Party"), that may be considering making,
or has made, any Aviation Services Acquisition Proposal. Hudson will promptly
notify the Buyer after its receipt
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of any Aviation Services Acquisition Proposal or any indication that any Third
Party is considering making an Aviation Services Acquisition Proposal. For
purposes of this Agreement, (i) "Aviation Services Acquisition" means (x) an
acquisition of the Aviation Services Business or any substantial part of it or
(y) an acquisition of Hudson or a significant interest in Hudson which, to the
knowledge of any of Hudson's executive officers, is conditioned upon, or likely
to result in, Hudson's not completing the transactions which are the subject of
this Agreement, and (ii) "Aviation Services Acquisition Proposal" means a
proposal to make, or other expression of serious interest in making, an Aviation
Services Acquisition.
(b) From the date of execution of this Agreement until
the earlier of (x) the Closing Date or (y) the date on which this Agreement
terminates for any reason whatsoever (whether in accordance with Article VII or
otherwise), neither Hudson nor any of its subsidiaries (including the Company
after it is formed) will, and Hudson will use its best efforts to cause its
directors, officers, employees or other agents (including, but not limited to,
investment bankers) not to, engage in any negotiations or discussions of
substantive terms with any Third Party regarding a possible Aviation Services
Acquisition until at least twenty-four hours after Hudson has given the Buyer a
notice (a "Negotiation Notice") that Hudson intends to begin negotiations or
discussions of substantive terms with that Third Party (who will be named in the
Negotiation Notice)regarding a possible Aviation Services Acquisition (the
principal proposed terms of which, including price, will be described in the
Negotiation Notice).
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(c) Unless within 30 days after Hudson gives a
Negotiation Notice to the Buyer, Hudson gives the Buyer a notice (a "Termination
of Negotiation Notice") that Hudson has terminated all negotiations and
discussions with the Third Party named in the Negotiation Notice regarding a
possible Aviation Services Acquisition, at any time during the period beginning
on the thirty-first day after the day on which the Negotiation Notice was given
and ending on the day on which a Termination of Negotiation Notice relating to
that Negotiation Notice is given to the Buyer, the Buyer may, by a notice to
Hudson, terminate this Agreement with the same effect as a termination under
Article VII.
(d) Notwithstanding what is said in Paragraph 9.1(a)
or (c), if between the date this Agreement is executed and the earlier of (x)
the Closing Date or (y) the date on which this Agreement terminates for any
reason whatsoever (whether in accordance with Article VII of this Agreement or
otherwise), Hudson receives a proposal for an acquisition of Hudson or a
significant interest in Hudson (the "Initial Proposal"), after Hudson gives the
Buyer a notice of its intention to do so (a "Competing Bid Solicitation
Notice"), Hudson may, and may cause its directors, officers, employees and other
agents (including, but not limited to, investment bankers) to, solicit proposals
from other parties for an acquisition of Hudson or a significant interest in
Hudson. The Initial Proposal and any amendments orrevisions to, or modifications
of, the Initial Proposal from the party who made the Initial Proposal at all
times shall be subject to the provisions of paragraphs (a),(b) and (c) of this
Section 9.1 and shall not be subject to this paragraph (d). After Hudson gives
the Buyer a
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Competing Bid Solicitation Notice, (i) any proposal Hudson receives for an
acquisition of Hudson or a significant interest in Hudson will be an Aviation
Services Acquisition Proposal and the transaction which is the subject of that
proposal will be an Aviation Services Acquisition, even if neither the proposal
nor the transaction is conditioned upon, or is likely to result in, Hudson's not
completing the transactions which are the subject of this Agreement, and (ii) if
Hudson gives the Buyer a Negotiation Notice regarding a possible acquisition of
Hudson or a substantial interest in Hudson, the Buyer may at any time during the
period beginning on the day that a Negotiation Notice is given to the Buyer and
ending on the day on which a Termination of Negotiation Notice relating to that
Negotiation Notice is given to the Buyer, terminate this Agreement with the same
effect as a termination under Article VII; unless, however, such acquisition is
conditioned upon Hudson's not completing the transactions which are the subject
of this Agreement, in which event the provisions of Paragraphs (a), (b) and (c)
of this Section 9.1 shall govern.
(e) If either (i) Hudson or the Buyer terminates this
Agreement under Paragraph 7.1(e) or (ii) the Buyer terminates this Agreement
under Paragraph 9.1(c), within ten days after demand from the Buyer accompanied
by a reasonably detailedstatement of the out-of-pocket costs the Buyer has
incurred (with legal fees billed at not more than its counsel's standard hourly
billing rates) in connection with its efforts to enter into the transactions
which are the subject of this Agreement (including reasonable estimates of
out-of-pocket costs for which the Buyer has not yet been billed), accompanied by
reasonable documentation of
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those costs, Hudson will reimburse the Buyer for those costs, up to a maximum
of $650,000.
ARTICLE X
AVIATION SERVICES COOPERATION
10.1 Cooperation In Expanding Presence. The Buyer and
the Company will cooperate in their common efforts to expand their presence in
the market for services of the type included in the Aviation Services Business
("Aviation Ground Services") in North America and internationally. To accomplish
this, they will work together to develop a common international marketing
concept for their respective Aviation Ground Services, including, possibly,
providing Aviation Ground Services under a common international brand. If they
do this, they will consider changing the name of the Company to reflect that
international brand. In addition, the Buyer and the Company will attempt to
agree upon a common strategy in the fields of equipment purchasing, ground
handling, equipment maintenance, passenger services training, electronic data
processing, fuel purchasing and other elements of providing Aviation Ground
Services with a view to improving the quality, and reducing the cost, of
Aviation Ground Services offered to customers of each of them. Except as
described in Paragraph 10.3, the cooperation will not include passenger handling
services.
10.2 Steering Committee. Promptly after the Closing,
the Buyer and the Company will form a joint steering committee (the "Steering
Committee"), which will include the chief executive officer of Hudson and the
managing director of the Buyer, will meet regularly, and in any event at least
once each quarter, and will
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develop strategies and make recommendations to the Buyer and the Company
regarding expansion of Aviation Ground Services activities in the United States
and Canada, international Aviation Ground Services business development
strategies (including entering into local partnerships), Aviation Ground
Services customer service, Aviation Ground Services general marketing activities
and other significant issues relating to the management and marketing of their
respective Aviation Ground Services activities. The Buyer and the Company will
keep each other informed of the efforts each of them is making to carry out the
strategies developed and recommendations made by the Steering Committee.
10.3 Option if the Buyer Creates a Passenger Handling
Services Subsidiary.
(a) If at any time when the Buyer owns at least 15% of
the outstanding Units, or within one year after the day on which the Buyer and
its affiliates, or Hudson and its affiliates, cease to own at least 15% of the
outstanding Units, a direct or indirect subsidiary of the Buyer or Deutsche
Lufthansa AG ("Lufthansa") begins rendering passenger handling services (i.e.,
ticketing, check-ins, passenger loading and other passenger related airport
services) in North America to airlines other than Lufthansa German Airlines or
airlines majority owned by, or majority commonly owned with, Lufthansa, promptly
after the subsidiary begins rendering those services, the Buyer will (a) notify
Hudson that the subsidiary is rendering those services, and (b) offer Hudson the
option, which must be exercised within six months after the date of the notice
to Hudson, to purchase 26% of the outstanding equity securities of the
subsidiary on terms substantially the same as
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those on which the Buyer is purchasing the Purchased Units, with the price of
the 26% interest in the passenger handling services subsidiary being based upon
(i) the estimated average earnings of the passenger handling services subsidiary
during the fiscal year (based on the Buyer's fiscal year) in which Hudson
purchases the 26% interest and the following three fiscal years, as estimated by
the Buyer, divided by (ii) 0.12. For the purposes of this Paragraph, rendering
interline services relating to passengers who use an airline which is an
alliance party with Lufthansa German Airlines, for a portion of a trip which
includes travel on Lufthansa German Airlines (whether under a code sharing
arrangement or otherwise), will not constitute rendering passenger handling
services to an airline other than Lufthansa German Airlines or an airline
majority owned by, or majority commonly owned with, Lufthansa German Airlines.
(b) If Hudson exercises the option described in
Paragraph 10.3(a) and purchases a 26% interest in the passenger handling
services subsidiary, Hudson will have the further option to purchase equity
securities of that subsidiary which will increase Hudson's ownership to up to
49%, which further option will be on substantially the same terms as the Option,
with the exercise price based upon (i) the average pre-tax earnings of the
passenger handling services subsidiary during the four fiscal years (based on
the Buyer's fiscal year) preceding the fiscal year in which the further option
is exercised (or, to the extent the further option is exercised before the
passenger handling services subsidiary has been rendering passenger handling
services for four full fiscal years, the average of the actual pre-tax earnings
of the passenger
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handling services subsidiary during the full fiscal years it
has been rendering passenger handling services and the estimated pre-tax
earnings of the passenger handling services subsidiary during a number of
subsequent years such that the average will be of actual or estimated pre-tax
earnings for a total of four years), divided by (ii) 0.12.
(c) If the Buyer is required to give Hudson an option
under Paragraph 10.3(a) or (b), the Buyer and Hudson will cooperate to agree
upon complete terms of that option, consistent with those set forth in
Paragraphs 10.3(a) and (b).
ARTICLE XI
AGREEMENT NOT TO COMPETE
11.1 Agreement by the Buyer not to Compete. Neither
the Buyer nor Lufthansa nor any of their respective affiliates will, at any time
when the Buyer owns Units, nor within one year after the Buyer ceases to own
Units, engage directly or through ownership of equity of other entities (other
than less than 2% of the shares of a publicly traded company acquired solely as
an investment), in rendering Aviation Ground Services (other than passenger
handling services) in the United States of America or in Canada, except that
nothing will prevent the Buyer from rendering Aviation Ground Services to
Lufthansa German Airlines or airlines which are alliance partners of Lufthansa
German Airlines.
ARTICLE XII
ABSENCE OF BROKERS
12.1 Representations and Warranties Regarding Brokers
and Others. The Buyer and Hudson each represents and warrants to the
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other of them that nobody acted as a broker, a finder or in any similar capacity
in connection with the transactions which are the subject of this Agreement,
except that Allen & Company, Incorporated acted as a financial adviser to
Hudson. Hudson will pay all sums due to Allen & Company, Incorporated. The Buyer
and Hudson each indemnifies the other of them against, and agrees to hold the
other of them harmless from, all losses, liabilities and expenses (including,
but not limited to, reasonable fees and expenses of counsel and costs of
investigation) incurred because of any claim by anyone for compensation as a
broker, a finder or in any similar capacity by reason of services allegedly
rendered to the indemnifying party in connection with the transactions which are
the subject of this Agreement.
ARTICLE XIII
CERTAIN COVENANTS OF BUYER
13.1 Restrictions on Buyer's Activities Regarding Hudson
and Its Stock. The Buyer agrees that from the date of this Agreement until
the later of (i) the third anniversary of the date of this Agreement, or (ii)
the first anniversary of the date on which the Buyer and its affiliates, or
Hudson and its affiliates, cease to own any Units of the Company, without the
prior written consent of the Board of Directors of Hudson, specifically
expressed in a resolution adopted by a majority of the directors of Hudson, the
Buyer will not, and the Buyer will cause each of its affiliates not to, directly
or indirectly:
(a) Acquire, offer or propose to acquire, or agree to
acquire, directly or indirectly, whether by purchase, tender or
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exchange offer, through the acquisition of control of another Person (as defined
below), by joining a partnership, limited partnership, syndicate or other
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) or
otherwise, any shares of common stock or any other securities of Hudson entitled
to vote generally in the election of directors or any other securities
(including, without limitation, rights and options) convertible into,
exchangeable for or exercisable for, any of the foregoing (whether or not
presently convertible, exchangeable or exercisable) (any such securities being
"Voting Securities");
(b) make, or in any way participate, directly or indirectly, in
any "solicitation" (as such term is used in the proxy rules of the Securities
and Exchange Commission as in effect on the date hereof) of proxies or consents
(whether or not relating to the election or removal of directors), or otherwise
communicate with Hudson's shareholders pursuant to Rule 14a-1(l)(2)(iv) under
the Exchange Act, seek to advise, encourage or influence any individual, group,
corporation, partnership, firm, government or agency or political subdivision
thereof, or other entity of whatever nature (each a "Person") with respect to
the voting of any Voting Securities, initiate, propose or otherwise "solicit"
(as such term is used in the proxy rules of the Securities and Exchange
Commission as in effect on the date hereof) shareholders of Hudson for the
approval of shareholder proposals whether made pursuant to Rule 14a-8 under the
Exchange Act or otherwise, or induce or attempt to induce any other Person to
initiate any such shareholder proposal;
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(c) seek, propose, or make any statement with respect to, any
merger, consolidation, business combination, tender or exchange offer, sale or
purchase of assets, sale or purchase of securities, dissolution, liquidation,
restructuring, recapitalization or similar transaction of or involving the
Company or any of its affiliates or "associates" (as defined in Rule 12b-2 under
the Exchange Act as in effect on the date hereof) of Hudson and its affiliates;
(d) form, join or in any way participate in a "group" (as
defined in Section 12(d)(3) of the Exchange Act) with respect to any Voting
Securities;
(e) deposit any Voting Securities in any voting trust or
subject any Voting Securities to any arrangement or agreement with respect to
the voting of any Voting Securities;
(f) execute any written consent with respect to Hudson or its
Voting Securities;
(g) otherwise, act, alone or in concert with others, to control
or seek to control or influence or seek to influence the management, Board of
Directors or policies of Hudson (except that nothing in this Agreement will
prevent the Buyer or any affiliate of the Buyer from attempting to influence any
matter related to the Company or its activities);
(h) seek, alone or in concert with others, representation on
the Board of Directors of Hudson, or seek the removal of any member of the Board
of Directors of Hudson;
(i) make any publicly disclosed proposal or enter into any
discussion regarding the foregoing;
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(j) make any proposal, statement or inquiry, or disclose any
intention, plan or arrangement (whether written or oral) inconsistent with the
foregoing, or make or disclose any request to amend, waive or terminate any
provisions of this Paragraph 13.1; or
(k) have any discussions or communications, or enter into any
arrangements, understandings or agreements (whether written or oral) with, or
advise, finance, assist or encourage, any other Person in connection with any of
the foregoing, or make any investment in or enter into any arrangement with, any
other Person that engages, or offers or proposes to engage, in any of the
foregoing.
ARTICLE XIV
GENERAL
14.1 Expenses. The Buyer and Hudson will each pay its
own expenses, and Hudson will cause the Company to pay the Company's expenses,
in connection with the transactions which are the subject of this Agreement,
including legal fees.
14.2 Access to Properties, Books and Records.
(a) From the date of this Agreement until the Closing Date,
Hudson will, and will cause each of the Aviation Services Subsidiaries, the
Company and each of the Company's subsidiaries to, give representatives of the
Buyer full access during normal business hours to all of their respective
properties, books and records. The Buyer will, and will cause its
representatives to, hold all information it receives as a result of its access
to the properties, books and records of Hudson, the Company or their
subsidiaries in confidence, except to the extent that information
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(i) is or becomes available to the public (other than through a breach of this
Agreement), (ii) becomes available to the Buyer from a third party which,
insofar as the Buyer is aware, is not under an obligation to Hudson, to the
Company or to a subsidiary to keep the information confidential, (iii) was known
to the Buyer before it was made available to the Buyer or its representative by
Hudson, the Company or a subsidiary, or (iv) otherwise is independently
developed by the Buyer. If this Agreement is terminated without the Buyer's
acquiring the Purchased Units, the Buyer will, at Hudson's request, deliver to
Hudson all documents and other material obtained by the Buyer from Hudson, the
Company or a subsidiary in connection with the transactions which are the
subject of this Agreement or evidence that material has been destroyed by the
Buyer.
(b) In addition to (and not in limitation of) the provisions of
Paragraph 14.2(a), the Buyer and Hudson expressly recognize and acknowledge that
(x) the customers and airport authorities served by Hudson (and which, after the
Closing Date, will be served by the Company) engage and will engage in
discussions and negotiations with Hudson (and, after the Closing Date, with the
Company) that are proprietary and confidential in nature, and (y) that many of
such customers and airport authorities compete for business with Lufthansa, and
accordingly are and will be desirous of restricting the access of Lufthansa to
information concerning their business relationships with Hudson (and, after the
Closing Date, with the Company). Accordingly, the Buyer will not request, nor
shall Hudson or the Company be required to provide to Lufthansa or any of its
representatives or agents (except those
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employees of Lufthansa who have responsibility for overseeing the performance of
the Company or the Buyer's relationship with the Company and who are not engaged
in its airline business in a capacity which might lead them to be directly or
indirectly (or, as to a Representative (as defined in the LLC Agreement) who is
not engaged in its airline business in a capacity which might lead the
Representative to be directly) engaged in procuring for Lufthansa services in
North America which are rendered by the Company or its subsidiaries, or are
competitive with services rendered by the Company or its subsidiaries, as part
of the Aviation Services Business) copies of any proprietary or confidential
agreements or other documentation including, but not limited to, proposals,
notes, contracts, annexes, exhibits, cost analyses or pricing information of any
nature and in any form pertaining to customers or airport authorities served by
Hudson (and, after the Closing Date, served by the Company.) In addition, the
Buyer and Hudson will instruct and cause their employees not to provide to or
discuss with any employees of Lufthansa, other than those excepted in the
preceding sentence, any proprietary or confidential information (whether
relating to negotiations, discussions or otherwise) pertaining to customers or
airport authorities with which Hudson (and, after the Closing Date, the Company)
has a business relationship. The Company will only engage in business
transactions with Lufthansa that provide for normal pricing, terms and
conditions in the ordinary course of business and consistent with past practice.
14.3 Press Releases. The Buyer and Hudson will consult
with each other before issuing any press releases with respect to
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this Agreement, except that nothing in this Paragraph will prevent either party
from making any statement when and as required by law or by the rules of any
securities exchange or securities trading system on which securities of that
party or an affiliate are traded.
14.4 No Impediment to Sales of Hudson Shares. Except as
expressly stated in Paragraph 9.1, nothing in this Agreement or in the LLC
Agreement will prohibit or limit Hudson's right or ability to engage in any
transaction or transactions relating to or involving any sale, exchange,
transfer or other disposition of shares of Hudson (whether or not those shares
constitute a controlling interest in Hudson), whether by sale, merger, other
business combination or otherwise.
14.5 Entire Agreement. This Agreement, the LLC
Agreement and the documents and certificates required to be delivered, or the
delivery of which is a condition to obligations, at the Closing (the "Closing
Documents") contain the entire agreement between Hudson and the Buyer relating
to the transactions which are the subject of this Agreement. All prior
negotiations, understandings and agreements between Hudson and the Buyer are
superseded by this Agreement, the LLC Agreement and the Closing Documents, and
there are no representations, warranties, understandings or agreements
concerning the transactions which are the subject of this Agreement other than
those expressly set forth in this Agreement, the LLC Agreement and the Closing
Documents. Without limiting what is said in the preceding sentence, Hudson and
the Buyer each (i) acknowledges that, other than as expressly set forth herein,
none of the other party, its subsidiaries or any of their
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respective officers, directors, agents, representatives, employees or affiliates
makes or has made any representation or warranty, either express or implied, as
to the accuracy or completeness of any of the information provided or made
available to Hudson or the Buyer, as the case may be, or its agents or
representatives, and (ii) agrees that none of the other party's, directors,
agents, representatives, employees or affiliates shall have any liability or
responsibility whatsoever to Hudson or the Buyer, as the case may be, or any of
its agents or representatives on any basis (including, without limitation, in
contract, under Federal or state securities laws or otherwise) based upon any
information made available or statements made to Hudson or the Buyer, as the
case may be, or its agents or representatives (or any omissions therefrom),
excepting those representations, warranties, covenants and agreements of Hudson
or the Buyer set forth in this Agreement, the LLC Agreement or the Closing
Documents and subject to the limitations and restrictions contained herein or
therein.
14.6 Effect of Disclosures. Any information disclosed
by a party in connection with any representation or warranty contained in this
Agreement (including exhibits to this Agreement) will be treated as having been
disclosed in connection with each representation and warranty made by that party
in this Agreement.
14.7 Captions. The captions of the articles and paragraphs of
this Agreement are for reference only, and do not affect the meaning or
interpretation of this Agreement.
14.8 Assignments. Neither this Agreement nor any right of any
party under it may be assigned, except that the Buyer may assign its rights and
obligations under this Agreement to
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a corporation which is wholly owned by the Buyer or by persons or entities which
directly or indirectly own all the outstanding stock of the Buyer, in each case
if the corporation agrees in writing to make the representations and warranties
set forth in Paragraph 4.2 (with such changes as are appropriate to reflect
differences between the Buyer and its assignee) and to be bound by the other
obligations of the Buyer contained in this Agreement; provided, however, that no
such assignment will release the Buyer from the representations and warranties
set forth in Paragraph 4.2 or its other obligations contained in this Agreement.
14.9 Notices and Other Communications. Any notice or
other communication under this Agreement must be in writing and will be deemed
given when delivered in person or sent by facsimile (with proof of receipt at
the number to which it is required to be sent), or on the third business day
after the day on which mailed by certified mail return receipt requested from
within the United States of America, to the following addresses (or such other
address as may be specified after the date of this Agreement by the party to
which the notice or communication is sent):
If to Hudson:
Hudson General Corporation
111 Great Neck Road
Great Neck, New York 11021
Attention: Chief Executive Officer
Facsimile No.: 1-516-487-4855
with a copy to:
Skadden Arps Slate Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Daniel Stoller, Esq.
Facsimile No.: 1-212-735-2000
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If to the Buyer:
Lufthansa Airport and Ground Services GmbH
Lufthansa-Basis, Geb. 357
D-60546 Frankfurt am Main
Germany
Attention: Managing Director
Facsimile No.: 49-69-696-6883
with copies to:
Lufthansa German Airlines
1640 Hempstead Turnpike
East Meadow, L.I., New York 11554
Attention: General Counsel North America
Facsimile No.: 1-516-296-9399
and
Rogers & Wells
200 Park Avenue
New York, New York 10166
Attention: David W. Bernstein
Facsimile No.: 1-212-878-8375
14.10 Governing Law; Jurisdiction. This Agreement will be
governed by, and construed under, the laws of the State of New York in the
United States of America relating to contracts made and to be performed in that
state. Any action or proceeding relating to this Agreement or any matters
arising out of or in connection with this Agreement, and any action for
enforcement of any judgment in respect thereof, shall be brought exclusively in
the courts of the State of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Agreement,
Hudson and the Buyer each hereby accepts for itself and in respect of its
property, generally and unconditionally, the exclusive jurisdiction of the
aforesaid courts and appellate courts thereof. Hudson and the Buyer each
irrevocably consents to service of process out of any of the aforementioned
courts in any such action or proceeding by the
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mailing of copies thereof by registered or certified mail, postage prepaid, or
by recognized international express carrier or delivery service, to Hudson or
the Buyer at their respective addresses referred to in Paragraph 14.9. In
addition, the Buyer hereby designates its General Counsel North America, 1640
Hempstead Turnpike, East Meadow, New York 11554, or with respect to any time
when there is no person in that capacity, the Buyer hereby designates the Vice
President USA of Deutsche Lufthansa AG, at that address, as its agent for
service of process, and service upon the Buyer shall be deemed to be effective
upon service of its agent as aforesaid or of its successor designated in
accordance with the following sentence. The Buyer may designate another
corporate agent or law firm reasonably acceptable to Hudson and located in the
Borough of Manhattan, in the City of New York, as successor agent for service of
process upon 30-days prior written notice to Hudson. Hudson and the Buyer each
hereby irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement, or for enforcement of a judgment in
respect thereof, in the courts referred to above and hereby further irrevocably
waives and agrees, to the extent permitted by applicable law, not to plead or
claim that such an action or proceeding brought in any such court has been
brought in an inconvenient forum. Nothing herein shall affect the right of any
party hereto to serve process in any other manner permitted by law.
14.11 Amendments. This Agreement may be amended only by a
document in writing signed by both the Buyer and Hudson.
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14.12 Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the Buyer and Hudson have executed this
Agreement, intending to be legally bound by it, on the day shown on the first
page of this Agreement.
HUDSON GENERAL CORPORATION
By: /s/ Jay B. Langner
----------------------------
Title: President
LUFTHANSA AIRPORT AND GROUND
SERVICES GmbH
By: /s/ Peter Bluth
----------------------------
Title: Managing Director
By: /s/ Andreas Vetter
----------------------------
Title: Authorized Signatory
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[Letterhead of Hudson General]
Michael Rubin
Transaction with Executive
Subject: Lufthansa Contact: Vice President Release: February 28, 1996
---------------- --------------- -----------------
Great Neck, New York - February 28, 1996 - Hudson General
Corporation announced today that Hudson General and Lufthansa Airport and Ground
Services GmbH ("LAGS") have executed an agreement pursuant to which LAGS will
acquire a 26% interest in Hudson General's aviation services business (the
"Aviation Business"). Hudson General previously announced that it was engaged in
negotiations with LAGS concerning this transaction. LAGS is a wholly owned
subsidiary of Deutsche Lufthansa AG ("Lufthansa").
Pursuant to the Agreement, LAGS will acquire, for a price of
approximately $23.8 million, a 26% interest in a newly formed Hudson General
subsidiary which will conduct the Aviation Business. Approximately $16 million
of the purchase price will be paid in cash by LAGS at the closing. The balance
of the purchase price of approximately $7.8 million, which is subject to
downward adjustment based on future earnings of the Aviation Business, is
payable in three annual installments ending in September 1998. Neither LAGS nor
Lufthansa will acquire any securities of Hudson General.
The Agreement also provides that LAGS will have an option,
exercisable until October 1, 2000, to increase its interest in the Aviation
Business from 26% up to a maximum of 49%. The option price is based on a formula
related to the earnings of the Aviation Business, subject to certain minimum and
maximum amounts.
Hudson General will continue to manage the Aviation Business.
The Aviation Business constitutes approximately 70% of Hudson General's assets
and virtually all of its revenues.
The transaction, which is expected to close on or about July 1,
1996, is subject to certain conditions, including the prior approval of the
holders of a majority of Hudson General's outstanding stock. Allen & Company
Incorporated is acting as financial advisor to Hudson General in connection with
this transaction.
Hudson General provides various services at airports throughout
the United States and Canada and is a participant in a joint venture to develop
4,000 acres of land in Hawaii.
Hudson General Corporation shares are traded on the American
Stock Exchange under the ticker symbol HGC.
