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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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HUDSON GENERAL CORPORATION
(NAME OF SUBJECT COMPANY)
HUDSON GENERAL CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
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COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
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443784103
(CUSIP NUMBER OF CLASS OF SECURITIES)
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NOAH E. ROCKOWITZ, ESQ.
SENIOR VICE PRESIDENT AND SECRETARY
HUDSON GENERAL CORPORATION
111 GREAT NECK ROAD
GREAT NECK, NEW YORK 11021
(516) 487-8610
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
WITH COPY TO:
DANIEL E. STOLLER, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Hudson General Corporation, a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 111 Great Neck Road, Great Neck, New York 11021. The title of
the class of equity securities to which this Schedule 14D-9 relates is the
common stock, par value $1.00 per share (the "Shares"), of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER.
This Schedule 14D-9 relates to the tender offer by GLGR Acquisition
Corporation, a Delaware corporation ("Purchaser") and an indirect wholly-owned
subsidiary of GlobeGround GmbH ("GlobeGround"), a corporation organized and
existing under the laws of the Federal Republic of Germany and an indirect
wholly-owned subsidiary of Deutsche Lufthansa AG ("Lufthansa"), disclosed in a
Tender Offer Statement on Schedule 14D-1, dated February 19, 1999 (the "Schedule
14D-1"), to purchase all of the issued and outstanding Shares at $76.00 per
Share net to the seller in cash (the "Offer Price"), upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated February 19, 1999
(the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with the Offer to Purchase, as amended or supplemented from time to
time, constitute the "Offer").
As set forth in the Schedule 14D-1, the principal executive offices of
Purchaser are located at 1640 Hempstead Turnpike, East Meadow, New York 11554.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above.
(b) Except as set forth in this Item 3(b) or in Item 8, to the knowledge of
the Company, there are no material contracts, agreements, arrangements or
understandings and no actual or potential conflicts of interest between the
Company or its affiliates and (i) the Company's executive officers, directors or
affiliates or (ii) Purchaser or its executive officers, directors or affiliates.
ARRANGEMENTS WITH PURCHASER OR ITS AFFILIATES.
The Merger Agreement
The following is a summary of certain material provisions of the Agreement
and Plan of Merger, dated as of February 15, 1999, between Purchaser and the
Company (the "GlobeGround Merger Agreement"). This summary does not purport to
be complete and is qualified in its entirety by reference to the complete text
of the GlobeGround Merger Agreement, a copy of which is filed as Exhibit 1
hereto and incorporated herein by reference in its entirety. Capitalized terms
used and not otherwise defined below have the meanings set forth in the
GlobeGround Merger Agreement.
The Offer. The GlobeGround Merger Agreement provides that Purchaser will
file with the Securities and Exchange Commission (the "SEC") the Schedule 14D-1
with respect to the Offer and commence the Offer within five business days after
the public announcement of the Offer. Purchaser will, on the terms and subject
to the prior satisfaction or waiver (except that the Minimum Condition, as
defined below, may not be waived) of the conditions of the Offer, accept for
payment and pay for Shares tendered as soon as it is legally permitted to do so
under applicable law. The obligation of Purchaser to accept for payment and pay
for Shares which are properly tendered and not withdrawn will not be subject to
any conditions other than the Minimum Condition (which may not be waived) and
the other conditions of the Offer set forth below. The GlobeGround Merger
Agreement also provides that Purchaser cannot, without the consent of the
Company acting through
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the Special Committee of the Company's Board of Directors (the "Special
Committee"), decrease the Offer Price or the number of Shares being solicited in
the Offer, change the form of consideration payable in the Offer, or modify or
add to the conditions of the Offer or otherwise modify the terms of the Offer.
Notwithstanding the foregoing, Purchaser has agreed to extend the Offer for one
or more periods of not more than 10 business days, the last of which will end no
later than May 31, 1999, if, at the initial expiration date of the Offer (which
date will not be earlier than 20 business days, and (except as provided below)
will not be later than 30 business days, after the day on which the Schedule
14D-1 is filed with the SEC (the "Expiration Date")), or any extension thereof,
the Minimum Condition or the condition to the Offer requiring the expiration or
termination of any applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), is not
satisfied. If (i) the Offer is modified to increase the Offer Price or in any
other manner permitted by the GlobeGround Merger Agreement, Purchaser may extend
the Expiration Date until not more than 10 business days after the day on which
the Purchaser makes a public announcement of the modification, (ii) anyone other
than Purchaser makes a tender offer for the Shares before the Offer expires,
Purchaser may extend the Expiration Date until not more than 10 business days
after the other tender offer expires, or (iii) Purchaser is prevented by an
order of a court or other governmental agency from accepting shares which are
tendered in response to the Offer, Purchaser may extend the Expiration Date
until 10 business days after Purchaser is able to accept the Shares without
violating any order of any court or other governmental agency.
Conditions to the Offer. The obligations of Purchaser to accept for
payment and pay for Shares tendered pursuant to the Offer is subject to the
condition that there will be validly tendered and not withdrawn a number of
Shares which, together with any Shares beneficially owned by Purchaser or its
affiliates, constitute at least a majority of the Shares outstanding on a fully
diluted basis (the "Minimum Condition"). In addition, Purchaser is not required
to accept for payment or, subject to applicable legal requirements, pay for, and
may delay the acceptance for payment of or, subject to applicable legal
requirements, the payment for, any tendered Shares, and may terminate the Offer,
if (i) any applicable waiting period under the HSR Act has not expired or
terminated prior to the expiration of the Offer, (ii) the Minimum Condition has
not been satisfied, or (iii) at any time on or after February 15, 1999 and
before the time of acceptance of the Shares for payment pursuant to the Offer,
any of the following occur: (a) the Supervisory Board of Lufthansa (the
"Lufthansa Supervisory Board") shall not have approved the GlobeGround Merger
Agreement and the transactions contemplated thereby by March 15, 1999, (b) any
statute, rule, regulation, order or injunction has been enacted, promulgated,
entered or enforced by any national or state government or governmental
authority or by any United States court of competent jurisdiction, which (w)
prohibits, or imposes any material limitations on, Purchaser's or its parent's
ownership or operation of all or a material portion of the Company's businesses
or assets, (x) prohibits, or makes illegal the acceptance for payment, payment
for or purchase of the Shares or the consummation of the Offer or the Merger,
(y) results in a material delay in or restricts the ability of Purchaser, or
renders Purchaser unable, to accept for payment, pay for or purchase some or all
of the tendered Shares, or (z) imposes material limitations on the ability of
Purchaser or its parent effectively to exercise full rights of ownership of the
tendered Shares, including, without limitation, the right to vote the tendered
Shares purchased by it on all matters properly presented to the Company's
stockholders, provided that Purchaser shall have used all reasonable efforts to
cause any such judgment, order or injunction to be vacated or lifted; provided
further that the condition specified in clause (b) shall not be deemed to exist
by reason of any court proceeding pending on the date of the GlobeGround Merger
Agreement and known to Purchaser, unless in the reasonable judgment of its
parent there is any material adverse development in any such proceeding after
the date of the GlobeGround Merger Agreement, or before the date of the
GlobeGround Merger Agreement if not known to Purchaser on the date of the
GlobeGround Merger Agreement, which would result in any of the consequences
referred to in subclauses (w) through (z) above; (c) the representations and
warranties of the Company set forth in the GlobeGround Merger Agreement shall
not be true and correct in any material respect as of the date of consummation
of the Offer as though made on or as of such date or the Company shall have
breached or failed in any material respect to perform or comply with any
material obligation, agreement or covenant required by the GlobeGround Merger
Agreement to be performed or complied with by it except, in each case, (x) for
changes specifically permitted by the GlobeGround Merger Agreement and (y) (A)
those representations and warranties that address matters only as of a
particular date which are true and
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correct as of such date or (B) where the failure of such representations and
warranties to be true and correct, or the performance or compliance with such
obligations, agreements or covenants, do not, individually or in the aggregate,
have a Company Material Adverse Effect (as defined in the GlobeGround Merger
Agreement); (d) the Company shall have entered into a definitive agreement or
agreement in principle with any person with respect to an Acquisition Proposal
(as defined below) or similar business combination with the Company; (e) the
GlobeGround Merger Agreement has been terminated in accordance with its terms;
or (f) the Board of Directors of the Company (the "Board of Directors" or the
"Board"), or the Special Committee shall have withdrawn or modified in a manner
adverse to Purchaser the Board's approval or recommendation of the Offer or the
Merger.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, Purchaser will be merged with and into the Company (the
"Merger"), with the Company continuing as the Surviving Corporation and a
wholly-owned subsidiary of GlobeGround, and each issued and outstanding Share
(other than (i) Shares owned by Purchaser or any of its subsidiaries, (ii)
Shares held by the Company as treasury stock or by any wholly-owned subsidiary
of the Company, or (iii) Shares held by stockholders who properly exercise their
dissenters' rights of appraisal under the Delaware General Corporation Law (the
"DGCL")) will be converted into the right to receive the Offer Price, without
interest. The GlobeGround Merger Agreement also provides that (i) the directors
of Purchaser and the officers of the Company at the effective time of the Merger
(the "Effective Time") will be the directors and officers, respectively, of the
Surviving Corporation, until their successors have been duly elected, appointed
or qualified in accordance with applicable law, and (ii) the Certificate of
Incorporation of the Company and the By-laws of Purchaser will be the
Certificate of Incorporation and By-laws, respectively, of the Surviving
Corporation.
Stockholders' Meeting. Pursuant to the GlobeGround Merger Agreement, the
Company will, if required by applicable law in order to consummate the Merger,
duly call, give notice of, convene and hold a special meeting of its
stockholders (the "Special Meeting") as soon as practicable following the
acceptance for payment and purchase of Shares by Purchaser pursuant to the Offer
for the purpose of considering and taking action upon the approval of the Merger
and adoption of the GlobeGround Merger Agreement.
The GlobeGround Merger Agreement also provides that the Company will, as
promptly as practicable following the Expiration Date, if required by applicable
law in order to consummate the Merger, (i) file with the SEC a proxy or
information statement (together with any amendments thereof or supplements
thereto, the "Proxy Statement") relating to the Merger and the GlobeGround
Merger Agreement, (ii) respond promptly to any comments made by the SEC with
respect to the Proxy Statement, (iii) cause the Proxy Statement to be mailed to
the Company's stockholders at the earliest practicable time following the
Expiration Date and in all other respects, use its best efforts to cause the
Company's stockholders to adopt the GlobeGround Merger Agreement and approve the
Merger; and (iv) include in the Proxy Statement the recommendation of the Board,
based on the unanimous recommendation of the Special Committee, that the
stockholders of the Company vote in favor of the adoption of the GlobeGround
Merger Agreement and approve the Merger, unless the Board, based upon written
advice from its counsel, determines in good faith that the failure to amend or
withdraw that recommendation could reasonably be expected to be a breach of the
directors' fiduciary duties under applicable law. Purchaser agrees that it will
vote or cause to be voted, all of the Shares owned by it or any of its
subsidiaries and affiliates in favor of the approval of the Merger and adoption
of the GlobeGround Merger Agreement. In the event that Purchaser acquires at
least 90% of the outstanding Shares in the Offer, the parties will take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer, without a meeting of the
Company's stockholders in accordance with Section 253 of the DGCL.
Representations and Warranties. The GlobeGround Merger Agreement contains
limited representations and warranties of Purchaser and the Company. The
representations of the Company relate to, among other things, corporate
organization and qualification, capitalization, authority to enter into the
GlobeGround Merger Agreement, no conflict, required filings and consents,
opinion of Allen & Company Incorporated ("Allen & Company") and the absence of
brokers. The representations of Purchaser relate to, among other
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things, the organization and qualification to do business of Purchaser,
authority to enter into the GlobeGround Merger Agreement, no conflict, required
filings and consents, absence of brokers, capitalization and ownership of
Purchaser. Additional representations of the Company relate to, among other
things, accuracy of documents and reports filed with the SEC, including
financial statements, the accuracy of the information contained in the Schedule
14D-9 and any Proxy Statement to be filed with the SEC, and availability of cash
and cash equivalents and investment securities available for sale. Additional
representations of Purchaser relate to, among other things, the financial
capability of GlobeGround to consummate the Offer and the Merger and fulfill all
GlobeGround's obligations as guarantor of the obligations of Purchaser, and the
accuracy of the information contained in the Schedule 14D-1 and any Proxy
Statement to be filed with the SEC.
No Solicitation; Fiduciary Obligations of Directors. The GlobeGround
Merger Agreement provides that the Company shall not, and shall not authorize or
permit any of its officers, directors, employees or agents to directly or
indirectly solicit, encourage, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Purchaser, any of its affiliates or
representatives) (collectively, a "Person") concerning any merger,
consolidation, tender offer, exchange offer, sale of all or substantially all of
the Company's assets, sale of shares of capital stock or similar business
combination transaction involving the Company or any principal operating or
business unit of the Company or its subsidiaries (an "Acquisition Proposal").
If, however, the Company or the Special Committee receives an unsolicited,
written indication of a willingness to make an Acquisition Proposal at a price
per Share which the Special Committee reasonably concludes is in excess of the
Offer Price from any Person, and if the Special Committee reasonably concludes,
based upon advice of its financial advisor, that the Person delivering such
indication is capable of consummating such an Acquisition Proposal (based upon,
among other things, the availability of financing and the capacity to obtain
financing) then the Company or the Special Committee may, directly or
indirectly, provide access to or furnish or cause to be furnished information
concerning the Company's business, properties or assets to any such Person
pursuant to an appropriate confidentiality agreement, and the Company or the
Special Committee may engage in discussions related thereto. In addition, the
Company or the Special Committee may participate in and engage in discussions
and negotiations with any Person meeting the requirements in the preceding
sentence in response to a written Acquisition Proposal, if the Special Committee
concludes, upon advice of its legal counsel, that the failure to engage in such
discussions or negotiations would be inconsistent with the Special Committee's
(and the Board's) fiduciary duties to the Company's stockholders under
applicable law. If after the Company has received a written Acquisition Proposal
(without breaching the foregoing obligations of the Company) but prior to the
purchase by Purchaser of the Shares pursuant to the Offer, the Special Committee
determines, in good faith and upon advice of its financial advisor and legal
counsel, that it is necessary to do so in order to comply with its fiduciary
duties to the Company's stockholders under applicable law, the Special Committee
may do either or both of the following: (x) withdraw or modify the Board of
Directors' approval or recommendation of the Offer, the Merger or the
GlobeGround Merger Agreement and (y) terminate the GlobeGround Merger Agreement
in the manner and under the circumstances set forth in the Superior Proposal
Termination Event (as defined below) of the GlobeGround Merger Agreement.
Furthermore, notwithstanding the foregoing, the Company or its Board of
Directors may, upon the recommendation of the Special Committee, take and
disclose to the Company's stockholders a position with respect to a tender or
exchange offer by a third party or make such disclosure to the Company's
stockholders or otherwise which, in the judgment of the Special Committee upon
advice of legal counsel, is necessary under applicable law or rules of any stock
exchange.
Pursuant to the GlobeGround Merger Agreement, the Company is required to
promptly (but in any event within two days) advise Purchaser in writing of any
Acquisition Proposal or any inquiry regarding the making of an Acquisition
Proposal including any request for information, the material terms and
conditions of such request, Acquisition Proposal or inquiry and the identity of
the Person making such request, Acquisition Proposal or inquiry. The Company is
also required, to the extent reasonably practicable, to keep Purchaser fully
informed of the status and details (including amendments or proposed amendments)
of any such request, Acquisition Proposal or inquiry.
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Termination. The GlobeGround Merger Agreement may be terminated at any
time prior to the Effective Time, whether before or after the adoption of the
GlobeGround Merger Agreement by the stockholders of the Company, by the mutual
written consent of the Company (acting through the Special Committee) and
Purchaser, or by either the Company or Purchaser (i) if any permanent
injunction, order, decree, ruling or other action of any governmental entity
preventing the purchase of Shares in the Offer or the consummation of the Merger
has become final and nonappealable, (ii) if the Expiration Date of the Offer is
not May 31, 1999 or an earlier date (provided that such termination will not be
available to any party whose failure to fulfill any obligation under the
GlobeGround Merger Agreement has been the cause of or resulted in the failure of
the Effective Time to occur on or before such date), or (iii) if the Lufthansa
Supervisory Board has not approved the GlobeGround Merger Agreement by March 15,
1999.
The Company may terminate the GlobeGround Merger Agreement at any time
prior to the Effective Time, whether before or after its adoption by the
stockholders, if (i) prior to Purchaser's purchasing Shares pursuant to the
Offer, upon a material breach of any covenant by Purchaser which is not cured or
if any representation or warranty of Purchaser has become untrue in any material
respect, and in either case such breach or untruth is not capable of being cured
by May 31, 1999; (ii) (a) the Company receives a Superior Proposal (as defined
below), (b) the Company notifies Purchaser that the Company has received a
Superior Proposal, stating in the notice (x) the material terms of the Superior
Proposal, including the amount per Share the Company's stockholders will receive
(valuing any non-cash consideration at what the Special Committee determines in
good faith, after consultation with its independent financial advisor, to be the
fair value of the non-cash consideration) and (y) that, unless Purchaser
increases the Offer Price to an amount at least as great as the amount per Share
the Company's stockholders would receive as a result of the Superior Proposal,
the Company may terminate the GlobeGround Merger Agreement, (c) Purchaser does
not, by 5:00 p.m., New York City time, on the second business day after the day
on which the Company notifies Purchaser of the Superior Proposal, increase the
Offer Price to an amount at least as great as the amount per Share the Company's
stockholders would receive as a result of the Superior Proposal, as set forth in
the notice from the Company, without changing or modifying any other of the
terms and conditions of the GlobeGround Merger Agreement, and (d) the Company
has paid Purchaser the termination fee (including reimbursement of expenses),
and delivered to Purchaser the agreement regarding further reimbursement of
expenses, required by the expense reimbursement and termination fee provisions
of the GlobeGround Merger Agreement (see "Fees and Expenses; Termination Fee"
below) (such termination right set forth in this clause (ii) is referred to as
the "Superior Proposal Termination Event"); (iii) Purchaser has terminated the
Offer or the Offer expires, without Purchaser purchasing any of the Shares
(provided that the Company may not terminate the GlobeGround Merger Agreement if
the Company is in material breach of the GlobeGround Merger Agreement); or (iv)
the Executive Board of Lufthansa withdraws or negatively modifies its
recommendation to the Lufthansa Supervisory Board that it approve the
transactions which are the subject of the GlobeGround Merger Agreement.
A Superior Proposal is defined as an Acquisition Proposal or unsolicited
tender offer which (i) would result in the Company's stockholders receiving an
amount per Share which is greater than the Offer Price, (ii) is not subject to
the outcome of a due diligence review of the Company's business or financial
condition, (iii) is not subject to a financing contingency and is from a
potential acquiror which the Special Committee reasonably concludes, based upon
advice of its financial advisor, is capable of consummating the Acquisition
Proposal or, if it is subject to a financing contingency, the Special Committee
concludes, based on advice of its financial advisor, it is reasonably likely
that the financing contingency will be fulfilled and (iv) the Special Committee
determines in good faith, after consultation with its financial advisor, to be
more favorable to the Company's stockholders than the Offer and the Merger
contemplated by the GlobeGround Merger Agreement.
Purchaser may terminate the GlobeGround Merger Agreement at any time prior
to the Effective Time, either before or after its adoption by the stockholders,
if (i) the Board (acting through the Special Committee) withdraws, modifies or
changes its recommendation so that it is not in favor of the GlobeGround Merger
Agreement or the Merger; (ii) the Board (acting through the Special Committee)
recommends or
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resolves to recommend to stockholders an Acquisition Proposal from someone other
than Purchaser; or (iii) prior to its purchasing Shares pursuant to the Offer,
upon a material breach of any covenant or agreement contained in the GlobeGround
Merger Agreement by the Company which is not cured, or if any representation or
warranty of the Company shall have become untrue in any material respect, and in
either case such breach or untruth is incapable of being cured by May 31, 1999.
Fees and Expenses; Termination Fee. Whether or not the Offer is
consummated or the Merger is consummated and except as otherwise provided in the
GlobeGround Merger Agreement, all fees and expenses incurred in connection with
the transactions contemplated by the GlobeGround Merger Agreement will be paid
by the party incurring such fees and expenses, except that the Company will pay
for all costs and expenses relating to the printing and mailing of any Proxy
Statement.
The Company will pay Purchaser a termination fee, along with its reasonable
costs and expenses incurred in connection with the Offer and the Merger, upon
termination of the GlobeGround Merger Agreement under certain circumstances. If
the GlobeGround Merger Agreement is terminated by either (i) Purchaser because
(a) the Board (acting through the Special Committee) withdraws, modifies or
changes its recommendation so that it is not in favor of the GlobeGround Merger
Agreement or the Merger, or (b) the Board (acting through the Special Committee)
decides to recommend an alternative Acquisition Proposal from someone other than
Purchaser to the Company's stockholders, or (ii) the Company, as a result of a
Superior Proposal Termination Event, then the Company will pay Purchaser (x)
$2,625,000 if the GlobeGround Merger Agreement is terminated before the
Lufthansa Supervisory Board approves the GlobeGround Merger Agreement, and will
reimburse Purchaser for its reasonable expenses incurred in connection with the
Offer and the Merger, up to a maximum of $875,000 or (y) $3,500,000 if the
GlobeGround Merger Agreement is terminated after the Lufthansa Supervisory Board
approves the GlobeGround Merger Agreement, and will reimburse Purchaser for its
reasonable expenses incurred in connection with the Offer and the Merger, up to
a maximum of $1,750,000.
Employee Benefits. GlobeGround and Purchaser have also agreed that
effective as of the Effective Time and for a one-year period following the
Effective Time, the Surviving Corporation and its subsidiaries and successors
will provide those individuals who are employees of the Company and its
subsidiaries immediately prior to the Effective Time ("Affected Employees") with
employee benefit plans which provide coverage and benefits that are no less
favorable in the aggregate than those provided to such employees immediately
prior to the Effective Time. The Surviving Corporation will give the Affected
Employees full credit, for purposes of eligibility, vesting and benefits accrual
under any employee benefit plans or arrangements made by the Company, for the
Affected Employee's service with the Company and its subsidiaries to the same
extent recognized by the Company and its subsidiaries immediately prior to the
Effective Time and will provide each Affected Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any welfare benefit
plan that the Affected Employees are eligible to participate in after the
Effective Time. The Company and Purchaser also acknowledge that the consummation
of the Merger shall constitute (i) a "Change in Control" for purposes of
employment agreements between the Company and the Affected Employees and (ii) a
"change in control of the Company" for purposes of severance agreements between
the Company and Affected Employees.
Treatment of Options. The GlobeGround Merger Agreement provides that as of
the Effective Time, each outstanding stock option to acquire Shares (the
"Options") will be cancelled. In consideration of such cancellation, the
Surviving Corporation will pay to the holder of each such cancelled Option, as
soon as practicable, but in any event within five days of the Effective Time, an
amount determined by multiplying (i) the excess, if any, of the Offer Price over
the applicable exercise price per Share of such Option by (ii) the number of
Shares issuable upon exercise of the Option, subject to any required withholding
of taxes (the "Option Consideration"). At the Effective Time, all Options will
be converted into, and will thereafter only represent the right to receive, the
Option Consideration.
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Prior to the Effective Time, the Company will use its best efforts to (i)
obtain any consents from the holders of the Options and (ii) make any amendments
to the terms of the Company's option plans and any options granted thereunder
that are necessary or appropriate to consummate the transactions contemplated by
the GlobeGround Merger Agreement.
Conditions to the Merger. The respective obligations of Purchaser and the
Company to consummate the Merger are subject to the following conditions: (i) if
required by applicable law or by the rules of the American Stock Exchange, the
approval and adoption of the GlobeGround Merger Agreement by the affirmative
vote of the holders of a majority of all outstanding Shares, (ii) the absence of
any governmental action or order which materially restricts, prevents or
prohibits consummation of the Merger, (iii) the expiration or termination of any
waiting period applicable to the consummation of the Merger under the HSR Act
and no action shall have been instituted by the Department of Justice or the
Federal Trade Commission challenging or seeking to enjoin the consummation of
the Merger, (iv) the approval of the GlobeGround Merger Agreement by the
Lufthansa Supervisory Board not later than March 15, 1999, and (v) the purchase
by Purchaser or its affiliates of all the Shares which are properly tendered in
the Offer and not withdrawn.
Covenants. The Company has agreed to conduct its business in the ordinary
and usual course prior to the Effective Time. In this regard, the Company has
agreed that it will not, without the prior consent of Purchaser (which consent
may not be unreasonably withheld), engage in certain types of transactions.
Specifically, the Company has agreed that prior to the Effective Time neither
the Company nor significant subsidiaries of the Company will amend their
certificate of incorporation or bylaws; declare or pay any dividends or other
distributions (other than the Company's regular semi-annual dividend of $.50 per
Share, or dividends declared and paid by wholly-owned subsidiaries or by Hudson
LLC); authorize for issuance or issue, grant or sell any of its securities other
than upon exercise of existing options; take any action with respect to
accounting policies or procedures; or take any action that would or could
reasonably be expected to result in, any of the Company's representations and
warranties set forth in the GlobeGround Merger Agreement being untrue or in any
of the conditions to the Merger not being satisfied. In addition, Purchaser and
the Company have made further agreements regarding the access to the Company's
records; preparation and filing of this Schedule 14D-9 and any Proxy Statement
with the SEC; reasonable best efforts to fulfill the conditions to the other
party's obligation to consummate the Merger; public announcements; and
conveyance taxes.
Indemnification and Insurance. The GlobeGround Merger Agreement provides
that from and after the consummation of the Merger, the Surviving Corporation
will indemnify, defend and hold harmless the present and former officers and
directors of the Company, to the full extent permitted under the DGCL or the
Company's certificate of incorporation, bylaws or indemnification agreements in
effect upon execution of the GlobeGround Merger Agreement (including provisions
relating to advancement of expenses incurred in defense of any action or suit),
against all losses, claims, damages, liabilities, costs and expenses (including,
attorneys' fees and expenses) and amounts paid in settlement with the written
approval of the Surviving Corporation (which approval will not unreasonably be
withheld) in connection with any action, suit, claim, proceeding or
investigation (each a "Claim") to the extent that any such Claim is based on, or
arises out of, (i) the fact that such person is or was a director, officer,
employee or agent of the Company or any of its subsidiaries or is or was serving
at the request of the Company or any of its subsidiaries as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or (ii) the GlobeGround Merger Agreement, or any of the
transactions contemplated thereby, in each case to the extent that any such
Claim pertains to any matter or fact arising, existing, or occurring prior to or
at the Effective Time, regardless of whether such Claim is asserted or claimed
prior to, at or after the Effective Time.
The GlobeGround Merger Agreement provides that the Surviving Corporation
will maintain in effect, for not less than six years from the Effective Time,
the Company's existing directors' and officers' liability insurance policy ("D&O
Insurance"); provided, that the Surviving Corporation may substitute therefor
policies of substantially similar coverage and amounts containing terms no less
advantageous to such former directors or officers so long as such substitution
does not result in gaps or lapses in coverage; provided, further, if the
existing D&O Insurance expires or is cancelled during such period, the Purchaser
or the Surviving
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<PAGE> 9
Corporation will use its best efforts to obtain substantially similar D&O
Insurance; provided, however, that if the aggregate annual premiums for such D&O
Insurance (or successor insurance policy) at any time during such period exceed
200% of the per annum rate of premiums currently paid by the Company for such
insurance on the date of the GlobeGround Merger Agreement, then the Surviving
Corporation will be required to provide the maximum coverage that is then
available at an annual premium equal to 200% of such rate.
In addition, the GlobeGround Merger Agreement provides that, subject to
certain conditions, (i) all rights to indemnification and all limitations on
liability existing in favor of present or former directors or officers of the
Company, as provided in the Company's certificate of incorporation and by-laws
as currently in effect, will survive the Merger and will continue in effect for
a period of six years from the Effective Time of the Merger and (ii) successors
and assigns of the Surviving Corporation are required to assume the Surviving
Corporation's obligations under the GlobeGround Merger Agreement regarding such
indemnification and insurance.
Guaranty. In connection with the GlobeGround Merger Agreement, GlobeGround
executed a guaranty pursuant to which GlobeGround (i) unconditionally guarantees
all the obligations of Purchaser under the GlobeGround Merger Agreement and (ii)
agrees to provide to Purchaser (a) all of the funds Purchaser requires to pay
for Shares which are properly tendered in the Offer and (b) all the funds
Purchaser requires to pay for Shares converted into the right to receive the
Offer Price upon the consummation of the Merger.
Certain Relationships with GlobeGround and its Affiliates
The Company, through its 51% owned affiliate, Hudson General LLC ("Hudson
LLC"), is principally engaged in providing a broad range of services to the
aviation industry. Such services include aircraft ground handling, aircraft
fueling, fuel management, ground transportation, snow removal, cargo
warehousing, and sale, leasing and maintenance of airline ground support
equipment (the "Aviation Services Business").
The Unit Purchase and Option Agreement
General. Effective June 1, 1996, pursuant to the terms of a Unit Purchase
and Option Agreement dated February 27, 1996 (the "Purchase Agreement") between
the Company and GlobeGround (formerly named Lufthansa Airport and Ground
Services GmbH), the Company transferred substantially all of the assets and
liabilities of its aviation services business to Hudson LLC. In exchange for the
transfer of such assets and liabilities and the assumption by Hudson LLC, as
co-obligor with the Company, of all of the Company's 7% convertible subordinated
debentures (all of which were subsequently redeemed or converted into Shares),
the Company received a 74% interest in Hudson LLC. In addition, Hudson LLC sold
LAGS (USA), Inc. ("LAGS (USA)"), a wholly-owned subsidiary of GlobeGround, a 26%
interest in Hudson LLC, for a purchase price of $23,686,000 in cash (after
certain adjustments), of which $15,848,000 was paid at the closing, and deferred
payments of $2,650,000 and $5,188,000 plus interest thereon were made,
respectively, in September 1996 and December 1996. The Purchase Agreement, as
amended, provided LAGS (USA) an option (the "LAGS Option"), exercisable on
October 1 of each year through 1999, effective as of the preceding July 1,
pursuant to which LAGS (USA) could increase its equity interest in Hudson LLC to
up to 49%. On October 1, 1998, LAGS (USA) gave notice of its exercise of the
LAGS Option. On November 2, 1998, the closing of the LAGS Option took place, and
LAGS (USA) increased from 26% to 49% its ownership interest in Hudson LLC. The
Company's ownership interest in Hudson LLC was correspondingly decreased from
74% to 51%. The $29,627,000 exercise price of the LAGS Option (plus $1,123,000
of interest) was paid by LAGS (USA) to Hudson LLC. Upon such payment, LAGS (USA)
acquired 230 additional Class B Units of Hudson LLC (the "Class B Units").
Concurrently therewith, the Company converted 230 of the Class A Units of Hudson
LLC (the "Class A Units") held by it into 230 new non-voting Preferred Units
(the "Preferred Units") of Hudson LLC. After giving effect to the LAGS Option
exercise and the Company's exchange of 230 Class A Units for 230 Preferred
Units, LAGS (USA) owns 490 Class B Units and the
8
<PAGE> 10
Company owns 510 Class A Units. The 230 Preferred Units owned by the Company
have a liquidation preference of $128,811 per unit, and are redeemable by Hudson
LLC at any time on or after August 1, 2001 for an amount equal to the
liquidation preference. From and after October 1, 2001, the Preferred Units, if
not previously called for redemption, are convertible, at the option of the
holders, into Class A Units on a one-for-one basis. The Preferred Units are
entitled to receive a fixed distribution per annum at 3.95% of the liquidation
preference, payable quarterly, commencing on December 31, 1998 until September
30, 2001, and at an Internal Revenue Service safe harbor rate, as defined,
thereafter. Such distributions are cumulative, and all such distributions must
be made in full before any distribution may be made in respect of the Class A
Units and Class B Units. As a result of the LAGS Option exercise, the Company's
investment in Hudson LLC and paid in capital were increased by $25,308,000 and
$12,554,000 (net of deferred income taxes and transaction fees), respectively.
The Company is unable to determine when, or whether, such deferred income taxes
will result in a current tax liability.
Standstill Provisions. The Purchase Agreement provides that, from February
26, 1996 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
GlobeGround and its affiliates, or the Company and its affiliates, cease to own
any Units of Hudson LLC, GlobeGround will not, and it will cause its affiliates
not to, among other things, directly or indirectly, without the prior written
consent of the Board of Directors of the Company, specifically expressed in a
resolution adopted by a majority of its directors: (a) acquire, or propose to
acquire, any of the Company's voting securities, (b) engage in any solicitation
of proxies from the Company's stockholders, or initiate stockholder proposals,
(c) seek to engage in any type of business combination with the Company, (d)
seek to control or influence the management, Board of Directors or policies of
the Company (other than attempting to influence any matter related to Hudson LLC
or its activities), (e) seek representation on the Board of Directors of the
Company or the removal of any of its members, (f) make any publicly disclosed
proposal or enter into any discussion regarding the foregoing, (g) act in a way
inconsistent with the foregoing restrictions, or make or disclose any request to
amend, waive or terminate any of these standstill provisions, or (h) 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.
As described below in "Item 4. The Solicitation or Recommendation.
- -- Background; Reasons for the Board's and Special Committee's Recommendation,"
on February 5, 1999 the Board of Directors of the Company waived the
restrictions of the standstill provisions until June 30, 1999.
Agreement Not to Compete. Neither GlobeGround nor Lufthansa nor any of
their respective affiliates will, at any time when GlobeGround owns Units, nor
within one year after GlobeGround 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 or in Canada, except that nothing will prevent GlobeGround
from rendering aviation ground services to Lufthansa German Airlines or airlines
which are alliance partners of Lufthansa German Airlines.
The foregoing description of the Purchase Agreement and Amendment No. 1
thereto are qualified in their entirety by reference to the full text of the
Purchase Agreement and Amendment No. 1 thereto which are filed herewith as
Exhibits 9 and 10 and are incorporated herein by reference in their entirety.
The Limited Liability Company Agreement
General. The Company, GlobeGround and Hudson LLC entered into a limited
liability company agreement (the "LLC Agreement") which provides, among other
things, (i) that certain decisions concerning Hudson LLC will require the
consent of representatives of GlobeGround, (ii) for certain restrictions on the
transferability of interests in Hudson LLC (including restrictions on transfers
to competitors and certain rights of first refusal) and (iii) for covenants not
to compete.
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<PAGE> 11
Restrictions on Transferability of Interests. The LLC Agreement contains
certain restrictions on the operation of Hudson LLC's business and the
transferability of interests in Hudson LLC. The restrictions include, among
other things, a supermajority vote (i) to approve any merger or consolidation of
Hudson LLC; (ii) to approve any sale of assets of Hudson LLC which constitute
15% or more of the total assets of Hudson LLC and its subsidiaries taken as a
whole; (iii) to allow Hudson LLC to file a registration statement under the
Securities Act of 1933; (iv) to approve or amend the budget of Hudson LLC and
its subsidiaries; and (v) to approve the entry by Hudson LLC or any of its
subsidiaries into any line of business other than the aviation services business
(as such term is defined in the LLC Agreement).
Confidentiality. The parties to the LLC Agreement agreed to hold all
non-public information which it has received relating to Hudson LLC and its
business in confidence.
The foregoing description of the LLC Agreement, as amended, is qualified in
its entirety by reference to the full text of the LLC Agreement and amendments
thereto which are filed herewith as Exhibits 11, 12, and 13 and are incorporated
herein by reference in their entirety.
ARRANGEMENTS WITH EXECUTIVE OFFICERS, DIRECTORS OR AFFILIATES OF THE COMPANY.
Employment Agreements and Severance Agreements
The Company has an employment agreement with Jay B. Langner, Chairman of
the Board and Chief Executive Officer of the Company (the "Employment
Agreement"), which expires on January 31, 2001. Mr. Langner's annual base salary
is $500,000, and the Employment Agreement provides that such base amount may not
be reduced except under certain limited circumstances. If Mr. Langner's
employment is terminated for any reason except death, disability or Cause (as
defined in the Employment Agreement), or if he terminates his employment for
Good Reason (as defined in the Employment Agreement), Mr. Langner will receive
severance pay in installments at the same rate as his salary in effect upon his
termination for three years. If termination is due to Mr. Langner's death,
severance payments will be made for twelve months. Unless Mr. Langner is
terminated for Cause, he is also entitled to continue to participate during the
period in which he receives severance payments in all employee benefit plans for
which he was eligible, or to be provided with substantially similar benefits. If
Mr. Langner is terminated and obtains other employment, his severance pay is
subject to mitigation after twelve months of the severance payment period. In
the event of a Change in Control (as defined in the Employment Agreement) which
occurs after termination of Mr. Langner's employment by the Company other than
for Cause or disability, or by Mr. Langner for Good Reason, and prior to January
31, 2001, Mr. Langner is entitled to receive certain additional amounts under
certain circumstances. If while Mr. Langner is employed there is a Change in
Control, the Employment Agreement shall terminate, and all rights and
obligations of the Company and Mr. Langner with respect to his employment shall
be governed by the terms of his Severance Agreement with the Company, which is
described below. The consummation of the Offer will constitute a Change in
Control for purposes of the Employment Agreement.
The Company also has employment agreements (the "Contracts") with Michael
Rubin, President and Director of the Company; Paul R. Pollack, Executive Vice
President, Chief Operating Officer and Director of the Company; Raymond J.
Rieder, Senior Vice President and Chief Marketing Officer of the Company;
Fernando DiBenedetto, Senior Vice President -- Operations of the Company; Barry
I. Regenstein, Vice President and Chief Financial Officer of the Company; and
Noah E. Rockowitz, Senior Vice President, General Counsel and Secretary of the
Company. The Contracts with Messrs. Rubin, Pollack and Rieder currently extend
until December 31, 2001, and the Contracts with Messrs. DiBenedetto, Regenstein
and Rockowitz currently extend until December 31, 1999. The Contracts with
Messrs. Rubin, Pollack and Rieder are subject to extension for additional three
year periods, and the Contracts with Messrs. DiBenedetto, Regenstein and
Rockowitz for additional two year periods, unless on or before the September 30
preceding any then-existing expiration date, the Company notifies the executive
that it elects not to so extend the term. The Contracts provide that the
executives shall receive an annual base salary of not less than their respective
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<PAGE> 12
salary levels in effect on the date of the Contracts, and in the case of Mr.
Rubin, that he is entitled to a percentage of the total allocation under the
Company's Executive Incentive Program which is no less than the average of his
percentage allocations for the three preceding years. If the term of the
executive's Contract is not extended, or if the executive's employment is
terminated for any reason except death, disability or Cause (as defined in the
Contracts), or if the executive terminates his employment for Good Reason (as
defined in the Contracts), the executive will receive severance pay in
installments at the same rate as his salary in effect upon his termination
(plus, in the case of Mr. Rubin, the average of his bonuses for the three
preceding years) for the greater of twenty-four months (eighteen months in the
case of Messrs. DiBenedetto and Rockowitz and fifteen months in the case of Mr.
Regenstein) or the period to the expiration of his Contract. If termination is
due to the executive's death, severance payments will be made for three months
(twelve months in the case of Mr. Rubin, including the average of his bonuses
for the three preceding years). Unless the executive is terminated for Cause, he
is also entitled to participate during the period in which he receives severance
payments in all employee benefit plans for which he was eligible, or to be
provided with substantially similar benefits. If the executive is terminated and
obtains other employment, his severance pay is subject to mitigation after
twelve months (nine months in the case of Messrs. DiBenedetto and Rockowitz and
seven and one-half months in the case of Mr. Regenstein). In the event of a
Change in Control (as defined in the Contracts) after termination of the
executive's employment and prior to the expiration of the Contract, the
executive is entitled to receive certain additional amounts under certain
circumstances. If while the executive is employed there is a Change in Control,
his Contract shall terminate, and all rights and obligations of the Company and
the executive with respect to the executive's employment will be governed by the
terms of his Severance Agreement with the Company described below. The
consummation of the Offer will constitute a Change in Control for purposes of
the Contracts.
Pursuant to the terms of the Severance Agreements, if an executive's
employment with the Company is terminated other than by reason of death,
retirement, disability or Cause (as defined in the Severance Agreements), or an
executive terminates his employment for Good Reason (as defined in the Severance
Agreements), in each case within a period of 48 months (in the case of Messrs.
Langner, Rubin, Pollack and Rieder) or 36 months (in the case of Messrs.
DiBenedetto, Regenstein and Rockowitz), following a "change in control of the
Company" (as defined in the Severance Agreements) (such termination, a
"Termination"), the executive will be entitled to receive: (i) a lump sum cash
payment equal to a specified multiple (three in the case of Messrs. Langner,
Rubin, Pollack and Rieder; two in the case of Messrs. DiBenedetto, Regenstein
and Rockowitz) of the executive's average Compensation (as defined in the
Severance Agreements) for the five years prior to Termination, (ii) life,
disability, accident and health insurance benefits for 36 months (24 months in
the case of Messrs. DiBenedetto, Regenstein, and Rockowitz), (iii) a lump sum
cash payment in respect of any then-outstanding Options and stock appreciation
rights held by the executive, and (iv) a lump sum cash payment equal to the
present value of the additional retirement benefit that the executive would have
earned under the Company's pension plan if the executive had remained employed
by the Company until the expiration date of the executive's Employment
Agreement. Except in the case of Mr. Langner, any payment or benefit received by
an executive in connection with a change in control of the Company or the
executive's termination of employment will be reduced to the extent that such
payment would not be deductible by the Company pursuant to Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"). With respect to Mr.
Langner, the Company is obligated to pay him an additional amount to compensate
him for the impact of the excise tax imposed by Section 4999 of the Code (the
"Tax Payment") (including the impact of such excise tax and any federal, state
and local income taxes on the Tax Payment itself). The consummation of the Offer
will constitute a "change in control of the Company" for purposes of the
Severance Agreements. If the employment of Messrs. Langner, Rubin, Pollack,
DiBenedetto, Regenstein, Rieder and Rockowitz terminates following consummation
of the Offer under circumstances resulting in severance payments, they would be
entitled to receive approximately $2,185,000 (including the Tax Payment
described above), $1,503,000, $1,506,000, $702,000, $544,000, $1,216,000 and
$629,000, respectively, pursuant to the Severance Agreements (other than
payments in respect of Options or cost of health benefits).
The foregoing description of the Employment Agreement, the Severance
Agreements and the Contracts, as amended, are qualified in their entirety by
reference to the full text of the Employment Agreement, the
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<PAGE> 13
Severance Agreements and the Contracts and any amendments thereto which are
filed herewith as Exhibits 14 through 28 and are incorporated herein by
reference in their entirety.
Set forth below is a table disclosing the treatment in the Offer and the
Merger of (A) Shares beneficially owned by each director and executive officer
of the Company (excluding Shares issuable upon exercise of Options) and (B)
currently outstanding Options held by each director and executive officer of the
Company.
<TABLE>
<CAPTION>
TREATMENT OF COMMON STOCK
-------------------------------- TREATMENT OF OPTIONS
AMOUNT PAYABLE --------------------------------------
NUMBER OF WITH RESPECT TO NUMBER OF OPTIONS/
SHARES TO SHARES TO BE EXERCISE PRICE FOR AMOUNT PAYABLE
RECEIVE OFFER TENDERED OPTIONS TO BE UPON CASH-OUT OF
NAME PRICE IN THE OFFER CASHED-OUT OPTIONS
---- ------------- --------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Milton H. Dresner.............. 69,000 $5,244,000 -- --
Jay B. Langner................. 121,254 9,215,304 10,000/$14.79 $612,100
Edward J. Rosenthal............ 7,200 547,200 -- --
Hans H. Sammer................. 1,000 76,000 -- --
Richard D. Segal............... 125,972(1) 9,573,872 -- --
Stanley S. Shuman.............. -- -- -- --
Paul R. Pollack................ 1,940 147,440 1100/$19.88 61,732
600/$19.07 34,158
6500/$14.79 397,865
Michael Rubin.................. 230 17,480 1100/$19.88 61,732
600/$19.07 34,158
6500/$14.79 397,865
Raymond J. Rieder.............. -- -- 900/$19.88 50,508
500/$19.07 28,465
1500/$14.79 91,815
Fernando DiBenedetto........... 10 760 700/$19.88 39,284
300/$19.07 17,079
Noah E. Rockowitz.............. -- -- 400/$19.88 22,448
400/$19.07 22,772
1000/$14.79 61,210
Barry I. Regenstein............ -- -- 400/$19.88 22,448
200/$19.07 11,386
2000/$14.79 122,420
</TABLE>
- ---------------
(1) Includes 98,382 Shares as to which Mr. Segal disclaims beneficial ownership.
The Special Committee
See "Item 5. Persons Retained, Employed or to be Compensated. -- The
Special Committee" for a description of the fees payable by the Company to the
members of the Special Committee for their service on the Special Committee.
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<PAGE> 14
Indemnification
The GlobeGround Merger Agreement provides that from and after the
consummation of the Merger, the Surviving Corporation will indemnify, defend and
hold harmless the present and former officers and directors of the Company, to
the full extent permitted under the DGCL or the Company's certificate of
incorporation, by-laws or indemnification agreements in effect upon execution of
the GlobeGround Merger Agreement (including provisions relating to advancement
of expenses incurred in defense of any action or suit), against all losses,
claims, damages, liabilities, costs and expenses (including, attorneys' fees and
expenses) and amounts paid in settlement with the written approval of the
Surviving Corporation (which approval will not unreasonably be withheld) in
connection with any Claim to the extent that any such Claim is based on, or
arises out of, (i) the fact that such person is or was a director, officer,
employee or agent of the Company or any of its subsidiaries or is or was serving
at the request of the Company or any of its subsidiaries as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or (ii) the GlobeGround Merger Agreement, or any of the
transactions contemplated thereby, in each case to the extent that any such
Claim pertains to any matter or fact arising, existing, or occurring prior to or
at the Effective Time, regardless of whether such Claim is asserted or claimed
prior to, at or after the Effective Time.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS, BASED ON THE UNANIMOUS RECOMMENDATION OF THE
SPECIAL COMMITTEE, HAS UNANIMOUSLY APPROVED THE OFFER, THE MERGER AND THE
GLOBEGROUND MERGER AGREEMENT, HAS DETERMINED THAT THE TERMS OF THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
STOCKHOLDERS, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES IN THE OFFER.
A letter to the Company's stockholders communicating the Special
Committee's and the Board's recommendations and a press release announcing the
execution of the GlobeGround Merger Agreement are filed herewith as Exhibits 30
and 31, respectively, and are incorporated herein by reference in their
entirety.
(b) BACKGROUND; REASONS FOR THE BOARD'S AND SPECIAL COMMITTEE'S
RECOMMENDATION.
Background
During the period from 1990 to 1992, the Company conducted periodic
discussions with GlobeGround (which was then known as Lufthansa Airport and
Ground Services GmbH), a wholly-owned subsidiary of Lufthansa, concerning
certain joint business operations related to the Company's Aviation Services
Business. In May 1995, the Company and GlobeGround commenced preliminary
discussions with regard to a possible transaction involving the Aviation
Services Business.
On February 27, 1996, the Company and GlobeGround entered into the Purchase
Agreement, which provided for, among other things, (i) the transfer by the
Company to Hudson LLC of substantially all the assets of the Company's Aviation
Services Business and the assumption by Hudson LLC of certain obligations of the
Aviation Services Business and the Company, in exchange for a 74% interest in
Hudson LLC, (ii) the sale by Hudson LLC of a 26% interest in Hudson LLC to
GlobeGround and (iii) the grant to GlobeGround of the LAGS Option. GlobeGround
subsequently assigned its rights under the Purchase Agreement to LAGS (USA).
On May 23, 1996, the Company's stockholders, voting at a Special Meeting of
Stockholders, approved the transactions contemplated by the Purchase Agreement.
Effective June 1, 1996, the transactions contemplated by the Purchase Agreement
(other than the exercise of the LAGS Option) were consummated,
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<PAGE> 15
and LAGS (USA) acquired a 26% interest in Hudson LLC for a purchase price of
$23,686,000 in cash, of which $15,848,000 was paid at the closing, and deferred
payments of $2,650,000 and $5,188,000 plus interest thereon were made,
respectively, in September 1996 and December 1996. At the closing, the Company
and LAGS (USA) entered into the LLC Agreement which governs the relationship of
the Company and LAGS (USA) as the owners of Hudson LLC.
On May 15, 1998, Jay B. Langner, Chairman of the Board and Chief Executive
Officer of the Company, informed the Board that he and Richard D. Segal, Vice
Chairman of the Board, had an interest in exploring the feasibility of
organizing a management buyout of the Company.
On June 22, 1998, the Board, following consultation with the Company's
legal counsel, Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden Arps"),
determined that, in view of possible conflicts of interest, it was advisable to
form a Special Committee of the Board consisting of three directors, Milton H.
Dresner, Edward J. Rosenthal and Hans H. Sammer, none of whom are employed by or
affiliated with the Company (except in their capacities as directors) and none
of whom would participate as members of any management buyout group. The Special
Committee was authorized by the Board to receive, study, negotiate and make
recommendations to the Board in connection with any proposed acquisition of the
Company by the members of management or any other prospective acquiror. The
Special Committee also was authorized by the Board to retain, at the Company's
expense, legal and financial advisors of the Special Committee's choosing.
On June 22, 1998, the newly-formed Special Committee held an organizational
meeting and considered, among other things, the retention of legal and financial
advisors. At a meeting of the Special Committee held on June 24, 1998, the
Special Committee determined to engage Skadden Arps, the Company's legal
counsel, as its legal advisor and Allen & Company, the Company's financial
advisor, as its financial advisor. The Special Committee made such determination
based on Allen & Company's and Skadden Arps' respective experience, expertise
and long-standing familiarity with the Company and its businesses. Stanley S.
Shuman, a Managing Director of Allen & Company, also serves as a director of the
Company.
Between June 30, 1998 and July 6, 1998, the Company entered into separate
Confidentiality Agreements with each of Jay B. Langner, Richard D. Segal,
Michael Rubin, Paul R. Pollack, Noah E. Rockowitz and Barry I. Regenstein, who
were the individuals the Special Committee believed would likely be in contact
with potential financing sources and other third parties regarding a potential
management buyout.
On July 24, 1998, the Board authorized that each of the members of the
Special Committee receive $7,500 for service on the Special Committee.
In late September 1998, counsel to members of management advised counsel to
the Special Committee that members of management were valuing the Shares
somewhere in the range of the "low 50's" in determining the feasibility of
making a buyout proposal.
On September 28, 1998, the Special Committee was informed by its legal and
financial advisors that members of management were considering a possible buyout
proposal which would value the Company's Shares in a price range of the "low
50's." The Special Committee requested Allen & Company to complete its
preliminary financial analysis of the Company so that the Special Committee
could determine whether it should engage in any discussions with members of
management concerning a buyout proposal in such a price range. At such meeting,
the Special Committee discussed the fact that LAGS (USA) had informed the
Company that it would be exercising the LAGS Option to increase its equity
interest in Hudson LLC from 26% to 49% and that the exercise price would be
approximately $29.6 million.
At its meeting on September 28, 1998, the Special Committee also considered
letters received by the Company from Ranger Aerospace Corporation ("Ranger") and
from another entity inquiring as to whether the Company had an interest in
entering into discussions concerning a possible business combination. The
Special Committee, after discussing such letters with its legal and financial
advisors, determined that the Company should not initiate contact at that time
with Ranger or the other entity. Among the factors
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<PAGE> 16
considered by the Special Committee in making such determination were (i) the
possibility that the members of management might decide to abandon their
consideration of an acquisition proposal; (ii) the fact that neither Ranger nor
the other entity had made any specific proposal but had merely expressed a
general interest in meeting with the Company's management; (iii) that neither
Ranger nor the other entity had initiated any further contact with the Company
following the Company's receipt of their letters; (iv) that the Special
Committee could determine at any time prior to entering into an acquisition
agreement with members of management (which agreement the Special Committee
recognized might preclude such determination) to initiate contact with either or
both Ranger or the other entity; (v) that the form of transaction contemplated
by members of management was a one-step cash merger which would afford third
parties, including Ranger and the other entity which had sent a letter, a
sufficient opportunity to make a competing offer for the Company should they
wish to do so; (vi) that any competing offer which might be made by a third
party would exceed a "floor" price established in any transaction with members
of management; and (vii) that the Special Committee expected that any agreement
the Company might enter into with members of management would not preclude or
serve as an unreasonable impediment to any third party which might be interested
in making a competing acquisition proposal although the Special Committee
recognized that certain amounts, such as expense reimbursement, might be
required to be paid to the members of management if a competing acquisition
proposal was received by the Special Committee following the execution of a
merger agreement with members of management. The Special Committee did not seek
contacts from other potential third party bidders for the reasons set forth
above in clauses (i), (v), (vi) and (vii).
On October 1, 1998, LAGS (USA) notified the Company of its intention to
exercise the LAGS Option to increase its interest in Hudson LLC from 26% to 49%.
On October 7, 1998, the Special Committee met, together with its legal and
financial advisors. Allen & Company presented a preliminary financial analysis
of the Company, and informed the Special Committee that based on such
preliminary analysis, and subject to the review and consideration of any
additional information that might be furnished by members of management or their
financial advisors or otherwise considered by Allen & Company to be relevant to
its analysis, a purchase price per Share in the range of the "low 50's" would
not fairly value the Company. The Special Committee concluded that it would not
engage in any discussions with members of management concerning a possible
acquisition of the Company at a price range in the "low 50's."
In October 1998, the Company's management, as part of Hudson LLC's normal
annual budgeting and planning process, completed the preparation of updated
projections, which they furnished to Allen & Company. The updated projections
showed, among other things, lower results for the Aviation Services Business
than the original projections previously prepared by the Company's management
and which had previously been furnished to Allen & Company. Allen & Company
reviewed the updated projections and discussed them with members of the
Company's management.
On November 2, 1998, the closing of the LAGS Option took place, and LAGS
(USA) increased from 26% to 49% its ownership interest in Hudson LLC. The
Company's ownership interest in Hudson LLC was correspondingly decreased from
74% to 51%. The LAGS Option exercise price of $29,627,000 (plus $1,123,000 of
interest) was paid by LAGS (USA) to Hudson LLC. For additional information
concerning the interests of the Company and LAGS (USA) in Hudson LLC following
the exercise of the LAGS Option, see "Item 3. Identity and Background. --
Certain Relationships with GlobeGround and its Affiliates."
On November 9, 1998, management's counsel informed the Special Committee's
counsel that management shortly would be in a position to present an acquisition
proposal valuing the Company in excess of $56 per Share.
On the evening of November 16, 1998, counsel to members of management
furnished a draft merger agreement to the Special Committee's advisors for
discussion purposes and in order to accelerate the process in the event that a
buyout proposal was made by members of management and accepted by the Special
Committee. The draft merger agreement contemplated a one-step cash merger and
did not identify the price
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<PAGE> 17
that management would be willing to offer in the merger. Commencing on November
17, 1998, counsel to the Special Committee and counsel to members of management
negotiated the terms of the merger agreement (other than price) and continued
such negotiations through November 22, 1998. During such negotiations, the
Special Committee's legal and financial advisors informed the members of
management and their counsel that the Special Committee would not agree to any
termination fees payable to management. During this period, the respective
counsel discussed the circumstances under which members of management would be
entitled to expense reimbursement upon termination of the merger agreement, and
the dollar limitations placed upon such expense reimbursement.
Starting in the late afternoon of November 20, 1998, the Special Committee
met, with its legal and financial advisors present, and reviewed the status of
the negotiations of the merger agreement. Allen & Company presented a detailed
financial analysis of the Company. Based upon Allen & Company's financial
presentation, the indication by management that it was prepared to present a
buyout proposal which valued the Company in excess of $56 per Share, and the
fact that management had withdrawn its request for termination fees, the Special
Committee determined that it would receive an acquisition proposal from
management.
On the evening of November 20, 1998, Mr. Langner informed the Special
Committee that he and Mr. Segal, and the other members of management who would
become members of the buyout group (which persons are referred to herein as the
"Buyout Group") were offering to purchase all outstanding Shares of the Company
(other than those Shares owned by members of the Buyout Group) at a price of $57
per Share in cash.
On November 22, 1998, after further negotiations, the Buyout Group proposed
an increase in its offer to $57.25 per Share in cash if the Company would agree
to an expense reimbursement cap of $1,750,000 in the event the Board changes its
recommendation or approves an alternative transaction, and a cap of $875,000 if
stockholders do not approve the merger agreement (the "River Merger Agreement")
between the Company and River Acquisition Corp. ("River Acquisition"), a new
entity formed by Messrs. Langner and Segal for purposes of accomplishing the
acquisition of the Company by the Buyout Group. The Special Committee, after
further consideration, accepted the Buyout Group's proposal. On November 22,
1998, the Special Committee approved the Buyout Group's $57.25 per Share cash
offer price and the terms and provisions of the proposed River Merger Agreement
and determined to recommend that the Board of Directors approve the River Merger
Agreement and the transactions contemplated thereby.
On November 22, 1998, the full Board unanimously approved the proposed
merger with the Buyout Group. Following the Board meeting, the Company entered
into the River Merger Agreement.
On November 23, 1998, the Company issued a press release announcing that
the Company had entered into the River Merger Agreement.
Subsequent to the Company's public announcement on November 23, 1998 that
it had entered into the River Merger Agreement, the Special Committee's
financial advisor was contacted by or on behalf of several other entities. Each
of such entities indicated a possible interest in making an acquisition proposal
for the Company and two of such entities also expressed an interest in assisting
the Buyout Group in connection with the pending merger pursuant to the River
Merger Agreement. One of the entities expressing a possible interest in making
an acquisition proposal was Ranger. Ranger did not express interest in assisting
the Buyout Group in connection with the pending merger.
The Special Committee is aware that starting in late November 1998 and
continuing until late December 1998, the Buyout Group and its financial advisors
from time to time engaged in discussions with representatives of GlobeGround to
discuss the possibility of GlobeGround's participating with the Buyout Group in
its pending acquisition of the Company in order to increase the price that the
Buyout Group would be in a position to pay for the Shares. The Special Committee
understands that GlobeGround informed the Buyout Group that it might consider
making an acquisition proposal for the Company on its own.
16
<PAGE> 18
On December 9, 1998, Ranger delivered a letter (the "Ranger December 9
Letter") to the Special Committee. In the Ranger December 9 Letter, Ranger
stated it was submitting an "indication of willingness to acquire all
outstanding stock" of the Company at a price in excess of $57.25 per Share in
cash, but did not indicate a specific price. In the Ranger December 9 Letter,
Ranger also requested that the Company furnish it with confidential information
subject to an appropriate confidentiality agreement, and stated that its
acquisition proposal would not be subject to a financing contingency.
On December 11, 1998, the Special Committee, with the assistance of its
legal and financial advisors, reviewed the Ranger December 9 Letter and
determined, in accordance with applicable provisions of the River Merger
Agreement, to furnish information to Ranger and engage in discussions related
thereto pursuant to an appropriate confidentiality agreement. Also, on December
11, 1998, the Company issued a press release concerning the Ranger December 9
Letter and the determination made by the Special Committee to furnish
information to Ranger.
On December 24, 1998, the Company entered into a Confidentiality Agreement
with Ranger and, on December 28, 1998, commenced furnishing Ranger with due
diligence materials. Ranger's due diligence review continued throughout the
month of January 1999. Such due diligence review included meetings with the
Company's senior management and outside accountants, as well as a review of
various financial and legal documents furnished to Ranger and made available to
Ranger in data rooms established by the Special Committee.
On January 21, 1999, GlobeGround's counsel telephoned the Special
Committee's counsel and stated that if Ranger made a proposal to acquire the
Company, GlobeGround would consider submitting a higher acquisition proposal.
GlobeGround's counsel also advised the Special Committee's counsel that any
acquisition proposal made by GlobeGround would be subject to the approval of the
Lufthansa Supervisory Board, which was scheduled to meet on March 10, 1999.
On February 1, 1999, the Special Committee received a letter from Ranger in
which Ranger offered to acquire all of the Company's outstanding Shares at a
price of $62.00 per Share in cash, subject to Ranger's satisfactory completion
of a confirmatory due diligence review (the "Ranger $62.00 Proposal").
On February 2, 1999, the Company issued a press release concerning the
Ranger $62.00 Proposal, and stated that such proposal would be reviewed shortly
by the Special Committee.
Also, on February 2, 1999, the Special Committee's counsel was informed by
GlobeGround's counsel that, in light of the fact that the Company had received
an acquisition proposal from Ranger, GlobeGround intended to consider making a
proposal to acquire all of the Company's outstanding Shares at a price in excess
of $62.00 per Share in cash. GlobeGround's counsel reiterated that any such
proposal would be subject to the approval of the Lufthansa Supervisory Board.
On February 3, 1999, GlobeGround's counsel informed the Special Committee's
counsel that certain "standstill" provisions contained in the Purchase Agreement
could have the effect of preventing GlobeGround from making an acquisition
proposal for the Company. Later that day, counsel to the Special Committee
contacted counsel to the Buyout Group and requested that River Acquisition waive
in writing certain "no solicitation" provisions contained in the River Merger
Agreement so that the Special Committee and the Board, should they choose to do
so, could take appropriate action to permit GlobeGround to submit an acquisition
proposal. On February 5, 1999, River Acquisition furnished the Special Committee
with such written waiver.
On February 5, 1999, the Special Committee met, together with its legal and
financial advisors, to review the Ranger $62.00 Proposal and determined, in
accordance with applicable provisions of the River Merger Agreement, to engage
in discussions and negotiations with Ranger concerning the Ranger $62.00
Proposal. Also, on February 5, 1999, the Company issued a press release
regarding the Special Committee's determination concerning the Ranger $62.00
Proposal.
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<PAGE> 19
At its meeting on February 5, 1999, the Special Committee designated Mr.
Sammer as its Chairman and, on the same date, the Board authorized that each of
the members of the Special Committee receive an additional $5,000 for service on
the Special Committee and that Mr. Sammer receive an additional sum of $2,500
for serving as Chairman of the Special Committee.
On February 5, 1999, the Board determined to waive, until June 30, 1999,
the "standstill" provisions set forth in the Purchase Agreement in order to
permit GlobeGround to make an acquisition proposal for the Company, should it
choose to do so. The same day, counsel to the Special Committee furnished such
written waiver to counsel to GlobeGround.
On February 8, 1999, the financial advisor to Ogden Corporation ("Ogden")
informed the Special Committee's financial advisor that Ogden had a possible
interest in making an acquisition proposal for the Company.
Also, on February 8, 1999, GlobeGround informed Mr. Langner that it
intended to submit an acquisition proposal to the Company the next day if it
received approval from the Lufthansa Executive Board. The Special Committee has
been informed by GlobeGround that the acquisition proposal was approved by the
Lufthansa Executive Board on February 9, 1999.
On February 9, 1999, the Special Committee received a letter from
GlobeGround, in which GlobeGround offered to acquire all of the Company's
outstanding Shares at a price of $67.00 per Share (the "GlobeGround $67.00
Proposal"), in a cash merger transaction. GlobeGround stated in its letter that
the GlobeGround $67.00 Proposal would remain open until 5:00 p.m., New York City
time, on February 16, 1999, and that the offer would be deemed accepted when it
was approved by the Company's Board and a definitive agreement was executed.
GlobeGround's letter also stated that the obligations of GlobeGround under its
proposed merger agreement would be subject to approval by the Lufthansa
Supervisory Board not later than March 15, 1999. Counsel to GlobeGround informed
counsel to the Special Committee that the GlobeGround $67.00 Proposal had been
approved by Lufthansa's Executive Board, and the Lufthansa Supervisory Board was
scheduled to meet on March 10, 1999.
Also, on February 9, 1999, the Special Committee received a letter from
Ogden, in which Ogden offered to acquire all of the Company's outstanding Shares
at a price of $65.00 per Share either in cash or in common shares of Ogden (the
"Ogden $65.00 Proposal"). Ogden's letter stated that the Ogden $65.00 Proposal
was subject to a customary due diligence review regarding the Company and its
business prospects and approval of Ogden's Board of Directors.
In addition, on February 9, 1999, River Acquisition offered to amend the
River Merger Agreement to increase from $57.25 to $61.00 the per Share cash
merger price to be paid by River Acquisition to the Company's stockholders.
In the late afternoon on February 9, 1999, the Special Committee met,
together with its legal and financial advisors, to review the GlobeGround $67.00
Proposal and the Ogden $65.00 Proposal, and to consider River Acquisition's
proposal to amend the River Merger Agreement to increase to $61.00 per Share the
cash merger price to be paid to the Company's stockholders. The Special
Committee determined, in accordance with applicable provisions of the River
Merger Agreement, to engage in discussions and negotiations with GlobeGround
concerning the GlobeGround $67.00 Proposal and with Ogden concerning the Ogden
$65.00 Proposal. The Special Committee also determined to accept River
Acquisition's proposal to increase the price under the River Merger Agreement,
and an amendment to the River Merger Agreement was entered into on February 9,
1999. In addition, it was the Special Committee's position that, in view of the
fact that the Ranger $62.00 Proposal was now the third highest proposal, the
Special Committee's advisors should devote their efforts to pursuing discussions
and negotiations with the highest bidders and suspend due diligence meetings
with Ranger which had been scheduled for the next few days.
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<PAGE> 20
In the early evening of February 9, 1999, counsel to the Special Committee
telephoned counsel to Ranger and informed Ranger's counsel that the Company that
day had received GlobeGround's $67.00 Proposal and Ogden's $65.00 Proposal, and
had amended the River Merger Agreement to provide for an increased price of
$61.00 per Share in cash. The Special Committee's counsel further informed
Ranger's counsel that due diligence meetings scheduled to be held during the
succeeding days would be suspended for the time being in view of the fact that
the Special Committee had received two proposals which were higher than the
Ranger $62.00 Proposal. Ranger's counsel stated that Ranger would consider
increasing the price of its acquisition proposal.
Later in the evening of February 9, 1999, Ranger's counsel telephoned the
Special Committee's counsel, and stated that Ranger was seeking to convene a
meeting of its Board of Directors that night to consider increasing its proposed
purchase price. Ranger's counsel inquired as to whether it would be "too late"
if Ranger submitted an increased proposal by the close of business on February
10, 1999, and asked for an assurance that the Special Committee would not enter
into an agreement on February 10, 1999 to sell the Company. The Special
Committee's counsel responded that an acquisition proposal received from Ranger
on February 10, 1999 would not be "too late" and that the Company would not
enter into an agreement to be sold on February 10, 1999. Shortly after midnight
on the same night, Ranger's counsel left a message for the Special Committee's
counsel stating that Ranger's Board of Directors had met that night and was
considering increasing its proposal, and that a new proposal might be submitted
on February 10, 1999.
On the morning of February 10, 1999, the Company issued a press release
regarding the GlobeGround $67.00 Proposal, the Ogden $65.00 Proposal and the
amendment to the River Merger Agreement.
Also, on the morning of February 10, 1999, the Special Committee's counsel
received from Ranger's counsel a draft of a proposed merger agreement, which
contemplated a cash merger. Despite Ranger's earlier assurances, as set forth in
the Ranger December 9 Letter and subsequently confirmed at a due diligence
meeting, that a merger with Ranger would not be subject to a financing
contingency, the draft merger agreement furnished by Ranger's counsel provided
that the merger would, in fact, be subject to the receipt of financing. The
draft merger agreement furnished by Ranger's counsel also provided for
termination fees of $3.5 million (and, in certain circumstances, an additional
$2.0 million) and certain expense reimbursement provisions. In addition,
Ranger's counsel stated in a letter dated February 9, 1999 that they intended to
furnish separately a "lock-up" Option Agreement which would give Ranger the
right, under certain circumstances, to purchase up to 19.9% of the Company's
outstanding Shares.
During the day on February 10, 1999, counsel to the Special Committee
commenced discussions and negotiations with GlobeGround's counsel concerning the
draft merger agreement furnished by GlobeGround to the Special Committee on
February 9, 1999.
Early in the afternoon on February 11, 1999, the Special Committee met,
together with its legal and financial advisors, to review the status of the
various acquisition proposals.
Also, on the afternoon of February 11, 1999, GlobeGround's counsel informed
the Special Committee's counsel that GlobeGround was revising the structure of
the GlobeGround $67.00 Proposal to provide for a tender offer at a price of
$67.00 per Share to be followed by a second-step cash merger at the same price.
During the course of the day, the Special Committee's counsel continued to
engage in discussions and negotiations with GlobeGround's counsel regarding
GlobeGround's proposed merger agreement.
Late in the afternoon of February 11, 1999, the Company entered into a
Confidentiality Agreement with Ogden and, that evening, the Special Committee's
financial advisors furnished certain due diligence materials to Ogden's counsel.
On the morning of February 12, 1999, the Special Committee received a
letter from Ranger in which Ranger offered to acquire all of the Company's
outstanding Shares at a price of $72.00 per Share in cash, on the terms and
subject to the conditions set forth in a proposed merger agreement which was
furnished by
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<PAGE> 21
Ranger's counsel to the Special Committee's legal and financial advisors the
same morning, and subject to the satisfaction of Ranger's outstanding due
diligence requests (the "Ranger $72.00 Proposal"). Ranger's draft merger
agreement furnished on February 12, 1999 was substantially the same as the draft
merger agreement which the Special Committee's counsel received from Ranger's
counsel on the morning of February 10, 1999, and continued to provide that the
merger under the Ranger $72.00 Proposal would be subject to a financing
contingency.
Shortly after the receipt of Ranger's draft merger agreement on the morning
of February 12, 1999, the Special Committee's counsel telephoned Ranger's
counsel and inquired whether the financing contingency could be eliminated and
whether Ranger was still seeking a "lock-up" option which would give Ranger the
right, under certain circumstances, to purchase up to 19.9% of the Company's
outstanding Shares. Ranger's counsel responded that Ranger would not eliminate
the financing contingency and stated that Ranger was continuing to seek an
option to acquire 19.9% of the Company's outstanding Shares, but also stated
that the terms of Ranger's proposal were negotiable.
Also, on February 12, 1999, the Company issued a press release concerning
its receipt of the Ranger $72.00 Proposal. Shortly before the press release was
issued, the Special Committee's counsel, who had been involved in ongoing
negotiations with GlobeGround's counsel during the past few days concerning
GlobeGround's proposed merger agreement, telephoned GlobeGround's counsel and
informed such counsel of the contents of the press release which was being
issued by the Company.
In the early afternoon on February 12, 1999, GlobeGround's counsel
telephoned the Special Committee's counsel and informed such counsel that
GlobeGround was considering making an acquisition proposal in excess of $72.00
per Share and discussed the general framework of such a proposal, but did not
indicate any particular price.
Later in the afternoon on February 12, 1999, the Special Committee received
a letter from GlobeGround, in which GlobeGround presented two alternative
acquisition proposals. The first proposal contemplated a cash tender offer at a
price of $73.00 per Share to be followed by a second-step cash merger at the
same price, and provided for termination fees of $3.8 million plus certain
previously negotiated expense reimbursement provisions (the "GlobeGround $73.00
Proposal"). The second proposal contemplated a cash tender offer at a price of
$76.00 per Share to be followed by a second-step cash merger at the same price,
and provided for termination fees of $3.9 million plus certain previously
negotiated expense reimbursement provisions (the "GlobeGround $76.00 Proposal").
The GlobeGround $76.00 Proposal also contemplated that the Company would grant
an option to GlobeGround to increase its interest in Hudson LLC from 49% to 54%
for an exercise price of $9.16 million and gain a majority voting interest in,
and operating control of, Hudson LLC (the "LLC Option"). GlobeGround's letter
stated that the GlobeGround $73.00 Proposal and the GlobeGround $76.00 Proposal
would remain open until 5:00 p.m., New York City time, on February 16, 1999, and
that the offer would be deemed accepted when it was approved by the Company's
Board and a definitive agreement was executed.
During the late afternoon and early evening of February 12, 1999, the
Chairman of the Special Committee and the Special Committee's legal and
financial advisors reviewed and considered the GlobeGround $73.00 Proposal and
the GlobeGround $76.00 Proposal including the LLC Option. They concluded that
the LLC Option could preclude further acquisition proposals from other parties,
including Ranger and Ogden, because the LLC Option, if exercised, would give
GlobeGround a majority interest in, and operating control of, the Company's main
operating business. Accordingly, they determined to recommend that the Special
Committee not accept the GlobeGround $76.00 Proposal as long as it included the
LLC Option. They also determined to recommend that the Special Committee not
agree to any termination fees under the GlobeGround $73.00 Proposal but that it
would be appropriate to negotiate termination fees in connection with the
GlobeGround $76.00 Proposal. The Special Committee's counsel telephoned
GlobeGround's counsel on the evening of February 12, 1999, and informed
GlobeGround's counsel of the recommendations that would be made to the Special
Committee.
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<PAGE> 22
On the morning of February 13, 1999, counsel to GlobeGround informed
counsel to the Special Committee that GlobeGround had withdrawn its request for
the LLC Option. GlobeGround's counsel then proposed a cash tender offer and
second-step cash merger at a price of $75.00 per Share, with termination fees of
$3.9 million plus certain previously negotiated expense reimbursement provisions
(the "GlobeGround $75.00 Proposal"). In addition, GlobeGround's counsel stated
that as part of the GlobeGround $75.00 Proposal, GlobeGround would require the
Company to agree that in the event of any superior third party offers for the
Company, GlobeGround would have an opportunity to match or exceed such competing
bids before the Company could terminate its merger agreement with GlobeGround
(the "Matching Right").
During the course of the morning and early afternoon on February 13, 1999,
GlobeGround's counsel and the Special Committee's counsel negotiated the terms
of the GlobeGround $75.00 Proposal. The Special Committee's counsel, after
consultation with the Chairman of the Special Committee and the Special
Committee's financial advisors, requested a reduction in the amount of the
termination fees and the elimination of the Matching Right, and requested that
there be a fee, in an amount to be negotiated, payable from GlobeGround to the
Company in the event that the Lufthansa Supervisory Board did not approve
GlobeGround's acquisition of the Company (the "Reverse Break-Up Fee").
GlobeGround's counsel advised the Special Committee's counsel that GlobeGround
would not eliminate the Matching Right and did not have authority to agree to a
Reverse Break-Up Fee. After further negotiation, GlobeGround agreed to a
reduction in termination fees, with the specific amount of the termination fee
depending on whether termination occurred before or after approval of the
transaction by the Lufthansa Supervisory Board.
GlobeGround's counsel also proposed that, as an alternative, GlobeGround
was continuing to offer the GlobeGround $73.00 Proposal, without termination
fees and without the Matching Right.
In the mid-afternoon on February 13, 1999, the Special Committee met,
together with its legal and financial advisors, and reviewed the status of all
proposals, including the proposals made that day by GlobeGround. The Special
Committee also discussed the possibility of establishing a formal auction
process, in which all interested bidders could submit final offers after first
having had the opportunity to satisfy conditions such as receipt of financing,
due diligence and necessary board approvals. The Special Committee concluded
that it was desirable and in the interests of the Company's stockholders to move
the process towards conclusion, and determined not to prolong the process
through the use of a formal auction. The Special Committee, after considering
its alternatives, requested its counsel to propose to GlobeGround's counsel that
GlobeGround increase the GlobeGround $75.00 Proposal to $76.00 per Share, in
return for which the Special Committee would eliminate its request for a Reverse
Break-Up Fee. Such proposal was accepted by GlobeGround.
The Special Committee requested that its counsel contact Ranger and Ogden,
and afford each of them an opportunity to increase their respective offers. The
Special Committee, after consultation with its financial advisor, determined
that its best strategy was not to disclose to Ranger and Ogden the amount of
GlobeGround's $76.00 per Share proposal but that, instead, Ranger and Ogden
should be informed that a higher bid had been received by the Special Committee
and that if either of them desired to submit their highest and best offers they
should do so promptly. In addition, the Special Committee instructed its legal
counsel to inform Ranger and Ogden, among other things, that the Special
Committee had a strong preference for a cash tender offer transaction which was
not subject to a due diligence condition or a financing contingency and could be
entered into promptly.
The Special Committee then reviewed with its advisors, among other things,
(i) the fiduciary duties of the members of the Special Committee, (ii) Allen &
Company's financial analysis and valuation of the Company, (iii) the terms of
the proposed GlobeGround Merger Agreement, including the Matching Right, the
termination fees and the expense reimbursement provisions, (iv) the tender offer
structure of the proposed transaction with GlobeGround and the anticipated
timing of the commencement and completion of the tender offer and (v) the
benefits of the proposed transaction to the Company's stockholders and the
reasons for approving the proposed transaction. The valuation methodologies
reviewed by Allen & Company with the
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<PAGE> 23
Special Committee included a discounted cash flow analysis, a multiple-based
valuation analysis, a related company trading analysis, an analysis of selected
related merger and acquisition transactions and an acquisition premium analysis
of selected acquisitions.
On February 13, 1999, following the meeting of the Special Committee, there
was a meeting of the full Board with all directors present. The Special
Committee's legal and financial advisors reviewed with the Board the status of
the various acquisition proposals which had been received by the Special
Committee, and the status of negotiations with GlobeGround. The Board was
informed that the Special Committee was in the process of negotiating the terms
of a definitive merger agreement with GlobeGround, and that the Special
Committee had scheduled another meeting for 9:00 a.m. on February 15, 1999. The
Board also was informed that Ranger and Ogden would be given an opportunity to
increase their respective offers.
At the Board meeting on February 13, 1999, the directors were advised by
Skadden Arps as to their fiduciary duties, and Allen & Company summarized its
financial analysis of the Company. The Board reviewed the terms of the proposed
GlobeGround Merger Agreement. The Board also reviewed the reasons discussed by
the Special Committee in considering a recommendation to the full Board of
approval of the Offer, the Merger and the GlobeGround Merger Agreement.
Following the Board meeting on February 13, 1999, Messrs. Langner and
Segal, on behalf of River Acquisition, informed the Special Committee's counsel
that River Acquisition would not compete with GlobeGround's $76 per Share
proposal. The Special Committee's counsel then separately telephoned counsel to
Ranger and counsel to Ogden. The Special Committee's counsel informed each such
counsel that (i) the Special Committee had received a proposal in excess of
$72.00 per Share, (ii) the situation was highly fluid and rapidly moving, (iii)
the Special Committee was negotiating a transaction with the high bidder and the
transaction would involve termination fees, (iv) it should be assumed that the
Special Committee would not negotiate termination fees if the offer was only
slightly above $72.00 per Share, (v) their respective clients should present
their highest and best offers as early as possible on February 14, 1999, (vi) if
their respective clients submitted the highest bid, they should be prepared to
move towards execution of a merger agreement on an accelerated basis, (vii) the
Special Committee expected all offers to provide for a cash tender offer to be
followed by a second-step cash merger, (viii) the Special Committee was not
prepared to accept proposals which included due diligence conditions, financing
conditions or stock option "lock-ups," but would negotiate reasonable
termination fees and (ix) the Special Committee would require that a financially
responsible entity be obligated on a merger agreement.
In the early morning on February 14, 1999, Ogden's counsel informed the
Special Committee's counsel in a telephone call that Ogden would not be in a
position to respond that day to the Special Committee, but hoped to be in a
position to do so by mid-day on February 15, 1999.
In the early afternoon on February 14, 1999, Ranger's counsel informed the
Special Committee's counsel in a telephone call that (i) Ranger objected to not
being informed as to the dollar amount of the highest offer made to the Special
Committee, (ii) Ranger believed that the bidding process was unfair to it, (iii)
Ranger was prepared to increase its offer but had been unable to locate a quorum
of its directors and convene a board meeting because it was a holiday weekend,
(iv) Ranger had been unable to reach its financing sources, (v) Ranger was
prepared to structure its acquisition proposal as a cash tender offer to be
followed by a second-step cash merger, (vi) Ranger was prepared to make certain
of the modifications in its proposal requested by the Special Committee and
(vii) Ranger urged that the Special Committee not take any actions that would
preclude further offers and not give transactional protections to other bidders.
In the late afternoon on February 14, 1999, Ranger faxed a letter to the
Special Committee which, in substance, reiterated Ranger's objections to the
Special Committee's procedures. In such letter, Ranger stated: "We believe that,
after we have had an opportunity to convene a meeting of our entire Board, to
consult with our financing sources and outside advisors, and to review the
specific due diligence materials requested in January, we could satisfactorily
address a number of the requests regarding the terms of our offer suggested by
[the Company's] legal counsel on Saturday evening and increase our bid."
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On the morning of February 15, 1999, the Special Committee met, together
with its legal and financial advisors, and reviewed the final terms of the
proposed transaction with GlobeGround and received a report from its legal
counsel concerning the recent contacts with Ranger's and Ogden's counsel. The
Special Committee again reviewed with its advisors the fiduciary duties of the
members of the Special Committee and Allen & Company's financial analysis and
valuation of the Company. Allen & Company rendered its written opinion that, as
of such date, the amount of $76.00 per Share in cash to be received by the
Company's stockholders in connection with the Offer and the Merger is fair to
such stockholders from a financial point of view. The Special Committee then
discussed its reasons for approving and recommending the Offer, the Merger and
the GlobeGround Merger Agreement, and determined that the Offer, the Merger and
the GlobeGround Merger Agreement are fair to and in the best interests of the
Company's stockholders and recommended that (i) the Board approve and adopt the
GlobeGround Merger Agreement and the transactions contemplated thereby and (ii)
the Board recommend that the Company's stockholders accept the Offer and tender
their Shares, and approve the GlobeGround Merger Agreement and the transactions
contemplated thereby.
On February 15, 1999, immediately following the meeting of the Special
Committee, there was a meeting of the full Board. The directors again were
advised by Skadden Arps as to their fiduciary duties, and Allen & Company
summarized its financial analysis of the Company and advised the Board of the
written opinion it had rendered to the Special Committee. The Board reviewed the
final terms of the GlobeGround Merger Agreement, and reasons that the Special
Committee was recommending to the full Board approval of the GlobeGround Merger
Agreement. The full Board thereupon unanimously concluded that the terms and
provisions of the Offer, the Merger and the GlobeGround Merger Agreement are
fair to and in the best interests of the Company and its stockholders, approved
the Offer, the Merger and the GlobeGround Merger Agreement, and recommended that
the Company's stockholders accept the Offer and tender their Shares. Following
the Board meeting, River Acquisition waived in writing, until March 17, 1999,
its right to terminate the River Merger Agreement by reason of the Company
entering into the GlobeGround Merger Agreement. The GlobeGround Merger Agreement
was then executed by the Company and Purchaser, and GlobeGround executed a
Guaranty pursuant to which it guaranteed Purchaser's obligations under the
GlobeGround Merger Agreement.
On February 15, 1999, the Company issued a press release announcing that
the Company had entered into the GlobeGround Merger Agreement.
On February 16, 1999, Ogden's counsel informed the Special Committee's
counsel in a telephone call that Ogden would not submit any further offers and
would return to the Special Committee all previously furnished due diligence
materials.
Reasons for the Transaction; Factors Considered by the Special Committee
and the Board
On February 15, 1999, the Special Committee determined that the Offer, the
Merger and the terms and provisions of the GlobeGround Merger Agreement were
fair to, and in the best interest of, the Company and its stockholders, and
unanimously recommended to the full Board that it approve the GlobeGround Merger
Agreement and the transactions contemplated thereby.
At a special meeting of the Board held immediately following the Special
Committee's determination, at which all directors of the Company were present,
the Board considered the recommendation of the Special Committee. The Board
unanimously concluded that the Offer, the Merger and the terms and provisions of
the GlobeGround Merger Agreement are fair to, and in the best interests of, the
Company and its stockholders, approved the GlobeGround Merger Agreement, and
recommended that the Company's stockholders accept the Offer and tender their
Shares pursuant to the Offer.
In approving the Merger Agreement, the Offer, the Merger and the other
transactions contemplated by the GlobeGround Merger Agreement, and recommending
that the Company's stockholders accept the Offer
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and tender their Shares, the Special Committee and the Board of Directors
considered a variety of factors, including the following:
- Highest Proposal. The Special Committee and Board of Directors
considered the fact that the $76.00 per Share price offered by Purchaser
was higher than the two other proposals received by the Special
Committee, $65.00 per Share either in cash or common stock from Ogden and
$72.00 per Share in cash from Ranger, and was higher than the $61.00 per
Share price provided for in the Company's cash merger agreement with
River Acquisition.
- Allen & Company Opinion. The Special Committee and Board of Directors
considered the financial presentation of Allen & Company delivered at the
February 13, 1999 meetings of the Special Committee and Board of
Directors, and Allen & Company's written opinion delivered at the
February 15, 1999 meeting of the Special Committee to the effect that, as
of the date of its opinion and based upon and subject to the matters
stated in its opinion, the $76.00 per Share to be received by the
Company's stockholders pursuant to the Offer and the GlobeGround Merger
Agreement was fair from a financial point of view. THE FULL TEXT OF ALLEN
& COMPANY'S WRITTEN OPINION, WHICH SETS FORTH THE ASSUMPTIONS MADE,
MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY ALLEN &
COMPANY, IS FILED AS EXHIBIT 32 TO THIS SCHEDULE 14D-9 AND IS
INCORPORATED HEREIN BY REFERENCE IN ITS ENTIRETY. THE OPINION OF ALLEN &
COMPANY IS ATTACHED HERETO AND STOCKHOLDERS ARE URGED TO, AND SHOULD,
READ THE OPINION OF ALLEN & COMPANY CAREFULLY.
- Transaction Structure. The Special Committee and Board of Directors also
evaluated the benefits of the transaction being structured as a two-step
tender offer and merger, and concluded that the Offer provided the
Company's stockholders with an opportunity to receive $76.00 per Share on
an accelerated basis, while still providing a sufficient period of time
for Ranger, Ogden or any other interested third party to prepare and
present a superior acquisition proposal for the Company.
- Buyout Group Agreement Remains in Effect. The Special Committee and
Board of Directors considered the fact that the River Merger Agreement
will remain in effect even though the Company is entering into the
GlobeGround Merger Agreement. Accordingly, if the GlobeGround Merger
Agreement were terminated because the Lufthansa Supervisory Board did not
approve the GlobeGround Merger Agreement, the Company would still have in
place the River Merger Agreement pursuant to which River Acquisition
would acquire the Shares at a price of $61.00 per Share, and the Special
Committee would still have the ability to negotiate with other bidders
who would be willing to pay more than the $61.00 per Share provided for
in the River Merger Agreement.
- Terms of Other Proposals. The Special Committee and Board of Directors
considered the fact that the $65.00 per Share proposal from Ogden was
subject to a customary due diligence review of the Company and its
business prospects (which had only recently commenced) and approval of
Ogden's Board of Directors. The Special Committee considered the fact
that the $72.00 per Share proposal from Ranger was subject to
satisfactory completion of its due diligence review and was now subject
to receipt of financing. In addition, the Special Committee noted that
Ranger had furnished counsel to the Special Committee with a draft merger
agreement which was significantly less favorable to the Company than
either the River Merger Agreement or the GlobeGround Merger Agreement and
that Ranger had requested a 19.9% stock option from the Company. The
Special Committee also considered the letter dated February 14, 1999 from
Ranger stating that, subject to certain conditions, Ranger believed it
could increase its $72.00 per Share bid and change certain terms of its
offer as set forth in its draft merger agreement.
- Terms of GlobeGround Merger Agreement. The Special Committee and Board
of Directors also considered the terms of the GlobeGround Merger
Agreement, including (i) the absence of any financing condition; (ii) the
provision providing that the Special Committee or the Company may furnish
or provide access to information concerning the Company to third parties
who indicate in writing a willingness to make an acquisition proposal at
a price in excess of $76.00 per Share; (iii) the
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<PAGE> 26
ability of the Special Committee, in the exercise of its fiduciary
duties, to furnish information to any third party making an Acquisition
Proposal and to engage in discussions and negotiations with such third
party; (iv) the ability of the Special Committee, in the exercise of its
fiduciary duty, to terminate the GlobeGround Merger Agreement in order to
permit the Company to enter into a business combination transaction with
a third party which has made a superior acquisition proposal to the
Company's stockholders unless GlobeGround has agreed to match such
superior proposal; and (v) the fact that the Company would be required to
pay GlobeGround certain termination fees and expenses in order to accept
a superior proposal and that while such fees and expense reimbursement
would increase the cost to a third party interested in acquiring the
Company, they would not preclude a third party from making a superior
acquisition proposal or from acquiring the Company. The Special Committee
and Board of Directors noted that the amount of the termination fees
($2,625,000) and maximum expense reimbursement amount ($875,000) payable
to GlobeGround would be lower if the GlobeGround Merger Agreement were
terminated prior to its approval by the Lufthansa Supervisory Board
(which was currently scheduled to meet on March 10, 1999), compared to
the termination fees ($3,500,000) and maximum expense reimbursement
amount ($1,750,000) following the Lufthansa Supervisory Board approval.
The Special Committee and Board of Directors also recognized that the
Company has certain expense reimbursement obligations under the River
Merger Agreement (see "Item 8. Additional Information to be Furnished.
-- River Merger Agreement -- Fees and Expenses"). The Special Committee
and Board also noted that the Executive Board of Lufthansa had approved
the transaction and recommended to the Lufthansa Supervisory Board that
it approve the transaction.
- Role of Special Committee and Arm's-Length Negotiations. The Special
Committee and Board of Directors considered the fact that the GlobeGround
Merger Agreement and the transactions contemplated thereby were the
product of arm's-length negotiations between GlobeGround and its advisors
and the Special Committee, none of whose members were employed by or
affiliated with the Company (except in their capacities as directors),
and its advisors.
- Market Price and Premium. The Special Committee and Board of Directors
considered the historical market prices of the Company's Common Stock and
noted that the $76.00 per Share price offered by GlobeGround exceeded the
highest market price per Share in the Company's history. The Special
Committee and Board of Directors also considered the fact that $76.00 per
Share represented a premium of 39.1% to the $54.625 closing price of the
Shares on the American Stock Exchange on November 20, 1998, the last full
trading day before the River Merger Agreement was publicly announced. The
Special Committee and Board of Directors also noted that $76.00 per Share
was $18.75 (or 32.8%) higher than the $57.25 price agreed to in the
original River Merger Agreement and $15.00 (or 24.6%) higher than the
price agreed to in the amended River Merger Agreement.
- Historical and Projected Financial Performance and Related Risks and
Uncertainties. The Special Committee and Board of Directors considered
the financial projections prepared by the Company's management, including
the most recent projections prepared by management as part of Hudson
LLC's normal annual budgeting and planning process which showed, among
other things, lower results for the Aviation Services Business due to
increased labor costs in Hudson LLC's operations at certain locations,
the recent loss of certain contracts and increased competitive pricing
pressures in Hudson LLC's business. (See "Item 8. Additional Information
to be Furnished. -- Certain Projections")
- The Company's Recent Earnings Results. The Special Committee and Board
of Directors considered their familiarity with the Company's business,
financial condition, results of operations, prospects and the nature of
the industries in which the Company operates, including the prospects of
the Company if it were to remain independent. The Special Committee and
Board of Directors noted the continued recent decline in the results of
operations for the Company's second fiscal quarter ended December 31,
1998. In particular, the Special Committee and Board of Directors
considered the fact that operating income for Hudson LLC, the Company's
51% owned affiliate, for the three and six months ended
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December 31, 1998, decreased $1.0 and $1.9 million, respectively, due
primarily to: (i) decreased results associated with domestic ground
handling operations related to higher labor and fleet maintenance costs;
(ii) lower sales of de-icing fluid; (iii) the impact of the loss of
certain ground handling contracts; (iv) the recognition of deferred
income in October 1997; and (v) higher selling, general and
administrative expenses. The Special Committee and Board of Directors
also considered the potential deterioration in the value of the Company
based on the disruption and uncertainty of a prolonged sale process.
- Effects of Significant Stockholder. The Special Committee and Board of
Directors also considered the fact that Mario J. Gabelli and certain of
his affiliated entities (the "Gabelli Group") control nearly 50% of the
Shares. Prior to the execution of the River Merger Agreement, the Special
Committee had been informed by the Buyout Group that Mr. Gabelli had in
the past indicated that he would not oppose a merger transaction at a
fair price, so long as the merger agreement did not preclude a third
party from making a superior acquisition proposal for the Company;
however, there are no assurances that members of the Gabelli Group will
tender their Shares in the Offer. The Special Committee and Board of
Directors also considered the risks associated with having a large block
of stock held by members of the Gabelli Group, including the risks that
members of the Gabelli Group could effectively veto corporate
transactions that the Board believed were in the best interests of the
Company and its stockholders, and could sell their Shares -- and
effectively deliver control of the Company -- in a transaction not
approved by the Board of Directors.
- Liquidity of Common Stock. The Special Committee and Board of Directors
also considered the thin trading market and the lack of liquidity of the
Shares and the existence of a large percentage of the Shares in the hands
of a few stockholders. The Special Committee and Board of Directors
believe that the Offer and the GlobeGround Merger will permit the
stockholders of the Company to sell all of their Shares at a fair price,
especially in light of the fact that there exists little liquidity in the
Shares.
- Possible Decline in Market Price of Common Stock. The Special Committee
and Board of Directors also considered the possibility that if the
Company remained as a publicly owned corporation, it is possible that
because of a decline in the market price of the Shares or the stock
market in general, the price that might be received by the holders of the
Company's Shares in the open market or in a future transaction might be
less than the $76.00 per Share price to be received by stockholders in
connection with the Offer and the Merger.
- Regulatory Approvals. The Special Committee and Board of Directors
considered the fact that there are relatively few regulatory approvals
required to consummate the transactions contemplated by the GlobeGround
Merger Agreement, and the favorable prospects for receiving such
approvals.
- Availability of Dissenters' Rights. The Special Committee and Board of
Directors also considered the fact that dissenters' rights of appraisal
will be available to the holders of Shares under Delaware law.
In the light of the number and variety of factors that the Special
Committee and the Board considered in connection with their evaluation of the
Offer and the Merger, neither the Special Committee nor the Board found it
practicable to assign relative weights to the foregoing factors, and,
accordingly, neither the Special Committee nor the Board did so. In addition,
individual members of the Special Committee and the Board may have given
different weights to different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Allen & Company. The Company and Allen & Company are parties to a letter
agreement, dated February 16, 1988, as most recently amended on July 1, 1998
(the "Engagement Letter"). The Engagement Letter provides that the Company pay
Allen & Company a fee of two percent of the consideration (as defined below) if
a sale involving the Company occurs on or before December 31, 1999 or within six
months of the
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date of the expiration of the Engagement Letter if the Company is sold to
certain parties. Upon the consummation of the transactions contemplated by the
GlobeGround Merger Agreement, the Company will pay Allen & Company a fee which
will be approximately $1,600,000.
The Engagement Letter defines "consideration" as the sum of the following
received by the Company, its stockholders or holders of options and warrants to
acquire Shares: (i) the cash, market value of marketable securities or
interests, and fair market value of unmarketable equity securities or interests
received from an acquiring party, plus (ii) the face amount of straight and
convertible debt instruments or obligations issued or issuable from an acquiring
party, less (iii) the lesser of (A) the sum of (x) the cash ultimately received
by the Company from LAGS (USA) as a result of the transaction consummated
pursuant to the Purchase Agreement between the Company and GlobeGround on June
1, 1996, and (y) the cash and any preferred interest in Hudson LLC received by
the Company as a result of the exercise by LAGS (USA) of the LAGS Option,
reduced by any extraordinary cash distribution made by the Company to the
Company's stockholders after July 1, 1998 to the day the sale of the Company is
completed, or (B) the sum of (x) cash and cash equivalents, (y) short term
advances to Hudson LLC and (z) any preferred interest in Hudson LLC, as such
amounts in subclauses (x), (y) and (z) of clause (B) are included in the
Company's balance sheet on the day the sale of the Company is completed.
The Engagement Letter provides that in the event the Company engages in a
transaction which results in the directors and executive officers of the Company
owning a majority of Shares, then Allen & Company will not be entitled to any
fee or compensation related to the sale of any Shares which (i) are beneficially
owned by the directors and executive officers of the Company or members of their
families and (ii) are not acquired by or transferred to the Company or another
entity either (x) on the same basis and at the same time as Shares held by the
Company's public stockholders or (y) within one year following the consummation
of the transaction in which Shares held by the public stockholders of the
Company were acquired.
The Engagement Letter also provides that the Company will reimburse Allen &
Company for its out-of-pocket expenses and will indemnify Allen & Company and
its affiliates from and against certain liabilities.
In November 1998, in connection with the exercise by LAGS (USA) of the LAGS
Option, Allen & Company received a fee from the Company of $593,000.
Allen & Company has in the past rendered other financial advisory services
to the Company for which it has received customary compensation. In addition,
Stanley S. Shuman, a Managing Director of Allen & Company, also serves as a
director of the Company.
The Special Committee. Each of the members of the Special Committee was
authorized to receive $7,500 for service on the Special Committee by the Board
of Directors on July 24, 1998. On February 5, 1999, the Board of Directors
authorized an increase in the fees paid to each member of the Special Committee
by an additional $5,000, with the Chairman of the Special Committee receiving an
additional $2,500 for serving in such capacity.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the extent currently known to the Company, no transactions in the
Shares have been effected during the past 60 days by the Company or, to the best
of the Company's knowledge, by any executive officer, director, affiliate or
subsidiary of the Company.
(b) To the extent currently known to the Company, each executive officer,
director, affiliate or subsidiary of the Company currently intends to tender,
pursuant to the Offer, all Shares which are held of record or beneficially owned
by such person (other than Options which are subject to cash-out pursuant to the
GlobeGround Merger Agreement).
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ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiations in response to the Offer that relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization, involving
the Company or any subsidiary of the Company; (ii) a purchase, sale or transfer
of a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or dividend
policy of the Company.
Notwithstanding the foregoing, the Board of Directors could in the future
engage in negotiations that could have one of the effects specified in the
preceding paragraph, and the Board of Directors has determined that disclosure
with respect to the parties to, and the possible terms of, any transactions or
proposals of the type referred to in the preceding paragraph might jeopardize
any discussions or negotiations that the Company might conduct. Accordingly, the
Board of Directors has adopted a resolution instructing management not to
disclose the possible terms of any such transactions or proposals, or the
parties thereto, unless and until an agreement in principle relating thereto has
been reached or, upon the advice of counsel, as may be required by law.
(b) Except as described in Items 3(b), 4 and 8 of this Schedule 14D-9 (the
provisions of which are hereby incorporated herein by reference), there are no
transactions, board resolutions, agreements in principle or signed contracts in
response to the Offer that relate to or would result in one or more of the
matters referred to in Item 7(a).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Litigation Relating to the Management Buyout
On November 24, 1998, two purported class action lawsuits, each by a
stockholder of the Company against the Company and each of the Company's
directors, were filed in the Court of Chancery of the State of Delaware in and
for New Castle County, under the captions Harbor Finance Partners v. Dresner,
C.A. No. 16804, and Weiner v. Langner, C.A. No. 16805, and on November 30, 1998,
an additional purported class action lawsuit was filed by two stockholders of
the Company against the Company and each of the Company's directors, in the
Court of Chancery of the State of Delaware in and for New Castle County, under
the caption Soshtain v. Langner, C.A. No. 16414 NC (collectively, the
"Complaints"). The Complaints, which are substantially similar to each other,
allege, among other things, that: (i) the $57.25 per Share price offered by the
Buyout Group is inadequate and provides value substantially below the fair value
of the Company, (ii) the directors of the Company violated their fiduciary
duties to the stockholders of the Company, and (iii) the River Merger Agreement
was not the result of arm's-length negotiations. The Complaints seek, among
other things, an order: (i) certifying that the lawsuits may be maintained as
class actions on behalf of all holders of the Shares, excluding the defendants
and those affiliated with the defendants, (ii) preliminarily and permanently
enjoining the Company from proceeding with the River Merger (as defined below),
(iii) rescinding the River Merger, in the event the River Merger is consummated,
(iv) awarding compensatory damages to the members of the purported class in an
amount to be determined at trial, and (v) awarding the named plaintiffs their
costs, including counsel fees and expert fees. On December 28, 1998, the
Complaints were consolidated for all purposes, under the caption In Re Hudson
General Corporation Shareholders Litigation, Consolidated C.A. No. 16804 (the
"Consolidated Complaint"). On January 19, 1999, the Company and the defendant
directors filed an Answer denying the Claims contained in the Consolidated
Complaint. The Company and the defendant directors believe the Complaints are
without merit because, among other things, the Special Committee has taken
actions to maximize shareholder value and there exist sufficient procedural
safeguards, such as the Special Committee's independence and the receipt of a
fairness opinion from Allen & Company, to ensure the fairness of the
transactions entered into by the Company. The Company and the defendant
directors intend to defend the lawsuits vigorously. The foregoing description is
qualified in its entirety by reference to the full text of the Complaints and
the Answer to the
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Consolidated Complaint which are filed herewith as Exhibits 2, 3, 4, and 5 and
are hereby incorporated by reference in their entirety.
Change in Control Provisions in Bank Debt and Other Agreements
The Company and its affiliate, Hudson LLC, may be deemed to be in default
of certain financing agreements and certain operating permits upon the change in
control of the Company resulting from the transactions contemplated by the
GlobeGround Merger Agreement.
River Merger Agreement
General. As described under "Item 4. The Solicitation or
Recommendation. -- Background; Reasons for the Board's and Special Committee's
Recommendation," the Company has entered into the River Merger Agreement with
River Acquisition. Pursuant to the River Merger Agreement, as amended, River
Acquisition would be merged with and into the Company (the "River Merger"), the
separate corporate existence of River Acquisition would cease, and the Company
would continue as the surviving corporation. In the River Merger, each Share
(other than Shares held (i) in the treasury of the Company or by any of its
wholly-owned subsidiaries, (ii) by River Acquisition or (iii) by dissenting
stockholders) would, by virtue of the River Merger and without any action on the
part of the holder thereof, be converted into the right to receive $61.00 per
Share.
Waiver of Termination Rights by River Acquisition. On February 15, 1999,
the Company entered into a Waiver Agreement (the "Waiver Agreement") with River
Acquisition, pursuant to which River Acquisition has waived, until March 17,
1999, its right to terminate the River Merger Agreement, by reason of the
Company entering into the GlobeGround Merger Agreement. The River Merger
Agreement remains in effect at the present time, although the Company currently
intends to terminate the River Merger Agreement following approval of the
GlobeGround Merger Agreement by the Lufthansa Supervisory Board.
Pursuant to the GlobeGround Merger Agreement, Purchaser has agreed that so
long as the River Merger Agreement remains in effect, nothing contained in the
GlobeGround Merger Agreement will prohibit or limit the rights and obligations
of the Company to take any required actions under the River Merger Agreement as
in effect on the date of the GlobeGround Merger Agreement, and such actions will
not constitute a breach under the GlobeGround Merger Agreement.
Conditions. The respective obligations of River Acquisition and the
Company to consummate the River Merger are subject to the following conditions,
among others: (i) the approval and adoption of the River Merger Agreement by the
affirmative vote of the holders of a majority of all outstanding Shares and a
majority of all outstanding Shares not owned by River Acquisition and the
members of the Buyout Group and (ii) the absence of any governmental action or
order which materially restricts, prevents or prohibits consummation of the
River Merger.
The obligations of River Acquisition to effect the River Merger are subject
to the following additional conditions: (i) the representations and warranties
of the Company in the River Merger Agreement being true and correct in all
material respects, in each case as of the effective time of the River Merger
(the "River Effective Time") as though made on and as of the River Effective
Time, except where the failure to be true and correct, individually or in the
aggregate with all such other failures, would not have a material adverse effect
on the Company; (ii) the Company having performed or complied in all material
respects with agreements and covenants required by the River Merger Agreement to
be performed or complied with prior to the River Effective Time; (iii) River
Acquisition having obtained the financing under the commitment letter entered
into by River Acquisition with a group of banks (the "Commitment Letter"); (iv)
dissenting stockholders not representing more than 7.5% of the outstanding
Shares; and (v) since November 22, 1998, the absence of any event or events
that, individually or in the aggregate, could be expected to have a material
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adverse effect on the Company, excluding the effects of changes that are
applicable to (A) the United States and Canada aviation services business
generally, (B) the United States and Canadian economy generally or (C) the
United States securities markets generally.
The obligations of the Company to effect the River Merger are also subject
to the additional condition that all the covenants in the River Merger Agreement
to be complied with or performed by River Acquisition will have been complied
with and performed in all material respects prior to the River Effective Time
and the representations and warranties of River Acquisition will, if qualified
by materiality, be true and correct and, if not so qualified, be true and
correct in all material respects, in each case as of the River Effective Time as
if made on and as of the River Effective Time.
No Solicitation. The River Merger Agreement provides that the Company
shall not, and shall not authorize or permit any of its officers, directors,
employees or agents to directly or indirectly solicit, encourage, participate in
or initiate discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than River
Acquisition, any of its affiliates or representatives) (collectively, a
"Person") concerning any merger, consolidation, tender offer, exchange offer,
sale of all or substantially all of the Company's assets, sale of shares of
capital stock or similar business combination transaction involving the Company
or any principal operating or business unit of the Company or its subsidiaries
(an "Acquisition Proposal"). If, however, the Company or the Special Committee
receives an unsolicited, written indication of a willingness to make an
Acquisition Proposal at a price per Share which the Special Committee reasonably
concludes is in excess of $61.00 per Share from any Person, and if the Special
Committee reasonably concludes, based upon advice of its financial advisor, that
the Person delivering such indication is capable of consummating such an
Acquisition Proposal (based upon, among other things, the availability of
financing and the capacity to obtain financing) then the Company or the Special
Committee may, directly or indirectly, provide access to or furnish or cause to
be furnished information concerning the Company's business, properties or assets
to any such Person pursuant to an appropriate confidentiality agreement, and the
Company or the Special Committee may engage in discussions related thereto. In
addition, the Company or the Special Committee may participate in and engage in
discussions and negotiations with any Person meeting the requirements in the
preceding sentence in response to a written Acquisition Proposal, if the Special
Committee concludes, upon advice of its legal counsel, that the failure to
engage in such discussions or negotiations would be inconsistent with the
Special Committee's (and the Board's) fiduciary duties to the Company's
stockholders under applicable law. If after the Company has received a written
Acquisition Proposal (without breaching the foregoing obligations of the
Company) but prior to obtaining the required stockholder approval of the River
Merger, the Special Committee determines, in good faith and upon advice of its
financial advisor and legal counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's stockholders under applicable
law, the Special Committee may do any or all of the following: (x) withdraw or
modify the Board of Directors' approval or recommendation of the River Merger or
the River Merger Agreement, (y) approve or recommend an Acquisition Proposal and
(z) terminate the River Merger Agreement. Furthermore, notwithstanding the
foregoing, the Company or its Board of Directors may, upon the recommendation of
the Special Committee, take and disclose to the Company's stockholders a
position with respect to a tender or exchange offer by a third party or make
such disclosure to the Company's stockholders or otherwise which, in the
judgment of the Special Committee upon advice of legal counsel, is necessary
under applicable law or rules of any stock exchange.
Pursuant to the River Merger Agreement, the Company is required to promptly
(but in any event within two days) advise River Acquisition in writing of any
Acquisition Proposal or any inquiry regarding the making of an Acquisition
Proposal including any request for information, the material terms and
conditions of such request, Acquisition Proposal or inquiry and the identity of
the Person making such request, Acquisition Proposal or inquiry. The Company is
also required, to the extent reasonably practicable, to keep River Acquisition
fully informed of the status and details (including amendments or proposed
amendments) of any such request, Acquisition Proposal or inquiry.
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See "Item 3. Identity and Background. -- Arrangements with Purchaser or its
Affiliates -- The Merger Agreement -- No Solicitation; Fiduciary Obligations of
Directors" for a description of additional restrictions on the Company's ability
to solicit Acquisition Proposals contained the GlobeGround Merger Agreement.
Fees and Expenses. Whether or not the River Merger is consummated and
except as otherwise provided in the River Merger Agreement, all fees and
expenses incurred in connection with the River Merger will be paid by the party
incurring such fees and expenses, except that the Company will pay for all costs
and expenses relating to the printing and mailing of any proxy statement
pursuant to the River Merger Agreement. The Company will pay River Acquisition
its costs and expenses incurred in connection with the River Merger, including
any fees or expenses payable pursuant to the Commitment Letter, upon the
termination of the River Merger Agreement, up to a maximum of (i) $1,750,000 if
the River Merger Agreement is terminated (a) by River Acquisition because the
Board (acting through the Special Committee) withdraws, modifies or changes its
recommendation so that it is not in favor of the River Merger Agreement or the
River Merger; (b) by River Acquisition because the Board (acting through the
Special Committee) decides to recommend an alternative Acquisition Proposal to
the Company's stockholders; or (c) by the Company (acting through the Special
Committee), in order for the Special Committee to comply with its fiduciary
duties to the Company's stockholders in connection with an alternative
Acquisition Proposal; or (ii) $875,000 if the stockholders of the Company do not
vote to approve and adopt the River Merger Agreement and the transactions
contemplated thereby by April 30, 1999. In the event that the Company or River
Acquisition terminates the River Merger Agreement by reason of the Company
entering into the GlobeGround Merger Agreement, the Company will be obligated to
pay River Acquisition its costs and expenses up to a maximum of $1,750,000.
In the event that the financing contemplated by the Commitment Letter does
not close on or prior to April 30, 1999 and River Acquisition receives the
foregoing expense and fee reimbursement from the Company, River Acquisition will
be required to pay the initial lenders under its proposed financing arrangements
fees aggregating $150,000. In addition, River Acquisition will pay Lazard Freres
& Co. LLC, financial advisor to certain members of the Buyout Group, a fee of
$250,000 out of any reimbursement amounts received from the Company, provided
that, if such reimbursement payment is less than $1 million, the fee payable to
Lazard Freres will be reduced to $125,000.
See "Item 3. Identity and Background. -- Arrangements with Purchaser or its
Affiliates -- The Merger Agreement -- Fees and Expenses; Termination Fee" for a
description of additional fees and expense reimbursement payable by the Company
upon termination of the GlobeGround Merger Agreement under certain
circumstances.
The foregoing description of the River Merger Agreement and Amendment No. 1
thereto are qualified in their entirety by reference to the full text of the
River Merger Agreement and Amendment No. 1 thereto which are filed herewith as
Exhibits 6 and 7 and are incorporated herein by reference in their entirety.
Third Party Confidentiality Agreements.
The following is a summary of certain provisions of (i) the confidentiality
agreement, dated December 24, 1998, between the Company and Ranger (the "Ranger
Confidentiality Agreement") and (ii) the confidentiality agreement, dated
February 11, 1999, between the Company and Ogden (the "Ogden Confidentiality
Agreement" and together with the Ranger Confidentiality Agreement, the "Third
Party Confidentiality Agreements"), which are substantially similar to each
other.
The Third Party Confidentiality Agreements contain customary provisions
pursuant to which, among other matters, the Company agreed to provide
representatives of Ranger and Ogden, certain confidential, non-public
information (the "Confidential Information") concerning the Company and such
parties agreed to keep such information confidential and to use the Confidential
Information solely for the purpose of evaluating a possible transaction
involving the Company and Ranger or Ogden, respectively, and such Confidential
Information will not be used in any way detrimental to the Company.
31
<PAGE> 33
Ranger and Ogden each agreed that prior to the consummation of a potential
transaction with such party, without the prior written consent of the Company,
neither such party nor their affiliates will (i) initiate, engage or participate
in any discussions or negotiations or enter into any agreement regarding the
sale of any assets or securities of the Company or any of its subsidiaries,
except for agreements with bona fide financial institutions providing financing
for a potential transaction which requires sales of certain assets to third
parties prior to a certain time, or (ii) prior to June 30, 1999, acquire or seek
to acquire, or otherwise become or seek to become the beneficial owner of, any
securities of the Company. Notwithstanding the foregoing, each of Ranger and
Ogden is permitted to acquire or seek to acquire all outstanding Shares pursuant
to a tender offer for all outstanding Shares at a price in excess of the amount
per Share offered or proposed by any other party in any merger, tender offer or
similar transaction approved by the Company's Board of Directors prior to the
commencement of such cash tender offer by either Ranger or Ogden.
In addition, the Third Party Confidentiality Agreements provide, generally,
that none of Ranger, Ogden or any of their representatives will solicit for hire
or employment or hire any person presently employed by the Company or any of its
subsidiaries prior to the earlier of (i) eighteen months from the date of the
respective Third Party Confidentiality Agreements or (ii) the consummation of a
potential transaction with either Ranger or Ogden.
Waiver Agreement
The following is a summary of certain provisions of the Waiver Agreement.
The summary does not purport to be complete and is qualified in its entirety by
reference to the complete text of the Waiver Agreement which is filed as Exhibit
8 hereto, and is incorporated herein by reference in its entirety.
Pursuant to the terms of the Waiver Agreement, River Acquisition waived,
until March 17, 1999, its rights to terminate the River Merger Agreement arising
out of (i) the Company entering into the GlobeGround Merger Agreement, (ii) a
recommendation made by the Board of Directors or the Special Committee in
support or favor of the GlobeGround Merger Agreement, (iii) any withdrawal ,
modification or change by the Board of Directors or the Special Committee so
that the Board of Directors or the Special Committee is not in favor of the
River Merger Agreement, or (iv) any other actions taken by the Board of
Directors or the Special Committee in support or furtherance of the GlobeGround
Merger Agreement. Effective March 17, 1999, all rights which River Acquisition
may have had to terminate the River Merger Agreement and which were waived will
be reinstated and be in full force and effect if, and only if, as of such date,
the GlobeGround Merger Agreement has not been terminated. The terms of the
Waiver Agreement do not in any way limit or restrict the Company's right or
ability to at any time terminate the River Merger Agreement.
Short Form Merger
Under the DGCL, if Purchaser acquires pursuant to the Offer or otherwise,
at least 90% of the outstanding Shares, Purchaser will be able to effect the
Merger after consummation of the Offer without a vote of the Company's
stockholders. However, if Purchaser does not acquire at least 90% of the
outstanding Shares pursuant to the Offer or otherwise and a vote of the
Company's stockholders is required under the DGCL, a significantly longer period
of time will be required to effect the Merger.
Certain Projections
In June 1998 in connection with the consideration of a possible management
buyout transaction, the Company's management prepared projections relating to
the Company's future operating performance which included the original
projections prepared with respect to Hudson LLC, the Company's interest in the
Kohala Joint Venture and the exercise by LAGS (USA) of the LAGS Option (the
"Original Projections"). In
32
<PAGE> 34
October 1998, as a result of the management of the Company completing, in the
ordinary course, the preparation of Hudson LLC's operating budget for the fiscal
year ending June 30, 1999, an update of its Original Projections was made for
the fiscal years ending June 30, 1999 through June 30, 2005 (the "Updated
Projections"). The Updated Projections included updated projections prepared
with respect to Hudson LLC. The Company does not as a matter of course make
public forecasts as to future operations and the Original Projections and
Updated Projections set forth below are included in this Schedule 14D-9 only
because such information has been previously disclosed in the public filings
made in connection with the River Merger Agreement.
THE PROJECTED FINANCIAL INFORMATION SET FORTH BELOW NECESSARILY REFLECTS
NUMEROUS ASSUMPTIONS WITH RESPECT TO GENERAL BUSINESS AND ECONOMIC CONDITIONS
AND OTHER MATTERS, MANY OF WHICH ARE INHERENTLY UNCERTAIN OR BEYOND THE
COMPANY'S CONTROL. IT IS NOT POSSIBLE TO PREDICT WHETHER THE ASSUMPTIONS MADE IN
PREPARING THE PROJECTED FINANCIAL INFORMATION WILL BE VALID, AND ACTUAL RESULTS
MAY PROVE TO BE MATERIALLY HIGHER OR LOWER THAN THOSE CONTAINED IN THE
PROJECTIONS. ACCORDINGLY, NONE OF THE COMPANY, PURCHASER OR ANY OF THEIR
RESPECTIVE REPRESENTATIVES OR AFFILIATES CAN PROVIDE ANY ASSURANCE AS TO THE
VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF THE PROJECTED FINANCIAL
INFORMATION, AND THE COMPANY HAS MADE NO REPRESENTATIONS REGARDING SUCH
INFORMATION. THE INCLUSION OF THIS INFORMATION SHOULD NOT BE REGARDED AS AN
INDICATION THAT THE COMPANY, PURCHASER OR ANYONE ELSE WHO RECEIVED THIS
INFORMATION CONSIDERED IT A RELIABLE PREDICTOR OF FUTURE EVENTS, AND THIS
INFORMATION SHOULD NOT BE RELIED ON AS SUCH. SIGNIFICANT ASSUMPTIONS USED IN
DEVELOPING THE PROJECTIONS ARE DISCUSSED FOLLOWING THE TABLES BELOW AND SHOULD
BE CAREFULLY REVIEWED.
Set forth below is a summary of the Original Projections. Except as
specifically referenced in the assumptions set forth below, neither the Original
Projections nor the Updated Projections give effect to the Offer, the Merger or
the River Merger.
<TABLE>
<CAPTION>
YEARS ENDING JUNE 30,
-----------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005
------ ------ ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.......................... $3,797 $4,611 $ 4,806 $ 5,040 $ 5,325 $ 5,647 $ 5,995
------ ------ ------- ------- ------- ------- -------
Operating Costs:
Depreciation and Amortization... 520 450 393 343 304 271 173
Interest........................ 0 0 0 0 0 0 0
Selling, General and
Administrative Costs......... 1,556 1,532 1,502 1,466 1,422 1,372 1,314
------ ------ ------- ------- ------- ------- -------
Total Costs and
Expenses.............. 2,076 1,982 1,895 1,809 1,726 1,643 1,487
------ ------ ------- ------- ------- ------- -------
Company Earnings Before Income
Taxes........................... 1,721 2,629 2,911 3,231 3,599 4,004 4,508
Gain on Disposal of Interest in
Kohala Joint Venture............ 94 0 0 0 0 0 0
Equity in Earnings of Hudson
LLC............................. 6,706 7,270 7,847 8,324 8,839 9,337 9,877
------ ------ ------- ------- ------- ------- -------
Earnings Before Income Taxes...... 8,521 9,899 10,758 11,555 12,438 13,341 14,385
Income Taxes...................... 3,248 3,804 4,141 4,451 4,796 5,149 5,559
------ ------ ------- ------- ------- ------- -------
Net Earnings...................... 5,273 6,095 6,617 7,104 7,642 8,192 8,826
====== ====== ======= ======= ======= ======= =======
Earnings Per Share (Basic)........ $ 2.96 $ 3.42 $ 3.71 $ 3.99 $ 4.29 $ 4.60 $ 4.95
====== ====== ======= ======= ======= ======= =======
</TABLE>
33
<PAGE> 35
The following sets forth the material assumptions used in the preparation
of the Original Projections:
(1) The Original Projections do not reflect financial or accounting effects of
the Offer, the Merger or the River Merger except that the Original
Projections reflected the cost savings referred to in paragraph (6) below in
connection with the River Merger and except that regular dividends are not
included.
(2) The Original Projections use fiscal 1999 estimated results as the base year.
Such fiscal 1999 results were based upon expected actual results for fiscal
1998 and adjusted for known or expected variances between fiscal 1999 and
fiscal 1998. Expected actual results for fiscal 1998 were determined based
upon actual results for the eight months ended February 28, 1998 and
anticipated results for the four months ending June 30, 1998.
(3) The Original Projections assume that the United States and Canadian aviation
services business of Hudson LLC will experience revenue growth of 5% and 3%
per annum, respectively, in the years subsequent to fiscal 1999. The
Original Projections also assume a modest improvement in operating margins
of the Aviation Services Business of Hudson LLC and a normal level of
capital expenditures.
(4) For purposes of the Original Projections it was assumed that the Company
would dispose of its interest in the Kohala Joint Venture in Hawaii for a
cash price of $5.0 million on July 1, 1998, and accordingly, the Original
Projections do not reflect any operating results of the Kohala Joint Venture
for fiscal 1999, but do reflect a net gain of approximately $94,000 in
fiscal 1999.
(5) The Original Projections assume that LAGS (USA) exercises the LAGS Option
during fiscal 1999 for a cash exercise price (net of taxes) of approximately
$17.2 million.
(6) The Original Projections assume an increase in Selling, General and
Administrative Costs of 3% annually, which are reduced by $1.0 million for
each year of the Original Projections representing $250,000 of savings
anticipated by virtue of the Company not being publicly held and $750,000
related to reductions in senior executive cash compensation if the River
Merger is consummated. The Original Projections reflected such $1.0 million
of cost savings since they were prepared primarily for the purpose of
providing lending sources with projections in connection with a possible
management buyout transaction. In connection with its financial analysis of
the Company, Allen & Company did not take into account such cost savings
reflected in the Original Projections. The Original Projections also assume
an investment interest return of 5.5% per annum. In addition, the overhead
fee charged by the Company to Hudson LLC is included as a reduction to
Selling, General and Administrative Costs rather than as Revenues, and
interest income is included in Revenues.
(7) The Original Projections assume that Hudson LLC will pay annual
distributions to its members equal to the sum of 90% of its domestic net
income and 60% of its Canadian pre-tax earnings.
In October 1998, the Company's management, as a result of Hudson LLC's
normal annual budgeting and planning process, completed the preparation of the
Updated Projections. The Updated Projections, among other things, showed lower
results for the aviation services business than the Original Projections due to
increased labor costs in Hudson LLC's operations at certain locations, the loss
of certain contracts and increased competitive pricing pressures in Hudson LLC's
business, which lower results are reflected in the line item of "Equity in
Earnings of Hudson LLC." Allen & Company reviewed the Updated Projections in
preparing its financial presentation to the Special Committee and the Board. Set
forth below is a summary of the Updated Projections.
34
<PAGE> 36
<TABLE>
<CAPTION>
YEARS ENDING JUNE 30,
----------------------------------------------------------------
1999 2000 2001 2002 2003 2004 2005
------- ------ ------ ------ ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues........................... $ 3,828 $4,649 $4,794 $5,193 $ 5,648 $ 5,924 $ 6,224
------- ------ ------ ------ ------- ------- -------
Operating Costs:
Depreciation and Amortization.... 520 450 393 343 304 271 173
Interest......................... 0 0 0 0 0 0 0
Selling, General and
Administrative Costs.......... 2,556 2,532 2,502 2,466 2,422 2,372 2,314
------- ------ ------ ------ ------- ------- -------
Total Costs and
Expenses............... 3,076 2,982 2,895 2,809 2,726 2,643 2,487
------- ------ ------ ------ ------- ------- -------
Company Earnings Before Income
Taxes............................ 752 1,667 1,899 2,384 2,922 3,281 3,737
Loss on Disposal of Interest in
Kohala Joint Venture............. (3,906) 0 0 0 0 0 0
Equity in Earnings of Hudson LLC... 5,967 6,471 7,006 7,444 7,910 8,353 8,833
------- ------ ------ ------ ------- ------- -------
Earnings Before Income Taxes....... 2,813 8,138 8,905 9,828 10,832 11,634 12,570
Income Taxes....................... 856 3,066 3,364 3,727 4,122 4,433 4,799
------- ------ ------ ------ ------- ------- -------
Net Earnings....................... 1,957 5,072 5,541 6,101 6,710 7,201 7,771
======= ====== ====== ====== ======= ======= =======
Earnings Per Share (Basic)......... $ 1.10 $ 2.85 $ 3.11 $ 3.42 $ 3.77 $ 4.04 $ 4.36
======= ====== ====== ====== ======= ======= =======
</TABLE>
The following sets forth the material assumptions used in the preparation of the
Updated Projections:
(1) The Updated Projections do not reflect financial or accounting effects of
the Offer, the Merger or the River Merger except that regular dividends are
not included.
(2) The Updated Projections use fiscal 1999 estimated results as the base year.
Such fiscal 1999 results were developed during the normal annual budget
process.
(3) The Updated Projections assume that the United States and Canadian aviation
services business of Hudson LLC will experience revenue growth of 5% and 3%
per annum, respectively, in the years subsequent to fiscal 1999. The Updated
Projections also assume a modest improvement in operating margins of the
Aviation Services Business of Hudson LLC and a normal level of capital
expenditures.
(4) For purposes of the Updated Projections it was assumed that the Company
would dispose of its interest in the Kohala Joint Venture in Hawaii for a
cash price of $1.0 million on July 1, 1998, and accordingly, the Updated
Projections do not reflect any operating results for fiscal 1999, but do
reflect a net loss of approximately $3.9 million in fiscal 1999. The Updated
Projections were prepared primarily for the purpose of providing lending
sources with projections in connection with a management buyout transaction.
As such, the assumptions made related to Hawaii did not reflect what the
Company's expectation of the net realizable value of Hawaii would be, but
rather on a worst case liquidation basis to assist in setting financial
covenants required under arrangements to be entered into to finance a
potential management buyout of the Company. The Company is holding the
property on a held for use basis and has no current plans to hold the
property for sale on a liquidation basis. The Updated Projections assumed
(as did the Original Projections) a July 1998 sale date to simplify the
process of preparing the projections.
(5) The Updated Projections assume that LAGS (USA) exercises the LAGS Option
during fiscal 1999. The exercise price of approximately $29.6 million is
paid to Hudson LLC and the Company receives Preferred Units in Hudson LLC
with an aggregate value of $29.6 million. The Updated Projections also
assume
35
<PAGE> 37
that the Preferred Units will be redeemed at full value during fiscal 2002. LAGS
(USA) controls the redemption of the Preferred Units and therefore such
redemption cannot be assured. Such Preferred Units are assumed to receive a
fixed distribution of 4% per annum.
(6) The Updated Projections assume an increase in Selling, General and
Administrative Costs of 3% annually and assume an investment interest return
of 5.5% per annum. In addition, the overhead fee charged by the Company to
Hudson LLC is included as a reduction to Selling, General and Administrative
Costs rather than as Revenues, and interest income is included as Revenues.
In contrast to the Original Projections, Selling, General and Administrative
Costs in the Updated Projections are not reduced by $1.0 million for each
year of the projections, representing $250,000 of savings anticipated by
virtue of the Company not being publicly held and $750,000 related to
reductions in senior executive cash compensation if the River Merger is
consummated.
(7) The Updated Projections assume that Hudson LLC will pay annual distributions
to its members equal to the sum of 90% of its domestic net income and 60% of
its Canadian pre-tax earnings.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1. -- Agreement and Plan of Merger, dated as of February 15, 1999,
between Hudson General Corporation and GLGR Acquisition
Corp.
2. -- Complaint filed on November 24, 1998 against Milton H.
Dresner et al. by Harbor Finance Partners in the Delaware
Chancery Court and subsequently redesignated as In Re Hudson
General Corporation Shareholder Litigation.
3. -- Complaint filed on November 24, 1998 against Jay B. Langner
et al. by Robert Weiner in the Delaware Chancery Court.
4. -- Complaint filed on November 30, 1998 against Jay B. Langner
et al. by Miriam Soshtain and Harriet Rand in the Delaware
Chancery Court.
5. -- Answer to the Consolidated Complaint entitled In Re Hudson
General Corporation Shareholders Litigation filed in the
Delaware Chancery Court on January 19, 1999.
6. -- Agreement and Plan of Merger, dated as of November 22, 1998,
between Hudson General Corporation and River Acquisition
Corp. (incorporated by reference to Exhibit 2.1 to Hudson
General Corporation's Form 8-K, dated November 23, 1998).
7. -- Amendment No. 1 to Agreement and Plan of Merger, dated as of
February 9, 1999, amending the Agreement and Plan of Merger,
dated as of November 22, 1998, between Hudson General
Corporation and River Acquisition Corp. (incorporated by
reference to Exhibit 2.1 to Hudson General Corporation's
Form 8-K, dated February 9, 1999).
8. -- Waiver Agreement, dated February 15, 1999, between Hudson
General Corporation and River Acquisition Corp.
(incorporated by reference to Exhibit 2.2 to Hudson General
Corporation's Form 8-K, dated February 15, 1999).
9. -- Unit Purchase and Option Agreement, dated February 27, 1996,
between Hudson General Corporation and Lufthansa Airport and
Ground Services GmbH (currently known as GlobeGround GmbH)
(incorporated by reference to Exhibit 99.1 to Hudson General
Corporation's Form 8-K, dated March 6, 1996).
10. -- First Amendment to the Unit Purchase and Option Agreement
dated February 27, 1996 between Hudson General Corporation
and Lufthansa Airport and Ground Services GmbH (currently
known as GlobeGround GmbH), dated as of December 12, 1996
(incorporated by reference to Exhibit 10.10(c) to Hudson
General Corporation's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1996).
11. -- Limited Liability Company Agreement dated May 31, 1996,
effective as of June 1, 1996, among Hudson General
Corporation, LAGS (USA) Inc. and Hudson General LLC
(incorporated by reference to Exhibit 99.3 to Hudson General
Corporation's Form 8-K dated May 31, 1996).
</TABLE>
36
<PAGE> 38
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
12. -- Third Amendment to the Limited Liability Company Agreement
dated May 31, 1996, effective as of June 1, 1996, among
Hudson General Corporation, LAGS (USA) Inc. and Hudson
General LLC dated as of December 12, 1996, (incorporated by
reference to Exhibit 10.10(d) to Hudson General
Corporation's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1996).
13. -- Fifth Amendment to the Limited Liability Company Agreement
dated May 31, 1996, effective as of June 1, 1996, among the
Hudson General Corporation, LAGS (USA) Inc. and Hudson
General LLC dated as of September 28, 1998 (incorporated by
reference to Exhibit 10.8(e) to Hudson General Corporation's
Form 8-K, dated October 16, 1998).
14. -- Form of Severance Agreement, dated as of June 3, 1986,
between Hudson General Corporation and Michael Rubin
(incorporated by reference to Exhibit 10.5(a) to Hudson
General Corporation's Annual Report on Form 10-K for the
fiscal year ended June 30, 1988).
15. -- Amendment effective January 23, 1996, amending the Form of
Severance Agreement between Hudson General Corporation and
Michael Rubin, dated as of June 3, 1986 (incorporated by
reference to Exhibit 10.4(c) to Hudson General Corporation's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1996).
16. -- Amendment effective February 6, 1998, amending the form of
Severance Agreement between Hudson General Corporation and
Michael Rubin, dated as of June 3, 1986, as amended
(incorporated by reference to Exhibit 10.4(d) to Hudson
General Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998).
17. -- Employment Agreement, dated July 28, 1988, between Hudson
General Corporation and Jay B. Langner (incorporated by
reference to Exhibit 10.6(a) to Hudson General Corporation's
Annual Report on Form 10-K for the fiscal year ended June
30, 1988).
18. -- Amendment dated April 16, 1990, amending the Employment
Agreement between Hudson General Corporation and Jay B.
Langner, dated as of July 28, 1988 (incorporated by
reference to Exhibit 10.5(b) to Hudson General Corporation's
Annual Report on Form 10-K for the fiscal year ended June
30, 1990).
19. -- Amendment dated August 16, 1994, amending the Employment
Agreement between Hudson General Corporation and Jay B.
Langner, dated as of July 28, 1988, as amended (incorporated
by reference to Exhibit 10.5(c) to Hudson General
Corporation's Annual Report on Form 10-K for the fiscal year
ended June 30, 1994).
20. -- Amendment effective January 23, 1996, amending the
Employment Agreement between Hudson General Corporation and
Jay B. Langner, dated July 28, 1988, as amended
(incorporated by reference to Exhibit 10.5(e) to Hudson
General Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996).
21. -- Amendment effective February 6, 1998, amending the
Employment Agreement between Hudson General Corporation and
Jay B. Langner, dated as of July 28, 1988, as amended
(incorporated by reference to Exhibit 10.5(g) to Hudson
General Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998).
22. -- Severance Agreement, dated April 16, 1990, between Hudson
General Corporation and Jay B. Langner (incorporated by
reference to Exhibit 10.5(f) to Hudson General Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1990).
23. -- Amendment effective January 23, 1996, amending the Severance
Agreement between Hudson General Corporation and Jay B.
Langner, dated April 16, 1990 (incorporated by reference to
Exhibit 10.5(f) to Hudson General Corporation's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996).
24. -- Amendment effective February 6, 1998, amending the Severance
Agreement between Hudson General Corporation and Jay B.
Langner, dated April 16, 1990, as amended (incorporated by
reference to Exhibit 10.5(h) to Hudson General Corporation's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1998).
25. -- Form of Employment Agreement, dated February 8, 1990,
between Hudson General Corporation and Michael Rubin
(incorporated by reference to Exhibit 10.7(a) to Hudson
General Corporation's Annual Report on Form 10-K for the
fiscal year ended June 30, 1990).
</TABLE>
37
<PAGE> 39
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
26. -- Amendment effective January 23, 1996, amending the Form of
Employment Agreement between Hudson General Corporation and
Michael Rubin, dated February 8, 1990 (incorporated by
reference to Exhibit 10.7(c) to Hudson General Corporation's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1996).
27. -- Amendment effective February 6, 1998, amending the Form of
Employment Agreement between Hudson General Corporation and
Michael Rubin, dated February 8, 1990 (incorporated by
reference to Exhibit 10.6(d) to Hudson General Corporation's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1998).
28. -- Amendment effective May 15, 1998, amending the Employment
Agreement between Hudson General Corporation and Michael
Rubin, dated February 8, 1990, as amended (incorporated by
reference to Exhibit 10.6(d) to Hudson General Corporation's
Annual Report on Form 10-K for the fiscal year ended June
30, 1998).
29. -- Description of Executive Incentive Program adopted by the
Compensation Committee of the Board of Directors on December
1, 1993, as amended on May 17, 1996 (incorporated by
reference to Exhibit 10.9 to Hudson General Corporation's
Annual Report on Form 10-K for the fiscal year ended June
30, 1996).
30. -- Letter to Stockholders, dated February 19, 1999.*
31. -- Text of Press Release issued by Hudson General Corporation,
dated February 16, 1999.
32. -- Opinion of Allen & Company Incorporated, dated February 15,
1999.*
</TABLE>
- ---------------
* Included in copies of the Schedule 14D-9 mailed to stockholders.
38
<PAGE> 40
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
HUDSON GENERAL CORPORATION
By: /s/ MICHAEL RUBIN
------------------------------------
Michael Rubin
President
Dated: February 19, 1999
39
<PAGE> 41
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ------- ----------- ------
<C> <C> <S> <C>
1. -- Agreement and Plan of Merger, dated as of February 15, 1999,
between Hudson General Corporation and GLGR Acquisition
Corp........................................................
2. -- Complaint filed on November 24, 1998 against Milton H.
Dresner et al. by Harbor Finance Partners in the Delaware
Chancery Court and subsequently redesignated as In Re Hudson
General Corporation Shareholder Litigation..................
3. -- Complaint filed on November 24, 1998 against Jay B. Langner
et al. by Robert Weiner in the Delaware Chancery Court......
4. -- Complaint filed on November 30, 1998 against Jay B. Langner
et al. by Miriam Soshtain and Harriet Rand in the Delaware
Chancery Court..............................................
5. -- Answer to the Consolidated Complaint entitled In Re Hudson
General Corporation Shareholders Litigation filed in the
Delaware Chancery Court on January 19, 1999.................
6. -- Agreement and Plan of Merger, dated as of November 22, 1998,
between Hudson General Corporation and River Acquisition
Corp. (incorporated by reference to Exhibit 2.1 to Hudson
General Corporation's Form 8-K, dated November 23, 1998)....
7. -- Amendment No. 1 to Agreement and Plan of Merger, dated as of
February 9, 1999, amending the Agreement and Plan of Merger,
dated as of November 22, 1998, between Hudson General
Corporation and River Acquisition Corp. (incorporated by
reference to Exhibit 2.1 to Hudson General Corporation's
Form 8-K, dated February 9, 1999)...........................
8. -- Waiver Agreement, dated February 15, 1999, between Hudson
General Corporation and River Acquisition Corp.
(incorporated by reference to Exhibit 2.2 to Hudson General
Corporation's Form 8-K, dated February 15, 1999)............
9. -- Unit Purchase and Option Agreement, dated February 27, 1996,
between Hudson General Corporation and Lufthansa Airport and
Ground Services GmbH (currently known as GlobeGround GmbH)
(incorporated by reference to Exhibit 99.1 to Hudson General
Corporation's Form 8-K, dated March 6, 1996)................
10. -- First Amendment to the Unit Purchase and Option Agreement
dated February 27, 1996 between Hudson General Corporation
and Lufthansa Airport and Ground Services GmbH (currently
known as GlobeGround GmbH), dated as of December 12, 1996
(incorporated by reference to Exhibit 10.10(c) to Hudson
General Corporation's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1996)............................
11. -- Limited Liability Company Agreement dated May 31, 1996,
effective as of June 1, 1996, among Hudson General
Corporation, LAGS (USA) Inc. and Hudson General LLC
(incorporated by reference to Exhibit 99.3 to Hudson General
Corporation's Form 8-K dated May 31, 1996)..................
12. -- Third Amendment to the Limited Liability Company Agreement
dated May 31, 1996, effective as of June 1, 1996, among
Hudson General Corporation, LAGS (USA) Inc. and Hudson
General LLC dated as of December 12, 1996, (incorporated by
reference to Exhibit 10.10(d) to Hudson General
Corporation's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1996)....................................
13. -- Fifth Amendment to the Limited Liability Company Agreement
dated May 31, 1996, effective as of June 1, 1996, among the
Hudson General Corporation, LAGS (USA) Inc. and Hudson
General LLC dated as of September 28, 1998 (incorporated by
reference to Exhibit 10.8(e) to Hudson General Corporation's
Form 8-K, dated October 16, 1998)...........................
14. -- Form of Severance Agreement, dated as of June 3, 1986,
between Hudson General Corporation and Michael Rubin
(incorporated by reference to Exhibit 10.5(a) to Hudson
General Corporation's Annual Report on Form 10-K for the
fiscal year ended June 30, 1988)............................
15. -- Amendment effective January 23, 1996, amending the Form of
Severance Agreement between Hudson General Corporation and
Michael Rubin, dated as of June 3, 1986 (incorporated by
reference to Exhibit 10.4(c) to Hudson General Corporation's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1996)...................................................
</TABLE>
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<TABLE>
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16. -- Amendment effective February 6, 1998, amending the form of
Severance Agreement between Hudson General Corporation and
Michael Rubin, dated as of June 3, 1986, as amended
(incorporated by reference to Exhibit 10.4(d) to Hudson
General Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998)...............................
17. -- Employment Agreement, dated July 28, 1988, between Hudson
General Corporation and Jay B. Langner (incorporated by
reference to Exhibit 10.6(a) to Hudson General Corporation's
Annual Report on Form 10-K for the fiscal year ended June
30, 1988)...................................................
18. -- Amendment dated April 16, 1990, amending the Employment
Agreement between Hudson General Corporation and Jay B.
Langner, dated as of July 28, 1988 (incorporated by
reference to Exhibit 10.5(b) to Hudson General Corporation's
Annual Report on Form 10-K for the fiscal year ended June
30, 1990)...................................................
19. -- Amendment dated August 16, 1994, amending the Employment
Agreement between Hudson General Corporation and Jay B.
Langner, dated as of July 28, 1988, as amended (incorporated
by reference to Exhibit 10.5(c) to Hudson General
Corporation's Annual Report on Form 10-K for the fiscal year
ended June 30, 1994)........................................
20. -- Amendment effective January 23, 1996, amending the
Employment Agreement between Hudson General Corporation and
Jay B. Langner, dated July 28, 1988, as amended
(incorporated by reference to Exhibit 10.5(e) to Hudson
General Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996)...............................
21. -- Amendment effective February 6, 1998, amending the
Employment Agreement between Hudson General Corporation and
Jay B. Langner, dated as of July 28, 1988, as amended
(incorporated by reference to Exhibit 10.5(g) to Hudson
General Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998)...............................
22. -- Severance Agreement, dated April 16, 1990, between Hudson
General Corporation and Jay B. Langner (incorporated by
reference to Exhibit 10.5(f) to Hudson General Corporation's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1990).......................................................
23. -- Amendment effective January 23, 1996, amending the Severance
Agreement between Hudson General Corporation and Jay B.
Langner, dated April 16, 1990 (incorporated by reference to
Exhibit 10.5(f) to Hudson General Corporation's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1996).......................................................
24. -- Amendment effective February 6, 1998, amending the Severance
Agreement between Hudson General Corporation and Jay B.
Langner, dated April 16, 1990, as amended (incorporated by
reference to Exhibit 10.5(h) to Hudson General Corporation's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1998)...................................................
25. -- Form of Employment Agreement, dated February 8, 1990,
between Hudson General Corporation and Michael Rubin
(incorporated by reference to Exhibit 10.7(a) to Hudson
General Corporation's Annual Report on Form 10-K for the
fiscal year ended June 30, 1990)............................
26. -- Amendment effective January 23, 1996, amending the Form of
Employment Agreement between Hudson General Corporation and
Michael Rubin, dated February 8, 1990 (incorporated by
reference to Exhibit 10.7(c) to Hudson General Corporation's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1996)...................................................
27. -- Amendment effective February 6, 1998, amending the Form of
Employment Agreement between Hudson General Corporation and
Michael Rubin, dated February 8, 1990 (incorporated by
reference to Exhibit 10.6(d) to Hudson General Corporation's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1998)...................................................
28. -- Amendment effective May 15, 1998, amending the Employment
Agreement between Hudson General Corporation and Michael
Rubin, dated February 8, 1990, as amended (incorporated by
reference to Exhibit 10.6(d) to Hudson General Corporation's
Annual Report on Form 10-K for the fiscal year ended June
30, 1998)...................................................
29. -- Description of Executive Incentive Program adopted by the
Compensation Committee of the Board of Directors on December
1, 1993, as amended on May 17, 1996 (incorporated by
reference to Exhibit 10.9 to Hudson General Corporation's
Annual Report on Form 10-K for the fiscal year ended June
30, 1996)...................................................
</TABLE>
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<TABLE>
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30. -- Letter to Stockholders, dated February 19, 1999.*...........
31. -- Text of Press Release issued by Hudson General Corporation,
dated February 16, 1999.....................................
32. -- Opinion of Allen & Company Incorporated, dated February 15,
1999.*......................................................
</TABLE>
- ---------------
* Included in copies of the Schedule 14D-9 mailed to stockholders.
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF FEBRUARY 15, 1999
BETWEEN
HUDSON GENERAL CORPORATION
AND
GLGR ACQUISITION CORP.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I THE TENDER OFFER..................................................... 1
SECTION 1.01. The Tender Offer................................................. 1
SECTION 1.02. Company Action................................................... 2
ARTICLE II THE MERGER........................................................... 3
SECTION 2.01. Agreement to Effect Merger....................................... 3
SECTION 2.02. The Merger....................................................... 3
SECTION 2.03. Effective Time................................................... 3
SECTION 2.04. Effects of the Merger............................................ 4
SECTION 2.05. Certificate of Incorporation..................................... 4
SECTION 2.06. Bylaws........................................................... 4
SECTION 2.07. Directors and Officers........................................... 4
SECTION 2.08. Stockholders Meeting............................................. 4
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES................... 5
SECTION 3.01. Conversion of Securities......................................... 5
SECTION 3.02. Exchange of Certificates and Cash................................ 5
SECTION 3.03. Stock Transfer Books............................................. 7
SECTION 3.04. Stock Options; Payment Rights.................................... 7
SECTION 3.05. Dissenting Shares................................................ 7
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................ 7
SECTION 4.01. Organization and Qualifications; Subsidiaries.................... 7
SECTION 4.02. Certificate of Incorporation and Bylaws.......................... 8
SECTION 4.03. Capitalization................................................... 8
SECTION 4.04. Authority Relative to This Agreement............................. 8
SECTION 4.05. No Conflict; Required Filings and Consents....................... 9
SECTION 4.06. Opinion of Financial Advisor..................................... 9
SECTION 4.07. Board Approval................................................... 10
SECTION 4.08. Brokers.......................................................... 10
SECTION 4.09. SEC Filings...................................................... 10
SECTION 4.10. Schedule 14D-9................................................... 10
SECTION 4.11. Cash and Investment Securities................................... 11
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUISITION........................ 11
SECTION 5.01. Organization and Qualification................................... 11
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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SECTION 5.02. Authority Relative to This Agreement............................. 11
SECTION 5.03. No Conflict; Required Filings and Consents....................... 11
SECTION 5.04. Brokers.......................................................... 12
SECTION 5.05. Financial Capability............................................. 12
SECTION 5.06. Capitalization of Acquisition.................................... 12
SECTION 5.07. Offer Document................................................... 12
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER............................... 13
SECTION 6.01. Conduct of Business by the Company Pending the Merger............ 13
ARTICLE VII ADDITIONAL COVENANTS................................................. 14
SECTION 7.01. Access to Information; Confidentiality........................... 14
SECTION 7.02. Proxy Statement.................................................. 14
SECTION 7.03. Action by Stockholders........................................... 14
SECTION 7.04. No Solicitation.................................................. 15
SECTION 7.05. Directors' and Officers' Insurance and Indemnification........... 16
SECTION 7.06. Further Action; Best Efforts..................................... 17
SECTION 7.07. Public Announcements............................................. 17
SECTION 7.08. Conveyance Taxes................................................. 18
SECTION 7.09. Employee Benefits................................................ 18
SECTION 7.10. Knowledge of Breach.............................................. 18
ARTICLE VIII CLOSING CONDITIONS................................................... 19
SECTION 8.01. Conditions to Obligations of Each Party to Effect the Merger..... 19
SECTION 8.02. Additional Conditions to Obligations of Acquisition.............. 19
SECTION 8.03. Additional Conditions to Obligations of the Company.............. 20
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.................................... 20
SECTION 9.01. Termination...................................................... 20
SECTION 9.02. Effect of Termination............................................ 21
SECTION 9.03. Amendment........................................................ 21
SECTION 9.04. Waiver........................................................... 22
SECTION 9.05. Fees, Expenses and Other Payments................................ 22
ARTICLE X GENERAL PROVISIONS................................................... 22
SECTION 10.01. Effectiveness of Representations, Warranties and Agreements...... 22
SECTION 10.02. Notices.......................................................... 22
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
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SECTION 10.03. Certain Definitions.............................................. 23
SECTION 10.04. Headings......................................................... 24
SECTION 10.05. Severability..................................................... 24
SECTION 10.06. Entire Agreement................................................. 24
SECTION 10.07. Assignment....................................................... 24
SECTION 10.08. Parties in Interest.............................................. 24
SECTION 10.09. Governing Law.................................................... 24
SECTION 10.10. Submission to Jurisdiction; Waivers.............................. 24
SECTION 10.11. Enforcement of this Agreement.................................... 25
SECTION 10.12. Counterparts..................................................... 25
</TABLE>
-iii-
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 15, 1999 (the
"Agreement"), between HUDSON GENERAL CORPORATION, a Delaware corporation (the
"Company"), and GLGR ACQUISITION CORP., a Delaware corporation (the
"Acquisition").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this Agreement
(a) Acquisition will offer (the "Tender Offer") to purchase all the outstanding
common stock, par value $1.00 per share, of the Company ("Common Stock") at a
price per share, net to the seller, in cash of $76.00 per share of Common Stock
(that price, or any greater amount per share Acquisition pays pursuant to the
Tender Offer, being the "Tender Offer Price"), and (b) if Acquisition purchases
the shares which are tendered in response to the Tender Offer, as promptly as
practicable, in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Acquisition will merge with and into the Company in a
transaction (the "Merger") pursuant to which each outstanding share of Common
Stock (other than shares owned by Acquisition) shall be converted into the right
to receive in cash per share of Common Stock an amount equal to the Tender Offer
Price, each as more fully set forth herein;
WHEREAS, the Board of Directors of the Company, based on the unanimous
recommendation of the Special Committee (as defined in Section 1.01(d)), has
determined that the Tender Offer and the Merger are fair to and in the best
interests of the Company and its stockholders and would be more beneficial to
the Company and its stockholders than either the transaction (the "Proposed
Management Transaction") which was the subject of an Agreement and Plan of
Merger dated as of November 22, 1998, as amended on February 9, 1999 (the "River
Acquisition Agreement") or any other proposal to acquire the Company or its
Common Stock which has been received by the Company as of the date hereof, and
has approved this Agreement, Acquisition's purchasing the shares which are
tendered in response to the Tender Offer, the Merger and the other transactions
contemplated hereby and has recommended approval and adoption of this Agreement
by the stockholders of the Company.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE TENDER OFFER
SECTION 1.01. The Tender Offer. (a) Not later than the first business
day after the date of this Agreement, Acquisition will make a public
announcement of the Tender Offer.
(b) Within five business days after Acquisition makes a public
announcement of the Tender Offer, Acquisition will file with the Securities and
Exchange Commission ("SEC") a Tender Offer Statement on Schedule 14D-1 with
respect to the Tender Offer (together with any amendments or supplements, the
"Schedule 14D-1"), including forms of an offer to purchase, a letter of
transmittal and a summary advertisement (the Schedule 14D-1 and the documents
included in it by which the Tender Offer will be made, as they may be
supplemented or amended, being the "Offer Documents") to purchase for cash all
outstanding shares of Common Stock at the Tender Offer Price, subject to there
being validly tendered and not withdrawn prior to the expiration of the Tender
Offer, that number of shares of Common Stock which, together with the Shares
beneficially owned by Acquisition or its affiliates, constitute at least a
majority of the shares of Common Stock outstanding on a fully diluted basis (the
"Minimum
<PAGE> 6
Condition") and to the other conditions set forth in Annex A hereto. Promptly
after that, Acquisition will communicate the Tender Offer to the record holders
and beneficial owners of the Common Stock. Each of Acquisition and the Company
will promptly correct any information provided by it for use in the Offer
Documents if and to the extent that information becomes incomplete or inaccurate
in any material respect, and Acquisition will supplement or amend the Offer
Documents to the extent required by the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations thereunder, file the
amended or supplemented Offer Documents with the SEC and, if required,
disseminate the amended Offer Documents to the Company's stockholders. The
Company and its counsel will be given a reasonable opportunity to review the
Offer Documents and any amendments or supplements to them before they are filed
with the SEC or disseminated to the Company's stockholders.
(c) The day on which the Tender Offer expires (the "Expiration
Date") will not be earlier than 20 business days, and (except as provided in
Section 1.01(d)) will not be later than 30 business days, after the day on which
the Schedule 14D-1 is filed with the SEC.
(d) Subject to the conditions to the Tender Offer set forth on
Annex A and the other conditions set forth in this Agreement, Acquisition will,
promptly after the initial Expiration Date or any permitted extended Expiration
Date, accept for payment and pay for all the shares of Common Stock which are
properly tendered in response to the Tender Offer and not withdrawn. The
obligation of Acquisition to accept for payment and pay for shares which are
properly tendered and not withdrawn will not be subject to any conditions other
than the Minimum Condition (which may not be waived) and those set forth on
Annex A. Acquisition will not, without the consent of the Company acting through
the Special Committee of its Board of Directors (the "Special Committee"), (i)
decrease the Tender Offer Price below that described in the first "Whereas"
clause, (ii) decrease the number of shares being solicited in the Tender Offer,
(iii) change the form of consideration payable in the Tender Offer, or (iv)
modify or add to the conditions set forth on Annex A or otherwise modify the
terms of the Tender Offer set forth in this Agreement. Notwithstanding the
foregoing, Acquisition agrees to extend the Tender Offer for one or more periods
of not more than 10 business days, the last of which will end no later than May
31, 1999, if at the initial expiration date of the Tender Offer, or any
extension thereof, the Minimum Condition or the condition to the Tender Offer
requiring the expiration or termination of any applicable waiting periods under
the HSR Act is not satisfied. If (A) the Tender Offer is modified to increase
the Tender Offer Price or in any other manner permitted by this Agreement,
Acquisition may extend the Expiration Date until not more than 10 business days
after the day on which Acquisition makes a public announcement of the
modification, (B) anyone other than Acquisition makes a tender offer for Common
Stock before the Tender Offer expires, Acquisition may extend the Expiration
Date until not more than 10 business days after the other tender offer expires,
or (C) Acquisition is prevented by an order of a court or other governmental
agency from accepting shares which are tendered in response to the Tender Offer,
Acquisition may extend the Expiration Date until 10 business days after
Acquisition is able to accept shares without violating any order of any court or
other governmental agency.
SECTION 1.02. Company Action. (a) The Company approves of and consents
to the Tender Offer and represents and warrants that its Board of Directors,
based on a recommendation of the Special Committee, has (i) determined that this
Agreement and the transactions contemplated by it are fair to and in the best
interests of the Company and its stockholders, (ii) approved this Agreement and
the transactions contemplated by it, including the Tender Offer and the Merger,
and (iii) resolved to recommend that the Company's stockholders accept the
Tender Offer, tender their shares in response to the Tender Offer, and adopt and
approve this Agreement and the Merger. Simultaneously with the execution of this
Agreement, each of the directors and executive officers of the Company has
indicated to the Company that he or she intends to tender and sell his or her
shares of Common Stock in response to the Tender Offer, except that directors
and executive officers whose sales of their shares in response to the Tender
Offer might result in liability under Section 16(b) of the Exchange Act intend
that if they do
2
<PAGE> 7
not tender and sell their shares in response to the Tender Offer, they will vote
their shares in favor of the Merger. Notwithstanding anything contained in this
subparagraph (a) or elsewhere in this Agreement, if the Board, based on a
recommendation of the Special Committee after consultation with independent
legal counsel, determines, in good faith to withdraw, modify or amend the
recommendation, because the failure to do so could reasonably be expected to be
a breach of the directors' fiduciary duties under applicable law, that
withdrawal, modification or amendment will not constitute a breach of this
Agreement.
(b) The Company will file with the SEC, promptly after
Acquisition files the Schedule 14D-1, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with any amendments or supplements, the "Schedule
14D-9") containing the recommendations described in subparagraph (a) and will
disseminate the Schedule 14D-9 as required by Rule 14d-9 under the Exchange Act.
The Company and Acquisition each agrees to correct promptly any information
provided by it for use in the Schedule 14D-9 if and to the extent that
information is or becomes incomplete or inaccurate in any material respect and
the Company will file any corrected Schedule 14D-9 with the SEC and disseminate
the corrected Schedule 14D-9 to the Company's stockholders to the extent
required by the Exchange Act or the rules and regulations under it.
(c) In connection with the Tender Offer, the Company will
promptly furnish Acquisition with mailing labels, security position listings and
any other available listing or computer files containing the names and addresses
of the record holders or beneficial owners of shares of Common Stock as of a
recent date and the Company will furnish Acquisition with such additional
information and assistance (including, without limitation, updated lists of
stockholders, mailing labels and lists of securities positions) as Acquisition
or its representatives may reasonably request in order to communicate the Tender
Offer to the record holders and beneficial owners of the Common Stock. Subject
to the requirements of applicable law, Acquisition will hold in confidence the
information contained in any such labels, listings or files, and will use that
information only in connection with the Tender Offer and the Merger. If this
Agreement is terminated, Acquisition will return to the Company the originals
and all copies of that information which are in Acquisition's possession.
ARTICLE II
THE MERGER
SECTION 2.01. Agreement to Effect Merger. If (a) Acquisition accepts
and pays for the shares which are properly tendered in response to the Tender
Offer and not withdrawn, and (b) the conditions to the Merger set forth in
Section 8.01 are satisfied or waived, Acquisition will take all steps in its
power, including voting all the Common Stock it beneficially owns or otherwise
has the power to vote in favor of adoption of this Agreement and approval of the
Merger, to cause Acquisition to be merged into the Company on the terms and with
the effects set forth in Sections 2.02 through 2.07.
SECTION 2.02. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, at the Effective
Time (as defined in Section 2.03), Acquisition shall be merged with and into the
Company. Following the Merger, the separate existence of Acquisition shall cease
and the Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
SECTION 2.03. Effective Time. As soon as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII, the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware and by making any related filings required under the
DGCL in connection with the
3
<PAGE> 8
Merger. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Secretary of State of the State of Delaware or at
such later time as is agreed to by the parties hereto and as is specified in the
Certificate of Merger (the "Effective Time" or the "Closing").
SECTION 2.04. Effects of the Merger. From and after the Effective Time,
the Merger shall have the effects set forth in the DGCL (including, without
limitation, Sections 259, 260 and 261 thereof). Without limiting the generality
of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and
Acquisition shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Acquisition shall become the debts, liabilities
and duties of the Surviving Corporation.
SECTION 2.05. Certificate of Incorporation. The certificate of
incorporation of the Company immediately prior to the Effective Time shall be
the certificate of incorporation of the Surviving Corporation (the "Surviving
Certificate") until thereafter amended in accordance with the DGCL.
SECTION 2.06. Bylaws. The bylaws of Acquisition immediately prior to
the Effective Time shall be the bylaws of the Surviving Corporation until
thereafter amended in accordance with the Surviving Certificate and the DGCL.
SECTION 2.07. Directors and Officers. From and after the Effective
Time, until their respective successors are duly elected or appointed and
qualified in accordance with applicable law, (a) the directors of Acquisition at
the Effective Time shall be the directors of the Surviving Corporation and (b)
the officers of the Company at the Effective Time shall be the officers of the
Surviving Corporation.
SECTION 2.08. Stockholders Meeting. (a) If the conditions described in
clauses (a) and (b) of Section 2.01 are satisfied, and if approval by the
Company's stockholders is required by applicable law in order to consummate the
Merger, the Company will:
(i) duly call, serve notice of, convene and hold a
special meeting of its stockholders as soon as practicable following the
Expiration Date for the purpose of adopting this Agreement and approving the
Merger (the "Stockholders Meeting");
(ii) as promptly as practicable after the Expiration
Date, (A) file with the SEC a proxy statement or information statement (together
with any amendments thereof or supplements thereto, the "Proxy Statement") and
other proxy soliciting materials relating to the Stockholders Meeting, (B)
respond promptly to any comments made by the staff of the SEC with respect to
the Proxy Statement or other proxy soliciting materials, (C) cause the Proxy
Statement to be mailed to its stockholders at the earliest practicable time
following the Expiration Date, and (D) in all other respects, use its best
efforts to cause its stockholders to adopt this Agreement and approve the
Merger; and
(iii) include in the Proxy Statement the
recommendation of the Board, based on the unanimous recommendation of the
Special Committee, that the stockholders of the Company vote in favor of the
adoption of this Agreement and approve the Merger, unless the Board, based upon
written advice from its counsel, determines in good faith that the failure to
amend or withdraw that recommendation could reasonably be expected to be a
breach of the directors' fiduciary duties under applicable law.
(b) Notwithstanding the foregoing, in the event that
Acquisition shall acquire at least 90% of the outstanding shares of Common Stock
in the Tender Offer, the parties hereto shall take all necessary actions to
cause the Merger to become effective, as soon as practicable after the
expiration of
4
<PAGE> 9
the Tender Offer, without a meeting of stockholders of Company, in accordance
with Section 253 of the DGCL.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Acquisition, the
Company or the holders of any of the following securities:
(a) Each share of the Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of Common Stock
to be canceled pursuant to Section 3.01(b) and any Dissenting Shares (as defined
below)) shall be converted into the right to receive an amount in cash equal to
the Tender Offer Price, without interest (the "Merger Consideration"). At the
Effective Time, each share of Common Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
certificate previously evidencing any such share (other than shares to be
canceled pursuant to Section 3.01(b) and any Dissenting Shares) shall thereafter
represent only the right to receive, upon the surrender of such certificate in
accordance with the provisions of Section 3.02, an amount in cash per share
equal to the Merger Consideration. The holders of such certificates previously
evidencing such shares of Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of
Common Stock except as otherwise provided herein or by law.
(b) Each share of capital stock of the Company (i) held in the
treasury of the Company or by any wholly owned subsidiary of the Company or (ii)
owned by Acquisition or any of its subsidiaries shall automatically be canceled,
retired and cease to exist without any conversion thereof and no payment shall
be made with respect thereto.
(c) Each share of common stock of Acquisition outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
SECTION 3.02. Exchange of Certificates and Cash. (a) Exchange Agent. At
or before the Effective Time, Acquisition shall enter into an agreement
providing for the matters set forth in this Section 3.02 (the "Exchange Agent
Agreement") with a bank or trust company selected by Acquisition and reasonably
acceptable to the Company (the "Exchange Agent"), authorizing such Exchange
Agent to act as Exchange Agent in connection with the Merger. Immediately prior
to the Effective Time, Acquisition shall deposit or shall cause to be deposited
with or for the account of the Exchange Agent, for the benefit of the holders of
shares of Common Stock (other than Dissenting Shares and shares to be canceled
pursuant to Section 3.01(b)), an amount in cash equal to the Merger
Consideration payable pursuant to Section 3.01(a) (such cash funds are hereafter
referred to as the "Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, Acquisition will instruct the Exchange Agent to mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time evidenced outstanding shares of Common Stock (other
than Dissenting Shares and shares to be canceled pursuant to Section 3.01(b))
(the "Certificates"), (i) a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Acquisition may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the
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Merger Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by
Acquisition, together with a letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions
(collectively, the "Transmittal Documents"), the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each share of Common Stock formerly represented by such Certificate, without any
interest thereon, less any required withholding of taxes, and the Certificate so
surrendered shall thereupon be canceled. In the event of a transfer of ownership
of shares of Common Stock which is not registered in the transfer records of the
Company, the Merger Consideration may be issued and paid in accordance with this
Article III to the transferee of such shares if the Certificate evidencing such
shares of Common Stock is presented to the Exchange Agent and is properly
endorsed or otherwise in proper form for transfer. The signature on the
Certificate or any related stock power must be properly guaranteed and the
person requesting payment of the Merger Consideration must either pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of the Certificate so surrendered or establish to the
Surviving Corporation that such tax has been paid or is not applicable. The
Merger Consideration will be delivered by the Exchange Agent as promptly as
practicable following surrender of a Certificate and the related Transmittal
Documents. Cash payments may be made by check unless otherwise required by a
depositary institution in connection with the book-entry delivery of securities.
No interest will be payable on such Merger Consideration. Until surrendered in
accordance with this Section 3.02, each Certificate shall be deemed at any time
after the Effective Time to evidence only the right to receive, upon such
surrender, the Merger Consideration for each share of Common Stock formerly
represented by such Certificate. The Exchange Fund shall not be used for any
purpose other than as set forth in this Article III. Any interest, dividends or
other income earned on the investment of cash held in the Exchange Fund shall be
for the account of the Surviving Corporation.
(c) Termination of Exchange Fund. Any portion of the Exchange
Fund (including the proceeds of any investments thereof) which remains
undistributed to the holders of Common Stock for one year following the
Effective Time shall be delivered to the Surviving Corporation, upon demand. Any
holders of Common Stock who have not theretofore complied with this Article III
shall thereafter look only to the Surviving Corporation for payment of the
Merger Consideration.
(d) No Liability. None of Acquisition, the Surviving
Corporation or the Company shall be liable to any holder of shares of Common
Stock for any cash delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) Withholding Rights. The Surviving Corporation and the
Exchange Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Common
Stock such amounts as the Surviving Corporation or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment under
the United States Internal Revenue Code of 1986, as amended, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
the Surviving Corporation or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Common Stock in respect of which such deduction and withholding
was made by the Surviving Corporation or the Exchange Agent.
(f) Lost, Stolen or Destroyed Certificates. In the event any
Certificates evidencing shares of Common Stock shall have been lost, stolen or
destroyed, the holder of such lost, stolen or destroyed Certificate(s) shall
execute an affidavit of that fact upon request. The holder of any such lost,
stolen or destroyed Certificate(s) shall also deliver a reasonable indemnity
against any claim that may be made against Acquisition, the Surviving
Corporation or the Exchange Agent with respect to the Certificate(s) alleged to
have been lost, stolen or destroyed. The affidavit and any indemnity which may
be required
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hereunder shall be delivered to the Exchange Agent, who shall be responsible for
making payment for such lost, stolen or destroyed Certificates(s) pursuant to
the terms hereof.
SECTION 3.03. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of shares of Common Stock thereafter on the records of
the Company. Any Certificates presented to the Exchange Agent or the Surviving
Corporation for any reason at or after the Effective Time shall be exchanged for
the Merger Consideration pursuant to the terms hereof.
SECTION 3.04. Stock Options; Payment Rights. (a) Subject to Section
3.04(b), each Option (as defined below) which is outstanding immediately prior
to the Effective Time, whether or not then exercisable, shall be canceled and
the Company Option Plans (as defined below) shall be assumed by the Surviving
Corporation, in each case at and as of the Effective Time, and each holder of
such canceled Options shall be paid by the Surviving Corporation as soon as
practicable, but in any event within five days after the Effective Time, for
each such Option, an amount determined by multiplying (i) the excess, if any, of
the Merger Consideration over the applicable exercise price per share of such
Option by (ii) the number of shares issuable upon exercise of such Option,
subject to any required withholding of taxes.
(b) Prior to the Effective Time, the Company shall use its
best efforts to (i) obtain any consents from holders of the Options and (ii)
make any amendments to the terms of the Company Option Plans and any Options
granted thereunder that, in the case of either (i) or (ii) are necessary or
appropriate to give effect to the transactions contemplated by this Section
3.04.
SECTION 3.05. Dissenting Shares. (a) Notwithstanding any other
provision of this Agreement to the contrary, shares of Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders (i) who shall not have voted in favor of adoption of this Agreement
and (ii) who shall be entitled to and shall have demanded properly in writing
appraisal for such shares in accordance with Section 262 of the DGCL
("Dissenting Shares"), shall not be converted into or represent the right to
receive the Merger Consideration unless such stockholders fail to perfect,
withdraw or otherwise lose their right to appraisal. Such stockholders shall be
entitled to receive payment of the appraised value of such Dissenting Shares in
accordance with the provisions of the DGCL. If, after the Effective Time, any
such stockholder fails to perfect, withdraws or loses its right to appraisal,
such shares of Common Stock shall be treated as if they had been converted as of
the Effective Time into a right to receive the Merger Consideration, without
interest thereon, upon surrender of the Certificate or Certificates that
formerly evidenced such shares of Common Stock in the manner set forth in
Section 3.02.
(b) The Company shall give Acquisition prompt notice of any
demands for appraisal received by it, withdrawals of such demands, and any other
instruments served pursuant to the DGCL and received by the Company and relating
thereto. Acquisition shall direct all negotiations and proceedings with respect
to demands for appraisal under the DGCL. The Company shall not, except with the
prior written consent of Acquisition, make any payment with respect to any
demands for appraisal, or offer to settle, or settle, any such demands.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Acquisition that:
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SECTION 4.01. Organization and Qualifications; Subsidiaries. The
Company and each significant subsidiary of the Company (a "Company Subsidiary")
within the meaning of Rule 1-02(w) of Regulation S-X under the Exchange Act is a
corporation, partnership or other legal entity duly incorporated or organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has the requisite power and authority and all
necessary governmental approvals, to own, lease and operate its properties and
to carry on its business as it is now being conducted, except where the failure
to be so organized, existing and in good standing would not have a Company
Material Adverse Effect (as defined below). The Company and each Company
Subsidiary is duly qualified or licensed and in good standing to do business in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, have a
material adverse effect on the business, assets, results of operations or
financial condition of the Company and the Company Subsidiaries, taken as a
whole (a "Company Material Adverse Effect").
SECTION 4.02. Certificate of Incorporation and Bylaws. Acquisition has
been given access by the Company to a complete and correct copy of the
certificate of incorporation and the bylaws or equivalent organizational
documents, each as amended to the date hereof, of the Company and each Company
Subsidiary. Such certificates of incorporation, bylaws and equivalent
organizational documents are in full force and effect. Neither the Company nor
any Company Subsidiary is in violation of any provision of its certificate of
incorporation, bylaws or equivalent organizational documents.
SECTION 4.03. Capitalization. The authorized capital stock of the
Company consists of 7,000,000 shares of Common Stock and 100,000 shares of
preferred stock, par value $1.00 per share ("Preferred Stock"). As of December
31, 1998, (a) 1,744,949 shares of Common Stock were outstanding, all of which
were validly issued, fully paid and nonassessable; (b) no shares of Preferred
Stock were issued and outstanding and no action had been taken by the Board of
Directors of the Company with respect to the designation of the rights and
preferences of any series of Preferred Stock; (c) 37,100 shares of Common Stock
were reserved for issuance upon the exercise of outstanding stock options (the
"Options") granted pursuant to the Company's 1981 Non-Qualified Stock Option and
Stock Appreciation Rights Plan and 1981 Incentive Stock Option and Stock
Appreciation Rights Plan (collectively, the "Company Option Plans"); (d) 357,311
shares of Common Stock and no shares of Preferred Stock were held in the
treasury of the Company; (e) no Company Subsidiary owns any shares of the
Company's capital stock; and (f) there are no securities of any Company
Subsidiary outstanding which are convertible into or exercisable or exchangeable
for capital stock of the Company. Except as set forth above, no shares of
capital stock or other voting securities of the Company have been issued, are
reserved for issuance or are outstanding. All shares of Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable.
SECTION 4.04. Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than,
with respect to the Merger, the adoption of this Agreement by the holders of a
majority of the aggregate voting power of the issued and outstanding shares of
Common Stock the "Company Stockholder Approval"), and the filing and recordation
of appropriate merger documents as required by, and in accordance with, the
DGCL. This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by
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Acquisition, constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the rights of
creditors generally and by general principles of equity.
SECTION 4.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement and the consummation of the transactions
contemplated hereby will not, (i) conflict with or violate the Company's
Restated Certificate of Incorporation, as amended to the date hereof (the
"Company Charter"), or its by-laws, or the certificate of incorporation, by-laws
or other equivalent organizational documents of any Company Subsidiary, or (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or affected, or (iii)
except as previously disclosed to Acquisition in a letter dated February 15,
1999, result in any breach of or constitute a default (or an event which, with
notice, lapse of time or both, would become a default) under, result in the loss
of a material benefit under or give to others any right of termination,
amendment, acceleration, increased payments or cancellation of, or result in the
creation of a lien or other encumbrance on any properties or assets of the
Company or any subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or any other instrument
or obligation to which the Company or any subsidiary is a party or by which the
Company or any subsidiary, or any of their respective properties or assets, is
bound or affected, except, in the case of clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which (A) would
not prevent or delay consummation of the Merger in any material respect or
otherwise prevent the Company from performing its obligations under this
Agreement in any material respect, and (B) would not, individually or in the
aggregate, have a Company Material Adverse Effect. Without limiting what is said
above, the execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement and the consummation of the transactions
contemplated hereby will not, conflict with or violate the River Acquisition
Agreement or give anybody any rights under the River Acquisition Agreement,
except for rights to terminate the River Acquisition Agreement and rights to
reimbursement of expenses under clause (x) of Section 8.05(b) of the River
Acquisition Agreement.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement and the consummation of
the Merger and the other transactions contemplated hereby by the Company will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, domestic or
foreign (each a "Governmental Entity"), except (i) for (A) any applicable
requirements of the Exchange Act or the Securities Act of 1933, as amended (the
"Securities Act"), (B) the pre-merger notification requirements of the HSR Act,
(C) the filing and recordation of appropriate merger and similar documents as
required by the DGCL, (D) filings under the rules and regulations of the
American Stock Exchange, Inc. and (E) filings and consents under any applicable
foreign laws, including, without limitation, the antitrust laws or laws intended
to prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade and any filings and consents which may be
required by any foreign environmental, health or safety laws or regulations
pertaining to any notification, disclosure or required approval triggered by the
Merger or the transactions contemplated by this Agreement, and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, (x) would not prevent or delay consummation
of the Merger in any material respect or otherwise prevent the Company from
performing its obligations under this Agreement in any material respect, and (y)
would not, individually or in the aggregate, have a Company Material Adverse
Effect.
SECTION 4.06. Opinion of Financial Advisor. Allen & Company
Incorporated has delivered to the Special Committee (as defined below) its
opinion substantially to the effect that, as of the date hereof,
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the consideration to be received by the stockholders of the Company pursuant to
the Tender Offer and the Merger is fair to such stockholders from a financial
point of view.
SECTION 4.07. Board Approval. The Board of Directors of the Company,
based on the unanimous recommendation of the Special Committee, at a meeting
duly called and held and at which a quorum was present and voting, unanimously
(a) determined that this Agreement and the Merger are fair to and in the best
interests of the Company's stockholders, (b) approved this Agreement, the Merger
and the other transactions contemplated hereby, and (c) resolved to recommend
approval and adoption of this Agreement by the Company's stockholders.
SECTION 4.08. Brokers. No broker, finder or investment banker (other
than Allen & Company Incorporated) is entitled to any brokerage, finder's or
other fee or commission in connection with this Agreement, the Merger and the
other transactions contemplated hereby based upon arrangements made by or on
behalf of the Company. The fees of Allen & Company Incorporated with regard to
(i) the Merger (based on a Tender Offer Price and Merger Consideration of $76.00
per share) and the other transactions contemplated hereby, (ii) the transactions
contemplated by the River Acquisition Agreement, and (iii) any other proposed
transactions relating to sale of the Company or substantially all its stock or
assets, will not in total exceed $1,650,000.
SECTION 4.09. SEC Filings.
(a) Since June 30, 1997, the Company has filed with the SEC
all forms, statements, reports and other documents it has been required to file
under the Exchange Act.
(b) The Company's Annual Report on Form 10-K for the year
ended June 30, 1998 (the "1998 10-K") and its Reports on Form 10-Q for the
periods ended September 30, 1998 and December 31, 1998 (the "10-Q's") which were
filed with the SEC, including the documents incorporated by reference in each of
them, each contained all the information required to be included in it and, when
it was filed, did not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made in it, in
light of the circumstances under which they were made, not misleading. Without
limiting what is said in the preceding sentence, the financial statements
included in the 1998 10-K all were prepared, and the financial information
included in the 10-Q's was derived from financial statements which were
prepared, in accordance with United States generally accepted accounting
principles applied on a consistent basis (except that financial information
included in the 10-Q's is subject to normal year end adjustments) and presented
fairly the consolidated financial condition and the consolidated results of
operations of the Company and its subsidiaries at the dates, and for the
periods, to which they relate. At the date of this Agreement, the Company has
not filed any reports with the SEC with regard to any period which ended, or any
event which occurred, after December 31, 1998, except a Current Report on Form
8-K filed on February 10, 1999.
SECTION 4.10. Schedule 14D-9. Neither the Schedule 14D-9 nor any
information supplied by the Company for inclusion in the Offering Documents
will, at the respective times the Schedule 14D-9 and the Schedule 14D-1 are
filed with the SEC and first published, sent or given to the Company's
stockholders, contain a false or misleading statement with respect to any
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. However, the Company
does not make any representations or warranties with respect to information
supplied by Acquisition or any of its affiliates or representatives for
inclusion in the Schedule 14D-9 or with respect to the Offering Documents
(except to the extent of information supplied by the Company for inclusion in
the Offering Documents). The Schedule 14D-9 will comply as to form in all
material respects with the requirements of the Exchange Act and the rules under
it.
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SECTION 4.11. Cash and Investment Securities. At the date of this
Agreement the Company and its subsidiaries (including Hudson General LLC) had,
and at the Effective Time the Company and its subsidiaries will have, cash and
cash equivalents and investment securities available for sale totaling at least
$45,000,000.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
Acquisition hereby makes to the Company the representations and warranties set
forth below:
SECTION 5.01. Organization and Qualification. Acquisition is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted. Acquisition is duly
qualified or licensed and in good standing to do business in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, have a material adverse effect on the
business, results of operations or financial condition of Acquisition and its
subsidiaries, taken as a whole ("Acquisition Material Adverse Effect").
SECTION 5.02. Authority Relative to This Agreement. (a) Acquisition has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Acquisition and the consummation by it of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of
Acquisition and no other corporate proceedings on the part of Acquisition are
necessary to authorize this Agreement or to consummate such transactions (other
than the filing and recordation of appropriate merger documents as required by
the DGCL). This Agreement has been duly and validly executed and delivered by
Acquisition and, assuming the due authorization, execution and delivery by the
Company, constitutes the legal, valid and binding obligation of Acquisition,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the rights of
creditors generally and by general principles of equity.
(b) The transactions which are the subject of this Agreement
have been approved by the Executive Board of Deutsche Lufthansa AG (the
"Lufthansa Executive Board") which includes the senior members of the management
of Deutsche Lufthansa AG, and the Lufthansa Executive Board has recommended to
the Supervisory Board of Deutsche Lufthansa AG (the "Lufthansa Supervisory
Board") that it approve those transactions.
SECTION 5.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Acquisition do not, and the
consummation of the transactions contemplated hereby will not, (i) conflict with
or violate the certificate of incorporation or by-laws of Acquisition, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Acquisition or by which any of its properties or assets are bound
or affected, or (iii) result in any breach of or constitute a default (or an
event which, with notice, lapse of time or both, would become a default) under,
result in the loss of a material benefit under or give to others any right of
termination, amendment, acceleration, increased payments or cancellation of, or
result in the creation of a lien or other encumbrance on any properties or
assets of Acquisition pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or any other instrument
or obligation to which Acquisition is a party or by which Acquisition or any of
its properties or assets is bound or affected, except in the case of clauses
(ii) and
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(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which (x) would not prevent or delay consummation of the Merger in
any material respect or otherwise prevent Acquisition from performing its
obligations under this Agreement in any material respect, or (y) would not,
individually or in the aggregate, have a Acquisition Material Adverse Effect.
(b) The execution and delivery of this Agreement by
Acquisition do not, and the performance of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby by Acquisition will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Entity, except (i) for (A) any applicable
requirements, if any, of the Exchange Act, the Securities Act and state takeover
laws, (B) the pre-merger notification requirements of the HSR Act, (C) filing
and recordation of appropriate merger and similar documents as required by the
DGCL and (D) filings and consents under applicable foreign law, including,
without limitation, the antitrust laws or laws intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade and any filings and consents which may be required by any foreign
environmental, health or safety laws or regulations pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not (x) prevent or delay consummation of the
Merger in any material respect or otherwise prevent Acquisition from performing
its obligations under this Agreement in any material respect, or (y) would not,
individually or in the aggregate, have a Acquisition Material Adverse Effect.
SECTION 5.04. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with this Agreement, the Merger and the other transactions contemplated hereby
based upon arrangements made by or on behalf of Acquisition and its affiliates.
SECTION 5.05. Financial Capability. GlobeGround GmbH ("GlobeGround"), a
German company, which is guaranteeing the obligations of Acquisition under this
Agreement, and is agreeing to provide the funds which Acquisition requires to
pay for the shares of Common Stock which are properly tendered in response to
the Tender Offer and not withdrawn and the funds which the Surviving Corporation
will need to pay the Merger Consideration as contemplated by this Agreement, has
adequate funds (including funds which are available from its parent, Deutsche
Lufthansa AG, and funds which are available under existing credit lines) to
enable it to provide the funds which Acquisition requires to pay for the shares
of Common Stock which are properly tendered in response to the Tender Offer and
not withdrawn and the funds which the Surviving Corporation will need to pay the
Merger Consideration and cash out all outstanding Options, and to fulfill all
GlobeGround's other obligations as guarantor of the obligations of Acquisition
under this Agreement.
SECTION 5.06. Capitalization of Acquisition. The authorized capital
stock of Acquisition consists of 1,000 shares of Common Stock, par value $.01
per share ("Acquisition Common Stock"). As of the date hereof, 200 shares of
Acquisition Common Stock are outstanding, all of which (i) were validly issued,
and are fully paid and nonassessable and (ii) are owned by LAGS (USA), Inc., a
Delaware corporation, which is a wholly owned subsidiary of GlobeGround, which
in turn is a wholly owned subsidiary of Deutsche Lufthansa AG.
SECTION 5.07. Offer Document. Neither the Offer Documents nor any
information supplied by Acquisition for inclusion in the Schedule 14D-9 will, at
the respective times the Schedule 14D-1 and the Schedule 14D-9 are filed with
the SEC and first published, sent or given to the Company's stockholders,
contain a false or misleading statement with respect to any material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If a Proxy Statement is mailed to the Company's
stockholders, on the date the Proxy Statement is mailed to the
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Company's stockholders and on the date of the Stockholders Meeting, if there is
one, none of the information supplied by Acquisition for inclusion in the Proxy
Statement will be false or misleading with respect to any material fact or will
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading or necessary to correct any statement in any
earlier communication with respect to the Stockholders Meeting or the
solicitation of proxies to be used at the Stockholders Meeting. However,
Acquisition does not make any representations or warranties with respect to
information supplied by the Company or any of its affiliates or representatives
for inclusion in the Offer Documents, or with respect to the Schedule 14D-9 or
the Proxy Statement (except to the extent of information supplied by Acquisition
for inclusion in the Schedule 14D-9 or the Proxy Statement). The Offer Documents
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. Conduct of Business by the Company Pending the Merger.
Except as required by the River Acquisition Agreement, as it is in effect on the
date of this Agreement, the Company covenants and agrees that, between the date
of this Agreement and the Effective Time, unless Acquisition shall have
consented (which consent shall not be unreasonably withheld), neither the
Company nor any Company Subsidiary shall:
(a) conduct its business in any manner other than in the
ordinary course of business consistent with past practice;
(b) amend or propose to amend its certificate of incorporation
or by-laws;
(c) authorize for issuance, issue, grant, sell, pledge, redeem
or acquire for value any of its or their securities, including options,
warrants, commitments, stock appreciation rights, subscriptions, rights to
purchase or otherwise (other than the issuance of equity securities upon the
conversion of outstanding convertible securities or in connection with any
dividend reinvestment plan or any Benefit Plan with an employee stock fund or
employee stock ownership plan feature, consistent with applicable securities
laws, or the exercise of options or warrants outstanding as of the date of this
Agreement and in accordance with the terms of such options or warrants in effect
on the date of this Agreement);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property, or otherwise, with respect to
any of its capital stock or other equity interests, except for (i) the regular
semi-annual dividends of $.50 per share which shall be paid consistent with past
practice and (ii) dividends and other distributions declared and paid by a
Company Subsidiary only to the Company (and also to LAGS (USA) Inc. in the case
of Hudson General LLC), or subdivide, reclassify, recapitalize, split, combine
or exchange any of its shares of capital stock;
(e) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice, with
respect to accounting policies or procedures (including tax accounting policies
and procedures);
(f) take any action that would, or could reasonably be
expected to result in, any of its representations and warranties set forth in
this Agreement being untrue or in any of the conditions to the Merger set forth
in Article VIII not being satisfied; or
(g) authorize any of, or commit or agree to take any of, the
foregoing actions.
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ARTICLE VII
ADDITIONAL COVENANTS
SECTION 7.01. Access to Information; Confidentiality. From the date
hereof to the Effective Time, the Company shall (and shall cause the Company
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and each of the Company Subsidiaries to) afford the officers, employees
and agents of Acquisition ("Acquisition's Representatives") reasonable access at
all reasonable times to its officers, employees, agents, properties, offices,
plants and other facilities, books and records, and shall furnish Acquisition's
Representatives with all financial, operating and other data and information as
may from time to time be reasonably requested. Acquisition agrees to, and to
cause its Representatives to, hold all information it receives as a result of
the access afforded as required by this Section in confidence, except to the
extent that information (i) is or becomes available to the public (other than
through a breach of this Agreement), (ii) becomes available to Acquisition from
a third party which, insofar as Acquisition is aware, is not under an obligation
to the Company, or to a subsidiary of the Company, to keep the information
confidential, (iii) was known to Acquisition or its affiliates (which include
GlobeGround and LAGS (USA), Inc.) before it was made available to Acquisition or
its Representatives by reason of this Section, or (iv) otherwise was
independently developed by Acquisition or its affiliates. If this Agreement is
terminated prior to the Effective Time, Acquisition will, at the request of the
Company, deliver to the Company all documents and other material obtained by
Acquisition or its Representatives from the Company or a subsidiary in
connection with the transactions which are the subject of this Agreement or
evidence that that material has been destroyed by Acquisition or its
Representatives.
SECTION 7.02. Proxy Statement. (a) Except as provided in Section
2.08(b), if Acquisition accepts and pays for the shares which are tendered in
response to the Tender Offer and stockholder approval of the Merger is required
by applicable law or by the rules of the American Stock Exchange (if they are
applicable), as soon as practicable after the Expiration Date, the Company shall
prepare the Proxy Statement in form and substance reasonably satisfactory to
Acquisition and, if required by the Exchange Act, file it with the SEC.
Acquisition shall furnish to the Company such information concerning itself and
its affiliates as the Company may reasonably request in connection with the
preparation of the Proxy Statement. The Proxy Statement will comply in all
material respects with applicable federal securities laws, except that no
representation is made by the Company with respect to information supplied by
Acquisition for inclusion in the Proxy Statement. As promptly as practicable
after the Proxy Statement has been cleared by the SEC, the Company shall mail
the Proxy Statement to its stockholders. The Proxy Statement shall include the
opinion of Allen & Company Incorporated referred to in Section 4.06 hereof.
(b) The information provided by each of the Company and
Acquisition for use in the Proxy Statement shall not, at (i) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company or (ii) the time of the Company stockholders'
meeting contemplated by such Proxy Statement, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. If at any
time prior to the Effective Time any event or circumstance relating to any party
hereto, or their respective officers or directors, should be discovered by such
party which should be set forth in an amendment or a supplement to the Proxy
Statement, such party shall promptly inform the Company and Acquisition thereof
and take appropriate action in respect thereof.
SECTION 7.03. Action by Stockholders. Except as otherwise provided in
Section 2.08(b) and except as otherwise required by the fiduciary duties of the
Board of Directors of the Company (as determined in good faith by the Special
Committee after consulting with its outside legal counsel): (a) the
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Company, acting through its Board of Directors, shall, in accordance with
applicable law, the Company Charter and the Company's bylaws, duly call, give
notice of, convene and hold the Stockholders Meeting as soon as practicable
after the Expiration Date for the purpose of adopting this Agreement and (b) the
Company will, through the Board of Directors based on the recommendation of the
Special Committee, (i) recommend to its stockholders the adoption of this
Agreement, and (ii) use its best efforts to cause the Company's stockholders to
approve and adopt this Agreement and approve the Merger (the "Company
Stockholder Approval"). Acquisition shall vote all shares of Common Stock owned
by it, if any, in favor of the adoption of this Agreement.
SECTION 7.04. No Solicitation. The Company shall not, and shall not
authorize or permit any of its officers, directors, employees or agents to
directly or indirectly, solicit, encourage, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than
Acquisition, any of its affiliates or representatives) (collectively, a
"Person") concerning any merger, consolidation, tender offer, exchange offer,
sale of all or substantially all of the Company's assets, sale of shares of
capital stock or similar business combination transaction involving the Company
or any principal operating or business unit of the Company or its Subsidiaries
(an "Acquisition Proposal"). Notwithstanding the foregoing, (i) if the Company
or the Special Committee receives an unsolicited, written indication of a
willingness to make an Acquisition Proposal at a price per share which the
Special Committee reasonably concludes is in excess of the Tender Offer Price
from any Person and if the Special Committee reasonably concludes, based upon
advice of its financial advisor, that the Person delivering such indication is
capable of consummating such an Acquisition Proposal (based upon, among other
things, the availability of financing and the capacity to obtain financing, the
expectation of receipt of required antitrust and other regulatory approvals and
the identity and background of such Person), then the Company or the Special
Committee may, directly or indirectly, provide access to or furnish or cause to
be furnished information concerning the Company's business, properties or assets
to any such Person pursuant to an appropriate confidentiality agreement and the
Company or the Special Committee may engage in discussions related thereto, and
(ii) the Company or the Special Committee may participate in and engage in
discussions and negotiations with any Person meeting the requirement set forth
in clause (i) above in response to a written Acquisition Proposal if the Special
Committee concludes, upon advice of its legal counsel, that the failure to
engage in such discussions or negotiations would be inconsistent with the
Special Committee's (and the Board's) fiduciary duties to the Company's
stockholders under applicable law. In the event that, after the Company has
received a written Acquisition Proposal (without breaching its obligations under
clause (i) or (ii) above) but prior to the purchase by Acquisition of Common
Stock pursuant to the Tender Offer, the Special Committee determines, in good
faith and upon advice of its financial advisor and legal counsel, that it is
necessary to do so in order to comply with its fiduciary duties to the Company's
stockholders under applicable law, the Special Committee may do any or all of
the following: (x) withdraw or modify the Board of Directors' approval or
recommendation of the Tender Offer, the Merger or this Agreement and (y)
terminate this Agreement in the manner, and under the circumstances, set forth
in Section 9.01(g). Furthermore, nothing contained in this Section 7.04 shall
prohibit the Company or its Board of Directors, upon the recommendation of the
Special Committee, from taking and disclosing to the Company's stockholders a
position with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making such
disclosure to the Company's stockholders or otherwise which, in the judgment of
the Special Committee upon advice of legal counsel, is necessary under
applicable law or rules of any stock exchange. The Company shall promptly (but
in any event within two days) advise Acquisition in writing of any Acquisition
Proposal or any inquiry regarding the making of an Acquisition Proposal
including any request for information, the material terms and conditions of such
request, Acquisition Proposal or inquiry and the identity of the Person making
such request, Acquisition Proposal or inquiry. The Company will, to the extent
reasonably practicable, keep Acquisition fully informed of the status and
details (including amendments or proposed amendments) of any such request,
Acquisition Proposal or inquiry. So long as the River Acquisition
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Agreement remains in effect, nothing contained in this Agreement shall prohibit
or limit the rights and obligations of the Company to take such actions as may
be required by the River Acquisition Agreement as it is in effect at the date of
this Agreement and such actions shall not constitute a breach under this
Agreement.
SECTION 7.05. Directors' and Officers' Insurance and Indemnification.
(a) From and after the consummation of the Merger, the parties shall, and shall
cause the Surviving Corporation to, indemnify, defend and hold harmless any
person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, an officer or director (the "Indemnified
Party") of the Company and its subsidiaries against all losses, claims, damages,
liabilities, costs and expenses (including attorneys' fees and expenses),
judgments, fines, losses, and amounts paid in settlement, with the written
approval of the Surviving Corporation (which approval shall not be unreasonably
withheld), in connection with any actual or threatened action, suit, claim,
proceeding or investigation (each a "Claim") to the extent that any such Claim
is based on, or arises out of, (i) the fact that such person is or was a
director, officer, employee or agent of the Company or any subsidiaries or is or
was serving at the request of the Company or any of its subsidiaries as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (ii) this Agreement, or any of the
transactions contemplated hereby, in each case to the extent that any such Claim
pertains to any matter or fact arising, existing, or occurring prior to or at
the Effective Time, regardless of whether such Claim is asserted or claimed
prior to, at or after the Effective Time, to the full extent permitted under
Delaware law or the Company's Certificate of Incorporation, By-laws or
indemnification agreements in effect at the date hereof, including provisions
relating to advancement of expenses incurred in the defense of any action or
suit. Without limiting the foregoing, in the event any Indemnified Party becomes
involved in any capacity in any Claim, then from and after consummation of the
Merger, the parties shall cause the Surviving Corporation to periodically
advance to such Indemnified Party its legal and other expenses (including the
cost of any investigation and preparation incurred in connection therewith),
subject to the provision by such Indemnified Party of an undertaking to
reimburse the amounts so advanced in the event of a final non-appealable
determination by a court of competent jurisdiction that such Indemnified Party
is not entitled thereto.
(b) Acquisition and the Company agree that all rights to
indemnification and all limitations on liability existing in favor of the
Indemnified Party as provided in the Company's Certificate of Incorporation and
By-laws as in effect as of the date hereof shall survive the Merger and shall
continue in full force and effect, without any amendment thereto, for a period
of six years from the Effective Time to the extent such rights are consistent
with the DGCL; provided that in the event any claim or claims are asserted or
made within such six year period, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of any and all such
claims; provided further, that any determination required to be made with
respect to whether an Indemnified Party's conduct complies with the standards
set forth under Delaware law, the Company's Certificate of Incorporation or
By-laws or such agreements, as the case may be, shall be made by independent
legal counsel selected by the Indemnified Party and reasonably acceptable to the
Surviving Corporation; and, provided further, that nothing in this Section 7.05
shall impair any rights or obligations of any present or former directors or
officers of the Company.
(c) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all or substantially all
of its properties and assets to any person, then, and in each such case, to the
extent necessary to effectuate the purposes of this Section 7.05, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 7.05 and none of
the actions described in clauses (i) or (ii) shall be taken until such provision
is made.
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(d) The parties shall cause the Surviving Corporation to
maintain the Company's existing officers' and directors' liability insurance
policy ("D&O Insurance") for a period of not less than six years after the
Effective Date; provided, that the Surviving Corporation may substitute therefor
policies of substantially similar coverage and amounts containing terms no less
advantageous to such former directors or officers so long as such substitution
does not result in gaps or lapses in coverage; provided, further, if the
existing D&O Insurance expires or is cancelled during such period, Acquisition
or the Surviving Corporation will use its best efforts to obtain substantially
similar D&O Insurance; provided, however, that if the aggregate annual premiums
for such D&O Insurance (or successor insurance policy) at any time during such
period exceed 200% of the per annum rate of premiums currently paid by the
Company for such insurance on the date of this Agreement, then the parties will
cause the Surviving Corporation to, and the Surviving Corporation will, provide
the maximum coverage that shall then be available at an annual premium equal to
200% of such rate.
(e) This Section 7.05 is intended to be for the benefit of,
and shall be enforceable by, the Indemnified Parties, their heirs and personal
representatives, and shall be binding on the Surviving Corporation and its
respective successors and assigns.
SECTION 7.06. Further Action; Best Efforts. (a) Upon the terms and
subject to the conditions hereof, each of the parties hereto shall (i) make
promptly its respective filings and thereafter make any other required
submissions under the HSR Act with respect to the Merger and the other
transactions contemplated hereby, and (ii) use its reasonable best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations or otherwise to consummate the Tender Offer and consummate and make
effective the Merger and the other transactions contemplated hereby, including,
without limitation, using its reasonable best efforts to obtain all licenses,
permits, waivers, orders, consents, approvals, authorizations, qualifications
and orders of Governmental Entities and parties to contracts with the Company
and the Company Subsidiaries as are necessary for the consummation of the Merger
and the other transactions contemplated hereby.
(b) Notwithstanding the provisions of Section 7.06(a), nothing
contained in this Agreement shall obligate Acquisition to take any action to
consummate the Tender Offer, the Merger and the other transactions contemplated
hereby, the consummation of which is dependent or conditioned on the receipt of
any governmental or regulatory approval or consent, in the event that the
approval or consent so received specifically includes conditions or restrictions
in addition to those imposed by laws and regulations of general applicability as
in effect from time to time (including conditions in addition to those imposed
by existing laws and regulations which require the prior approval of any
governmental or regulatory agency to the taking of any action or the
consummation of any transaction), the direct or indirect effect of which is or
would be, to restrict, limit or otherwise subject to penalty Acquisition in the
ownership of its assets or the conduct of its business. For purposes of the
foregoing, a condition, restriction or limitation arising out of any such
approval or consent shall be deemed to be a restriction or limitation on
Acquisition (regardless of whether Acquisition is a party to or otherwise
legally obligated by such consent or approval) to the extent that the taking of
an action or the consummation of a transaction by Acquisition would result in
Acquisition, the Company or any Company Subsidiary being in breach or violation
of such consent or approval or otherwise causing such consent or approval to
terminate or expire.
(c) In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use
their reasonable best efforts to take all such action.
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SECTION 7.07. Public Announcements. Acquisition and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which consent
shall not be unreasonably withheld; provided, however, that a party may, without
the prior consent of the other party, issue such press release or make such
public statement as may be required by law, regulation or any listing agreement
or arrangement to which the Company, Acquisition or an affiliate of Acquisition
is a party with a securities exchange or securities quotation system if it has
used all reasonable efforts to consult with the other party and to obtain such
party's consent but has been unable to do so in a timely manner.
SECTION 7.08. Conveyance Taxes. Acquisition and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated by
this Agreement that are required or permitted to be filed on or before the
Effective Time.
SECTION 7.09. Employee Benefits.
(a) For purposes hereof, "Affected Employees" shall mean those
individuals who are employees of the Company and its subsidiaries immediately
prior to the Effective Time.
(b) Surviving Corporation shall give the Affected Employees
full credit, for purposes of eligibility, vesting and benefits accrual under any
employee benefit plans or arrangements maintained by the Company, for the
Affected Employees' service with the Company and the Company Subsidiaries to the
same extent recognized by the Company and the Company Subsidiaries immediately
prior to the Effective Time.
(c) Surviving Corporation shall provide each Affected Employee
with credit for any co-payments and deductibles paid prior to the Effective Time
in satisfying any applicable deductible or out-of-pocket requirements under any
welfare benefit plans that the Affected Employees are eligible to participate in
after the Effective Time.
(d) For a period of one year immediately following the
Effective Time, the coverage and benefits provided to the Affected Employees
pursuant to employee benefit plans and arrangements maintained by Surviving
Corporation shall be, in the aggregate, no less favorable than those provided to
the Affected Employees immediately prior to the Effective Time.
(e) The Company and Acquisition acknowledge that the
consummation of the Merger shall constitute (i) a "Change in Control" for
purposes of employment agreements between the Company and Affected Employees and
(ii) a "change in control of the Company" for purposes of severance agreements
between the Company and Affected Employees.
SECTION 7.10. Knowledge of Breach. If prior to the Closing Acquisition
shall have actual knowledge of any breach of a representation and warranty or
covenant of the Company, Acquisition shall promptly notify the Company of such
knowledge, including the basis of such belief set forth in reasonable detail. If
an officer of Acquisition had actual knowledge prior to the execution of this
Agreement of a breach by the Company of any representation, warranty, covenant,
agreement or condition of this Agreement, such breach shall not be deemed to be
a breach of this Agreement for any purpose hereunder,
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and Acquisition shall not have any claim or recourse against the Company or its
directors, officers, employees, affiliates, controlling persons, agents,
advisors or representatives with respect to such breach.
ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.01. Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger and the
other transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Effective Time of the following conditions, any or all of which
may be waived, in whole or in part, to the extent permitted by applicable law:
(a) Stockholder Approval. If the Company Stockholder Approval
is required by applicable law or by the rules of the American Stock Exchange (if
they are applicable), the Company Stockholder Approval shall have been obtained.
(b) No Order. No Governmental Entity or federal or state court
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in effect and
which materially restricts, prevents or prohibits consummation of the Merger or
the other transactions contemplated by this Agreement; provided, however, that
the parties shall use their reasonable best efforts (subject to Section 7.06(b))
to cause any such decree, judgment, injunction or other order to be vacated or
lifted.
(c) HSR Act. Any waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated, and no
action shall have been instituted by the Department of Justice or the Federal
Trade Commission challenging or seeking to enjoin the consummation of the
Merger, which action shall not have been withdrawn or terminated.
(d) Lufthansa Supervisory Board. The Lufthansa Supervisory
Board shall have approved this Agreement and the transactions contemplated by it
not later than March 15, 1999.
(e) Purchase of Shares in the Tender Offer. Acquisition or its
affiliates shall have purchased all the shares of Common Stock which are
properly tendered in response to the Tender Offer and not withdrawn.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after adoption of this Agreement
by the stockholders of the Company:
(a) by mutual consent of the Company (acting through the
Special Committee) and Acquisition;
(b) by Acquisition, prior to its purchasing shares of Common
Stock pursuant to the Tender Offer, upon a material breach of any covenant or
agreement on the part of the Company set forth in this Agreement which has not
been cured, or if any representation or warranty of the Company shall have
become untrue in any material respect, in either case such that such breach or
untruth is incapable of being cured prior to May 31, 1999;
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(c) by the Company, prior to Acquisition's purchasing shares
of Common Stock pursuant to the Tender Offer, upon a material breach of any
covenant or agreement on the part of Acquisition set forth in this Agreement
which has not been cured, or if any representation or warranty of the Company or
Acquisition shall have become untrue in any material respect, in either case
such that such breach or untruth is incapable of being cured prior to May 31,
1999;
(d) by either Acquisition or the Company, if any permanent
injunction, order, decree, ruling or other action by any Governmental Entity
preventing the purchase of the shares of Common Stock which are tendered in
response to the Tender Offer or consummation of the Merger shall have become
final and nonappealable;
(e) by either Acquisition or the Company, if the Expiration
Date shall not be May 31, 1999 or an earlier date (provided that the right to
terminate this Agreement under this Section 9.01(e) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Effective Time to occur on or
before such date);
(f) by Acquisition if: (i) the Board of Directors of the
Company (acting through the Special Committee) shall withdraw, modify or change
its recommendation so that it is not in favor of this Agreement or the Merger or
shall have resolved to do any of the foregoing; or (ii) the Board of Directors
of the Company (acting through the Special Committee) shall have recommended or
resolved to recommend to its stockholders an Acquisition Proposal from someone
other than Acquisition;
(g) by the Company if (i) the Company receives a Superior
Proposal, (ii) the Company notifies Acquisition that the Company has received a
Superior Proposal, stating in the notice (A) the material terms of the Superior
Proposal, including the amount per share the Company's stockholders will receive
per share of Common Stock (valuing any non-cash consideration at what the
Special Committee determines in good faith, after consultation with its
independent financial advisor, to be the fair value of the non-cash
consideration) and (B) that, unless Acquisition increases the Tender Offer Price
to an amount at least as great as the amount per share the Company's
stockholders would receive as a result of the Superior Proposal, the Company may
terminate this Agreement, (iii) Acquisition does not, by 5:00 p.m., New York
City time, on the second business day after the day on which the Company
notifies Acquisition of the Superior Proposal, increase the Tender Offer Price
to an amount at least as great as the amount per share the Company's
stockholders would receive as a result of the Superior Proposal, as set forth in
the notice from the Company, without changing or modifying any other of the
terms and conditions of this Agreement and (iv) the Company has paid Acquisition
the sums (including reimbursement of expenses), and delivered to Acquisition the
agreement regarding further reimbursement of expenses, required by Section
9.05(b). A Superior Proposal is an Acquisition Proposal or unsolicited tender
offer which (A) would result in the Company's stockholders receiving an amount
per share which is greater than the Tender Offer Price, (B) is not subject to
the outcome of a due diligence review of the Company's business or financial
condition, (C) is not subject to a financing contingency and is from a potential
acquiror which the Special Committee reasonably concludes, based upon advice of
its financial advisor, is capable of consummating the Acquisition Proposal or,
if it is subject to a financing contingency, the Special Committee concludes,
based on advice of its financial advisor, it is reasonably likely that the
financing contingency will be fulfilled and (D) the Special Committee determines
in good faith, after consultation with its financial advisor, to be more
favorable to the Company's stockholders than the Tender Offer and Merger
contemplated by this Agreement;
(h) by either the Company (acting through the Special
Committee) or Acquisition, if the Lufthansa Supervisory Board shall not have
approved this Agreement and the transactions contemplated hereby by March 15,
1999;
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(i) by the Company, if Acquisition shall have terminated the
Tender Offer, or the Tender Offer shall have expired, without Acquisition
purchasing any shares of Common Stock pursuant thereto, provided that the
Company may not terminate this Agreement pursuant to this Section 9.01(i) if the
Company is in material breach of this Agreement; and
(j) by the Company, if the Lufthansa Executive Board shall
have withdrawn or negatively modified its recommendation to the Lufthansa
Supervisory Board that it approve the transactions which are the subject of this
Agreement.
The right of any party hereto to terminate this Agreement pursuant to this
Section 9.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
SECTION 9.02. Effect of Termination. Except as provided in Section 9.05
or Section 10.01(b), in the event of the termination of this Agreement pursuant
to Section 9.01, this Agreement shall forthwith become void, there shall be no
liability on the part of any party hereto, or any of their respective officers
or directors, to the other and all rights and obligations of any party hereto
shall cease; provided, however, that (a) nothing herein shall relieve any party
from liability for the willful breach of any of its representations, warranties,
covenants or agreements set forth in this Agreement and (b) a termination of
this Agreement after Acquisition purchases shares of Common Stock pursuant to
the Tender Offer but before the Effective Time will not affect any provisions of
this Agreement relating to the Tender Offer, to the Offer Documents or to any
other documents relating to the Tender Offer which are filed with the SEC in
connection with the Tender Offer.
SECTION 9.03. Amendment. Before or after adoption of this Agreement by
the stockholders of the Company, this Agreement may be amended by the parties
hereto at any time prior to the Effective Time; provided, however, that (a) any
such amendment shall, on behalf of the Company, have been approved by the
Special Committee and (b) after adoption of this Agreement by the stockholders
of the Company, no amendment which under applicable law may not be made without
the approval of the stockholders of the Company may be made without such
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 9.04. Waiver. At any time prior to the Effective Time, either
the Company (acting through the Special Committee), on the one hand, or
Acquisition, on the other, may (a) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance by
the other party with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby and, with respect to
extensions or waivers granted by the Company, if the Special Committee shall
have approved such waiver or extension.
SECTION 9.05. Expenses and Other Payments. (a) Subject to paragraph (b)
of this Section 9.05, all costs and expenses (including any expenses related to
any claims or litigation in connection with the transactions contemplated by
this Agreement, or any settlement thereof), including, without limitation, fees
and disbursements of counsel, financial advisors and accountants and other
out-of-pocket expenses, incurred or to be incurred by the parties hereto in
connection with the transactions contemplated hereby (with respect to such
party, its "Expenses"), shall be borne solely and entirely by the party which
has incurred such costs and expenses; provided, however, that all costs and
expenses related to printing and mailing the Proxy Statement shall be borne by
the Company.
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(b) The Company agrees that if this Agreement is terminated by
Acquisition pursuant to clause (i) or (ii) of Section 9.01(f) hereof, or if this
Agreement is terminated by the Company pursuant to Section 9.01(g) hereof, at or
before the time when this Agreement is terminated by the Company, or promptly
after this Agreement is terminated by Acquisition, the Company will (i) pay
Acquisition $3,500,000 ($2,625,000 if this Agreement is terminated before the
Lufthansa Supervisory Board approves this Agreement and the transactions
contemplated by it), (ii) reimburse Acquisition for the reasonable expenses
incurred by Acquisition in connection with the transactions which are the
subject of this Agreement for which the Company has received reasonable
supporting documentation, and (iii) agree in writing to reimburse Acquisition,
promptly after the Company receives reasonable supporting documentation, for
additional reasonable expenses which were or are incurred by Acquisition in
connection with the transactions which are the subject of this Agreement,
provided that the total reimbursement of expenses by the Company will not exceed
$875,000 if this Agreement is terminated by Acquisition pursuant to clause (i)
or (ii) of Section 9.01(f) hereof, or by the Company pursuant to Section 9.01(g)
hereof, before the Lufthansa Supervisory Board approves this Agreement and the
transactions contemplated by it, and will not exceed $1,750,000 if this
Agreement is terminated by Acquisition pursuant to clause (i) or (ii) of Section
9.01(f) hereof, or by the Company pursuant to Section 9.01(g) hereof, after the
Lufthansa Supervisory Board approves this Agreement and the transactions
contemplated by it.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Effectiveness of Representations, Warranties and
Agreements. (a) Except as set forth in Section 10.01(b), the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
respective officers or directors, whether prior to or after the execution of
this Agreement.
(b) The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Article IX, except that the agreements set forth in
Articles II, III and X and Section 7.05 shall survive the Effective Time and
those set forth in the last sentence of Section 7.01 and Sections 9.02 and 9.05
and Article X shall survive termination.
SECTION 10.02. Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
(a) If to Acquisition:
c/o GlobeGround GmbH
Lufthansa-Basis, Geb. 357
D-60546 Frankfurt am Main
Germany
Attention: Peter Bluth
Telecopier No.: 46-69-696-6833
22
<PAGE> 27
with separate copies to:
Lufthansa German Airlines
1640 Hempstead Turnpike
East Meadow, New York 11554
Attention: Arthur Molins
Telecopier No.: (516) 296-9399
and
Rogers & Wells LLP
200 Park Avenue
New York, NY 10128
Attention: David W. Bernstein
Telecopier: 212-878-8375
(b) If to the Company:
Hudson General Corporation
111 Great Neck Road
P.O. Box 355
Great Neck, NY 11022
Attention: Chief Executive Officer
Telecopier No.: (516) 773-0343
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Daniel E. Stoller
Telecopier No.: (212) 735-2000
SECTION 10.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" means a person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(b) "business day" means any day other than a day on which (i)
banks in the State of New York are authorized or obligated to be closed or (ii)
the SEC or The American Stock Exchange, Inc. is closed;
(c) "control" (including the terms "controlled," "controlled
by" and "under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause the
direction of the management or polices of a person or entity, whether through
the ownership of stock or as trustee or executor, by contract or credit
arrangement or otherwise;
(d) "person" means any person or any corporation, partnership,
limited liability company or other legal entity; and
23
<PAGE> 28
(e) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other subsidiary) owns,
directly or indirectly, at least a majority of the securities or other interests
having by their terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization.
SECTION 10.04. Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 10.06. Entire Agreement. This Agreement, together with the
guaranty by GlobeGround and the other documents delivered in connection
herewith, constitutes the entire agreement of the parties and supersedes all
prior agreements and undertakings, both written and oral, between the parties,
or any of them, with respect to the subject matter hereof.
SECTION 10.07. Assignment. This Agreement shall not be assigned by
operation of law or otherwise and any purported assignment shall be null and
void, provided that Acquisition may assign its rights, but not its obligations,
under this Agreement to any of its subsidiaries.
SECTION 10.08. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied (other than the provisions of Section 7.05 and
7.09, which provisions are intended to benefit and may be enforced by the
beneficiaries thereof), is intended to or shall confer upon any person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 10.09. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to the conflict of laws rules thereof.
SECTION 10.10. Submission to Jurisdiction; Waivers. Each party hereto
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the Court of Chancery, or other courts, of the State of
Delaware, and each party hereto hereby irrevocably submits with regard to any
such action or proceeding for itself and in respect to its property, generally
and unconditionally, to the nonexclusive jurisdiction of the aforesaid courts.
Each party hereto hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, counterclaim or otherwise, in any action or proceeding
with respect to this Agreement, (a) the defense of sovereign immunity, (b) any
claim that it is not personally subject to the jurisdiction of the courts for
any reason other than the failure to serve process in accordance with this
Section 10.10, (c) that it, or its property, is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise),
and (d) to the fullest extent permitted by applicable law, that (i) the suit,
action or proceeding in any such court is brought in an inconvenient
24
<PAGE> 29
forum, (ii) the venue of such suit, action or proceeding is improper and (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
SECTION 10.11. Enforcement of this Agreement. (a) The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
(b) The parties hereto acknowledge and agree that no director,
officer, employee, stockholder, affiliate or representative of Acquisition shall
have any liability whatsoever for any obligation or liability of Acquisition.
SECTION 10.12. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
25
<PAGE> 30
ANNEX A
Notwithstanding any other provisions of the Tender Offer, and in
addition to (and not in limitation of) Acquisition's rights to extend and amend
the Tender Offer at any time in its sole discretion (subject to the provisions
of the Merger Agreement), Acquisition shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Acquisition's
obligation to pay for or return tendered shares of Common Stock promptly after
termination or withdrawal of the Tender Offer), pay for, and may delay the
acceptance for payment of or, subject to the restriction referred to above, the
payment for, any tendered shares of Common Stock, and may terminate the Tender
Offer if (i) any applicable waiting period under the HSR Act has not expired or
terminated prior to the expiration of the Tender Offer, (ii) the Minimum
Condition has not been satisfied, or (iii) at any time on or after February 15,
1999 and before the time of acceptance of shares of Common Stock for payment
pursuant to the Tender Offer, any of the following events shall occur:
(a) The Lufthansa Supervisory Board does not approve this
Agreement, the Tender Offer, and the Merger by March 15, 1999;
(b) Any statute, rule, regulation, order or injunction has
been enacted, promulgated, entered or enforced by any national or state
government or governmental authority or by any United States court of competent
jurisdiction, which (i) prohibits, or imposes any material limitations on,
Acquisition's or its parent's ownership or operation of all or a material
portion of the Company's businesses or assets, (ii) prohibits, or makes illegal
the acceptance for payment, payment for or purchase of Common Stock or the
consummation of the Tender Offer or the Merger, (iii) results in a material
delay in or restricts the ability of Acquisition, or renders Acquisition unable,
to accept for payment, pay for or purchase some or all of the tendered Common
Stock, or (iv) imposes material limitations on the ability of Acquisition or its
parent effectively to exercise full rights of ownership of the tendered Common
Stock, including, without limitation, the right to vote the tendered Common
Stock purchased by it on all matters properly presented to the Company's
stockholders, provided that Acquisition shall have used all reasonable efforts
to cause any such judgment, order or injunction to be vacated or lifted;
provided further that the condition specified in this paragraph (b) shall not be
deemed to exist by reason of any court proceeding pending on the date hereof and
known to Acquisition, unless in the reasonable judgment of its parent there is
any material adverse development in any such proceeding after the date hereof,
or before the date hereof if not known to Acquisition on the date hereof, which
would result in any of the consequences referred to in clauses (i) through (iv)
above;
(c) The representations and warranties of the Company set
forth in the Merger Agreement shall not be true and correct in any material
respect as of the date of consummation of the Tender Offer as though made on or
as of such date or the Company shall have breached or failed in any material
respect to perform or comply with any material obligation, agreement or covenant
required by the Merger Agreement to be performed or complied with by it except,
in each case, (i) for changes specifically permitted by the Merger Agreement and
(ii) (A) those representations and warranties that address matters only as of a
particular date which are true and correct as of such date or (B) where the
failure of such representations and warranties to be true and correct, or the
performance or compliance with such obligations, agreements or covenants, do
not, individually or in the aggregate, have a Company Material Adverse Effect;
(d) The Company shall have entered into a definitive agreement
or agreement in principle with any person with respect to an Acquisition
Proposal or similar business combination with the Company;
1
<PAGE> 31
(e) The Agreement has been terminated in accordance with its
terms; or
(f) The Company's Board of Directors or the Special Committee
has withdrawn or modified in a manner adverse to Acquisition the Board's
approval or recommendation of the Tender Offer or the Merger.
The conditions set forth above are for the sole benefit of Acquisition,
and may be waived by Acquisition, in whole or in part. Any delay by Acquisition
in exercising the right to terminate the Tender Offer because any of the
conditions are not fulfilled will not be deemed a waiver of its right to do so.
2
<PAGE> 32
IN WITNESS WHEREOF, the Company and Acquisition have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
COMPANY:
HUDSON GENERAL CORPORATION
By: /s/ Michael Rubin
Name: Michael Rubin
Title: President
ACQUISITION:
GLGR ACQUISITION CORPORATION
By: /s/ Arthur Molins
Name: Arthur Molins
Title: Vice President
<PAGE> 33
GUARANTY
In order to induce Hudson General Corporation (the "Company") to enter
into the Agreement and Plan of Merger (the "Merger Agreement"), dated as of
February 15, 1999, between the Company and GLGR Acquisition Corp.
("Acquisition"), GlobeGround GmbH, a German company, (1) unconditionally
guarantees all the obligations of Acquisition under the Merger Agreement, (2)
agrees to provide to Acquisition all the funds Acquisition requires to pay for
shares which are properly tendered in response to the Tender Offer described in
the Merger Agreement and not withdrawn, (3) agrees to provide the Company, as
the surviving corporation of the merger which is the subject of the Merger
Agreement, all funds the Company requires to pay the Merger Consideration
specified in the Merger Agreement with regard to the Common Stock of the Company
which is issued and outstanding immediately prior to the Effective Time of that
Merger and to cash out all outstanding options pursuant to the Merger Agreement
and (4) agrees to be bound by the provisions of Section 10.10 of the Merger
Agreement.
February 15, 1999 GLOBEGROUND GmbH
By: /s/ Dr. Raoul Hille
-------------------------------
By: /s/ Peter Bluth
-------------------------------
1
<PAGE> 1
Exhibit 2
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
x
HARBOR FINANCE PARTNERS, a :
Colorado Partnership, Individually And
On Behalf Of All Others Similarly Situated, : C.A. No. 16804
Plaintiff, :
-against- :
CLASS ACTION
MILTON H. DRESNER, JAY B. LANGNER, PAUL : COMPLAINT
R. POLLACK, EDWARD J. ROSENTHAL,
MICHAEL RUBIN, HANS H. SAMMER, :
RICHARD D. SEGAL, STANLEY S. SHUMAN,
and HUDSON GENERAL CORPORATION, :
Defendants. :
x
Plaintiff, by its attorneys, alleges upon personal knowledge
as to its own acts and upon information and belief as to all other matters, as
follows:
NATURE OF THE ACTION
1. Plaintiff brings this action individually and as a class
action on behalf of all persons, other than defendants and persons or entities
affiliated with defendants, who own the common stock of Hudson General
Corporation ("Hudson General" or the "Company"), for injunctive or other
appropriate relief in connection with a proposed transaction in which members of
senior management (the "Management Group"), led by the Company's Chairman and
Chief Executive Officer, Jay B. Langner
<PAGE> 2
("Langner"), and Vice Chairman Richard D. Segal ("Segal"), would acquire all of
the shares of the Company that they do not already own for a grossly inadequate
price. Alternatively, in the event that the proposed transaction is consummated,
plaintiff seeks to recover damages caused by the breach of fiduciary duties owed
by the Management Group and the other defendants to the class members.
PARTIES
2. Plaintiff is a Colorado partnership and is and, at all
relevant times, has been the owner of Hudson General common stock.
3. Hudson General is a corporation duly organized and existing
under the laws of the State of Delaware. Hudson General, through its 51% owned
affiliate Hudson General LLC, provides various services at airports throughout
the United States and Canada, including aircraft ground handling, aircraft
de-icing and fueling and ground transport services.
4. Defendant Langner is Chief Executive Officer and Chairman
of the Board of Directors of Hudson General.
5. Defendant Segal is the Vice Chairman of Hudson General.
6. Defendant Paul R. Pollack ("Pollack") is Executive Vice
President, Chief Operating Officer, and a director of Hudson General. Pollack is
also President of the Company's subsidiary Hudson General LLC.
2
<PAGE> 3
7. Defendant Michael Rubin is President and a director of the
Company.
8. Defendants Milton H. Dresner, Edward J. Rosenthal, Hans H.
Sammer and Stanley S. Shuman are directors of the Company.
9. As officers/directors of Hudson General, the individual
defendants owe fiduciary duties of loyalty and due care to plaintiff and the
other members of the class.
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this case in its own behalf and as a
class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on
behalf of all holders of the Company's securities (except defendants herein and
any person, firm, trust, corporation, or other entity related to or affiliated
with any of the defendants, or any of the Company's principal shareholders), who
are being threatened with injury arising from defendants' actions as is
described more fully below (the "Class").
11. This action is properly maintainable as a class action
because:
a. The Class is so numerous that joinder of all members is
impracticable. As of September 1998, the Company had 1,744,949 shares
outstanding. There are hundreds, if not thousands, of record and beneficial
shareholders.
b. There are questions of law and fact common to the
Class including, inter alia, whether:
3
<PAGE> 4
(1) defendants have breached and will continue to breach
their fiduciary and other common law duties owed by them to plaintiff and the
members of the Class; and
(2) plaintiff and the other members of the Class would be
irreparably damaged by the transaction complained of herein.
c. Plaintiff is committed to prosecuting the action and has
retained competent counsel experienced in litigation of this nature. Plaintiff's
claims are typical of the claims of the other members of the Class and plaintiff
has the same interests as the other members of the Class. Accordingly, plaintiff
is an adequate representative of the Class.
d. The prosecution of separate actions by individual members
of the Class would create the risk of inconsistent or varying adjudications with
respect to individual members of the Class which would establish incompatible
standards of conduct for defendants, or adjudications with respect to individual
members of the Class which would as a practical matter be dispositive of the
interests of the other members not parties to the adjudications or substantially
impair or impede their ability to protect their interests.
e. The defendants have acted, or refused to act, on grounds
generally applicable to, and causing injury to, the Class and, therefore,
preliminary and final injunctive relief on behalf of the Class as a whole is
appropriate.
4
<PAGE> 5
SUBSTANTIVE ALLEGATIONS
12. On November 23, 1998, defendants announced that the
Company had entered into a definitive agreement to be acquired by members of its
senior management at a price of $57.25 per share in cash. The transaction is
valued at approximately $101 million in cash and represents only a 5% premium to
the price of Hudson General's stock on November 20, 1998 of $54.625 per share.
13. Members of the Management Group include defendants
Langner, Segal, Rubin and Pollack, all directors and officers of Hudson General.
The Management Group controls in excess of 14% of the outstanding stock of the
Company.
14. Hudson General recently announced that LAGS (USA) Inc.
("LAGS") gave notice to the Company on October 1, 1998 that it would exercise
its option to increase its interest in the Company's subsidiary Hudson General
LLC. As a result, the Company will receive a cash infusion of $29,627,000. This
infusion of cash makes the prospects for further growth very strong.
15. In light of what has been publicly disclosed about Hudson
General's present business and future prospectus, the proposed transaction is
unfair, inadequate, and provides value to Hudson General's stockholders
substantially below the fair or inherent value of the Company. The intrinsic
value of the equity of Hudson General is materially greater than the
consideration contemplated in the proposed offer, taking into
5
<PAGE> 6
account the Company's asset value, liquidation value, its expected growth, and
its revenues and cash flow.
16. The terms of the proposed transaction are not the result
of arm's-length negotiations but were fixed by the Management Group as part of
their plan and scheme to obtain 100% of Hudson General at the lowest possible
price. The other director defendants have been handpicked by senior management
and are beholden to senior management for the perquisites they enjoy from their
offices. As a consequence, they are unable to protect the interests of Hudson
General's public shareholders with undivided loyalty and independence.
17. Defendants have violated their fiduciary and other common
law duties owed to plaintiff and the other members of the Class in that they
have not and are not exercising independent business judgement, and have acted
and are acting to the detriment of the Class.
18. Unless enjoined by this Court, defendants will continue to
breach their fiduciary duties owed to plaintiff and the Class, and the
Management Group will succeed in their plan to exclude plaintiff and the Class
from the fair proportionate share of Hudson General's valuable assets and
businesses, to the irreparable harm of the Class.
19. Plaintiff and the Class have no adequate remedy of law.
6
<PAGE> 7
WHEREFORE, plaintiff prays for judgment and relief as follows:
a. declaring that this lawsuit is properly maintainable as a
class action and certifying plaintiff as representative of the Class;
b. preliminarily and permanently enjoining defendants and
their counsel, agents, employees, and all persons acting under, in concert with,
or for them, from proceeding with or implementing the transaction complained of
herein;
c. in the event the transaction is consummated, rescinding it
and setting it aside;
d. awarding compensatory damages against defendants, jointly
and severally, in an amount to be determined at trial, together with prejudgment
interest at the maximum rate allowable by law;
e. awarding plaintiff and the Class their costs and
disbursements and reasonable allowances for plaintiff's counsel and experts'
fees and expenses; and
7
<PAGE> 8
f. granting such other and further relief as may be just and
proper.
ROSENTHAL MONHAIT GROSS
& GODDESS, P.A.
By: /s/ J. Rosenthal
---------------------------------
Suite 214, Mellon Bank Center
P.O. Box 1070
Wilmington, Delaware 19899
(302) 656-4433
Of Counsel:
WECHSLER HARWOOD
HALEBIAN & FEFFER LLP
488 Madison Avenue
New York, NY 10022
(212) 935-7400
8
<PAGE> 1
Exhibit 3
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
x
ROBERT WEINER, : C.A. No. 16805
Plaintiff, :
-against- : CLASS ACTION
COMPLAINT
JAY B. LANGNER, MILTON H. DRESNER, :
PAUL R. POLLACK, EDWARD J. ROSENTHAL,
MICHAEL RUBIN, HANS H. SAMMER, :
RICHARD D. SEGAL, STANLEY S. SHUMAN
and HUDSON GENERAL CORPORATION, :
Defendants. :
x
Plaintiff, by his attorneys, alleges upon information and
belief, except as to paragraph 1 which plaintiff alleges upon knowledge, as
follows:
1. Plaintiff Robert Weiner is a stockholder of defendant
Hudson General Corporation ("Hudson" or the "Company").
2. Hudson is a corporation duly organized and existing under
the laws of the State of Delaware. Hudson provides aviation services such as
aircraft ground handling, ramp cleaning, aircraft fueling, fuel management, snow
removal and ground transportation. It also sells, leases and maintains support
equipment.
<PAGE> 2
3. Defendant Langner is Chief Executive Officer and Chairman
of the Board of Directors of Hudson.
4. Defendant Richard D. Segal ("Segal") is Vice Chairman of
Hudson.
5. Defendant Paul R. Pollack ("Pollack") is Executive Vice
President, Chief Operating Officer, and a director of Hudson. Pollack is also
President of the Company's subsidiary, Hudson General LLC.
6. Defendant Michael Rubin is President and a director of the
Company.
7. Defendants Milton H. Dresner, Edward J. Rosenthal, Hans H.
Sammer and Stanley S. Shuman are directors of the Company.
8. The Individual Defendants have a fiduciary relationship and
responsibility to plaintiff and the other public stockholders of Hudson and owe
to plaintiff and the other Class members the highest obligations of good faith,
loyalty, fair dealing, due care and candor.
CLASS ACTION ALLEGATIONS
9. Plaintiff brings this action on his own behalf and as a
class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on
behalf of all common stockholders of Hudson, or their successors in interest,
who are being and will be harmed by defendants' actions described below (the
"Class"). Excluded from the Class are
2
<PAGE> 3
defendants herein and any person, firm, trust, corporation, or other entity
related to or affiliated with any of defendants.
10. This action is properly maintainable as a class action
because:
a. The Class is so numerous that joinder of all members is
impracticable. There are hundreds of Hudson stockholders of record who are
located throughout the United States;
b. There are questions of law and fact which are common to
the Class, including: whether the management of Hudson has acted in a manner
calculated to benefit themselves at the expense of Hudson's public stockholders;
and whether plaintiff and the other members of the Class would be irreparably
damaged by the wrongs complained of herein;
c. Defendants have acted or refused to act on grounds
generally applicable to the Class, thereby making appropriate final injunctive
relief with respect to the Class as a whole; and
d. Plaintiff is committed to prosecuting this action and
has retained competent counsel experienced in litigation of this nature. The
claims of plaintiff are typical of the claims of the other members of the Class
and plaintiff has the same interests as the other members of the Class.
Accordingly, plaintiff is an adequate representative of the Class and will
fairly and adequately protect the interests of the Class.
3
<PAGE> 4
CLAIM FOR RELIEF
11. Hudson specializes in aviation services such as aircraft
ground handling, ramp cleaning, aircraft fueling, fuel management, removal and
bus ground transportation. As of July 31, 1998, there were over 1.7 million
shares of Hudson common stock outstanding.
12. On November 23, 1998, it was reported that Hudson's Board
of Directors had agreed to a management buyout whereby the Company would be
acquired by the management of Hudson (led by defendants Langner and Segal) in a
deal valued at about $100 million. Under the terms of a definitive agreement
already accepted by the Company's Board of Directors, Hudson shareholders would
receive $57.25 per share.
13. The loyalties of Hudson's board members are, at best,
divided in the instant transaction and they cannot be expected to act in the
best interests of Hudson's public stockholders.
14. The purpose of the proposed acquisition is to enable
Hudson's management to acquire the Company and its valuable assets for their own
benefit at the expense of Hudson's public stockholders.
15. The proposed acquisition comes at a time when Hudson has
performed well and management expects it will continue to perform well.
4
<PAGE> 5
16. Hudson's management has timed this transaction to capture
Hudson's future potential without paying an adequate or fair price for the
Company's shares.
17. Amidst this backdrop of positive and improving financial
position and increased prospects for growth, the management buyout at $57.25
cash for each share of Hudson common stock represents a woefully inadequate
premium over the current price of Hudson common stock.
18. The Individual Defendants have access to internal
financial information about Hudson, its true value, expected increase in true
value and the benefits of 100 percent ownership of Hudson to which plaintiff and
the Class members are not privy. Defendants are using their positions of power
and control to benefit themselves in this transaction, to the detriment of the
Hudson common stockholders.
19. In approving the buyout, the Individual Defendants have
committed or threatened to commit the following acts to the detriment and
disadvantage of Hudson public stockholders:
a. They have undervalued Hudson common stock by ignoring
the full value of its assets and future prospects. The proposed buyout
consideration does not reflect the value of Hudson's valuable assets; and
5
<PAGE> 6
b. They timed the announcement of the buyout to place an
artificial lid on the market price of Hudson's common stock in order to justify
a price which is unfair to Hudson's public stockholders.
20. The Individual Defendants have clear and material
conflicts of interest and are acting to better the interests of Hudson's
management at the expense of Hudson's public stockholders.
21. In light of the foregoing, the Individual Defendants must,
as their fiduciary obligations require, undertake an appropriate evaluation of
Hudson's worth as an acquisition candidate.
22. As a result of the defendants' unlawful actions,
plaintiffs and the other members of the Class will be irreparably harmed in that
they will not receive their fair portion of the value of Hudson's assets and
business and will be prevented from obtaining the full fair value of their
equity ownership of the Company. Unless the proposed buyout is enjoined by the
Court, defendants will continue to breach their fiduciary duties owned to
plaintiffs and the members of the Class, and may consummate the proposed
transaction, to the irreparable harm of the members of the Class.
23. Plaintiff and the other members of the Class have no
adequate remedy at law.
6
<PAGE> 7
WHEREFORE, plaintiff prays for judgment and relief as follows:
A. Ordering that this action may be maintained as a class
action and certifying plaintiff as the Class representative:
B. Preliminarily and permanently enjoining defendants and
their counsel, agents, employees and all persons acting under, in concert with,
or for them, from proceeding with, consummating or closing the proposed
transaction;
C. In the event the proposed buyout is consummated, rescinding
it and setting it aside;
D. Awarding compensatory damages against defendants
individually and severally in an amount to be determined at trial, together with
prejudgment interest at the maximum rate allowable by law;
E. Awarding plaintiff his costs and disbursements, including
plaintiff's counsel's fees and experts' fees; and
7
<PAGE> 8
F. Granting such other and further relief as to the Court may
seem just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ J. Rosenthal
---------------------------------
919 North Market Street
Suite 1401
Mellon Bank Center
Wilmington, Delaware 19801
(302) 656-4433
OF COUNSEL:
ABBEY, GARDY & SQUITIERI, LLP
212 East 39th Street
New York, New York 10016
(212) 889-3700
8
<PAGE> 1
Exhibit 4
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
MIRIAM SOSHTAIN and HARRIET RAND,
Plaintiffs, C.A. No. 16414NC
-against- CLASS ACTION
COMPLAINT
JAY B. LANGNER, MILTON H. DRESNER,
PAUL R. POLLACK, EDWARD J. ROSEHTHAL,
MICHAEL RUBIN, HANS H. SAMMER,
RICHARD D. SEGAL, STANLEY S. SHUMAN
and HUDSON GENERAL CORPORATION,
Defendants.
Plaintiffs, by their attorneys, allege upon information and
belief, except as to paragraph 1 which plaintiffs allege upon knowledge, as
follows:
1. Plaintiffs Miriam Soshtain and Harriet Rand are
stockholders of defendant Hudson General Corporation ("Hudson" or the
"Company").
2. Hudson is a corporation duly organized and existing under
the laws of the State of Delaware. Hudson provides aviation services such as
aircraft ground handling, ramp cleaning, aircraft fueling, fuel management, snow
removal and ground transportation. It also sells, leases and maintains support
equipment.
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3. Defendant Jay B. Langner ("Langner") is Chief Executive
Officer and Chairman of the Board of Directors of Hudson.
4. Defendant Richard D. Segal ("Segal") is Vice Chairman of
Hudson.
5. Defendant Paul R. Pollack ("Pollack") is Executive Vice
President, Chief Operating Officer, and a director of Hudson. Pollack is also
President of the Company's subsidiary, Hudson General LLC.
6. Defendant Michael Rubin is President and a director of the
Company.
7. Defendants Milton H. Dresner, Edward J. Rosenthal, Hans H.
Sammer and Stanley S. Shuman are directors of the Company.
8. The Individual Defendants have a fiduciary relationship and
responsibility to plaintiffs and the other public stockholders of Hudson and owe
to plaintiffs and the other Class members the highest obligations of good faith,
loyalty, fair dealing, due care and candor.
CLASS ACTION ALLEGATIONS
9. Plaintiffs bring this action on their own behalf and as a
class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on
behalf of all common stockholders of Hudson, or their successors in interest,
who are being and will be harmed by defendants' actions described below (the
"Class"). Excluded from the Class
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are defendants herein and any person, firm, trust, corporation, or other entity
related to or affiliated with any of defendants.
10. This action is properly maintainable as a class
action because:
a. The Class is so numerous that joinder of all members
is impracticable. There are hundreds of Hudson stockholders of record who are
located throughout the United States;
b. There are questions of law and fact which are common
to the Class, including: whether the management of Hudson has acted in a manner
calculated to benefit themselves at the expense of Hudson's public stockholders;
and whether plaintiffs and the other members of the Class would be irreparably
damaged by the wrongs complained of herein;
c. Defendants have acted or refused to act on grounds
generally applicable to the Class, thereby making appropriate final injunctive
relief with respect to the Class as a whole; and
d. Plaintiffs are committed to prosecuting this action
and have retained competent counsel experienced in litigation of this nature.
The claims of plaintiffs are typical of the claims of the other members of the
Class and plaintiffs have the same interests as the other members of the Class.
Accordingly, plaintiffs are adequate representatives of the Class and will
fairly and adequately protect the interests of the Class.
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CLAIM OF RELIEF
11. Hudson specializes in aviation services such as aircraft
ground handling, ramp cleaning, aircraft fueling, fuel management, removal and
bus ground transportation. As of July 31, 1998, there were over 1.7 million
shares of Hudson common stock outstanding.
12. On November 23, 1998, it was reported that Hudson's Board
of Directors had agreed to a management buyout whereby the Company would be
acquired by the management of Hudson (led by defendants Langner and Segal) in a
deal valued at about $100 million. Under the terms of a definitive agreement
already accepted by the Company's Board of Directors, Hudson shareholders would
receive $57.25 per share.
13. The loyalties of Hudson's Board members are, at best,
divided in the instant transaction and they cannot be expected to act in the
best interests of Hudson's public stockholders.
14. The purpose of the proposed acquisition is to enable
Hudson's management to acquire the Company and its valuable assets for their own
benefit at the expense of Hudson's public stockholders.
15. The proposed acquisition comes at a time when Hudson has
performed well and management expects it will continue to perform well.
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16. Hudson's management has timed this transaction to capture
Hudson's future potential without paying an adequate or fair price for the
Company's shares.
17. Amidst this backdrop of positive and improving financial
position and increased prospects for growth, the management buyout at $57.25
cash for each share of Hudson common stock represents a woefully inadequate
premium over the current price of Hudson common stock.
18. The Individual Defendants have access to internal
financial information about Hudson, its true value, expected increase in true
value and the benefits of 100 percent ownership of Hudson to which plaintiffs
and the Class members are not privy. Defendants are using their positions of
power and control to benefit themselves in this transaction, to the detriment of
the Hudson common stockholders.
19. In approving the buyout, the Individual Defendants have
committed or threatened to commit the following acts to the detriment and
disadvantage of Hudson public stockholders:
a. They have undervalued Hudson common stock by ignoring
the full value of its assets and future prospects. The proposed buyout
consideration does not reflect the value of Hudson's valuable assets; and
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b. They timed the announcement of the buyout to place an
artificial lid on the market price of Hudson's common stock in order to justify
a price which is unfair to Hudson's public stockholders.
20. The Individual Defendants have clear and material
conflicts of interest and are acting to better the interests of Hudson's
management at the expense of Hudson's public stockholders.
21. In light of the foregoing, the Individual Defendants must,
as their fiduciary obligations require, undertake an appropriate evaluation of
Hudson's worth as an acquisition candidate.
22. As a result of the defendants' unlawful actions,
plaintiffs and the other members of the Class will be irreparably harmed in that
they will not receive their fair portion of the value of Hudson's assets and
business and will be prevented from obtaining the full fair value of their
equity ownership of the Company. Unless the proposed buyout is enjoined by the
Court, defendants will continue to breach their fiduciary duties owed to
plaintiffs and the members of the Class, and may consummate the proposed
transaction, to the irreparable harm of the members of the Class.
23. Plaintiffs and the other members of the Class have no
adequate remedy at law.
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WHEREFORE, plaintiffs pray for judgment and relief as follows:
A. Ordering that this action may be maintained as a class
action and certifying plaintiffs as the Class representatives;
B. Preliminarily and permanently enjoining defendants and
their counsel, agents, employees and all persons acting under, in concert with,
or for them, from proceeding with, consummating or closing the proposed
transaction;
C. In the event the proposed buyout is consummated, rescinding
it and setting it aside;
D. Awarding compensatory damages against defendants
individually and severally in an amount to be determined at trial, together with
prejudgment interest at the maximum rate allowable by law;
E. Awarding plaintiffs their costs and disbursements,
including plaintiffs' counsels' fees and experts' fees; and
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F. Granting such other and further relief as to the Court may
seem just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ J.Rosenthal
------------------------------------
919 North Market Street
Suite 1401, Mellon Bank Center
Wilmington, Delaware 19801
(302) 656-4433
Attorneys for Plaintiffs
OF COUNSEL:
STULL, STULL & BRODY
6 East 45th Street
New York, NY 10017
(212) 687-7230
WEISS & YOURMAN
The French Building, Suite 1600
551 Fifth Avenue
New York, NY 10176
(212) 682-3025
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Exhibit 5
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- -----------------------------------------------------X
IN RE HUDSON GENERAL CORPORATION : CONSOLIDATED
SHAREHOLDERS LITIGATION : C.A. No. 16804
- -----------------------------------------------------X
ANSWER
Defendants, Milton H. Dresner, Jay B. Langner, Paul R.
Pollack, Edward J. Rosenthal, Michael Rubin, Hans H. Sammer, Richard D. Segal,
Stanley S. Shuman ("Individual Defendants"), and Hudson General Corporation
("Hudson General" and, together with the Individual Defendants, "Defendants"),
by their attorneys, Skadden, Arps, Slate, Meagher & Flom LLP, respond as follows
to the allegations of the Class Action Complaint ("Complaint"):
NATURE OF THE ACTION
1. Paragraph 1 of the Complaint states legal conclusions and
expressions of Plaintiffs intent as to which no responsive pleading is required.
PARTIES
2. Defendants lack knowledge or information sufficient to form
a belief as to the truth of the allegations contained in paragraph 2 of the
Complaint and therefore deny those allegations.
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3. Admitted.
4. Admitted.
5. Admitted.
6. Admitted.
7. Admitted.
8. Admitted.
9. Paragraph 9 of die Complaint states legal conclusions as to
which no responsive pleading is required.
CLASS ACTION ALLEGATIONS
10. Denied.
11. Denied, except that Defendants admit that Hudson General
had 1,744,949 shares of common stock outstanding in September 1998 and further
admit that Plaintiff has retained competent counsel experienced in litigation of
this nature.
SUBSTANTIVE ALLEGATIONS
12. Defendants admit the allegations contained in the first
sentence of paragraph 12 of the Complaint, except deny that the announcement
referred to therein was made by all "defendants." The allegations contained in
the second sentence of paragraph 12 of the Complaint are too vague to require a
responsive pleading, except Defendants admit that the closing price of Hudson
General's
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<PAGE> 3
common stock on the American Stock Exchange on November 20, 1998 was
$54.625.
13. Defendants deny the allegations contained in the first
sentence of paragraph 13 of the Complaint, except admit that the Management
Group includes Langner, Segal, Rubin, and Pollack and also includes all officers
with the exception of Hudson General Corporation's Treasurer and with the
exception of its divisional officers. Defendants admit die allegations contained
in the second sentence of paragraph 13.
14. Defendants admit the allegations contained in the first
sentence of paragraph 14 of the Complaint. The allegations contained in the
second sentence of paragraph 14 of the Complaint are denied. The allegations
contained in the third sentence of paragraph 14 of the Complaint are too vague
to require a responsive pleading and, therefore, Defendants deny those
allegations.
15. Denied.
16. Denied.
17. Denied.
18. Denied.
19. Paragraph 19 of the Complaint contains legal conclusions
as to which no responsive pleading is required.
AFFIRMATIVE DEFENSES
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<PAGE> 4
FIRST AFFIRMATIVE DEFENSE
Plaintiffs claims are barred in whole or in part because
Plaintiff has failed to state a claim upon which relief can be granted.
SECOND AFFIRMATIVE DEFENSE
Plaintiffs claims are barred in whole or in part because
Defendants at all times acted in good faith and with due care, and the
Individual Defendants are protected by the business judgment rule.
THIRD AFFIRMATIVE DEFENSE
Plaintiff has suffered no cognizable injury as a result of
Defendants' alleged conduct.
FOURTH AFFIRMATIVE DEFENSE
Plaintiff's claims are barred in whole or in part by Article
Tenth of Hudson General's Restated Certificate of Incorporation.
WHEREFORE, Defendants respectfully request that this Court
enter an Order and Judgment:
(i) dismissing Plaintiff's Class Action Complaint,
(ii) awarding the Defendants the reasonable costs of suit,
including their attorneys' fees; and
(iii) granting such other relief as the Court deems just and
proper.
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/s/ Thomas J. Allingham
__________________________________
Thomas J. Allingham II
Leonard P. Stark
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
P.O. Box 636
One Rodney Square
Wilmington, Delaware 19899
(302) 651-3000
Attorneys for Defendants
DATED: January 19,1999
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CERTIFICATE OF SERVICE
I hereby certify that two copies of the foregoing Answer were
served by-hand this 19th day of January, 1999 on the following counsel of
record:
Joseph A. Rosenthal
Rosenthal, Monhait, Gross & Goddess
Mellon Bank Center, Suite 1401
P.O. Box 1070
Wilmington, Delaware 19899
/s/ Thomas J. Allingham
____________________________________
Thomas J. Allingham II
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<TABLE>
<S> <C>
HUDSON GENERAL CORPORATION
111 GREAT NECK ROAD
POST OFFICE BOX 355
[HUDSON LOGO] GREAT NECK, NY 11022-0355
(516) 487-8610 TWX
5102212186
FAX (516) 487-4855
</TABLE>
February 19, 1999
Dear Stockholder:
On behalf of the Board of Directors of Hudson General Corporation (the
"Company"), I am pleased to inform you that the Company has entered into an
Agreement and Plan of Merger, dated as of February 15, 1999 (the "Merger
Agreement"), with GLGR Acquisition Corporation ("Purchaser"), an indirect
wholly-owned subsidiary of GlobeGround GmbH which, in turn, is an indirect
wholly-owned subsidiary of Deutsche Lufthansa AG ("Lufthansa"). Pursuant to the
Merger Agreement, Purchaser has today commenced a cash tender offer (the
"Offer") to purchase all outstanding shares of common stock of the Company (the
"Shares") at a price of $76.00 per Share, net to the seller in cash, without
interest. The Offer is conditioned upon, among other things, the approval of the
Supervisory Board of Lufthansa and the tender of at least a majority of the
Shares on a fully diluted basis. The transaction has been approved by the
Executive Board of Lufthansa.
Following the successful completion of the Offer, upon the terms and
subject to the conditions contained in the Merger Agreement, Purchaser will be
merged with and into the Company (the "Merger"), with the Company as the
surviving corporation. At the effective time of the Merger, each remaining
issued and outstanding Share will be converted into the right to receive $76.00
in cash, subject to dissenters' rights.
YOUR BOARD OF DIRECTORS, BASED ON THE UNANIMOUS RECOMMENDATION OF A SPECIAL
COMMITTEE OF THE BOARD OF DIRECTORS CONSISTING OF THREE INDEPENDENT,
UNAFFILIATED DIRECTORS (THE "SPECIAL COMMITTEE"), HAS UNANIMOUSLY APPROVED THE
OFFER, THE MERGER AND THE MERGER AGREEMENT, HAS DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTEREST OF, THE COMPANY AND
THE COMPANY'S STOCKHOLDERS, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES IN THE OFFER.
In arriving at its recommendation, the Special Committee and Board of
Directors gave careful consideration to the factors described in the enclosed
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being filed today with the Securities and Exchange Commission,
including, among other things, the written opinion of Allen & Company
Incorporated, the Special Committee's financial advisor, that the $76.00 per
Share to be received by the stockholders of the Company pursuant to the Offer
and the Merger is fair to such stockholders from a financial point of view.
Important information with respect to the Board of Directors' decision and
the background of the transaction is contained in the enclosed Schedule 14D-9,
and we urge you to consider this information carefully.
In addition to the attached Schedule 14D-9, also enclosed is Purchaser's
Offer to Purchase, dated February 19, 1999, together with related materials,
including a Letter of Transmittal to be used for tendering Shares in the Offer.
These documents set forth the terms and conditions of the Offer and provide
instructions on how to tender your Shares. I urge you to read and consider the
enclosed materials carefully before making your decision with respect to
tendering your Shares pursuant to the Offer.
Very truly yours,
JAY B. LANGNER SIGNATURE
Jay B. Langner
Chairman of the Board and Chief
Executive Officer
<PAGE> 1
Exhibit 31
HUDSON GENERAL CORPORATION AGREES TO BE ACQUIRED
BY GLOBEGROUND GMBH, A UNIT OF DEUTSCHE LUFTHANSA AG, FOR
$76.00 PER SHARE IN CASH
- --------------------------------------------------------------------------------
Great Neck, New York -- February 16, 1999 -- Hudson General Corporation
(AMEX:HGC) announced today that it has entered into a definitive merger
agreement pursuant to which GlobeGround GmbH, a wholly-owned subsidiary of
Deutsche Lufthansa AG, will acquire all of Hudson General's outstanding shares
of Common Stock. The merger agreement provides for a subsidiary of GlobeGround
to commence promptly a tender offer for all of Hudson General's shares at a
price of $76.00 per share in cash. The tender offer will be followed as soon as
possible by a second-step merger in which each share of Hudson General Common
Stock not acquired in the tender offer will be converted into the right to
receive $76.00 per share in cash.
The tender offer is conditioned on the approval of Deutsche Lufthansa's
Supervisory Board not later than March 15, 1999, the valid tender of a majority
of Hudson General's outstanding shares on a fully diluted basis, the expiration
or termination of any applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and certain other customary conditions. The
transactions provided for in the merger agreement have been approved by Deutsche
Lufthansa's Executive Board, and Deutsche Lufthansa's Supervisory Board is
currently scheduled to meet on March 10, 1999.
LAGS (USA) Inc., a wholly-owned subsidiary of GlobeGround, holds a
49% interest in Hudson General LLC, Hudson General's 51%-owned affiliate, which
provides services at airports throughout the United States and Canada.
The merger agreement with GlobeGround was approved by Hudson
General's Board of Directors, acting upon the unanimous recommendation of a
Special Committee of the Board comprised of three independent, unaffiliated
directors. In reaching its decision, the Special Committee was advised by its
financial advisor, Allen & Company Incorporated, which rendered a written
opinion that the $76.00 per share price is fair to the holders of Common Stock
of Hudson General from a financial point of view.
<PAGE> 2
The merger agreement provides, among other things, that GlobeGround
will receive a termination fee of $2.625 million and the reimbursement of
expenses up to $875,000 if the merger agreement is terminated under certain
circumstances prior to approval by Deutsche Lufthansa's Supervisory Board. The
termination fee and maximum expense reimbursement amount will increase to $3.5
million and $1.75 million, respectively, following approval by Deutsche
Lufthansa's Supervisory Board. The merger agreement also provides that in the
event of any superior third party offers for Hudson General, GlobeGround will
have an opportu nity to match or exceed such competing bids before Hudson
General may terminate the merger agreement.
As previously announced, Hudson General recently has received two
other acquisition proposals. On February 12, 1999, Ranger Aerospace Corporation
proposed, subject to certain conditions, to acquire Hudson General at a price of
$72.00 per share in cash, and on February 9, 1999, Ogden Corporation proposed,
subject to certain conditions, to acquire Hudson General at a price of $65.00
per share either in cash or in common shares of Ogden.
Also, as previously announced, on November 22, 1998, Hudson General
entered into a definitive agreement to be acquired by a management-led buyout
group. That agreement, as amended on February 9, 1999, contemplates a one-step
merger in which all outstanding shares of Hudson General Common Stock would be
acquired for $61.00 per share in cash. Hudson General said today that the
management-led buyout group has waived, until March 17, 1999, its right to termi
nate its merger agreement with Hudson General by reason of Hudson General
entering into the definitive merger agreement with GlobeGround, and such agree
ment remains in effect at the present time.
In addition to its 51% ownership interest in Hudson General LLC,
Hudson General is a participant in a joint venture to develop 4,000 acres of
land in Hawaii. Hudson General shares are traded on the American Stock Exchange
under the ticker symbol HGC.
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EXHIBIT 32
[ALLEN & COMPANY INCORPORATED LOGO]
February 15, 1999
Special Committee of the Board of Directors
Hudson General Corporation
111 Great Neck Road
Great Neck, NY 11021
Gentlemen:
We understand that Hudson General Corporation ("Hudson") and GLGR
Acquisition Corp. ("Acquisition Corp.") are entering into a Merger Agreement
dated February 15, 1999 (the "Agreement") proposing to effect the transaction as
described in the Agreement (the "Transaction").
As you know, Allen & Company Incorporated ("Allen") has been engaged by
Hudson to render certain financial advisory services. In this connection,
pursuant to our February, 1988 engagement letter agreement, as amended July 1,
1998 (the "Engagement Letter"), you have asked us to render our opinion as to
the fairness of the consideration to be received by the shareholders of Hudson
in connection with the Transaction from a financial point of view. Pursuant to
the Engagement Letter, Allen will receive a fee upon consummation of the
Transaction.
Allen, as part of its investment banking business, is regularly engaged in
the valuation of businesses and their securities in connection with mergers and
acquisitions, private placements and related financings, bankruptcy
reorganizations and similar recapitalizations, negotiated underwritings,
secondary distributions of listed and unlisted securities, and valuations for
corporate and other purposes. As you are aware, Stanley S. Shuman, a managing
director of Allen, serves as a director of Hudson.
Our opinion as expressed herein reflects and gives effect to our general
familiarity with Hudson over a period of time, as well as information concerning
Hudson which we acquired during the course of this assignment, including
information provided by senior management in the course of a number of
discussions. We have not, however, conducted an independent appraisal of
Hudson's assets, or independently verified the information concerning Hudson's
operations or other data which we have considered in our review. In rendering
our opinion, we have relied upon and assumed the accuracy and completeness of
all of the financial and other information that was available to us from public
sources, that was provided to us by Hudson or its representatives, or that was
otherwise reviewed by us. With respect to the financial projections provided to
us, we have assumed that they have been reasonably prepared in good faith
reflecting the best currently available estimates and judgments of the
management of Hudson as to the future operating and financial performance of
Hudson. In connection with rendering our opinion, we were not authorized to
solicit, and did not solicit, interest from any third party with respect to
Hudson or any of its assets.
In arriving at our conclusion, we have considered, among other factors we
deemed relevant, (i) the terms of the draft Merger Agreement and related
documentation; (ii) the nature of the operations and financial history of
Hudson, including discussions with senior management of Hudson of the business
and prospects of Hudson relating to, among other things, Hudson's operating
budget and financial projections; (iii) Hudson's filings with the Securities and
Exchange Commission, including audited and unaudited financial statements for
Hudson; (iv) the historical price ranges and trading volumes for the common
stock of Hudson; (v) certain financial and stock market information for certain
other companies in businesses related to those of Hudson's; (vi) certain
financial information relating to certain merger and acquisition transactions
involving companies in businesses related to those of Hudson; and (vii) certain
publicly available information relating to premiums paid in certain selected
merger and acquisitions transactions. In addition to our review and analyses of
the specific information set forth above, our opinion herein reflects and gives
effect to our assessment of general
<PAGE> 2
Hudson General Corporation
February 15, 1999
Page 2
economic, monetary, industry, regulatory, market and other conditions existing
as of the date hereof as they may affect the business and prospects of Hudson.
It is understood that this opinion is for the information of the Special
Committee of the Board of Directors of Hudson and may not be used for any other
purpose without our prior written consent, except that this opinion may be
included in its entirety in any filing made by Hudson or Acquisition Corp. with
the Securities and Exchange Commission with respect to the Transaction.
This opinion does not constitute a recommendation as to what course of
action the Special Committee should pursue in connection with the Transaction.
The opinion rendered herein does not constitute a recommendation to shareholders
of Hudson as to whether to vote in favor of the Transaction or to tender any or
all of their shares in connection with the Transaction.
Based upon and subject to the foregoing, it is our opinion as of the date
hereof that the consideration to be received by the shareholders of Hudson in
connection with the Transaction is fair from a financial point of view.
Very truly yours,
ALLEN & COMPANY INCORPORATED
By: /s/ STANLEY S. SHUMAN
------------------------------------
Managing Director
[Allen & Company Logo]
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