EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Among
UAL CORPORATION,
YELLOW JACKET ACQUISITION CORP.
and
US AIRWAYS GROUP, INC.
Dated as of May 23, 2000
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TABLE OF CONTENTS
ARTICLE I
The Merger
SECTION 1.01 The Merger........................................1
SECTION 1.02 Closing...........................................1
SECTION 1.03 Effective Time....................................2
SECTION 1.04 Effects of the Merger.............................2
SECTION 1.05 Certificate of Incorporation and By-laws..........2
SECTION 1.06 Directors.........................................2
SECTION 1.07 Officers..........................................2
ARTICLE II
Conversion of Securities
SECTION 2.01 Conversion of Capital Stock.......................2
SECTION 2.02 Exchange of Certificates..........................3
ARTICLE III
Representations and Warranties
SECTION 3.01 Representations and Warranties of the Company.....5
SECTION 3.02 Representations and Warranties of Parent and Sub.25
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01 Conduct of Business..............................26
SECTION 4.02 No Solicitation..................................32
ARTICLE V
Additional Agreements
SECTION 5.01 Preparation of the Proxy Statement; Stockholders
Meeting .........................................35
SECTION 5.02 Access to Information; Confidentiality...........35
SECTION 5.03 Efforts; Notification............................36
SECTION 5.04 Company Stock Options............................38
SECTION 5.05 Indemnification, Exculpation and Insurance.......38
SECTION 5.06 Fees and Expenses................................39
SECTION 5.07 Information Supplied.............................40
SECTION 5.08 Benefits Matters.................................41
SECTION 5.09 Public Announcements.............................43
SECTION 5.10 Future Employment................................43
ARTICLE VI
Conditions Precedent
SECTION 6.01 Conditions to Each Party's Obligation to Effect
the Merger ......................................43
SECTION 6.02 Conditions to Obligations of Parent and Sub......44
SECTION 6.03 Conditions to Obligation of the Company..........45
SECTION 6.04 Frustration of Closing Conditions................45
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01 Termination......................................45
SECTION 7.02 Effect of Termination............................46
SECTION 7.03 Amendment........................................47
SECTION 7.04 Extension; Waiver................................47
ARTICLE VIII
General Provisions
SECTION 8.01 Nonsurvival of Representations and Warranties....47
SECTION 8.02 Notices..........................................47
SECTION 8.03 .................................................49
SECTION 8.04 Interpretation...................................49
SECTION 8.05 Counterparts.....................................49
SECTION 8.06 Entire Agreement; No Third-Party Beneficiaries...50
SECTION 8.07 Governing Law....................................50
SECTION 8.08 Assignment.......................................50
SECTION 8.09 Enforcement......................................50
AGREEMENT AND PLAN OF MERGER dated as of May 23, 2000, by and
among UAL CORPORATION, a Delaware corporation ("Parent"), YELLOW JACKET
ACQUISITION CORP., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and US AIRWAYS GROUP, INC., a Delaware corporation (the
"Company").
WHEREAS the Board of Directors of each of the Company and Sub
has approved and declared advisable, and the Board of Directors of Parent
has approved, this Agreement and the merger of Sub with and into the
Company (the "Merger"), upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding share of
common stock, par value $1.00 per share, of the Company (the "Company
Common Stock") not owned by Parent, Sub or the Company, other than the
Appraisal Shares (as defined in Section 2.01(d)), will be converted into
the right to receive $60.00 in cash;
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
The Merger
SECTION 1.01 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.03). At the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL.
SECTION 1.02 Closing. Upon the terms and subject to the
conditions set forth in this Agreement, the closing of the Merger (the
"Closing") shall take place at 11:00 a.m., New York time, on the second
business day after the satisfaction or (to the extent permitted by
applicable law) waiver of the conditions set forth in Article VI (other
than those that by their terms cannot be satisfied until the time of the
Closing), at the offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New
York, New York 10019, or at such other time, date or place agreed to in
writing by Parent and the Company; provided, however, that if all the
conditions set forth in Article VI shall not have been satisfied or (to the
extent permitted by applicable law) waived on such second business day,
then the Closing shall take place on the first business day on which all
such conditions shall have been satisfied or (to the extent permitted by
applicable law) waived. The date on which the Closing occurs is referred to
in this Agreement as the "Closing Date".
SECTION 1.03 Effective Time. Upon the terms and subject to the
conditions set forth in this Agreement, as soon as practicable on or after
the Closing Date, a certificate of merger or other appropriate documents
(in any such case, the "Certificate of Merger") shall be duly prepared,
executed and acknowledged by the parties in accordance with the relevant
provisions of the DGCL and filed with the Secretary of State of the State
of Delaware. The Merger shall become effective upon the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
or at such subsequent time or date as Parent and the Company shall agree
and specify in the Certificate of Merger. The time at which the Merger
becomes effective is referred to in this Agreement as the "Effective Time".
SECTION 1.04 Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05 Certificate of Incorporation and By-laws. (a) The
Restated Certificate of Incorporation of the Company, as amended to the
date of this Agreement, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The By-laws of Sub as in effect immediately prior to
the Effective Time shall be the By-laws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06 Directors. The directors of Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07 Officers. The officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving
Corporation until the earlier of their resignation or removal or until
their respective successors are duly elected and qualified, as the case may
be.
ARTICLE II
Conversion of Securities
SECTION 2.01 Conversion of Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of the
holder of any shares of capital stock of the Company, Parent or Sub:
(a) Capital Stock of Sub. Each issued and outstanding
share of common stock of Sub shall be converted into and become one fully
paid and nonassessable share of common stock of the Surviving Corporation.
(b) Cancelation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock that is owned by the Company as treasury
stock, or by Parent or Sub, immediately prior to the Effective Time shall
automatically be canceled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each share of
Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be canceled in accordance with Section
2.01(b) and the Appraisal Shares) shall be converted into the right to
receive $60.00 in cash, without interest (the "Merger Consideration"). At
the Effective Time all such shares shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any
such shares (a "Certificate") shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration.
(d) Appraisal Rights. Notwithstanding anything in this
Agreement to the contrary, shares (the "Appraisal Shares") of Company
Common Stock issued and outstanding immediately prior to the Effective Time
that are held by any holder who is entitled to demand and properly demands
appraisal of such shares pursuant to, and who complies in all respects
with, the provisions of Section 262 of the DGCL ("Section 262") shall not
be converted into the right to receive the Merger Consideration as provided
in Section 2.01(c), but instead such holder shall be entitled to payment of
the fair value of such shares in accordance with the provisions of Section
262. At the Effective Time, all Appraisal Shares shall no longer be
outstanding and shall automatically be canceled and shall cease to exist,
and each holder of Appraisal Shares shall cease to have any rights with
respect thereto, except the right to receive the fair value of such shares
in accordance with the provisions of Section 262. Notwithstanding the
foregoing, if any such holder shall fail to perfect or otherwise shall
waive, withdraw or lose the right to appraisal under Section 262 or a court
of competent jurisdiction shall determine that such holder is not entitled
to the relief provided by Section 262, then the right of such holder to be
paid the fair value of such holder's Appraisal Shares under Section 262
shall cease and such Appraisal Shares shall be deemed to have been
converted at the Effective Time into, and shall have become, the right to
receive the Merger Consideration as provided in Section 2.01(c). The
Company shall serve prompt notice to Parent of any demands for appraisal of
any shares of Company Common Stock, and Parent shall have the right to
participate in and direct all negotiations and proceedings with respect to
such demands. Prior to the Effective Time, the Company shall not, without
the prior written consent of Parent, make any payment with respect to, or
settle or offer to settle, any such demands, or agree to do any of the
foregoing.
SECTION 2.02 Exchange of Certificates. (a) Paying Agent. Prior
to the Effective Time Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as agent for the payment of the
Merger Consideration upon surrender of Certificates (the "Paying Agent"),
and, from time to time after the Effective Time, Parent shall provide, or
cause the Surviving Corporation to provide, to the Paying Agent funds in
amounts and at the times necessary for the payment of the Merger
Consideration pursuant to Section 2.01(c) upon surrender of Certificates,
it being understood that any and all interest or income earned on funds
made available to the Paying Agent pursuant to this Agreement shall be
turned over to Parent.
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of
record of a Certificate (i) a form of letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates held by such person shall pass, only upon proper delivery of
the Certificates to the Paying Agent and shall be in customary form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancelation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly
completed and validly executed, and such other documents as may reasonably
be required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash into which the
shares formerly represented by such Certificate shall have been converted
pursuant to Section 2.01(c) into the right to receive, and the Certificate
so surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock that is not registered in the stock
transfer books of the Company, the proper amount of cash may be paid in
exchange therefor to a person other than the person in whose name the
Certificate so surrendered is registered if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that
such tax has been paid or is not applicable. No interest shall be paid or
shall accrue on the cash payable upon surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock.
All cash paid upon the surrender of a Certificate in accordance with the
terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock
formerly represented by such Certificate. At the close of business on the
day on which the Effective Time occurs the stock transfer books of the
Company shall be closed, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the
shares of Company Common Stock that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Paying Agent for transfer or
any other reason, they shall be canceled and exchanged as provided in this
Article II.
(d) No Liability. None of Parent, Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash delivered
to a public official pursuant to any applicable abandoned property, escheat
or similar law. If any certificates shall not have been surrendered prior
to two years after the Effective Time (or immediately prior to such earlier
date on which any Merger Consideration would otherwise escheat to or became
the property of any Governmental Entity (as defined in Section 3.01(d)),
any such Merger Consideration in respect thereof shall, to the extent
permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(e) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and,
if required by the Surviving Corporation, the posting by such person of a
bond in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to
such Certificate, the Paying Agent shall pay in respect of such lost,
stolen or destroyed Certificate the Merger Consideration.
(f) Withholding Rights. Parent, the Surviving Corporation
or the Paying Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Parent, the Surviving
Corporation or the Paying Agent is required to deduct and withhold with
respect to the making of such payment under the Code or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld
and paid over to the appropriate taxing authority by Parent, the Surviving
Corporation or the Paying Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock in respect of which such deduction and
withholding was made by Parent, the Surviving Corporation or the Paying
Agent.
ARTICLE III
Representations and Warranties
SECTION 3.01 Representations and Warranties of the Company.
Except as set forth on the disclosure schedule, with specific reference to
the Section or Subsection of this Agreement to which the information stated
in such disclosure relates (the "Company Disclosure Schedule") (provided
that any subsection under Section 3.01 of the Company Disclosure Schedule
or any subsections thereof shall each be deemed to include (i) all
disclosures set forth in other sections and subsections of the Company
Disclosure Schedule (including Sections 4.01(a) and 4.01(b)) and (ii) all
disclosures set forth in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1999 (the "Company's 1999 10-K"), US
Airways, Inc.'s (the "Principal Operating Sub") Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, or any other report or other
document filed by the Company or the Principal Operating Sub with the
Securities and Exchange Commission (the "SEC") and publicly available
subsequent to December 31, 1999, and prior to the date of this Agreement,
including the financial statements (and notes thereto) filed therewith
(collectively, the "Filed SEC Documents"), in each of clauses (i) and (ii)
as and to the extent the context of such disclosures makes it reasonably
clear, if read in the context of such other section or subsection, that
such disclosures are applicable to such other sections or subsections), the
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Power. Each of the Company
and its subsidiaries (as defined in Section 8.03) (i) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization, (ii) has all requisite corporate, company or partnership
power and authority to carry on its business as now being conducted and
(iii) is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary, other than (except in the case of clause (i) above
with respect to the Company) where the failure to be so organized,
existing, qualified or licensed or in good standing individually or in the
aggregate would not be expected to result in (taking into account the
likelihood of such result occurring and the expected magnitude of such
event if it were to occur) a material adverse effect (as defined in Section
8.03). The Company has delivered to Parent true and complete copies of its
Restated Certificate of Incorporation and By-laws and the certificate of
incorporation and by-laws (or similar organizational documents) of each of
its subsidiaries, in each case as amended to the date of this Agreement.
Except as identified in writing by the Company to Parent prior to the date
of this Agreement, the Company has made available to Parent and its
representatives true and complete copies of the minutes of all meetings of
the stockholders, the Board of Directors of the Company and each committee
of the Board of Directors of the Company and each of its subsidiaries held
since January 1, 1997, that have been requested by Parent.
(b) Subsidiaries. All the outstanding shares of capital
stock or other equity or voting interests of each such subsidiary are owned
by the Company, by another wholly owned subsidiary of the Company or by the
Company and another wholly owned subsidiary of the Company, free and clear
of all pledges, claims, liens, charges, encumbrances and security interests
of any kind or nature whatsoever (collectively, "Liens"), and are duly
authorized, validly issued, fully paid and nonassessable. Except for the
capital stock of, or other equity or voting interests in, its subsidiaries,
the Company does not own, directly or indirectly, any capital stock of, or
other equity or voting interests in, any corporation, partnership, joint
venture, association or other entity.
(c) Capital Structure. (i) The authorized capital stock of the
Company consists of 150,000,000 shares of Company Common Stock, 3,000,000
shares of senior preferred stock, without nominal or par value (the
"Company Senior Preferred Stock"), and 5,000,000 shares of preferred stock,
without nominal or par value (the "Company Preferred Stock"). As of the
close of business on May 19, 2000, (A) 67,029,029 shares of Company Common
Stock (excluding shares held by the Company as treasury shares) were issued
and outstanding, (B) 34,142,767 shares of Company Common Stock were held by
the Company as treasury shares, (C) 20,486,116 shares of Company Common
Stock were reserved for issuance pursuant to the Nonemployee Directors
Stock Purchase Plan, the 1984 Stock Option and Stock Appreciation Rights
Plan, the 1992 Stock Option Plan, the Nonemployee Director Deferred Stock
Unit Plan, the Nonemployee Director Stock Incentive Plan, the 1996 Stock
Incentive Plan, the 1997 Stock Incentive Plan and the 1998 Pilot Stock
Option Plan (such plans, collectively, the "Company Stock Plans"), of which
11,495,500 shares were subject to outstanding Company Stock Options (as
defined below), (D) no shares of Company Senior Preferred Stock were issued
and outstanding or were held by the Company as treasury shares and (E) no
shares of Company Preferred Stock were issued and outstanding or were held
by the Company as treasury shares. There are no outstanding stock
appreciation rights or other rights that are linked to the price of Company
Common Stock granted under any Company Stock Plan that were not granted in
tandem with a related Company Stock Option. No shares of Company Common
Stock are owned by any subsidiary of the Company. The Company has delivered
to Parent a true and complete list, as of the close of business on May 19,
2000, of all outstanding stock options to purchase Company Common Stock
granted under the Company Stock Plans (collectively, the "Company Stock
Options") and all other rights to purchase or receive Company Common Stock
(collectively, the "Company Stock Issuance Rights") granted under the
Company Stock Plans, the number of shares subject to each such Company
Stock Option or Company Stock Issuance Right, the grant dates and exercise
prices of each such Company Stock Option or, as applicable, Company Stock
Issuance Right and the names of the holder thereof. Except as set forth
above, as of the close of business on May 19, 2000, no shares of capital
stock of, or other equity or voting interests in, the Company, or, to the
extent issued or granted by the Company, options, warrants or other rights
to acquire any such stock or securities were issued, reserved for issuance
or outstanding. During the period from May 19, 2000 to the date of this
Agreement, (x) there have been no issuances by the Company of shares of
capital stock of, or other equity or voting interests in, the Company other
than issuances of shares of Company Common Stock pursuant to the exercise
of Company Stock Options outstanding on such date as required by their
terms as in effect on the date of this Agreement and (y) there have been no
issuances by the Company of options, warrants or other rights to acquire
shares of capital stock or other equity or voting interests from the
Company. All outstanding shares of capital stock of the Company are, and
all shares that may be issued pursuant to the Company Stock Plans will be,
when issued in accordance with the terms thereof, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
There are no bonds, debentures, notes or other indebtedness of the Company
or any of its subsidiaries, and, except as set forth above, no securities
or other instruments or obligations of the Company or any of its
subsidiaries the value of which is in any way based upon or derived from
any capital or voting stock of the Company, having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of the Company or any of its
subsidiaries may vote. Except as set forth above and except as specifically
permitted under Section 4.01(a), there are no Contracts (as defined in
Section 3.01(d)) of any kind to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is bound obligating the Company or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of, or other equity or voting interests in, or
securities convertible into, or exchangeable or exercisable for, shares of
capital stock of, or other equity or voting interests in, the Company or
any of its subsidiaries or obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right or Contract. There are not any outstanding
contractual obligations of the Company or any of its subsidiaries to (I)
repurchase, redeem or otherwise acquire any shares of capital stock of, or
other equity or voting interests in, the Company or any of its subsidiaries
or (II) vote or dispose of any shares of the capital stock of, or other
equity or voting interests in, any of its subsidiaries. To the knowledge of
the Company as of the date of this Agreement, there are no irrevocable
proxies and no voting agreements to which the Company is a party with
respect to any shares of the capital stock or other voting securities of
the Company or any of its subsidiaries.
(ii) As of the date of the Agreement, the number of
outstanding shares of Company Common Stock held by the trustee (the
"Trustee") under the Company's Employee Stock Ownership Plan (the
"ESOP") is 2,081,873, of which 900,156 shares are allocated to
participants and beneficiaries under the ESOP and 1,181,717 shares
are unallocated. As of the date of this Agreement, the outstanding
and unpaid principal amount of the note evidencing the agreement to
repay the loan (the "ESOP Loan") from the Company to the Trustee,
dated August 11, 1989, the proceeds of which were used by the Trustee
on behalf of the ESOP to purchase from the Company on such date
2,200,000 shares of Company Common Stock, is $72,241,786. The
unallocated shares of Company Common Stock held in the ESOP's
suspense account have been pledged as collateral for the ESOP Loan.
(d) Authority; Noncontravention. The Company has the requisite
corporate power and authority to execute and deliver this Agreement 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 authorized by all necessary
corporate action on the part of the Company and no other corporate
proceedings on the part of the Company are necessary to approve this
Agreement or to consummate the transactions contemplated hereby, subject,
in the case of the consummation of the Merger, to obtaining the Stockholder
Approval (as defined in Section 3.01(t)). This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms. The Board of Directors of the Company, at a meeting duly
called and held at which all directors of the Company were present, duly
and unanimously adopted resolutions (i) approving and declaring advisable
the Merger, this Agreement and the transactions contemplated hereby, (ii)
declaring that it is in the best interests of the Company's stockholders
that the Company enter into this Agreement and consummate the Merger on the
terms and subject to the conditions set forth in this Agreement, (iii)
declaring that the consideration to be paid to the Company's stockholders
in the Merger is fair to such stockholders, (iv) directing that this
Agreement be submitted to a vote at a meeting of the Company's stockholders
and (v) recommending that the Company's stockholders adopt this Agreement.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof
do not and will not conflict with, or result in any violation or breach of,
or default (with or without notice or lapse of time, or both) under, or
give rise to a right of, or result in, termination, cancelation or
acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien in or upon any of the properties or
assets of the Company or any of its subsidiaries under, or give rise to any
increased, additional, accelerated or guaranteed rights or entitlements
under, any provision of (i) the Restated Certificate of Incorporation or
By-laws of the Company or the certificate of incorporation or by-laws (or
similar organizational documents) of any of its subsidiaries, (ii) any loan
or credit agreement, bond, debenture, note, mortgage, indenture, guarantee,
lease or other contract, commitment, agreement, instrument, arrangement,
understanding, obligation, undertaking, permit, concession, franchise or
license, whether oral or written (each, including all amendments thereto, a
"Contract"), to which the Company or any of its subsidiaries is a party or
any of their respective properties or assets is subject or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any (A) statute, law, ordinance, rule or regulation or (B)
judgment, order or decree, in each case applicable to the Company or any of
its subsidiaries or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, violations,
breaches, defaults, rights, losses, Liens or entitlements that individually
or in the aggregate would not be expected to result in (taking into account
the likelihood of such result occurring and the expected magnitude of such
event if it were to occur) a material adverse effect. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
domestic or foreign (whether national, federal, state, provincial, local or
otherwise) government or any court, administrative agency or commission or
other governmental or regulatory authority or agency, domestic, foreign or
supranational (a "Governmental Entity"), is required by or with respect to
the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby or compliance with the
provisions hereof, except for (1) the filing of a premerger notification
and report form by the Company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") or any other
applicable competition, merger control, antitrust or similar law or
regulation, (2) any consent, approval, order, authorization, registration,
declaration or filing required to be received from or made with any foreign
regulatory authorities, (3) any filings required under Title 49 of the
United States Code and the rules and regulations of the Federal Aviation
Administration (the "FAA"), (4) any filings required under the rules and
regulations of the Department of Transportation (the "DOT"), (5) the filing
with the SEC of a proxy statement relating to the adoption by the Company's
stockholders of this Agreement (as amended or supplemented from time to
time, the "Proxy Statement") and such reports under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as may be required in
connection with this Agreement, the Merger and the other transactions
contemplated hereby, (6) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware and appropriate documents with
the relevant authorities of other states in which the Company or any of its
subsidiaries is qualified to do business, (7) any filings required under
the rules and regulations of the New York Stock Exchange ("NYSE"), (8) any
consent, approval, order, authorization, registration, declaration or
filing required to be received from or made with any Governmental Entity
that generally regulates aspects of airline operations, including, but not
limited to, noise, environmental, aircraft communications, agricultural,
export/import and customs and (9) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to be obtained or made individually or in the aggregate would not be
expected to result in (taking into account the likelihood of such result
occurring and the expected magnitude of such event if it were to occur) a
material adverse effect.
(e) SEC Documents. Each of the Company and the Principal
Operating Sub has filed with the SEC, and has heretofore made available to
Parent true and complete copies of, all forms, reports, schedules,
statements and other documents required to be filed with the SEC by it
since January 1, 1997 (together with all information incorporated therein
by reference, the "SEC Documents"). No subsidiary of the Company, other
than the Principal Operating Sub, is required to file any form, report,
schedule, statement or other document with the SEC. As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act") or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the
SEC Documents at the time they were filed contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements (including the related notes) included in the SEC Documents
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto in effect at the time of filing, have been prepared in
accordance with generally accepted accounting principles ("GAAP") (except,
in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects
(x) in the case of the SEC Documents filed by the Company, the consolidated
financial position of the Company and its consolidated subsidiaries as of
the dates thereof and their consolidated results of operations and cash
flows for the periods then ended, and (y) in the case of the SEC Documents
filed by the Principal Operating Sub, the consolidated financial position
of the Principal Operating Sub and its consolidated subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows
for the periods then ended (subject, in the case of unaudited statements,
to normal and recurring year-end audit adjustments). Except for contingent
liabilities referenced or reflected (without regard to potential amount) in
the Filed SEC Documents, as of December 31, 1999, the Company and its
subsidiaries had no contingent liabilities, other than contingent
liabilities that individually would not be expected to result in (taking
into account the likelihood of such result occurring and the expected
magnitude of such event if it were to occur) a material adverse effect.
(f) Absence of Certain Changes or Events. Since December
31, 1999, the Company and its subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice, and
there has not been (i) any state of facts, change, development, effect,
condition or occurrence that individually or in the aggregate constitutes,
has had, or would be expected to result in (taking into account the
likelihood of such result occurring and the expected magnitude of such
event if it were to occur) a material adverse effect, (ii) prior to the
date of this Agreement, any declaration, setting aside or payment of any
dividend on, or other distribution (whether in cash, stock or property) in
respect of, any of the Company's or any of its subsidiaries' capital stock,
except for dividends by a wholly owned subsidiary of the Company to its
parent, (iii) prior to the date of this Agreement, any purchase, redemption
or other acquisition of any shares of capital stock or any other securities
of the Company or any of its subsidiaries or any options, warrants, calls
or rights to acquire such shares or other securities, (iv) prior to the
date of this Agreement, any split, combination or reclassification of any
of the Company's or any of its subsidiaries' capital stock or any issuance
or the authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of capital stock or other
securities of the Company or any of its subsidiaries, (v) (x) any granting
by the Company or any of its subsidiaries to any current or former
director, officer, employee or consultant of any increase in compensation,
bonus or other benefits or any such granting of any type of compensation or
benefits to any current or former director, officer, employee or consultant
not previously receiving or entitled to receive such type of compensation
or benefit, except for (A) increases of cash compensation and other
immaterial changes in benefits (except for changes in benefits provided to
officers other than as the result of immaterial changes made to Company
Benefit Plans that are generally applicable to the employees of the Company
or any of its subsidiaries, which changes are not specifically directed at
or do not disproportionately affect such officers) in each case (1) in the
ordinary course of business consistent with past practice or (2) required
under any agreement or benefit plan in effect as of December 31, 1999, or
(B) those actions taken by the Company to retain or attract employees in
key positions as and to the extent consistent with the Employee
Retention/Attraction Plan set forth as Exhibit N to the Company Disclosure
Schedule (the "Retention Plan"), (y) any granting to any current or former
director, officer, employee or consultant of the right to receive any
severance or termination pay, or increases therein, other than (A)
termination arrangements for employees (other than officers) entered into
in the ordinary course of business consistent with past practice and (B)
those actions taken by the Company to retain or attract employees in key
positions as and to the extent consistent with the Retention Plan or (z)
any entry by the Company or any of its subsidiaries into, or any amendment
of, any Company Benefit Agreement(as defined in Section 3.01(j)), (vi) any
payment of any benefit or the grant or amendment of any award (including in
respect of stock options, stock appreciation rights, performance units,
restricted stock or other stock-based or stock-related awards or the
removal or modification of any restrictions in any Company Benefit
Agreement or Company Benefit Plan or awards made thereunder) except as
required to comply with any applicable law or any Company Benefit Agreement
or Company Benefit Plan existing on such date and except for those actions
taken by the Company to retain or attract employees in key positions as and
to the extent consistent with the Retention Plan, (vii) any damage or
destruction, whether or not covered by insurance, that individually or in
the aggregate would be expected to result in (taking into account the
likelihood of such result occurring and the expected magnitude of such
event if it were to occur) a material adverse effect, (viii) any material
change in financial accounting methods, principles or practices by the
Company or any of its subsidiaries, except insofar as may have been
required by a change in GAAP or SEC accounting regulations or guidelines or
applicable law, (ix) on or prior to the date of this Agreement, any
material election with respect to taxes by the Company or any of its
subsidiaries or any settlement or compromise of any material tax liability
or refund of the Company or any of its subsidiaries, (x) on or prior to the
date of this Agreement, any material change in tax accounting methods,
principles or practices by the Company or any of its subsidiaries, except
insofar as may have been required by a change in GAAP or SEC accounting
regulations or guidelines or applicable law or (xi) any revaluation by the
Company or any of its subsidiaries of any of the material assets of the
Company or any of its subsidiaries.
(g) Litigation. There is no suit, claim, action,
investigation or proceeding pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries or
any of their respective assets that individually or in the aggregate would
be expected to result in (taking into account the likelihood of such result
occurring and the expected magnitude of such event if it were to occur) a
material adverse effect, nor is there any statute, law, ordinance, rule,
regulation, judgment, order or decree, of any Governmental Entity or
arbitrator outstanding against, or, to the knowledge of the Company,
investigation, proceeding, notice of violation, order of forfeiture or
complaint by any Governmental Entity involving, the Company or any of its
subsidiaries that individually or in the aggregate would be expected to
result in (taking into account the likelihood of such result occurring and
the expected magnitude of such event if it were to occur) a material
adverse effect.
(h) Contracts. Except for Contracts filed as exhibits to
the Filed SEC Documents, as of the date hereof there are no Contracts that
are required to be filed as an exhibit to any Filed SEC Document under the
Exchange Act and the rules and regulations promulgated thereunder. Except
for Contracts filed in unredacted form as exhibits to the Filed SEC
Documents, Section 3.01(h) of the Company Disclosure Schedule sets forth a
true and complete list of:
(i) all Contracts to which the Company or any of its
subsidiaries is a party, or that purports to be binding upon the
Company, any of its subsidiaries or any of its affiliates, that
contain a covenant (a "Restrictive Covenant") materially restricting
the ability of the Company or any of its subsidiaries (or which,
following the consummation of the Merger, could materially restrict
the ability of Parent or any of its subsidiaries, including the
Company and its subsidiaries) to compete in any business that is
material to the Company and its subsidiaries, taken as a whole, or
Parent and its subsidiaries, taken as a whole, or with any person or
in any geographic area, except for any such Contract (x) that would
not be expected to result in the Company incurring costs or receiving
revenues in excess of $5,000,000 per year, (y) that may be canceled
without penalty by the Company or any of its subsidiaries upon notice
of 60 days or less or (z) the terms and scope (including with respect
to any Restrictive Covenants) are customary in the airline industry
for Contracts of that type;
(ii) all material joint venture, partnership,
business alliance (excluding information technology contracts), code
sharing and frequent flyer agreements (including all material
amendments to each of the foregoing agreements);
(iii) all maintenance agreements for repair and
overhaul that would be expected to result in the Company incurring
costs in excess of $10,000,000 per year (including all material
amendments to each of the foregoing agreements); and
(iv) as of the date hereof, all loan agreements,
credit agreements, notes, debentures, bonds, mortgages, indentures
and other Contracts pursuant to which any indebtedness (which term
shall include capital leases and operating leases) of the Company or
any of its subsidiaries is outstanding or may be incurred and all
guarantees of or by the Company or any of its subsidiaries of any
indebtedness of any other person (except for such indebtedness or
guarantees of indebtedness the aggregate principal amount of which
does not exceed $10,000,000), including the respective aggregate
principal amounts outstanding as of the date of this Agreement. The
Company has previously disclosed to Parent in writing, based upon the
assumptions in such writing, the aggregate amount of indebtedness
(which shall be deemed solely for purposes of this sentence to
consist of capital leases, aircraft operating leases and indebtedness
for borrowed money) of the Company and its subsidiaries (including
all guarantees of indebtedness to third parties) as of the date of
this Agreement.
None of the Company or any of its subsidiaries is in violation of or
default (with or without notice or lapse of time or both) under, or has
waived or failed to enforce any rights or benefits under, any Contract to
which it is a party or by which it or any of its properties or assets is
bound, and, to the knowledge of the Company or such subsidiary, no other
party to any of its Contracts is in violation or default (with or without
notice or lapse of time or both) under, or has waived or failed to enforce
any rights or benefits under, and there has occurred no event giving to
others any right of termination, amendment or cancelation of, with or
without notice or lapse of time or both, any such Contract except, in each
case, for violations, defaults, waivers or failures to enforce benefits
that individually or in the aggregate would not be expected to result in
(taking into account the likelihood of such result occurring and the
expected magnitude of such event if it were to occur) a material adverse
effect. Except as identified in writing by the Company to Parent prior to
the date of this Agreement, the Company has delivered or made available to
Parent or its representatives true and complete copies of all Contracts
listed on Section 3.01(h) of the Company Disclosure Schedule.
(i) Compliance with Laws. Except with respect to
Environmental Laws (as defined in Section 3.01(l)(vi)) and taxes, which are
the subject of Sections 3.01(l) and 3.01(n), respectively, and except as
otherwise set forth in any documents filed by the Company or the Principal
Operating Sub with the SEC and publicly available prior to December 31,
1999, the Company and its subsidiaries and their relevant personnel and
operations are, and since January 1, 1997 have been, in compliance with all
statutes, laws, ordinances, rules, regulations, judgments, orders and
decrees of any Governmental Entity applicable to their businesses or
operations, including all applicable operating certificates, Airworthiness
Directives ("ADs"), Federal Aviation Regulations ("FARs"), DOT regulations,
common carrier obligations and other applicable licensing agreements,
except for any such noncompliance which would not individually or in the
aggregate be expected to result in (taking into account the likelihood of
such result occurring and the expected magnitude of such event if it were
to occur) a material adverse effect. Except as otherwise set forth in any
documents filed by the Company or the Principal Operating Sub with the SEC
and publicly available prior to December 31, 1999, none of the Company or
any of its subsidiaries has received, since January 1, 1997, a notice or
other written communication alleging or identifying a possible material
violation of any statute, law, ordinance, rule, regulation, judgment, order
or decree of any Governmental Entity applicable to its businesses or
operations. Except as otherwise set forth in any documents filed by the
Company or the Principal Operating Sub with the SEC and publicly available
prior to December 31, 1999, the Company and its subsidiaries have in effect
all permits, licenses, variances, exemptions, authorizations, operating
certificates, Slots (as defined in Section 3.01(p)), air service
designations, franchises, orders and approvals of all Governmental
Entities, including the FAA and the DOT (collectively, "Permits"),
necessary or reasonably advisable for them to own, lease or operate their
properties and assets and to carry on their businesses as now conducted,
and there has occurred no violation of, default (with or without notice or
lapse of time or both) under, or event giving to others any right of
termination, amendment or cancelation of, with or without notice or lapse
of time or both, any such Permit, except where the failure to have in
effect such Permits or such violation, default or event would not
individually or in the aggregate be expected to result in (taking into
account the likelihood of such result occurring and the expected magnitude
of such event if it were to occur) a material adverse effect. The Company
does not believe that the Merger, in and of itself, would be expected to
cause (taking into account the likelihood of such result occurring) the
revocation or cancelation of any such Permit.
(j) Absence of Changes in Company Benefit Plans;
Employment Agreements. Since December 31, 1999, none of the Company or any
of its subsidiaries has (i) terminated, adopted, amended or agreed to amend
in any material respect any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock appreciation, restricted stock, stock option, phantom stock,
performance, retirement, thrift, savings, stock bonus, cafeteria, paid
time-off, perquisite, fringe benefit, vacation, severance, disability,
death benefit, hospitalization, medical, welfare benefit or other plan,
program, policy, arrangement or understanding (whether or not legally
binding) providing benefits to any of the current or former directors,
officers, employees or consultants of the Company or any of its
subsidiaries (collectively, "Company Benefit Plans") (other than any such
actions taken with respect to Non-Significant Benefit Plans (as defined
below) in the ordinary course of business), (ii) made any material change
in any actuarial or other assumption used to calculate funding obligations
with respect to any Company Pension Plan (as defined in Section 3.01(m)) or
(iii) made any material change in the manner in which contributions to any
Company Pension Plan are made or the basis on which such contributions are
determined. There exist no employment, consulting, deferred compensation,
severance, termination or indemnification agreements or arrangements
between the Company or any of its subsidiaries, on the one hand, and any
current or former director, officer, employee or consultant of the Company
or any of its subsidiaries, on the other hand (collectively, "Company
Benefit Agreements") (other than Non-Significant Benefit Agreements (as
defined below)), and no Company Benefit Agreement (other than
Non-Significant Benefit Agreements) or Company Benefit Plan (other than
Non-Significant Benefit Plans) provides benefits that are contingent, or
the terms of which are materially altered, upon the occurrence of a
transaction involving the Company or its subsidiaries of the nature
contemplated by this Agreement. "Non-Significant Benefit Plans" means all
immaterial Company Benefit Plans which do not provide benefits to any
officers or directors of the Company or the Principal Operating Sub.
"Non-Significant Benefit Agreements" means all immaterial Company Benefit
Agreements which are not between the Company or the Principal Operating
Sub, on the one hand, and any current officer or director of the Company or
the Principal Operating Sub, on the other hand.
(k) Labor and Employment Matters. As of the date hereof,
Section 3.01(k) of the Company Disclosure Schedule sets forth a true and
complete list of all collective bargaining or other labor union contracts
(including all amendments thereto) applicable to any employees of the
Company or any of its subsidiaries. There is no labor dispute, strike, work
stoppage or lockout, or, to the knowledge of the Company, threat thereof,
by or with respect to any employee of the Company or any of its
subsidiaries, except where such dispute, strike, work stoppage or lockout
individually or in the aggregate would not be expected to result in (taking
into account the likelihood of such result occurring and the expected
magnitude of such event if it were to occur) a material adverse effect.
None of the Company or any of its subsidiaries has breached or otherwise
failed to comply with any provision of any collective bargaining or other
labor union contract applicable to any employees of the Company or any of
its subsidiaries and there are no grievances or complaints outstanding or,
to the knowledge of the Company, threatened against the Company or any of
its subsidiaries under any such Contract except for any breaches, failures
to comply, grievances or complaints that individually or in the aggregate
would not be expected to result in (taking into account the likelihood of
such result occurring and the expected magnitude of such event if it were
to occur) a material adverse effect. The Company has made available to
Parent and its representatives true and complete copies of all Contracts
listed on Section 3.01(k) of the Company Disclosure Schedule.
(l) Environmental Matters. (i) Permits and Authorizations.
Each of the Company and its subsidiaries possesses all material Environmental
Permits (as defined below) necessary to conduct its businesses and operations as
currently conducted.
(ii) Compliance. Each of the Company and its
subsidiaries is in compliance in all material respects with all
applicable Environmental Laws (as defined below) and all
Environmental Permits, and none of the Company or its subsidiaries
has received any (A) communication from any Governmental Entity or
other person that alleges that the Company or any of its subsidiaries
has violated or is liable under any Environmental Law other than
communications with respect to violations or liabilities that would
not be expected to result in (taking into account the likelihood of
such result occurring and the expected magnitude of such event if it
were to occur) a material adverse effect or (B) written request for
material information pursuant to Section 104(e) of the U.S.
Comprehensive Environmental Response, Compensation and Liability Act
or similar state statute concerning the disposal of Hazardous
Materials (as defined below).
(iii) Environmental Claims. There are no Environmental
Claims (as defined below) (A) pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries or
(B) to the knowledge of the Company, pending or threatened against
any person whose liability for any Environmental Claim the Company or
any of its subsidiaries has retained or assumed, either contractually
or by operation of law, in each case other than Environmental Claims
that would not be expected to result in (taking into account the
likelihood of such result occurring and the expected magnitude of
such event if it were to occur) a material adverse effect. None of
the Company or its subsidiaries has contractually retained or assumed
any liabilities or obligations that would be expected to provide the
basis for any Environmental Claim that would be expected to result in
(taking into account the likelihood of such result occurring and the
expected magnitude of such event if it were to occur) a material
adverse effect.
(iv) Stage III Requirements. (A) None of the Company
or any of its subsidiaries will be required to make material
expenditures to comply with the Stage III noise reduction
requirements promulgated by the FAA (the "Stage III Requirements") or
other applicable noise reduction requirements and (B) the retirement
or other discontinuation of use by the Company or any of its
subsidiaries of any aircraft that will not be in compliance with the
Stage III Requirements or other applicable noise reduction
requirements would not individually or in the aggregate be expected
to result in (taking into account the likelihood of such result
occurring and the expected magnitude of such event if it were to
occur) a material adverse effect.
(v) Releases. To the knowledge of the Company, there
have been no Releases (as defined in Section 3.01(l)(vi)(D)) of any
Hazardous Materials that could reasonably be expected to form the
basis of any material Environmental Claim.
(vi) Definitions. (A) "Environmental Claims" means
any and all administrative, regulatory or judicial actions, orders,
decrees, suits, demands, demand letters, directives, claims, liens,
investigations, proceedings or notices of noncompliance or
violation by any Governmental Entity or other person alleging
potential responsibility or liability (including potential
responsibility or liability for costs of enforcement, investigation,
cleanup, governmental response, removal or remediation, for natural
resources damages, property damage, personal injuries or penalties or
for contribution, indemnification, cost recovery, compensation or
injunctive relief) arising out of, based on or related to (x) the
presence, Release or threatened Release of, or exposure to, any
Hazardous Materials at any location, whether or not owned, operated,
leased or managed by the Company or any of its subsidiaries, or (y)
circumstances forming the basis of any violation or alleged violation
of any Environmental Law or Environmental Permit.
(B) "Environmental Laws" means all domestic or
foreign (whether national, federal, state, provincial or
otherwise) laws, rules, regulations, orders, decrees,
common law, judgments or binding agreements issued,
promulgated or entered into by or with any Governmental
Entity relating to pollution or protection of the
environment (including ambient air, surface water,
groundwater, soils or subsurface strata) or protection of
human health as it relates to the environment, including
laws and regulations relating to Releases or threatened
Releases of Hazardous Materials or otherwise relating to
the generation, manufacture, processing, distribution,
use, treatment, storage, transport, handling of or
exposure to Hazardous Materials.
(C) "Environmental Permits" means all permits,
licenses, registrations and other authorizations required
under applicable Environmental Laws.
(D) "Hazardous Materials" means all hazardous,
toxic, explosive or radioactive substances, wastes or
other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing material,
polychlorinated biphenyls ("PCBs") or PCB-containing
materials or equipment, radon gas, infectious or medical
wastes and all other substances or wastes of any nature
regulated pursuant to any Environmental Law.
(E) "Release" means any release, spill, emission,
leaking, dumping, injection, pouring, deposit, disposal,
discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within
any building, structure, facility or fixture.
(m) ERISA Compliance. (i) Section 3.01(m)(i) of the
Company Disclosure Schedule contains a true and complete list, as of the date
hereof, of all "employee welfare benefit plans" (as defined in Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), "employee pension benefit plans" (as defined in Section 3(2) of
ERISA) ("Company Pension Plans") and all other Company Benefit Plans
maintained or contributed to by the Company or any of its subsidiaries or
any person or entity that, together with the Company or any of its
subsidiaries, is treated as a single employer (a "Commonly Controlled
Entity") under Section 414(b), (c), (m) or (o) of the Internal Revenue Code
of 1986, as amended (the "Code"), for the benefit of any current or former
directors, officers, employees or consultants of the Company or any of its
subsidiaries, other than, in each case, any Non-Significant Benefit Plans.
The Company has provided or made available to Parent, to the extent
requested by Parent, true and complete copies of (1) each Company Benefit
Plan (or, in the case of any unwritten Company Benefit Plans, descriptions
thereof), (2) the most recent annual report on Form 5500 required to be
filed with the Internal Revenue Service (the "IRS") with respect to each
Company Benefit Plan (if any such report was required), (3) the most recent
summary plan description for each Company Benefit Plan for which such
summary plan description is required and (4) each trust agreement and group
annuity contract relating to any Company Benefit Plan, other than, in each
case, any Non-Significant Benefit Plans. Each Company Benefit Plan has been
administered in accordance with its terms, except where the failure so to
be administered individually or in the aggregate would not be expected to
result in (taking into account the likelihood of such result occurring and
the expected magnitude of such event if it were to occur) a material
adverse effect. The Company and its subsidiaries and all the Company
Benefit Plans are in compliance with all applicable provisions of ERISA and
the Code, except for instances of possible noncompliance that individually
or in the aggregate would not be expected to result in (taking into account
the likelihood of such result occurring and the expected magnitude of such
event if it were to occur) a material adverse effect.
(ii) Neither the Company nor any Commonly Controlled
Entity has maintained, contributed to or been obligated to contribute
to any Company Benefit Plan that is subject to Title IV of ERISA with
respect to which the Company or any Commonly Controlled Entity has
liabilities or obligations (whether accrued, absolute, contingent or
otherwise).
(iii) With respect to any Company Benefit Plan (other
than any Non-Significant Benefit Plan) that is an employee welfare
benefit plan, there are no understandings, agreements or
undertakings, written or oral, that would prevent any such plan
(including any such plan covering retirees or other former employees)
from being amended or terminated without material liability to the
Company or any of its subsidiaries on or at any time after the
Effective Time.
(iv) No current or former director, officer employee
or consultant of the Company or any of its subsidiaries are party to
any agreement or arrangement with the Company or any of its
subsidiaries, nor are there any corporate policies in place, the
benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Company
of the nature contemplated by this Agreement. Prior to the date of
this Agreement, the Company has delivered to Parent a report that
sets forth the Company's good faith estimate, as of the date of such
report, of (x) the amount to be paid (subject to the exceptions
described in such report and based upon the assumptions described in
such report) to the current officers of the Company and the Principal
Operating Sub and the president of each of the Company's three
commuter subsidiaries under all Company Benefit Agreements and
Company Benefit Plans (or the amount by which any of their benefits
may be accelerated or increased) as a result of (i) the execution of
this Agreement, (ii) the obtaining of the Stockholder Approval, (iii)
the consummation of the Merger or the other transaction contemplated
by this Agreement or (iv) the termination or constructive termination
of the employment of such officers following one of the events set
forth in clauses (i) through (iii) above and (y) the ramifications of
such payments Sections 280G and 4999 of the Code.
(v) The deduction of any amount payable pursuant to
the terms of the Company Benefit Plans or any other employment
contracts or arrangements will not be subject to disallowance under
Section 162(m) of the Code.
(vi) The Company has no liability or obligations,
including under or on account of a Company Benefit Plan or Company
Benefit Agreement, arising out of the Company's hiring of persons to
provide services to the Company and treating such persons as
consultants or independent contractors and not as employees of the
Company, except where such liability or obligation would not be
expected to result in (taking into account the likelihood of such
result occurring and the expected magnitude of such event if it were
to occur) a material adverse effect.
(n) Taxes. (i) Each of the Company and its subsidiaries
has filed all tax returns required to be filed by it or requests for
extensions to file such returns have been timely filed, granted and have
not expired, and all such returns are true and complete, except for such
failures to file or to have extensions granted that remain and such
inaccuracies that individually or in the aggregate would not be expected to
result in (taking into account the likelihood of such result occurring and
the expected magnitude of such event if it were to occur) a material
adverse effect. Each of the Company and its subsidiaries has paid (or the
Company has paid on its behalf) all taxes shown as due on such returns and
all material taxes otherwise due (including withholding taxes pursuant to
Sections 1441, 1442, 3121 and 3402 of the Code or similar provisions under
any foreign federal laws or any state or local laws, domestic or foreign),
except for such failures to pay that individually or in the aggregate would
not be expected to result in (taking into account the likelihood of such
result occurring and the expected magnitude of such event if it were to
occur) a material adverse effect, and the most recent financial statements
contained in the Filed SEC Documents adequately provide for all taxes payable
by the Company and its subsidiaries (in addition to any reserve for deferred
taxes established to reflect timing differences between book and tax income)
for all taxable periods and portions thereof accrued through the date of such
financial statements, except where the failure to have such an adequate
provision would not be expected to result in (taking into account the
likelihood of such result occurring and the expected magnitude of such
event if it were to occur) a material adverse effect.
(ii) No deficiencies for any taxes have been
proposed, asserted or assessed against the Company or any of its
subsidiaries that are not adequately reflected in the most recent
financial statements contained in the Filed SEC Documents, except for
deficiencies that individually or in the aggregate would not be
expected to result in (taking into account the likelihood of such
result occurring and the expected magnitude of such event if it were
to occur) a material adverse effect, and no requests for waivers of
the time to assess any such taxes have been granted or are pending.
The United States Federal income tax returns of the Company and each
of its subsidiaries consolidated in such returns have been either
examined by and settled with the IRS or closed by virtue of the
applicable statute of limitations. There is no audit, examination,
deficiency or refund litigation pending with respect to taxes and
during the past three years no taxing authority has given written
notice of the intent to commence any such examination, audit or
refund litigation and which such examination, audit or refund
litigation has not yet ended. None of the assets or properties of the
Company or any of its subsidiaries is subject to any material tax
lien, other than any such liens for taxes which are not due and
payable, which may thereafter be paid without penalty or the validity
of which are being contested in good faith by appropriate proceedings
and for which adequate provisions are being maintained in accordance
with GAAP.
(iii) None of the Company or any of its subsidiaries
has constituted either a "distributing corporation" or a "controlled
corporation" in a distribution of stock outside of the affiliated
group of which the Company is the common parent qualifying or
intended to qualify for tax-free treatment under Section 355(a) of
the Code (A) in the two years prior to the date of this Agreement or
(B) in a distribution that could otherwise constitute part of a
"plan" or "series of related transactions" (within the meaning of
Section 355(e) of the Code) in conjunction with the Merger.
(iv) As used in this Agreement, "taxes" shall include
all (x) domestic and foreign (whether national, federal, state,
provincial, local or otherwise) income, franchise, property, sales,
excise, employment, payroll, social security, value-added, ad
valorem, transfer, withholding and other taxes, including taxes based
on or measured by gross receipts, profits, sales, use or occupation,
tariffs, levies, impositions, assessments or governmental charges of any
nature whatsoever, including any interest penalties or additions with
respect thereto, (y) liability for the payment of any amounts of the
type described in clause (x) as a result of being a member of an
affiliated, consolidated, combined or unitary group, and (z)
liability for the payment of any amounts as a result of being party
to any tax sharing agreement or as a result of any express or implied
obligation to indemnify any other person with respect to the payment
of any amounts of the types described in clause (x) or (y).
(o) Aircraft. (i) Section 3.01(o)(i) of the Company
Disclosure Schedule sets forth a true and complete list of all aircraft
owned, leased or operated by the Company or any of its subsidiaries as of
April 30, 2000. All aircraft owned, leased or operated by the Company or
any of its subsidiaries (other than the Non-Operating Aircraft (as defined
below) and the Excluded Leased Aircraft (as defined below)) are in
airworthy condition and are being maintained according to applicable FAA
regulatory standards and the FAA-approved maintenance program of the
Company and its subsidiaries. The Company and its subsidiaries have
implemented plans with respect to their respective aircraft (other than the
Non-Operating Aircraft and Excluded Leased Aircraft) and engines that, if
complied with, would result in the satisfaction of all requirements under
all applicable ADs and FARs required to be complied with in accordance with
the FAA-approved maintenance program of the Company and its subsidiaries,
and the Company and its subsidiaries are in compliance with such plans in
all material respects and currently have no reason to believe that they
will not satisfy any component of such plan on or prior to the dates
specified in such plan. No Non-Operating Aircraft is currently included in,
or is currently contemplated by the Company to be included in, the active
fleet of the Company or any of its subsidiaries. All lease agreements
relating to the lease of an Excluded Leased Aircraft by the Company or any
of its subsidiaries to a third party lessee contain a customary undertaking
by the third party lessee with respect to maintaining such Excluded Leased
Aircraft in accordance with FAA regulatory standards and requirements under
applicable ADs and FARs. The term "Non-Operating Aircraft" means each
aircraft of the Company or any of its subsidiaries identified on Section
3.01(o)(i) of the Company Disclosure Schedule as not being in operation.
The term "Excluded Leased Aircraft" means each aircraft owned or leased by
the Company that has been leased to a third party lessee and with respect
to which neither the Company nor any of its subsidiaries has retained any
maintenance obligations.
(ii) Except as identified in writing by the Company
to Parent prior to the date of this Agreement, Section 3.01(o)(ii) of
the Company Disclosure Schedule sets forth a true and complete list,
as of the date hereof, containing all Contracts (other than existing
aircraft leases) pursuant to which the Company or any of its
subsidiaries may purchase or lease aircraft, including the
manufacturer and model of all aircraft subject to each Contract, the
nature of the purchase or lease obligation (i.e., firm commitment,
subject to reconfirmation or option), the anticipated delivery date
of each aircraft and the other material terms of each Contract.
Except as identified in writing by the Company to Parent prior to the
date of this Agreement, the Company has delivered or made available
to Parent true and complete copies of all Contracts listed on Section
3.01(o)(ii) of the Company Disclosure Schedule, including all
amendments thereto. The Company has also delivered to Parent a true
and complete copy of the fleet plan for the Principal Operating Sub
for the period ending December 31, 2004.
(p) Slots; Operating Rights. (i) Section 3.01(p)(i) of
the Company Disclosure Schedule sets forth a true and complete list of all
takeoff and landing slots and other similar takeoff and landing rights
(collectively, the "Slots") used or held by the Company or any of its
subsidiaries on the date of this Agreement at Slot-controlled airports,
including a true and complete list of all Slot lease agreements. The Slots
have been used 80% of each full and partial reporting period (as described
in 14 CFR ss. 93.227(i)) since December 31, 1999, except to the extent less
usage was permitted as provided under 14 CFR ss. 93.227. The Slots have not
been designated for the provision of essential air service under the
regulations of the FAA.
(ii) Section 3.01(p)(ii) of the Company Disclosure
Schedule sets forth a true and complete list of all foreign operating
rights and all foreign takeoff and landing authorizations and other
similar takeoff and landing rights used by the Company or any of its
subsidiaries on the date of this Agreement.
(q) Intellectual Property. (i) Each of the Company and
its subsidiaries owns, or is validly licensed or otherwise has the right to
use, all patents, patent rights, trademarks, trade secrets, trade names,
service marks, copyrights and other proprietary intellectual property
rights and computer programs (the "Intellectual Property Rights") used in
its business, except for such Intellectual Property Rights the failure of
which to own, license or otherwise have the right to use individually or in
the aggregate would not be expected to result in (taking into account the
likelihood of such result occurring and the expected magnitude of such
event if it were to occur) a material adverse effect.
(ii) None of the Company or any of its subsidiaries
has infringed upon, misappropriated or otherwise violated any
Intellectual Property Rights or other proprietary information of any
other person, except for any such infringement, misappropriation or
other violation that individually or in the aggregate would not be
expected to result in (taking into account the likelihood of such
result occurring and the expected magnitude of such event if it were
to occur) a material adverse effect. None of the Company or any of
its subsidiaries has received any written charge, complaint, claim,
demand or notice alleging any such infringement, misappropriation or
other violation (including any claim that the Company or any of its
subsidiaries must license or refrain from using any Intellectual
Property Rights or other proprietary information of any other person)
that has not been settled or otherwise fully resolved, except for any
such infringement, misappropriation or other violation that
individually or in the aggregate would not be expected to result in
(taking into account the likelihood of such result occurring and the
expected magnitude of such event if it were to occur) a material
adverse effect. To the Company's knowledge, no other person has
infringed upon, misappropriated or otherwise violated any
Intellectual Property Rights of the Company or any of its
subsidiaries, except for any such infringement, misappropriation or
other violation that individually or in the aggregate would not be
expected to result in (taking into account the likelihood of such
result occurring and the expected magnitude of such event if it were
to occur) a material adverse effect.
(r) Business Combination Charter Provision. The approval
of this Agreement by the Board of Directors of the Company referred to in
Section 3.01(d) represents the only action necessary to ensure that ARTICLE
SIXTH of the Restated Certificate of Incorporation of the Company does not
and will not apply to the execution or delivery of this Agreement or the
consummation of the Merger.
(s) State Takeover Statutes. The approval of the Merger
by the Board of Directors of the Company referred to in Section 3.01(d)
constitutes approval of the Merger for purposes of Section 203 of the DGCL
and represents the only action necessary to ensure that Section 203 of the
DGCL does not and will not apply to the execution or delivery of this
Agreement or the consummation of the Merger and the other transactions
contemplated hereby. No other state takeover or similar statute or
regulation is applicable to this Agreement, the Merger or the other
transactions contemplated hereby.
(t) Voting Requirements. The affirmative vote at the
Stockholders Meeting (as defined in Section 5.01(b)) or any adjournment or
postponement thereof of the holders of a majority of the outstanding shares
of Company Common Stock in favor of adopting this Agreement (the
"Stockholder Approval") is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve or adopt this
Agreement or the Merger. The affirmative vote of the holders of the Company
Common Stock is not necessary to approve any transaction contemplated by
this Agreement (other than the consummation of the Merger).
(u) Brokers. No broker, investment banker, financial
advisor or other person, other than Salomon Smith Barney Inc., the fees and
expenses of which will be paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has delivered
to Parent true and complete copies of all agreements under which any such
fees or expenses are payable and all indemnification and other agreements
related to the engagement of the persons to whom such fees are payable.
(v) Opinion of Financial Advisor. The Company has
received the written opinion of Salomon Smith Barney Inc., in customary
form, to the effect that, as of the date of this Agreement, the
consideration to be received in the Merger by the Company's stockholders is
fair to the Company's stockholders from a financial point of view, a copy
of which opinion has been delivered to Parent.
(w) Other Matters. The information (other than forecasts)
furnished by the Company to Parent relating to the items (the "Specified
Matters") identified in a letter specifically referencing this Section of
the Agreement delivered by Parent to the Company on or prior to the date of
this Agreement is accurate in all material respects and, taking into
account the limited nature of the information disclosed, does not omit to
state any fact necessary in order to make such information not misleading.
There are no facts or terms with respect to the Specified Matters which
have not been disclosed to Parent which would be expected to result in
(taking into account the likelihood of such result occurring and the
expected magnitude of such event if it were to occur) a material adverse
effect. The forecasts dated April 25, 2000 delivered by or on behalf of the
Company to Parent relating to the Specified Matters were prepared on the
basis of assumptions the Company believes in good faith as of the date of
this Agreement to be reasonable and the Company has no knowledge as of the
date of this Agreement of any fact or information that would lead it to
believe that such assumptions are incorrect or misleading in any material
respect.
SECTION 3.02 Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization. Each of Parent and Sub is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has all requisite corporate
power and authority to carry on its business as now being conducted.
(b) Authority; Noncontravention. Parent and Sub have the
requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
Parent and Sub and no other corporate proceedings on the part of Parent or
Sub, including the approval of their respective stockholders, are necessary
to approve this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Parent and
Sub, as applicable, and constitutes a valid and binding obligation of
Parent and Sub, as applicable, enforceable against Parent and Sub, as
applicable, in accordance with its terms. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
and compliance with the provisions of this Agreement do not and will not
conflict with, or result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right
of, or result in, termination, cancelation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Parent under,
or give rise to any increased, additional, accelerated or guaranteed rights
or entitlements under, any provision of (i) the Restated Certificate of
Incorporation or By-laws of Parent or the certificate of incorporation or
by-laws (or similar organizational documents) of any of its subsidiaries
(including Sub), (ii) any Contract applicable to Parent or Sub or their
respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any (A)
statute, law, ordinance, rule or regulation or (B) judgment, order or
decree, in each case applicable to Parent or Sub or their respective
properties or assets, other than, in the case of clauses (ii) and (iii),
any such conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not prevent or materially impede or
delay (taking into account the likelihood of such result occurring and the
expected magnitude of such event if it were to occur) the consummation of
the Merger or the other transactions contemplated hereby. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Parent or
Sub in connection with the execution and delivery of this Agreement by
Parent and Sub or the consummation by Parent and Sub of the transactions
contemplated hereby or the compliance with the provisions of this
Agreement, except for (1) the filing of a premerger notification and report
form under the HSR Act or any other applicable competition, merger control,
antitrust or similar law or regulation, (2) any consent, approval, order,
authorization, registration, declaration or filing required to be received
from or made with any foreign regulatory authorities, (3) any filings
required under the rules and regulations of the FAA, (4) any filings
required under the rules and regulations of the DOT, (5) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
and appropriate documents with the relevant authorities of other states in
which the Company is qualified to do business, (6) any consent, approval,
order, authorization, registration, declaration or filing required to be
received from or made with any Governmental Entity that generally regulates
aspects of airline operations, including, but not limited to, noise,
environmental, aircraft communications, agricultural, export/import and
customs and (7) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained
or made individually or in the aggregate would not impair in any material
respect the ability of Parent or Sub to perform its obligations under this
Agreement or prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement.
(c) Interim Operations of Sub. Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby and has
engaged in no business other than in connection with the transactions
contemplated by this Agreement.
(d) Capital Resources. Parent has or, on or prior to the
Closing Date, will have, sufficient cash to pay the Merger Consideration.
(e) No Capital Ownership. As of the date hereof, neither
Parent nor Sub own any shares of capital stock of the Company for purposes
of Section 203 of the DGCL.
ARTICLE IV
Covenants Relating to Conduct of Business
SECTION 4.01 Conduct of Business. (a) Conduct of Business by
the Company. During the period from the date of this Agreement to the
Effective Time, except as consented to in writing by Parent or as
specifically contemplated by this Agreement (including the Company
Disclosure Schedule), the Company shall, and shall cause its subsidiaries
to, carry on their respective businesses in the ordinary course consistent
with past practice and use their reasonable efforts to comply with all
applicable laws, rules and regulations and, to the extent consistent
therewith, use their reasonable efforts to preserve their assets and
preserve their relationships with customers, suppliers, employees,
licensors, licensees, distributors and others having business dealings with
them. Without limiting the generality of the foregoing, during the period
from the date of this Agreement to the Effective Time, except as consented
to in writing by Parent or as specifically contemplated by this Agreement
(including the Company Disclosure Schedule), the Company shall not, and
shall not permit any of its subsidiaries to:
(i) (x) declare, set aside or pay any dividends on,
or make any other distributions (whether in cash, stock or property)
in respect of, any of its capital stock, provided that Parent's
consent shall not be required for dividends by a direct or indirect
wholly owned subsidiary of the Company to its parent, (y) purchase,
redeem or otherwise acquire any shares of its capital stock or any
other securities of the Company or its subsidiaries or any options,
warrants, calls or rights to acquire any such shares or other
securities or (z) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock or any of its other securities;
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other equity or voting
interests or any securities convertible into, or exchangeable for, or
any options, warrants, calls or rights to acquire, any such shares,
voting securities or convertible securities or any stock appreciation
rights or other rights that are linked to the price of Company Common
Stock, provided that Parent's consent shall not be required for the
issuance of shares of Company Common Stock upon the exercise of
Company Stock Options in accordance with the terms of such options as
in effect on the date of this Agreement;
(iiiamend its certificate of incorporation or
by-laws (or similar organizational documents);
(iv)directly or indirectly acquire or agree to
acquire (A) by merging or consolidating with, or by purchasing all or
a substantial portion of the assets of, or by any other manner, any
<PAGE>
assets constituting a business or any corporation, partnership, joint
venture or association or other entity or division thereof, or any
direct or indirect interest in any of the foregoing, provided that
the restrictions set forth in this Section 4.01(a)(iv)(A) shall not
apply to the merger of any direct or indirect wholly owned subsidiary
of the Company with or into the Company or any other direct or
indirect wholly owned subsidiary of the Company, or (B) any asset,
provided that the restrictions set forth in this Section
4.01(a)(iv)(B) shall not apply to the acquisition or the agreement to
acquire (1) assets which are not aircraft or engines (w) acquired in
the ordinary course of business consistent with past practice with an
individual purchase price equal to or less than $1,000,000, (x)
acquired in response to unanticipated operational, competitive or
economic factors if (I) such action is consistent with past practice,
(II) the Company determines, based upon its reasonable judgment, that
such action is an appropriate response to such factor and (III)
Parent determines, based upon its reasonable judgment, that such
action would not have a significant and adverse effect on Parent and
its subsidiaries (which, for purposes of this clause (III), shall
include the Company and its subsidiaries), (y) acquired reasonably in
response to a regulatory requirement or mandate or (z) acquired in
accordance with Section 4.01(a)(vii) and (2) new or used aircraft and
engines pursuant to the transactions set forth in Section 4.01(a)(iv)
(the "Acquired Aircraft/Engines Schedule") of the Company Disclosure
Schedule;
(v) directly or indirectly sell, lease, license,
sell and leaseback (other than, with respect to assets other than
aircraft and engines, a sale and leaseback transaction disclosed in
the Company Capital Budget), mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets or any interest therein, provided that the restrictions set
forth in this Section 4.01(a)(v) shall not apply to (A) sales of
assets in the ordinary course of business consistent with past
practice with individual sale prices equal to or less than $1,000,000
or (B) transactions contemplated by clause (vi)(x)(B) below;
(vi)(x) repurchase, prepay or incur any indebtedness
or guarantee any indebtedness of another person or issue or sell any
debt securities or options, warrants, calls or other rights to
acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of another person, enter
into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, provided that the
restrictions set forth in this Section 4.01(a)(vi)(x) shall not apply
to (A) short-term borrowings incurred in the ordinary course of
business consistent with past practice and (B) the incurrence of
indebtedness to (I) finance the purchase or leasing of new aircraft
and engines as set forth in the Acquired Aircraft/Engines Schedule,
(II) refinance indebtedness that was incurred to finance the purchase
or leasing of aircraft on terms no less favorable to the Company than
the terms of the indebtedness to be refinanced or (III) purchase
aircraft currently leased by a third party to the Company pursuant to
the terms of the applicable lease agreement as in effect on the date
of this Agreement, which financing, refinancing and purchases shall
be effected either (1) in the ordinary course of business consistent
with past practice or (2) as otherwise described in the Acquired
Aircraft/Engines Schedule, or (y) make any loans, advances or capital
contributions to, or investments in, any other person, provided that
the restrictions set forth in this Section 4.01(a)(vi)(y) shall not
apply to loans, advances or capital contributions to, or investments
in, any other person (A) to the extent made in the ordinary course of
business consistent with past practice and to the extent not
otherwise prohibited by this Agreement, (B) to the extent made to, or
in, the Company or any direct or indirect wholly owned subsidiary of
the Company and (C) to the extent any such capital contributions are
made to the Employee Stock Ownership Trust in an amount not to exceed
the amount of principal and interest then due and owing under the
ESOP Loan;
(vii) incur or commit to incur any capital
expenditures, or any obligations or liabilities in connection
therewith, (x) with respect to 2000, in any manner materially
inconsistent with the Company's current capital budget for 2000, a
true and complete copy of which has been provided to Parent prior to
the date of this Agreement (the "Company Capital Budget"), and (y)
with respect to 2001, (A) that in the aggregate exceed the aggregate
amount of capital expenditures set forth in the Company Capital
Budget or (B) that individually exceed $20,000,000, provided that the
restrictions set forth in this Section 4.01(a)(vii) shall not apply
to (1) cost variances experienced in the ordinary course of business
consistent with past practice, (2) other expenditures made in
response to unanticipated operational, competitive or economic
factors if (I) such action is consistent with past practice, (II) the
Company determines, based upon its reasonable judgment, that such
action is an appropriate response to such factor and (III) Parent
determines, based upon its reasonable judgment, that such action
would not have a significant and adverse effect on Parent and its
subsidiaries (which, for purposes of this clause (III), shall include
the Company and its subsidiaries), (3) expenditures reasonably made
in response to a regulatory requirement or mandate, (4) expenditures
to acquire assets in the ordinary course of business consistent with
past practice with individual purchase prices not to exceed
$1,000,000 and (5) for each of 2000 and 2001, other expenditures in
the ordinary course of business consistent with past practice in an
aggregate amount not to exceed $20,000,000;
(viii) except as required by law, (x) pay,
discharge, settle or satisfy any material claims (including claims of
stockholders), liabilities or obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise), provided that the
restrictions set forth in this Section 4.01(a)(viii)(x) shall not
apply to the payment, discharge or satisfaction of claims,
liabilities or obligations (A) in the ordinary course of business
consistent with past practice, (B) as required by their terms as in
effect on the date of this Agreement or (C) incurred since the date
of this Agreement in the ordinary course of business consistent with
past practice, or (y) waive, release, grant or transfer any right of
material value, provided that the restrictions set forth in this
Section 4.01(a)(viii)(y) shall not apply to any waiver, release,
grant or transfer made in the ordinary course of business consistent
with past practice, or (z) waive any material benefits of, or agree
to modify in any materially adverse respect, or fail to enforce, or
consent to any matter with respect to which its consent is required
under, any material confidentiality, standstill or similar agreement
to which the Company or any of its subsidiaries is a party;
(ix) enter into, modify, amend or terminate (A) any
collective bargaining or other labor union contract applicable to the
employees of the Company or any of its subsidiaries, provided that
the restrictions set forth in this Section 4.01(a)(ix)(A) shall not
apply to (1) immaterial modifications, amendments or terminations of
such contracts made in the ordinary course of business consistent
with past practice, (2) any modifications to such existing contracts
pursuant to a "parity plus 1% review" (as such term is defined in the
applicable contract) or (3) any modification, amendment or
termination of any collective bargaining agreement to the extent
required by a change in applicable law, (B) any Company Benefit
Agreement or Company Benefit Plan providing for the payment of
severance, compensation or benefits to any current or former
director, officer, employee or consultant of the Company or any of
its subsidiaries upon the termination of employment, provided that
the restrictions set forth in this Section 4.01(a)(ix)(B) shall not
apply to (I) any increase in cash compensation, (II) other immaterial
changes in benefits (except for changes in benefits provided to
officers other than as the result of immaterial changes made to
Company Benefit Plans that are generally applicable to the employees
of the Company or any of its subsidiaries that are not specifically
directed at or do not disproportionately affect such officers) and
(III) termination arrangements for employees (other than officers),
which increases, changes or arrangements described above in clauses
(I) through (III) are made in the ordinary course of business
consistent with past practice and (IV) those actions taken by the
Company to retain or attract employees in key positions as and to the
extent consistent with the Retention Plan, or (C) any other material
Contract to which the Company or any of its subsidiaries is a party,
provided that the restrictions set forth in this Section
4.01(a)(ix)(C) shall not apply to any modifications, amendments or
terminations of any such Contract to the extent made in the ordinary
course of business consistent with past practice;
(x) except as required to comply with applicable law
or any provision of any Company Benefit Agreement, Company Benefit
Plan or other Contract as in effect on the date of this Agreement,
(A) take any action to fund or in any other way secure the payment of
compensation or benefits under any Company Benefit Agreement, Company
Benefit Plan or other Contract or (B) take any action to accelerate
the vesting or payment of any compensation or benefit under any
Company Benefit Agreement, Company Benefit Plan or other Contract;
(xi)(A) decrease or defer in any material respect
the level of training provided to their employees or the level of
costs expended in connection therewith, (B) fail to keep in effect
any governmental route authority in effect and used by the Principal
Operating Sub or any other subsidiary of the Company as of the date
of this Agreement, provided that the restrictions set forth in this
Section 4.01(a)(xi)(B) shall not apply to any such failure if such
failure occurs in the ordinary course of business consistent with
past practice, (C) make any material route changes, other than
changes in the ordinary course of business consistent with past
practice, (D) fail to maintain insurance at levels at least
comparable to current levels or otherwise in a manner inconsistent
with past practice, (E) establish any new pilot or flight attendant
domicile cities or (F) take any action, or fail to take action, which
action or failure could result in the loss of Slots of the Company or
any of its subsidiaries with an aggregate value in excess of
$7,500,000;
(xii) take any action which would result in the
Company's representation and warranty set forth in the fifth sentence
of Section 3.01(d) not being accurate at any time after the date of
this Agreement, disregarding solely for purposes of this clause (xii)
the exception in such representation and warranty relating to matters
which would not be expected to result in (taking into account the
likelihood of such result occurring and the expected magnitude of
such event if it were to occur) a material adverse effect;
(xiii) take any action that would be expected to result
in (A) any representation and warranty of the Company set forth in
this Agreement that is qualified as to materiality becoming untrue,
(B) any such representation and warranty that is not so qualified
becoming untrue in any material respect or (C) any condition to the
Merger set forth in Article VI not being satisfied; or
(xiv) authorize any of, or commit, resolve or agree to
take any of, the foregoing actions to the extent prohibited by the
terms of this Agreement.
(b) Certain Tax Matters. During the period from the date
of this Agreement to the Effective Time, except as specifically
contemplated by this Agreement (including anything set forth in the Company
Disclosure Schedule as of the date of this Agreement), the Company shall,
and shall cause each of its subsidiaries to (i)(A) promptly notify Parent
upon the earlier of (x) receipt of notice of any suit, claim, action,
investigation, proceeding or audit (collectively, "Actions") pending
against or with respect to the Company or any of its subsidiaries in
respect of any material tax (which is material at the time of receipt of
such notice) and (y) any such Action becoming material to the Company and
its subsidiaries and (B) not settle or compromise any such Action without
Parent's consent; (ii) not make any material tax election without Parent's
consent; and (iii) not make any material change in tax accounting methods,
principles or practices except insofar as may have been required by a
change in GAAP or SEC accounting regulations or guidelines or applicable
law.
(c) Advice of Changes; Filings. The Company and Parent
shall confer on a regular basis regarding operational and other material
matters. The Company shall promptly advise Parent in writing of any change
or event of which it has knowledge that would be expected to result in
(taking into account the likelihood of such result occurring and the
expected magnitude of such event if it were to occur) a material adverse
effect. The Company and Parent shall each promptly provide the other copies
of all filings made by such party with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby,
other than the portions of such filings that include confidential
information.
(d) Consents. Parent shall not unreasonably withhold any
consent contemplated by Section 4.01(a) or (b) above. The reasonableness of
withholding any such consent shall be determined from Parent's point of
view, taking into account the relative burden to Parent and benefit to the
Company of granting such consent and any other factors which Parent
determines in good faith to be, and which are, of reasonable consequence to
it in connection with its determination.
SECTION 4.02 No Solicitation. (a) The Company shall not, nor
shall it permit any of its subsidiaries to, or authorize or permit any
director, officer or employee of the Company or any of its subsidiaries or
any investment banker, attorney, accountant or other advisor or
representative of the Company or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage, or take any other action
knowingly to facilitate, any Takeover Proposal (as defined below) or (ii)
enter into, continue or otherwise participate in any discussions or
negotiations regarding, or furnish to any person any information with
respect to, or otherwise cooperate in any way with, any Takeover Proposal,
in each case other than a Takeover Proposal made by Parent; provided,
however, that at any time prior to obtaining the Stockholder Approval, the
Board of Directors of the Company may, in response to a bona fide written
Takeover Proposal that such Board of Directors determines in good faith is
reasonably likely to result in an Adverse Recommendation Change (as defined
below) or constitutes or is reasonably likely to lead to a Superior
Proposal (as defined below), and which Takeover Proposal was unsolicited
and did not otherwise result from a breach of this Section 4.02, and
subject to compliance with Section 4.02(c) and (d), (x) furnish information
with respect to the Company and its subsidiaries to the person making such
Takeover Proposal (and its representatives) pursuant to a customary
confidentiality agreement, provided that all such information is provided
on a prior or substantially concurrent basis to Parent, and (y) participate
in discussions or negotiations with the person making such Takeover
Proposal (and its representatives) regarding such Takeover Proposal.
The term "Takeover Proposal" means any inquiry, proposal or
offer from any person relating to, or that is reasonably likely to lead to,
any direct or indirect acquisition, in one transaction or a series of
transactions, including any merger, consolidation, tender offer, exchange
offer, binding share exchange, business combination, recapitalization,
liquidation, dissolution, joint venture or similar transaction, of (A)
assets or businesses that constitute or represent 20% or more of the total
revenue, operating income, EBITDA or assets of the Company and its
subsidiaries, taken as a whole, or (B) 20% or more of the outstanding
shares of Company Common Stock or capital stock of, or other equity or
voting interests in, any of the Company's subsidiaries directly or
indirectly holding the assets or businesses referred to in clause (A)
above.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall (i) withdraw (or modify in a manner adverse to
Parent or Sub) or propose publicly to withdraw (or modify in a manner
adverse to Parent or Sub) the recommendation or declaration of advisability
by such Board of Directors or any such committee of this Agreement or the
Merger, or recommend, or propose publicly to recommend, the approval or
adoption of any Takeover Proposal (other than a Takeover Proposal made by
Parent), unless the Board of Directors or a committee thereof determines in
good faith, based on such matters as it deems appropriate, after consulting
with legal counsel, that the failure to take such action would be
reasonably likely to result in a breach of its fiduciary duties under
applicable law (each such action being referred to herein as an "Adverse
Recommendation Change"), (ii) adopt or approve, or propose publicly to
adopt or approve, any Takeover Proposal, or withdraw its approval of the
Merger, or propose publicly to withdraw its approval of the Merger, (iii)
cause or permit the Company to enter into any letter of intent, memorandum
of understanding, agreement in principle, acquisition agreement, merger
agreement, option agreement, joint venture agreement, partnership agreement
or other agreement (each, an "Acquisition Agreement") constituting or
related to, or which is intended to or is reasonably likely to lead to, any
Takeover Proposal (other than a confidentiality agreement referred to in
Section 4.02(a)) or (iv) agree or resolve to take any of the actions
prohibited by clauses (i), (ii) or (iii) of this sentence. Notwithstanding
anything in this Section 4.02 to the contrary, at any time prior to
obtaining the Stockholder Approval, the Board of Directors of the Company
may, in response to a Superior Proposal that was unsolicited and that did
not otherwise result from a breach of Section 4.02(a), cause the Company to
terminate this Agreement pursuant to Section 7.01(f) and concurrently enter
into an Acquisition Agreement; provided, however, that the Company shall
not terminate this Agreement pursuant to Section 7.01(f), and any purported
termination pursuant to Section 7.01(f) shall be void and of no force or
effect, unless the Company shall have complied in all material respects
with the provisions of this Section 4.02, including the notification
provisions in this Section 4.02, and in all material respects with the
applicable requirements of Sections 5.06(b) and (c) (including the payment
of the Parent Termination Fee (as defined in Section 5.06(b)) prior to or
concurrently with such termination); and provided further, however, that
the Company shall not exercise its right to terminate this Agreement
pursuant to Section 7.01(f) until after the fifth business day following
Parent's receipt of written notice (a "Notice of Superior Proposal") from
the Company advising Parent that the Board of Directors of the Company has
received a Superior Proposal and specifying the terms and conditions of the
Superior Proposal and identifying the person making such Superior Proposal
(it being understood and agreed that any amendment to the price or any
other material term of a Superior Proposal shall require a new Notice of
Superior Proposal and a new five business day period). It is understood and
agreed that the termination of this Agreement in accordance with the
previous sentence shall not constitute a breach of any provision of this
Agreement.
The term "Superior Proposal" means any bona fide binding
written offer not solicited by or on behalf of the Company or any of its
subsidiaries made by a third party that if consummated would result in such
third party (or in the case of a direct merger between such third party and
the Company, the stockholders of such third party) acquiring, directly or
indirectly, more than 50% of the voting power of the Company Common Stock
or all or substantially all the assets of the Company and its subsidiaries,
taken as a whole, for consideration consisting of cash and/or securities
that the Board of Directors of the Company determines in its good faith
judgment (after consultation with a financial advisor of nationally
recognized reputation) to be superior from a financial view to the
stockholders of the Company, taking into account, among other things, any
changes to the terms of this Agreement proposed by Parent in response to
such Superior Proposal or otherwise.
(c) In addition to the obligations of the Company set
forth in paragraphs (a) and (b) of this Section 4.02, the Company promptly
shall advise Parent in writing of any request for information that the
Company reasonably believes could lead to or contemplates a Takeover
Proposal or of any Takeover Proposal, or any inquiry the Company reasonably
believes could lead to any Takeover Proposal, the terms and conditions of
such request, Takeover Proposal or inquiry (including any subsequent
material amendment or modification to such terms and conditions) and the
identity of the person making any such request, Takeover Proposal or
inquiry. The Company shall keep Parent informed in all material respects of
the status and details (including material amendments or proposed
amendments) of any such request, Takeover Proposal or inquiry.
(d) Nothing contained in this Section 4.02 or elsewhere
in this Agreement shall prohibit the Company from (i) taking and disclosing
to its stockholders a position contemplated by Rule 14e-2(a) promulgated
under the Exchange Act or (ii) making any disclosure to the Company's
stockholders if, in the good faith judgment of the Board of Directors of
the Company, after consultation with outside counsel, failure so to
disclose would be inconsistent with applicable law; provided, however, that
in no event shall the Company or its Board of Directors or any committee
thereof take, agree or resolve to take any action prohibited by Section
4.02(b)(i) or 4.02(b)(ii).
ARTICLE V
Additional Agreements
SECTION 5.01 Preparation of the Proxy Statement; Stockholders
Meeting. (a) As promptly as practicable following the date of this
Agreement, the Company and Parent shall prepare and file with the SEC the
Proxy Statement and the Company shall use its reasonable efforts to respond
as promptly as practicable to any comments of the SEC with respect thereto
and to cause the Proxy Statement to be mailed to the Company's stockholders
as promptly as practicable following the date of this Agreement. The
Company shall promptly notify Parent upon the receipt of any comments from
the SEC or its staff or any request from the SEC or its staff for
amendments or supplements to the Proxy Statement and shall provide Parent
with copies of all correspondence between the Company and its
representatives, on the one hand, and the SEC and its staff, on the other
hand. Notwithstanding the foregoing, prior to filing or mailing the Proxy
Statement (or any amendment or supplement thereto) or responding to any
comments of the SEC with respect thereto, the Company (i) shall provide
Parent an opportunity to review and comment on such document or response,
(ii) shall include in such document or response all comments reasonably
proposed by Parent and (iii) shall not file or mail such document or
respond to the SEC prior to receiving Parent's approval, which approval
shall not be unreasonably withheld or delayed.
(b) The Company shall, as promptly as practicable
following the date of this Agreement, establish a record date (which will
be as promptly as reasonably practicable following the date of this
Agreement) for, duly call, give notice of, convene and hold a meeting of
its stockholders (the "Stockholders Meeting") for the purpose of obtaining
the Stockholder Approval, regardless of whether an Adverse Recommendation
Change has occurred at any time after the date of this Agreement. The
Company shall use its reasonable best efforts to cause the Stockholders
Meeting to be held as promptly as practicable following the date of this
Agreement. The Company shall, through its Board of Directors, recommend to
its stockholders that they adopt this Agreement, and shall include such
recommendation in the Proxy Statement, in each case subject to its rights
under Section 4.02(b)(i). Without limiting the generality of the foregoing,
the Company agrees that its obligations pursuant to this Section 5.01(b)
shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company or any other person of any
Takeover Proposal.
SECTION 5.02 Access to Information; Confidentiality. The
Company shall, and shall cause each of its subsidiaries to, afford to
Parent, and to Parent's officers, employees, investment bankers, attorneys,
accountants and other advisors and representatives, reasonable and prompt
access during normal business hours during the period prior to the
Effective Time or the termination of this Agreement to their respective
properties, assets, books, contracts, commitments, directors, officers,
employees, attorneys, accountants, auditors, other advisors and
representatives and records and, during such period, the Company shall, and
shall cause each of its subsidiaries to, make available to Parent on a
timely basis (a) a copy of each material report, schedule, form, statement
and other document received by it during such period pursuant to the
requirements of domestic or foreign (whether national, federal, state,
provincial, local or otherwise) laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request, in each case subject to any confidentiality restrictions or legal
restrictions that prohibit the Company's ability to provide any such
information to Parent. The Company shall, and shall cause each of its
subsidiaries to, (i) use their respective reasonable best efforts to cause
any confidentiality provision in any Contract to which the Company or any
of its subsidiaries becomes a party to be inapplicable to Parent, its
subsidiaries and their respective advisors or representatives and (ii) in
the event such reasonable best efforts are unsuccessful, provide notice to
Parent at least five business days prior to entering into such contract
that the Company or such subsidiary intends to enter into a Contract that
contains confidentiality provisions that would prohibit Parent, its
subsidiaries or their respective advisors or representatives from reviewing
such Contract. Parent will hold, and will direct its officers, employees,
investment bankers, attorneys, accountants and other advisors and
representatives to hold, any and all information received from the Company,
directly or indirectly, in confidence as and to the extent provided in the
Confidentiality Agreement dated March 3, 2000, between Parent and the
Company (as it may be amended from time to time, the "Confidentiality
Agreement"). The parties hereby agree that the term of the Confidentiality
Agreement is hereby amended such that it shall remain in full force and
effect until the one year anniversary of the date of termination of this
Agreement.
SECTION 5.03 Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, in order to
consummate and make effective the Merger and the other transactions
contemplated by this Agreement, Parent shall effect the divestiture of the
assets and the provision of assets, facilities and services as described in
Exhibit A hereto to a person or persons reasonably acceptable to the
Company upon the terms and subject to the conditions set forth in Exhibit
A, it being understood that taking any or all of the actions described in
this sentence shall in no way limit Parent's obligations under the next
following sentence. In addition, each of the parties agrees to use all
reasonable efforts to take, or cause to be taken, all the other actions
that are necessary, proper or advisable to consummate and make effective
the Merger and the other transactions contemplated by this Agreement,
including using all reasonable efforts to accomplish the following: (i)
causing the conditions precedent set forth in Article VI to be satisfied,
(ii) obtaining all necessary actions or nonactions, waivers, consents,
approvals, orders and authorizations from Governmental Entities and the
making of all necessary registrations, declarations and filings and (iii)
obtaining all necessary consents, approvals or waivers from third parties.
The parties shall promptly after the date of this Agreement make all
necessary filings and registrations with the Governmental Entities,
including filings under the HSR Act and submissions of information
requested by Governmental Entities. In connection with and without limiting
the foregoing, the Company and its Board of Directors shall, if any state
takeover statute or similar statute or regulation is or becomes applicable
to this Agreement, the Merger or any of the other transactions contemplated
hereby, use its reasonable efforts to ensure that the Merger and the other
transactions contemplated by this Agreement are consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on this Agreement, the
Merger and the other transactions contemplated hereby. The Company and
Parent will provide such assistance, information and cooperation to each
other as is reasonably required to obtain any such waivers, consents,
approvals, orders, and authorizations referred to above and, in connection
therewith, will notify the other person promptly following the receipt of
any comments from any Governmental Entity and of any request by any
Governmental Entity for amendments, supplements or additional information
in respect of any registration, declaration or filing with such
Governmental Entity and will supply the other person with copies of all
correspondence between such person and any of its representatives, on the
one hand, and any Governmental Entity on the other hand.
(b) The Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate such that the condition set forth in Section 6.02(a)
would not be satisfied (a "Failed Section 6.02(a) Condition"); provided,
however, that no such notification shall affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under this Agreement except that, as to any such
notice of a Failed Section 6.02(a) Condition with respect to which Parent
has not within 25 days (i) disagreed, in a notice delivered to the Company,
with the Company's conclusion that the condition set forth in Section 6.02
would not be satisfied as a result of the circumstance described in such
notice by the Company, (ii) expressed the view, in a notice delivered to
the Company, that (A) it was in good faith considering waiving such Failed
Section 6.02(a) Condition (and would continue to comply with its
obligations under Section 5.03) or (B) it believed in good faith that it
did not yet have adequate information to form a reasonably complete view as
to the facts and circumstances with respect to the matter described in such
notice from the Company (which may include the magnitude of the harm
resulting from such circumstances), in which case such notice from Parent
shall identify for the Company the aspects of such information that Parent
is lacking, or (iii) terminated this Agreement pursuant to Section
7.01(d)(i) hereof, then the Failed Section 6.02(a) Condition shall be
deemed waived insofar as arising out of the circumstances set forth in such
notice. In the case of clause (ii) above, Parent shall give notice to the
Company promptly after (x) in the case of clause (ii)(A) it no longer is in
good faith considering waiving a Failed Section 6.02(a) Condition and (y)
in the case of clause (ii)(B), it believed in good faith that it had
adequate information to form a reasonably complete view as to the relevant
facts and circumstances, and, in either such case, absent termination of
this Agreement by Parent within 20 days of such notice, such Failed Section
6.02(a) Condition shall be deemed waived at the end of such 20 day period.
(c) Parent shall give prompt notice to the Company of any
representation or warranty made by it or Sub contained in this Agreement
becoming untrue or inaccurate such that the condition set forth in Section
6.03(a) would not be satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the
parties under this Agreement.
SECTION 5.04 Company Stock Options. (a) As soon as practicable
following the date of this Agreement, the Board of Directors of the Company
(or, if appropriate, any committee administering the Company Stock Plans)
shall adopt such resolutions or take such other actions (if any) as may be
required to provide that each Company Stock Option outstanding immediately
prior to the Effective Time, together with each outstanding stock
appreciation right granted in tandem with such Company Stock Option, shall
be canceled in exchange for a lump sum cash payment equal to (1) the
product of (x) the number of shares of Company Common Stock subject to such
Company Stock Option and (y) the Merger Consideration, minus (2) the
product of (x) the number of shares of Company Common Stock subject to such
Company Stock Option and (y) the per share exercise price of such Company
Stock Option. Such payment shall be made promptly following the Effective
Time.
(b) The Company shall take all steps as may be required
to cause the transactions contemplated by this Section 5.04 and any other
dispositions of Company equity securities (including derivative securities)
in connection with this Agreement by each individual who is a director or
officer of the Company to be exempt under Rule 16b-3 promulgated under the
Exchange Act, such steps to be taken in accordance with the Interpretive
Letter dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate,
Meagher & Flom LLP.
SECTION 5.05 Indemnification, Exculpation and Insurance. (a)
Parent and Sub agree that all rights to indemnification and exculpation
from liabilities for acts or omissions occurring at or prior to the
Effective Time now existing in favor of the current or former directors or
officers of the Company and its subsidiaries as provided in their
respective certificates of incorporation or by-laws (or similar
organizational documents) shall be assumed by the Surviving Corporation in
the Merger, without further action, at the Effective Time and shall survive
the Merger and shall continue in full force and effect in accordance with
their terms.
(b) In the event that the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other
person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially
all its properties and assets to any person, then, and in each such case,
Parent shall cause proper provision to be made so that the successors and
assigns of the Surviving Corporation assume the obligations set forth in
this Section 5.05.
(c) For six years after the Effective Time, Parent shall
maintain in effect the Company's current directors' and officers' liability
insurance covering each person currently covered by the Company's
directors' and officers' liability insurance policy for acts or omissions
occurring prior to the Effective Time on terms with respect to such
coverage and amounts no less favorable in any material respect to such
directors and officers than those of such policy as in effect on the date
of this Agreement; provided that Parent may substitute therefor policies of
a reputable insurance company the material terms of which, including coverage
and amount, are no less favorable in any material respect to such directors
and officers than the insurance coverage otherwise required under this
Section 5.05(c); provided however, that in no event shall Parent be
required to pay aggregate premiums for insurance under this Section 5.05(c)
in excess of 250% of the amount of the aggregate premiums paid by the
Company for 1999 for such purpose (which 1999 premiums are hereby
represented and warranted by the Company to be equal to the amount
identified in writing by the Company to Parent prior to the date of this
Agreement), provided that Parent shall nevertheless be obligated to provide
such coverage as may be obtained for such 250% amount.
(d) From and after the Effective Time, Parent shall
unconditionally guarantee the timely payment of all funds owed by, and the
timely performance of all other obligations of, the Surviving Corporation
under this Section 5.05. Parent agrees that its payment obligations
hereunder are unconditional, irrespective of the validity or enforceability
of this Agreement against the Surviving Company or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense
of a guarantor (other than the defenses of statute of limitations, which
are not waived). Parent hereby acknowledges that its obligations under this
Section 5.05 constitute a guaranty of payment and not merely of
collectability and Parent hereby waives (i) promptness, diligence,
presentment, demand of payment, protest and order in connection with this
guarantee and (ii) any requirement that any party enforcing the guarantee
exhaust any right to take any action against the Surviving Company or any
other person prior to or contemporaneously with proceeding to exercise any
right against Parent hereunder.
(e) The provisions of this Section 5.05 are intended to
be for the benefit of, and will be enforceable by, each indemnified party,
his or her heirs and his or her representatives.
SECTION 5.06 Fees and Expenses. (a) Except as set forth in
Section 5.06(c), all fees and expenses incurred in connection with this
Agreement, the Merger and the other transactions contemplated by this
Agreement shall be paid by the party incurring such fees or expenses,
whether or not the Merger is consummated.
(b) In the event that (i) (A) a Takeover Proposal has
been made to the Company or its stockholders or any person has announced an
intention (whether or not conditional and whether or not withdrawn) to make
a Takeover Proposal, (B) thereafter this Agreement is terminated by either
Parent or the Company pursuant to Section 7.01(b)(i) (but only if the
Stockholders Meeting has not been held by the date that is five business
days prior to the date of such termination) or 7.01(b)(iii) and (C) within
12 months after such termination, the Company or any of its subsidiaries
enters into any Acquisition Agreement with respect to, or consummates, any
Takeover Proposal (solely for purposes of this Section 5.06(b)(i)(C), the
term "Takeover Proposal" shall have the meaning set forth in the definition
of Takeover Proposal contained in Section 4.02(a) except that all
references to 20% shall be deemed references to 40%), (ii) this Agreement
is terminated by the Company pursuant to Section 7.01(f) or (iii) this
Agreement is terminated by Parent pursuant to Section 7.01(c), then the
Company shall pay Parent a fee equal to $150,000,000 (the "Parent
Termination Fee") by wire transfer of same day funds to an account
designated by Parent (x) in the case of a termination by the Company
pursuant to Section 7.01(f), concurrently with such termination, (y) in the
case of a termination by Parent pursuant to Section 7.01(c), within two
business days after such termination and (z) in the case of a payment as a
result of any event referred to in Section 5.06(b)(i)(C), upon the first to
occur of such events.
(c) If a Parent Termination Fee becomes payable to Parent
in accordance with Section 5.06(b), the Company shall reimburse Parent and
Sub for all their expenses incurred in connection with this Agreement
concurrently with the payment of such Parent Termination Fee to Parent;
provided, however, that the aggregate amount of such reimbursement shall
not exceed $10,000,000. All payments made pursuant to this Section 5.06(c)
shall be made by wire transfer of same day funds to an account designated
by Parent.
(d) In the event that this Agreement is terminated for
any reason other than pursuant to Sections 7.01(c), 7.01(d)(i) or 7.01(f),
then Parent shall, within two business days after such termination, pay to
the Company $50,000,000 (the "Company Termination Fee"). In the case where
this Agreement is terminated pursuant to Section 7.01(b)(i) or 7.01(b)(iii)
and Parent, subsequent to such termination, becomes entitled to payment of
the Parent Termination Fee pursuant to Section 5.06(b), the Company shall
refund to Parent the full amount of the Company Termination Fee, if any,
paid by Parent pursuant to this Section 5.06(d) concurrently with the
payment of such Parent Termination Fee. All payments made to the Company
pursuant to this Section 5.06(d) shall be made by wire transfer of same day
funds to an account designated by the Company.
SECTION 5.07 Information Supplied. (a) The Company agrees that
none of the information included or incorporated by reference in the Proxy
Statement will, at the date it is filed with the SEC or mailed to the
Company's stockholders or at the time of the Stockholders Meeting, or at
the time of any amendment or supplement thereof, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading,
except that no covenant is made by the Company with respect to statements
made in the Proxy Statement based on information supplied by Parent or Sub
specifically for inclusion or incorporation by reference therein. The Proxy
Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder.
(b) Parent and Sub agree that none of the information
supplied or to be supplied by Parent or Sub specifically for inclusion in
the Proxy Statement will (except to the extent revised or superseded by
amendments or supplements contemplated hereby), at the date the Proxy
Statement is filed with the SEC or mailed to the Company's stockholders or
at the time of the Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
SECTION 5.08 Benefits Matters. (a) For purposes of this
Agreement, "Affected Employees" shall mean those individuals who are
classified as regular permanent employees of the Company and its
subsidiaries (including those so classified employees who are on vacation,
leave of absence, disability or maternity leave) as of the Effective Time
who are in jobs that will not be covered by collective bargaining or other
labor union contracts applicable to employees of Parent or the Company or
any of their subsidiaries after giving effect to the Merger.
(b) Parent shall, and shall cause the Surviving
Corporation to, give the Affected Employees full credit, for purposes of
eligibility, vesting and benefit accrual under any employee benefit plans
or arrangements maintained by Parent, the Surviving Corporation and their
respective subsidiaries, for the Affected Employees' service with the
Company and its subsidiaries to the same extent recognized by the Company
and its subsidiaries immediately prior to the Effective Time, except where
such crediting would result in a duplication of benefits. In addition,
Parent shall, and shall cause the Surviving Corporation to, give to each
Affected Employee who (i) is a current officer of the Company or the
Principal Operating Sub or is one of the three current director-level
employees of the Principal Operating Sub who satisfy the requirements of
clauses (ii) and (iii) of this sentence, (ii) was formerly employed by
Parent and its subsidiaries and (iii) who became employed by the Company
and its subsidiaries within three months of terminating employment with
Parent and its subsidiaries, full credit (as if there has been no break in
service) for purposes of eligibility, vesting and benefit accrual under any
employee benefit plans or arrangements maintained by Parent, the Surviving
Corporation and their respective subsidiaries, for such Affected Employee's
service with Parent and its subsidiaries prior to the Effective Time to the
same extent recognized by Parent and its subsidiaries immediately prior to
such Affected Employee's termination of employment with Parent and its
subsidiaries, except where such crediting would result in a duplication of
benefits. The foregoing provisions of this Section 5.08(b) shall not limit
or impair Parent's ability to offset under its plans, programs and
arrangements any benefits provided or accrued under the Company's benefit
plans, programs, or arrangements for the same period of service.
(c) Parent shall, and shall cause the Surviving
Corporation to, (i) waive all limitations as to preexisting conditions
exclusions and waiting periods with respect to participation and coverage
requirements applicable to the Affected Employees under any welfare benefit
plans in which such employees may be eligible to participate after the
Effective Time to the extent waived under the applicable Company plan
immediately prior to the Effective Time and (ii) provide each Affected
Employee with credit for any co-payments and deductibles paid prior to the
Effective Time in the calendar year in which the Effective Time occurs in
satisfying any applicable deductible or out-of-pocket requirements under
any welfare plans in which the Affected Employees are eligible to
participate after the Effective Time.
(d) Parent agrees to honor, and shall cause the Surviving
Corporation to honor, the Company Benefit Plans and Company Benefit
Agreements in accordance with their terms subject to any power to amend or
terminate such Company Benefit Plans and Company Benefit Agreements
contained therein. For a period of one year immediately following the
Effective Time, Parent shall, or shall cause the Surviving Corporation to,
provide to the Affected Employees while employed by the Surviving
Corporation or its subsidiaries employee benefit plans and arrangements not
materially less favorable in the aggregate to those provided to the
Affected Employees immediately prior to the Effective Time excluding, for
this purpose, equity-based compensation plans and arrangements; provided,
however, Parent will provide eligibility for option grants during such
one-year period to Affected Employees on the same basis as provided to
similarly situated employees of Parent and its subsidiaries. If an Affected
Employee becomes employed by Parent, such Affected Employee shall be
provided employee benefit plans and arrangements that are in the aggregate
not materially less favorable than the benefit plans and arrangements
provided to similarly situated employees of Parent.
(e) Parent acknowledges that (i) except as disclosed in
the Company Disclosure Schedule, the consummation of the Merger (or, if
otherwise provided under the applicable Company Benefit Plan or Company
Benefit Agreement, the approval of the Merger by the Company's
stockholders) shall constitute a "Change in Control" or a "Change of
Control" for purposes of each Company Benefit Plan and Company Benefit
Agreement listed on Section 3.01(m)(iv) of the Company Disclosure Schedule
in which such concept is relevant and (ii)(A) any termination of employment
by or of any individual identified on Section 5.08(e)(ii)(A) of the Company
Disclosure Schedule following the Effective Time and (B) any termination of
employment by or of any individual identified on Section 5.08(e)(ii)(B) of
the Company Disclosure Schedule during the period commencing six months
following the Effective Time and ending nine months following the Effective
Time, shall be deemed to be for "Good Reason" for purposes of any
employment agreement or other Company Benefit Agreement listed on Section
3.01(m)(iv) of the Company Disclosure Schedule, and any Company Benefit
Plan in which such individual participates.
SECTION 5.09 Public Announcements. Parent and Sub, on the one
hand, and the Company, on the other hand, shall, to the extent reasonably
practicable, consult with each other before issuing, and give each other a
reasonable opportunity to review and comment upon, any press release or
other public statements with respect to this Agreement, the Merger and the
other transactions contemplated by this Agreement. The parties agree that
the initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form heretofore agreed to by
the parties.
SECTION 5.10 Future Employment. For a period of two years
following the Closing Date, Parent shall, and shall cause the Surviving
Corporation to, offer continued employment to all non-officer employees of
the Company or any of its subsidiaries who are employed by the Company or
any of its subsidiaries at the Effective Time; provided, however, that this
Section 5.10 shall not apply to any employees of the Company or any of its
subsidiaries (i) who are discharged for cause or performance related
reasons or (ii) who are employees of a subsidiary of the Company which is
sold or transferred to a third party at or after the Effective Time.
Following the two year period specified in the prior sentence, Parent
shall, and shall cause the Surviving Corporation to, provide all former
non-officer, non-union employees of the Company and its subsidiaries the
same job security protection, if any, as provided to similarly-situated
employees of Parent and its subsidiaries.
ARTICLE VI
Conditions Precedent
SECTION 6.01 Conditions to Each Party's Obligation to Effect
the Merger. The obligation of each party to effect the Merger is subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Stockholder Approval shall
have been obtained.
(b) Antitrust. Any waiting period (and any extension
thereof) applicable to the Merger under the HSR Act or any other applicable
competition, merger control, antitrust or similar law or regulation shall
have been terminated or shall have expired.
(c) No Injunctions or Legal Restraints. No temporary
restraining order, preliminary or permanent injunction or other order or
decree issued by any court of competent jurisdiction or other legal
restraint or prohibition (collectively, "Legal Restraints") that has the
effect of preventing the consummation of the Merger shall be in effect.
SECTION 6.02 Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations
and warranties of the Company contained herein that are qualified as to
materiality shall be true and correct, and the representations and
warranties of the Company contained herein that are not so qualified shall
be true and correct in all material respects, in each case as of the date
of this Agreement and as of the Closing Date with the same effect as though
made as of the Closing Date, except that the accuracy of representations
and warranties that by their terms speak as of a specified date will be
determined as of such date. Parent shall have received a certificate signed
on behalf of the Company by the chief executive officer or the chief
financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing Date, and Parent shall have received a certificate signed on behalf
of the Company by the chief executive officer or the chief financial
officer of the Company to such effect.
(c) Legal Restraint. No Legal Restraint that has the
effect of (i) prohibiting or limiting in any material respect the ownership
or operation by the Company, Parent or any of their respective affiliates
of a material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, or to require any such person to dispose of or hold separate any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, as a result of the Merger; (ii) prohibiting Parent or any of its
affiliates from effectively controlling in any material respect a
substantial portion of the business or operations of the Company or its
subsidiaries; or (iii) imposing material limitations on the ability of
Parent or any of its affiliates to acquire or hold, or exercise full rights
of ownership of, any shares of Company Common Stock, including the right to
vote the Company Common Stock on all matters properly presented to the
stockholders of the Company shall be in effect.
(d) Consents. Parent shall have received evidence, in
form and substance reasonably satisfactory to it, that Parent or the
Company shall have obtained (i) all material consents, approvals,
authorizations, qualifications and orders of all Governmental Entities
legally required in connection with this Agreement and the transactions
contemplated by this Agreement and (ii) all other consents, approvals,
authorizations, qualifications and orders of Governmental Entities or third
parties required in connection with this Agreement and the transactions
contemplated by this Agreement, except, in the case of this clause (ii),
for those the failure of which to be obtained individually or in the
aggregate would not be expected to result in (taking into account the
likelihood of such result occurring and the expected magnitude of such
event if it were to occur) a material adverse effect.
SECTION 6.03 Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. The representations
and warranties of Parent and Sub contained herein that are qualified as to
materiality shall be true and correct, and the representations and
warranties of Parent contained herein that are not so qualified shall be
true and correct in all material respects, in each case as of the date of
this Agreement and as of the Closing Date with the same effect as though
made as of the Closing Date, except that the accuracy of representations
and warranties that by their terms speak as of a specified date will be
determined as of such date. The Company shall have received a certificate
signed on behalf of Parent by the chief executive officer or the chief
financial officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent
and Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate signed on
behalf of Parent by the chief executive officer or the chief financial
officer of Parent to such effect.
SECTION 6.04 Frustration of Closing Conditions. None of the
Company, Parent or Sub may rely on the failure of any condition set forth
in Section 6.01, 6.02 or 6.03, as the case may be, to be satisfied if such
party's breach of this Agreement has been a principal reason that such
condition has not been satisfied.
ARTICLE VII
Termination, Amendment and Waiver
SECTION 7.01 Termination. This Agreement may be terminated, and
the Merger contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether before or after the Stockholder Approval has been
obtained:
(a) by mutual written consent of Parent, Sub and the
Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by
December 31, 2000 (the "Initial Termination Date", and as such may be
extended pursuant to this paragraph, the "Termination Date");
provided, however, that if on the Initial Termination Date the
conditions to the Closing set forth in Sections 6.01(a), 6.01(b),
6.01(c), 6.02(c) and 6.02(d) shall not have been fulfilled, but all
other conditions to the Closing shall be fulfilled on such date or
shall be capable of being fulfilled, then, if a written notice
requesting an extension of the Termination Date has been delivered by
Parent or the Company to the other at any time during the 45 day
period ending on the Initial Termination Date, the Termination Date
shall be extended to August 1, 2001; provided, however, that the
right to terminate this Agreement pursuant to this Section 7.01(b)(i)
shall not be available to any party whose breach of this Agreement
has been a principal reason the Merger has not been consummated by
such date;
(ii) if any Legal Restraint set forth in Section
6.01(c) shall be in effect and shall have become final and
nonappealable; provided, however, that the right to terminate this
Agreement pursuant to this Section 7.01(b)(ii) shall not be available
to any party whose breach of this Agreement has been a principal
reason that such event has occurred; or
(iii) if the Stockholder Approval shall not have been
obtained at the Stockholders Meeting duly convened therefor or any
adjournment or postponement thereof;
(c) by Parent in the event an Adverse Recommendation
Change has occurred in accordance with Section 4.02(b)(i);
(d) by Parent (i) if the Company shall have breached any
of its representations, warranties or covenants contained in this
Agreement, which breach (A) would give rise to the failure of a condition
set forth in Section 6.02(a) or 6.02(b), and (B) has not been or is
incapable of being cured by the Company within twenty business days after
its receipt of written notice thereof from Parent; or (ii) if any Legal
Restraint set forth in Section 6.02(c) shall be in effect and shall have
become final and nonappealable; provided, however, that the right to
terminate this Agreement pursuant to this Section 7.01(d)(ii) shall not be
available to Parent if any breach by Parent of this Agreement has been a
principal reason that such event occurred;
(e) by the Company if Parent shall have breached any of
its representations, warranties or covenants contained in this Agreement,
which breach (i) would give rise to the failure of a condition set forth in
Section 6.03(a) or 6.03(b), and (ii) has not been or is incapable of being
cured by Parent within twenty business days after its receipt of written
notice thereof from the Company; or
(f) by the Company in accordance with the terms and
subject to the conditions of Section 4.02(b).
SECTION 7.02 Effect of Termination. In the event of termination
of this Agreement by either the Company or Parent as provided in Section
7.01, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Sub or the
Company, other than the provisions of Section 3.01(u), the last two
sentences of Section 5.02, Section 5.06, this Section 7.02 and Article
VIII; provided, however, that no such termination shall relieve any party
hereto from any liability or damages resulting from a wilful breach by a
party of any of its representations, warranties or covenants set forth in
this Agreement.
SECTION 7.03 Amendment. This Agreement may be amended by the
parties hereto at any time, whether before or after the Stockholder
Approval has been obtained; provided, however, that after the Stockholder
Approval has been obtained, there shall be made no amendment that by law
requires further approval by stockholders of the parties without the
further approval of such stockholders. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
SECTION 7.04 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto or (c) waive compliance with any of
the agreements or conditions contained herein; provided, however, that
after the Stockholder Approval has been obtained, there shall be made no
waiver that by law requires further approval by stockholders of the parties
without the further approval of such stockholders. Except as provided in
Section 5.03(b), any agreement on the part of a party to any such extension
or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure or delay by any party to this
Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights nor shall any single or
partial exercise by any party to this Agreement of any of its rights under
this Agreement preclude any other or further exercise of such rights or any
other rights under this Agreement.
ARTICLE VIII
General Provisions
SECTION 8.01 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective
Time.
SECTION 8.02 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof
of delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to Parent or Sub, to:
UAL Corporation
1200 East Algonquin Road
Elk Grove Township, Illinois 60007
Attention: General Counsel
with a copy to: Chief Financial Officer
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Allen Finkelson, Esq.
Scott A. Barshay, Esq.
if to the Company, to:
US Airways Group, Inc.
2345 Crystal Drive
Arlington, Virginia 22227
Attention: Executive Vice President -
Corporate Affairs and General Counsel
Senior Vice President - Finance
and Chief Financial Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Attention: Peter Allan Atkins, Esq.
Eric L. Cochran, Esq.
SECTION 8.03 Section 8.03 poses of this Agreement:
(a) an "affiliate" of any person means another person
that directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such first person;
(b) "material adverse effect" means any state of facts,
change, development, effect, condition or occurrence that is material and
adverse to the business, assets, properties, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole, or to prevent or materially impede or delay the
consummation of the Merger or the other material transactions contemplated
by this Agreement, except for any state of facts, change, development,
effect, condition or occurrence (i) relating to the economy in general or
(ii) affecting the airline industry generally where such airline industry
state of facts, change, development, effect, condition or occurrence does
not arise out of the actions, failures to act or businesses of the Company
or any of its subsidiaries;
(c) "person" means an individual, corporation,
partnership, joint venture, association, trust, limited liability company,
Governmental Entity, unincorporated organization or other entity;
(d) a "subsidiary" of any person means another person of
which 50% or more of any class of capital stock, voting securities or other
equity interests are owned or controlled, directly or indirectly, by such
first person.
SECTION 8.04 Interpretation. When a reference is made in this
Agreement to a Section, Subsection or Schedule, such reference shall be to
a Section or Subsection of, or a Schedule to, this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation". The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The term "or" is not exclusive. The
definitions contained in this Agreement are applicable to the singular as
well as the plural forms of such terms. Any agreement or instrument defined
or referred to herein or in any agreement or instrument that is referred to
herein means such agreement or instrument as from time to time amended,
modified or supplemented. References to a person are also to its permitted
successors and assigns.
SECTION 8.05 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 8.06 Entire Agreement; No Third-Party Beneficiaries.
This Agreement (a) constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement, except for
the Confidentiality Agreement and any agreement entered into by the parties
on the date of this Agreement, and (b) except for the provisions of Section
5.05, are not intended to confer upon any person other than the parties
hereto (and their respective successors and assigns) any rights or
remedies.
SECTION 8.07 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws of such state; provided, however, that the
term "best efforts" as used in Section 5.01(b) shall have the meaning
ascribed to such term under the laws of the State of New York, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws of such state.
SECTION 8.08 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or
in part (except by operation of law, by any of the parties hereto without
the prior written consent of the other parties hereto, except that Sub may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect
wholly owned subsidiary of Parent, but no such assignment shall relieve
Parent of any of its obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon, inure to the benefit of and
be enforceable by, the parties hereto and their respective successors and
assigns.
SECTION 8.09 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the partes shall be
entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court of the United States located in the State of
Delaware or in any Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition,
each of the parties hereto (a) consents to submit itself to the personal
jurisdiction of any court of the United States located in the State of
Delaware or of any Delaware state court in the event any dispute arises out
of this Agreement or the transactions contemplated by this Agreement, (b)
agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and
(c) agrees that it will not bring any action relating to this Agreement or
the transactions contemplated by this Agreement in any court other than a
court of the United States located in the State of Delaware or a Delaware
state court.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
UAL CORPORATION,
by /s/ Frederic F. Brace
-----------------------------
Name: Frederic F. Brace
Title: Senior Vice President, Finance
YELLOW JACKET ACQUISITION CORP.,
by /s/ Frederic F. Brace
------------------------------
Name: Frederic F. Brace
Title: Vice President and Tresurer
US AIRWAYS GROUP, INC.,
by /s/ Lawrence M. Nagin
--------------------------------
Name: Lawrence M. Nagin
Title: Executive Vice President -
Corporate Affairs and
General Counsel
EXHIBIT A
Capitol Air Divestiture Plan
Capitol Air Assets: Capitol Air will be comprised of the following
assets:
(A) Aircraft: If requested by the buyer, a
number and type of aircraft identified by
Tar Heel that are necessary and
reasonably suited to operate Capitol Air.
(B) Slots: If requested by the buyer, a
number of jet and commuter slots at
Reagan-National Airport that are
necessary to operate Capitol Air, which
number shall not exceed 106 jet slots and
116 commuter slots. The timing and
identification numbers of such slots to
be reasonably agreed upon.
(C) Gates: If requested by the buyer, up to
eight gates at Reagan-National Airport at
locations to be reasonably agreed upon
that are necessary and reasonably suited
to operate Capitol Air. All leases
relating to such facilities will be
assumed by the buyer.
(D) Airport Facilities: If requested by the
buyer, ticket counter and similar airport
facilities to be reasonably agreed upon
that are necessary and reasonably suited
for the buyer to operate Capitol Air. All
leases relating to such facilities will
be assumed by the buyer.
(E) Maintenance Facility: If requested by the
buyer, Yellow Jacket's line maintenance
facility at Reagan-National Airport. The
lease relating to such facility will be
assumed by the buyer.
(F) Other: If requested by the buyer, ground
handling equipment, spare parts and other
items to be reasonably agreed upon that
are necessary for the buyer to operate
Capitol Air.
The Capitol Air assets will not include any
assets not necessary to operate Capitol Air or
any cash. Capitol Air will continue the
operations of Yellow Jacket at Reagan-National
Airport (other than the Shuttle Business and
certain flights to and from Charlotte,
Pittsburgh and Philadelphia).
"Shuttle Business" means all the assets
primarily used by Yellow Jacket in the
operation of the Yellow Jacket shuttle on the
following routes: (1) Boston - La Giardia
Airport, (2) Boston - Reagan-National Airport
and (3) La Guardia Airport - Reagan-National
Airport.
Capitol Air The buyer of Capitol Air will assume all
Liabilities: liabilities primarily related to Capitol Air.
Employees: If requested by the buyer, Tar Heel will
provide to the buyer on an interim basis,
subject to receipt of any necessary labor
approvals, the employees needed to operate
Capitol Air on market terms to be reasonably
agreed upon.
Additional Support: Tar Heel will provide frequent flyer program
support on market terms to be agreed upon. In
addition, Tar Heel will, if requested by the
buyer and if reasonably practicable, provide
to such buyer revenue accounting services,
maintenance services, training services, fuel
purchasing services and other services
necessary for such buyer to operate Capitol
Air upon market terms to be agreed upon.
Additional Assets: If requested by the buyer of Capitol Air, [P]
Airline, Inc. ("Commuter Air") will be
included in Capitol Air.
In this event, at the option of Tar Heel,
either (i) the buyer of Capitol Air will
provide commuter feed to Tar Heel and Yellow
Jacket, on a code share basis at market terms
to be agreed upon, from points behind Yellow
Jacket hubs (the "Commuter Feed Points")
currently served by Commuter Air or (ii) Tar
Heel will retain the assets of Commuter Air
that are used to provide service to the
Commuter Feed Points.
If the buyer of Capitol Air is not an existing
mainline carrier, such buyer will, if
requested by Tar Heel, reasonably and in good
faith explore partnering opportunities with
existing mainline carriers.
Other Terms: The divestiture agreement with each buyer will
be negotiated by such buyer and Tar Heel and
will contain customary terms for transactions
of this type; provided, however, that Tar
Heel's obligation to indemnify any buyer shall
be limited to (x) in the case of losses
relating to any breach of a representation or
warranty, 40% of the purchase price paid to
Tar Heel by such buyer, and (y) in the case of
all losses, the purchase price paid by such
buyer. The terms of the divestiture agreement
must be reasonably acceptable to both Tar Heel
and Yellow Jacket taking into account as a
primary objective obtaining antitrust
clearance for the merger.
Closing: The obligation to effect the Capitol Air
divestiture will be contingent upon the
satisfaction of all conditions precedent to
the closing of the Tar Heel/Yellow Jacket
merger (assuming such divestiture is
effected). The obligation to effect the
Capitol Air divestiture will also be
contingent upon receipt of all consents
required to permit the buyers to operate
Capitol Air as contemplated herein. At the
closing of each transaction, the buyer will
pay to Yellow Jacket the cash purchase price
agreed to by such buyer. Tar Heel shall not be
entitled to refrain from selling Capitol Air
on the terms contained herein on the basis
that the cash purchase price to which the
potential buyer has agreed is inadequate value
for such assets.
