<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 13, 1997
REFLECTONE, INC.
(Exact name of registrant as specified in its charter)
Florida 0-14059 06-0663546
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
4908 Tampa West Boulevard, Tampa, Florida 33634-2481
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (813) 885-7481
Not Applicable.
(Former name or former address, if changed since last report.)
<PAGE> 1
<PAGE>
Item 5. Other Events
On February 13, 1997, Reflectone, Inc., a Florida corporation (the
"Company"), British Aerospace Holdings, Inc., a Delaware corporation
("Holdings"), and Bar Mergerco, Inc., a Florida corporation and a wholly
owned subsidiary of Holdings ("Mergerco"), entered into an Agreement and
Plan of Merger (the "Merger Agreement"). The Merger Agreement provides,
subject to the approval of the shareholders of the Company and subject
to other conditions set forth in the Merger Agreement, that: (a) Mergerco
will be merged with and into the Company (the "Merger"), with the Company
continuing as the surviving corporation of the Merger; (b) each share of the
Company's common stock that is outstanding at the Effective Time (as defined
in the Merger Agreement) of the Merger, excluding shares of the Company's
common stock held by Holdings, will be converted into the right to receive
$24.00 per share in cash, without interest, subject to applicable back-up
withholding taxes; and (c) Holdings, as a practical matter, will own 100% of
the Company. Completion of the transactions contemplated by the Merger
Agreement is subject to, among other things, approval by the Company's
shareholders and certain regulatory agencies.
A copy of the Merger Agreement is attached hereto as Exhibit 10.1.
A copy of the Company's press release announcing the execution of the Merger
Agreement is attached hereto as Exhibit 99.1.
Item 7. Financial Statements and Exhibits
(A) Exhibits
Exhibit 10.1 Agreement and Plan of Merger dated February 13, 1997,
among Reflectone, Inc., British Aerospace Holdings, Inc.,
and Bar Mergerco, Inc.
Exhibit 99.1 Press Release of the Company announcing execution of the
Merger Agreement.
<PAGE> 2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REFLECTONE, INC.
(Registrant)
Date: February 21, 1997 By: /s/ Richard W. Welshhans
Richard W. Welshhans
Vice President and Chief Financial Officer
<PAGE> 3
<PAGE>
REFLECTONE, INC.
Form 8-K
February 13, 1997
EXHIBIT INDEX
Exhibit
Number
10.1 Agreement and Plan of Merger dated February 13, 1997, among
Reflectone, Inc., British Aerospace Holdings, Inc., and
Bar Mergerco, Inc.
99.1 Press Release of the Company announcing execution of the Merge
Agreement.
<PAGE> 4
<PAGE>
<PAGE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------------------------------
AGREEMENT AND PLAN OF MERGER, dated as of the 13th day of February, 1997
("Agreement"), by and among Reflectone, Inc., a Florida corporation (the
"Company"), British Aerospace Holdings, Inc., a Delaware corporation
("Parent") and Bar Mergerco, Inc., a Florida corporation ("Mergerco"), 100%
of whose capital stock is owned by Parent.
WHEREAS, the respective Boards of Directors of the Company and Mergerco
deem it advisable and in the best interests of each corporation that Mergerco
be merged with and into the Company (the "Merger"); and
WHEREAS, the respective Boards of Directors of the Company and Mergerco
(i) have approved the Merger pursuant to and subject to the terms and
conditions of this Agreement and (ii) have recommended approval of the Merger
to the shareholders of each corporation; and
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, warranties and agreements herein
contained, the parties, intending to be legally bound hereby, agree as
follows:
1. THE MERGER AND RELATED MATTERS
1.1 The Merger
(a) Upon the terms and subject to the conditions of this
Agreement, and in accordance with the Florida Business Corporation Act (the
"FBCA"), at the Effective Time (as defined in Section 1.1(b) hereof) Mergerco
shall be merged with and into the Company and the separate corporate
existence of Mergerco shall cease, and the Company shall continue as the
surviving corporation of the Merger to be governed by the laws of the State
of Florida (the "Surviving Corporation").
(b) Subject to the provisions of this Agreement, the parties
hereto shall cause the Merger to be consummated by duly filing articles of
merger (the "Articles of Merger"), in the form attached hereto as Exhibit A
and acknowledged by Mergerco and the Company, with the Secretary of State of
the State of Florida, as provided by the FBCA, as soon as practicable on
or after the Closing Date (as defined in Section 3.1 hereof). The Merger
shall become effective upon such filing or at such time thereafter as is
provided in the Articles of Merger (the "Effective Time").
<PAGE> 5
<PAGE>
(c) At the Effective Time, the effect of the Merger shall be as
provided in Section 607.1106 of the FBCA. Without limiting the generality of
the foregoing, and subject thereto, the Surviving Corporation shall thereupon
and thereafter possess all the rights, privileges, immunities, powers and
franchises, of a public as well as of a private nature, of the Company and
Mergerco; and all property, real, personal and mixed, and all debts due on
whatever account and all other causes of action and all and every other
interest of, or belonging to or due to, Company or Mergerco, shall be deemed
to be transferred to and vested in such Surviving Corporation without further
act or deed; and the title to any real estate, or any interest therein,
vested in either of the merged companies shall not revert or in any way be
impaired by reason of the Merger. The Surviving Corporation shall thereafter
be responsible and liable for all of the liabilities and obligations of the
Company and Mergerco; any claim existing or action or proceeding pending by
or against either of the merged companies may be prosecuted to judgment
as if such Merger had not taken place, or the Surviving Corporation may be
substituted in the place of the Company or Mergerco.
1.2 Articles of Incorporation. The Articles of Incorporation of
Mergerco as in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until duly amended in
accordance with the terms thereof and the FBCA.
1.3 By-Laws. The By-Laws of Mergerco as in effect immediately prior to
the Effective Time shall be the By-Laws of the Surviving Corporation until
duly amended in accordance with the terms thereof and the FBCA.
1.4 Directors and Officers. The directors of the Company immediately
prior to the Effective Time, shall be, from and after the Effective Time, the
directors of the Surviving Corporation, and the executive officers of the
Company immediately prior to the Effective Time will be the initial officers
of the Surviving Corporation, in each case until their successors have
been duly elected or appointed and qualified in the manner provided in the
Articles of Incorporation and By-Laws of the Surviving Corporation, or as
otherwise provided by law.
2. CONVERSION OF SHARES
2.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any shares of
Common Stock, $.10 par value, of the Company ("Company Common Stock") or the
holder of any shares of Common Stock, $.01 par value, of Mergerco ("Mergerco
Common Stock"):
<PAGE> 6
<PAGE>
(a) Each share of Mergerco Common Stock issued and outstanding
immediately prior to the Effective Time shall be converted into and exchanged
for one newly and validly issued, fully paid and nonassessable share of
common stock, $.10 per value, of the Surviving Corporation ("Surviving
Corporation Common Stock").
(b) Each share of Company Common Stock and 8% Cumulative
Convertible Preferred Stock, par value $1.00 per share, of the Company
("Convertible Preferred Stock") owned by Parent and all other shares of
capital stock of the Company that are held in the treasury of the Company
immediately prior to the Effective Time, if any, shall be canceled and
extinguished without any conversion right thereof and no consideration shall
be delivered or deliverable in exchange therefor.
(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of Company
Common Stock described in Subsection (b) above) shall be converted into and
represent the right to receive an amount in cash equal to $24.00, payable to
the holder thereof, without any interest thereon, less any required back-up
withholding taxes (the "Merger Consideration"). At and after the
Effective Time, all such shares of Company Common Stock, when converted as
provided in this Section 2.1(c), no longer shall be outstanding and shall
automatically be canceled and retired and shall cease to exist, and
certificates previously evidencing shares of Company Common Stock
immediately prior to the Effective Time, taking into account all certificates
of a holder of Company Common Stock delivered by such holder at any one time
(taken together, a "Company Certificate" or "Company Certificates") shall
thereafter represent only the right to receive the Merger Consideration.
2.2 Payment Procedures
(a) As of the Effective Time, the Surviving Corporation shall
deposit or cause to be deposited with a paying agent to be selected jointly
by Mergerco and the Company (the "Paying Agent"), in a separate fund
established for the benefit of the holders of shares of Company Common Stock,
for payment in accordance with this Section 2.2 (the "Payment Fund"),
immediately available funds in amounts necessary to make the payments
pursuant to Section 2.1(c) to the holders of Company Common Stock entitled
thereto pursuant to Section 2.1(c). As soon as reasonably practicable after
the Effective Time, the Surviving Corporation shall mail to each holder of
record entitled to the Merger Consideration, (i) a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Company Certificates shall pass, only upon proper
delivery of the Company Certificates to the Surviving Corporation, and shall
be in such form and have such other provisions as the Surviving Corporation
<PAGE> 7
<PAGE>
reasonably may specify) and (ii) instructions for use in effecting the
surrender of the Company Certificates in exchange for payment therefor. Upon
the proper surrender of a Company Certificate to the Surviving Corporation,
together with such letter of transmittal and any additional documentation as
the Surviving Corporation may reasonably require, the holder of such Company
Certificate shall be entitled to receive in exchange therefor a check
representing the amount of cash equal to the product of: (x) the number of
shares of Company Common Stock represented by such Company Certificate and
(y) the Merger Consideration, and the Company Certificate so surrendered
shall forthwith be canceled. If payment is to be made to a person other than
the person in whose name the surrendered Company Certificate is registered,
it shall be a condition of payment that the Certificate so surrendered shall
be promptly endorsed or otherwise in proper form for transfer and that 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 the
surrendered Company Certificate or established to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. For
purposes of this Agreement,"Person" means an individual, a corporation, a
limited liability company, a partnership, an association, a trust or any
other entity or organization, including a government or political subdivision
or any agency or instrumentality thereof.
(b) Until surrendered in accordance with the provisions of this
Section 2.2, from and after the Effective Time, each Company Certificate
(other than Certificates representing shares held in the treasury of the
Company or held by Parent) shall represent for all purposes only the right to
receive the Merger Consideration and shall cease to have any rights with
respect to the shares of Company Common Stock formerly represented thereby,
except as otherwise provided herein or by law.
(c) Any portion of the Payment Fund which remains undistributed to
the holders of Company Common Stock for six months after the Effective Time
will be returned to the Surviving Corporation and any shareholder who has not
exchanged his shares of Company Common Stock for the Merger Consideration
prior to such time shall look thereafter only to the Surviving Corporation
for payment of the Merger Consideration in respect of his shares. Any
amounts remaining unclaimed by shareholders of the Company two years after
the Effective Time shall, to the extent permitted by abandoned property and
any other applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any Person previously entitled to
such claims. All interest accrued in respect of the Payment Fund shall
inure to the benefit of and be paid to the Surviving Corporation.
Notwithstanding the foregoing, the Surviving Corporation shall not be liable
to any former holder of Company Common Stock for any amount delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
<PAGE> 8
<PAGE>
(d) The Surviving Corporation 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 the Surviving
Corporation is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation, 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 the Surviving Corporation.
(e) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall be no further registration of transfers of
shares of Company Common Stock thereafter on the records of the Company.
2.3 Options and Warrants
(a) At the Effective Time, except as otherwise provided in this
Section 2.3, each option and warrant granted by the Company to purchase
shares of Company Common Stock, which is outstanding immediately prior
thereto (an "Option" or, collectively, the "Options"), shall be canceled and
retired and shall cease to exist and no consideration shall be delivered or
deliverable in exchange therefor, except to the extent that (i) any such
Option granted by the Company to purchase shares of Company Common Stock has
vested and is exercisable immediately prior to the Effective Time, whether as
a result of the passing of time, the Merger or otherwise, or (ii) any such
Option was granted pursuant to a Company stock option plan and such option
has not yet vested. In such event, each holder of such an Option (excluding
Parent) shall, individually, in settlement thereof, receive from the
Surviving Corporation for each share subject to such an Option an amount
(subject to any applicable back-up withholding taxes) in cash equal to the
difference between: (i) the Merger Consideration and (ii) the per share
exercise price of such Option, to the extent such difference is a positive
number (the "Option Consideration").
(b) Upon receipt of the Option Consideration, the Option shall be
canceled. The surrender of an Option to the Surviving Company in exchange for
the Option Consideration shall be deemed a release of any and all rights the
holder had or may have had in respect of such Options.
(c) Prior to the Effective Time, the Company shall use its best
efforts to obtain all necessary consents or releases from holders of Options
under any and all Company stock option plan(s) and take all such other lawful
action as may be necessary to give effect to the transactions contemplated by
this Section (except for such action that may require the approval of the
<PAGE> 9
<PAGE>
Company's shareholders). Except as otherwise agreed to by the parties: (i)
any and all Company stock option plan(s) shall terminate as of the Effective
Time and the provisions in any other plan, program or arrangement providing
for the issuance or grant of any other interest in respect of the capital
stock of the Company shall be canceled as of the Effective Time and (ii) the
Company shall take all commercially reasonable action in an effort to provide
that following the Effective Time no participant in any stock option plan(s)
or other plans, programs or arrangements shall have any right thereunder to
acquire equity securities of the Company or the Surviving Corporation and to
terminate all such plans.
3. CLOSING
3.1 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of Fowler, White, Gillen, Boggs, Villareal and Banker,
P.A. , Suite 1700, 501 East Kennedy Boulevard, Tampa, Florida, at 10:00 a.m.,
local time, on the day which is the third business day after the day on which
the last of the conditions set forth in Section 5 hereof is fulfilled or
waived (subject to applicable law), or at such other time and place and on
such other date as Mergerco, Parent and the Company shall mutually agree (the
"Closing Date").
4. REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Mergerco as follows:
(a) Corporate Existence. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Florida, has all requisite power and authority to own, lease and operate
its properties and to carry on its business as now being conducted, and is
duly qualified and in good standing to conduct business in each jurisdiction
in which the business it is conducting, or the operation, ownership or
leasing of its properties, makes such qualification necessary, other than in
such jurisdictions where the failure so to qualify could not reasonably be
expected to have a Material Adverse Effect (as defined below) which respect
to the Company. As used in this Agreement, a "Material Adverse Effect"
shall mean, with respect to a particular party, the result of one or more
events, changes or effects which, individually or in the aggregate, would
have a material adverse effect on the condition (financial or otherwise),
business, results of operations, assets or prospects of such party.
(b) Articles and By-Laws. The Company has heretofore made
available to Parent complete and correct copies of its Amended and Restated
Articles of Incorporation and By-Laws. The Company is not in violation of
any provisions of its Amended and Restated Articles of Incorporation or
By-Laws.
<PAGE> 10
<PAGE>
(c) Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 10,000,000 shares of Common Stock and 50,000
shares of Convertible Preferred Stock. At the close of business on February
12, 1997: (i) 2,864,216 shares of Company Common Stock were issued and
outstanding and there were outstanding employee and director stock options to
purchase an aggregate of not more than 229,821 shares of Common Stock (of
which options to purchase an aggregate of at least 76,321 shares of Common
Stock were exercisable), (ii) 50,000 shares of Convertible Preferred Stock
were issued and outstanding, (iii) Warrants to purchase 78,261 shares of
Common Stock at an exercise price equal to the lesser of $11.50 per share or
the per share market price of the Company's Common Stock on the date
of exercise were outstanding, and (iv) no bonds, debentures, notes or other
instruments or evidence of indebtedness having the right to vote (or
convertible into, or exercisable or exchangeable for, securities having the
right to vote) on any matters on which the Company shareholders may vote
("Company Voting Debt") were issued or outstanding. There are no employment,
executive termination or similar agreements providing for the issuance of
shares of Common Stock. All outstanding shares of Company Common Stock are
validly issued, fully paid and nonassessable and are not subject to
preemptive or other similar rights. Except as set forth in this Section, or
as otherwise disclosed on Schedule 4.1(c), there are outstanding: (i) no
shares of capital stock, Company Voting Debt or other voting securities of
the Company; (ii) no securities of the Company convertible into, or
exchangeable or exercisable for, shares of capital stock, Company Voting Debt
or other voting securities of the Company; and (iii) no options, warrants,
calls, rights (including preemptive rights), commitments or agreements to
which the Company is a party or by which it is bound, in any case obligating
the Company to issue, deliver, sell, purchase, redeem or acquire, or cause to
be issued, delivered, sold, purchased, redeemed or acquired, additional
shares of capital stock or any Company Voting Debt or other voting securities
of the Company, or obligating the Company to grant, extend or enter into any
such option, warrant, call, right, commitment or agreement. Between January
1, 1996 and the date hereof, the Company has not: (i) granted any options,
warrants or rights to purchase shares of Company Common Stock or (ii) amended
or repriced any Option or Company stock option plan. There are not as of the
date hereof and there will not be at the Effective Time any shareholder
agreements, voting trusts or other agreements or understandings to which the
Company is a party or by which it is bound relating to the voting of any
shares of the capital stock of the Company which will limit in any way the
solicitation of proxies by or on behalf of the Company from, or the casting
of votes by, the shareholders of the Company with respect to the Merger.
<PAGE> 11
<PAGE>
(d) Corporate Authorization and Non-contravention.
(i) The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to the Company
Shareholder Approval (as defined in Section 4.1(d)(iii)), to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company, subject to the Company Shareholder Approval. This Agreement has
been duly executed and delivered by the Company and, subject to the Company
Shareholder Approval, and assuming that this Agreement constitutes the valid
and binding agreement of Parent and Mergerco, constitutes a valid and
binding obligation of the Company enforceable in accordance with its terms
except that the enforcement hereof may be limited by: (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (b) general principles
of equity (regardless of whether enforceability is considered in a proceeding
at law or in equity).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Company and its
Subsidiaries (as defined in Section 4.1(f)) will not conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the creation of a lien, pledge, security
interest or other encumbrance on assets or property ("Lien"), or any right of
first refusal with respect to any asset or property (any such conflict,
violation, default, Lien, right of termiation or cancellation, collectively,
"Violation"), pursuant to any provision of the Amended and Restated Articles
of Incorporation or By-Laws of the Company or, except as to which requisite
waivers or consents have been obtained, and except as disclosed on Schedule
4.1(d), and assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in paragraph (iii) of this Section
4.1(d) are duly and timely obtained or made and, if required, the Company
Shareholder Approval has been obtained, result in any Violation of any loan
or credit agreement, note, mortgage, indenture, lease, employee benefit plan
or other agreement, obligation, instrument, permit, concession, franchise,
license (collectively, "Agreements") to which the Company is a party, or any
judgment, order, decree, statute, law, ordinance, rule or regulation
(collectively, "Laws") applicable to the Company or its respective properties
or assets, in each case which could reasonably be expected to have a Material
Adverse Effect with respect to the Company.
<PAGE> 12
<PAGE>
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), including
such other such filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval necessitated by the Merger or
the transactions contemplated by this Agreement, is required by or with
respect to the Company in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, which if not obtained or made could
reasonably be expected to have a Material Adverse Effect with respect to the
Company, except for: (a) the filing with and clearance by the United States
Securities and Exchange Commission ("SEC") of: (x) a Transaction Statement
on Schedule 13E-3 (such Schedule 13E-3 as amended or supplemented from time
to time being hereinafter referred to as the "Transaction Statement") and
Proxy Statement on Schedule 14A in definitive form (such Proxy Statement as
amended or supplemented from time to time being hereinafter referred to as
the "Proxy Statement") relating to a special meeting of the shareholders of
the Company ("Company's Shareholders Meeting") to approve the Merger
("Company Shareholder Approval"), and (y) such reports under and such other
compliance with the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the rules and regulations thereunder, as may be required
in connection with this Agreement and the transactions contemplated hereby:
(b) the filing of the Articles of Merger with the Secretary of State of the
State of Florida; (c) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws; (d) compliance with
any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act") and (e) such other necessary consents, approvals
and authorizations of Governmental Entities as may be required.
(e) SEC Filings.
(i) The Company has made available to Mergerco a true and
complete copy of each report, schedule, effective registration statement
(other than preliminary registration statements which later became effective)
and definitive proxy statement filed by the Company with the SEC since
January 1, 1994 and prior to the date of this Agreement (the "Company SEC
Documents") which are all the documents (other than preliminary material)
that the Company was required to file with the SEC since such date. As of
their respective dates, the Company SEC Documents complied in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or the Exchange Act, as the case may be, and the rules
and regulations of the SEC thereunder applicable to such Company SEC
Documents, and none of the Company SEC Documents contained any untrue
<PAGE> 13
<PAGE>
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents and the
audited financial statements for the fiscal year ended December 31, 1996
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted
by Rule 10-01 of Regulation S-X of the SEC) and fairly present in accordance
with applicable requirements of GAAP (subject, in the case of the unaudited
statements, to normal recurring adjustments, none of which will be material)
the consolidated financial position of the Company and its consolidated
subsidiaries as of their respective dates and the consolidated results of
operations and the consolidated cash flows of the Company and its
consolidated subsidiaries for the periods presented therein. For purposes of
this Agreement, "Balance Sheet" means the audited consolidated balance sheet
of the Company and its subsidiaries as of December 31, 1996 and "Balance
Sheet Date" means December 31, 1996.
(ii) None of the information supplied or to be supplied by the
Company in writing expressly for inclusion or incorporation by reference in
the Proxy Statement, on the date first mailed to the holders of the Company
Common Stock or at the time of the Company's Shareholders Meeting, and in the
Transaction Statement, on the date it is filed with the SEC, will 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.
(f) Subsidiaries.
(i) Each Subsidiary (as defined below) that is a corporation
is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation, has all corporate powers
and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except
for those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect. For
purposes of this Agreement, "Subsidiary" means any corporation or other
entity (including any partnership referred to in Section 4.1(f)(ii) below) of
<PAGE> 14
<PAGE>
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions are directly or indirectly owned by the Company. All
Subsidiaries and their respective jurisdictions of incorporation are
identified in the Company's annual report on Form 10-K for the fiscal year
ended December 31, 1995.
(ii) Each partnership (whether or not a limited partnership)
in which the Company directly or indirectly owns a partnership interest
entitling it to 50% or more of the voting interest therein, and each limited
partnership for which the Company or a Subsidiary is general partner, has
been duly organized and is in good standing under the laws of its
jurisdiction of organization and has all material governmental licenses,
authorizations, consents and approvals required to carry on its business as
now conducted and is duly qualified to do business and is in good standing in
each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except
for those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect. The
Company has previously delivered to Parent a list of all such partnerships.
(iii) All of the outstanding capital stock of, or other
ownership interests in, each Subsidiary, is owned by the Company, directly or
indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests). There
are no outstanding (a) securities of the Company or any Subsidiary
convertible into or exchangeable for shares of capital stock or other voting
securities or ownership interests in any Subsidiary, and (b) options or other
rights to acquire from the Company or any Subsidiary, and no other obligation
of the Company or any Subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities convertible
into or exchangeable for any capital stock, voting securities or ownership
interests in, any Subsidiary (the items in clauses 4.1(f)(iii)(a) and
4.1(f)(iii)(b) being referred to collectively as the "Subsidiary
Securities"). There are no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
(g) Board of Directors Approval. The Company hereby consents to
the Merger and represents that: (a) its Board of Directors (at a meeting duly
called and held and acting on the unanimous recommendation of a special
committee of the Board of Directors of the Company comprised entirely of
non-management, non-affiliate independent directors (the "Special Independent
Committee")) has (i) unanimously determined that each of this Agreement and
<PAGE> 15
<PAGE>
the Merger are fair to and in the best interests of the non-Parent affiliated
shareholders of the Company (the "Unaffiliated Shareholders"), (ii) approved
this Agreement and the transactions contemplated hereby and thereby,
including the Merger, and such approval constitutes approval of this
Agreement and the transactions contemplated hereby and thereby,
including the Merger, and such approval is sufficient to satisfy the
provisions of any applicable laws of the State of Florida, including without
limitation Section 607.0901 of the FBCA, if applicable, and (iii) resolved to
recommend the approval and adoption of this Agreement and approval of the
Merger by the holders of the Company Common Stock, and (b) Robert W. Baird
& Co. Incorporated has delivered to the Board of Directors of the Company its
written opinion that the Merger, including the Merger Consideration to be
received by the holders of Company Common Stock, is fair, from a financial
point of view, to such Unaffiliated Shareholders, a signed, true and complete
copy of which has been delivered to Mergerco and is attached hereto as
Exhibit B, and such opinion has not been withdrawn or modified.
(h) Absence of Certain Changes. Since the Balance Sheet Date, the
Company and Subsidiaries have conducted their business in the ordinary course
consistent with past practice and there has not been:
(i) any event, occurrence or development of a state of
circumstances or facts which has had or reasonably could be expected to have
a Material Adverse Effect;
(ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
the Company, or any repurchase, redemption or other acquisition by the
Company or any Subsidiary of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or any
Subsidiary;
(iii) any amendment of any material term of any outstanding
security of the Company or any Subsidiary;
(iv) any occurrence, assumption or guarantee by the Company
or any Subsidiary of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices;
(v) any creation or assumption by the Company or any
Subsidiary of any Lien on any material asset other than in the ordinary
course of business consistent with past practices;
(vi) any making of any loan, advance or capital contributions
to or investment in any Person other than loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries made in the
ordinary course of business consistent with past practices;
<PAGE> 16
<PAGE>
(vii) any damage, destruction or other casualty loss (whether
or not covered by insurance) affecting the business or assets of the Company
or any Subsidiary which, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect;
(viii)except as set forth on Schedule 4.1 (h)(viii), any
transaction or commitment made, or any contract or agreement entered into, by
the Company or any Subsidiary relating to its assets or business (including
the acquisition or disposition of any assets) or any relinquishment by the
Company or any Subsidiary of any contract or other right, in either case,
material to the Company and the Subsidiaries taken as a whole, other than
transactions and commitments in the ordinary course of business consistent
with past practice and those contemplated by this Agreement;
(ix) any change in any method of accounting or accounting
practice by the Company or any Subsidiary, except for any such change
required by reason of a concurrent change in generally accepted accounting
principles;
(x) except as set forth on Schedule 4.1(h)(x), any (a) grant
of any severance or termination pay to any director, officer or employee of
the Company or any Subsidiary, (b) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the Company or
any Subsidiary, (c) increase in benefits payable under any existing severance
or termination pay policies or employment agreements or (d) increase in
compensation, bonus or other benefits payable to directors, officers or
employees of the Company or any Subsidiary, other than in the ordinary course
of business consistent with past practice;
(xi) any labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any Subsidiary, which
employees were not subject to a collective bargaining agreement at the
Balance Sheet Date, or any lockouts, strikes, slowdowns, work stoppages or
threats thereof by or with respect to such employees; or
(xii) any cancellation of any licenses, sublicenses,
franchises, permits or agreements to which the Company or any Subsidiary is a
party, or any notification to the Company or any Subsidiary that any party to
any such arrangements intends to cancel or not renew such arrangements beyond
its expiration date as in effect on the date hereof, which cancellation or
notification, individually or in the aggregate, has had or reasonably could
be expected to have a Material Adverse Effect.
<PAGE> 17
<PAGE>
(i) No Undisclosed Material Liabilities. There are no liabilities
of the Company or any Subsidiary of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably
be expected to result in such a liability, other than:
(i) liabilities disclosed or provided for in the Balance
Sheet;
(ii) liabilities incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date, which in the
aggregate would not have a Material Adverse Effect upon the Company and the
Subsidiaries, taken as a whole; and
(iii) liabilities under this Agreement.
(j) Litigation. Except as set forth in the Company SEC Documents,
there is no action, suit, investigation or proceeding (or any basis therefor)
pending against, or to the knowledge of the Company threatened against or
affecting, the Company or any Subsidiary or any of their respective
properties before any court or arbitrator or any governmental body,
agency or official which, if determined or resolved adversely to the Company
or any Subsidiary in accordance with the plaintiff's demands, would
reasonably be expected to have a Material Adverse Effect or which in any
manner challenges or seeks to prevent, enjoin, alter or materially
delay the Merger or any of the other transactions contemplated hereby.
(k) Taxes. The Company and each Subsidiary have properly completed
and filed on a timely basis all Tax Returns required to be filed on or prior
to the day hereof, and as of the date of filing, each of the Tax Returns was
substantially accurate and complete. The Company and each Subsidiary have
paid or accrued in full all Taxes, if any, due to or claimed to be due by any
governmental entity. The Tax Returns are not subject to penalties under
Section 6662 of the Code relating to accuracy-related penalties (or any
corresponding provision of the state, local or foreign Tax law) or any
predecessor provision of law. An extension of time within which to file any
Tax Return that has not been filed has not been requested or granted. With
respect to all amounts and respective Taxes imposed on the Company and each
Subsidiary or for which the Company or each Subsidiary are or could be liable
to taxing authorities or to other persons or entities with respect to all
taxable periods or portion of periods ending on or before the Closing Date,
all applicable tax laws and agreements have been fully complied with and all
such amounts required to be paid by the Company or any Subsidiary to tax
authorities or others on or before the date hereof have been paid. Schedule
4.1(k) sets forth the taxable years of the Company or any Subsidiaries as to
<PAGE> 18
<PAGE>
which the respective statute of limitations with respect to Taxes has not
expired, and with respect to such taxable years, those periods for which
examinations have been completed, those periods for which examinations are
presently being conducted, those periods for which examinations have not been
initiated and those years for which the required Tax Returns have not yet
been filed. All deficiencies asserted or assessments made as a result of any
examination have been fully paid or are fully reflected as a liability in the
financial statements of the Company or Subsidiary or are being contested and
an adequate reserve therefor has been established and is fully reflected in
the financial statements of the Company or Subsidiary. Except as does not
involve or would not result in liability to the Company that could reasonably
be expected to have a Material Adverse Effect on the Company, (i) there are
no tax liens on any assets of the Company; and (ii) the Company has not been
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any tax. The accruals and
reserves for taxes (including deferred taxes) reflected in the Balance Sheet
are adequate in all material respects to cover all taxes accruable through
the date thereof (including interest and penalties, if any, thereon and taxes
being contested) in accordance with GAAP (excluding any reserve for deferred
taxes established to reflect timing differences between books and tax
income). The Company has previously delivered or made available to Parent
true and complete copies of its federal income tax returns for each of the
fiscal years ended December 31, 1990 through December 31, 1995. The
Company is not a party to or bound by any agreement providing for the
allocation or sharing of taxes with any entity which is not, either directly
or indirectly, a Subsidiary. The Company has not filed a consent pursuant to
or agreed to the application of Section 341(f) of the Code. The Company is
not a "United States real property holding corporation" as defined in Section
897(c)(2) of the Code during the applicable period specified in Section
897(1)(A)(ii) of the Code. Except for the group of which the Company is
presently the common parent, neither the Company nor any Subsidiary has ever
been a member of any affiliated group of corporations within the meaning of
Section 1504 of the Code. Neither the Company nor any Subsidiary has
agreed to make or is required to make any adjustments under Section 481(a) of
the Code by reason of a change in accounting method or otherwise. Neither
the Company nor any Subsidiary participated in, and will not participate in,
an international boycott within the meaning of Section 999 of the Code.
Neither the Company nor any Subsidiary is a party to any agreement, contract,
arrangement or other plan that resulted or would result separately or in the
aggregate in the payment of any excess parachute payment within the meaning
of Section 280G of the Code. Except as set forth in Schedule 4.1(k), neither
the Company nor any Subsidiary is a partner to any joint venture, partnership
or other arrangement or contract that could be treated as a partnership for
federal income tax purposes. For the purpose of this Agreement, (i) the term
"Tax" (and, with correlative meaning, the terms "taxes" and "taxable") shall
<PAGE> 19
<PAGE>
include all federal, state, local and foreign income, profits, franchise,
gross receipts, payroll, sales, employment, use, property, withholding,
excise and other taxes, duties or assessments of any nature whatsoever,
together with all interest, penalties and additions imposed with respect to
such amounts, and (ii) the term "Tax Returns" shall mean returns, reports and
information statements with respect to taxes to be filed with the Internal
Revenue Service or any other taxing authority, domestic or foreign, including
without limitation consolidated combined and unitary tax returns.
(l) ERISA.
(i) Schedule 4.1(l)(i) sets forth a list identifying each
"employee benefit plan", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), which (A) is subject to any
provision of ERISA and (B) is maintained, administered or contributed to by
the Company or any affiliate (as defined below) and covers any employee or
former employee of the Company or any affiliate or under which the Company or
any affiliate has any liability. Copies of such plans (and, if applicable,
related trust agreement or other funding arrangements) and all amendments
thereto and written interpretations thereof have been furnished or made
available to Parent together with the three most recent annual reports (Form
5500 including, if applicable, Schedule B thereto) prepared in connection
with any such plan. Such plans are referred to collectively herein as the
"Employee Plans". For purposes of this Section, "affiliate" of any Person
means any other Person which, together with such Person, would be treated as
a single employer under Section 414 of the Code. None of the Employee Plans
individually or collectively constitute an "employee pension benefit plan" as
defined in Section 3(2) of ERISA.
(ii) Except as otherwise identified in Schedule 4.1(l)(i) no
Employee Plan constitutes a "multiemployer plan", as defined in Section 3(37)
of ERISA (a "Multiemployer Plan"), and no Employee Plan is maintained in
connection with any trust described in Section 501(c)(9) of the Code. None
of the Employee Plans are subject to Title IV of ERISA. The Company knows of
no "reportable event", within the meaning of Section 4043 of ERISA, and no
event described in Section 4041, 4042, 4062 or 4063 of ERISA has occurred
in connection with any Employee Plan, other than a "reportable event" that
will not have a Material Adverse Effect. No condition exists and no event
has occurred that could constitute grounds for termination of any Retirement
Plan or, with respect to any Employee Plan which is a Multiemployer Plan,
presents a risk of a complete or partial withdrawal under Title IV of ERISA
and neither the Company nor any of its affiliates has incurred any liability
under Title IV of ERISA arising in connection with the termination of, or
complete or partial withdrawal from, any plan covered or previously covered
by Title IV of ERISA. If a "complete withdrawal" or "partial withdrawal" by
<PAGE> 20
<PAGE>
the Company and all of its affiliates were to occur as of the Effective
Time with respect to all Employee Plans which are Multiemployer Plans,
neither the Company nor any affiliate would incur any withdrawal liability
under Title IV of ERISA. Nothing done or omitted to be done and no
transaction or holding of any asset under or in connection with any
Employee Plan has or will make the Company or any Subsidiary, any officer or
director of the Company or any Subsidiary subject to any liability under
Title I of ERISA or liable for any tax pursuant to Section 4975 of the Code
that could have a Material Adverse Effect.
(iii) Each Employee Plan which is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, and each trust forming a part
thereof is exempt from tax pursuant to Section 501 (a) of the Code. The
Company has furnished or made available to Parent copies of the most recent
Internal Revenue Service determination letters with respect to each such
Plan. Each Employee Plan has been maintained in compliance with its terms
and with the requirements prescribed by any and all statutes, orders, rules
and regulations, including but not limited to ERISA and the Code, which are
applicable to such Plan.
(iv) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Company or any affiliate
that, individually or collectively, could give rise to the payment of any
amount that would not be deductible pursuant to the terms of Section 280G of
the Code.
(v) Schedule 4.1(l)(v) sets forth a list of each employment,
severance or other similar contract, arrangement or policy and each plan or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits or
for deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (A) is not an Employee Plan, (B) is
entered into, maintained or contributed to, as the case may be, by the
Company or any of its affiliates and (C) covers any employee or former
employee of the Company or any of its affiliates. Such contracts, plans and
arrangements as are described above, copies or descriptions of all of which
have been furnished previously to Parent are referred to collectively herein
as the "Benefit Arrangements". Each Benefit Arrangement has been maintained
in compliance with its terms and with the requirements prescribed by any and
all statutes, orders, rules and regulations that are applicable to such
Benefit Arrangement.
<PAGE> 21
<PAGE>
(vi) Neither the Company nor its affiliates maintains or has
any obligation to contribute to (or any other liability with respect to) any
plan or arrangement which provides medical, health, life or other
welfare-type benefits for current or future retired or terminated employees
(except for COBRA coverage or other coverage as required under applicable
state law).
(vii) There has been no amendment to, written interpretation
or announcement (whether or not written) by the Company or any of its
affiliates relating to, or change in employee participation or coverage
under, any Employee Plan or Benefit Arrangement which would increase
materially the expense of maintaining such Employee Plan or Benefit
Arrangement above the level of the expense incurred in respect thereof for
the fiscal year ended on the Balance Sheet Date.
(viii) Except as set forth on Schedule 4.01(l)(viii), neither
the Company nor any Subsidiary is a party to or subject to any union contract
or any employment contract or arrangement providing for annual future
compensation of $100,000 or more with any officer, consultant, director or
employee.
(m) Finders' Fees. With the exception of fees payable to Robert
W. Baird & Co. Incorporated, a copy of whose engagement agreement has been
provided to Parent and Mergerco, there is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to
act on behalf, of the Company or any Subsidiary who might be entitled to any
fee or commission from the Company or any Subsidiary or any of its affiliates
upon consummation of the transactions contemplated by this Agreement.
(n) Labor Matters. The Company is in compliance with all
currently applicable laws respecting employment practices, terms and
conditions of employment and wages and hours, and is not engaged in any
unfair labor practice, failure to comply with which or engagement in which,
as the case may be, would reasonably be expected to have a Material
Adverse Effect. There is no unfair labor practice complaint pending or, to
the knowledge of Company, threatened against the Company before the National
Labor Relations Board or otherwise. There are no strikes, slowdowns, union
organizational campaigns or other protected concerted activity under the
National Labor Relations Act or, to the knowledge of Company, threats
thereof, by or with respect to any employees of the Company.
<PAGE> 22
<PAGE>
4.2 Representations and Warranties of Parent and Mergerco. Parent and
Mergerco represents and warrants to the Company as follows:
(a) Corporate Existence. Each of Parent and Mergerco is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all requisite power and
authority to own, lease and operate its properties and to carry on its
business as now conducted, and is duly qualified and in good standing to
conduct business in each jurisdiction in which the business it is conducting,
or the operation, ownership or leasing of its properties, makes such
qualification necessary, other than in such jurisdictions where the failure
so to qualify could not reasonably be expected to have a Material Adverse
Effect with respect to Parent or Mergerco.
(b) Articles and By-Laws. Each of Parent and Mergerco has hereto
made available to the Company complete and correct copies of its Articles of
Incorporation or Certificate of Incorporation, as applicable, and By-Laws.
Parent is not in violation of any provision of its Certificate of
Incorporation or By-Laws. Mergerco is not in violation of any provisions of
its Articles of Incorporation or By-Laws.
(c) Corporate Authorization, Non-contravention and Governmental
Authorization.
(i) Each of Parent and Mergerco has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of
each of Parent and Mergerco. This Agreement has been duly executed and
delivered by each of Parent and Mergerco and, assuming this Agreement
constitutes the valid and binding agreement of the Company, constitutes a
valid and binding obligation of each of Parent and Mergerco enforceable in
accordance with its terms except that the enforcement hereof may be limited
by: (a) bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and
(b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by each of Parent and
Mergerco will not conflict with, or result in any Violation pursuant to any
provision of the Certificate of Incorporation or Articles of Incorporation,
as applicable, or By-Laws of Parent or Mergerco or, except as to which
requisite waivers or consents have been obtained, and assuming the consents,
approvals, authorizations or permits and filings or notifications referred to
<PAGE> 23
<PAGE>
in paragraph (iii) of this Section 4.2(c) are duly and timely obtained or
made, result in any Violation of any Agreements to which Parent or Mergerco
is a party, or any Laws applicable to Parent or Mergerco or its respective
properties or assets, in each case which could reasonably be expected
to have a Material Adverse Effect with respect to Parent or Mergerco.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity, including such other such filings and consents as may be
required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval necessitated
by the Merger or the transactions contemplated by this Agreement, is required
by or with respect to Parent or Mergerco in connection with the execution and
delivery of this Agreement by each of Parent or Mergerco or the consummation
by Parent or Mergerco of the transactions contemplated hereby, which if not
obtained or made could reasonably be expected to have a Material Adverse
Effect with respect to Parent or Mergerco, except for: (a) the filing with
and clearance by the SEC of such reports under and such other compliance with
the Exchange Act and the rules and regulations thereunder, as may be required
in connection with this Agreement and the transactions contemplated hereby;
(b) the filing of the Articles of Merger with the Secretary of State of the
State of Florida; (c) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws; (d) compliance with
any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 (the "HSR Act") and (e) such other necessary consents, approvals
and authorizations of Governmental Entities as may be required.
(d) Disclosure Documents. None of the information supplied or to
be supplied by Parent or Mergerco in writing expressly for inclusion or
incorporation by reference in the Proxy Statement, on the date first mailed
to the holders of the Company Common Stock or at the time of the Company's
Shareholders Meeting, and in the Transaction Statement, on the date it is
filed with the SEC, will 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.
(e) Mergerco Board and Shareholder Approval. Mergerco hereby
consents to the Merger and represents that (I) its Board of Directors (at a
meeting duly called and held) has (A) unanimously determined that each of
this Agreement and the Merger are fair to and in the best interests of the
sole shareholder of Mergerco; and (B) approved this Agreement and the
transactions contemplated hereby and thereby, including the Merger; an (II)
its sole shareholder has by written consent, unanimously determined that each
of this Agreement and the Merger are fair to and in the best interest of
Mergerco and has approved the same.
<PAGE> 24
<PAGE>
(f) Parent Board Approval. Parent hereby consents to the Merger
and represents that its Board of Directors by unanimous written consent has
approved this Agreement and the transactions contemplated hereby and thereby,
including the Merger.
(g) Merger Consideration. Mergerco was formed solely for the
purpose of effecting the Merger, and has undertaken no business other than in
connection with the transactions contemplated by this Agreement. Prior to
the Closing Date, the sole shareholder of Mergerco shall have sufficiently
capitalized Mergerco such that the monies available to Mergerco are
sufficient in amount to make the payment of all Merger Consideration.
(h) Finders' Fees. With the exception of fees payable to JP
Morgan & Co. Incorporated, whose fees will be paid by Mergerco, there is no
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf, of Parent or Mergerco or any
Subsidiary who might be entitled to any fee or commission from Parent or
Mergerco upon consummation of the transactions contemplated by this
Agreement.
5. CONDITIONS PRECEDENT TO MERGER
5.1 Conditions Precedent to Obligations of Parent, Mergerco and the
Company. The respective obligations of Mergerco and the Company to effect
the Merger are subject to the satisfaction or waiver (subject to applicable
law) at or prior to the Effective Time of each of the following conditions:
(a) This Agreement and the Merger shall have been approved and
adopted by the affirmative vote of the holders of a majority of the shares of
the Company Common Stock entitled to vote thereon and the affirmative vote of
the holders of a majority of the shares of the Convertible Preferred Stock if
such vote is required by applicable law;
(b) No claim, action, suit, proceeding, arbitration or litigation
has been threatened to be filed, has been filed or is proceeding which has
arisen in whole or in part out of, or pertains to the approval of the Special
Independent Committee and the Board of Directors of any party to this
Agreement and the transactions contemplated hereby, the negotiation,
execution or delivery of this Agreement, the performance of obligations
hereunder or the consummation of the transactions contemplated hereby;
(c) No statute, rule, regulation, executive order, decree,
injunction or order of any kind shall have been enacted, issued, entered,
promulgated or enforced by any Governmental Entity which prohibits the
consummation of the Merger and which is in effect at the Effective
Time;
<PAGE> 25
<PAGE>
(d) The Company shall have received SEC clearance of the
Transaction Statement and Proxy Statement, all state securities laws and
"Blue Sky" permits and other necessary consents, approvals and authorizations
of Governmental Entities;
(e) Neither the recommendation of the Special Independent
Committee and the Board of Directors that the Company's shareholders approve
the Merger nor the opinion from Robert W. Baird & Co. Incorporated to the
effect that the Merger Consideration is fair to the Company's shareholders
from a financial point of view, shall have been withdrawn or modified;
(f) The holders of all Options (other than Holdings), the per
share exercise price of which is greater than the Merger Consideration, shall
have entered into written agreements terminating such Options as set forth in
Section 2.3 hereof;
(g) Any applicable waiting period under the HSR Act relating to
the Merger shall have expired or been terminated;
(h) A majority of the shares of Common Stock voting on the Merger
(other than shares held by Parent or any affiliates of Parent) shall have
been voted to approve and adopt this Agreement and the Merger; and
(i) The Board of Directors of the Company as of the date of this
Agreement shall have received an agreement from British Aerospace plc, in a
form reasonably satisfactory to the Special Independent Committee, agreeing
to cause the Surviving Corporation to comply with the provisions of Section
8.2 hereof.
5.2 Conditions to the Obligations of Parent and Mergerco. The
obligations of Parent and Mergerco to effect the Merger are subject to the
satisfaction or waiver (subject to applicable law) at or prior to the
Effective Time of each of the following conditions:
(a) The Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to
the Closing Date, the representations and warranties of the Company contained
in this Agreement and in any certificate or other writing delivered by the
Company pursuant hereto shall be true in all material respects at
and as of the Closing Date as if made at and as of such time and Mergerco
shall have received a certificate signed by the chief executive officer of
the Company to the foregoing effect;
(b) From and after the date hereof, the Company shall carry on its
business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, there shall not be any adverse change to the
Company's business, operations or financial condition which has resulted in a
Material Adverse Effect with respect to the Company;
<PAGE> 26
(c) There shall not be instituted or pending any action or
proceeding by any government or governmental authority or agency, domestic or
foreign, or by any other Person, domestic or foreign, before any court or
governmental authority or agency, domestic or foreign, (i) challenging or
seeking to make illegal, to delay materially or otherwise directly or
indirectly to restrain or prohibit the consummation of the Merger or seeking
to obtain material damages or otherwise directly or indirectly relating to
the transactions contemplated by this Agreement, (ii) seeking to restrain or
prohibit Parent's or Mergerco's ownership or operation (or that of Parent's
respective Subsidiaries or affiliates) of all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or
of Parent and its Subsidiaries or affiliates, taken as a whole, or to compel
Parent or Mergerco or any of their Subsidiaries or affiliates to dispose of
or hold separate all or any material portion of the business or assets of the
Company and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole or any of their respective affiliates, (iii)
(except for the Special Security Agreement among the Company, Parent, British
Aerospace plc and the United States Department of Defense as it exists
on the date hereof,) seeking to impose or confirm material limitations on the
ability of Parent or Mergerco or any of their Subsidiaries or affiliates to
effectively control the business or operations of the Company and its
Subsidiaries, taken as a whole, or effectively to exercise full rights of
ownership of the shares of Common Stock, including, without limitation, the
right to vote any shares of Common Stock acquired or owned by Mergerco or any
of its Subsidiaries or affiliates on all matters properly presented to the
Company's shareholders, or (iv) seeking to require divestiture by Parent or
Mergerco or any of their Subsidiaries or affiliates of any shares of
Common Stock, or (v) that otherwise is likely to materially adversely affect
the Company and its Subsidiaries, taken as a whole, or Mergerco, Parent or
their respective Subsidiaries or affiliates; and no court, arbitrator or
governmental body, agency or official shall have issued any judgment,
order, decree or injunction, and there shall not be any statute, rule or
regulation, that, in the sole judgment of the Mergerco, is likely, directly
or indirectly, to result in any of the consequences referred to in the
preceding clauses (i) through (v);
(d) Parent and Mergerco shall have received a copy of the Report
of Independent Accountants, without qualification, from Coopers & Lybrand
LLP, the Company's independent accountants, with respect to the audited
consolidated financial statements of the Company for the fiscal year ended
December 31, 1996; and
(e) Parent and Mergerco shall have received all documents it may
reasonably request relating to the existence of the Company and the
Subsidiaries and the authority of the Company for this Agreement, all in form
and substance satisfactory to Parent and Mergerco.
<PAGE> 27
<PAGE>
5.3 Conditions to the Obligations of the Company. The obligation of
the Company to effect the Merger are subject to the satisfaction or waiver
(subject to applicable law) at or prior to the Effective Time of each of the
following conditions:
(a) Parent and Mergerco shall have performed in all material
respects all of their respective obligations hereunder required to be
performed by either of them at or prior to the Closing Date, the
representations and warranties of Parent and Mergerco contained in this
Agreement and in any certificate or other writing delivered by the Company
pursuant hereto shall be true in all material respects at and as of the
Closing Date as if made at and as of such time and the Company shall have
received a certificate signed by the chief executive officer of each of
Mergerco and Parent to the foregoing effect;
(b) There shall not be instituted or pending any action or
proceeding by any government or governmental authority or agency, domestic or
foreign, or by any other Person, domestic or foreign, before any court or
governmental authority or agency, domestic or foreign, challenging or seeking
to make illegal, to delay materially or otherwise directly or indirectly to
restrain or prohibit the consummation of the Merger or seeking to obtain
material damages or otherwise directly or indirectly relating to the
transactions contemplated by this Agreement; and
(c) The Company shall have received all documents it may
reasonably request relating to the existence of Parent and Mergerco and the
authority of Parent and Mergerco for this Agreement, all in form and
substance satisfactory to the Company.
6. COVENANTS RELATING TO THE CONDUCT OF THE BUSINESS
6.1 Covenants of the Company. Except as otherwise specifically
provided in this Agreement, from the date hereof to the Effective Time,
neither the Special Independent Committee nor the Board of Directors of the
Company shall approve or authorize any action that would allow the Company
and its Subsidiaries to carry on their respective businesses other than
in the ordinary and usual course of business and consistent with past
practice or any action that would prevent the Company and its Subsidiaries
from using their best efforts to (i) preserve intact its present business
organization, (ii) maintain in effect all federal, state, local and foreign
licenses, approvals and authorizations that are required for the Company or
any of its Subsidiaries to carry on their business, (iii) keep available the
services of its key officers and employees and (iv) maintain satisfactory
relationships with its lenders, suppliers and others having business
relationships with it. Without limiting the generality of the foregoing, and
<PAGE> 28
<PAGE>
except as otherwise specifically provided in this Agreement, without the
prior written consent of Mergerco, prior to the Effective Time, neither the
Special Independent Committee nor the Board of Directors of the Company
shall, or shall authorize or direct the Company or any Subsidiary,
directly or indirectly, to:
(a) adopt or propose any change in its Articles of Incorporation
or By-laws;
(b) except in the ordinary course of business consistent with past
practices and except pursuant to existing agreements or arrangements or as
set forth on Schedule 6.1(b), (i) acquire (by merger, consolidation or
acquisition of stock or assets) any material corporation, partnership or
other business organization or division thereof, or sell, lease or otherwise
dispose of a material Subsidiary or a material amount of assets or
securities; (ii) make any investment in an amount in excess of $25,000 in the
aggregate whether by purchase of stock or securities, contributions to
capital or any property transfer, or purchase for an amount in excess of
$25,000 in the aggregate, other than in the ordinary course of business and
consistent with past practices, any property or assets of any other
individual or entity; (iii) except in the ordinary course of business and
consistent with past practices, waive, release, grant, or transfer any rights
of material value; (iv) except in the ordinary course of business and
consistent with past practices, modify or change in any material respect any
existing material license, lease, contract, or other document; (v) except to
refund or refinance commercial paper, incur, assume or prepay an amount of
long-term or short-term debt in excess of $25,000 in the aggregate; (vi)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person
which, are in excess of $25,000 in the aggregate; (vii) make any loans,
advances or capital contributions to, or investments in, any other
Person which are in excess of $25,000 in the aggregate or (viii) take any
action in violation of the Agreement for Credit Availability dated as of
November 20, 1996 by and between the Company and British Aerospace plc;
(c) take any action that would make any representation and
warranty of the Company hereunder inaccurate in any respect at, or as of any
time prior to, the Effective Time, or omit to take any action necessary to
prevent any such representation or warranty from being inaccurate in any
respect at any such time;
(d) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, or redeem or otherwise acquire or offer to acquire any of its
securities or any securities of its Subsidiaries;
<PAGE> 29
<PAGE>
(e) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or employee benefit plan, agreement, trust, plan,
fund or other arrangement for the benefit and welfare of any director,
officer or employee, or increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required
by any existing plan or arrangement (including, without limitation, the
granting of stock options or stock appreciation rights or the removal of
existing restrictions in any benefit plans or agreements);
(f) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing off notes
or accounts receivable, other than in the ordinary course of business;
(g) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge or satisfaction in the ordinary
course of business, consistent with past practices, of liabilities reflected
or reserved against in the consolidated financial statements of the
Company or incurred in the ordinary course of business, consistent with past
practices;
(h) make any tax election or settle or compromise any material
income tax liability;
(i) take any action other than in the ordinary course of business
and consistent with past practices with respect to accounting policies or
procedures; or
(j) agree or commit to do any of the foregoing.
6.2 Covenant of Parent and Mergerco-Voting of Shares. Each of Parent
and Mergerco agrees to vote all shares of Company Common Stock and
Convertible Preferred Stock beneficially owned by it in favor of adoption of
this Agreement and the Merger at the Company's Shareholders Meeting.
6.3 Covenants of Mergerco and the Company. The parties hereto agree
that:
(a) Best Efforts. Subject to the terms and conditions of this
Agreement, each party will use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement. Each party shall also refrain
from taking, directly or indirectly, any action contrary to or inconsistent
<PAGE> 30
<PAGE>
with the provisions of this Agreement, including action which would impair
such party's ability to consummate the Merger and the other transactions
contemplated hereby. Without limiting the foregoing, the Company
and its Board of Directors shall use their best efforts to (a) take all
action necessary so that no state takeover statute or similar statute or
regulation is or becomes applicable to the Merger or any of the other
transactions contemplated by this Agreement and (b) if any state takeover
statute or similar statute or regulation becomes applicable to any of the
foregoing, take all action necessary so that the Merger and the other
transactions contemplated by this Agreement may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and the other
transactions contemplated by this Agreement.
(b) Public Announcements. Mergerco and the Company will consult
with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except with respect to any press release or public statement as
may be required by applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or make any such
public statement prior to such consultation.
(c) Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Mergerco,
any deeds, bills of sale, assignments or assurances and to take and do, in
the name and on behalf of the Company or Mergerco, any other actions and
things to vest, perfect or confirm of record or otherwise in the Surviving
Corporation any and all right, title and interest in, to and under any of the
rights, properties or assets of the Company acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger.
7. ADDITIONAL AGREEMENTS
7.1 Preparation of Proxy Statement and Transaction Statement. As soon
as practicable after the date of announcement of the execution of the Merger
Agreement, the Company and Parent shall prepare and file the Transaction
Statement with respect to the Merger. Parent and the Company each agrees to
correct any information provided by it for use in the Transaction Statement
if and to the extent that it shall have become false or misleading in any
material respect. The responsible party agrees to take all steps necessary
(and bear all costs associated therewith to cause the Transaction Statement
as so corrected to be filed with the SEC and to be disseminated to holders of
shares of Common Stock, in each case as and to the extent required by
applicable federal securities laws. Each of the Parent and the Company and
<PAGE> 31
<PAGE>
their respective counsel shall be given an opportunity to review and comment
on the Transaction Statement prior to its being filed with the SEC. As soon
as practicable after the date hereof, the Company, with the cooperation of
Mergerco, shall prepare and file with the SEC the Proxy Statement. The
Company shall use commercially reasonable efforts to respond to all SEC
comments with respect to the Proxy Statement and to cause the Proxy Statement
to be mailed to the Company's shareholders at the earliest practicable date.
The Company will, as soon as practicable, use commercially reasonable efforts
to duly call, give notice of, convene and hold the Company's Shareholders
Meeting for the purpose of approving this Agreement and the transactions
contemplated hereby and will otherwise comply with all legal requirements
applicable to such meeting. The Company will use its best efforts to obtain
the necessary approvals by its shareholders of this Agreement and the
transactions contemplated hereby.
7.2 Further Assistance. After the Effective Time, from time to time,
as and when required by the Surviving Corporation or by its successors or
assigns, there shall be executed and delivered on behalf of the Company such
deeds or other instruments, and there shall be taken or caused to be taken by
all such further and other action, as shall be appropriate, advisable or
necessary in order to vest, perfect or confirm, or record or otherwise, in
the Surviving Corporation the title to and possession of all property
interests, assets, rights, privileges, immunities, powers, franchises and
authority of the Company and Mergerco, and otherwise to carry out the
purposes of this Agreement. The officers and directors of the Surviving
Corporation are fully authorized in the name and on behalf of the Company and
Mergerco or otherwise, to take any and all such action and to execute and
deliver any and all such deeds and other instruments.
7.3 Agreements. The Company will take such commercially reasonable
steps as are appropriate, including the giving of required notices, to
preserve its rights under the Agreements and to ensure that such rights will
be transferred to the Surviving Corporation.
7.4 Fees and Expenses. All fees and expenses (including attorneys' and
consultants' fees and expenses) incurred by the parties hereto in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and all other matters related to the closing of
the transactions contemplated hereby shall be borne solely and entirely by
the party which has incurred the same. Notwithstanding the foregoing, in the
event that the transactions contemplated hereby are consummated, all of such
fees and expenses will be paid by the Surviving Corporation from the funds
provided by the sole shareholder of Mergerco for such purpose.
<PAGE> 32
<PAGE>
7.5 Confidentiality. From the date hereof and until the Effective
Time, and for a period of two years after the effective date of any
termination of this Agreement, the Company, Parent and Mergerco: (i) shall
use commercially reasonable efforts (x) to maintain the confidentiality and
(y) not disclose any material information to any Person or entity other than
its employees, agents, attorneys and financial advisors who are participating
in the transactions contemplated by this Agreement, and (ii) shall not use,
other than in connection with this Agreement, any proprietary and
confidential information of the Parent or Mergerco, in the case
of the Company, and the Company, in the case of Parent and Mergerco.
Notwithstanding the foregoing, the Company, Parent and Mergerco may make such
disclosures if and to the extent required by applicable law, legal process or
other regulatory requirements.
7.6 Access to Information. From the date hereof and until the
Effective Time, the Company will give Parent and Mergerco, their counsel,
financial advisors, auditors and other authorized representatives full access
to the offices, properties, books and records of the Company and the
Subsidiaries, will furnish to Parent and Mergerco, their counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such Persons may reasonably request
and will instruct the Company's employees, counsel and financial advisors to
cooperate with Parent and Mergerco in their investigation of the business of
the Company and the Subsidiaries; provided that no investigation pursuant to
this Section shall affect any representation or warranty given by the Company
to Parent and Mergerco hereunder.
7.7 Other Offers.
From the date hereof until the termination pursuant to Section 9.1
hereof, the Company and the Subsidiaries and the officers, directors,
employees or other agents of the Company and the Subsidiaries will not,
directly or indirectly, (i) take any action to solicit, initiate
or encourage any Acquisition Proposal (as hereinafter defined) or (ii)
subject to the fiduciary duties of the Special Independent Committee and the
Board of Directors under applicable law as advised by counsel to the Special
Independent Committee, engage in negotiations or discussions with, or
disclose any nonpublic information relating to the Company or any Subsidiary
or afford access to the properties, books or records of the Company or any
Subsidiary to, or otherwise assist, facilitate or encourage, any Third Party
(as defined below) that may be considering making, or has made, an
Acquisition Proposal. The Company will promptly notify Mergerco
after receipt of any Acquisition Proposal or any indication that any Third
Party is considering making an Acquisition Proposal or any request for
nonpublic information relating to the Company or any Subsidiary or for access
<PAGE> 33
<PAGE>
to the properties, books or records of the Company or any Subsidiary by any
Third Party that may be considering making, or has made, an Acquisition
Proposal and will keep Mergerco fully informed of the status and details of
any such Acquisition Proposal, indication or request. If otherwise permitted
under this Section 7.7, prior to furnishing any non-public information to, or
entering into negotiations or discussions with, any Person, the Company will
obtain an executed confidentiality agreement from such Person on terms which
are normally contained in such agreement used for such purpose. For purposes
of this Agreement, "Acquisition Proposal" means any offer or proposal for, or
any indication of interest in, a merger or other business combination
involving the Company or any Subsidiary or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company or
any Subsidiary, other than the transactions contemplated by this Agreement.
As used in this Agreement, the term "Third Party" means any person,
corporation, entity or "group," as defined in Section 13(d) of the Exchange
Act, other than Parent or Mergerco or any of their affiliates.
7.8 Notices of Certain Events. The Company shall promptly notify
Mergerco of:
(a) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting the Company or any Subsidiary which, if
pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 4.1(j) or which relate to the consummation of
the transactions contemplated by this Agreement.
8. INDEMNIFICATION
8.1 Indemnification. It is understood and agreed that, from and after
the Effective Time, the Surviving Corporation shall, to the fullest extent
permitted under applicable law (subject to the penultimate sentence of this
Section 8.1), indemnify and hold harmless, Mergerco and Parent, any affiliate
of any such person and any of their respective partners, members, directors
and officers and each other person, if any, controlling such persons, to the
extent Mergerco and Parent would be required to provide indemnification
thereto, fiduciaries and agents of such persons (all such persons are
<PAGE> 34
<PAGE>
referred to collectively as "Mergerco Indemnified Parties") and the directors
and officers of the Company as in existence on the date of this Agreement
("Company Indemnified Parties" and collectively with Mergerco Indemnified
Parties, "Indemnified Parties") from and against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
pending, threatened or completed claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to any of the transactions contemplated by this
Agreement; provided, however, that the Surviving Corporation shall not be
obligated pursuant to this Section to pay the fees and expenses of more than
one counsel for all Indemnified Parties in any single action except to the
extent that counsel for the Indemnified Parties shall have advised that two
or more of such Indemnified Parties may have conflicting interests in the
outcome of such action. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the
Effective Time and whether or not such Indemnified Party is a party thereto),
(x) the Surviving Corporation shall advance expenses to each such Indemnified
Party, including the payment of the reasonable fees and expenses of counsel
selected by such Indemnified Party (as and to the extent permitted by the
preceding sentence), which counsel shall be reasonably satisfactory to the
Surviving Corporation, promptly after statements therefor are received;
provided, however, that the obligation to advance expenses pursuant to this
Section shall arise only to the extent that the Indemnified Party requesting
such advancement shall execute an undertaking (in form and substance
reasonably satisfactory to the Surviving Corporation, as the case may be) to
repay all amounts so advanced in the event and to the extent that it shall
ultimately be determined that such Indemnified Party was not entitled to be
so indemnified, and (y) the Indemnified Party will fully cooperate in the
defense of any such matter and will promptly furnish the Surviving
Corporation with any information and documents within such person's
possession or control necessary to defend such matter. The Surviving
Corporation shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld).
Notwithstanding anything to the contrary contained in the foregoing, (i) no
Company Indemnified Party shall be entitled to be indemnified under this
Section 8.1 for any costs or expenses, judgments, fines, losses, claims,
damages, liabilities or amounts paid in settlement arising primarily from its
or any other Company Indemnified Party's gross negligence, bad faith
or willful misconduct and (ii) no Mergerco Indemnified Party shall be
entitled to be indemnified under this Section 8.1 for any costs or expenses,
judgments, fines, losses, claims, damages, liabilities or amounts paid in
settlement arising primarily from its or any other Mergerco Indemnified
Party's gross negligence, bad faith or willful misconduct. This Section 8.1
shall survive any termination of this Agreement, however caused.
<PAGE> 35
<PAGE>
8.2 Directors' and Officers' Liability Insurance. For a period of six
years after the Effective Time, the Surviving Corporation, at its sole
discretion, shall either: (i) maintain the Surviving Corporation's existing
directors' and officers' liability insurance (or substitute equivalent
liability insurance) for those persons who are directors and officers of the
Company immediately prior to the Effective Time (the "Existing Directors") or
(ii) cause British Aerospace plc to indemnify the Existing Directors in the
same manner that British Aerospace plc currently provides indemnification for
its employees, officers and directors. Any Existing Director who is
indemnified pursuant to the foregoing provisions shall fully cooperate in the
defense of any such matter and shall promptly furnish the Surviving
Corporation and British Aerospace plc with any information and documents
within such person's possession or control necessary to defend such matter.
Notwithstanding anything to the contrary contained in the foregoing, no
Existing Director shall be entitled to be indemnified under this Section 8.2
for any costs or expenses, judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement arising primarily from its or any
other Existing Director's gross negligence, bad faith or willful misconduct.
9. TERMINATION AND AMENDMENT
9.1 Abandonment and Termination
(a) This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
shareholders of the Company or Mergerco:
(i) by the Company, Parent or Mergerco if the Merger
Agreement and the Merger fail to receive the requisite vote for approval and
adoption by the shareholders of the Company at the Company's Shareholders
Meeting;
(ii) by mutual written consent of the Company, on the one
hand, and Parent and Mergerco, on the other hand, if authorized or taken by
mutual action of their respective Boards of Directors and the Special
Independent Committee, in the case of the Company;
(iii) by either the Company, on the one hand, and Parent or
Mergerco, on the other hand: (A) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of the other set
forth in this Agreement which breach has not been cured within five (5)
business days following receipt by the breaching party of notice of
such breach, or (B) if a claim, action, suit, proceeding, arbitration or
litigation has been threatened to be filed, has been filed or is proceeding
<PAGE> 36
<PAGE>
which has arisen in whole or in part out of, or pertaining to the approval of
the Board of Directors (including the Special Independent Committee) of any
party to this Agreement and the transactions contemplated hereby, the
negotiation, execution or delivery of this Agreement, the performance of
obligations hereunder or the consummation of the transactions contemplated
hereby;
(iv) by either the Company or Mergerco, so long as such party
has not breached its obligations hereunder, if the Merger shall not have been
consummated on or before July 31, 1997; provided, that the right to terminate
this Agreement under this subsection shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before
such date; or
(v) By the Special Independent Committee acting on behalf of
the Company if prior to the Effective Time (A) the Board of Directors of the
Company or the Special Independent Committee shall have withdrawn its
approval or recommendation of this Agreement and the Merger or its
recommendation that shareholders of the Company adopt and approve this
Agreement and the Merger based upon the receipt by the Board of Directors or
the Special Independent Committee of an Acquisition Proposal from a Third
Party which the Board of Directors of the Company or the Special Committee
believes is more favorable to the Unaffiliated Shareholders, or (B) Robert W.
Baird & Co. Incorporated shall have withdrawn or modified or amended, in a
manner adverse to the Company or the Unaffiliated Shareholders, its
opinion at any time prior to the Effective Time;
(vi) By Mergerco if (A) the Board of Directors of the Company
or the Special Independent Committee shall have withdrawn or modified or
amended, in a manner adverse to Mergerco, its approval or recommendation of
this Agreement and the Merger or its recommendation that shareholders of the
Company adopt and approve this Agreement and the Merger, or approved,
recommended or endorsed any proposal for a transaction other than the
Merger (including a tender or exchange offer for shares of Common Stock) or
(B) J.P. Morgan & Co. Incorporated shall have withdrawn or modified or
amended, in a manner adverse to Mergerco, its opinion at any time prior to
the Effective Time.
(b) In the event of termination of this Agreement by either the
Company or Mergerco as provided in this Agreement, this Agreement shall
forthwith become void and there shall be no liability or obligation or the
part of Mergerco or the Company or their respective affiliates, officers,
directors or shareholders except (i) the provisions of Sections 7.5 and 8.1
shall continue in full force and effect, and (ii) to the extent that such
termination results from the willful breach by a party hereto of any of its
representations or warranties, or of any of its covenants or agreements, in
each case, as set forth in this Agreement.
<PAGE> 37
<PAGE>
9.2 Waiver; Amendment. At any time prior to the Effective Time, any
provision of this Agreement may be: (i) waived by the party benefitted by
the provision or by both parties by a writing executed by an executive
officer of such party, or (ii) amended or modified at any time (including the
structure of the transaction) by an agreement in writing between the parties
hereto approved by their respective Boards of Directors and the Special
Independent Committee, in the case of the Company.
10. MISCELLANEOUS
10.1 Survival. Only those agreements and covenants of the parties that
are applicable in whole or in part after the Effective Time shall survive the
Effective Time. All representations and warranties and other agreements and
covenants shall be deemed to be conditions of this Agreement and shall not
survive the Effective Time.
10.2 Entire Agreement; Etc. This Agreement represents the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written
agreements heretofore or contemporaneously made. All terms and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties thereto and their respective successors and assigns.
10.3 Assignment. Neither this Agreement nor any rights, interests or
obligations hereunder may be assigned by any party hereto (whether by
operation or law or otherwise) without the prior written consent of the other
party.
10.4 Headings. The descriptive headings of the several Articles and
Sections of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the
meaning or interpretation of this Agreement.
10.5 Counterparts. This Agreement may be executed in two (2) or more
counterparts, and by different parties hereto in separate counterparts, each
of which shall be deemed to be an original, and all of which taken together
shall be deemed to be one and the same instrument.
10.6 Applicable Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws
of the State of Florida, regardless of the laws that might otherwise govern
under applicable principles of conflicts laws thereof. In the event that it
becomes necessary for any party to this Agreement to enforce this Agreement
through legal proceedings, each party hereby agrees that the Circuit Court
for the Thirteenth Judicial Circuit in and for Hillsborough County, Florida,
<PAGE> 38
<PAGE>
Tampa Division, and the United States District Court for the Middle District
of Florida, Tampa Division, shall have exclusive jurisdiction to hear and
determine any such matters and, in connection therewith, each party hereby
expressly submits and consents in advance to such jurisdiction and venue in
any action or proceeding whether commenced by or brought against them in
either of the Courts. Each party further agrees that any service of process
in connection with any dispute arising out of this Agreement or the Merger
may be given to any other party hereto at the respective addresses and
pursuant to the notice provisions set forth in Section 10.8 below. In any
such court proceeding, the prevailing party shall be entitled to
reimbursement of all costs and expenses, which may be reasonably incurred or
paid in connection therewith, including, without limitation, attorney's fees
and costs at the trial and appellate court levels.
10.7 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
10.8 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and
shall be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five (5) business days after the
date of mailing to the following address or telecopy number, or to such other
address or addresses as such person may subsequently designate by notice
given hereunder:
(a) if to Mergerco or Parent, to:
British Aerospace Holdings, Inc.
15000 Conference Center Drive
Suite 200
Chantilly, VA 20151-3819
Attn: Charles E. Gaba, Esq.
with copies to:
Davis Polk & Wardwell
450 Lexington Ave.
New York, NY 10017
Attn: Peter R. Douglas, Esq.
and to:
Steel Hector & Davis LLP
200 South Biscayne Blvd.
40th Floor
Miami, FL 33131
Attn: Harvey Goldman, Esq.
<PAGE> 39
<PAGE>
(b) if to the Company, to:
Reflectone, Inc.
P.O. Box 15000
Tampa, Florida 33684
Attn: Richard Snyder
with copies to:
Fowler, White, Gillen, Boggs, Villareal and Banker, P.A.
501 East Kennedy Blvd.
Tampa, FL 33601
Attn: R. Alan Higbee, Esq.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be executed as of this day and year
first above written.
REFLECTONE, INC.
By: /s/R. G. Snyder
Name: Richard G. Snyder
Title: President and CEO
BRITISH AEROSPACE HOLDINGS, INC.
By: /s/Charles E. Gaba
Name: Charles E. Gaba
Title: Vice President
BAR MERGERCO., INC.
By: /s/Charles E. Gaba
Name: Charles E. Gaba
Title: Vice President
MIA9510/126371-9
<PAGE> 40
<PAGE>
<PAGE>
<PAGE>
FOR IMMEDIATE RELEASE
BRITISH AEROSPACE TO ACQUIRE BALANCE OF REFLECTONE, INC.
TAMPA, FL; February 13, 1997. British Aerospace Holdings, Inc. ("British
Aerospace") and Reflectone, Inc. ("Reflectone") announced that British
Aerospace and the Directors of Reflectone, based upon the recommendation of a
special independent committee of such Directors, have signed a Merger
Agreement providing for the acquisition of the common stock of Reflectone not
currently owned by British Aerospace at a price of $24 in cash per Reflectone
share. This transaction is subject to, among other things, approval by the
shareholders of Reflectone and regulatory agencies.
British Aerospace currently owns approximately 48% of Reflectone's
outstanding common stock (approximately 57% on a fully diluted basis).
Richard D. Lapthorne, Group Finance Director of British Aerospace plc, said
that he is pleased that an agreement has been reached as "it rationalizes our
investment in Reflectone--and integrates fully the operations of the company
into the training business of British Aerospace. Previously we provided the
majority of financial support, but had a significantly lower economic
return." Richard G. Snyder, President and Chief Executive Officer of
Reflectone, said that management supports this transaction as being in the
best interests of Reflectone shareholders, employees, customers, and other
constituents.
Reflectone is a Florida corporation whose business involves the design,
manufacture, and sale of flight simulators, weapons systems trainers,
tactical air defense trainers, maintenance trainers, part-task trainers, and
other sophisticated training devices for U.S. Government, commercial, and
international customers, as well as simulation-based entertainment devices
for the entertainment industry.
British Aerospace Holdings, Inc. is a wholly-owned subsidiary of British
Aerospace plc. British Aerospace plc is the U.K.'s largest military and
civil aircraft manufacturer and is involved in the design, development,
manufacture, and sale of both military and commercial aerospace products and
associated services. British Aerospace plc is also engaged in the design and
manufacture of armaments and guided weapons and other activities. British
Aerospace plc is organized into three principal sectors: Defense, Commercial
Aerospace, and Property, and in 1995 posted revenues of 5.7 billion pound
sterling, and pre-tax profits of 330 million pound sterling.
<PAGE> 41
<PAGE>
For More Information Contact: Richard G. Snyder, President & CEO
Reflectone, Inc.
(813) 887-1500 or [email protected]
-or-
Andy L. Wrathall, Corporate Communications Dept.
British Aerospace plc
011 44 1252 373232
<PAGE> 42
<PAGE>
