\n (d) Consents, etc…………………. 32
\n (e) Affiliate Letters……………… 32
\n (f) Continuity of Interest Agreement… 32
\n 6.3 Conditions to Obligation of the Company… 33
\n (a) Representations and Warranties….. 33
\n (b) Performance of Obligations of
\n Parent and Sub………………. 33
\n (c) Tax Opinion…………………… 33<\/p>\nARTICLE 7 TERMINATION, AMENDMENT AND WAIVER……… 33
\n 7.1 Termination…………………………. 33
\n 7.2 Effect of Termination………………… 34
\n 7.3 Amendment…………………………… 34
\n 7.4 Extension; Waiver……………………. 35<\/p>\n
ARTICLE 8 GENERAL PROVISIONS…………………… 35
\n 8.1 Nonsurvival of Representations and
\n Warranties………………………… 35
\n 8.2 Notices…………………………….. 35
\n 8.3 Definitions…………………………. 36
\n 8.4 Interpretation………………………. 36
\n 8.5 Counterparts………………………… 36
\n 8.6 Entire Agreement; No Third-party
\n Beneficiaries……………………… 37
\n 8.7 Governing Law……………………….. 37
\n 8.8 Assignment………………………….. 37
\n 8.9 Enforcement…………………………. 37
\n 8.10 Severability………………………… 37
\n<\/c><\/c><\/s><\/table>\n
iii<\/p>\n
AGREEMENT AND PLAN OF MERGER<\/p>\n
THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) is entered into as
\nof October 14, 1996, by and among Berkshire Hathaway Inc., a Delaware
\ncorporation (“Parent”), NY Acquisition Sub Inc., a New York corporation and a
\ndirect wholly owned subsidiary of Parent (“Sub”), and FlightSafety International
\nInc., a New York corporation formed under the name Flight Safety, Inc. (the
\n“Company”).<\/p>\n
RECITALS<\/p>\n
WHEREAS, the Boards of Directors of Parent and the Company have
\napproved, and deem it advisable and in the best interests of their respective
\ncompanies and stockholders to consummate, a merger of the Company with and into
\nSub (the “Merger”), with Sub as the surviving corporation in the Merger, upon
\nthe terms and subject to the conditions set forth in this Agreement, pursuant to
\nwhich (a) the shares of Common Stock, $.10 par value per share, of the Company
\n(“Company Common Stock”) issued and outstanding immediately prior to the
\nEffective Time (as defined in Section 1.3) other than (i) shares of Company
\nCommon Stock owned, directly or indirectly, by the Company or any subsidiary (as
\ndefined in Section 8.3) of the Company or by Parent, Sub or any other subsidiary
\nof Parent and (ii) Dissenting Shares (as defined in Section 2.1(d)), will be
\nconverted into the right to receive, at the elections of the holders of Company
\nCommon Stock, subject to the terms hereof, shares of Class A Common Stock, $5.00
\npar value per share, of Parent (“Class A Stock”), or shares of Class B Common
\nStock, $.1667 par value per share, of Parent (“Class B Stock,” and together with
\nClass A Stock, “Parent Stock”), or cash;<\/p>\n
WHEREAS, the Merger and this Agreement require the vote of two-thirds
\nof the outstanding shares of the Company Common Stock entitled to vote thereon
\nfor the approval thereof (the “Company Stockholder Approval”); and<\/p>\n
WHEREAS, for United States Federal income tax purposes, it is intended
\nthat the Merger shall qualify as a reorganization under the provisions of
\nSection 368 of the Internal Revenue Code of 1986, as amended (the “Code”) and
\nthis Agreement is intended to be and is adopted as a plan of reorganization
\nwithin the meaning of Section 368 of the Code.<\/p>\n
NOW, THEREFORE, in consideration of the representations, warranties,
\ncovenants and agreements contained in this Agreement, the parties agree as
\nfollows:<\/p>\n
ARTICLE 1<\/p>\n
THE MERGER<\/p>\n
1.1 The Merger. Upon the terms and subject to the conditions set forth in
\n ———-
\nthis Agreement, and in accordance with the New York Business Corporation Law
\n(the “NYBCL”), the Company shall be merged with and into Sub at the Effective
\nTime. Upon the Effective Time, the separate existence of the Company shall
\ncease, and Sub shall continue as the surviving corporation (the “Surviving
\nCorporation”) having the name FlightSafety International Inc.<\/p>\n
1.2 Closing. Unless this Agreement shall have been terminated and the
\n ——-
\ntransactions herein contemplated shall have been abandoned pursuant to Section
\n7.1, and subject to the satisfaction or waiver of the conditions set forth in
\nArticle 6, the closing of the Merger (the “Closing”) will take place at 10:00
\na.m. Eastern time on the second business day after satisfaction of the
\nconditions set forth in Section 6.1 (or, if not satisfied or waived at that
\ntime, as soon as practicable thereafter following satisfaction or waiver of the
\nconditions set forth in Sections 6.2 and 6.3) (the “Closing Date”), at the
\noffices of Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New
\nYork, unless another date, time or place is agreed to in writing by the parties
\nhereto.<\/p>\n
1.3 Effective Time of the Merger. On the Closing Date, the parties shall
\n —————————-
\nfile a certificate of merger or other appropriate documents (in any such case,
\nthe “Certificate of Merger”) executed in accordance with the relevant provisions
\nof the NYBCL and shall make all other filings or recordings required under the
\nNYBCL. The Merger shall become effective at such time as the Certificate of
\nMerger is duly filed with the Department of State of the State of New York, or
\nat such other time as is permissible in accordance with the NYBCL and as Parent
\nand the Company shall agree should be specified in the Certificate of Merger
\n(the time the Merger becomes effective being the “Effective Time”).<\/p>\n
1.4 Effects of the Merger. The Merger shall have the effects set forth
\n ———————
\nin the NYBCL.<\/p>\n
1.5 Certificate of Incorporation; Bylaws.
\n ———————————— <\/p>\n
(a) The Certificate of Incorporation of Sub as in effect immediately
\nprior to the Effective Time shall be the Certificate of Incorporation of the
\nSurviving Corporation until thereafter changed or amended as provided therein or
\nby applicable law; provided that it shall be amended by virtue of the Merger to
\nchange the name of the Surviving Corporation to the name stated in Section 1.1.<\/p>\n
(b) The Bylaws of Sub as in effect at the Effective Time shall be the
\nBylaws of the Surviving Corporation until thereafter changed or amended as
\nprovided therein or by applicable law.<\/p>\n
-2-<\/p>\n
1.6 Directors. The directors of Sub at the Effective Time shall be the
\n ———
\ndirectors of the Surviving Corporation, until the earlier of their resignation
\nor removal or until their respective successors are duly elected and qualified,
\nas the case may be.<\/p>\n
1.7 Officers. The officers of the Company at the Effective Time shall be
\n ——–
\nthe officers of the Surviving Corporation, until the earlier of their
\nresignation or removal or until their respective successors are duly appointed
\nand qualified, as the case may be.<\/p>\n
ARTICLE 2<\/p>\n
EFFECT OF THE MERGER ON THE CAPITAL STOCK
\n OF THE CONSTITUENT CORPORATIONS<\/p>\n
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
\n ———————–
\nMerger and without any action on the part of the holder of any shares of Company
\nCommon Stock or any shares of capital stock of Sub:<\/p>\n
(a) Common Stock of Sub. Each share of common stock of Sub issued and
\n ——————-
\noutstanding immediately prior to the Effective Time shall remain outstanding as
\na share of the Surviving Corporation and shall be the issued and outstanding
\ncapital stock of the Surviving Corporation.<\/p>\n
(b) Cancellation of Treasury Stock and Parent-Owned Company Common
\n ————————————————————–
\nStock. Each share of the Company Common Stock that is owned by the Company or
\n– —–
\nby any subsidiary of the Company, and each share of Company Common Stock that is
\nowned by Parent, Sub or any other subsidiary of Parent shall automatically be
\ncancelled and retired and shall cease to exist, and no cash, Parent Stock or
\nother consideration shall be delivered or deliverable in exchange therefor.<\/p>\n
(c) Conversion of Company Common Stock. Except as otherwise provided
\n ———————————-
\nherein and subject to Sections 2.3 and 2.5, each issued and outstanding share of
\nCompany Common Stock shall be converted into the following (the consideration
\ndescribed in (i), (ii), and (iii) below being the “Merger Consideration” and the
\nconsideration described in (ii) and (iii) below being the “Stock
\nConsideration”):<\/p>\n
(i) for each such share of Company Common Stock with respect to
\n which an election to receive cash has been effectively made and not revoked
\n pursuant to Sections 2.2(c), (d) and (e) (“Cash Electing Shares”), the
\n right to receive in cash from Parent an amount equal to $50 (the “Cash
\n Election Price”); or<\/p>\n
(ii) for each share of Company Common Stock with respect to which
\n an election to receive Class A Stock has been effectively made and not
\n revoked pursuant to Sections 2.2(c), (d) and (e) (“Class A Electing
\n Shares”), the right to receive from Parent the portion of a fully paid and
\n nonassessable share of Class A Stock determined by dividing $48.00 by the
\n Average Class A Stock Price (as defined below) and rounding to nine decimal
\n places (the “Class A Exchange Ratio”); or<\/p>\n
-3-<\/p>\n
(iii) for each such share of Company Common Stock other than
\n Cash Electing Shares and Class A Electing Shares, the right to receive from
\n Parent the portion of a fully paid and nonassessable share of Class B Stock
\n determined by dividing $48.00 by the quotient of the Average Class A Stock
\n Price divided by 30 and rounding to nine decimal places (the “Class B
\n Exchange Ratio”).<\/p>\n
The “Average Class A Stock Price” means the average of the high and low trading
\nprices of the Class A Stock on the New York Stock Exchange (“NYSE”) Composite
\nTape for each of the five consecutive trading days ending on the trading day
\nwhich is the last business day prior to the Stockholders Meeting (as defined in
\nSection 5.1(b)).<\/p>\n
(d) Shares of Dissenting Stockholders. Notwithstanding anything in
\n ———————————
\nthis Agreement to the contrary, any issued and outstanding shares of Company
\nCommon Stock held by a person (a “Dissenting Stockholder”) who duly demands
\nappraisal of his shares of Company Common Stock pursuant to Section 623 of the
\nNYBCL and complies with all the provisions of the NYBCL concerning the right of
\nholders of Company Common Stock to demand appraisal of their shares in
\nconnection with the Merger (“Dissenting Shares”) shall not be converted as
\ndescribed in Section 2.1(c) but shall become the right to receive such cash
\nconsideration as may be determined to be due to such Dissenting Stockholder as
\nprovided in the NYBCL. If, however, such Dissenting Stockholder withdraws his
\ndemand for appraisal or fails to perfect or otherwise loses his right of
\nappraisal, in any case pursuant to the NYBCL, his shares shall be deemed to be
\nconverted as of the Effective Time into the right to receive Class B Stock,
\nwithout interest, pursuant to Section 2.1(c)(iii). The Company shall give
\nParent (i) prompt notice of any demands for appraisal of shares received by the
\nCompany and (ii) the opportunity to participate in and direct all negotiations
\nand proceedings with respect to any such demands. The Company shall not,
\nwithout the prior written consent of Parent, make any payment with respect to,
\nor settle, offer to settle or otherwise negotiate, any such demands.<\/p>\n
(e) Cancellation and Retirement of Company Common Stock. As of the
\n —————————————————
\nEffective Time, all shares of Company Common Stock (other than shares referred
\nto in Section 2.1(b)) issued and outstanding immediately prior to the Effective
\nTime, shall no longer be outstanding and shall automatically be cancelled and
\nretired and shall cease to exist, and each holder of a certificate representing
\nany such shares of Company Common Stock shall cease to have any rights with
\nrespect thereto, except (subject to Section 2.1(d)) the right to receive the
\napplicable Merger Consideration in accordance with Section 2.1(c) and any cash
\nin lieu of fractional shares of Parent Stock to be issued or paid in
\nconsideration therefor upon surrender of such certificate in accordance with
\nSection 2.5.<\/p>\n
2.2 Company Common Stock Elections.
\n —————————— <\/p>\n
(a) Subject to Sections 2.3 and 2.5(e), each person who, on or prior
\nto the Election Date referred to in (c) below, is a record holder of shares of
\nCompany Common Stock (and remains a record holder of such stock until the
\nEffective Time) will be entitled, with respect to all or any portion of his
\nshares, to make an unconditional election (a “Cash Election” or a “Class A
\nElection,” as the case may be) on or prior to such Election Date to<\/p>\n
-4-<\/p>\n
receive the Cash Election Price or the Class A Exchange Ratio, on the basis
\nhereinafter set forth.<\/p>\n
(b) Prior to the mailing of the Proxy Statement (as defined in Section
\n3.1(d)), Parent shall appoint a bank or trust company designated by Parent and
\nreasonably satisfactory to the Company to act as exchange agent (the “Exchange
\nAgent”) for the payment of the Merger Consideration.<\/p>\n
(c) Parent shall prepare and mail a form of election (the “Form of
\nElection”) with the Proxy Statement to the record holders of Company Common
\nStock as of the record date for the Stockholders Meeting (as defined in Section
\n5.1(b)). The Form of Election shall be used by each record holder of shares of
\nCompany Common Stock who wishes to elect to receive the Cash Election Price or
\nthe Class A Exchange Ratio for any or all shares of Company Common Stock held by
\nsuch holder. On such Form of Election, such a holder may indicate his election.
\nThe Company will use its best efforts to make the Form of Election and the Proxy
\nStatement available to all persons who become holders of Company Common Stock
\nduring the period between such record date and the Election Date referred to
\nbelow. Any such holder’s election to receive the Cash Election Price or the
\nClass A Exchange Ratio shall have been properly made only if the Exchange Agent
\nshall have received at its designated office, by 5:00 p.m., New York City time
\non the last business day (the “Election Date”) prior to the date of the
\nStockholders Meeting, a Form of Election properly completed and signed and
\naccompanied by certificates for the shares of Company Common Stock to which such
\nForm of Election relates, duly endorsed in blank or otherwise in form acceptable
\nfor transfer on the books of the Company (or by an appropriate guarantee of
\ndelivery of such certificates as set forth in such Form of Election from a firm
\nwhich is a member of a registered national securities exchange or of the
\nNational Association of Securities Dealers, Inc. or a commercial bank or trust
\ncompany having an office or correspondent in the United States, provided such
\ncertificates are in fact delivered to the Exchange Agent within five NYSE
\ntrading days after the date of execution of such guarantee of delivery).<\/p>\n
(d) Any Form of Election may be revoked only by duly executed written
\nnotice received by the Exchange Agent prior to 5:00 p.m., New York City time on
\nthe Election Date. In addition, all Forms of Election shall automatically be
\nrevoked if the Exchange Agent is notified in writing by Parent and the Company
\nthat the Merger has been abandoned. If a Form of Election is revoked, the
\nshares of Company Common Stock to which such Form of Election relates shall be
\ntreated as shares as to which no election has been made.<\/p>\n
(e) The determination of the Exchange Agent shall be binding as to
\nwhether or not elections to receive the Cash Election Price or the Class A
\nExchange Ratio have been properly made or revoked pursuant to this Section 2.2
\nwith respect to shares of Company Common Stock, and as to the time when
\nelections and revocations were received by it. If the Exchange Agent determines
\nthat any election to receive the Cash Election Price or the Class A Exchange
\nRatio was not properly made with respect to shares of Company Common Stock, such
\nshares shall be treated by the Exchange Agent as shares which were not Cash
\nElecting Shares or Class A Electing Shares at the Effective Time, and such
\nshares<\/p>\n
-5-<\/p>\n
shall be exchanged in the Merger for shares of Class B Stock pursuant to Section
\n2.1(c)(iii). The Exchange Agent shall also make all computations contemplated
\nby Section 2.3, and any such computation shall be conclusive and binding on the
\nholders of shares of Company Common Stock. Parent and the Company shall make
\nsuch rules as are consistent with this Section 2.2 and Section 2.3 for the
\nimplementation of the elections and computations provided for herein and therein
\nas shall be necessary or desirable fully to effect such elections and
\ncomputations.<\/p>\n
2.3 Issuance of Stock Consideration and Payment of Cash Election Price.
\n ——————————————————————
\nThe manner in which each share of Company Common Stock (other than shares of
\nCompany Common Stock to be cancelled as set forth in Section 2.1(b) and
\nDissenting Shares) shall be converted as of the Effective Time into the right to
\nreceive the Stock Consideration or the Cash Election Price shall be as set forth
\nin this Section 2.3. All references to “outstanding shares of Company Common
\nStock” in this Section 2.3 shall mean all shares of Company Common Stock
\noutstanding immediately prior to the Effective Time.<\/p>\n
(a) In the event that, between the date of this Agreement and the
\nEffective Time, the issued and outstanding shares of Class A Stock or Class B
\nStock, as the case may be, shall have been changed into a different number or
\nclass of shares as a result of a stock split, reverse stock split, stock
\ndividend, spin-off, extraordinary dividend, recapitalization, reclassification
\nor other similar transaction with a record date within such period, the Merger
\nConsideration shall be appropriately adjusted.<\/p>\n
(b) As is more fully set forth below, the Total Cash Consideration (as
\ndefined below) in the Merger pursuant to this Agreement shall not be more than
\n58 percent of the sum of (i) the Total Cash Consideration, and (ii) the Total
\nClass A Merger Consideration, and (iii) the Total Class B Merger Consideration;
\nsuch amount is referred to herein as the “Cash Limitation”. “Total Class A
\nMerger Consideration” means the product of (i) the Class A Exchange Ratio and
\n(ii) the number of shares of Company Common Stock converted into Class A Stock,
\nafter the application, if and to the extent necessary, of Section 2.5(e) and
\n(iii) the average of the high and low trading prices of the Class A Stock on the
\nNYSE Composite Tape on the date on which the Effective Time occurs. “Total
\nClass B Merger Consideration” means the product of (i) the Class B Exchange
\nRatio and (ii) the number of shares of Company Common Stock converted into Class
\nB Stock, after the application, if and to the extent necessary, of Sections
\n2.3(e) and 2.5(e), and (iii) the average of the high and low trading prices of
\nthe Class B Stock on the NYSE Composite Tape on the date on which the Effective
\nTime occurs. “Total Cash Consideration” means the sum (after the application,
\nif and to the extent necessary, of Sections 2.3(e) and 2.5(e)) of (i) cash paid
\nin connection with Cash Elections, (ii) cash paid in lieu of fractional shares,
\nand (iii) cash paid for Dissenting Shares. For this purpose, cash paid for
\nDissenting Shares shall be computed as if holders of Dissenting Shares had made
\nCash Elections with respect to all of their Dissenting Shares.<\/p>\n
(c) Each share of Company Common Stock that is a Class A Electing
\nShare shall be converted into the right to receive Class A Stock pursuant to
\nSection 2.1(c)(ii) and each share of Company Common Stock that is neither a
\nClass A Electing Share nor a<\/p>\n
-6-<\/p>\n
Cash Electing Share (a “Non-Electing Class B Share”) shall be converted into the
\nright to receive Class B Stock pursuant to Section 2.1(c)(iii).<\/p>\n
(d) If the Total Cash Consideration is equal to or less than the Cash
\nLimitation, each share of Company Common Stock that is a Cash Electing Share
\nshall be converted into the right to receive the Cash Election Price pursuant to
\nSection 2.1(c)(i).<\/p>\n
(e) If the Total Cash Consideration is more than the Cash Limitation,
\nthe number of Cash Electing Shares shall be reduced, and the following
\nshareholders of the Company who have made a Cash Election (a “Cash Electing
\nShareholder”) shall instead receive one or more shares of Class B Stock to the
\nextent and in the order described below until the Total Cash Consideration is
\nequal to or less than the Cash Limitation:<\/p>\n
(i) Each Cash Electing Shareholder who holds a sufficient number
\n of shares of Company Common Stock covered by a Cash Election to receive as
\n part of the Merger Consideration at least one whole share of Class B Stock
\n pursuant to Section 2.1(c)(iii) if such shares are treated as Non-Electing
\n Class B Shares, shall receive such one whole share of Class B Stock for
\n such shares of Company Common Stock, at the Class B Exchange Ratio pursuant
\n to Section 2.1(c)(iii), in lieu of receiving the Cash Election Price for
\n such shares pursuant to Section 2.1(c)(i);<\/p>\n
(ii) If the application of Section 2.3(e)(i) is not sufficient to
\n reduce the Total Cash Consideration to an amount equal to or less than the
\n Cash Limitation, then, in addition to the application of Section 2.3(e)(i),
\n each Cash Electing Shareholder who holds a sufficient number of shares of
\n Company Common Stock covered by a Cash Election to receive as part of the
\n Merger Consideration at least two whole shares of Class B Stock pursuant to
\n Section 2.1(c)(iii) if such shares are treated as Non-Electing Class B
\n Shares, shall receive such two whole shares of Class B Stock for such
\n shares of Company Common Stock, at the Class B Exchange Ratio pursuant to
\n Section 2.1(c)(iii), in lieu of receiving the Cash Election Price for such
\n shares pursuant to Section 2.1(c)(i); and<\/p>\n
(iii) If the application of Section 2.3(e)(ii) is not sufficient
\n to reduce the Total Cash Consideration to an amount equal to or less than
\n the Cash Limitation, under the principles of Section 2.3(e)(i) and (ii),
\n the Cash Electing Shares shall continue to be reduced, and each Cash
\n Electing Shareholder who holds a sufficient number of shares of Company
\n Common Stock covered by a Cash Election to receive as part of the Merger
\n Consideration at least three whole shares and, to the extent necessary,
\n greater than three whole shares, of Class B Stock pursuant to Section
\n 2.1(c)(iii) if such shares are treated as Non-Electing Class B Shares,
\n shall receive such three or more whole shares of Class B Stock for such
\n shares of Company Common Stock, at the Class B Exchange Ratio pursuant to
\n Section 2.1(c)(iii), in lieu of receiving the Cash Election Price for such
\n shares pursuant to Section 2.1(c)(i), until the Total Cash Consideration is
\n equal to or less than the Cash Limitation.<\/p>\n
-7-<\/p>\n
(f) If the Exchange Agent shall determine that any Cash Election was
\nnot effectively made or was revoked, the shares of Company Common Stock covered
\nby such Cash Election shall, for purposes hereof, be deemed to be Non-Electing
\nClass B Shares.<\/p>\n
(g) If, due to the existence of Dissenting Shares, the amount of cash
\npaid in cancellation of Company Stock Options (as defined in Section 2.4(a)), or
\nany other uncertainty in the calculation of the Cash Limitation, it reasonably
\nappears to Parent or Company that the Merger may potentially fail to satisfy
\ncontinuity of interest requirements under applicable principles relating to
\nreorganizations under Section 368(a) of the Code, the number of Cash Electing
\nShares shall be reduced, and Cash Electing Shareholders shall instead receive
\none or more shares of Class B Stock in the order described in Section 2.3(e), to
\nthe extent necessary to enable the Merger to satisfy such requirements.<\/p>\n
2.4 Stock Plans. Prior to the mailing of the Proxy Statement, the Board
\n ———–
\nof Directors of Parent and the Board of Directors of the Company (or, if
\nappropriate, any committee administering the Stock Plans (as defined below))
\nshall adopt such resolutions or take such other actions as may be required to
\neffect the following:<\/p>\n
(a) Adjust the terms of all outstanding employee stock options to
\npurchase shares of Company Common Stock (“Company Stock Options”) granted under
\nany of the Company’s 1979 Non-Qualified Stock Option Plan, as amended, 1982
\nIncentive Stock Option Plan, as amended, and 1992 Stock Option Plan
\n(collectively, the “Option Plans”), to provide that, at the Effective Time, each
\nCompany Stock Option outstanding immediately prior to the Effective Time shall
\n(except to the extent that Parent and the holder of a Company Stock Option
\notherwise agree in writing prior to the Effective Time): (i) if such Company
\nStock Option is vested before the Merger and exercisable and has an exercise
\nprice of less than $50, and the holder of such Company Stock Option shall have
\nelected by written notice to Parent prior to the date 15 business days prior to
\nthe Effective Time to receive the payment contemplated by this clause (i), be
\ncancelled in exchange for a payment from the Surviving Corporation (subject to
\nany applicable withholding taxes) equal to the product of (1) the total number
\nof shares of Company Common Stock subject to such Company Stock Option and (2)
\nthe excess of $50 over the exercise price per share of Company Common Stock
\nsubject to such Company Stock Option, payable in cash immediately following the
\nEffective Time; provided, however, that, at the request of any person subject to
\n ——– ——-
\nSection 16(a) of the Securities Exchange Act of 1934, as amended (“Exchange
\nAct”), any such amount to be paid shall be paid as soon as practicable after the
\nfirst date payment can be made without liability for such person under Section
\n16(b) of the Exchange Act; or (ii) with respect to any Company Stock Option not
\ncancelled pursuant to clause (i) above, be deemed to constitute an option to
\nacquire, on the same terms and conditions as were applicable under such Company
\nStock Option, the number of shares of Class B Stock equal to the product of (1)
\nthe number of shares of Company Common Stock issuable upon exercise of such
\nOption and (2) the Class B Exchange Ratio, provided that any fractional shares
\nof Class B Stock resulting from such multiplication shall be rounded up or down
\nto the nearest whole share, at a price per share equal to (1) the exercise price
\nfor the shares of Company Common Stock otherwise purchasable pursuant to such
\nCompany Stock Option divided by (2) the Class B Exchange Ratio, provided that
\nsuch exercise price shall be rounded up or down to the nearest cent.<\/p>\n
-8-<\/p>\n
(b) Adjust the terms of the Company’s 1984 Restricted Stock
\nCompensation Plan, as amended (the “Restricted Stock Plan”), which (or a plan
\nsubstantially identical thereto) the Surviving Corporation shall adopt, to
\nprovide (i) that, at the Effective Time, the Merger Consideration into which
\neach share of Company Common Stock subject at such time to the Restricted Stock
\nPlan is converted shall thereafter be free of the requirement under the
\nRestricted Stock Plan that such shares be held in escrow for the periods set
\nforth therein, and (ii) that, after the Effective Time, no further grants of
\nCompany Common Stock or any other interest in the capital stock of the Company
\nshall be made under the Restricted Stock Plan.<\/p>\n
(c) Except as provided herein or as otherwise agreed to in writing by
\nthe parties, the Option Plans, the Restricted Stock Plan, the Company’s Employee
\nStock Purchase Plan, as amended (the “Stock Purchase Plan”) and the Nonemployee
\nDirectors Stock Plan, and any other plan, program or arrangement providing for
\nthe issuance or grant of any interest in respect of the capital stock of the
\nCompany or any subsidiary (collectively, the “Stock Plans”) shall terminate as
\nof the Effective Time, and the Company shall ensure that following the Effective
\nTime no holder of a Company Stock Option nor any participant in any of the Stock
\nPlans shall have any right thereunder to acquire equity securities of the
\nCompany or the Surviving Corporation.<\/p>\n
2.5 Exchange of Certificates.
\n ———————— <\/p>\n
(a) Exchange Agent. As soon as reasonably practicable as of or after
\n ————–
\nthe Effective Time of the Merger, Parent shall deposit with the Exchange Agent,
\nfor the benefit of the holders of shares of Company Common Stock, for exchange
\nin accordance with this Article 2, the Merger Consideration.<\/p>\n
(b) Exchange Procedures. As soon as practicable after the Effective
\n ——————-
\nTime of the Merger, the Exchange Agent shall mail to each holder of an
\noutstanding certificate or certificates which prior thereto represented shares
\nof Company Common Stock (i) a letter of transmittal (which shall specify that
\ndelivery shall be effected, and risk of loss and title to such certificate shall
\npass, only upon delivery of such certificates to such Exchange Agent), and (ii)
\ninstructions for use in effecting the surrender of the certificates for the
\nMerger Consideration. Upon surrender to the Exchange Agent of such certificate
\nfor cancellation, together with such letter of transmittal, the holder of such
\ncertificate shall be entitled to a certificate or certificates representing the
\nnumber of full shares of Parent Stock and the amount of cash, if any, into which
\nthe aggregate number of shares of Company Common Stock previously represented by
\nsuch certificate or certificates surrendered shall have been converted pursuant
\nto this Agreement. The Exchange Agent shall accept such certificates upon
\ncompliance with such reasonable terms and conditions as the Exchange Agent may
\nimpose to effect an orderly exchange thereof in accordance with normal exchange
\npractices. After the Effective Time of the Merger, there shall be no further
\ntransfer on the records of the Company or its transfer agent of certificates
\nrepresenting shares of Company Common Stock and if such certificates are
\npresented to the Company for transfer, they shall be cancelled against delivery
\nof certificates for Parent Stock and cash as hereinabove provided. If any
\ncertificate for such Parent Stock is to be issued in, or if cash is to be
\nremitted to, a name other than that in which the certificate for Company Common
\nStock surrendered for<\/p>\n
-9-<\/p>\n
exchange is registered, it shall be a condition of such exchange that the
\ncertificate so surrendered shall be properly endorsed, with signature
\nguaranteed, or otherwise in proper form for transfer and that the person
\nrequesting such exchange shall pay to Parent or its transfer agent any transfer
\nor other taxes required by reason of the issuance of certificates for such
\nParent Stock in a name other than that of the registered holder of the
\ncertificate surrendered, or establish to the satisfaction of Parent or its
\ntransfer agent that such tax has been paid or is not applicable. Until
\nsurrendered as contemplated by this Section 2.5(b), each certificate for shares
\nof Company Common Stock shall be deemed at any time after the Effective Time of
\nthe Merger to represent only the right to receive upon such surrender the Merger
\nConsideration. No interest will be paid or will accrue on any cash payable as
\nMerger Consideration or in lieu of any fractional shares of Parent Stock.<\/p>\n
(c) Distributions with Respect to Unexchanged Shares. No dividends or
\n ————————————————
\nother distributions with respect to Parent Stock with a record date after the
\nEffective Time of the Merger shall be paid to the holder of any unsurrendered
\ncertificate for shares of Company Common Stock with respect to the shares of
\nParent Stock represented thereby and no cash payment in lieu of fractional
\nshares shall be paid to any such holder pursuant to Section 2.5(e) until the
\nsurrender of such certificate in accordance with this Article 2. Subject to the
\neffect of applicable laws, following surrender of any such certificate, there
\nshall be paid to the holder of the certificate representing whole shares of
\nParent Stock issued in exchange therefor, without interest, (i) at the time of
\nsuch surrender the amount of any cash payable in lieu of a fractional share of
\nParent Stock to which such holder is entitled pursuant to Section 2.5(e) and the
\namount of dividends or other distributions with a record date after the
\nEffective Time of the Merger theretofore paid with respect to such whole shares
\nof Parent Stock, and (ii) at the appropriate payment date, the amount of
\ndividends or other distributions with a record date after the Effective Time of
\nthe Merger but prior to such surrender and a payment date subsequent to such
\nsurrender payable with respect to such whole shares of Parent Stock.<\/p>\n
(d) No Further Ownership Rights in Company Common Stock. All shares
\n —————————————————
\nof Parent Stock issued and cash paid upon the surrender for exchange of
\ncertificates representing shares of Company Common Stock in accordance with the
\nterms of this Article 2 (including any cash paid pursuant to Section 2.5(e))
\nshall be deemed to have been issued (and paid) in full satisfaction of all
\nrights pertaining to the shares of Company Common Stock theretofore represented
\nby such certificates.<\/p>\n
(e) No Fractional Shares.
\n ——————– <\/p>\n
(i) No certificates or scrip representing fractional shares of
\n Parent Stock shall be issued upon the surrender for exchange of
\n certificates representing shares of Company Common Stock, and such
\n fractional share interests will not entitle the owner thereof to vote or to
\n any rights of a stockholder of Parent; and<\/p>\n
(ii) Notwithstanding any other provision of this Agreement, (A)
\n each holder of shares of Company Common Stock exchanged pursuant to the
\n Merger who would have otherwise been entitled to receive a fraction of a
\n share of<\/p>\n
-10-<\/p>\n
Class A Stock (after taking into account all Class A Electing Shares
\n delivered by such holder or, as to a holder of record who holds shares of
\n Company Common Stock as nominee or in a similar representative capacity,
\n after taking into account all Class A Electing Shares delivered by such a
\n representative holder on behalf of a particular beneficial owner) shall
\n receive, in lieu thereof, the number of shares of Class B Stock determined
\n by dividing (x) the product of such fraction and the Average Class A Stock
\n Price by (y) the quotient of the Average Class A Stock Price divided by 30,
\n and (B) after application of Section 2.5(e)(ii)(A), each holder of shares
\n of Company Common Stock exchanged pursuant to the Merger who would have
\n otherwise been entitled to receive a fraction of a share of Class B Stock
\n (after taking into account all shares of Company Common Stock delivered by
\n such holder, or by such a representative holder on behalf of a particular
\n beneficial owner, other than Class A Electing Shares and Cash Electing
\n Shares) shall receive, in lieu thereof, a cash payment (without interest)
\n equal to the product of (x) such fraction and (y) the quotient of the
\n Average Class A Stock Price divided by 30.<\/p>\n
(f) Termination of Exchange Fund. Any portion of the Merger
\n —————————-
\nConsideration deposited with the Exchange Agent pursuant to this Section 2.5
\n(the “Exchange Fund”) which remains undistributed to the holders of the
\ncertificates representing shares of Company Common Stock for nine months after
\nthe Effective Time of the Merger shall be delivered to Parent, upon demand, and
\nany holders of shares of Company Common Stock who have not theretofore complied
\nwith this Article 2 shall thereafter look only to Parent and only as general
\ncreditors thereof for payment of their claim for cash, Parent Stock, any cash in
\nlieu of fractional shares of Parent Stock and any dividends or distributions
\nwith respect to Parent Stock to which such holders may be entitled.<\/p>\n
(g) No Liability. None of Parent, Sub, the Company or the Exchange
\n ————
\nAgent shall be liable to any person in respect of any shares of Parent Stock (or
\ndividends or distributions with respect thereto) or cash from the Exchange Fund
\ndelivered to a public official pursuant to any applicable abandoned property,
\nescheat or similar law. If any certificates representing shares of Company
\nCommon Stock shall not have been surrendered prior to five years after the
\nEffective Time of the Merger (or immediately prior to such earlier date on which
\nany cash, shares of Parent Stock, any cash in lieu of fractional shares of
\nParent Stock or any dividends or distributions with respect to Parent Stock in
\nrespect of such certificate would otherwise escheat to or become the property of
\nany Governmental Entity (as defined in Section 3.1(d)), any such shares, cash
\ndividends or distributions in respect of such certificate shall, to the extent
\npermitted by applicable law, become the property of the Surviving Corporation,
\nfree and clear of all claims or interest of any person previously entitled
\nthereto.<\/p>\n
(h) Investment of Exchange Fund. The Exchange Agent shall invest any
\n —————————
\ncash included in the Exchange Fund, as directed by Parent, on a daily basis.
\nAny interest and other income resulting from such investments shall be paid to
\nParent.<\/p>\n
-11-<\/p>\n
ARTICLE 3<\/p>\n
REPRESENTATIONS AND WARRANTIES<\/p>\n
3.1 Representations and Warranties of the Company. The Company
\n ———————————————
\nrepresents and warrants to Parent and Sub as follows:<\/p>\n
(a) Organization, Standing and Corporate Power. Each of the Company
\n ——————————————
\nand each of its Subsidiaries (as defined in Section 3.1(b)) is duly organized,
\nvalidly existing and in good standing under the laws of the jurisdiction in
\nwhich it is incorporated and has the requisite corporate power and authority to
\ncarry on its business as now being conducted. Each of the Company and each of
\nits Subsidiaries is duly qualified or licensed to do business and is in good
\nstanding in each jurisdiction in which the nature of its business or the
\nownership or leasing of its properties makes such qualification or licensing
\nnecessary, other than in such jurisdictions where the failure to be so qualified
\nor licensed (individually or in the aggregate) would not have a material adverse
\neffect (as defined in Section 8.3) with respect to the Company. Attached as
\nSection 3.1(a) of the disclosure schedule (“Disclosure Schedule”) delivered to
\nParent by the Company at the time of execution of this Agreement are complete
\nand correct copies of the Certificate of Incorporation and Bylaws of the
\nCompany. The Company has delivered to Parent complete and correct copies of the
\ncertificate or articles of incorporation (or other organizational documents) and
\nbylaws of each of its Subsidiaries, in each case as amended to the date of this
\nAgreement.<\/p>\n
(b) Subsidiaries. The only direct or indirect subsidiaries of the
\n ————
\nCompany (other than subsidiaries of the Company that would not constitute in the
\naggregate a “Significant Subsidiary” within the meaning of Rule 1-02 of
\nRegulation S-X of the Securities and Exchange Commission (the “SEC”)) (the
\n“Subsidiaries”) and other ownership interests held by the Company in any other
\nperson are those listed in Section 3.1(b) of the Disclosure Schedule. Except as
\nset forth in Section 3.1(b) of the Disclosure Schedule, all the outstanding
\nshares of capital stock of each such Subsidiary which is a corporation have been
\nvalidly issued and are fully paid and nonassessable and are owned (of record and
\nbeneficially) by the Company, by another Subsidiary (wholly owned) of the
\nCompany or by the Company and another such Subsidiary (wholly owned), free and
\nclear of all pledges, claims, liens, charges, encumbrances and security
\ninterests of any kind or nature whatsoever (collectively, “Liens”). Except as
\nset forth in Section 3.1(b) of the Disclosure Schedule, the Company does not
\nown, directly or indirectly, any capital stock or other ownership interest in
\nany corporation, partnership, business association, joint venture or other
\nentity.<\/p>\n
(c) Capital Structure. The authorized capital stock of the Company
\n —————–
\nconsists of 100,000,000 shares of Company Common Stock. Subject to any
\nPermitted Changes (as defined in Section 4.1(b)) following the date of this
\nAgreement, there are (i) 30,174,081 shares of Company Common Stock issued and
\noutstanding, (ii) 118,000 shares of Company Common Stock held in the treasury of
\nthe Company or held by any subsidiary of the Company; (iii) 791,580 shares of
\nCompany Common Stock reserved for issuance upon exercise of authorized but
\nunissued Company Stock Options pursuant to the Option Plans; (iv) 545,358 shares
\nof Company Common Stock issuable upon exercise of outstanding Company Stock
\nOptions, (v) 99,510 shares of Company Common Stock issued and<\/p>\n
-12-<\/p>\n
outstanding (and included in the number stated in clause (i) above) subject to
\nrestrictions under the Restricted Stock Plan, and (vi) an aggregate of 400
\nshares of Company Common Stock issuable under the Nonemployee Directors Stock
\nPlan. As of September 30, 1996, there were $582,000 withheld from the Company’s
\nemployees’ salaries to purchase shares of Company Common Stock pursuant to and
\nissuable under the Stock Purchase Plan. Except as set forth above, no shares of
\ncapital stock or other equity securities of the Company are issued, reserved for
\nissuance or outstanding. All outstanding shares of capital stock of the Company
\nare, and all shares which may be issued pursuant to the Stock Plans will be when
\nissued, duly authorized, validly issued, fully paid and nonassessable and not
\nsubject to preemptive rights. There are no outstanding bonds, debentures, notes
\nor other indebtedness or other securities of the Company having the right to
\nvote (or convertible into, or exchangeable for, securities having the right to
\nvote) on any matters on which stockholders of the Company may vote. Except as
\nset forth above, there are no outstanding securities, options, warrants, calls,
\nrights, commitments, agreements, arrangements or undertakings of any kind to
\nwhich the Company or any of its subsidiaries is a party or by which any of them
\nis bound obligating the Company or any of its subsidiaries to issue, deliver or
\nsell, or cause to be issued, delivered or sold, additional shares of capital
\nstock or other equity or voting securities of the Company or of any of its
\nsubsidiaries or obligating the Company or any of its subsidiaries to issue,
\ngrant, extend or enter into any such security, option, warrant, call, right,
\ncommitment, agreement, arrangement or undertaking. Other than the Company Stock
\nOptions, (i) there are no outstanding contractual obligations, commitments,
\nunderstandings or arrangements of the Company or any of its subsidiaries to
\nrepurchase, redeem or otherwise acquire or make any payment in respect of or
\nmeasured or determined based on the value or market price of any shares of
\ncapital stock of the Company or any of its subsidiaries and (ii) to the
\nknowledge of the Company, there are no irrevocable proxies with respect to
\nshares of capital stock of the Company or any subsidiary of the Company. There
\nare no agreements or arrangements pursuant to which the Company is or could be
\nrequired to register shares of Company Common Stock or other securities under
\nthe Securities Act of 1933, as amended (the “Securities Act”).<\/p>\n
(d) Authority; Noncontravention. The Company has the requisite
\n —————————
\ncorporate power and authority to enter into this Agreement and, subject to the
\nCompany Stockholder Approval with respect to the consummation of the Merger, to
\nconsummate the transactions contemplated hereby. The execution and delivery of
\nthis Agreement by the Company and the consummation by the Company of the
\ntransactions contemplated hereby have been duly authorized by all necessary
\ncorporate action on the part of the Company, subject, in the case of the Merger,
\nto the Company Stockholder Approval. This Agreement has been duly executed and
\ndelivered by the Company and constitutes a valid and binding obligation of the
\nCompany, enforceable against the Company in accordance with its terms. Except
\nas disclosed in Section 3.1(d) of the Disclosure Schedule, the execution and
\ndelivery of this Agreement does not, and the consummation of the transactions
\ncontemplated hereby and compliance with the provisions hereof will not, conflict
\nwith, or result in any breach or violation of, or default (with or without
\nnotice or lapse of time, or both) under, or give rise to a right of termination,
\ncancellation or acceleration of or “put” right with respect to any obligation or
\nto loss of a material benefit under, or result in the creation of any Lien upon
\nany of the properties or assets of the Company or any of its subsidiaries under,
\n(i) the Certificate of Incorporation or Bylaws of the Company or the comparable
\ncharter or<\/p>\n
-13-<\/p>\n
organizational documents of any of its subsidiaries, (ii) any loan or credit
\nagreement, note, bond, mortgage, indenture, lease or other agreement,
\ninstrument, permit, concession, franchise or license applicable to the Company
\nor any of its subsidiaries or their respective properties or assets or (iii)
\nsubject to the governmental filings and other matters referred to in the
\nfollowing sentence, any judgment, order, decree, statute, law, ordinance, rule,
\nregulation or arbitration award applicable to the Company or any of its
\nsubsidiaries or their respective properties or assets, other than, in the case
\nof clauses (ii) and (iii), any such conflicts, breaches, violations, defaults,
\nrights, losses or Liens that individually or in the aggregate could not have a
\nmaterial adverse effect with respect to the Company or could not prevent, hinder
\nor materially delay the ability of the Company to consummate the transactions
\ncontemplated by this Agreement. No consent, approval, order or authorization
\nof, or registration, declaration or filing with, or notice to, any Federal,
\nstate or local government or any court, administrative agency or commission or
\nother governmental authority or agency, domestic or foreign (a “Governmental
\nEntity”), is required by or with respect to the Company or any of its
\nsubsidiaries in connection with the execution and delivery of this Agreement by
\nthe Company or the consummation by the Company of the transactions contemplated
\nhereby, except for (i) the filing of a premerger notification and report form by
\nthe Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
\namended (the “HSR Act”), (ii) the filing with the SEC of (y) a proxy statement
\nrelating to the Company Stockholder Approval (such proxy statement as amended or
\nsupplemented from time to time, the “Proxy Statement”), and (z) such reports
\nunder the Exchange Act as may be required in connection with this Agreement and
\nthe transactions contemplated by this Agreement, (iii) the filing of the
\nCertificate of Merger with the Department of State of the State of New York, and
\nappropriate documents with the relevant authorities of other states in which the
\nCompany is qualified to do business and (iv) such other consents, approvals,
\norders, authorizations, registrations, declarations, filings or notices as are
\nset forth in Section 3.1(d) of the Disclosure Schedule.<\/p>\n
(e) SEC Documents; Undisclosed Liabilities. The Company has filed all
\n ————————————–
\nrequired reports, schedules, forms, statements and other documents with the SEC
\nsince January 1, 1994, (collectively, and in each case including all exhibits
\nand schedules thereto and documents incorporated by reference therein, the “SEC
\nDocuments”). As of their respective dates, the SEC Documents complied in all
\nmaterial respects with the requirements of the Securities Act or the Exchange
\nAct, as the case may be, and the rules and regulations of the SEC promulgated
\nthereunder applicable to such SEC Documents, and none of the SEC Documents
\n(including any and all financial statements included therein) as of such dates
\ncontained any untrue statement of a material fact or omitted to state a material
\nfact required to be stated therein or necessary in order to make the statements
\ntherein, in light of the circumstances under which they were made, not
\nmisleading. The consolidated financial statements of the Company included in
\nthe SEC Documents (the “SEC Financial Statements”) comply as to form in all
\nmaterial respects with applicable accounting requirements and the published
\nrules and regulations of the SEC with respect thereto, have been prepared in
\naccordance with generally accepted accounting principles (except, in the case of
\nunaudited consolidated quarterly statements, as permitted by Form 10-Q of the
\nSEC) applied on a consistent basis during the periods involved (except as may be
\nindicated in the notes thereto) and fairly present the consolidated financial
\nposition of the Company and its consolidated subsidiaries as of the dates
\nthereof and the consolidated results of their operations and cash<\/p>\n
-14-<\/p>\n
flows for the periods then ended (subject, in the case of unaudited quarterly
\nstatements, to normal year-end audit adjustments). Since December 31, 1995,
\nneither the Company nor any of its subsidiaries, has incurred any liabilities or
\nobligations of any nature (whether accrued, absolute, contingent or otherwise)
\nexcept (i) as and to the extent set forth on the audited balance sheet of the
\nCompany and its subsidiaries as of December 31, 1995 (including the notes
\nthereto), (ii) as incurred in connection with the transactions contemplated by
\nthis Agreement, (iii) as incurred after December 31, 1995 in the ordinary course
\nof business and consistent with past practice, (iv) as described in the SEC
\nDocuments filed since December 31, 1995 (the “Recent SEC Documents”), or (v) as
\nwould not, individually or in the aggregate, have a material adverse effect with
\nrespect to the Company.<\/p>\n
(f) Information Supplied. None of the information supplied or to be
\n ——————–
\nsupplied by the Company for inclusion or incorporation by reference in (i) the
\nregistration statement on Form S-4 to be filed with the SEC by Parent in
\nconnection with the issuance of Parent Stock in the Merger (the “Form S-4”)
\nwill, at the time the Form S-4 is filed with the SEC, and at any time it is
\namended or supplemented or at the time it becomes effective under the Securities
\nAct, contain any untrue statement of a material fact or omit to state any
\nmaterial fact required to be stated therein or necessary to make the statements
\ntherein not misleading, and (ii) the Proxy Statement will, at the date it is
\nfirst mailed to the Company’s stockholders or at the time of the Stockholders
\nMeeting, contain any untrue statement of a material fact or omit to state any
\nmaterial fact required to be stated therein or necessary in order to make the
\nstatements therein, in light of the circumstances under which they are made, not
\nmisleading. The Proxy Statement will comply as to form in all material respects
\nwith the requirements of the Exchange Act and the rules and regulations
\npromulgated thereunder, except that no representation is made by the Company
\nwith respect to statements made or incorporated by reference therein based on
\ninformation supplied by Parent for inclusion or incorporation by reference
\ntherein.<\/p>\n
(g) Absence of Certain Changes or Events. Except as disclosed in the
\n ————————————
\nRecent SEC Documents or in Section 3.1(g) of the Disclosure Schedule, since the
\ndate of the most recent audited financial statements included in such Recent SEC
\nDocuments, the Company has conducted its business only in the ordinary course
\nconsistent with past practice, and there is not and has not been: (i) any
\nmaterial adverse change with respect to the Company; (ii) any condition, event
\nor occurrence which, individually or in the aggregate, could reasonably be
\nexpected to have a material adverse effect or give rise to a material adverse
\nchange with respect to the Company; (iii) any event which, if it had taken place
\nfollowing the execution of this Agreement, would not have been permitted by
\nSection 4.1 without the prior consent of Parent; or (iv) any condition, event or
\noccurrence which would prevent, hinder or materially delay the ability of the
\nCompany to consummate the transactions contemplated by this Agreement.<\/p>\n
(h) Litigation; Labor Matters; Compliance with Laws.
\n ———————————————– <\/p>\n
(i) Except as disclosed in the Recent SEC Documents, there is no
\n suit, action or proceeding or investigation pending or, to the knowledge of
\n the Company, threatened against or affecting the Company or any of its
\n subsidiaries or any basis for any such suit, action, proceeding or
\n investigation that, individually or in<\/p>\n
-15-<\/p>\n
the aggregate, could reasonably be expected to have a material adverse
\n effect with respect to the Company or prevent, hinder or materially delay
\n the ability of the Company to consummate the transactions contemplated by
\n this Agreement, nor is there any judgment, decree, injunction, rule or
\n order of any Governmental Entity or arbitrator outstanding against the
\n Company or any of its subsidiaries having, or which, insofar as reasonably
\n could be foreseen by the Company, in the future could have, any such
\n effect.<\/p>\n
(ii) Neither the Company nor any of its subsidiaries is a party
\n to, or bound by, any collective bargaining agreement, contract or other
\n agreement or understanding with a labor union or labor organization, nor is
\n it or any of its subsidiaries the subject of any proceeding asserting that
\n it or any subsidiary has committed an unfair labor practice or seeking to
\n compel it to bargain with any labor organization as to wages or conditions
\n of employment nor is there any strike, work stoppage or other labor dispute
\n involving it or any of its subsidiaries pending or, to its knowledge,
\n threatened, any of which could have a material adverse effect with respect
\n to the Company.<\/p>\n
(iii) The conduct of the business of each of the Company and
\n each of its subsidiaries complies with all statutes, laws, regulations,
\n ordinances, rules, judgments, orders, decrees or arbitration awards
\n applicable thereto, except for violations or failures so to comply, if any,
\n that, individually or in the aggregate, could not reasonably be expected to
\n have a material adverse effect with respect to the Company.<\/p>\n
(i) Employee Matters. The Company has delivered or made available to
\n —————-
\nParent full and complete copies or descriptions of each material employment,
\nseverance, bonus, profit sharing, compensation, termination, stock option, stock
\nappreciation right, restricted stock, phantom stock, performance unit, pension,
\nretirement, deferred compensation, welfare or other employee benefit agreement,
\ntrust fund or other arrangement and any union, guild or collective bargaining
\nagreement maintained or contributed to or required to be contributed to by the
\nCompany or any of its ERISA Affiliates, for the benefit or welfare of any
\ndirector, officer, employee or former employee of the Company or any of its
\nERISA Affiliates (such plans and arrangements being collectively the “Company
\nBenefit Plans”). Each of the Company Benefit Plans is in material compliance
\nwith all applicable laws including ERISA and the Code. The Internal Revenue
\nService has determined that each Company Benefit Plan that is intended to be a
\nqualified plan under Section 401(a) of the Code is so qualified and the Company
\nis aware of no event occurring after the date of such determination that would
\nadversely affect such determination. The liabilities accrued under each such
\nplan are reflected on the latest balance sheet of the Company included in the
\nRecent SEC Reports in accordance with generally accepted accounting principles
\napplied on a consistent basis. No condition exists that is reasonably likely to
\nsubject the Company or any of its subsidiaries to any direct or indirect
\nliability under Title IV of ERISA or to a civil penalty under Section 502(j) of
\nERISA or liability under Section 4069 of ERISA or 4975, 4976, or 4980B of the
\nCode or the loss of a federal tax deduction under Section 280G of the Code or
\nother liability with respect to the Company Benefit Plans that would have a
\nmaterial adverse effect on the Company and that is not reflected on such balance
\nsheet. No Company<\/p>\n
-16-<\/p>\n
Benefit Plan (other than any Company Benefit Plan that is a “multiemployer plan”
\nas such term is defined in Section 4001(a)(3) of ERISA) is subject to Title IV
\nof ERISA. There are no pending, threatened, or anticipated claims (other than
\nroutine claims for benefits or immaterial claims) by, on behalf of or against
\nany of the Company Benefit Plans or any trusts related thereto. “ERISA
\nAffiliate” means, with respect to any person, any trade or business, whether or
\nnot incorporated, that together with such person would be deemed a “single
\nemployer” within the meaning of Section 4001(a)(15) of the Employee Retirement
\nIncome Security Act of 1974, as amended (“ERISA”).<\/p>\n
(j) Tax Returns and Tax Payments. The Company and each of its
\n —————————-
\nsubsidiaries has timely filed (or, as to subsidiaries, the Company has filed on
\nits behalf) all Tax Returns (as defined below) required to be filed by it, has
\npaid (or, as to subsidiaries, the Company has paid on its behalf) all Taxes (as
\ndefined below) shown thereon to be due and has provided (or, as to subsidiaries,
\nthe Company has made provision on its behalf of) adequate reserves in its
\nfinancial statements for any Taxes that have not been paid, whether or not shown
\nas being due on any Tax Returns. Except as set forth in Section 3.1(j) of the
\nDisclosure Schedule: (i) no material claim for unpaid Taxes has been asserted
\nby a Tax authority or has become a lien (except for liens not yet due and
\npayable) against the property of the Company or any of its subsidiaries or is
\nbeing asserted against the Company or any of its subsidiaries, (ii) no audit of
\nany Tax Return of the Company or any of its subsidiaries is being conducted by a
\nTax authority, and (iii) no extension of the statute of limitations on the
\nassessment of any Taxes has been granted by the Company or any of its
\nsubsidiaries and is currently in effect. Neither the Company nor any of its
\nSubsidiaries is or has been a member of any consolidated, combined, unitary or
\naggregate group for Tax purposes except such a group consisting only of the
\nCompany and its subsidiaries. As used herein, “Taxes” shall mean all taxes of
\nany kind, including, without limitation, those on or measured by or referred to
\nas income, gross receipts, sales, use, ad valorem, franchise, profits, license,
\nwithholding, payroll, employment, excise, severance, stamp, occupation, premium,
\nvalue added, property or windfall profits taxes, customs, duties or similar
\nfees, assessments or charges of any kind whatsoever, together with any interest
\nand any penalties, additions to tax or additional amounts imposed by any
\ngovernmental authority, domestic or foreign. As used herein, “Tax Return” shall
\nmean any return, report or statement required to be filed with any governmental
\nauthority with respect to Taxes.<\/p>\n
(k) State Antitakeover Laws Not Applicable. No state takeover statute
\n ————————————–
\nor similar statute or regulation of the State of New York (and, to the knowledge
\nof the Company after due inquiry, of any other state or jurisdiction) applies or
\npurports to apply to this Agreement or the transactions contemplated hereby and
\nno provision of the Certificate of Incorporation, Bylaws or other governing
\ninstruments of the Company or any of its subsidiaries or the terms of any rights
\nplan or agreement of the Company would, directly or indirectly, restrict or
\nimpair the ability of Parent to vote, or otherwise to exercise the rights of a
\nstockholder with respect to, securities of the Company and its subsidiaries that
\nmay be acquired or controlled by Parent or permit any stockholder to acquire
\nsecurities of the Company or of Parent or any of its subsidiaries on a basis not
\navailable to Parent in the event that Parent were to acquire securities of the
\nCompany.<\/p>\n
-17-<\/p>\n
(l) Environmental Matters. There are no legal, administrative,
\n ———————
\narbitral or other proceedings, claims, actions, causes of action, private
\nenvironmental investigations or remediation activities or governmental
\ninvestigations of any nature seeking to impose, or that reasonably could be
\nexpected to result in the imposition, on the Company or any of its subsidiaries
\nof any liability or obligations arising under common law standards relating to
\nenvironmental protection, human health or safety, or under any local, state,
\nfederal, national or supernational environmental statute, regulation or
\nordinance, including the Comprehensive Environmental Response, Compensation and
\nLiability Act of 1980, as amended (collectively, “Environmental Laws”), pending
\nor, to the knowledge of the Company, threatened, against the Company or any of
\nits subsidiaries, which liability or obligation would have or would reasonably
\nbe expected to have a material adverse effect on the Company or any of its
\nsubsidiaries. To the knowledge of the Company or any of its subsidiaries, there
\nis no reasonable basis for any such proceeding, claim, action or governmental
\ninvestigation that would impose any liability or obligation that would have or
\nwould reasonably be expected to have a material adverse effect on the Company or
\nany of its subsidiaries. To the knowledge of the Company, during or prior to
\nthe period of (i) its or any of its subsidiaries’ ownership or operation of any
\nof their respective current properties, (ii) its or any of its subsidiaries’
\nparticipation in the management of any property, or (iii) its or any of its
\nsubsidiaries’ holding of a security interest or other interest in any property,
\nthere was no release or threatened release of hazardous, toxic, radioactive or
\ndangerous materials or other materials regulated under Environmental Laws in,
\non, under or affecting any such property which would reasonably be expected to
\nhave a material adverse effect on the Company or any of its subsidiaries.
\nNeither the Company nor any of its subsidiaries is subject to any agreement,
\norder, judgment, decree, letter or memorandum by or with any court, governmental
\nauthority, regulatory agency or third party imposing any material liability or
\nobligations pursuant to or under any Environmental Law that would have or would
\nreasonably be expected to have a material adverse effect on the Company or any
\nof its subsidiaries.<\/p>\n
(m) Properties. Except as disclosed in the Recent SEC Documents, each
\n ———-
\nof the Company and its subsidiaries (i) has good, clear and marketable title to
\nall the properties and assets reflected in the latest audited balance sheet
\nincluded in such Recent SEC Documents as being owned by the Company or one of
\nits subsidiaries or acquired after the date thereof which are, individually or
\nin the aggregate, material to the Company’s business on a consolidated basis
\n(except properties sold or otherwise disposed of since the date thereof in the
\nordinary course of business), free and clear of (A) all Liens except (1)
\nstatutory liens securing payments not yet due and (2) such imperfections or
\nirregularities of title or other Liens (other than real property mortgages or
\ndeeds of trust) as do not materially affect the use of the properties or assets
\nsubject thereto or affected thereby or otherwise materially impair business
\noperations at such properties, and (B) all real property mortgages and deeds of
\ntrust and (ii) is the lessee of all leasehold estates reflected in the latest
\naudited financial statements included in such Recent SEC Documents or acquired
\nafter the date thereof which are material to its business on a consolidated
\nbasis and is in possession of the properties purported to be leased thereunder,
\nand each such lease is valid without default thereunder by the lessee or, to the
\nCompany’s knowledge, the lessor.<\/p>\n
(n) Brokers. No broker, investment banker, financial advisor or other
\n ——-
\nperson, other than Merrill Lynch & Co. and Morgan Lewis Githens & Ahn, Inc., the
\nfees<\/p>\n
-18-<\/p>\n
and expenses of each of which will be paid by the Company (pursuant to fee
\nagreements, copies of which have been provided to Parent), is entitled to any
\nbroker’s, finder’s, financial advisor’s or other similar fee or commission in
\nconnection with the transactions contemplated by this Agreement based upon
\narrangements made by or on behalf of the Company.<\/p>\n
(o) Opinion of Financial Advisor. The Company has received the
\n —————————-
\nopinion of Merrill Lynch & Co., dated the date of this Agreement, to the effect
\nthat the Merger Consideration to be received in the Merger by the Company’s
\nstockholders is fair to the holders of the Company Common Stock from a financial
\npoint of view, a signed copy of which opinion has been delivered to Parent.<\/p>\n
(p) Board Recommendation. The Board of Directors of the Company, at a
\n ——————–
\nmeeting duly called and held, has by unanimous vote of those directors present
\n(who constituted 100% of the directors then in office) (i) determined that this
\nAgreement and the transactions contemplated hereby, including the Merger, are
\nfair to and in the best interests of the stockholders of the Company, and (ii)
\nresolved to recommend that the holders of the shares of Company Common Stock
\napprove this Agreement and the transactions contemplated herein, including the
\nMerger.<\/p>\n
(q) Required Company Vote. The Company Stockholder Approval, being
\n ———————
\nthe affirmative vote of two-thirds of the outstanding shares of the Company
\nCommon Stock voting separately as a class, is the only vote of the holders of
\nany class or series of the Company’s securities necessary to approve this
\nAgreement, the Merger and the other transactions contemplated hereby.<\/p>\n
3.2 Representations and Warranties of Parent. Parent represents and
\n —————————————-
\nwarrants to the Company as follows:<\/p>\n
(a) Organization, Standing and Corporate Power. Each of Parent, Sub
\n ——————————————
\nand the other Parent Subsidiaries (as defined in Section 3.2(b)) is duly
\norganized, validly existing and in good standing under the laws of the
\njurisdiction in which it is incorporated and has the requisite corporate power
\nand authority to carry on its business as now being conducted. Each of Parent,
\nSub and the other Parent Subsidiaries is duly qualified or licensed to do
\nbusiness and is in good standing in each jurisdiction in which the nature of its
\nbusiness or the ownership or leasing of its properties makes such qualification
\nor licensing necessary, other than in such jurisdictions where the failure to be
\nso qualified or licensed (individually or in the aggregate) would not have a
\nmaterial adverse effect with respect to Parent. Parent has delivered to the
\nCompany complete and correct copies of its Restated Certificate of Incorporation
\nand Bylaws and the certificate of incorporation (or other organizational
\ndocuments) and bylaws of Sub, in each case as amended to the date hereof.<\/p>\n
(b) Subsidiaries. The only direct or indirect subsidiaries of Parent
\n ————
\n(other than such subsidiaries that would not constitute in the aggregate a
\nSignificant Subsidiary) are listed in Section 3.2(b) of the disclosure schedule
\n(the “Parent Disclosure Schedule”) delivered to the Company by Parent at the
\ntime of execution of this Agreement (together with Sub, the “Parent
\nSubsidiaries”). All the outstanding shares of capital stock of each such Parent
\nSubsidiary which is a corporation have been validly issued and are fully paid
\nand<\/p>\n
-19-<\/p>\n
nonassessable and, except as set forth in Section 3.2(b) of the Parent
\nDisclosure Schedule, are owned (of record and beneficially) by Parent, by
\nanother Parent Subsidiary (wholly owned) or by Parent and another such Parent
\nSubsidiary (wholly owned), free and clear of all Liens.<\/p>\n
(c) Capital Structure. The authorized capital stock of Parent
\n —————–
\nconsists of 1,500,000 shares of Class A Stock, 50,000,000 shares of Class B
\nStock, and 1,000,000 shares of preferred stock, no par value per share (“Parent
\nPreferred Stock”). Subject to such changes as may occur after September 30,
\n1996, and subject in the case of clauses (i) and (iii) to adjustment as a result
\nof conversions of Class A Stock into Class B Stock, there were, as of September
\n30, 1996: (i) 1,189,074 shares of Class A Stock, 650,640 shares of Class B
\nStock, and no shares of Parent Preferred Stock issued and outstanding; (ii)
\n187,796 shares of Class A Stock held by Parent in its treasury; and (iii)
\n35,672,220 shares of Class B Stock reserved for issuance upon conversion of
\nClass A Stock. Except as set forth above, no shares of capital stock or other
\nequity securities of Parent are issued, reserved for issuance or outstanding.
\nAll outstanding shares of capital stock of Parent are, and all shares of Parent
\nStock which may be issued pursuant to this Agreement will be, when issued, duly
\nauthorized, validly issued, fully paid and nonassessable and not subject to
\npreemptive rights. All shares of Parent Stock issued pursuant to this Agreement
\nwill, when so issued, be registered under the Securities Act for such issuance
\nand registered under the Exchange Act, be registered or exempt from registration
\nunder any applicable state securities laws, and be listed on the NYSE, subject
\nto official notice of issuance. There are no outstanding bonds, debentures,
\nnotes or other indebtedness or other securities of Parent having the right to
\nvote (or convertible into, or exchangeable for, securities having the right to
\nvote) on any matters on which stockholders of Parent may vote. Except as set
\nforth above or as contemplated by Section 2.4, there are no outstanding
\nsecurities, options, warrants, calls, or rights obligating Parent or any of its
\nsubsidiaries to issue, deliver or sell, or cause to be issued, delivered or
\nsold, additional shares of capital stock or other equity securities of Parent or
\nany of its subsidiaries or obligating Parent or any of its subsidiaries to
\nissue, grant, extend or enter into any such security, option, warrant, call, or
\nright. The authorized capital stock of Sub consists of 100 shares of common
\nstock, $.01 par value per share, all of which have been validly issued, are
\nfully paid and nonassessable and are owned directly by Parent, free and clear of
\nany Lien.<\/p>\n
(d) Authority; Noncontravention. Parent and Sub have all requisite
\n —————————
\ncorporate power and authority to enter into this Agreement and to consummate the
\ntransactions contemplated by this Agreement. The execution and delivery of this
\nAgreement by Parent and Sub and the consummation by Parent and Sub of the
\ntransactions contemplated by this Agreement have been duly authorized by all
\nnecessary corporate action on the part of Parent and Sub. No vote or consent of
\nthe stockholders of Parent or Sub, which has not been obtained, is required
\nunder applicable law or rule of the NYSE to approve the Merger, this Agreement
\nor the transactions contemplated hereby. This Agreement has been duly executed
\nand delivered by and constitutes a valid and binding obligation of each of
\nParent and Sub, enforceable against such party in accordance with its terms.
\nThe execution and delivery of this Agreement do not, and the consummation of the
\ntransactions contemplated by this Agreement and compliance with the provisions
\nof this Agreement will not, conflict with, or result in any breach or violation
\nof, or default (with or without notice or lapse of time, or<\/p>\n
-20-<\/p>\n
both) under, or give rise to a right of termination, cancellation or
\nacceleration of or “put” right with respect to any obligation or to loss of a
\nmaterial benefit under, or result in the creation of any Lien upon any of the
\nproperties or assets of Parent or any of its subsidiaries under, (i) the
\ncertificate of incorporation or by-laws of Parent or Sub or the comparable
\ncharter or organizational documents of any other subsidiary of Parent, (ii) any
\nloan or credit agreement, note, bond, mortgage, indenture, lease or other
\nagreement, instrument, permit, concession, franchise or license applicable to
\nParent, Sub or any other subsidiary of Parent or their respective properties or
\nassets or (iii) subject to the governmental filings and other matters referred
\nto in the following sentence, any judgment, order, decree, statute, law,
\nordinance, rule, regulation or arbitration award applicable to Parent, Sub or
\nany other subsidiary of Parent or their respective properties or assets, other
\nthan, in the case of clauses (ii) and (iii), any such conflicts, breaches,
\nviolations, defaults, rights, losses or Liens that individually or in the
\naggregate could not have a material adverse effect with respect to Parent or
\ncould not prevent, hinder or materially delay the ability of Parent to
\nconsummate the transactions contemplated by this Agreement. No consent,
\napproval, order or authorization of, or registration, declaration or filing
\nwith, or notice to, any Governmental Entity is required by or with respect to
\nParent, Sub or any other subsidiary of Parent in connection with the execution
\nand delivery of this Agreement by Parent or Sub or the consummation by Parent or
\nSub, as the case may be, of any of the transactions contemplated by this
\nAgreement, except for (i) the filing of a premerger notification and report form
\nunder the HSR Act, (ii) the filing with the SEC of (y) the Form S-4 and (z) such
\nreports under the Exchange Act as may be required in connection with this
\nAgreement and the transactions contemplated hereby, (iii) the filing of the
\nCertificate of Merger with the Department of State of the State of New York and
\nappropriate documents with the relevant authorities of other states in which the
\nCompany is qualified to do business, and (iv) such other consents, approvals,
\norders, authorizations, registrations, declarations, filings or notices as may
\nbe required under the “takeover” or “blue sky” laws of various states.<\/p>\n
(e) SEC Documents; Undisclosed Liabilities. Parent has filed all
\n ————————————–
\nrequired reports, schedules, forms, statements and other documents with the SEC
\nsince January 1, 1994 (collectively, and in each case, including all exhibits
\nand schedules thereto and documents incorporated by reference therein, the
\n“Parent SEC Documents”). As of their respective dates, the Parent SEC Documents
\ncomplied in all material respects with the requirements of the Securities Act or
\nthe Exchange Act, as the case may be, and the rules and regulations of the SEC
\npromulgated thereunder applicable to such Parent SEC Documents, and none of the
\nParent SEC Documents (including any and all financial statements included
\ntherein) as of such date contained any untrue statement of a material fact or
\nomitted to state a material fact required to be stated therein or necessary in
\norder to make the statements therein, in light of the circumstances under which
\nthey were made, not misleading. The consolidated financial statements of Parent
\nincluded in the Parent SEC Documents comply as to form in all material respects
\nwith applicable accounting requirements and the published rules and regulations
\nof the SEC with respect thereto, have been prepared in accordance with generally
\naccepted accounting principles (except, in the case of unaudited consolidated
\nquarterly statements, as permitted by Form 10-Q of the SEC) applied on a
\nconsistent basis during the periods involved (except as may be indicated in the
\nnotes thereto) and fairly present the consolidated financial position of Parent
\nand its consolidated subsidiaries as of the dates thereof and the consolidated
\nresults of operations and<\/p>\n
-21-<\/p>\n
changes in cash flows for the periods then ended (subject, in the case of
\nunaudited quarterly statements, to normal year-end audit adjustments). Since
\nDecember 31, 1995, neither Parent nor any of its subsidiaries has incurred any
\nliabilities or obligations of any nature (whether accrued, absolute, contingent
\nor otherwise) except (i) as and to the extent set forth on the audited balance
\nsheet of Parent and its subsidiaries as of December 31, 1995 (including the
\nnotes thereto), (ii) as incurred in connection with the transactions
\ncontemplated by this Agreement, (iii) as incurred after December 31, 1995 in the
\nordinary course of business and consistent with past practice, (iv) as described
\nin the SEC Documents filed since December 31, 1995 (the “Recent Parent SEC
\nDocuments”), or (v) as would not, individually or in the aggregate, have a
\nmaterial adverse effect with respect to Parent.<\/p>\n
(f) Information Supplied. None of the information supplied or to be
\n ——————–
\nsupplied by Parent or Sub for inclusion or incorporation by reference in (i) the
\nForm S-4 will, at the time the Form S-4 is filed with the SEC, and at any time
\nit is amended or supplemented or at the time it becomes effective under the
\nSecurities Act, contain any untrue statement of a material fact or omit to state
\nany material fact required to be stated therein or necessary to make the
\nstatements therein not misleading, and (ii) the Proxy Statement will, at the
\ndate the Proxy Statement is first mailed to the Company’s stockholders or at the
\ntime of the Stockholders Meeting, contain any untrue statement of a material
\nfact or omit to state any material fact required to be stated therein or
\nnecessary in order to make the statements therein, in light of the circumstances
\nunder which they are made, not misleading. The Form S-4 will comply as to form
\nin all material respects with the requirements of the Securities Act and the
\nrules and regulations promulgated thereunder, except that no representation or
\nwarranty is made by Parent or Sub with respect to statements made or
\nincorporated by reference therein based on information supplied by the Company
\nfor inclusion or incorporation by reference in the Form S-4.<\/p>\n
(g) Absence of Certain Changes or Events. Except as disclosed in the
\n ————————————
\nRecent Parent SEC Documents, since the date of the most recent financial
\nstatements included in the Recent Parent SEC Documents, Parent has conducted its
\nbusiness only in the ordinary course consistent with past practice, and there is
\nnot and has not been (i) any material adverse change with respect to Parent;
\n(ii) any condition, event or occurrence which, individually or in the aggregate,
\ncould reasonably be expected to have a material adverse effect or give rise to a
\nmaterial adverse change with respect to Parent; or (iii) any condition, event or
\noccurrence which could reasonably be expected to prevent, hinder or materially
\ndelay the ability of Parent to consummate the transactions contemplated by this
\nAgreement.<\/p>\n
(h) Interim Operations of Sub. Sub was formed on October 11, 1996
\n ————————-
\nsolely for the purposes of engaging in the transactions contemplated hereby, has
\nengaged in no other business activities and has conducted its operations only as
\ncontemplated hereby.<\/p>\n
(i) Brokers. No broker, investment banker, financial advisor or other
\n ——-
\nperson, other than Salomon Brothers Inc, the fees and expenses of which will be
\npaid by Parent, and a certain Parent shareholder, is entitled to or may be paid
\nany broker’s, finder’s, financial advisor’s or other similar fee or commission
\nin connection with the transactions contemplated by this Agreement based upon
\narrangements made by or on behalf of Parent.<\/p>\n
-22-<\/p>\n
ARTICLE 4<\/p>\n
COVENANTS RELATING TO CONDUCT OF
\n BUSINESS PRIOR TO MERGER<\/p>\n
4.1 Conduct of Business of the Company. From the date of this Agreement
\n ———————————-
\nto the Effective Time (except as otherwise specifically required by the terms of
\nthis Agreement), the Company shall, and shall cause its subsidiaries to, act and
\ncarry on their respective businesses in the usual, regular and ordinary course
\nof business consistent with past practice and, to the extent consistent
\ntherewith, use its best efforts to preserve intact their current business
\norganizations, keep available the services of their current officers and
\nemployees and preserve their relationships with customers, suppliers, licensors,
\nlicensees, advertisers, distributors and others having business dealings with
\nthem to the end that their goodwill and ongoing businesses shall not be impaired
\nin any material respect at the Effective Time. Without limiting the generality
\nof the foregoing, from the date of this Agreement to the Effective Time, the
\nCompany shall not, and shall not permit any of its subsidiaries to, without the
\nprior consent of the Parent:<\/p>\n
(a) (i) declare, set aside or pay any dividends on, or make any other
\n distributions in respect of, any of its capital stock, other than dividends
\n and distributions by a direct or indirect wholly owned subsidiary of the
\n Company to its parent and the declaration and payment by the Company of
\n regular quarterly cash dividends in an amount not in excess of $.16 per
\n share of Company Common Stock, with usual record and payment dates for such
\n dividends in accordance with the Company’s past dividend practices, (ii)
\n split, combine or reclassify any of its capital stock or issue or authorize
\n the issuance of any other securities in respect of, in lieu of or in
\n substitution for shares of its capital stock, or (iii) purchase, redeem or
\n otherwise acquire any shares of capital stock of the Company or any of its
\n subsidiaries or any other securities thereof or any rights, warrants or
\n options to acquire any such shares or other securities, except, in the case
\n of clause (iii), for the acquisition of shares of Company Common Stock from
\n holders of Company Stock Options in full or partial payment of the exercise
\n price payable by such holder or tax liability arising in connection
\n therewith, upon exercise of Company Stock Options outstanding on the date
\n of this Agreement in accordance with their present terms;<\/p>\n
(b) authorize for issuance, issue, deliver, sell, pledge or otherwise
\n encumber any shares of its capital stock or the capital stock of any of its
\n subsidiaries, any other voting securities or any securities convertible
\n into, or any rights, warrants or options to acquire, any such shares,
\n voting securities or convertible securities or any other securities or
\n equity equivalents (including without limitation stock appreciation
\n rights), or contractual obligation valued or measured by the value or
\n market price of Company Common Stock (other than the issuance of Company
\n Common Stock upon the exercise of Company Stock Options outstanding on the
\n date of this Agreement and in accordance with their present terms, such
\n issuance, together with the acquisitions of shares of Company Common Stock
\n permitted under clause (a) above, being referred to herein as “Permitted
\n Changes”);<\/p>\n
-23-<\/p>\n
(c) amend its certificate of incorporation, by-laws or other
\n comparable charter or organizational documents;<\/p>\n
(d) acquire or agree to acquire by merging or consolidating with, or
\n by purchasing a substantial portion of the stock or assets of, or by any
\n other manner, any business or any corporation, partnership, joint venture,
\n association, or other business organization or division thereof;<\/p>\n
(e) sell, lease, license, mortgage or otherwise encumber or subject
\n to any Lien or otherwise dispose of any of its properties or assets that
\n are material, individually or in the aggregate, to the Company and its
\n subsidiaries taken as a whole, except sales of inventory and equipment in
\n the ordinary course of business consistent with past practice;<\/p>\n
(f) (i) incur any indebtedness for borrowed money or guarantee any
\n such indebtedness of another person, issue or sell any debt securities or
\n warrants or other rights to acquire any debt securities of the Company or
\n any of its subsidiaries, guarantee any debt securities of another person,
\n enter into any “keep well” or other agreement to maintain any financial
\n statement condition of another person or enter into any arrangement having
\n the economic effect of any of the foregoing, except for short-term
\n borrowings incurred in the ordinary course of business consistent with past
\n practice, or (ii) make any loans, advances or capital contributions to, or
\n investments in, any other person, other than to the Company or any direct
\n or indirect wholly owned subsidiary of the Company;<\/p>\n
(g) acquire or agree to acquire any assets that are material,
\n individually or in the aggregate, to the Company and its subsidiaries taken
\n as a whole, or make or agree to make any capital expenditures except in the
\n ordinary course of business consistent with past practice;<\/p>\n
(h) pay, discharge or satisfy any claims (including claims of
\n stockholders), liabilities or obligations (absolute, accrued, asserted or
\n unasserted, contingent or otherwise), except for the payment, discharge or
\n satisfaction, of (i) liabilities or obligations in the ordinary course of
\n business consistent with past practice or in accordance with their terms as
\n in effect on the date hereof, (ii) liabilities reflected or reserved
\n against in, or contemplated by, the most recent consolidated audited
\n financial statements (or the notes thereof) of the Company included in the
\n Recent SEC Documents, or waive, release, grant, or transfer any rights of
\n material value or modify or change in any material respect any existing
\n license, lease, contract or other document, other than in the ordinary
\n course of business consistent with past practice;<\/p>\n
(i) adopt or amend in any material respect (except as may be
\n required by law or by this Agreement) any bonus, profit sharing,
\n compensation, stock option, pension, retirement, deferred compensation,
\n employment or other employee benefit plan, agreement, trust, fund or other
\n arrangement (including any Company Benefit Plan) for the benefit or welfare
\n of any employee, director or former director or<\/p>\n
-24-<\/p>\n
employee or, other than increases for individuals (other than officers and
\n directors) in the ordinary course of business consistent with past
\n practice, increase the compensation or fringe benefits of any director,
\n employee or former director or employee; pay any benefit not required by
\n any existing plan, arrangement or agreement, grant any new or modified
\n severance or termination arrangement or increase or accelerate any benefits
\n payable under its severance or termination pay policies in effect on the
\n date hereof, other than any such increase or acceleration provided for
\n under such policies as in effect on the date of this Agreement;<\/p>\n
(j) change any material accounting principle used by it, except
\n for such changes as may be required to be implemented following the date of
\n this Agreement pursuant to generally accepted accounting principles or
\n rules and regulations of the SEC promulgated following the date hereof;<\/p>\n
(k) take any action that would, or is reasonably likely to,
\n result in any of its representations and warranties in this Agreement
\n becoming untrue, or in any of the conditions to the Merger set forth in
\n Article 6 not being satisfied;<\/p>\n
(l) except in the ordinary course of business and consistent with
\n past practice, make any tax election or settle or compromise any federal,
\n state, local or foreign income tax liability; and<\/p>\n
(m) authorize any of, or commit or agree to take any of, the
\n foregoing actions.<\/p>\n
ARTICLE 5<\/p>\n
ADDITIONAL AGREEMENTS<\/p>\n
5.1 Preparation of Form S-4 and the Proxy Statement; Stockholder
\n ————————————————————
\nMeetings.
\n– ——–<\/p>\n
(a) Promptly following the date of this Agreement, the Company shall
\nprepare and file with the SEC the Proxy Statement, and Parent shall prepare and
\nfile with the SEC the Form S-4, in which the Proxy Statement will be included as
\na prospectus. Each of the Company and Parent shall use its reasonable best
\nefforts as promptly as practicable to have the Form S-4 declared effective under
\nthe Securities Act as promptly as practicable after such filing. The Company
\nwill use its reasonable best efforts to cause the Proxy Statement to be mailed
\nto the Company’s stockholders as promptly as practicable after the Form S-4 is
\ndeclared effective under the Securities Act. Parent shall also take any action
\n(other than qualifying to do business in any jurisdiction in which it is not now
\nso qualified) required to be taken under any applicable state securities laws in
\nconnection with the issuance of Parent Stock in the Merger, and the Company
\nshall furnish all information concerning the Company and the holders of the
\nCompany Common Stock and rights to acquire Company Common Stock pursuant to the
\nStock Plans as may be reasonably requested in connection with any such action.<\/p>\n
-25-<\/p>\n
(b) The Company will, as promptly as practicable following the date of
\nthis Agreement, duly call, give notice of, convene and hold a meeting of its
\nstockholders (the “Stockholders Meeting”) for the purpose of approving this
\nAgreement and the transactions contemplated by this Agreement. The Company
\nwill, through its Board of Directors, recommend to its stockholders approval of
\nthe foregoing matters, as set forth in Section 3.1(p). Such recommendation,
\ntogether with a copy of the opinion referred to in Section 3.1(o), shall be
\nincluded in the Proxy Statement. The Company will use reasonable efforts to
\nhold such meeting as soon as practicable after the date hereof.<\/p>\n
(c) The Company will cause its transfer agent to make stock transfer
\nrecords relating to the Company available to the extent reasonably necessary to
\neffectuate the intent of this Agreement.<\/p>\n
5.2 Letter of the Company’s Accountants. The Company shall use its best
\n ———————————–
\nefforts to cause to be delivered to Parent a letter of Price Waterhouse LLP, the
\nCompany’s independent public accountants, dated a date within two business days
\nbefore the date on which the Form S-4 shall become effective and addressed to
\nParent, in form and substance reasonably satisfactory to Parent and customary in
\nscope and substance for letters delivered by independent public accountants in
\nconnection with registration statements similar to the Form S-4.<\/p>\n
5.3 Parent Access to Information.
\n —————————- <\/p>\n
(a) The Company shall, and shall cause its subsidiaries, officers,
\nemployees, counsel, financial advisors and other representatives to, afford to
\nParent and its representatives reasonable access during normal business hours
\nduring the period prior to the Effective Time to its properties, books,
\ncontracts, commitments, personnel and records and, during such period, shall,
\nand shall cause its subsidiaries, officers, employees and representatives to,
\nfurnish promptly to Parent (i) a copy of each report, schedule, registration
\nstatement and other document filed by it during such period pursuant to the
\nrequirements of Federal or state securities laws and (ii) all other information
\nconcerning its business, properties, financial condition, operations and
\npersonnel as Parent may from time to time reasonably request. No investigation
\npursuant to this Section 5.3 shall affect any representations or warranties of
\nthe Company herein or the conditions to the obligations of the parties hereto.<\/p>\n
(b) The Company shall report on operational matters and promptly
\nadvise Parent orally and in writing of any change or event having, or which,
\ninsofar as can reasonably be foreseen, could have, a material adverse effect on
\nthe Company and its Subsidiaries taken as a whole.<\/p>\n
5.4 Best Efforts. Each of the parties agrees to use its best efforts to
\n ————
\ntake, or cause to be taken, all actions, and to do, or cause to be done, and to
\nassist and cooperate with the other parties in doing, all things necessary,
\nproper or advisable to consummate and make effective, in the most expeditious
\nmanner practicable, the Merger and the other transactions contemplated by this
\nAgreement. Parent, Sub and the Company will use their best efforts and
\ncooperate with one another (i) in promptly determining whether any filings<\/p>\n
-26-<\/p>\n
are required to be made or consents, approvals, waivers, permits or
\nauthorizations are required to be obtained under any applicable law or
\nregulation or from any governmental authorities or third parties in connection
\nwith the transactions contemplated by this Agreement and (ii) in promptly making
\nany such filings, in furnishing information required in connection therewith and
\nin timely seeking to obtain any such consents, approvals, waivers, permits or
\nauthorizations.<\/p>\n
5.5 Employee Benefits.
\n —————– <\/p>\n
(a) Parent and the Company agree that the Company Benefit Plans shall,
\nto the extent practicable and except as otherwise provided in Section 2.4
\nhereof, remain in effect without amendment until the Effective Time and that
\nthereafter the Surviving Corporation will maintain, subject to such changes and
\nmodifications as may be necessary or desirable to facilitate compliance by
\nParent and its subsidiaries (including the Surviving Corporation) with
\napplicable statutory and regulatory requirements, for a period of at least three
\nyears after the Effective Time, the Company Benefit Plans (other than the Stock
\nPlans).<\/p>\n
(b) Parent will, and will cause the Surviving Corporation to, honor
\nwithout modification for a period of at least three years after the Effective
\nTime all employee severance plans (or policies) and employment and severance
\nagreements of the Company or any of its subsidiaries in existence on the date
\nhereof as such plans, policies and agreements shall be in effect in accordance
\nwith the terms of this Agreement at the Effective Time.<\/p>\n
(c) Parent and Company will use their best efforts to agree on
\ncompensation plans for the officers and employees of the Company after the
\nEffective Time to provide them incentive compensation that in the aggregate is
\nreasonably comparable (without giving effect to any payments to them resulting
\nfrom the Merger) to that historically provided by the Stock Plans, except that
\nneither Parent nor the Surviving Corporation shall be required to issue any
\nshares of its equity securities in connection with such compensation plans.<\/p>\n
5.6 Indemnification.
\n ————— <\/p>\n
(a) The Company shall, and from and after the Effective Time Parent
\nand the Surviving Corporation shall, indemnify, defend and hold harmless each
\nperson who is now, or has been at any time prior to the date of this Agreement
\nor who becomes such prior to the Effective Time, an officer, director or
\nemployee of the Company or any of its subsidiaries (the “Indemnified Parties”)
\nagainst (i) all losses, claims, damages, costs, expenses, liabilities or
\njudgments or amounts that are paid in settlement with the approval of the
\nindemnifying party (which approval shall not be unreasonably withheld) of or in
\nconnection with any claim, action, suit, proceeding or investigation based in
\nwhole or in part on or arising in whole or in part out of the fact that such
\nperson is or was a director, officer or employee of the Company or any of its
\nsubsidiaries (the “Indemnified Parties”) against (i) all losses, claims,
\ndamages, costs, expenses, liabilities or judgments or amounts that are paid in
\nsettlement with the approval of the indemnifying party (which approval shall not
\nbe unreasonably withheld) of or in connection with any claim, action, suit,
\nproceeding or investigation based in whole or in part on or arising in whole or
\nin part out of the fact that<\/p>\n
-27-<\/p>\n
such person is or was a director, officer or employee of the Company or any of
\nits subsidiaries, whether pertaining to any matter existing or occurring at or
\nprior to the Effective Time and whether asserted or claimed prior to, or at or
\nafter, the Effective Time (“Indemnified Liabilities”) and (ii) all Indemnified
\nLiabilities based in whole or in part on, or arising in whole or in part out of,
\nor pertaining to this Agreement or the transactions contemplated hereby;
\nprovided, however, that, in the case of the Company and the Surviving
\n– ——– ——-
\nCorporation such indemnification shall only be to the fullest extent a
\ncorporation is permitted under the NYBCL to indemnify its own directors,
\nofficers and employees, and in the case of Parent, such indemnification shall
\nnot be limited by the NYBCL but such indemnification shall not be applicable to
\nany claims made against the Indemnified Parties if a judgment or other final
\nadjudication established that (A) their acts or omissions were committed in bad
\nfaith or were the result of active and deliberate dishonesty and were material
\nto the cause of action so deliberated or (B) arising out of, based upon or
\nattributable to the gaining in fact of any financial profit or other advantage
\nto which they were not legally entitled; and the Company, Parent and the
\nSurviving Corporation, as the case may be, will pay all expenses of each
\nIndemnified Party in advance of the final disposition of any such action or
\nproceeding, in the case of the Company and the Surviving Corporation only to the
\nfullest extent permitted by law upon receipt of any undertaking contemplated by
\nSection 723(c) of the NYBCL. Without limiting the foregoing, in the event any
\nsuch claim, action, suit, proceeding or investigation is brought against any
\nIndemnified Party (whether arising before or after the Effective Time), (i) the
\nIndemnified Parties may retain counsel satisfactory to them and the Company (or
\nthem and Parent and the Surviving Corporation after the Effective Time), (ii)
\nthe Company (or after the Effective Time, the Surviving Corporation) shall pay
\nall reasonable fees and expenses of such counsel for the Indemnified Parties
\npromptly as statements therefor are received, and (iii) the Company (or after
\nthe Effective Time, Parent and the Surviving Corporation) will use all
\nreasonable efforts to assist in the vigorous defense of any such matter,
\nprovided that none of the Company, Parent or the Surviving Corporation shall be
\nliable for any settlement of any claim effected without its written consent,
\nwhich consent, however, shall not be unreasonably withheld. Any Indemnified
\nParty wishing to claim indemnification under this Section 5.6, upon learning of
\nany such claim, action, suit, proceeding or investigation, shall notify the
\nCompany, Parent or the Surviving Corporation (but the failure so to notify an
\nindemnifying party shall not relieve it from any liability which it may have
\nunder this Section 5.6 except to the extent such failure prejudices such party),
\nand shall deliver to the Company (or after the Effective Time, the Surviving
\nCorporation (but not Parent)) the undertaking contemplated by Section 723(c) of
\nthe NYBCL. The Indemnified Parties as a group may retain only one law firm to
\nrepresent them with respect to each such matter unless there is, under
\napplicable standards of professional conduct, a conflict on any significant
\nissue between the positions of any two or more Indemnified Parties.<\/p>\n
(b) The provisions of this Section 5.6 are intended to be for the
\nbenefit of, and shall be enforceable by, each Indemnified Party, his or her
\nheirs and representatives.<\/p>\n
5.7 Expenses. Whether or not the Merger is consummated, all costs and
\n ——–
\nexpenses incurred in connection with this Agreement and the transactions
\ncontemplated hereby shall be paid by the party incurring such expenses, except
\nthat the expenses in connection with printing and mailing the Proxy Statement
\nand the Form S-4, as well as all<\/p>\n
-28-<\/p>\n
SEC filing fees relating to the transactions contemplated herein, shall be
\nshared equally between Parent and the Company.<\/p>\n
5.8 Public Announcements. Parent and Sub, on the one hand, and the
\n ——————–
\nCompany, on the other hand, will consult with each other before issuing, and
\nprovide each other the opportunity to review and comment upon, any press release
\nor other public statements with respect to the transactions contemplated by this
\nAgreement, including the Merger, and shall not issue any such press release or
\nmake any such public statement prior to such consultation, except as may be
\nrequired by applicable law, court process or by obligations pursuant to any
\nlisting agreement with any national securities exchange. The parties agree that
\nthe initial press release or releases to be issued with respect to the
\ntransactions contemplated by this Agreement shall be mutually agreed upon prior
\nto the issuance thereof.<\/p>\n
5.9 Affiliates. Prior to the Closing Date, the Company shall deliver to
\n ———-
\nParent a letter identifying all persons who are, at the time this Agreement is
\nsubmitted for approval to the stockholders of the Company, “affiliates” of the
\nCompany for purposes of Rule 145 under the Securities Act. The Company shall
\nuse its best efforts to cause each such person to deliver to Parent on or prior
\nto the Closing Date a written agreement substantially in the form attached as
\nExhibit A hereto.<\/p>\n
5.10 Stock Exchange Listing. Parent shall use its best efforts to cause
\n ———————-
\nthe shares of Parent Stock to be issued in the Merger and under the Stock Plans
\nto be approved for listing on the New York Stock Exchange, subject to notice of
\nissuance, prior to the Closing Date.<\/p>\n
5.11 Takeover Statutes. If any “fair price,” “moratorium,” “control share
\n —————–
\nacquisition” or other form of antitakeover statute or regulation shall become
\napplicable to the transactions contemplated hereby, the Company and the members
\nof the Board of Directors of the Company shall grant such approvals and take
\nsuch actions as are reasonably necessary so that the transactions contemplated
\nhereby may be consummated as promptly as practicable on the terms contemplated
\nhereby and otherwise act to eliminate or minimize the effects of such statute or
\nregulation on the transactions contemplated hereby.<\/p>\n
5.12 No Solicitation. Neither the Company nor any of its subsidiaries
\n —————
\nshall, nor shall the Company or any of its subsidiaries authorize or permit any
\nof its or their officers, directors, agents, representatives, advisors or
\nsubsidiaries to, (a) solicit, initiate or encourage (including by way of
\nfurnishing information), or take any other action to facilitate the submission
\nof inquiries, proposals or offers from any person relating to any acquisition or
\npurchase of a substantial amount of assets of the Company or any of its
\nsubsidiaries (other than in the ordinary course of business) or of over 20% of
\nany class of equity securities of the Company or any of its subsidiaries or any
\ntender offer (including a self tender offer) or exchange offer that if
\nconsummated would result in any person beneficially owning 20% or more of any
\nclass of equity securities of the Company or any of its subsidiaries, or any
\nmerger, consolidation, business combination, sale of substantially all assets,
\nrecapitalization, liquidation, dissolution or similar transaction involving the
\nCompany or any of its subsidiaries, other than the transactions contemplated by
\nthis Agreement, or any other transaction the consummation of which would or
\ncould reasonably be expected to impede,<\/p>\n
-29-<\/p>\n
interfere with, prevent or materially delay the Merger or which would or could
\nreasonably be expected to materially dilute the benefits to Parent of the
\ntransactions contemplated hereby (collectively, “Transaction Proposals”) or
\nagree to or endorse any Transaction Proposal, or (b) enter into or participate
\nin any discussions or negotiations regarding any of the foregoing, or furnish to
\nany other person any information with respect to its business, properties or
\nassets or any of the foregoing, or otherwise cooperate in any way with, or
\nassist or participate in, facilitate or encourage, any effort or attempt by any
\nother person to do or seek any of the foregoing; provided, however, that the
\n ——– ——-
\nforegoing shall not prohibit the Company from (i) furnishing information
\nconcerning the Company and its businesses, properties or assets pursuant to an
\nappropriate confidentiality agreement substantially similar to the
\nConfidentiality Agreement dated October 4, 1996 between the Company and Parent
\nto a third party who has made an unsolicited Transaction Proposal, (ii) engaging
\nin discussions or negotiations with a third party who has made an unsolicited
\nTransaction Proposal, (iii) following receipt of an unsolicited Transaction
\nProposal, taking and disclosing to its stockholders a position contemplated by
\nRule 14e-2(a) under the Exchange Act or otherwise making disclosure to its
\nstockholders, and\/or (iv) following receipt of an unsolicited Transaction
\nProposal, failing to make or withdrawing or modifying its recommendation
\nreferred to in Section 3.1(p), but in each case referred to in the foregoing
\nclauses (i) through (iv) only if and to the extent that the Board of Directors
\nof the Company shall have concluded in good faith, after consulting with and
\nconsidering the advice of outside counsel, that such action is required by the
\nBoard of Directors of the Company in the exercise of its fiduciary duties to the
\nstockholders of the Company; provided, further, that the Board of Directors of
\n ——– ——-
\nthe Company shall not take any of the foregoing actions referred to in clauses
\n(i) through (iv) until after giving at least one business day’s advance notice
\nto Parent with respect to the actions specified in the foregoing clauses (i)
\nthrough (iv) that it shall take. In addition, if the Board of Directors of the
\nCompany receives a Transaction Proposal, then the Company shall promptly inform
\nParent in writing of the material terms of such proposal and the identity of the
\nperson (or group) making it. The Company will immediately cease and cause to be
\nterminated any existing activities, discussions or negotiations with any parties
\nconducted heretofore with respect to any of the foregoing. Without limiting the
\nforegoing, it is understood that any violation of the restrictions set forth in
\nthis Section by any director or executive officer of the Company or any of its
\nsubsidiaries or by any investment banker, financial adviser, attorney,
\naccountant, or other representative of the Company or any of its subsidiaries
\nshall be deemed to be a breach of this Section by the Company.<\/p>\n
5.13 Certain Agreements. Neither the Company nor any subsidiary of the
\n ——————
\nCompany will waive or fail to enforce any provision of any confidentiality or
\nstandstill or similar agreement to which it is a party without the prior written
\nconsent of Parent.<\/p>\n
5.14 Company Access to Information.
\n —————————– <\/p>\n
(a) The Parent shall, and shall cause its officers, employees,
\ncounsel, financial advisors and other representatives to, afford to the Company
\nand its representatives reasonable access during normal business hours during
\nthe period prior to the Effective Time to its books, personnel and records and,
\nduring such period, shall, and shall cause its subsidiaries, officers, employees
\nand representatives to, furnish promptly to the Company (i) a copy of each
\nreport, schedule, registration statement and other document filed by it<\/p>\n
-30-<\/p>\n
during such period pursuant to the requirements of Federal or state securities
\nlaws and (ii) all other information concerning its business, financial condition
\nand operations as the Company may from time to time reasonably request;
\nprovided, however, that the foregoing shall not create any obligation to
\n– —————–
\ndisclose to any person any nonpublic information respecting securities holdings
\nof Parent or any of its subsidiaries. No investigation pursuant to this Section
\n5.14 shall affect any representations or warranties of the Parent herein or the
\nconditions to the obligations of the parties hereto.<\/p>\n
(b) Parent shall promptly advise the Company orally and in writing of
\nany change or event having, or which, insofar as can reasonably be foreseen,
\ncould have, a material adverse effect on the Parent and its Subsidiaries taken
\nas a whole.<\/p>\n
ARTICLE 6<\/p>\n
CONDITIONS PRECEDENT<\/p>\n
6.1 Conditions to Each Party’s Obligation To Effect the Merger. The
\n ———————————————————-
\nrespective obligation of each party to effect the Merger is subject to the
\nsatisfaction or waiver on or prior to the Closing Date of the following
\nconditions:<\/p>\n
(a) Company Stockholder Approval. The Company Stockholder Approval
\n —————————-
\nshall have been obtained.<\/p>\n
(b) NYSE Listing. The shares of Parent Stock issuable to the
\n ————
\nCompany’s stockholders pursuant to this Agreement shall have been approved for
\nlisting on the NYSE, subject to notice of issuance.<\/p>\n
(c) HSR Act. The waiting period (and any extension thereof)
\n ——-
\napplicable to the Merger under the HSR Act shall have been terminated or shall
\nhave expired.<\/p>\n
(d) No Injunctions or Restraints. No temporary restraining order,
\n —————————-
\npreliminary or permanent injunction or other order issued by any court of
\ncompetent jurisdiction or other legal restraint or prohibition preventing the
\nconsummation of the Merger shall be in effect; provided, however, that the
\n ——– ——-
\nparties hereto shall use their best efforts to have any such injunction, order,
\nrestraint or prohibition vacated.<\/p>\n
(e) Form S-4. The Form S-4 shall have become effective under the
\n ——–
\nSecurities Act and shall not be the subject of any stop order or proceedings
\nseeking a stop order, and any material “blue sky” and other state securities
\nlaws applicable to the issuance of the Parent Stock shall have been complied
\nwith.<\/p>\n
6.2 Conditions to Obligation of Parent and Sub. The obligations of
\n ——————————————
\nParent and Sub to effect the Merger are further subject to the following
\nconditions:<\/p>\n
-31-<\/p>\n
(a) Representations and Warranties. The representations and
\n ——————————
\nwarranties of the Company set forth in this Agreement shall be true and correct
\nin all material respects, in each case as of the date of this Agreement and as
\nof the Closing Date as though made on and as of the Closing Date. Parent shall
\nhave received a certificate signed on behalf of the Company by the chief
\nexecutive officer and the chief financial officer of the Company to such effect.<\/p>\n
(b) Performance of Obligations of the Company. The Company shall have
\n —————————————–
\nperformed the obligations required to be performed by it under this Agreement at
\nor prior to the Closing Date (except for such failures to perform as have not
\nhad or could not reasonably be expected, either individually or in the
\naggregate, to have a material adverse effect with respect to the Company or
\nadversely affect the ability of the Company to consummate the transactions
\nherein contemplated or perform its obligations hereunder), and Parent shall have
\nreceived a certificate signed on behalf of the Company by the chief executive
\nofficer and the chief financial officer of the Company to such effect.<\/p>\n
(c) Tax Opinion. Parent shall have received the opinion of Munger,
\n ———–
\nTolles & Olson, counsel to Parent, dated the Closing Date, based on appropriate
\nrepresentations of the Company, its affiliates, and Parent, and such other
\nfacts, representations, assumptions, and agreements as counsel may reasonably
\ndeem relevant, to the effect that for United States Federal income tax purposes
\nthe Merger will qualify as a reorganization within the meaning of Section 368 of
\nthe Code and that each of Parent, Sub and the Company will be a party to the
\nreorganization within the meaning of Section 368(b) of the Code.<\/p>\n
(d) Consents, etc. Parent shall have received evidence, in form and
\n ————–
\nsubstance reasonably satisfactory to it, that such licenses, permits, consents,
\napprovals, authorizations, qualifications and orders of governmental authorities
\nand other third parties as are necessary in connection with the transactions
\ncontemplated hereby have been obtained, except such licenses, permits, consents,
\napprovals, authorizations, qualifications and orders which are not, individually
\nor in the aggregate, material to Parent or the Company or the failure of which
\nto have been received would not (as compared to the situation in which such
\nlicense, permit, consent, approval, authorization, qualification or order had
\nbeen obtained) materially dilute the aggregate benefits to Parent of the Merger.<\/p>\n
(e) Affiliate Letters. Parent shall have received the agreements
\n —————–
\nreferred to in Section 5.9.<\/p>\n
(f) Continuity of Interest Agreement. Mr. Albert L. Ueltschi shall
\n ——————————–
\nhave executed and delivered, and shall have used his best efforts to cause the
\nspecified members of his family to have executed and delivered, a Continuity of
\nInterest Agreement in substantially the form attached as Exhibit B hereto.<\/p>\n
-32-<\/p>\n
6.3 Conditions to Obligation of the Company. The obligation of the
\n —————————————
\nCompany to effect the Merger is further subjected to the following conditions:<\/p>\n
(a) Representations and Warranties. The representations and
\n ——————————
\nwarranties of Parent and Sub set forth in this Agreement shall be true and
\ncorrect in all material respects, in each case as of the date of this Agreement
\nand as of the Closing Date as though made on and as of the Closing Date. The
\nCompany shall have received a certificate signed on behalf of Parent by the
\nchief executive officer and the chief financial officer of Parent to such
\neffect.<\/p>\n
(b) Performance of Obligations of Parent and Sub. Parent and Sub
\n ——————————————–
\nshall have performed the obligations required to be performed by them under this
\nAgreement at or prior to the Closing Date (except for such failures to perform
\nas have not had or could not reasonably be expected, either individually or in
\nthe aggregate, to have a material adverse effect with respect to Parent or
\nadversely affect the ability of Parent to consummate the transactions herein
\ncontemplated or perform its obligations hereunder), and the Company shall have
\nreceived a certificate signed on behalf of Parent by the chief executive officer
\nand the chief financial officer of Parent to such effect.<\/p>\n
(c) Tax Opinion. The Company shall have received the opinion of
\n ———–
\nSkadden, Arps, Slate, Meagher & Flom, counsel to the Company, dated the Closing
\nDate, based on appropriate representations of the Company, its affiliates, and
\nParent and such other facts, representations, assumptions, and agreements as
\ncounsel may reasonably deem relevant, to the effect that for United States
\nFederal income tax purposes the Merger will qualify as a reorganization within
\nthe meaning of Section 368 of the Code and that each of Parent, Sub and the
\nCompany will be a party to the reorganization within the meaning of Section
\n368(b) of the Code.<\/p>\n
ARTICLE 7<\/p>\n
TERMINATION, AMENDMENT AND WAIVER<\/p>\n
7.1 Termination. This Agreement may be terminated and abandoned at any
\n ———–
\ntime prior to the Effective Time of the Merger, whether before or after approval
\nof the Merger by the stockholders of the Company:<\/p>\n
(a) by mutual written consent of Parent and the Company; or<\/p>\n
(b) by either Parent or the Company if any Governmental Entity shall
\nhave issued an order, decree or ruling or taken any other action permanently
\nenjoining, restraining or otherwise prohibiting the Merger and such order,
\ndecree, ruling or other action shall have become final and nonappealable; or<\/p>\n
(c) by either Parent or the Company if the Merger shall not have been
\nconsummated on or before March 31, 1997 (other than due to the failure of the
\nparty seeking<\/p>\n
-33-<\/p>\n
to terminate this Agreement to perform its obligations under this Agreement
\nrequired to be performed at or prior to the Effective Time of the Merger); or<\/p>\n
(d) by Parent, if any required approval of the stockholders of the
\nCompany shall not have been obtained by reason of the failure to obtain the
\nrequired vote upon a vote held at a duly held meeting of stockholders or at any
\nadjournment thereof; or<\/p>\n
(e) by Parent, (1) if the Company shall have (i) withdrawn, modified
\nor amended in any respect adverse to Parent or Sub its approval or
\nrecommendation of this Agreement or the Merger, (ii) failed as soon as
\npracticable to mail the Proxy Statement to its stockholders or failed to include
\nin such statement such recommendation, (iii) recommended any Transaction
\nProposal from a person other than Parent or (iv) resolved to do any of the
\nforegoing, or (2) if (i) the Company shall have exercised a right specified in
\nthe first proviso to Section 5.12 with respect to any Transaction Proposal and
\nshall, directly or through agents or representatives, continue discussions with
\nany third party concerning such Transaction Proposal for more than 10 business
\ndays after the date of receipt of such Transaction Proposal; or (ii) (A) a
\nTransaction Proposal that is publicly disclosed shall have been commenced,
\npublicly proposed or communicated to the Company which contains a proposal as to
\nprice (without regard to whether such proposal specifies a specific price or a
\nrange of potential prices) and (B) the Company shall not have rejected such
\nproposal within 10 business days of its receipt or, if sooner, the date its
\nexistence first becomes publicly disclosed; or<\/p>\n
(f) by the Company, if the Company exercises, pursuant to Section
\n5.12, the right specified in clause (iv) of the first proviso to Section 5.12;
\nor<\/p>\n
(g) by Parent, if the Company fails to perform any of its material
\nobligations under this Agreement; or<\/p>\n
(h) by the Company, if Parent or Sub fails to perform any of their
\nrespective material obligations under this Agreement.<\/p>\n
7.2 Effect of Termination. In the event of termination of this Agreement
\n ———————
\nby either the Company or Parent as provided in Section 7.1, this Agreement shall
\nforthwith become void and have no effect, without any liability or obligation on
\nthe part of Parent, Sub or the Company, other than pursuant to the provisions of
\nSection 5.7 and this Section 7.2. Nothing contained in this Section shall
\nrelieve any party for any breach of the representations, warranties, covenants
\nor agreements set forth in this Agreement.<\/p>\n
7.3 Amendment. This Agreement may be amended by the parties at any time
\n ———
\nbefore or after required approval of the Merger by the stockholders of the
\nCompany; provided, however, that after such approval, there shall be made no
\n ——– ——-
\namendment that by law requires further approval by such stockholders without the
\nfurther approval of such stockholders. This Agreement may not be amended except
\nby an instrument in writing signed on behalf of each of the parties.<\/p>\n
-34-<\/p>\n
7.4 Extension; Waiver. At any time prior to the Effective Time, the
\n —————–
\nparties may (a) extend the time for the performance of any of the obligations or
\nother acts of the other parties, (b) waive any inaccuracies in the
\nrepresentations and warranties contained in this Agreement or in any document
\ndelivered pursuant to this Agreement or (c) subject to the proviso of Section
\n7.3, waive compliance with any of the agreements or conditions contained in this
\nAgreement. Any agreement on the part of a party to any such extension or waiver
\nshall be valid only if set forth in an instrument in writing signed on behalf of
\nsuch party. The failure of any party to this Agreement to assert any of its
\nrights under this Agreement or otherwise shall not constitute a waiver of such
\nrights.<\/p>\n
ARTICLE 8<\/p>\n
GENERAL PROVISIONS<\/p>\n
8.1 Nonsurvival of Representations and Warranties. None of the
\n ———————————————
\nrepresentations and warranties in this Agreement or in any instrument delivered
\npursuant to this Agreement shall survive the Effective Time. This Section 8.1
\nshall not limit any covenant or agreement of the parties which by its terms
\ncontemplates performance after the Effective Time.<\/p>\n
8.2 Notices. All notices, requests, claims, demands and other
\n ——-
\ncommunications under this Agreement shall be in writing and shall be deemed
\ngiven if delivered personally or sent by overnight courier (providing proof of
\ndelivery) to the parties at the following addresses (or at such other address
\nfor a party as shall be specified by like notice):<\/p>\n
(a) if to Parent or Sub, to:<\/p>\n
Berkshire Hathaway Inc.
\n 1440 Kiewit Plaza
\n Omaha, Nebraska 68131
\n Attention: Chairman of the Board<\/p>\n
with a copy to:<\/p>\n
Munger, Tolles & Olson
\n 355 South Grand Avenue, 35th Floor
\n Los Angeles, California 90071-1560
\n Attention: R. Gregory Morgan<\/p>\n
(b) if to the Company, to:<\/p>\n
FlightSafety International Inc.
\n Marina Air Terminal
\n LaGuardia Airport
\n Flushing, New York 11371
\n Attention: Chairman of the Board<\/p>\n
-35-<\/p>\n
with a copy to:<\/p>\n
Skadden, Arps, Slate, Meagher & Flom
\n 919 Third Avenue
\n New York, New York 10022
\n Attention: Peter P. Mullen<\/p>\n
8.3 Definitions. For purposes of this Agreement:
\n ———– <\/p>\n
(a) an “affiliate” of any person means another person that directly or
\nindirectly, through one or more intermediaries, controls, is controlled by, or
\nis under common control with, such first person;<\/p>\n
(b) “material adverse change” or “material adverse effect” means, when
\nused in connection with the Company or Parent, any change or effect that either
\nindividually or in the aggregate with all other such changes or effects is
\nmaterially adverse to the business, assets, properties, condition (financial or
\notherwise) or results of operations of such party and its subsidiaries taken as
\na whole; provided, however, that, (i) a decline in general economic conditions
\n ——– ——-
\naffecting the Company or Parent shall not be deemed to be a “material adverse
\nchange” or to have a “material adverse effect” with respect to either such party
\nor its subsidiaries; and (ii) for purposes of Sections 3.2(g) and 6.3(a), in no
\nevent shall changes in the market prices of portfolio securities owned by Parent
\nor its subsidiaries be deemed to be a “material adverse change” or to have a
\n“material adverse effect” with respect to Parent or its subsidiaries;<\/p>\n
(c) “person” means an individual, corporation, partnership, joint
\nventure, association, trust, unincorporated organization or other entity; and<\/p>\n
(d) a “subsidiary” of any person means another person, an amount of
\nthe voting securities, other voting ownership or voting partnership interests of
\nwhich is sufficient to elect at least a majority of its board of directors or
\nother governing body (or, if there are no such voting interests, 50% or more of
\nthe equity interest of which) is owned directly or indirectly by such first
\nperson.<\/p>\n
8.4 Interpretation. A reference made in this Agreement to a Section,
\n ————–
\nExhibit or Schedule, shall be to a Section of, or an Exhibit or Schedule to,
\nthis Agreement unless otherwise indicated. The table of contents and headings
\ncontained in this Agreement are for reference purposes only and shall not affect
\nthe meaning or interpretation of this Agreement. Whenever the words “include,”
\n“includes” or “including” are used in this Agreement, they shall be deemed to be
\nfollowed by the words “without limitation.”<\/p>\n
8.5 Counterparts. This Agreement may be executed in one or more
\n ————
\ncounterparts, all of which shall be considered one and the same agreement and
\nshall become effective when one or more counterparts have been signed by each of
\nthe parties and delivered to the other parties.<\/p>\n
-36-<\/p>\n
8.6 Entire Agreement; No Third-party Beneficiaries. This Agreement
\n ———————————————-
\nconstitutes the entire agreement, and supersedes all prior agreements and
\nunderstandings, both written and oral, among the parties with respect to the
\nsubject matter of this Agreement, other than the Confidentiality Agreement dated
\nOctober 4, 1996 between Parent and the Company. Except as provided in Section
\n5.6(b), this Agreement is not intended to confer upon any person other than the
\nparties any rights or remedies.<\/p>\n
8.7 Governing Law. This Agreement shall be governed by, and construed in
\n ————-
\naccordance with, the laws of the State of Delaware regardless of the laws that
\nmight otherwise govern under applicable principles of conflicts of laws thereof.<\/p>\n
8.8 Assignment. Neither this Agreement nor any of the rights, interests
\n ———-
\nor obligations under this Agreement shall be assigned, in whole or in part, by
\noperation of law or otherwise, by any of the parties without the prior written
\nconsent of the other parties. Subject to the preceding sentence, this Agreement
\nwill be binding upon, inure to the benefit of, and be enforceable by, the
\nparties and their respective successors and assigns.<\/p>\n
8.9 Enforcement. The parties agree that irreparable damage would occur
\n ———–
\nin the event that any of the provisions of this Agreement were not performed in
\naccordance with their specific terms or were otherwise breached. It is
\naccordingly agreed that the parties shall be entitled to an injunction or
\ninjunctions to prevent breaches of this Agreement and to enforce specifically
\nthe terms and provisions of this Agreement in any court of the State of Delaware
\nor of the United States located in the State of Delaware in the event any
\ndispute arises out of this Agreement or any of the transactions contemplated by
\nthis Agreement, and each party (a) it will not attempt to deny or defeat
\npersonal jurisdiction or venue in any such court by motion or other request for
\nleave from any such court and (b) it will not bring any action relating to this
\nAgreement or any of the transactions contemplated by this Agreement in any court
\nother than any such court.<\/p>\n
8.10 Severability. Whenever possible, each provision or portion of any
\n ————
\nprovision of this Agreement will be interpreted in such manner as to be
\neffective and valid under applicable law but if any provision or portion of any
\nprovision of this Agreement is held to be invalid, illegal or unenforceable in
\nany respect under any applicable law or rule in any jurisdiction, such
\ninvalidity, illegality or unenforceability will not affect any other provision
\nor portion of any provision in such jurisdiction, and this Agreement will be
\nreformed, construed and enforced in such jurisdiction as if such invalid,
\nillegal or unenforceable provision or portion of any provision had never been
\ncontained herein, so long as the economic and legal substance of the
\ntransactions contemplated hereby are not affected in a manner materially adverse
\nto any party hereto.<\/p>\n
-37-<\/p>\n
IN WITNESS WHEREOF, Parent, Sub, and the Company have caused this
\nAgreement to be signed by their respective officers thereunto duly authorized,
\nall as of the date first written above.<\/p>\n
Berkshire Hathaway Inc.<\/p>\n
By: \/s\/ Warren E. Buffett
\n ______________________________<\/p>\n
Its: Chairman
\n _____________________________<\/p>\n
NY Acquisition Sub Inc.<\/p>\n
By: \/s\/ Warren E. Buffett
\n ______________________________<\/p>\n
Its: Chairman
\n _____________________________<\/p>\n
FlightSafety International
\n Inc.<\/p>\n
By: \/s\/ Albert L. Ueltschi
\n ______________________________<\/p>\n
Its: Chairman
\n _____________________________<\/p>\n
-38-<\/p>\n
EXHIBIT A<\/p>\n
FORM OF COMPANY AFFILIATE LETTER<\/p>\n
Gentlemen:<\/p>\n
The undersigned, a holder of shares of Common Stock, par value $.10
\nper share (“Company Stock”), of FlightSafety International Inc., a New York
\ncorporation (the “Company”), is entitled to receive in connection with the
\nmerger (the “Merger”) of the Company with NY Acquisition Sub Inc., a New York
\ncorporation (“Sub”), securities (the “Parent Securities”) of Berkshire Hathaway
\nInc., a Delaware corporation (“Parent”). The undersigned acknowledges that the
\nundersigned may be deemed an “affiliate” of the Company within the meaning of
\nRule 145 (“Rule 145”) promulgated under the Securities Act of 1933, as amended
\n(the “Act”), although nothing contained here should be construed as an admission
\nof such fact.<\/p>\n
If the undersigned were an affiliate under the Act, the undersigned’s
\nability to sell, assign or transfer the Parent Securities received by the
\nundersigned in exchange for any shares of Company Stock pursuant to the Merger
\nmay be restricted unless such transaction is registered under the Act or an
\nexemption from such registration is available. The undersigned understands that
\nsuch exemptions are limited and the undersigned has obtained advise of counsel
\nas to the nature and conditions of such exemptions, including information with
\nrespect to the applicability to the sale of such securities of Rules 144 and
\n145(d) promulgated under the Act.<\/p>\n
The undersigned hereby represents to and covenants with the Company,
\nSub, and Parent that the undersigned will not sell, assign or transfer any of
\nthe Parent Securities received by the undersigned in exchange for shares of
\nCompany Stock pursuant to the Merger except (i) pursuant to an effective
\nregistration statement under the Act, (ii) in conformity with the volume and
\nother limitations of Rule 145 or (iii) in a transaction which, in the opinion of
\nindependent counsel reasonably satisfactory to Parent or as described in a “no-
\naction” or interpretive letter from the Staff of the Securities and Exchange
\nCommission (the “SEC”), is not required to be registered under the Act.<\/p>\n
In the event of a sale or other disposition by the undersigned of
\nParent Securities pursuant to Rule 145, the undersigned will supply Parent with
\nevidence of compliance with such Rule, in the form of a letter in the form of
\nAnnex I hereto. The undersigned understands that Parent may instruct its
\ntransfer agent to withhold the transfer of any Parent Securities disposed of by
\nthe undersigned, but that upon receipt of such evidence of compliance the
\ntransfer agent shall effectuate the transfer of the Parent Securities sold as
\nindicated in the letter.<\/p>\n
The undersigned acknowledges and agrees that appropriate legends will
\nbe placed on certificates representing Parent Securities received by the
\nundersigned in the Merger or held by a transferee thereof, which legends will be
\nremoved by delivery of substitute certificates upon receipt of an opinion in
\nform and substance reasonably satisfactory to Parent from<\/p>\n
39<\/p>\n
independent counsel reasonably satisfactory to Parent to the effect that such
\nlegends are no longer required for purposes of the Act.<\/p>\n
The undersigned acknowledges that (i) the undersigned has carefully
\nread this letter and understands the requirements hereof and the limitations
\nimposed upon the distribution, sale, transfer or other disposition of Parent
\nSecurities and (ii) the receipt by Parent of this letter is an inducement and a
\ncondition to Parent’s obligations to consummate the Merger.<\/p>\n
Very truly yours,<\/p>\n
Dated:<\/p>\n
40<\/p>\n
ANNEX I
\n TO EXHIBIT A<\/p>\n
[NAME] [DATE]<\/p>\n
On _______________ the undersigned sold the securities (“Securities”)
\nof Berkshire Hathaway Inc. (“Parent”) described below in the space provided for
\nthat purpose (the “Securities”). The Securities were received by the
\nundersigned in connection with the merger of FlightSafety International Inc.
\nwith and into NY Acquisition Sub Inc., a subsidiary of Berkshire Hathaway.<\/p>\n
Based upon the most recent report or statement filed by Parent with
\nthe Securities and Exchange Commission, the Securities sold by the undersigned
\nwere within the prescribed limitations set forth in paragraph (e) of Rule 144
\npromulgated under the Securities Act of 1933, as amended (the “Act”).<\/p>\n
The undersigned hereby represents that Securities were sold in
\n“brokers’ transactions” within the meaning of Section 4(4) of the Act or in
\ntransactions directly with a “market maker” as that term is defined in Section
\n3(a)(38) of the Securities Exchange Act of 1934, as amended. The undersigned
\nfurther represents that the undersigned has not solicited or arranged for the
\nsolicitation of orders to buy the Securities, and that the undersigned has not
\nmade any payment in connection with the offer or sale of the Securities to any
\nperson other than to the broker who executed the order in respect of such sale.<\/p>\n
Very truly yours,<\/p>\n
[Space to be provided for description of securities]<\/p>\n
41<\/p>\n
EXHIBIT B<\/p>\n
CONTINUITY OF INTEREST AGREEMENT<\/p>\n
Berkshire Hathaway Inc., a Delaware corporation (“Parent”), NY
\nAcquisition Sub Inc., a New York corporation and a direct wholly-owned
\nsubsidiary of Parent (“Sub”) and each of the undersigned shareholders (each, a
\n“Shareholder” and collectively, the “Shareholders”) of FlightSafety
\nInternational Inc., a New York corporation (the “Company”), hereby enter into
\nthis Agreement on [DATE] for the purposes hereinafter set forth (collectively,
\nParent, Sub and the Shareholders are referred to as the “Parties”).<\/p>\n
WHEREAS, Parent, Sub and the Company entered into an Agreement and
\nPlan of Merger dated as of October 4, 1996 (the “Merger Agreement”);<\/p>\n
WHEREAS, pursuant to the Merger Agreement, Company will merge (the
\n“Merger”) with and into Sub with Sub as the surviving corporation in the Merger
\nand pursuant to such Merger, it is intended that each Shareholder will surrender
\nall of such Shareholder’s shares of Company Common Stock in exchange for Shares
\nof Class A Stock of Parent and\/or Class B Stock of Parent (collectively, “Parent
\nShares”);<\/p>\n
WHEREAS, the Parties wish to take certain steps to qualify the Merger
\nas a tax-free reorganization within the meaning of Section 368(a) of the
\nInternal Revenue Code of 1986, as amended (the “Code”);<\/p>\n
NOW, THEREFORE, the Parties agree as follows:<\/p>\n
(a) Each Shareholder has all necessary power and authority to enter
\ninto and perform all of such Shareholder’s obligations hereunder. The
\nexecution, delivery and performance of this Agreement by such Shareholder will
\nnot violate any other agreement to which such Shareholder is a party, including
\nany voting agreement, shareholders’ agreement, trust agreement or voting trust.
\nThis Agreement has been duly and validly executed and delivered by such
\nShareholder and constitutes a valid and binding agreement of such Shareholder,
\nenforceable against such Shareholder in accordance with its terms.<\/p>\n
(b) Each Shareholder is the beneficial owner or record holder of the
\nnumber of shares set forth on Schedule 1 attached hereto and, as of the date
\nhereof, the shares listed on Schedule 1, with respect to each Shareholder,
\nconstitute all the shares of Company Common Stock owned of record or
\nbeneficially by such Shareholder. Each Shareholder represents that such
\nShareholder has not purchased, sold, exchanged, transferred by gift or otherwise
\ndisposed of shares of Company Common Stock prior to the date hereof either in
\ncontemplation of or as part of the Merger or otherwise.<\/p>\n
(c) Each Shareholder represents that such Shareholder does not have
\nany plan or intention to sell, exchange, transfer by gift or otherwise dispose
\nof (including by transactions which would have the ultimate economic effect of a
\ndisposition including, but<\/p>\n
B-1<\/p>\n
not limited to, puts, short-sales and equity swap type of arrangements)
\n(collectively, “dispose” or “disposition”) any Parent Shares to be received by
\nsuch Shareholder pursuant to the Merger.<\/p>\n
(d) Each Shareholder further agrees that for a period of two (2) years
\nafter the Merger (the “Post-Merger Continuity Period”), such Shareholder will
\nnot sell, exchange, transfer by gift or otherwise dispose of (including by
\ntransactions which would have the ultimate economic effect of a disposition
\nincluding, but not limited to, puts, short-sales and equity swap type of
\narrangements) any of the Parent Shares that such Shareholder receives in
\nexchange for shares of Company Common Stock pursuant to the Merger; provided,
\n ——–
\nhowever, each Shareholder (or the estate of such Shareholder) is expressly
\n– ——-
\npermitted to transfer Parent Shares to beneficiaries, heirs or legatees upon
\nsuch Shareholder’s death, or to a “grantor” trust created for such Shareholder’s
\nbenefit in which such Shareholder is treated as the owner pursuant to Sections
\n671 through 678 of the Code. Notwithstanding this paragraph 3, each Shareholder
\nmay, prior to the end of the Post-Merger Continuity Period, sell, exchange,
\ntransfer by gift or otherwise dispose of Parent Shares that such Shareholder
\nreceives pursuant to the Merger, if, prior to the date of such disposition, the
\nShareholder obtains the written opinion of Skadden, Arps, Slate, Meagher & Flom
\n(“Skadden Arps”) (which opinion will specifically set forth the facts and
\nanalysis forming the basis of such opinion), which opinion is reasonably
\nsatisfactory to Munger, Tolles & Olson (“Munger Tolles”), that such disposition
\nwill not prevent such Parent Shares from qualifying as stock that satisfied the
\n“continuity of interest” requirement under Section 368 of the Code, generally on
\nthe ground that the Shareholder had no intent to dispose of such Parent Shares
\nat the time of the Merger and that the Shareholder’s decision to dispose of such
\nParent Shares was the result of an unanticipated change in circumstances
\nsubsequent to the Merger, or otherwise.<\/p>\n
(e) Each Shareholder agrees that, during the Post-Merger Continuity
\nPeriod, such Shareholder will give notice to Parent, Skadden Arps and Munger
\nTolles at least 30 days prior to any proposed disposition of Parent Shares
\nreceived pursuant to the Merger, which notice shall describe (i) the number of
\nParent Shares that will be subject to the proposed disposition, and (ii) the
\nmanner of such disposition.<\/p>\n
(f) This Agreement shall be binding upon and inure solely to the
\nbenefit of each party hereto and their respective successors, assigns, heirs,
\nexecutors, administrators and other legal representatives. Nothing in this
\nAgreement, express or implied, is intended to confer upon any other person any
\nrights or remedies of any nature whatsoever under or by reason of this
\nAgreement.<\/p>\n
(g) This Agreement shall not be modified, amended, altered or
\nsupplemented except by a written agreement executed by all of the Parties
\nhereto. A Shareholder requesting the written opinion of Skadden, Arps to
\ndispose of Parent Shares, agrees to bear and pay all fees and expenses of
\nSkadden Arps and Munger Tolles.<\/p>\n
(h) Each Shareholder is entering this Agreement to enable Skadden Arps
\nand Munger Tolles to opine that the Merger constitutes a reorganization within
\nthe meaning of Section 368(a) of the Code, and each Shareholder agrees that both
\nSkadden Arps and Munger Tolles may rely upon this Agreement in rendering their
\nopinions.<\/p>\n
B-2<\/p>\n
(i) All notices to Parent shall be sent to :<\/p>\n
Berkshire Hathaway Inc .
\n 1440 Kiewit Plaza
\n Omaha, Nebraska 68131<\/p>\n
(j) All notices to Skadden Arps should be sent to:<\/p>\n
Barnet Phillips, IV
\n Skadden, Arps, Slate, Meagher & Flom
\n 919 Third Avenue
\n New York, New York 10022<\/p>\n
(k) All notices to Munger Tolles should be sent to:<\/p>\n
Stephen Rose
\n Munger, Tolles & Olson
\n 355 South Grand Avenue
\n Los Angeles, California 90071<\/p>\n
IN WITNESS WHEREOF, the Parties hereto have caused this
\nAgreement to be duly executed on the date first set forth above.<\/p>\n
Albert L. Ueltschi<\/p>\n
___________________________
\n Name:<\/p>\n
ALU\/Ueltschi Enterprises
\n Partnership<\/p>\n
By:
\n ___________________________<\/p>\n
Its: ___________________________<\/p>\n
___________________________
\n Name:<\/p>\n
Berkshire Hathaway Inc.<\/p>\n
By: ___________________________
\n Name:<\/p>\n
Its: ___________________________<\/p>\n
B-3<\/p>\n
NY Acquisition Sub Inc.<\/p>\n
By: ___________________________<\/p>\n
Its: ___________________________<\/p>\n
FlightSafety International Inc.<\/p>\n
By: ___________________________<\/p>\n
Its: ___________________________<\/p>\n
[Additional shareholder signatures]<\/p>\n
B-4<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6889],"corporate_contracts_industries":[9446],"corporate_contracts_types":[9622,9626],"class_list":["post-43033","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-berkshire-hathaway-inc","corporate_contracts_industries-insurance__property","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43033","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43033"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43033"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43033"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43033"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}