Document/Exhibit Description Pages Size
1: 10-K Annual Report 27 106K
2: EX-2 Agreement and Plan of Merger 75 214K
3: EX-4.I Form of 6-7/8% Notes Due November 1, 2006 4 23K
4: EX-10.F Mdc Senior Executive Financial/Legal Services Plan 4 13K
5: EX-10.G Deferred Comp. Plan for Nonemployee Directors 7 29K
6: EX-10.L Employment Agreement 12 46K
7: EX-10.M Restricted Stock Award Agreement 3 18K
8: EX-10.N Form of Termination Benefits Agreement 21 95K
9: EX-10.O Settlement Agreement 9 39K
10: EX-10.P Settlement Agreement 10 40K
11: EX-10.S Form of 1997 Pars Agreement-Service Based 4 20K
12: EX-10.T Form of 1997 Pars Agreement - Performance Based 5 23K
13: EX-11 Computation of Earnings Per Share 1 7K
14: EX-12 Computation of Ratio of Earnings to Fixed Charges 1 9K
15: EX-13 Annual Report to Shareholders 69 254K
16: EX-21 Subsidiaries 1 8K
17: EX-23 Consents of Independent Auditors 2 13K
18: EX-27 Financial Data Schedule 1 9K
Exhibit (2)
Agreement and Plan of Merger, Dated as of December 14, 1996,
Among The Boeing Company, West Acquisition Corp., and
McDonnell Douglas Corporation.
==============================================================================
AGREEMENT AND PLAN OF MERGER
among
THE BOEING COMPANY
WEST ACQUISITION CORP.
and
MCDONNELL DOUGLAS CORPORATION
Dated as of December 14, 1996
==============================================================================
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
page
----
ARTICLE I
The Merger
1.1. The Merger . . . . . . . . . . . . . . . . . . 2
1.2. Closing . . . . . . . . . . . . . . . . . . . 2
1.3. Effective Time . . . . . . . . . . . . . . . . 2
1.4. Effects of the Merger . . . . . . . . . . . . 2
1.5. Charter and By-laws . . . . . . . . . . . . . 2
1.6. Directors . . . . . . . . . . . . . . . . . . 3
ARTICLE II
EFFECT OF THE MERGER ON THE
STOCK OF THE CONSTITUENT COMPANIES;
EXCHANGE OF CERTIFICATES
2.1. Effect on Stock . . . . . . . . . . . . . . . 3
2.2. Exchange of Certificates . . . . . . . . . . . 4
ARTICLE III
STOCKHOLDER APPROVAL; BOARD
OF DIRECTORS OF Boeing
3.1. Stockholder Approval . . . . . . . . . . . . . 9
3.2. Board of Directors of Boeing . . . . . . . . . 10
3.3. Officers of Boeing . . . . . . . . . . . . . . 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MDC
4.1. Organization, Qualification, Etc. . . . . . . 11
4.2. Stock . . . . . . . . . . . . . . . . . . . . 12
4.3. Corporate Authority Relative to this
Agreement; No Violation . . . . . . . . . . . 12
4.4. Reports and Financial Statements . . . . . . . 14
4.5. No Undisclosed Liabilities . . . . . . . . . . 15
4.6. No Violation of Law . . . . . . . . . . . . . 15
4.7. Environmental Laws and Regulations . . . . . . 15
4.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements . . . . 16
4.9. Absence of Certain Changes or Events . . . . . 16
4.10. Investigations; Litigation . . . . . . . . . . 16
4.11. Joint Proxy Statement; Registration Statement;
Other information . . . . . . . . . . . . . . 17
4.12. MDC Rights Plan . . . . . . . . . . . . . . . 17
4.13. Lack of Ownership of Boeing Common Stock . . . 18
4.14. Tax Matters . . . . . . . . . . . . . . . . . 18
4.15. Opinion of Financial Advisor . . . . . . . . . 20
4.16. Required Vote of MDC Stockholders . . . . . . 20
4.17. Pooling of Interests . . . . . . . . . . . . . 20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF Boeing and SUB
5.1. Organization, Qualification, Etc. . . . . . . 21
5.2. Capital Stock . . . . . . . . . . . . . . . . 21
5.3. Corporate Authority Relative to this
Agreement; No Violation . . . . . . . . . . 22
5.4. Reports and Financial Statements . . . . . . . 23
5.5. No Undisclosed Liabilities . . . . . . . . . . 24
5.6. No Violation of Law . . . . . . . . . . . . . 25
5.7. Environmental Laws and Regulations . . . . . . 25
5.8. No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements . . . . 25
5.9. Absence of Certain Changes or Events . . . . . 26
5.10. Investigation; Litigation . . . . . . . . . . 26
5.11. Joint Proxy Statement; Registration
Statement; Other Information . . . . . . . . 26
5.12. Lack of Ownership of MDC Common Stock . . . . 27
5.13. Boeing Rights Plan . . . . . . . . . . . . . . 27
5.14. Tax Matters . . . . . . . . . . . . . . . . . 27
5.15. Opinion of Financial Advisor . . . . . . . . . 28
5.16. Required Vote of Boeing Stockholders . . . . . 28
5.17. Pooling of Interests . . . . . . . . . . . . . 29
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1. Conduct of Business by MDC or Boeing . . . . . 29
6.2. Investigation . . . . . . . . . . . . . . . . 34
6.3. Cooperation . . . . . . . . . . . . . . . . . 35
6.4. Affiliate Agreements . . . . . . . . . . . . . 36
6.5. Employee Stock Options; Incentive and
Benefit Plans . . . . . . . . . . . . . . . . 37
6.6. Filings; Other Action . . . . . . . . . . . . 38
6.7. Further Assurances . . . . . . . . . . . . . . 39
6.8. Takeover Statute . . . . . . . . . . . . . . . 39
6.9. No Solicitation . . . . . . . . . . . . . . . 40
6.10. Public Announcements . . . . . . . . . . . . . 41
6.11. Indemnification and Insurance . . . . . . . . 41
6.12. Accountants' "Comfort" Letters . . . . . . . . 41
6.13. Additional Reports . . . . . . . . . . . . . . 42
6.14. Co-Ordination of Dividends . . . . . . . . . . 42
ARTICLE VII
CONDITIONS TO THE MERGER
7.1. Conditions to Each Party's Obligation
to Effect the Merger . . . . . . . . . . . . 42
7.2. Conditions to Obligations of MDC
to Effect in the Merger . . . . . . . . . . . 44
7.3. Conditions to Obligations of Boeing
to Effect the Merger . . . . . . . . . . . . 45
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
8.1. Termination of Abandonment . . . . . . . . . . 45
8.2. Termination Fee . . . . . . . . . . . . . . . 47
8.3. Amendment or Supplement . . . . . . . . . . . 48
8.4. Extension of Time, Waiver, Etc. . . . . . . . 48
ARTICLE IX
MISCELLANEOUS
9.1. No Survival of Representations
and Warranties . . . . . . . . . . . . . . . 49
9.2. Expenses . . . . . . . . . . . . . . . . . . . 49
9.3. Counterparts; Effectiveness . . . . . . . . . 49
9.4. Governing Law . . . . . . . . . . . . . . . . 49
9.5. Notices . . . . . . . . . . . . . . . . . . . 50
9.6. Assignment; Binding Effect . . . . . . . . . . 50
9.7. Severability . . . . . . . . . . . . . . . . . 51
9.8. Enforcement of Agreement . . . . . . . . . . . 51
9.9. Miscellaneous . . . . . . . . . . . . . . . . 51
9.10. Headings . . . . . . . . . . . . . . . . . . . 51
9.11. Subsidiaries; Significant
Subsidiaries; Affiliates . . . . . . . . . . 52
9.12. Finders or Brokers . . . . . . . . . . . . . . 52
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 14,
1996 (this "Agreement"), is among THE BOEING COMPANY ("Boeing"), WEST
ACQUISITION CORP. ("Sub") and MCDONNELL DOUGLAS CORPORATION ("MDC").
WHEREAS, MDC is a corporation duly organized and existing under
the laws of the State of Maryland, Boeing is a corporation duly organized and
existing under the laws of the State of Delaware and Sub is a corporation duly
organized and existing under the laws of the State of Maryland;
WHEREAS, the respective Boards of Directors of Boeing, Sub and
MDC have approved and have declared advisable the merger of Sub with and into
MDC (the "Merger"), upon the terms and subject to the conditions set forth
herein, whereby each issued and outstanding share of MDC Common Stock (as
defined in Section 4.2) not owned directly by MDC or Boeing will be converted
into .65 of a share of Boeing Common Stock (as defined in Section 5.2), and have
determined that the Merger and the other transactions contemplated hereby are
consistent with, and in furtherance of, their respective business strategies and
goals;
WHEREAS, the parties desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that
the Merger will qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for financial accounting purposes, it is intended that
the Merger will be accounted for as a pooling of interests transaction.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
2
ARTICLE I
The Merger
Section 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Maryland
General Corporation Law (the "MGCL"), Sub shall be merged with and into MDC at
the Effective Time (as defined in Section 1.3). Following the Effective Time,
the separate corporate existence of Sub shall cease and MDC shall be the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub in accordance with the MGCL.
Section 1.2. Closing. The closing of the Merger (the "Closing")
will take place at 10:00 a.m. on a date to be specified by the parties (the
"Closing Date"), which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VII, unless
another time or date is agreed to by the parties hereto. The Closing will be
held at such location in the City of New York as is agreed to by the parties
hereto.
Section 1.3. Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on or after the Closing Date, the parties
shall file articles of merger or other appropriate documents (in any such case,
the "Articles of Merger") executed in accordance with the relevant provisions of
the MGCL and shall make all other filings or recordings required under the MGCL.
The Merger shall become effective at such time as the State Department of
Assessments and Taxation of Maryland accepts the Articles of Merger for record,
or at such subsequent date or time as Boeing and MDC shall agree and specify in
the Articles of Merger (the time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
Section 1.4. Effects of the Merger. The Merger shall have the
effects set forth in Section 3-114 of the MGCL.
Section 1.5. Charter and By-laws. A. The charter of MDC, as
in effect immediately prior to the execution of this Agreement, shall be the
charter of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
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B. The by-laws of MDC, as in effect immediately prior to the
execution of this Agreement, shall be the by-laws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
Section 1.6. Directors. The directors of Sub at the Effective
Time shall be the directors of the Surviving Corporation until the next annual
meeting of stockholders of the Surviving Corporation (or their earlier
resignation or removal) and until their respective successors are duly elected
and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Stock of the
Constituent Corporations; Exchange of Certificates
Section 2.1. Effect on Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of Sub, MDC or the
holders of any securities of MDC or Sub:
(a) Cancelation of MDC-Owned Stock and Boeing-Owned Stock. Each
share of MDC Common Stock that is owned directly by MDC or by Boeing shall
automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.
(b) Conversion of MDC Common Stock. Subject to Section 2.2(e),
each issued and outstanding share of MDC Common Stock (other than shares to be
canceled in accordance with Section 2.1(a)) shall be converted into .65 of a
fully paid and nonassessable share of Boeing Common Stock, together with the
associated Boeing Right (as defined in Section 5.2; unless the context otherwise
requires, all references herein to Boeing Common Stock include the associated
Boeing Rights) (the "Merger Consideration"). As of the Effective Time, all such
shares of MDC Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of MDC Common Stock (the "Certificates") shall
cease to have any rights with respect thereto, except theright to receive (i)
certificates representing the number of whole shares of
Boeing Common Stock into which such shares have been converted ("Boeing
Certificates"), (ii) certain dividends
4
and other distributions in accordance with Section 2.2(c) and (iii) cash in lieu
of fractional shares of Boeing Common Stock in accordance with Section 2.2(e),
without interest.
(c) Conversion of Common Stock of Sub. Each issued and
outstanding share of common stock, par value $1.00 per share, of Sub shall be
converted into one validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation.
Section 2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Boeing shall
enter into an agreement with such bank or trust company as may be designated by
Boeing and as shall be reasonably satisfactory to MDC (the "Exchange Agent"),
which shall provide that Boeing shall deposit with the Exchange Agent as of the
Effective Time, for the benefit of the holders of shares of MDC Common Stock,
for exchange in accordance with this Article II, through the Exchange Agent,
Boeing Certificates representing the number of whole shares of Boeing Common
Stock (such shares of Boeing Common Stock, together with any dividends or
distributions with respect thereto with a record date after the Effective Time,
any Excess Shares (as defined in Section 2.2(e)) and any cash (including cash
proceeds from the sale of the Excess Shares) payable in lieu of any fractional
shares of Boeing Common Stock being hereinafter referred to as the "Exchange
Fund") issuable pursuant to Section 2.1 in exchange for outstanding shares of
MDC Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate whose shares were converted into the Merger Consideration, pursuant
to Section 2.1, (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Boeing and MDC may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancelation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a Boeing Certificate representing that number of
whole shares of Boeing Common Stock
5
which such holder has the right to receive pursuant to the provisions of this
Article II, certain dividends or other distributions in accordance with Section
2.2(c) and cash in lieu of any fractional share in accordance with Section
2.2(e), and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of MDC Common Stock which is not registered in
the transfer records of MDC, a Boeing Certificate representing the proper number
of shares of Boeing Common Stock may be issued to a person other than the person
in whose name the Certificate so surrendered is registered if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such issuance shall pay any transfer or other nonincome taxes
required by reason of the issuance of shares of Boeing Common Stock to a person
other than the registered holder of such Certificate or establish to the
satisfaction of Boeing that such tax has been paid or is not applicable. Until
surrendered as contemplated by thisSection 2.2, each Certificate shall be deemed
at any time after the Effective Time to represent only the right to receive upon
such surrender Boeing Certificates representing the number of whole shares of
Boeing Common Stock into which the shares of MDC Common Stock formerly
represented by such Certificate have been converted, certain dividends or other
distributions in accordance with Section 2.2(c) and cash in lieu of any
fractional share in accordance with Section 2.2(e). No interest will be paid or
will accrue on any cash payable to holders of Certificates pursuant to the
provisions of this Article II.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Boeing Common Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Boeing Common Stock
represented thereby, and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.2(e), and all such dividends,
other distributions and cash in lieu of fractional shares of Boeing Common Stock
shall be paid by Boeing to the Exchange Agent and shall be included in the
Exchange Fund, in each case until the surrender of such Certificate in
accordance with this Article II. Subject to the effect of applicable escheat or
similar laws, following surrender of any such Certificate there shall be paid to
the holder of the Boeing Certificate representing whole shares of Boeing Common
Stock issued in exchange therefor, without interest, (i) at the
6
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such whole
shares of Boeing Common Stock and the amount of any cash payable in lieu of a
fractional share of Boeing Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and (ii) at the appropriate payment date, the amount
of dividends or other distributions with a record date after the Effective Time
but prior to such surrender and with a payment date subsequent to such surrender
payable with respect to such whole shares of Boeing Common Stock. Boeing shall
make available to the Exchange Agent cash for these purposes.
(d) No Further Ownership Rights in MDC Common Stock. All shares
of Boeing Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this Article II (including any cash paid pursuant
to this Article II) shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of MDC Common Stock
theretofore represented by such Certificates, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have been authorized or
made by MDC on such shares of MDC Common Stock which remain unpaid at the
Effective Time, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of MDC Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
the Exchange Agent for any reason, they shall be canceled and exchanged as
provided in this Article II, except as otherwise provided by law.
(e) No Fractional Shares. (i) No Boeing Certificates or scrip
representing fractional shares of Boeing Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution of Boeing
shall relate to such fractional share interests and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Boeing.
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent will determine the excess of (A) the number of whole shares
of Boeing Common Stock delivered to the Exchange Agent by Boeing pursuant to
Section 2.2(a) over (B) the aggregate number of whole shares
7
of Boeing Common Stock to be distributed to holders of MDC Common Stock pursuant
to Section 2.2(b) (such excess being herein called the "Excess Shares").
Following the Effective Time, the Exchange Agent will, on behalf of former
stockholders of MDC, sell the Excess Shares at then-prevailing prices on the New
York Stock Exchange, Inc. (the "NYSE"), all in the manner provided in Section
2.2(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent will
be executed on the NYSE through one or more member firms of the NYSE and will be
executed in round lots to the extent practicable. The Exchange Agent will use
reasonable efforts to complete the sale of the Excess Shares as promptly
following the Effective Time as, in the Exchange Agent's sole judgment, is
practicable consistent with obtaining the best execution of such sales in light
of prevailing market conditions. Until the net proceeds of such sale or sales
have been distributed to the holders of MDC Common Stock, the Exchange Agent
will hold such proceeds in trust for the holders of MDC Common Stock (the
"Common Shares Trust"). The Surviving Corporation will pay all commissions,
transfer taxes and other out-of-pocket transaction costs, including the expenses
and compensation of the Exchange Agent incurred in connection with such sale of
the Excess Shares. The Exchange Agent will determine the portion of the Common
Shares Trust to which each holder of MDC Common Stock is entitled, if any, by
multiplying the amount of the aggregate net proceeds comprising the Common
Shares Trust by a fraction, the numerator of which is the amount of the
fractional share interest to which such holder of MDC Common Stock is entitled
(after taking into account all shares of MDC Common Stock held at the Effective
Time by such holder) and the denominator of which is the aggregate amount of
fractional share interests to which all holders of MDC Common Stock are
entitled.
(iv) Notwithstanding the provisions of Section 2.2(e)(ii) and
(iii), the Surviving Corporation may elect at its option, exercised prior to the
Effective Time, in lieu of the issuance and sale of Excess Shares and the making
of the payments hereinabove contemplated, to pay each holder of MDC Common Stock
an amount in cash equal to the product obtained by multiplying (A) the
fractional share interest to which such holder (after taking into account all
shares of MDC Common Stock held at the Effective Time by such holder) would
otherwise be entitled by (B) the closing price for a share of Boeing Common
Stock as reported on the NYSE Composite Transaction Tape (as reported in The
Wall Street Journal,
8
or, if not reported thereby, any other authoritative source) on the Closing
Date, and, in such case, all references herein to the cash proceeds of the sale
of the Excess Shares and similar references will be deemed to mean and refer to
the payments calculated as set forth in this Section 2.2(e)(iv).
(v) As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of MDC Common Stock with respect to any
fractional share interests, the Exchange Agent will make available such amounts
to such holders of MDC Common Stock subject to and in accordance with the terms
of Section 2.2(c).
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Boeing, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Boeing for payment of their claim for
Merger Consideration or shares, any cash in lieu of fractional shares of Boeing
Common Stock and any dividends or distributions with respect to Boeing Common
Stock.
(g) No Liability. None of Boeing, MDC, Sub or the Exchange Agent
shall be liable to any person in respect of any shares of Boeing Common Stock
(or dividends or distributions with respect thereto) or cash from the Exchange
Fund in each case delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate shall not have
been surrendered prior to seven years after the Effective Time (or immediately
prior to such earlier date on which any Merger Consideration, any cash payable
to the holder of such Certificate pursuant to this Article II or any dividends
or distributions payable to the holder of such Certificate would otherwise
escheat to or become the property of any governmental body or authority) any
such Merger Consideration or cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Boeing, on a daily basis.
9
Any interest and other income resulting from such investments shall be paid to
Boeing.
(i) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration and, if applicable, any cash in lieu of
fractional shares, and unpaid dividends and distributions on shares of Boeing
Common Stock deliverable in respect thereof, pursuant to this Agreement.
ARTICLE III
Stockholder Approval; Board
of Directors of Boeing
Section 3.1. Stockholder Approval. Subject to the terms and
conditions contained herein, (i) this Agreement shall be submitted for approval
to the holders of shares of MDC Common Stock at a meeting to be duly held for
this purpose by MDC (the "MDC Meeting"), and (ii) the issuance of Boeing Common
Stock in connection with the Merger (the "Share Issuance"), shall be submitted
for approval to the holders of shares of Boeing Common Stock at a meeting to be
duly held for this purpose by Boeing (the "Boeing Meeting"). MDC and Boeing
shall coordinate and cooperate with respect to the timing of such meetings and
shall endeavor to hold such meetings on the same day and as soon as practicable
after the date hereof. MDC and Boeing shall recommend that their respective
stockholders approve such matters and such recommendation shall be contained in
the Joint Proxy Statement (as defined in Section 4.11), except, in the case of
MDC, to the extent that the Board of Directors of MDC shall have withdrawn or
modified its approval or recommendation of this Agreement or the Merger and
terminated this Agreement in accordance with Section 8.1(e). Nothing contained
in the preceding sentence shall prohibit MDC from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act(as defined in Section 4.3)
10
or from making any disclosure to MDC or MDC's stockholders if, in the good faith
judgment of the Board of Directors of MDC, after consultation with outside
counsel, failure so to disclose would be inconsistent with its duties to MDC or
MDC's stockholders under applicable law; provided, however, neither MDC nor its
Board of Directors nor any committee thereof shall, except as permitted by the
preceding sentence, withdraw or modify, or propose publicly to its position with
respect to this Agreement or the Merger or approve or recommend, or propose
publicly to approve or recommend, a Takeover Proposal (as defined in Section
6.9).
Section 3.2. Board of Directors of Boeing. The Board of
Directors of Boeing shall take all action necessary immediately following the
Effective Time to fix the number of directors constituting the Board of
Directors at between 12 and 15 members. The Board of Directors of MDC shall
select from among the current members of the Board of Directors of MDC such
number (rounded up to the next whole number) of individuals acceptable to Boeing
for nomination as directors of Boeing as shall constitute one-third of the total
number of members of the Board of Directors of Boeing immediately following the
Effective Time. If an individual so selected consents to serve as a director,
such individual shall be elected as a director of Boeing (and shall be assigned
to such class of directors such that, after giving effect to the election of all
the directors of MDC to be elected to the Board of Directors of Boeing pursuant
to the preceding sentence and the assignment of each such director to a class,
the directors of MDC elected to the Board of Directors of Boeing shall be
allocated as equally as practicable among the different classes of the Board of
Directors of Boeing), effective as of the Effective Time, for a term expiring at
Boeing's next annual meeting of stockholders following the Effective Time at
which the term of the class to which such director belongs expires, subject to
being renominated as a director at the discretion of Boeing's Board of
Directors.
Section 3.3. Officers of Boeing. Immediately following the
Effective Time, Philip Condit shall be the Chairman of the Board and the Chief
Executive Officer and Harry Stonecipher shall be the President and the Chief
Operating Officer of Boeing.
11
ARTICLE IV
Representations and Warranties of MDC
MDC represents and warrants to Boeing and Sub that:
Section 4.1. Organization, Qualification, Etc. MDC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland and has the corporate power and authority to own its
properties and assets and to carry on its business as it is now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not, individually or
in the aggregate, have a Material Adverse Effect (as hereinafter defined) on
MDC. As used in this Agreement, any reference to any state of facts, event,
change or effect having a "Material Adverse Effect" on or with respect to MDC or
Boeing, as the case may be, means such state of facts, event, change or effect
that has had, or would reasonably be expected to have, a material adverse effect
on the business, results of operations or financial condition of MDC and its
Subsidiaries (as defined in Section 9.11), taken as a whole, or Boeing and its
Subsidiaries, taken as a whole, as the case may be. The copies of MDC's charter
and by-laws which have been delivered to Boeing are complete and correct and in
full force and effect on the date hereof. Each of MDC's Significant Subsidiaries
(as defined in Section 9.11) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization, has the power and authority to own its properties and to carry on
its business as it is now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which the ownership of its
property or the conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be in good standing
would not, individually or in the aggregate, have a Material Adverse Effect on
MDC. All the outstanding shares of capital stock of, or other ownership
interests in, MDC's Significant Subsidiaries are validly issued, fully paid and
non-assessable and are owned by MDC, directly or indirectly, free and clear of
all liens, claims, charges or encumbrances, except for restrictions contained in
12
credit agreements and similar instruments to which MDC is a party under which no
event of default has occurred or arisen. There are no existing options, rights
of first refusal, preemptive rights, calls or commitments of any character
relating to the issued or unissued capital stock or other securities of, or
other ownership interests in, any Significant Subsidiary of MDC (other than
rights of first refusal, preemptive rights or similar rights held by MDC with
respect to certain of such Subsidiaries).
Section 4.2. Stock. The authorized stock of MDC consists of
400,000,000 shares of common stock, par value $1.00 per share ("MDC Common
Stock"), and 10,000,000 shares of preferred stock, par value $1.00 per share
("MDC Preferred Stock"), of which 1,000,000 shares have been designated as
Series A Junior Participating Preferred Stock ("MDC Series A Preferred Stock").
As of December 6, 1996, 209,731,625 shares of MDC Common Stock and no shares of
MDC Preferred Stock were issued and outstanding. All the outstanding shares of
MDC Common Stock have been validly issued and are fully paid and non-assessable.
As of December 6, 1996, there were no outstanding subscriptions, options,
warrants, rights or other arrangements or commitments obligating MDC to issue
any shares of its stock other than:
(a) rights to acquire shares of MDC Series A Preferred Stock
pursuant to the Rights Agreement, amended and restated as of May 31, 1996,
between MDC and First Chicago Trust Company of New York (the "MDC Rights Plan");
and
(b) options and other rights to receive or acquire 1,050,479
shares of MDC Common Stock granted on or prior to December 6, 1996, pursuant to
employee incentive or benefit plans, programs and arrangements and non-employee
director plans.
Except for the issuance of shares of MDC Common Stock pursuant
to the options and other rights referred to in clause 4.2(b) and except as
provided for in clause 6.1(a)(ix), since December 6, 1996, no shares of MDC
Common Stock or MDC Preferred Stock have been issued.
Section 4.3. Corporate Authority Relative to this Agreement; No
Violation. MDC has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
13
of this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of MDC and,
except for the approval of its stockholders, no other corporate proceedings on
the part of MDC are necessary to authorize this Agreement and the transactions
contemplated hereby. The Board of Directors of MDC has determined that the
transactions contemplated by this Agreement are in the best interest of MDC and
its stockholders and to recommend to such stockholders that they vote in favor
thereof. This Agreement has been duly and validly executed and delivered by MDC
and, assuming this Agreement constitutes a valid and binding Agreement of the
other parties hereto, this Agreement constitutes a valid and binding agreement
of MDC, enforceable against MDC in accordance with its terms (except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
MDC is not subject to or obligated under any charter, bylaw or contract
provision or any licenses, franchise or permit, or subject to any order or
decree, which would be breached or violated by its executing or, subject to the
approval of its stockholders, carrying out this Agreement, except as otherwise
previously disclosed in writing to Boeing and for any breaches or violations
which would not, individually or in the aggregate, have a Material Adverse
Effect on MDC. Other than in connection with or in compliance with the
provisions of the MGCL, the Securities Act of 1933, as amended (the "Securities
Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), Section 4043 of ERISA (as defined in Section 4.8), the Communications Act
of 1934, as amended (the "Communications Act"), any non-United States
competition, antitrust and investment laws and the securities or blue sky laws
of the various states and other than any necessary approvals of the United
States government or any agencies, departments or instrumentalities thereof
(collectively, the "MDC Required Approvals"), no authorization, consent or
approval of, or filing with, any governmental body or authority is necessary for
the consummation by MDC of the transactions contemplated by this Agreement,
except for such authorizations,consents, approvals or filings, the failure to
obtain or make which would not, individually or in the aggregate, have a
Material Adverse Effect on MDC or substantially impair or delay the consummation
of the transactions contemplated hereby; provided that MDC makes no
14
representation with respect to such of the foregoing as are required by reason
of the regulatory status of Boeing or any of its Subsidiaries or facts
specifically pertaining to any of them.
Section 4.4. Reports and Financial Statements. MDC has
previously furnished to Boeing true and complete copies of:
(a) MDC's Annual Reports on Form 10-K filed with the Securities
and Exchange Commission (the "SEC") for each of the years ended December 31,
1993 through 1995;
(b) MDC's Quarterly Reports on Form 10-Q filed with the SEC for
the quarters ended March 31, June 30 and September 30, 1996;
(c) each definitive proxy statement filed by MDC with the SEC
since December 31, 1993;
(d) each final prospectus filed by MDC with the SEC since
December 31, 1993, except any final prospectus on Form S-8; and
(e) all Current Reports on Form 8-K filed by MDC with the SEC
since December 31, 1995.
Except as previously disclosed in writing to Boeing, as of their
respective dates, such reports, proxy statements and prospectuses (collectively,
the "MDC SEC Reports") (i) complied as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations promulgated thereunder and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements included in the MDC SEC Reports (including any related notes and
schedules) fairly present the financial position of MDC and its consolidated
Subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods or as of the dates then ended (subject, where appropriate,
to normal year-end adjustments), in each case in accordance with past practice
and generally accepted accounting principles in the United States ("GAAP")
consistently applied during the periods involved (except as otherwise disclosed
15
in the notes thereto). Since December 31, 1993, MDC has timely filed all
material reports, registration statements and other filings required to be filed
by it with the SEC under the rules and regulations of the SEC. Notwithstanding
anything to the contrary contained in this Section 4.4, no representation or
warranty is made with respect to matters relating to the consent decree dated
June 24, 1996, between MDC and the SEC, the complaint referred to therein and
the matters at issue or referred to in such complaint.
Section 4.5. No Undisclosed Liabilities. Neither MDC nor any of
its Subsidiaries has any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, except (a) liabilities or obligations
reflected in any of the MDC SEC Reports and (b) liabilities or obligations which
would not, individually or in the aggregate, have a Material Adverse Effect on
MDC.Section 4.6. No Violation of Law. The businesses of MDC and its Subsidiaries
are not being conducted in violation of any law, ordinance or regulation of any
governmental body or authority (provided that no representation or warranty is
made in this Section 4.6 with respect to Environmental Laws (as hereinafter
defined)) except (a) as described in any of the MDC SEC Reports and (b) for
violations or possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect on MDC.
Section 4.7. Environmental Laws and Regulations. Except as
described in any of the MDC SEC Reports, (a) MDC and each of its Subsidiaries is
in material compliance with all applicable federal, state, local and foreign
laws and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) (collectively, "Environmental Laws"),
except for non-compliance which would not, individually or in the aggregate,
have a Material Adverse Effect on MDC, which compliance includes, but is not
limited to, the possession by MDC and its Subsidiaries of material permits and
other governmental authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof; (b) neither MDC nor any of
its Subsidiaries has received written notice of, or, to the knowledge of MDC, is
the subject of, any actions, causes of action, claims, investigations, demands
or notices by any Person alleging liability under or non-compliance with any
16
Environmental Law ("Environmental Claims") which would, individually or in the
aggregate, have a Material Adverse Effect on MDC; and (c) to the knowledge of
MDC, there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
Section 4.8. No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements. Except as described in any of the MDC SEC Reports, all
"employee benefit plans", as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained or contributed to
by MDC or its Subsidiaries are in compliance with all applicable provisions of
ERISA and the Code, and MDC and its Subsidiaries do not have any liabilities or
obligations with respect to any such employee benefit plans, whether or not
accrued, contingent or otherwise, except (a) as described in any of the MDC SEC
Reports or previously disclosed in writing to Boeing and (b) for instances of
non-compliance or liabilities or obligations that would not, individually or in
the aggregate, have a Material Adverse Effect on MDC. Except with respect to (i)
awards granted under the MDC 1994 Performance and Equity Incentive Plan, (ii)
the termination benefit agreements (substantially in the form previously
provided to Boeing) which are in effect on the date hereof or which may be
entered into hereafter in accordance with the approval of the MDC Board prior to
the date hereof (the "Termination Benefit Agreements") and (iii) the Stonecipher
Agreement (as defined in Section 4.14), no employee of MDC will be entitled to
any additional benefits or any acceleration of the time of payment or vesting of
any benefits under any employee incentive or benefit plan, program or
arrangement as a result of the transactions contemplated by this Agreement.
Section 4.9. Absence of Certain Changes or Events. Other than as
disclosed in the MDC SEC Reports or previously disclosed in writing to Boeing,
since December 31, 1995 the businesses of MDC and its Subsidiaries have been
conducted in all material respects in the ordinary course and there has not been
any event, occurrence, development or state of circumstances or facts that has
had, or would have, a Material Adverse Effect on MDC.
17
Section 4.10. Investigations; Litigation. Except as described
in any of the MDC SEC Reports or previously disclosed in writing to Boeing:
(a) no investigation or review by any governmental body or
authority with respect to MDC or any of its Subsidiaries which would,
individually or in the aggregate, have a Material Adverse Effect on MDC is
pending nor has any governmental body or authority notified MDC of an intention
to conduct the same; and
(b) there are no actions, suits or proceedings pending (or, to
MDC's knowledge, threatened) against or affecting MDC or its Subsidiaries, or
any of their respective properties at law or in equity, or before any federal,
state, local or foreign governmental body or authority, which, individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect on MDC.
Section 4.11. Joint Proxy Statement; Registration Statement;
Other Information. None of the information with respect to MDC or its
Subsidiaries to be included in the Joint Proxy Statement or the Registration
Statement (as defined in Section 6.3(a)) will, in the case of the Joint Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
mailing of the Joint Proxy Statement or any amendments or supplements thereto,
and at the time of the MDC Meeting and the Boeing Meeting, or, in the case of
the Registration Statement, at the time it becomes effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by MDC with respect to information supplied in writing by
Boeing or any affiliate of Boeing specifically for inclusion in the Joint Proxy
Statement. The Joint Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
promulgated thereunder. The letters to stockholders, notices of meeting, joint
proxy statement and forms of proxies to be distributed to stockholders in
connection with the Merger, the Share Issuance and any schedules required to be
filed with the SEC in connection therewith are collectively referred to herein
as the "Joint Proxy Statement".
18
Section 4.12. MDC Rights Plan. The Board of Directors of MDC has
approved in writing the acquisition by Boeing of beneficial ownership of voting
securities of MDC and, accordingly, the execution and delivery of this
Agreement, and the consummation of the Merger and the other transactions
contemplated hereby, will not cause (i) Boeing to constitute an "Acquiring
Person" (as such term is defined in the MDC Rights Plan), (ii) a "Distribution
Date" (as such term is defined in the MDC Rights Plan) to occur or (iii) the
rights issued pursuant to the MDC Rights Plan to become exercisable. MDC shall
cause the MDC Rights Plan to be amended such that the "Final Expiration Date"
(as defined in the MDC Rights Plan) shall occur immediately prior to the
Effective Time.
Section 4.13. Lack of Ownership of Boeing Common Stock. Neither
MDC nor any of its Subsidiaries owns any shares of Boeing Common Stock or other
securities convertible into shares of Boeing Common Stock (exclusive of any
shares owned by MDC's employee benefit plans).
Section 4.14. Tax Matters. (a) All federal, state, local and
foreign Tax Returns required to be filed by or on behalf of MDC, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which MDC or any of its Subsidiaries is (i) a member (a "Current MDC Group") or
(ii) has been a member within six years prior to the date hereof but is not
currently a member, but only insofar as any such Tax relates to a taxable period
ending on a date within the last six years (a "Past MDC Group", together with
Current MDC Groups, an "MDC Affiliated Group") have been timely filed, and all
returns filed are complete and accurate except to the extent any failure to file
or any inaccuracies in filed returns would not, individually or in the
aggregate, have a Material Adverse Effect on MDC (it being understood that the
representations made in this Section, to the extent that they relate to Past MDC
Groups, are made to the knowledge of MDC). All Taxes due and owing by MDC, any
Subsidiary of MDC or any MDC Affiliated Group have been paid, or adequately
reserved for, except to the extent any failure to pay or reserve would not,
individually or in the aggregate, have a Material Adverse Effect on MDC. There
is no audit examination, deficiency, refund litigation, proposed adjustment or
matter in controversy with respect to any Taxes due and owing by MDC, any
Subsidiary of MDC or any MDC Affiliated Group which would, individually or in
the aggregate, have a Material Adverse Effect on MDC. All assessments for Taxes
19
due and owing by MDC, any Subsidiary of MDC or any MDC Affiliated Group with
respect to completed and settled examinations or concluded litigation have been
paid. As soon as practicable after the public announcement of the Merger
Agreement, MDC will provide Boeing with written schedules of (i) the taxable
years of MDC for which the statutes of limitations with respect to federal
income Taxes, have not expired, and (ii) with respect to federal income Taxes
those years for which examinations have been completed, those years for which
examinations are presently being conducted, and those years for which
examinations have not yet been initiated. MDC and each of its Subsidiaries has
complied in all material respects with all rules and regulations relating to the
withholding of Taxes, except to the extent any such failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect on MDC.
(b) Neither MDC nor any of its Subsidiaries knows of any fact or
has taken any action that could reasonably be expected to prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(c) Except with respect to awards granted under the MDC 1994
Performance and Equity Incentive Plan, the Termination Benefit Agreements and
the Employment Agreement dated September 24, 1994 between MDC and Harry
Stonecipher, as amended (the "Stonecipher Agreement"), any amount or other
entitlement that could be received (whether in cash or property or the vesting
of property) as a result of any of the transactions contemplated by this
Agreement by any employee, officer or director of MDC or any of its affiliates
who is a "disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employee benefit plan or other
compensation arrangement currently in effect would not be characterized as an
"excess parachute payment" or a "parachute payment" (as such terms are defined
in Section 280G(b)(1) of the Code).
For purposes of this Agreement: (i) "Taxes" means any and all
federal, state, local, foreign or other taxes of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock, payroll,
20
employment, social security, workers' compensation, unemployment compensation,
or net worth, and taxes or other charges in the nature of excise, withholding,
ad valorem or value added, and (ii) "Tax Return" means any return, report or
similar statement (including the attached schedules) required to be filed with
respect to any Tax, including, without limitation, any information return, claim
for refund, amended return or declaration of estimated Tax.
Section 4.15. Opinion of Financial Advisor. The Board of
Directors of MDC has received the opinion of J.P. Morgan Securities Inc., dated
the date of this Agreement, to the effect that, as of such date, the exchange
ratio is fair to MDC's stockholders from a financial point of view. A copy of
the written opinion of J.P. Morgan Securities Inc. will be delivered to Boeing
as soon as practicable after the date of this Agreement.
Section 4.16. Required Vote of MDC Stockholders. The affirmative
vote of the holders of two-thirds of the outstanding shares of MDC Common Stock
is required to approve the Merger. No other vote of the stockholders of MDC is
required by law, the charter or by-laws of MDC or otherwise in order for MDC to
consummate the Merger and the transactions contemplated hereby.
Section 4.17. Pooling of Interests. To the knowledge of MDC,
neither it nor any of its Subsidiaries has taken any action or failed to take
any action which action or failure (without giving effect to any actions or
failures to act by Boeing or any of its Subsidiaries) would prevent the
treatment of the Merger as a pooling of interests for accounting purposes,
except as previously disclosed in writing to Boeing.
ARTICLE V
Representations and Warranties of Boeing and Sub
Boeing and Sub represent and warrant to MDC that:
Section 5.1. Organization, Qualification, Etc. Each of Boeing
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and has the corporate power
and authority to own its properties and assets and to carry on its business as
21
it is now being conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the ownership of its properties or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on Boeing. The
copies of Boeing's Restated Certificate of Incorporation and by-laws and Sub's
articles of incorporation and by-laws which have been delivered to MDC are
complete and correct and in full force and effect on the date hereof. Each of
Boeing's Significant Subsidiaries is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, has the power
and authority to own its properties and to carry on its business as it is now
being conducted, and is duly qualified to do business and is in good standing
in each jurisdiction in which the ownership of its property or the conduct of
its business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not, individually or
in the aggregate, have a Material Adverse Effect on Boeing. All the outstanding
shares of capital stock of, or other ownership interests in, Boeing's
Significant Subsidiaries and Sub are validly issued, fully paid and
non-assessable and are owned by Boeing, directly or indirectly, free and clear
of all liens, claims, charges or encumbrances, except for restrictions contained
in credit agreements and similar instruments to which Boeing is a party under
which no event of default has occurred or arisen. There are no existing options,
rights of first refusal, preemptive rights, calls or commitments of any
character relating to the issued or unissued capital stock or other securities
of, or other ownership interests in, any Significant Subsidiary of Boeing or Sub
(other than rights of first refusal, preemptive rights or similar rights held by
Boeing with respect to certain of such Subsidiaries).
Section 5.2. Capital Stock. Except as previously disclosed in
writing to MDC, the authorized capital stock of Boeing consists of 600,000,000
shares of common stock, par value $5.00 per share ("Boeing Common Stock"), and
10,000,000 shares of preferred stock, par value $1.00 per share ("Boeing
Preferred Stock"), of which 6,000,000 shares were designated as Series A Junior
Participating Preferred Stock ("Boeing Series A Preferred Stock"). The shares of
Boeing Common Stock to be issued in the Merger or upon the exercise of MDC stock
options, warrants, conversion rights or other rights or vesting or payment of
other MDC equity-based awards thereafter will, when issued, be validly issued
22
fully paid and non-assessable. As of December 13, 1996, 349,384,515 shares of
Boeing Common Stock and no shares of Boeing Preferred Stock were issued and
outstanding, 9,194,044 shares of Boeing Common Stock were reserved for issuance
in connection with the acquisition of the aerospace and defense businesses of
Rockwell International Corporation (the "Rockwell A&D Acquisition") and 4,689
shares of Boeing Common Stock were held in Boeing's treasury. All the
outstanding shares of Boeing Common Stock have been validly issued and are fully
paid and non-assessable. Included in the number of shares of Boeing Common Stock
that were issued and outstanding are 11,326,943 shares held in the Boeing
ShareValue Trust, which shares are legally outstanding and entitled to receive
dividends. As of November 30, 1996, there were no outstanding subscriptions,
options, warrants, rights or other arrangements or commitments obligating Boeing
to issue any shares of its capital stock other than:
(a) rights ("Boeing Rights") to acquire shares of Boeing Series
A Preferred Stock pursuant to the Rights Agreement, dated as of July 27, 1987,
between Boeing and The First National Bank of Boston (the "Boeing Rights Plan");
and
(b) options and other rights to receive or acquire 14,004,086
shares of Boeing Common Stock granted on or prior to November 30, 1996, pursuant
to employee incentive or benefit plans, programs and arrangements and
non-employee director plans.
Except for the issuance of shares of Boeing Common Stock
pursuant to the options and other rights referred to in clause 5.2(b) and for
the issuance of shares of Boeing Common Stock pursuant to the Rockwell A&D
Acquisition and except as provided for in clause 6.1(b) (viii), since November
30, 1996, no shares of Boeing Common Stock or Boeing Preferred Stock have been
issued.
Section 5.3. Corporate Authority Relative to this Agreement; No
Violation. Each of Boeing and Sub has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder. The execution
23
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Boards of
Directors of Boeing and Sub and, except for the approval of the stockholders of
Boeing of the Share Issuance, no other corporate proceedings on the part of
Boeing or Sub are necessary to authorize this Agreement and the transactions
contemplated hereby. The Board of Directors of Boeing has determined that the
transactions contemplated by this Agreement are in the best interest of Boeing
and its stockholders and to recommend to such stockholders that they vote in
favor thereof. This Agreement has been duly and validly executed and delivered
by Boeing and Sub and, assuming this Agreement constitutes a valid and binding
Agreement of the other parties hereto, this Agreement constitutes a valid and
binding agreement of Boeing and Sub, enforceable against each of them in
accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies). Neither Boeing nor Sub is subject to or
obligated under any charter, by-law or contract provision or any license,
franchise or permit, or subject to any order or decree, which would be breached
or violated by its executing or, subject to the approval by the stockholders of
Boeing of the Share Issuance, carrying out this Agreement, except for any
breaches or violations which would not, individually or in the aggregate, have a
Material Adverse Effect on Boeing. Other than in connection with or in
compliance with the provisions of the MGCL, the Delaware General Corporation
Law, the Securities Act, the Exchange Act, the HSR Act, Section 4043 of ERISA,
the Communications Act, any non-United States competition, antitrust and
investments laws and the securities or blue sky laws of the various states and
other than any necessary approvals of the United States government or any
agencies, departments or instrumentalities thereof (collectively, the "Boeing
Required Approvals"), no authorization, consent or approval of, or filing with,
any governmental body or authority is necessary for the consummation by Boeing
of the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals or filings, the failure to obtain or make
which would not, individually or in the aggregate, have a Material Adverse
Effect on Boeing or substantially impair or delay the consummation of the
transactions contemplated hereby; provided that Boeing makes no representation
with respect to such of the foregoing as are required by reason of the
regulatory status of MDC or any of its Subsidiaries or facts specifically
pertaining to any of them.
24
Section 5.4. Reports and Financial Statements. Boeing has
previously furnished to MDC true and complete copies of:
(a) Boeing's Annual Reports on Form 10-K filed with the SEC
for each of the years ended December 31, 1993 through 1995;
(b) Boeing's Quarterly Reports on Form 10-Q filed with the SEC
for the quarters ended March 31, June 30 and September 30, 1996;
(c) each definitive proxy statement filed by Boeing with
the SEC since December 31, 1993;
(d) each final prospectus filed by Boeing with the SEC
since December 31, 1993, except any final prospectus on Form S-8; and
(e) all Current Reports on Form 8-K filed by Boeing with
the SEC since December 31, 1995.
As of their respective dates, such reports, proxy statements and
prospectuses (collectively, "Boeing SEC Reports") (i) complied as to form in all
material respect with the applicable requirements of the Securities Act, the
Exchange Act, and the rules and regulations promulgated thereunder and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited consolidated interim
financial statements included in the Boeing SEC Reports (including any related
notes and schedules) fairly present the financial position of Boeing and its
consolidated Subsidiaries as of the dates thereof and the results of their
operations and their cash flows for the periods or as of the dates then ended
(subject, where appropriate, to normal year-end adjustments), in each case in
accordance with past practice and GAAP consistently applied during the periods
involved (except as otherwise disclosed in the notes thereto). Since December
31, 1993, Boeing has timely filed all material reports, registration statements
and other filings required to be filed by it with the SEC under the rules and
regulations of the SEC.
25
Section 5.5. No Undisclosed Liabilities. Neither Boeing nor any
of its Subsidiaries has any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, except (a) liabilities or obligations
reflected in any of the Boeing SEC Reports and (b) liabilities or obligations
which would not, individually or in the aggregate, have a Material Adverse
Effect on Boeing.
Section 5.6. No Violation of Law. The businesses of Boeing and
its Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental body or authority (provided that no
representation or warranty is made in this Section 5.6 with respect to
Environmental Laws) except (a) as described in any of the Boeing SEC Reports and
(b) for violations or possible violations which would not, individually or in
the aggregate, have a Material Adverse Effect on Boeing.
Section 5.7. Environmental Laws and Regulations. Except as
described in any of the Boeing SEC Reports, (a) Boeing and each of its
Subsidiaries is in material compliance with all applicable Environmental Laws,
except for non-compliance which would not, individually or in the aggregate,
have a Material Adverse Effect on Boeing, which compliance includes, but is not
limited to, the possession by Boeing and its Subsidiaries of material permits
and other governmental authorizations required under applicable Environmental
Laws, and compliance with the terms and conditions thereof; (b) neither Boeing
nor any of its Subsidiaries has received written notice of, or, to the knowledge
of Boeing, is the subject of, any Environmental Claims which would, individually
or in the aggregate, have a Material Adverse Effect on Boeing; and (c) to the
knowledge of Boeing, there are no circumstances that are reasonably likely to
prevent or interfere with such material compliance in the future.
Section 5.8. No Undisclosed Employee Benefit Plan Liabilities or
Severance Arrangements. Except as described in any of the Boeing SEC Reports,
all "employee benefit plans", as defined in Section 3(3) of ERISA, maintained or
contributed to by Boeing or its Subsidiaries are in compliance with all
applicable provisions of ERISA and the Code, and Boeing and its Subsidiaries do
not have any liabilities or obligations with respect to any such employee
benefit plans, whether or not accrued, contingent or otherwise, except (a) as
26
described in any of the Boeing SEC Reports and (b) for instances of
non-compliance or liabilities or obligations that would not, individually or in
the aggregate, have a Material Adverse Effect on Boeing. No employee of Boeing
will be entitled to any additional benefits or any acceleration of the time of
payment or vesting of any benefits under any employee incentive or benefit plan,
program or arrangement as a result of the transactions contemplated by this
Agreement.
Section 5.9. Absence of Certain Changes or Events. Other than as
disclosed in the Boeing SEC Reports, since December 31, 1995 the businesses of
Boeing and its Subsidiaries have been conducted in all material respects in the
ordinary course and there has not been any event, occurrence, development or
state of circumstances or facts that has had, or would have, a Material Adverse
Effect on Boeing.
Section 5.10. Investigations; Litigation. Except as described
in any of the Boeing SEC Reports or previously disclosed in writing to MDC:
(a) no investigation or review by any governmental body or
authority with respect to Boeing or any of its Subsidiaries which would,
individually or in the aggregate, have a Material Adverse Effect on Boeing is
pending nor has any governmental body or authority notified Boeing of an
intention to conduct the same; and
(b) there are no actions, suits or proceedings pending (or, to
Boeing's knowledge, threatened) against or affecting Boeing or its Subsidiaries,
or any of their respective properties at law or in equity, or before any
federal, state, local or foreign governmental body or authority which,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on Boeing.
Section 5.11. Joint Proxy Statement; Registration Statement;
Other Information. None of the information with respect to Boeing or its
Subsidiaries to be included in the Joint Proxy Statement or the Registration
Statement will, in the case of the Joint Proxy Statement or any amendments
thereof or supplements thereto, at the time of the mailing of the Joint Proxy
Statement or any amendments or supplements thereto, and at the time of the MDC
Meeting and the Boeing Meeting, or, in the case of the Registration Statement,
at the time it becomes effective, contain any untrue statement of a material
27
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by Boeing with respect to information supplied in writing by MDC or any
affiliate of MDC specifically for inclusion in the Joint Proxy Statement. The
Joint Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder.
Section 5.12. Lack of Ownership of MDC Common Stock. Neither
Boeing nor any of its Subsidiaries owns any shares of MDC Common Stock or other
securities convertible into shares of MDC Common Stock (exclusive of any shares
owned by Boeing's employee benefit plans).
Section 5.13. Boeing Rights Plan. Under the terms of the Boeing
Rights Plan, the transactions contemplated by this Agreement will not cause a
Distribution Date (as such term is defined in the Boeing Rights Plan) to occur
or cause the rights issued pursuant to the Boeing Rights Plan to become
exercisable.
Section 5.14. Tax Matters. (a) All federal, state, local and
foreign Tax Returns required to be filed by or on behalf of Boeing, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which Boeing or any of its Subsidiaries is (i) a member (a "Current Boeing
Group") or (ii) has been a member within six years prior to the date hereof but
is not currently a member, but only insofar as any such Tax relates to a taxable
period ending on a date within the last six years (a "Past Boeing Group",
together with Current Boeing Groups, a "Boeing Affiliated Group") have been
timely filed, and all returns filed are complete and accurate except to the
extent any failure to file or any inaccuracies in filed returns would not,
individually or in the aggregate, have a Material Adverse Effect on Boeing (it
being understood that the representations made in this Section, to the extent
that they relate to Past Boeing Groups, are made to the knowledge of Boeing).
All Taxes due and owing by Boeing, any Subsidiary of Boeing or any Boeing
Affiliated Group have been paid, or adequately reserved for, except to the
extent any failure to pay or reserve would not, individually or in the
aggregate, have a Material Adverse Effect on Boeing. There is no audit
examination, deficiency, refund litigation, proposed adjustment or matter in
28
controversy with respect to any Taxes due and owing by Boeing, any Subsidiary of
Boeing or any Boeing Affiliated Group which would, individually or in the
aggregate, have a Material Adverse Effect on Boeing. All assessments for Taxes
due and owing by Boeing, any Subsidiary of Boeing or any Boeing consolidated
group with respect to completed and settled examinations or concluded litigation
have been paid. As soon as practicable after the public announcement of the
Merger Agreement, Boeing will provide MDC with written schedules of (i) the
taxable years of Boeing for which the statutes of limitations with respect to
federal income Taxes have not expired, and (ii) with respect to federal income
Taxes, those years for which examinations have been completed, those years for
which examinations are presently being conducted, and those years for which
examinations have not yet been initiated. Boeing and each of its Subsidiaries
has complied in all material respects with all rules and regulations relating to
the withholding of Taxes, except to the extent any such failure to comply would
not, individually or in the aggregate, have a Material Adverse Effect on Boeing.
(b) Neither Boeing nor any of its Subsidiaries knows of any fact
or has taken any action that could reasonably be expected to prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(c) Any amount or other entitlement that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of Boeing or any of its affiliates who is a "disqualified individual"
(as such term is defined in proposed Treasury Regulation Section 1.280G-1) under
any employee benefit plan or other compensation arrangement currently in effect
would not be characterized as an "excess parachute payment" or a "parachute
payment" (as such terms are defined in Section 280G(b)(1) of the Code).
Section 5.15. Opinion of Financial Advisor. The Board of
Directors of Boeing has received the opinion of CS First Boston Corporation,
dated the date of this Agreement to the effect that, as of such date, the
exchange ratio is fair to Boeing from a financial point of view. A copy of the
written opinion of CS First Boston Corporation will be delivered to MDC as soon
as practicable after the date of this Agreement.
29
Section 5.16. Required Vote of Boeing Stockholders. The
affirmative vote of the holders of a majority of the shares of Boeing Common
Stock voted at the Boeing Meeting is required to approve the Share Issuance;
provided that holders of a majority of the outstanding shares of Boeing Common
Stock are present, in person or by proxy, at the Boeing Meeting and vote upon
the Share Issuance. No other vote of the stockholders of Boeing is required by
law, the charter or by-laws of Boeing or otherwise in order for Boeing to
consummate the Merger and the transactions contemplated hereby.
Section 5.17. Pooling of Interests. To the knowledge of Boeing,
neither it nor any of its Subsidiaries has taken any action or failed to take
any action which action or failure (without giving effect to any actions or
failures to act by MDC or any of its Subsidiaries) would prevent the treatment
of the Merger as a pooling of interests for accounting purposes.
ARTICLE VI
Covenants and Agreements
It is further agreed as follows:
Section 6.1. Conduct of Business by MDC or Boeing. Prior to the
Effective Time or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 8.1 (the "Termination Date"), and except as may
be agreed to by the other parties hereto or as may be permitted pursuant to this
Agreement:
(a) MDC:
(i) shall, and shall cause each of its Subsidiaries to, conduct
its operations according to their ordinary and usual course of business in
substantially the same manner as heretofore conducted;
(ii) shall use its reasonable best efforts, and cause each of
its Subsidiaries to use its reasonable best efforts, to preserve intact its
business organizations and goodwill in all material respects, keep available the
services of its officers and employees as a group, subject to changes in the
ordinary course, and maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with them;
30
(iii) shall confer at such times as Boeing may reasonably
request with one or more representatives of Boeing to report material
operational matters and the general status of ongoing operations (to the extent
Boeing reasonably requires such information);
(iv) shall notify Boeing of any emergency or other change in the
normal course of its or its Subsidiaries' respective businesses or in the
operation of its or its Subsidiaries' respective properties and of any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any governmental body or authority if such
emergency, change, complaint, investigation or hearing would have a Material
Adverse Effect on MDC;
(v) shall not, and shall not (except in the ordinary course of
business consistent with past practice) permit any of its Subsidiaries that is
not wholly owned, to authorize or pay any dividends on or make any distribution
with respect to its outstanding shares of stock other than regular quarterly
dividends of $.12 per share on MDC Common Stock made in the ordinary course
consistent with past practice;
(vi) shall not, and shall not permit any of its Subsidiaries to,
except (i) in the ordinary course of business consistent with past practice,
(ii) as otherwise provided in this Agreement, (iii) as previously disclosed in
writing to Boeing or (iv) for the Termination Benefit Agreements, enter into or
amend any employment, severance or similar agreements or arrangements with any
of their respective directors or executive officers;
(vii) shall not, and shall not permit any of its Subsidiaries
to, authorize, propose or announce an intention to authorize or propose, or
enter into an agreement with respect to, any merger, consolidation or business
combination (other than the Merger and any mergers, consolidations or business
combinations with MDC's Subsidiaries entered into in the ordinary course of
business consistent with past practice), any acquisition of a material amount of
assets or securities, any disposition of a material amount of assets or
securities or any release or relinquishment of any material contract rights not
in the ordinary course of business;
31
(viii) shall not propose or adopt any amendments to its
corporate charter or by-laws;
(ix) shall not, and shall not permit any of its Significant
Subsidiaries to, issue any shares of their capital stock, except upon exercise
of rights or options issued pursuant to existing employee incentive or benefit
plans, programs or arrangements and non-employee director plans (including,
without limitation, shares issued in connection with stock grants or awards or
the exercise of rights or options granted in the ordinary course of business
consistent with past practice pursuant to such plans, programs or arrangements)
or effect any stock split not previously announced or otherwise change its
capitalization as it existed on December 6, 1996, except as contemplated herein
and except for the contemplated issuance or sale of shares of MDC Common Stock
previously agreed to in writing by Boeing);
(x) shall not, and shall not permit any of its Subsidiaries to,
grant, confer or award any options, warrants, conversion rights or other rights,
not existing on the date hereof, to acquire any shares of its capital stock,
except pursuant to employee incentive or benefit plans, programs or arrangements
and non-employee director plans in existence on the date hereof in the ordinary
course of business and consistent with past practice (including, but not limited
to, certain grants of Performance Accelerated Restricted Stock under the MDC
1994 Performance and Equity Incentive Plan) covering not in excess of 700,000
shares of MDC Common Stock;
(xi) shall not, and shall not permit any of its Subsidiaries to,
except in the ordinary course of business in connection with employee incentive
and benefit plans, programs or arrangements in existence on the date hereof,
purchase or redeem any shares of its stock;
(xii) shall not, and shall not permit any of its Subsidiaries
to, take any actions which would, or would be reasonably likely to, prevent
Boeing from accounting for the Merger in accordance with the pooling of
interests method of accounting under the requirements of Opinion No. 16
"Business Combinations" of the Accounting Principles Board of the American
Institute of Certified Public Accountants, as amended by applicable
pronouncements by the Financial Accounting Standards Board ("APB No. 16");
32
(xiii) shall not, and shall not permit any of its Subsidiaries
to, except as contemplated by this Section 6.1 or Section 6.5 or except as
previously disclosed in writing to Boeing, amend in any significant respect the
terms of their respective employee benefit plans, programs or arrangements or
any severance or similar agreements or arrangements in existence on the date
hereof, or adopt any new employee benefit plans, programs or arrangements or any
severance or similar agreements or arrangements;
(xiv) shall not, and shall not permit any of its Subsidiaries
to, enter into any material loan agreement, other than in the ordinary course of
business consistent with past practice and other than any loan or lease
arrangement relating to the sale or lease of commercial aircraft or commercial
equipment;
(xv) shall not, and shall not permit any of its Subsidiaries to
make any material Tax election or settle or compromise any material Tax
liability, other than in connection with currently pending proceedings or other
than in the ordinary course of business; and
(xvi) shall not, and shall not permit any of its Subsidiaries
to, agree, in writing or otherwise, to take any of the foregoing actions or take
any action which would make any representation or warranty in Article IV hereof
untrue or incorrect.
(b) Boeing:
(i) shall, and shall cause each of its Subsidiaries to, conduct
its operations according to their ordinary and usual course of business in
substantially the same manner as heretofore conducted;
(ii) shall use its reasonable best efforts, and cause each of
its Subsidiaries to use its reasonable best efforts, to preserve intact its
business organizations and goodwill in all material respects, keep available the
services of its officers and employees as a group, subject to changes in the
ordinary course, and maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with them;
33
(iii) shall confer at such times as MDC may reasonably request
with one or more representatives of MDC to report material operational matters
and the general status of ongoing operations (to the extent MDC reasonably
requires such information);
(iv) shall notify MDC of any emergency or other change in the
normal course of its or its Subsidiaries' respective businesses or in the
operation of its or its Subsidiaries' respective properties and of any
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) of any governmental body or authority if such
emergency, change, complaint, investigation or hearing would have a Material
Adverse Effect on Boeing;
(v) except as previously disclosed in writing to MDC, shall not,
and shall not (except in the ordinary course of business consistent with past
practice) permit any of its Subsidiaries that is not wholly owned, to declare or
pay any dividends on or make any distribution with respect to their outstanding
shares of capital stock other than regular quarterly dividends of $.28 per share
on Boeing Common Stock made in the ordinary course consistent with past
practice;
(vi) shall not, and shall not permit any of its Subsidiaries to,
authorize, propose or announce an intention to authorize or propose, or enter
into an agreement with respect to, any merger, consolidation or business
combination (other than the Merger and any mergers, consolidations or business
combinations with Boeing's Subsidiaries entered into in the ordinary course of
business consistent with past practice), any acquisition of a material amount of
assets or securities, or any release or relinquishment of any material contract
rights not in the ordinary course of business;
(vii) shall not propose or adopt any amendments to its
corporate charter (except as previously disclosed in writing to MDC) or
by-laws;
(viii) shall not, and shall not permit any of its Significant
Subsidiaries to, issue any shares of their capital stock, except upon exercise
of rights or options issued pursuant to existing employee incentive or benefit
plans, programs or arrangements and non-employee director plans (including,
without limitation, shares issued in connection with stock grants or awards or
the exercise of rights or options granted in the ordinary course of business
consistent with past practice pursuant to such plans, programs or arrangements)
or effect any stock split not previously announced or otherwise change its
capitalization as it existed on November 30, 1996 (except as contemplated herein
or as previously disclosed in writing to MDC);
34
(ix) shall not, and shall not permit any of its Subsidiaries to,
grant, confer or award any options, warrants, conversion rights or other rights,
not existing on the date hereof, to acquire any shares of its capital stock,
except pursuant to employee incentive or benefit plans, programs or arrangements
and non-employee director plans in existence on the date hereof in the ordinary
course of business and consistent with past practice covering not in excess of
5,000,000 shares of Boeing Common Stock;
(x) shall not, and shall not permit any of its Subsidiaries to,
take any actions which would, or would be reasonably likely to, prevent Boeing
from accounting for the Merger in accordance with the pooling of interests
method of accounting under the requirements of APB No. 16; and
(xi) shall not, and shall not permit any of its Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions or take any
action which would make any representation or warranty in Article V hereof
untrue or incorrect.
Section 6.2. Investigation. Each of MDC and Boeing shall afford
to one another and to one another's officers, employees, accountants, counsel
and other authorized representatives full and complete access during normal
business hours, throughout the period prior to the earlier of the Effective Time
or the date of termination of this Agreement, to its and its Subsidiaries'
plants, properties, contracts, commitments, books, and records (including but
not limited to tax returns) and any report, schedule or other document filed or
received by it pursuant to the requirements of federal or state securities laws
and shall use their reasonable best efforts to cause their respective
representatives to furnish promptly to one another such additional financial and
operating data and other information as to its and its Subsidiaries' respective
businesses and properties as the other or its duly authorized representatives
may from time to time reasonably request; provided, that nothing herein shall
require either MDC or Boeing or any of their respective Subsidiaries to disclose
35
any information to the other that would cause significant competitive harm to
such disclosing party or its affiliates if the transactions contemplated by this
Agreement are not consummated. The parties hereby agree that each of them will
treat any such information in accordance with the Confidentiality Agreement,
dated as of October 17, 1995, between MDC and Boeing (the "Confidentiality
Agreement"). Notwithstanding any provision of this Agreement to the contrary, no
party shall be obligated to make any disclosure in violation of applicable laws
or regulations, including any such laws or regulations pertaining to the
treatment of classified information.
Section 6.3. Cooperation. (a) MDC and Boeing shall together,
or pursuant to an allocation of responsibility to be agreed upon between them:
(i) prepare and file with the SEC as soon as is reasonably
practicable the Joint Proxy Statement (which, if requested by Boeing, may also
relate to an amendment of the Restated Certificate of Incorporation of Boeing to
increase its authorized capitalization) and a registration statement on Form S-4
under the Securities Act with respect to the Boeing Common Stock issuable in the
Merger (the "Registration Statement"), and shall use their reasonable best
efforts to have the Joint Proxy Statement cleared by the SEC under the Exchange
Act and the Registration Statement declared effective by the SEC under the
Securities Act;
(ii) as soon as is reasonably practicable take all such action
as may be required under state blue sky or securities laws in connection with
the transactions contemplated by this Agreement;
(iii) promptly prepare and file with the NYSE and such other
stock exchanges as shall be agreed upon listing applications covering the shares
of Boeing Common Stock issuable in the Merger or upon exercise of MDC stock
options, warrants, conversion rights or other rights or vesting or payment of
other MDC equity-based awards and use its reasonable best efforts to obtain,
prior to the Effective Time, approval for the listing of such Common Stock,
subject only to official notice of issuance;
(iv) cooperate with one another in order to lift any injunctions
or remove any other impediment to the consummation of the transactions
contemplated herein; and
36
(v) cooperate with one another in obtaining opinions of Skadden,
Arps, Slate, Meagher & Flom LLP, counsel to MDC, and Cravath, Swaine & Moore,
counsel to Boeing, dated as of the Effective Time, to the effect that the Merger
qualifies as a reorganization under the provisions of Section 368(a) of the
Code. In connection therewith, each of MDC and Boeing shall deliver to Skadden,
Arps, Slate, Meagher & Flom LLP and Cravath, Swaine & Moore representation
letters substantially in the form attached hereto as Exhibits 7.1(g)(1) and
7.1(g)(2), respectively, and MDC shall use its reasonable best efforts to obtain
the representation letter substantially in the form attached hereto as Exhibit
7.1(g)(3) from appropriate stockholders and shall deliver any such letters
obtained to Skadden, Arps, Slate, Meagher & Flom LLP and Cravath, Swaine &
Moore.
(b) Subject to the limitations contained in Section 6.2, MDC and
Boeing shall each furnish to one another and to one another's counsel all such
information as may be required in order to effect the foregoing actions and each
represents and warrants to the other that no information furnished by it in
connection with such actions or otherwise in connection with the consummation of
the transactions contemplated by this Agreement will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in order to make any information so furnished, in light of the
circumstances under which it is so furnished, not misleading.
Section 6.4. Affiliate Agreements. (a) MDC shall, prior to the
Effective Time, deliver to Boeing a list (reasonably satisfactory to counsel for
Boeing), setting forth the names and addresses of all persons who are, at the
time of the MDC Meeting, in MDC's reasonable judgment, "affiliates" of MDC for
purposes of Rule 145 under the Securities Act or under applicable SEC accounting
releases with respect to pooling of interests accounting treatment. MDC shall
furnish such information and documents as Boeing may reasonably request for the
purpose of reviewing such list. MDC shall use its reasonable best efforts to
cause each person who is identified as an "affiliate" in the list furnished
pursuant to this Section 6.4 to execute a written agreement on or prior to the
Effective Time, in substantially the form of Exhibit 6.4(a) hereto.
(b) Boeing shall, prior to the Effective Time, deliver to MDC a
list (reasonably satisfactory to counsel for MDC) setting forth the names and
addresses of all persons who are, at the time of the Boeing Meeting, in Boeing's
37
reasonable judgment, affiliates of Boeing under applicable SEC accounting
releases with respect to pooling of interests accounting treatment. Boeing shall
furnish such information and documents as MDC may reasonably request for the
purpose of reviewing such list. Boeing shall use its reasonable best efforts to
cause each person who is identified as an affiliate in the list furnished
pursuant to this Section 6.4 to execute a written agreement on or prior to the
Effective Time, in substantially the form of Exhibit 6.4(b) hereto.
Section 6.5. Employee Stock Options, Incentive and Benefit
Plans. (a) Simultaneously with the Merger, (i) each outstanding option (and
related stock appreciation right ("MDC SAR"), if any) to purchase or acquire a
share of MDC Common Stock under employee incentive or benefit plans, programs or
arrangements and non-employee director plans presently maintained by MDC ("MDC
Option Plans") shall be converted into an option (together with a related stock
appreciation right of Boeing, if applicable) to purchase the number of shares of
Boeing Common Stock equal to .65 times the number of shares of MDC Common Stock
which could have been obtained prior to the Effective Time upon the exercise of
each such option, at an exercise price per share equal to the exercise price for
each such share of MDC Common Stock subject to an option (and related MDC SAR,
if any) under the MDC Option Plans divided by .65, and all references in each
such option (and related MDC SAR, if any) to MDC shall be deemed to refer to
Boeing, where appropriate, and (ii) Boeing shall assume the obligations of MDC
under the MDC Option Plans. The other terms of each such option and MDC SAR, and
the plans under which they were issued, shall continue to apply in accordance
with their terms, including any provisions providing for acceleration.
(b) Simultaneously with the Merger, each outstanding award
(including restricted stock, stock equivalents and stock units) ("MDC Award")
under any employee incentive or benefit plans, programs or arrangements and
non-employee director plans presently maintained by MDC which provide for grants
of equity-based awards shall be amended or converted into a similar instrument
of Boeing, in each case with such adjustments to the terms of such MDC Awards as
are appropriate to preserve the value inherent in such MDC Awards with no
detrimental effects on the holders thereof. The other terms of each MDC Award,
38
and the plans or agreements under which they were issued, shall continue to
apply in accordance with their terms, including any provisions providing for
acceleration. With respect to any restricted stock awards as to which the
restrictions shall have lapsed on or prior to the Effective Time in accordance
with the terms of the applicable plans or award agreements, shares of such
previously restricted stock shall be converted in accordance with the provisions
of Section 2.1(b).
(c) Simultaneously with the Merger, Boeing shall assume each
Termination Benefit Agreement then in effect and all of MDC's rights and
obligations under each such Termination Benefit Agreement.
(d) MDC and Boeing agree that each of their respective employee
incentive or benefit plans, programs and arrangements and non-employee director
plans shall be amended, to the extent necessary and appropriate, to reflect the
transactions contemplated by this Agreement, including, but not limited to the
conversion of shares of MDC Common Stock held or to be awarded or paid pursuant
to such benefit plans, programs or arrangements into shares of Boeing Common
Stock on a basis consistent with the transactions contemplated by this
Agreement. The actions to be taken by MDC and Boeing pursuant to Section 6.5(d)
shall include the submission by MDC or Boeing of the amendments to the plans,
programs or arrangements referred to herein to their respective stockholders at
the MDC Meeting or the Boeing Meeting, respectively, if such submission is
determined to be necessary or advisable by counsel to MDC or Boeing after
consultation with one another; provided, however, that such approval shall not
be a condition to the consummation of the Merger.
(e) Boeing shall (i) reserve for issuance the number of shares
of Boeing Common Stock that will become subject to the benefit plans, programs
and arrangements referred to in this Section 6.5 and (ii) issue or cause to be
issued the appropriate number of shares of Boeing Common Stock pursuant to such
plans, programs and arrangements, upon the exercise or maturation of rights
existing thereunder on the Effective Time or thereafter granted or awarded.
Section 6.6. Filings; Other Action. (a) Subject to the terms and
conditions herein provided, MDC and Boeing shall (a) promptly make their
respective filings and thereafter make any other required submissions under the
39
HSR Act, (b) use reasonable efforts to cooperate with one another in (i)
determining whether any filings are required to be made with, or consents,
permits, authorizations or approvals are required to be obtained from, any third
party, the United States government or any agencies, departments or
instrumentalities thereof or other governmental or regulatory bodies or
authorities of federal, state, local and foreign jurisdictions in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby and (ii) timely making all such
filings and timely seeking all such consents, permits, authorizations or
approvals, and (c) use reasonable efforts to take, or cause to be taken, all
other actions and do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions contemplated hereby,
including, without limitation, taking all such further action as reasonably may
be necessary to resolve such objections, if any, as the Federal Trade
Commission, the Antitrust Division of the Department of Justice, state antitrust
enforcement authorities or competition authorities of any other nation or other
jurisdiction or any other person may assert under relevant antitrust or
competition laws with respect to the transactions contemplated hereby and to
ensure that it is a "poolable entity" eligible to participate in a transaction
to be accounted for under the pooling of interests method of accounting.
(b) MDC and Boeing shall take all such action as reasonably may
be necessary to obtain the advance agreement of the U.S. Department of Defense
("DOD") to the effect that (i) the transactions contemplated by this Agreement
will not trigger any liability to DOD with respect to any surplus assets in a
pension plan, (ii) for cost accounting purposes, the pension plans of MDC,
Boeing and Boeing North American, Inc. will be a single pension plan and (iii)
any subsequent reorganization or restructuring of MDC, Boeing and Boeing North
American, Inc. or mergers and other transactions conducted between MDC, Boeing
and Boeing North American, Inc. or between any of their pension plans will not
trigger a segment closing adjustment under Cost Accounting Standard 413 after
the Effective Time unless MDC, Boeing and Boeing North American, Inc.
discontinue doing business with the U.S. government or Boeing curtails the
benefits of all the pension plans.
Section 6.7. Further Assurances. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
40
purposes of this Agreement, the proper officers of MDC and Boeing shall take all
such necessary action.
Section 6.8. Takeover Statute. If any "fair price",
"moratorium", "control share acquisition" or other form of antitakeover statute
or regulation shall become applicable to the transactions contemplated hereby,
each of MDC and Boeing and the members of their respective Boards of Directors
shall grant such approvals and take such actions as are reasonably necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated hereby.
Section 6.9. No Solicitation. From and after the date hereof,
MDC will not, and shall use its reasonable best efforts not to permit, any of
its officers, directors, employees, attorneys, financial advisors, agents or
other representatives or those of any of its Subsidiaries to, directly or
indirectly, solicit, initiate or knowingly encourage (including by way of
furnishing information) any Takeover Proposal from any person, or engage in or
continue discussions or negotiations relating thereto; provided, however, that
MDC may engage in discussions or negotiations with, and furnish information
concerning MDC and its Subsidiaries, businesses, properties or assets to, any
third party which makes a Takeover Proposal if the Board of Directors of MDC
concludes in good faith after consultation with its outside counsel (who may be
its regularly engaged outside counsel) that the failure to take such action
would present a reasonable possibility of violating the obligations of such
Board to MDC or to MDC's stockholders under applicable law. MDC will promptly
(but in no case later than 24 hours) notify Boeing of the receipt of any
Takeover Proposal, including the material terms and conditions thereof and the
identity of the person or group making such Takeover Proposal, and will promptly
(but in no case later than 24 hours) notify Boeing of any determination by MDC's
Board of Directors that a Superior Proposal (as hereinafter defined) has been
made. As used in this Agreement, (i) "Takeover Proposal" shall mean any proposal
or offer, or any expression of interest by any third party relating to MDC's
willingness or ability to receive or discuss a proposal or offer, in each case
made prior to the stockholder vote at the MDC Meeting, other than a proposal or
offer by Boeing or any of its Subsidiaries, for a merger, consolidation or other
41
business combination involving, or any purchase of, all or substantially all of
the assets or more than 50% of the voting securities of, MDC, and (ii) "Superior
Proposal" shall mean a bona fide Takeover Proposal made by a third party on
terms that a majority of the members of the Board of Directors of MDC determines
in their good faith reasonable judgment (based on the advice of an independent
financial advisor) may be more favorable to MDC and to its stockholders than the
transactions contemplated hereby and for which any required financing is
committed or which, in the good faith reasonable judgment of a majority of such
members (after consultation with any independent financial advisor), is
reasonably capable of being financed by such third party.
Section 6.10. Public Announcements. MDC and Boeing will consult
with each other before issuing any press release relating to this Agreement or
the transactions contemplated herein and shall not issue any such press release
prior to such consultation except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange.
Section 6.11. Indemnification and Insurance. (a) Boeing and Sub
agree that all rights to exculpation and indemnification for acts or omissions
occurring prior to the Effective Time now existing in favor of the current or
former directors or officers (the "Indemnified Parties") of MDC as provided in
its charter or by-laws or in any agreement shall survive the Merger and shall
continue in full force and effect in accordance with their terms. For six years
from the Effective Time, Boeing shall indemnify the Indemnified Parties to the
same extent as such Indemnified Parties are entitled to indemnification pursuant
to the preceding sentence.
(b) For six years from the Effective Time, Boeing shall,
maintain in effect MDC's current directors' and officers' liability insurance
covering those persons who are currently covered by MDC's directors' and
officers' liability insurance policy (a copy of which has been heretofore
delivered to Boeing); provided, however, that in no event shall Boeing be
required to expend in any one year an amount in excess of 200% of the annual
premiums currently paid by MDC for such insurance, and, provided, further, that
if the annual premiums of such insurance coverage exceed such amount, Boeing
shall be obligated to obtain a policy with the greatest coverage available for a
cost not exceeding such amount.
42
Section 6.12. Accountants' "Comfort" Letters. MDC and Boeing
will each use reasonable best efforts to cause to be delivered to each other
letters from their respective independent accountants, dated a date within two
business days before the date of the Registration Statement, in form reasonably
satisfactory to the recipient and customary in scope for comfort letters
delivered by independent accountants in connection with registration statements
on Form S-4 under the Securities Act.
Section 6.13. Additional Reports. MDC and Boeing shall each
furnish to the other copies of any reports of the type referred to in Sections
4.4 and 5.4 which it files with the SEC on or after the date hereof, and MDC and
Boeing, as the case may be, represents and warrants that as of the respective
dates thereof, such reports will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statement therein, in light of the circumstances under which they
were made, not misleading. Any unaudited consolidated interim financial
statements included in such reports (including any related notes and schedules)
will fairly present the financial position of MDC and its consolidated
Subsidiaries or Boeing and its consolidated Subsidiaries, as the case may be, as
of the dates thereof and the results of operations and changes in financial
position or other information included therein for the periods or as of the date
then ended (subject, where appropriate, to normal year-end adjustments), in each
case in accordance with past practice and GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto).
Section 6.14. Co-ordination of Dividends. MDC and Boeing shall
coordinate with the other the authorization or declaration of any dividends in
respect of MDC Common Stock and Boeing Common Stock and the record dates and
payment dates relating thereto, it being the intention of the parties that
holders of MDC Common Stock or Boeing Common Stock shall not receive two
dividends, or fail to receive one dividend, for any single calendar quarter with
respect to their shares of MDC Common Stock and/or Boeing Common Stock and any
shares of Boeing Common Stock any such holder receives in exchange for MDC
Common Stock in the Merger.
43
ARTICLE VII
Conditions to the Merger
Section 7.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The holders of issued and outstanding shares of MDC Common
Stock shall have duly approved the Merger, and the holders of issued and
outstanding shares of Boeing Common Stock shall have approved the Share
Issuance, all in accordance with applicable law and the rules of the NYSE.
(b) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or enforced
by any court or other tribunal or governmental body or authority which prohibits
the consummation of the Merger substantially on the terms contemplated hereby.
In the event any order, decree or injunction shall have been issued, each party
shall use its reasonable efforts to remove any such order, decree or injunction.
(c) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and no stop order
suspending such effectiveness shall have been issued and remain in effect.
(d) The shares of Boeing Common Stock issuable in the Merger
shall have been approved for listing on the NYSE, subject only to official
notice of issuance.
(e) Any applicable waiting period under the HSR Act shall have
expired or been terminated and any other MDC Required Approvals and Boeing
Required Approvals shall have been obtained, except where the failure to obtain
such other MDC Required Approvals and Boeing Required Approvals would not have a
Material Adverse Effect on MDC or Boeing, as the case may be.
(f) At the Effective Time each of MDC and Boeing shall have
received a letter of its independent public accountants, in form and substance
reasonably satisfactory to it, stating that they concur with management's
conclusion that the Merger will qualify as a transaction to be accounted for the
parties hereto in accordance with the pooling of interests method of accounting
under the requirements of APB No. 16.
44
(g) Each of MDC and Boeing shall have received an opinion of its
tax counsel, Skadden, Arps, Slate, Meagher & Flom LLP and Cravath, Swaine &
Moore, respectively, in form and substance reasonably satisfactory to it, and
dated within five days of the date of the Joint Proxy Statement, to the effect
that the Merger will qualify for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and that none of MDC, its
stockholders, Boeing and Sub shall recognize gain or loss for federal income tax
purposes as a result of the Merger (other than, with respect to any cash paid in
lieu of fractional shares of Boeing Common Stock). In rendering such opinions,
Skadden, Arps, Slate, Meagher & Flom LLP and Cravath, Swaine & Moore may rely
upon representations of officers of MDC and Boeing and stockholders of MDC
substantially in the form of Exhibits 7.1(g)(1), 7.1(g)(2) and 7.1(g)(3).
Section 7.2. Conditions to Obligations of MDC to Effect the
Merger. The obligation of MDC to effect the Merger is further subject to the
conditions that (a) the representations and warranties of Boeing contained
herein shall be true and correct in all respects (but without regard to any
materiality qualifications or references to Material Adverse Effect contained in
any specific representation or warranty) as of the Effective Time with the same
effect as though made as of the Effective Time except (i) for changes
specifically permitted by the terms of this Agreement, (ii) that the accuracy of
representations and warranties that by their terms speak as of the date of this
Agreement or some other date will be determined as of such date and (iii) where
any such failure of the representations and warranties in the aggregate to be
true and correct in all respects would not have a Material Adverse Effect on
Boeing, (b) Boeing shall have performed in all material respects all obligations
and complied with all covenants required by this Agreement to be performed or
complied with by it prior to the Effective Time and (c) Boeing shall have
delivered to MDC a certificate, dated the Effective Time and signed by its
Chairman of the Board and Chief Executive Officer or a Senior Vice President,
certifying to both such effects.
45
Section 7.3. Conditions to Obligations of Boeing to Effect the
Merger. The obligation of Boeing to effect the Merger is further subject to the
conditions that (a) the representations and warranties of MDC contained herein
shall be true and correct in all respects (but without regard to any materiality
qualifications or references to Material Adverse Effect contained in any
specific representation or warranty) as of the Effective Time with the same
effect as though made as of the Effective Time except (i) for changes
specifically permitted by the terms of this Agreement, (ii) that the accuracy of
representations and warranties that by their terms speak as of the date of this
Agreement or some other date will be determined as of such date and (iii) where
any such failure of the representations and warranties in the aggregate to be
true and correct in all respects would not have a Material Adverse Effect on
MDC, (b) MDC shall have performed in all material respects all obligations and
complied with all covenants required by this Agreement to be performed or
complied with by it prior to the Effective Time and (c) MDC shall have delivered
to Boeing a certificate, dated the Effective Time and signed by its Chairman of
the Board, Chief Executive Officer and President or a Senior Vice President,
certifying to both such effects.
ARTICLE VIII
Termination, Waiver, Amendment and Closing
Section 8.1. Termination or Abandonment. Notwithstanding
anything contained in this Agreement to the contrary, this Agreement may be
terminated and abandoned at any time prior to the Effective Time, whether before
or after any approval of the matters presented in connection with the Merger by
the respective stockholders of MDC and Boeing:
(a) by the mutual written consent of MDC and Boeing;
(b) by either MDC or Boeing if the Effective Time shall not have
occurred on or before December 31, 1997; provided, that the party seeking to
terminate this Agreement pursuant to this clause 8.1(b) shall not have breached
in any material respect its obligations under this Agreement in any manner that
shall have proximately contributed to the failure to consummate the Merger on or
before such date;
46
(c) by either MDC or Boeing if (i) a statute, rule, regulation
or executive order shall have been enacted, entered or promulgated prohibiting
the consummation of the Merger substantially on the terms contemplated hereby or
(ii) an order, decree, ruling or injunction shall have been entered permanently
restraining, enjoining or otherwise prohibiting the consummation of the Merger
substantially on the terms contemplated hereby and such order, decree, ruling or
injunction shall have become final and non-appealable; provided, that the party
seeking to terminate this Agreement pursuant to this clause 8.1(c)(ii) shall
have used its reasonable best efforts to remove such injunction, order or
decree;
(d) by either MDC or Boeing if the approvals of the stockholders
of either MDC or Boeing contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a duly held
meeting of stockholders or of any adjournment thereof;
(e) by either Boeing or MDC if the Board of Directors of MDC
reasonably determines that a Takeover Proposal constitutes a Superior Proposal;
provided, however, that MDC may not terminate this Agreement pursuant to this
clause 8.1(e) unless and until five business days have elapsed following
delivery to Boeing of a written notice of such determination by the Board of
Directors of MDC and during such five business day period MDC (i) informs Boeing
of the terms and conditions of the Takeover Proposal and the identity of the
Person making the Takeover Proposal and (ii) otherwise fully cooperates with
Boeing with respect thereto (subject, in the case of this clause (ii), to the
condition that the MDC Board of Directors shall not be required to take any
action that it believes, after consultation with outside legal counsel, would
present a reasonable possibility of violating its obligations to MDC or MDC's
stockholders under applicable law) with the intent of enabling Boeing to agree
to a modification of the terms and conditions of this Agreement so that the
transactions contemplated hereby may be effected; provided, further, that MDC
may not terminate this Agreement pursuant to this clause 8.1(e) unless at the
end of such five business day period the Board of Directors of MDC continues
reasonably to believe that the Takeover Proposal constitutes a Superior Proposal
and simultaneously with such termination MDC pays to Boeing the amount specified
under Section 8.2; and provided, further, that this Agreement shall not
terminate pursuant to this clause 8.1(e) unless simultaneously with such
termination MDC enters into a definitive acquisition, merger or similar
agreement to effect the Superior Proposal;
47
(f) by Boeing if a tender offer or exchange offer for 50% or
more of the outstanding shares of capital stock of MDC is commenced prior to the
MDC Meeting, and the Board of Directors of MDC fails to recommend against
acceptance of such tender offer or exchange offer within the time period
presented by Rule 14e-2 by its stockholders (including by taking no position
with respect to the acceptance of such tender offer or exchange offer by its
stockholders); or
(g) by MDC or Boeing if there shall have been a material breach
by the other of any of its representations, warranties, covenants or agreements
contained in this Agreement and such breach shall not have been cured within 30
days after notice thereof shall have been received by the party alleged to be in
breach.
In the event of termination of this Agreement pursuant to this
Section 8.1, this Agreement shall terminate (except for the confidentiality
agreement referred to in Section 6.2 and Sections 8.2 and 9.2), and there shall
be no other liability on the part of MDC or Boeing to the other except liability
arising out of a wilful breach of this Agreement or as provided for in the
Confidentiality Agreement.
Section 8.2. Termination Fee. (a) Notwith-standing any provision
in this Agreement to the contrary (but subject to subsection (b) below), if (i)
this Agreement is terminated by MDC or Boeing pursuant to Section 8.1(e) or (ii)
(x) prior to the termination of this Agreement, a bona fide Takeover Proposal is
commenced, publicly proposed or publicly disclosed and not withdrawn, (y) this
Agreement is terminated by MDC pursuant to Section 8.1(b) or by Boeing or MDC
pursuant to Section 8.1(d) (but only due to the failure of the MDC stockholders
to approve the Merger) and (z) concurrently with or within twelve months after
such termination a Takeover Proposal shall have been consummated, then, in each
case, MDC shall (without prejudice to any other rights of Boeing against MDC)
pay to Boeing a fee (the "Termination Fee") of $200 million in cash, such
payment to be made simultaneously with such termination in the case of a
termination by MDC pursuant to Section 8.1(e) and promptly, but in no event
later than the second business day following a termination by Boeing pursuant to
Section 8.1(e) and, in the case of clause (ii), upon the consummation of such
Takeover Proposal.
48
(b) Notwithstanding anything to the contrary in this Agreement,
if this Agreement is terminated by either party hereto for any reason, and if
prior to such termination, the Board of Directors of Boeing shall have breached
its covenants hereunder by (i) failing to recommend to the Boeing stockholders
in the Joint Proxy Statement that they vote in favor of the Share Issuance, (ii)
having withdrawn a recommendation to the Boeing stockholders that they vote in
favor of the Share Issuance or (iii) having modified any such recommendation
that they vote in favor of the Share Issuance, then Boeing shall (without
prejudice to any other rights of MDC against Boeing) pay to MDC a fee in cash
equal to $200 million, such fee to be paid simultaneously with any termination
of this Agreement by Boeing and promptly after any termination of this Agreement
by MDC.
Section 8.3. Amendment or Supplement. At any time before or
after approval of the matters presented in connection with the Merger by the
respective stockholders of MDC and Boeing and prior to the Effective Time, this
Agreement may be amended or supplemented in writing by MDC and Boeing with
respect to any of the terms contained in this Agreement, except that following
approval by the stockholders of MDC and Boeing there shall be no amendment or
change to the provisions hereof with respect to the conversion ratio of shares
of MDC Common Stock into shares of Boeing Common Stock as provided herein nor
any amendment or change not permitted under applicable law, without further
approval by the stockholders of MDC and Boeing.
Section 8.4. Extension of Time, Waiver, Etc. At any time
prior to the Effective Time, MDC and Boeing may:
(a) extend the time for the performance of any of the
obligations or acts of the other party;
(b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered
pursuant hereto; or
(c) waive compliance with any of the agreements or
conditions of the other party contained herein.
49
Notwithstanding the foregoing no failure or delay by MDC or
Boeing in exercising any right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
ARTICLE IX
Miscellaneous
Section 9.1. No Survival of Representations and Warranties. None
of the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Merger, except
for the agreements set forth in Article II and Article III, the agreements of
"affiliates" of MDC and Boeing to be delivered pursuant to Section 6.4, the
provisions of Sections 6.5, 6.7 and 6.11 and this Article IX.
Section 9.2. Expenses. Whether or not the Merger is consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses, except that (a)(i) the filing fee in connection with
any HSR Act filing, (ii) the commissions and other out-of-pocket transaction
costs, including the expenses and compensation of the Exchange Agent, incurred
in connection with the sale of Excess Shares and (iii) the expenses incurred in
connection with the printing and mailing of the Joint Proxy Statement, shall be
shared equally by MDC and Boeing and (b) all transfer taxes shall be paid by
MDC.
Section 9.3. Counterparts; Effectiveness. This Agreement may be
executed in two or more consecutive counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument, and shall become effective when one or more counterparts
have been signed by each of the parties and delivered (by telecopy or otherwise)
to the other parties.
Section 9.4. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, except that
Maryland law shall apply to the Merger, without regard to the principles of
conflicts of laws thereof.
50
Section 9.5. Notices. All notices and other communications
hereunder shall be in writing (including telecopy or similar writing) and shall
be effective (a) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 9.5 and the appropriate telecopy
confirmation is received or (b) if given by any other means, when delivered at
the address specified in this Section 9.5:
To MDC:
McDonnell Douglas Corporation
P.O. Box 516
St. Louis, Missouri 63166
Attention: F. Mark Kuhlmann, Esq.
Telecopy: (314) 234-3226
copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Attention: Franklin M. Gittes, Esq.
Lou R. Kling, Esq.
Telecopy: (212) 735-2000
To Boeing:
The Boeing Company
7755 East Marginal Way South
Seattle, WA 98108
Attention: Theodore J. Collins, Esq.
Telecopy: (206) 544-4900
copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attention: Allen Finkelson, Esq.
Telecopy: (212) 474-3700
51
Section 9.6. Assignment; Binding Effect. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
Section 9.7. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 9.8. Enforcement of Agreement. The parties hereto agree
that money damages or other remedy at law would not be sufficient or adequate
remedy for any breach or violation of, or a default under, this Agreement by
them and that in addition to all other remedies available to them, each of them
shall be entitled to the fullest extent permitted by law to an injunction
restraining such breach, violation or default or threatened breach, violation or
default and to any other equitable relief, including, without limitation,
specific performance, without bond or other security being required.
Section 9.9. Miscellaneous. This Agreement:
(a) along with the Confidentiality Agreement and the agreements
referred to in Section 6.1(a)(ix) and contained in the disclosure referred to in
Section 6.1(b)(viii) constitutes the entire agreement, and supersedes all other
prior agreements and understandings, both written and oral, between the parties,
or any of them, with respect to the subject matter hereof and thereof; and
(b) except for the provision of Section 6.11 hereof, is not
intended to and shall not confer upon any Person other than the parties hereto
any rights or remedies hereunder.
Section 9.10. Headings. Headings of the Articles and Sections
of this Agreement are for convenience of the parties only, and shall be given
no substantive or interpretive effect whatsoever.
52
Section 9.11. Subsidiaries; Significant Subsidiaries;
Affiliates. References in this Agreement to "Subsidiaries" of MDC or Boeing
shall mean any corporation or other form of legal entity of which more than 50%
of the outstanding voting securities are on the date hereof directly or
indirectly owned by MDC or Boeing, as the case may be. References in this
Agreement to "Significant Subsidiaries" shall mean Subsidiaries (as defined
above) which constitute "significant subsidiaries" under Rule 405 promulgated by
the SEC under the Securities Act. References in this Agreement (except as
specifically otherwise defined) to "affiliates" shall mean, as to any person,
any other person which, directly or indirectly, controls, or is controlled by,
or is under common control with, such person. As used in this definition,
"control" (including, with its correlative meanings, "controlled by" and "under
common control with") shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of management or policies of a Person,
whether through the ownership of securities or partnership of other ownership
interests, by contract or otherwise. References in the Agreement to "person"
shall mean an individual, a corporation, a partnership, an association, a trust
or any other entity or organization, including, without limitation, a
governmental body or authority.
Section 9.12. Finders or Brokers. Except for J.P. Morgan
Securities Inc. with respect to MDC, a copy of whose engagement agreement has
been or will be provided to Boeing, and CS First Boston Corporation with respect
to Boeing, a copy of whose engagement agreement has been or will be provided to
MDC, neither MDC nor Boeing nor any of their respective Subsidiaries has
employed any investment banker, broker, finder or intermediary in connection
with the transactions contemplated hereby who might be entitled to any fee or
any commission in connection with or upon consummation of the Merger.
53
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first above written.
MCDONNELL DOUGLAS CORPORATION
By: /s/ Harry C. Stonecipher
---------------------------
Name: Harry C. Stonecipher
Title: President and Chief
Executive Officer
THE BOEING COMPANY
By: /s/ Philip M. Condit
---------------------------
Name: Philip M. Condit
Title: President and Chief
Executive Officer
WEST ACQUISITION CORP.
By: /s/ Philip M. Condit
----------------------------
Name: Philip M. Condit
Title: President
EXHIBIT 6.4(a)
FORM OF AFFILIATE LETTER FOR AFFILIATES OF MDC
The Boeing Company
7755 East Marginal Way South
Seattle, WA 98108
Attention of [ ]
Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of McDonnell Douglas Corporation, a Maryland
corporation ("MDC"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in and for
purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger dated as
of December 14, 1996 (the "Merger Agreement") among The Boeing Company, a
Delaware corporation ("Boeing"), West Acquisition Corp, a Maryland corporation
("Sub"), and MDC, Sub will be merged with and into MDC, with MDC continuing as
the Surviving Corporation (the "Merger"). Capitalized terms used in this letter
without definition shall have the meanings assigned to them in the Merger
Agreement.
As a result of the Merger, I may receive shares of common stock,
par value $5.00 per share, of Boeing (the "Boeing Shares"). I would receive such
Boeing Shares in exchange for shares (or upon exercise of options for shares)
owned by me of common stock, par value $1.00 per share of MDC (the "MDC
Shares").
1. I hereby represent, warrant and covenant to Boeing that in
the event I receive any Boeing Shares as a result of the Merger:
A. I shall not make any sale, transfer or other
disposition of the Boeing Shares in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Merger
Agreement and discussed the requirements of such documents and other applicable
2
limitations upon my ability to sell, transfer or otherwise dispose of the Boeing
Shares, to the extent I felt necessary, with my counsel or counsel for MDC.
C. I have been advised that the issuance of the Boeing
Shares to me pursuant to the Merger has been registered with the Commission
under the Act on a Registration Statement on Form S-4. However, I have also been
advised that, because at the time the Merger is submitted for a vote of the
stockholders of MDC, (a) I may be deemed to be an affiliate of MDC and (b) the
distribution by me of the Boeing Shares has not been registered under the Act, I
may not sell, transfer or otherwise dispose of the Boeing Shares issued to me in
the Merger unless (i) such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145 promulgated by the
Commission under the Act, (ii) such sale, transfer or other disposition has been
registered under the Act or (iii) in the opinion of counsel reasonably
acceptable to Boeing, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
D. I understand that except as provided for in the
Merger Agreement, Boeing is under no obligation to register the sale, transfer
or other disposition of the Boeing Shares by me or on my behalf under the Act
or, except as provided in paragraph 2(A) below, to take any other action
necessary in order to make compliance with an exemption from such registration
available.
E. I also understand that there will be placed on the
certificates for the Boeing Shares issued to me, or any substitutions therefor,
a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS
OF AN AGREEMENT DATED [ ], 1997 BETWEEN THE REGISTERED HOLDER
HEREOF AND BOEING, A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF BOEING."
3
F. I also understand that unless a sale or
transfer is made in conformity with the provisions of Rule 145, or pursuant to a
registration statement, Boeing reserves the right to put the following legend on
the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE
ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION
TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A
VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY
NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT OF 1933."
G. I further represent to, and covenant with, Boeing
that I will not, during the 30 days prior to the Effective Time (as defined in
the Merger Agreement), sell, transfer or otherwise dispose of or reduce my risk
(as contemplated by the SEC Accounting Series Release No. 135) with respect to
MDC Shares or shares of the capital stock of Boeing that I may hold and,
furthermore, that I will not sell, transfer or otherwise dispose of or reduce my
risk (as contemplated by SEC Accounting Series Release No. 135) with respect to
the Boeing Shares received by me in the Merger or any other shares of the
capital stock of Boeing until after such time as results covering at least 30
days of combined operations of MDC and Boeing have been published by Boeing, in
the form of a quarterly earnings report, an effective registration statement
filed with the Commission, a report to the Commission on Form 10-K 10-Q or 8-K,
or any other public filing or announcement which includes the combined results
of operations (the period commencing 30 days prior to the Effective Time and
ending on the date of the publication of the post-Merger financial results is
referred to herein as the "Pooling Period"). Boeing shall notify the
"affiliates" of the publications of such results. Notwithstanding the foregoing,
I understand that during the aforementioned period, subject to providing written
notice to Boeing, I will not be prohibited from selling up to 10% of the Boeing
4
Shares (the "10% Shares") received by me or MDC Shares owned by me or making
charitable contributions or bona fide gifts of the Boeing Shares received by me
or MDC Shares owned by me, subject to the same restrictions. The 10% Shares
shall be calculated in accordance with SEC Accounting Series Release 135 as
amended by Staff Accounting Bulletin No. 76. I covenant with Boeing that I will
not sell, transfer or otherwise dispose of any 10% Shares during the period
commencing from the Effective Time and ending on the last day of the Pooling
Period except in compliance with Rule 145(d)(i) under the Securities Act or
pursuant to charitable contributions or bona fide gifts. H. Execution of this
letter should not be considered an admission on my part that I am an "affiliate"
of MDC as described in the first paragraph of this letter, nor as a waiver of
any rights I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
2. By Boeing's acceptance of this letter, Boeing
hereby agrees with me as follows:
A. For so long as and to the extent necessary to
permit me to sell the Boeing Shares pursuant to Rule 145 and, to the extent
applicable, Rule 144 under the Act, Boeing shall (a) use its reasonable best
efforts to (i) file, on a timely basis, all reports and data required to be
filed with the Commission by it pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and (ii) furnish to me upon
request a written statement as to whether Boeing has complied with such
reporting requirements during the 12 months preceding any proposed sale of the
Boeing Shares by me under Rule 145, and (b) otherwise use its reasonable efforts
to permit such sales pursuant to Rule 145 and Rule 144. Boeing has filed all
reports required to be filed with the Commission under Section 13 of the 1934
Act during the preceding 12 months.
B. It is understood and agreed that certificates with
the legends set forth in paragraphs E and F above will be substituted by
delivery of certificates without such legend if (i) two years shall have elapsed
from the date the undersigned acquired the Boeing Shares received in the Merger
5
and the provisions of Rule 145(d)(2) are then available to the undersigned, (ii)
three years shall have elapsed from the date the undersigned acquired the Boeing
Shares received in the Merger and the provisions of Rule 145(d)(3) are then
applicable to the undersigned, or (iii) Boeing has received either an opinion of
counsel, which opinion and counsel shall be reasonably satisfactory to Boeing,
or a "no-action" letter obtained by the undersigned from the staff of the
Commission, to the effect that the restrictions imposed by Rule 144 and Rule 145
under the Act no longer apply to the undersigned.
Very truly yours,
-----------------
Name:
Agreed and accepted this day
of [ ], 1997, by
THE BOEING COMPANY,
By:_________________________
Name:
Title:
EXHIBIT 6.4(b)
FORM OF AFFILIATE LETTER FOR AFFILIATES OF BOEING
McDonnell Douglas Corporation
P.O. Box 516
St. Louis, MO 63166
Attention of [ ]
Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of The Boeing Company, a Delaware corporation
("Boeing"), as the term "affiliate" is defined for purposes of Accounting Series
Releases 130 and 135, as amended, of the Securities and Exchange Commission (the
"Commission"). Pursuant to the terms of the Agreement and Plan of Merger dated
as of December 14, 1996 (the "Merger Agreement") among Boeing, West Acquisition
Corp., a Maryland corporation ("Sub"), and McDonnell Douglas Corporation, a
Maryland corporation ("MDC"), Sub will be merged with and into MDC, with MDC
continuing as the Surviving Corporation (the "Merger").
I represent to, and covenant with, MDC that I will not, during
the 30 days prior to the Effective Time (as defined in the Merger Agreement)
until after such time as results covering at least 30 days of combined
operations of MDC and Boeing have been published by Boeing, in the form of a
quarterly earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q or 8-K, or any other
public filing or announcement which includes the combined results of operations,
sell, transfer or otherwise dispose of or reduce my risk (as contemplated by the
SEC Accounting Series Release No. 135) with respect to any shares of the capital
stock of Boeing ("Boeing Stock") or MDC that I may hold. I understand that
Boeing shall notify the "affiliates" of the publication of such results.
Notwithstanding the foregoing, I understand that subject to providing written
notice to Boeing and subject to SEC Accounting Series Release No. 135 as amended
by Staff Accounting Bulletin No. 76, during the aforementioned period I will not
be prohibited from selling up to 10% of the Boeing Stock that I hold or from
making charitable contributions or bona fide gifts of the Boeing Stock that I
hold, subject to the same restrictions.
2
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of Boeing as described in the first
paragraph of this letter, nor as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
Very truly yours,
-------------------------
Name:
Accepted this day of
[ ], 1997 by
MCDONNELL DOUGLAS CORPORATION,
By: _________________________
Name:
Title:
EXHIBIT 7.1(g)(1)
[Letterhead of]
McDONNELL DOUGLAS CORPORATION
___, 1997
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Dear Sirs:
In connection with the opinion to be delivered by you pursuant
to the Agreement and Plan of Merger (the "Merger Agreement") dated as of
December 14, 1996, by and among The Boeing Company, a Delaware corporation
("Parent"), McDonnell Douglas Corporation, a Maryland corporation (the
"Company"), and West Acquisition Corp., a Maryland corporation and a wholly
owned subsidiary of Parent ("Sub"), the undersigned certifies to the best of its
knowledge and belief, after due inquiry and investigation, as follows (any
capitalized term used but not defined herein shall have the meaning given to
such term in the Merger Agreement):
1. The facts relating to the contemplated merger (the "Merger")
of Sub with and into the Company pursuant to the Merger Agreement, as described
in the Merger Agreement, the documents described in Section 9.9(a) of the Merger
Agreement and the joint proxy statement/prospectus prepared by Parent and the
Company, are, insofar as such facts pertain to the Company, true, correct and
complete in all material respects.
2
2. Neither the Company nor any of its subsidiaries has acquired
any shares of Company Common Stock in contemplation of the Merger, or otherwise
as part of a plan of which the Merger is a part. For purposes of this
representation, Company Common Stock acquired in the ordinary course of business
in connection with employee incentive and benefit plans, programs or
arrangements in existence on the date hereof shall not be treated as an
acquisition in contemplation of the Merger or otherwise as part of a plan of
which the Merger is a part.
3. There is no present plan or intention on the part of the
stockholders of the Company that own 5% or more of the common stock of the
Company ("Company Common Stock") (including [ ]), and the Company knows of no
present plan or intention on the part of the remaining holders of Company Common
Stock, to sell, exchange or otherwise dispose of, reduce the risk of loss (by
short sale or otherwise) of the holding of, enter into any contract or other
arrangement with respect to, the sale, exchange or other disposition of (each of
the foregoing, a "disposition"), any interest in the shares of Parent Common
Stock received in the Merger in exchange for such Company Common Stock that
would reduce the ownership of Parent Common Stock by former holders of Company
Common Stock to a number of shares having a value, as of immediately prior to
the Merger, of less than 50% of the value of all of the outstanding shares of
Company Common Stock as of such date. For purposes of this representation, any
"disposition" (as defined above) of Parent Common Stock will be treated as a
reduction in ownership thereof. In addition, for purposes of this
representation, shares of Company Common Stock exchanged by holders of Company
Common Stock for cash in lieu of fractional shares of Parent Common Stock will
be treated as outstanding Company Common Stock immediately prior to the Merger.
Moreover, for purposes of this representation, shares of Company Common Stock
and shares of Parent Common Stock received in the Merger and sold, redeemed or
disposed of prior to or subsequent to the Merger, in contemplation thereof or as
part of a plan therewith, will be considered in making this representation.
4. The Company and the stockholders of the Company will each pay
their respective expenses, if any, incurred in connection with the Merger,
except in the case of transfer taxes for which such stockholders are liable,
which shall be paid by the Company.
3
5. Following the Merger, the Company will hold at least 90
percent of the fair market value of the net assets and at least 70 percent of
the fair market value of the gross assets the Company held immediately prior to
the Merger. For purposes of this representation, Company assets used to pay its
reorganization expenses and all redemptions and distributions (except for
regular, normal dividends) made by the Company immediately preceding, or in
contemplation of, the Merger will be included as assets of the Company prior to
the Merger.
6. Except as provided in [list plans], immediately prior to the
time of the Merger, the Company will not have outstanding any warrants, options,
convertible securities or any other type of right pursuant to which any person
could acquire stock of the Company ("Company Stock").
7. In the Merger, shares of Company Stock representing at least
80% of the total combined voting power of all classes of Company Stock
outstanding on the date of the Merger, and at least 80% of the total number of
each other class of Company Stock outstanding on the date of the Merger will be
exchanged solely for Parent Common Stock. For purposes of this representation,
shares of Company Stock exchanged for cash or other property originating with
Parent will be treated as outstanding stock of the Company on the date of the
Merger.
8. The Company is not an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of 1986, as
amended (the "Code").
9. The Company will not take, and the Company is not aware of
any plan or intention of Company stockholders to take, any position on any
Federal, state or local income or franchise tax return, or take any other tax
reporting position, that is inconsistent with the treatment of the Merger as a
reorganization within the meaning of Section 368(a) of the Code, unless
otherwise required by a "determination" (as defined in Section 1313(a)(1) of the
Code) or by applicable state or local income or franchise tax law.
10. None of the compensation received by any stockholder-
employee of the Company in respect of periods at or prior to the Effective Time
represents separate consideration for, or is allocable to, any of their Company
Common Stock. None of the Parent Common Stock that will be received by Company
stockholder-employees in the Merger represents separately bargained for
consideration which is allocable to any employment agreement or arrangement. The
compensation paid to any shareholder-employees will be for services actually
rendered and will be determined by bargaining at arm's-length.
4
11. There is no intercorporate indebtedness existing between
Parent and the Company or between Sub and the Company that was issued or
acquired, or will be settled, at a discount.
12. The Company is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
13. The Merger Agreement and the documents described in Section
9.9(a) of the Merger Agreement represent the entire understanding of the
Company, Parent and Sub with respect to the Merger.
14. The Company Common Stock will be surrendered pursuant to the
Merger in an arms-length exchange, and the Parent Common Stock received in
exchange therefor represents the sole bargained-for consideration therefor.
MCDONNELL DOUGLAS CORPORATION
By: __________________________
EXHIBIT 7.1(g)(2)
[Letterhead of]
THE BOEING COMPANY
___, 1997
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Dear Sirs:
In connection with the opinion to be delivered by you pursuant
to the Agreement and Plan of Merger (the "Merger Agreement") dated as of
December 14, 1996, by and among The Boeing Company, a Delaware corporation
("Parent"), McDonnell Douglas Corporation, a Maryland corporation (the
"Company"), and West Acquisition Corp., a Maryland corporation and a wholly
owned subsidiary of Parent ("Sub"), I certify that to the best of my knowledge
and belief, after due inquiry and investigation, as follows (any capitalized
term used but not defined herein shall have the meaning given to such term in
the Merger Agreement):
1. The facts relating to the contemplated merger (the "Merger")
of Sub with and into the Company pursuant to the Merger Agreement, as described
in the Merger Agreement, the documents described in Section 9.9(a) of the Merger
Agreement and the joint proxy statement/prospectus prepared by Parent and the
Company, are, insofar as such facts pertain to Parent and Sub, true, correct and
complete in all material respects.
2. Except in the Merger, neither Parent nor Sub (nor any other
subsidiary of Parent) has acquired or prior to the Merger will acquire, or has
owned in the past five years, [any] shares of common stock of the Company
("Company Common Stock").
2
3. Cash payments to be made to stockholders of the Company in
lieu of fractional shares of common stock of Parent ("Parent Common Stock") that
would otherwise be issued to such stockholders in the Merger will be made for
the purpose of saving Parent the expense and inconvenience of issuing and
transferring fractional shares of Parent Common Stock, and do not represent
separately bargained for consideration.
4. Prior to the Merger, Parent will own all the capital stock of
Sub. Parent has no plan or intention to cause the Company to issue additional
shares of its stock that would result in Parent owning less than all the capital
stock of the Company after the Merger.
5. Parent has no plan or intention, following the Merger, to
reacquire any of the Parent Common Stock issued in the Merger, other than
through a stock purchase program meeting the requirements of Section 4.05(1)(b)
of Revenue Procedure 96-30.
6. Parent has no plan or intention, following the Merger, to
liquidate the Company, to merge the Company with and into another corporation,
to sell or otherwise dispose of any of the stock of the Company, or to cause the
Company to sell or otherwise dispose of any of the assets held by the Company at
the time of the Merger, except for dispositions of such assets in the ordinary
course of business; provided, however, that Parent may transfer assets or stock
of the Company in a manner that is consistent with Section 368(a)(2)(C) of the
Internal Revenue Code of 1986, as amended (the "Code").
7. Parent and Sub will each pay their respective expenses, if
any, incurred in connection with the Merger.
8. Following the Merger, Parent intends to cause the Company to
continue its historic business or use a significant portion of its historic
business assets in a business.
3
9. Neither Parent nor Sub is an investment company as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.
10. Neither Parent nor Sub will take any position on any
Federal, state or local income or franchise tax return, or take any other tax
reporting position, that is inconsistent with the treatment of the Merger as a
reorganization within the meaning of Section 368(a) of the Code, unless
otherwise required by a "determination" (as defined in Section 1313(a)(1) of the
Code) or by applicable state or local income or franchise tax law.
11. None of the compensation received by any stockholder-
employee of the Company in respect of periods after the Effective Time
represents separate consideration for, or is allocable to, any of their Company
Common Stock. None of the Parent Common Stock that will be received by Company
stockholder-employees in the Merger represents separately bargained for
consideration which is allocable to any employment agreement or arrangement. The
compensation paid to any shareholder-employees will be for services actually
rendered and will be determined by bargaining at arm's-length.
12. No stock of Sub will be issued in the Merger.
13. There is no intercorporate indebtedness existing between
Parent and the Company or between Sub and the Company that was issued or
acquired, or will be settled, at a discount.
14. The Merger Agreement and the documents described in Section
9.9(a) of the Merger Agreement represent the entire understanding of the
Company, Parent and Sub with respect to the Merger.
4
15. Sub is a corporation newly formed for the purpose of
participating in the Merger and at no time prior to the Merger has had assets
(other than nominal assets contributed upon the formation of Sub, which assets
will be held by the Company following the Merger) or business operations. Sub
will have no liabilities assumed by the Company, and will not transfer to the
Company any assets subject to liabilities in the Merger.
16. The Company Common Stock will be surrendered pursuant to the
Merger in an arms-length exchange, and the Parent Common Stock received in
exchange therefor represents the sole bargained-for consideration therefor.
The Boeing Company,
By: ___________________________
EXHIBIT 7.1(g)(3)
[Letterhead of]
[McDONNELL DOUGLAS CORPORATION STOCKHOLDER]
___, 1997
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Dear Sirs:
In connection with the opinion to be delivered by you pursuant
to the Agreement and Plan of Merger (the "Merger Agreement") dated as of
December 14, 1996, by and among The Boeing Company, a Delaware corporation
("Parent"), McDonnell Douglas Corporation, a Maryland corporation (the
"Company"), and West Acquisition Corp., a Maryland corporation and a wholly
owned subsidiary of Parent ("Sub"), the undersigned certifies (to the best of
its knowledge and belief, where indicated), after due inquiry and investigation,
as follows (any capitalized term used but not defined herein shall have the
meaning given to such term in the Merger Agreement):
1. The undersigned has no present plan or intention to sell,
exchange or otherwise dispose of, reduce the risk of loss (by short sale or
otherwise) of the holding of, enter into any contract or other arrangement with
respect to, the sale, exchange or other disposition of (each of the foregoing, a
"disposition"), any interest in the shares of Parent common stock received in
the merger contemplated by the Merger Agreement (the "Merger"). For purposes of
this representation, shares of Company common stock and shares of Parent common
stock received in the Merger and sold, redeemed or disposed of prior to or
subsequent to the Merger, in contemplation thereof or as part of a plan
therewith, will be considered in making this representation.
2
2. The undersigned will not take any position on any Federal,
state or local income or franchise tax return, or take any other tax reporting
position, that is inconsistent with the treatment of the Merger as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), unless otherwise required by a "determination"
(as defined in Section 1313(a)(1) of the Code) or by applicable state or local
income or franchise tax law.
[McDONNELL DOUGLAS CORPORATION
STOCKHOLDER]
------------------------------
Dates Referenced Herein and Documents Incorporated by Reference
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