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SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
REG. SEC.240.14A-101
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-12
</TABLE>
PRIMEX TECHNOLOGIES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[PRIMEX TECHNOLOGIES LOGO]
Primex Technologies, Inc.
10101 Ninth Street North,
St. Petersburg, Florida
33716-3807
December 21, 2000
Dear Shareholder:
We invite you to attend a special meeting of shareholders of Primex
Technologies, Inc., to be held at 10:30 a.m., local time, on January 24, 2001,
at Renaissance Vinoy Resort, 501 5th Avenue N.E., St. Petersburg, Florida.
At the special meeting, we will ask you to approve the merger agreement
that we entered into on November 9, 2000 with General Dynamics Corporation
pursuant to which our company would be merged with a wholly owned subsidiary of
General Dynamics. If we complete the merger, you will receive $32.10 in cash,
without interest, for each share of Primex common stock you own, and Primex will
become a 100% owned subsidiary of General Dynamics.
The Board of Directors carefully reviewed and considered the terms and
conditions of the proposed merger. Based on its review, the Board of Directors
has determined that the terms of the merger agreement and the merger are in the
best interests of Primex and its shareholders. In making this determination, the
Board of Directors considered, among other things, the oral opinion given by
Goldman, Sachs & Co., Primex's financial advisor, on November 8, 2000 (confirmed
in writing on November 9, 2000) to the effect that, as of that date and on the
basis of and subject to the assumptions, limitations and qualifications set
forth in its written confirmation, the $32.10 per share to be received in the
merger is fair, from a financial point of view, to our shareholders. The written
confirmation of the Goldman, Sachs & Co. opinion is attached as Appendix B to
the attached proxy statement and should be read carefully in its entirety.
THE BOARD OF DIRECTORS HAS APPROVED THE MERGER AND RECOMMENDS THAT YOU VOTE
"FOR" THE APPROVAL OF THE MERGER AGREEMENT AT THE SPECIAL MEETING.
Your vote is very important. We cannot complete the merger unless the
conditions to closing are satisfied, including approval of the merger agreement
by the affirmative vote of the holders of more than two-thirds of the
outstanding shares of our common stock. Failure to vote will have the same
effect as a vote against approval of the merger agreement. Only holders of our
stock of record at the close of business on December 15, 2000 are entitled to
notice of and to vote at the special meeting or at any adjournments or
postponements.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE REQUESTED TO
COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD. If you hold your shares in
"street name", you should instruct your broker how to vote in accordance with
your voting instruction form.
The accompanying proxy statement explains the proposed merger and merger
agreement and provides specific information concerning the special meeting.
Please read these materials carefully.
Sincerely,
/s/ James G. Hascall
JAMES G. HASCALL
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
December 21, 2000
PRIMEX TECHNOLOGIES, INC.
10101 NINTH STREET NORTH
ST. PETERSBURG, FLORIDA
33716-3807
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Primex Technologies, Inc.:
The special meeting of shareholders of Primex Technologies, Inc. will be
held at Renaissance Vinoy Resort, 501 5th Avenue N.E., St. Petersburg, Florida,
on January 24, 2001, at 10:30 a.m., local time, for the purposes of considering
and voting upon a proposal to approve the Agreement and Plan of Merger, dated as
of November 9, 2000, among General Dynamics Corporation, Mars Acquisition
Corporation and Primex. In the merger, each outstanding share of common stock,
$1.00 par value per share, of Primex (other than certain shares held directly or
indirectly by General Dynamics or Primex) will be converted into the right to
receive $32.10 in cash, without interest. The merger agreement is more fully
described in the accompanying proxy statement and is attached as Appendix A to
the proxy statement. No other matters, except upon appropriate motion a
shareholder vote to adjourn or postpone the special meeting, may be brought
before the special meeting.
Primex's Board of Directors has fixed the close of business on December 15,
2000 as the record date for determining shareholders entitled to notice of and
to vote at the special meeting and any adjournment or postponement of the
meeting. A list of shareholders entitled to vote at the special meeting will be
available for examination at Primex's headquarters, during ordinary business
hours, from the date of the proxy statement until the special meeting.
The accompanying proxy statement describes the proposed merger, the actions
to be taken in connection with the merger and additional information about the
parties involved and their interests. Please give all this information your
careful attention.
THE BOARD OF DIRECTORS OF PRIMEX RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE MERGER AGREEMENT.
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON. YOU
MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE IN THE MANNER DESCRIBED
IN THE ATTACHED PROXY STATEMENT. ANY SHAREHOLDER PRESENT AT THE SPECIAL MEETING,
INCLUDING ANY ADJOURNMENT OR POSTPONEMENT, MAY REVOKE SUCH SHAREHOLDER'S PROXY
AND VOTE PERSONALLY ON THE MERGER AGREEMENT TO BE CONSIDERED AT THE SPECIAL
MEETING. EXECUTED PROXIES WITH NO INSTRUCTIONS INDICATED THEREON WILL BE VOTED
"FOR" APPROVAL OF THE MERGER AGREEMENT.
PLEASE DO NOT SEND YOUR SHARE CERTIFICATES AT THIS TIME.
By Order of the Board of Directors,
/s/ George H. Pain
GEORGE H. PAIN
Secretary
The proxy statement is dated December 21, 2000 and is first being mailed to
Primex's shareholders on or about December 21, 2000.
<PAGE> 4
TABLE OF CONTENTS
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
SUMMARY..................................................... 2
THE SPECIAL MEETING......................................... 6
General................................................... 6
Record date and quorum requirement........................ 6
Voting procedures; Required vote; Revocability of proxy... 7
Adjournments or postponements............................. 7
THE PARTIES................................................. 8
Primex Technologies, Inc. ................................ 8
General Dynamics Corporation.............................. 8
Mars Acquisition Corporation.............................. 8
SPECIAL FACTORS............................................. 9
Background of the merger.................................. 9
Recommendation of our Board of Directors; Reasons for the
merger................................................. 10
Opinion of Goldman, Sachs & Co. .......................... 10
Interests of Primex directors and executive officers...... 17
Effects of the merger..................................... 20
Federal income tax consequences........................... 21
Dissenters' rights........................................ 21
Approvals................................................. 21
Source of funds........................................... 22
THE MERGER AGREEMENT........................................ 23
The merger................................................ 23
Effective time of the merger.............................. 23
Payment for shares........................................ 23
Representations and warranties............................ 24
Covenants................................................. 24
Indemnification........................................... 26
Termination............................................... 26
No solicitation of transactions........................... 26
Termination fee payable to General Dynamics............... 27
Employee benefit matters.................................. 28
Conditions to the merger.................................. 29
Expenses.................................................. 29
Amendment and waiver...................................... 29
OWNERSHIP OF THE COMPANY.................................... 30
5% shareholders........................................... 30
Directors and executive officers.......................... 31
PRICE RANGE OF COMMON STOCK AND DIVIDENDS................... 32
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS... 32
ADDITIONAL INFORMATION...................................... 34
Solicitation of proxies/costs............................. 34
Other matters............................................. 34
Shareholder proposals..................................... 34
Voting procedures......................................... 34
WHERE YOU CAN FIND MORE INFORMATION......................... 35
APPENDIX A Merger agreement................................. A-1
APPENDIX B Fairness opinion................................. B-1
</TABLE>
<PAGE> 5
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT AM I VOTING FOR?
A: We are asking for your vote to approve the merger agreement that we
entered into on November 9, 2000 with General Dynamics Corporation
pursuant to which our company will be merged with a wholly owned
subsidiary of General Dynamics.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: If we complete the merger, you will receive $32.10 in cash for each
share of Primex common stock you own.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the information contained in
this proxy statement, please complete, date and sign your proxy and
return it in the enclosed return envelope as soon as possible, so that
your shares may be represented at the special meeting.
If you sign and send in your proxy and do not indicate how you want to
vote, we will count your proxy in favor of approval of the merger
agreement.
If you abstain from voting or do not vote, it will count as a vote
against the approval of the merger agreement.
The special meeting will take place on January 24, 2001. You may attend
the special meeting and vote your shares in person rather than voting
by proxy.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY?
A: Yes. You can change your vote at any time before your proxy is voted at
the special meeting. You can do this in one of three ways. First, you
can attend the special meeting and vote in person. Second, you can send
a written notice stating that you would like to revoke your proxy.
Third, you can complete and submit a new proxy. If you chose either of
these final two methods, you must submit your notice of revocation or
your new proxy to Primex's solicitation agent, Georgeson & Company,
Inc., at the following address so that your notice or new proxy is
received by the solicitation agent prior to 9:00 a.m. on the date of
the special meeting:
Georgeson Shareholder Communications Inc.
17 State Street
New York, New York 10004
Telephone: (800) 223-2064
Q: IF MY BROKER HOLDS MY SHARES IN "STREET NAME", WILL MY BROKER VOTE MY
SHARES?
A: Your broker will vote your shares only if you provide instructions as
to how to vote. You should follow the directions provided by your
broker regarding how to instruct your broker to vote your shares. If
you do not provide your broker with instructions on how to vote your
shares, it will count as a vote against the approval of the merger
agreement.
Q: AM I ENTITLED TO DISSENTERS' RIGHTS?
A: Under Virginia law, Primex shareholders are not entitled to dissenters'
rights, rights of appraisal or similar rights in connection with the
merger.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, you will receive written
instructions for exchanging your stock certificates. Please do not send
in your stock certificates with your proxy.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the merger or if you need additional
copies of this proxy statement or the enclosed proxy, you should
contact:
Georgeson Shareholder Communications Inc.
17 State Street
New York, New York 10004
Telephone: (800) 223-2064
Primex Technologies, Inc.
10101 Ninth Street North
St. Petersburg, Florida 33716
Attention: Gail Wilson
Telephone: (727) 578-8144
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<PAGE> 6
SUMMARY
This summary highlights selected information from this proxy statement
relating to the proposed merger and may not contain all of the information that
may be important to you. To understand the merger and related matters fully and
for a more complete description of the legal terms of the merger, you should
read carefully this entire proxy statement and the attached documents. Where
appropriate, items in this summary include a cross reference directing you to a
more complete description included elsewhere in this proxy statement.
THE SPECIAL MEETING
TIME AND PLACE OF THE SPECIAL MEETING
The special meeting of our shareholders will be held on January 24, 2001,
at 10:30 a.m., local time, at Renaissance Vinoy Resort, 501 5th Avenue N.E., St.
Petersburg, Florida.
PURPOSE OF THE SPECIAL MEETING
At the special meeting, our shareholders will consider and vote on a
proposal to approve the merger agreement, dated November 9, 2000, among General
Dynamics Corporation, Mars Acquisition Corporation and Primex Technologies,
Inc., which we refer to as "Primex" or the "Company". Under the merger
agreement, the Company will be merged with a wholly owned subsidiary of General
Dynamics, with the Company as the surviving corporation in the merger. Each
outstanding share of our common stock, par value $1.00 per share, other than
certain shares held directly or indirectly by General Dynamics or the Company,
will be converted automatically into the right to receive $32.10 in cash,
without interest. See "THE MERGER AGREEMENT -- The merger" beginning on page 23.
RECORD DATE AND QUORUM
Our Board of Directors has fixed the close of business on December 15,
2000, as the record date for determining shareholders entitled to notice of, and
to vote at, the special meeting and any adjournments or postponements. Each
holder of record of shares of our common stock at the close of business on the
record date is entitled to one vote for each share then held on each matter
submitted to a vote of shareholders. At the close of business on the record
date, 10,402,575 shares of our common stock were outstanding. The holders of a
majority of the outstanding shares of common stock must be present in person or
represented by proxy to constitute a quorum for the transaction of business at
the special meeting. See "THE SPECIAL MEETING -- Record date and quorum
requirement" beginning on page 6.
REQUIRED VOTE AND PROXIES
The affirmative vote of the holders of more than two-thirds of the
outstanding shares of our common stock is required to approve the merger
agreement. A failure to vote or a vote to abstain generally will have the same
effect as a vote cast against approval of the merger agreement. Brokers who hold
shares as nominees will not have discretionary authority to vote such shares in
the absence of instructions from the beneficial owners, and a broker non-vote
will have the same effect as a vote against approval of the merger agreement.
Shareholders are requested to promptly complete, date, sign and return the
accompanying proxy card. A shareholder may revoke a proxy at any time prior to
its exercise. See "THE SPECIAL MEETING -- Voting procedures; Required vote;
Revocability of proxy" beginning on page 7.
THE PARTIES
THE COMPANY
Primex provides a variety of munitions, propellants, satellite propulsion
systems and electronic products to the U.S. government and its allies, as well
as domestic and international industrial customers. The Company had
approximately 2400 employees as of October 31, 2000.
Our headquarters are located at 10101 Ninth Street North, St. Petersburg,
Florida 33716. Our general telephone number at the headquarters is (727)
578-8100.
GENERAL DYNAMICS CORPORATION
General Dynamics is engaged in business aviation, information systems,
shipbuilding and marine systems and combat systems. Shares of common stock of
General Dynamics are listed on the New York Stock Exchange under the ticker
symbol "GD".
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<PAGE> 7
The headquarters of General Dynamics are located at 3190 Fairview Park
Drive, Falls Church, Virginia 22041. General Dynamics' general telephone number
at the headquarters is (703) 876-3000.
MARS ACQUISITION CORPORATION.
Mars Acquisition Corporation is a newly-formed corporation organized and
existing under the laws of Delaware. General Dynamics directly owns 100% of Mars
Acquisition Corporation. Mars Acquisition Corporation was organized solely for
the purpose of entering into the merger agreement with the Company and has not
conducted any business operations.
SPECIAL FACTORS
BACKGROUND OF THE MERGER
For a description of the events leading to the approval of the merger by
our Board of Directors and the reasons for such approval, you should refer to
"SPECIAL FACTORS -- Background of the merger" beginning on page 9 and
"-- Recommendation of our Board of Directors; Reasons for the merger" beginning
on page 10.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
On November 8, 2000, our Board of Directors approved the merger agreement
and recommended that our shareholders approve the merger agreement by unanimous
vote of those directors present. In connection with the foregoing, our Board of
Directors determined that the merger is in the best interests of the Company and
its shareholders. In making its recommendation, our Board of Directors relied
upon, among other things, the fairness opinion of the Company's financial
advisor, Goldman, Sachs & Co. See "SPECIAL FACTORS -- Recommendation of our
Board of Directors; Reasons for the merger" beginning on page 10 and "-- Opinion
of Goldman, Sachs & Co." beginning on page 10.
OUR BOARD OF DIRECTORS RECOMMENDS THAT OUR SHAREHOLDERS VOTE "FOR" APPROVAL
OF THE MERGER AGREEMENT.
OPINION OF THE FINANCIAL ADVISOR
Goldman, Sachs & Co. provided its oral opinion on November 8, 2000
(confirmed in writing on November 9, 2000) to our Board of Directors that, as of
that date, the merger consideration was fair from a financial point of view to
our shareholders (other than General Dynamics and its subsidiaries).
The full text of the written confirmation of the Goldman, Sachs & Co.
opinion, which sets forth assumptions made, matters considered and limitations
on the review undertaken in connection with the opinion, is attached as Appendix
B and incorporated by reference into this proxy statement. The opinion of
Goldman, Sachs & Co. does not constitute a recommendation as to how you should
vote with respect to the merger agreement. We urge you to read the opinion in
its entirety. See "SPECIAL FACTORS -- Opinion of Goldman, Sachs & Co." beginning
on page 10.
REASONS FOR THE MERGER
The principal purpose of the merger is to enable General Dynamics to own
all of the equity interests in the Company and provide you the opportunity to
receive liquidity for your shares at a premium cash price over the market prices
at which the common stock generally traded prior to the announcement of the
merger agreement. See "SPECIAL FACTORS -- Recommendation of our Board of
Directors; Reasons for the merger" beginning on page 10.
INTERESTS OF PRIMEX DIRECTORS AND EXECUTIVE OFFICERS
In considering the recommendation of our Board of Directors with respect to
the merger agreement, you should be aware that some of our directors and
executive officers have interests in connection with the merger that are
different from, or in addition to, the interests of other Company shareholders.
These interests exist because of change in control agreements that the executive
officers have with the Company and rights that the executive officers and
directors have under the Company's compensation and benefits plans. In addition,
the merger agreement requires General Dynamics to indemnify directors and
executive officers of the Company for events occurring before the merger,
including events that are related to the merger. See "SPECIAL
FACTORS -- Interests of Primex directors and executive officers" beginning on
page 17 and "THE MERGER AGREEMENT -- Indemnification" beginning on page 26.
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<PAGE> 8
FEDERAL INCOME TAX CONSEQUENCES
The receipt of the cash merger consideration by a holder of our shares will
be a taxable transaction for U.S. federal income tax purposes. We urge you to
consult your tax advisors to determine the effect of the merger under applicable
federal, state, local and foreign tax laws. See "SPECIAL FACTORS -- Federal
income tax consequences" beginning on page 21.
RIGHTS OF DISSENTING SHAREHOLDERS
Under Virginia law, the Company's shareholders are not entitled to any
dissenters' rights, rights of appraisal or similar rights in connection with the
merger.
APPROVALS
The obligation of each of General Dynamics and the Company to close the
merger is subject to the receipt of any material regulatory approvals. The
waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 expired on December 15, 2000. We are not aware of any other significant
regulatory approval required in connection with the merger. See "SPECIAL
FACTORS -- Approvals" beginning on page 21.
SOURCE OF FUNDS
General Dynamics has informed us that the aggregate merger consideration
(including the cancellation of outstanding options and stock appreciation
rights) of approximately $354 million will be financed through its cash on hand,
existing lines of credit or other sources of funds (or a combination of such
sources).
THE MERGER AGREEMENT
THE MERGER
The merger agreement provides that, subject to satisfaction of various
conditions, Mars Acquisition Corporation will be merged with and into the
Company. Following the merger, the separate existence of Mars Acquisition
Corporation will cease, and the Company will continue as the surviving
corporation. As of the effective time of the merger, each of our issued and
outstanding shares, other than certain shares held directly or indirectly by
General Dynamics or the Company, will, by virtue of the merger, be canceled and
converted into the right to receive $32.10 in cash, without interest. See "THE
MERGER AGREEMENT -- The merger" beginning on page 23.
EFFECTIVE TIME OF THE MERGER AND PAYMENT FOR SHARES
The effective time of the merger will occur no later than three business
days following the satisfaction or waiver of the conditions to the merger
contained in the merger agreement. See "THE MERGER AGREEMENT -- Conditions to
the merger" beginning on page 29. Detailed instructions with regard to the
surrender of share certificates, together with a letter of transmittal, will be
forwarded to shareholders by the paying agent promptly following the effective
time of the merger. Shareholders should not submit their certificates to the
paying agent until they have received such materials. The paying agent will send
payment of the merger consideration to you as promptly as practicable following
receipt by the paying agent of your certificates and other required documents.
No interest will be paid or accrued on the cash payable upon the surrender of
certificates. See "THE MERGER AGREEMENT -- Payment for shares" beginning on page
23.
You should not send any share certificates to us at this time.
CONDITIONS TO THE MERGER
Each party's obligation to complete the merger is subject to satisfaction
of a number of conditions, including with respect to one or both parties:
- the merger agreement shall have been approved by holders of more than
two-thirds of the outstanding shares of our common stock;
- the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the receipt of
any other material regulatory approvals;
- the absence of any injunction or other legal restraint preventing the
closing of the merger;
- the representations and warranties of the Company, on the one hand, and
General Dynamics and Mars Acquisition Corporation, on the other hand, are
true and correct
4
<PAGE> 9
(subject, in most cases, to certain materiality standards) as of the
effective time of the merger (unless any such representation or warranty
refers to some other time); and
- performance by the Company, on the one hand, and General Dynamics and
Mars Acquisition Corporation, on the other hand, in all material respects
of their respective covenants.
Any or all of the conditions that have not been satisfied may be waived
(other than conditions that are required by law, such as approval of the merger
agreement by our shareholders, certain regulatory approvals and the absence of
injunctions enjoining the merger). See "THE MERGER AGREEMENT -- Conditions to
the merger" beginning on page 29. Even if our shareholders approve the merger
agreement, we cannot assure you that the merger will be completed.
TERMINATION
The merger agreement contains provisions addressing the circumstances under
which the Company or General Dynamics may terminate the merger agreement. In
addition, the merger agreement provides that, in several circumstances, the
Company may be required to pay General Dynamics a termination fee of $10
million. For a more complete discussion, see "THE MERGER
AGREEMENT -- Termination" beginning on page 26 and "-- Termination fee payable
to General Dynamics" beginning on page 27.
EXPENSES
All fees and expenses incurred in connection with the merger will be paid
by the party incurring such fees or expenses.
SECURITY OWNERSHIP OF PRIMEX DIRECTORS AND EXECUTIVE OFFICERS
At the close of business on the record date, our directors and executive
officers owned and were entitled to vote, in the aggregate, 458,141, or
approximately 4.4%, of the outstanding shares of our common stock. To our
knowledge, all of our directors and executive officers intend to vote their
beneficially owned shares which are eligible to be voted on the merger agreement
proposal in favor of approval of the merger agreement. See "OWNERSHIP OF THE
COMPANY -- Directors and executive officers" beginning on page 31.
MARKET PRICES OF COMMON STOCK
Currently, shares of our common stock are listed for trading on The Nasdaq
National Market. As a result of the merger, we will become a wholly owned
subsidiary of General Dynamics, and our shares will cease to trade on any public
trading market. The closing price of our common stock on December 15, 2000, was
$31.69 per share.
On the record date, there were approximately 5340 holders of record of our
common stock.
5
<PAGE> 10
THE SPECIAL MEETING
GENERAL
This proxy statement is being delivered to you in connection with a special
meeting of shareholders to be held on January 24, 2001, at 10:30 a.m., local
time, at Renaissance Vinoy Resort, 501 5th Avenue N.E., St. Petersburg, Florida.
The purpose of the special meeting is for our shareholders to consider and vote
upon a proposal to approve the Agreement and Plan of Merger dated as of November
9, 2000, among the Company, General Dynamics and Mars Acquisition Corporation.
Each copy of this proxy statement is accompanied by a proxy card or a voting
instruction card furnished in connection with the solicitation of proxies or
voting instructions by our Board of Directors for use at the special meeting.
This proxy statement is being mailed on or about December 21, 2000, to our
shareholders of record on December 15, 2000.
Our Board of Directors has determined that the merger and the merger
agreement are in the best interest of the Company and its shareholders and has
approved the merger and the merger agreement by unanimous vote of the directors
present. ACCORDINGLY, OUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" APPROVAL OF THE MERGER AGREEMENT. See "SPECIAL FACTORS -- Background of
the merger" beginning on page 9 and "-- Recommendation of our Board of
Directors; Reasons for the merger" beginning on page 10.
Shareholders are requested to promptly complete, date, sign and return the
accompanying proxy card. Return of an executed proxy with no instructions
indicated thereon will result in the applicable shares being voted "FOR"
approval of the merger agreement. A vote to abstain or a failure to return a
properly executed proxy card or to vote at the special meeting will have the
effect of a vote "AGAINST" approval of the merger agreement.
RECORD DATE AND QUORUM REQUIREMENT
Our Board of Directors has fixed the close of business on December 15, 2000
as the record date for the determination of shareholders entitled to notice of
and to vote at the special meeting. Each holder of record of common stock at the
close of business on the record date is entitled to one vote for each share then
held on each matter submitted to a vote of shareholders. Of those shares of
common stock outstanding as of the record date, approximately 1,067,770 shares
were held in the Primex Technologies, Inc. Retirement Investment Management
Experience Plan, which we refer to as the "PRIME Plan", by Boston Safe Deposit
and Trust Company, N.A., as the trustee. In addition, approximately 752,630
shares were held in the Olin Corporation Contributing Employee Ownership Plan,
which we refer to as the "CEOP", by the State Street Bank and Trust Company, as
the trustee. Each individual participating in the PRIME Plan or the CEOP is
entitled to instruct the trustee how to vote all shares of common stock credited
to the participant's account as of the record date. Shares of common stock held
in the PRIME Plan and the CEOP for which voting instructions are not received
from PRIME Plan or CEOP participants, respectively, will be voted by the trustee
in the same proportion as shares of common stock for which the trustee has
received instructions.
The holders of a majority of the outstanding shares entitled to vote at the
special meeting must be present in person or represented by proxy to constitute
a quorum for the transaction of business. Abstentions and shares referred to as
"broker or nominee non-votes" that are represented at the special
meeting -- shares held by brokers or nominees as to which instructions have not
been received from the beneficial owners or other persons entitled to vote and
for which the broker or nominee does not have discretionary voting power on a
particular matter -- are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. If less than a majority of
outstanding shares are represented at the special meeting, the special meeting
will be adjourned to a time, date and place designated by our management.
SHAREHOLDERS SHOULD NOT FORWARD ANY SHARE CERTIFICATES WITH THEIR PROXY
CARDS. IN THE EVENT THE MERGER IS COMPLETED, SHARE CERTIFICATES SHOULD BE
DELIVERED IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF TRANSMITTAL,
WHICH WILL BE SENT TO SHAREHOLDERS BY THE PAYING AGENT, PROMPTLY AFTER THE
EFFECTIVE TIME OF THE MERGER.
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VOTING PROCEDURES; REQUIRED VOTE; REVOCABILITY OF PROXY
Approval of the merger agreement will require the affirmative vote of the
holders of more than two-thirds of the outstanding shares of our common stock.
Except for shares held by PRIME Plan and CEOP participants, a failure to vote or
a vote to abstain will have the same effect as a vote cast against approval of
the merger agreement. Brokers and, in many cases, nominees will not have
discretionary power to vote on the merger proposal to be presented at the
special meeting. Accordingly, beneficial owners of shares should instruct their
brokers or nominees on how to vote. A broker or nominee non-vote will have the
same effect as a vote against approval of the merger agreement. If no
instructions are indicated on a properly executed proxy, such proxy will be
voted "FOR" approval of the merger agreement in accordance with the
recommendation of our Board of Directors. A shareholder may revoke a proxy at
any time prior to its exercise.
A shareholder may revoke a proxy by delivering to the Company's
solicitation agent, Georgeson & Company, Inc., either (1) a written notice of
revocation or (2) a duly executed proxy bearing a later date. Such notice or new
proxy must be received by the solicitation agent prior to 9:00 a.m. on the date
of the special meeting. A shareholder may also revoke a proxy by attending the
special meeting and voting in person. The presence of a shareholder at the
special meeting will not in and of itself automatically revoke such
shareholder's proxy. The address of the Company's solicitation agent is
Georgeson Shareholder Communications Inc., 17 State Street, New York, New York
10004.
ADJOURNMENTS OR POSTPONEMENTS
Although it is not expected, the special meeting may be adjourned or
postponed for the purpose of soliciting additional proxies or for other reasons
as determined by our Board of Directors. Any adjournment or postponement may be
made without notice, including by an announcement made at the special meeting,
by approval of the holders of a majority of the voting power represented by the
outstanding shares of the Company's common stock present in person or
represented by proxy at the special meeting, whether or not a quorum exists. Any
signed proxies received by the Company will be voted in favor of an adjournment
or postponement in these circumstances unless a written note on the proxy by the
shareholder directs otherwise. Any adjournment or postponement of the special
meeting for the purpose of soliciting additional proxies or for other reasons
will allow the Company's shareholders who have already sent in their proxies to
revoke them at any time prior to their use.
7
<PAGE> 12
THE PARTIES
PRIMEX TECHNOLOGIES, INC.
We are Primex Technologies, Inc. In this proxy statement, we refer to our
company as "Primex", the "Company", "we" or "us". We were organized under the
laws of the Commonwealth of Virginia in May 1996 and have been publicly owned
since December 31, 1996, when Olin Corporation made a distribution to its
shareholders of all the outstanding shares of our common stock. The Company
provides a variety of ordnance and aerospace products and services to the U.S.
government, friendly foreign governments and domestic and international
commercial and industrial customers. Our business operations are organized into
two segments that correspond to our primary products and services. Through our
Ordnance and Tactical Systems ("Ordnance") segment, the Company designs and
manufactures tank and other large and medium caliber ammunition for U.S. and
friendly foreign government customers. These products are used in ships,
aircraft, tanks and fighting vehicle based weapons and other applications.
Additionally, the Ordnance segment manufactures precision metal components and
provides explosive load, assemble and pack services for a variety of tactical
missile and rocket programs. The Ordnance segment also designs and produces
shaped charge warheads and control actuator systems that are used in various
weapons. Ball Powder(R) propellant, which is sold to U.S. and friendly foreign
militaries, commercial ammunition manufacturers and sporting and recreational
customers, is also manufactured by the Ordnance segment. The Aerospace and
Electronics ("Aerospace") segment designs and manufactures electronic products
utilized primarily in aeronautic applications, as well as rocket engines and
electronic products used in space applications. The Aerospace segment also
produces solid propellant products used in munitions dispensing and inflation
devices.
Our principal executive offices are located at 10101 Ninth Street North,
St. Petersburg, Florida 33716. Our general telephone number at that location is
(727) 578-8100.
GENERAL DYNAMICS CORPORATION
General Dynamics Corporation is a Delaware corporation formed in 1952 as
successor to the Electric Boat Company. The primary businesses of General
Dynamics focus on business aviation, information systems, shipbuilding, marine
systems and land and amphibious combat systems.
General Dynamics' principal executive offices are located at 3190 Fairview
Park Drive, Falls Church, Virginia 22041. Their general telephone number at that
location is (703) 876-3000.
MARS ACQUISITION CORPORATION
Mars Acquisition Corporation is a newly-formed corporation organized and
existing under the laws of Delaware. General Dynamics directly owns all the
outstanding shares of capital stock of Mars Acquisition Corporation. Mars
Acquisition Corporation was organized solely for the purpose of entering into
the merger agreement with the Company and has not conducted any business
operations.
8
<PAGE> 13
SPECIAL FACTORS
BACKGROUND OF THE MERGER
In January 2000, we received an unsolicited indication of interest to
acquire the Company from a financial investor. At the February 29, 2000 meeting
of our Board of Directors, in order to adequately respond to the offer, the
Board of Directors decided to explore the possibility of a strategic transaction
between the Company and certain potential industry and financial partners. The
Company engaged Goldman, Sachs & Co. to conduct a review of such strategic
possibilities, including contacting a number of potential partners to solicit
interest in a strategic transaction with the Company. Following the completion
of the review in April 2000 and based upon the responses and indications of
interest received by the Company as a result of the contacts, our Board of
Directors decided not to pursue any strategic transaction at such time.
In September 2000, James G. Hascall, our Chairman and Chief Executive
Officer, J. Douglas DeMaire, our President, and two other executive officers of
the Company met with Nicholas D. Chabraja, Chairman and Chief Executive Officer
of General Dynamics, and other officers and employees of General Dynamics, at a
meeting unrelated to a strategic transaction between General Dynamics and the
Company.
In early October 2000, Mr. Chabraja telephoned Mr. Hascall and indicated
that General Dynamics might be interested in pursuing a strategic transaction
with the Company and also indicated that he would be in further contact with Mr.
Hascall.
On October 18, 2000, Mr. Chabraja and Arthur J. Veitch, a Senior Vice
President of General Dynamics, met with Mr. Hascall and Mr. DeMaire to discuss
General Dynamics' interest in the Company. On October 19, 2000, the Company
received an offer letter from General Dynamics indicating that General Dynamics
was prepared to make an all-cash offer to acquire the Company, subject to a
number of conditions, including the completion of a due diligence review. In
response to the offer letter, Mr. Hascall indicated to Mr. Chabraja that he
would present the offer contained in the General Dynamics offer letter to the
Company's Board of Directors meeting scheduled for November 8, 2000. We also
contacted our financial and legal advisors, including Goldman, Sachs & Co. and
Cravath, Swaine & Moore, in connection with the proposed transaction. Mr.
Hascall also individually apprised each of the Company's directors concerning
the offer from General Dynamics. The Company then invited General Dynamics to
conduct its due diligence investigation.
From late October 2000 through early November 2000, representatives of the
Company, General Dynamics and their respective advisors met or spoke on numerous
occasions regarding the business and financial condition of the Company and the
status of General Dynamics' due diligence investigation. Representatives of the
Company, General Dynamics and their respective advisors also engaged in
negotiations concerning the merger agreement and other related documents during
this period. The Company and General Dynamics reached a definitive agreement on
the terms and conditions of the merger and the merger agreement by November 8,
2000.
At a Board of Directors meeting held on November 6, 2000, General Dynamics'
Board of Directors considered and approved the merger and other related
transactions by unanimous vote.
On November 8, 2000, our Board of Directors convened to consider the merger
and related transactions. At the meeting, (1) Mr. Hascall reported on the
background to the merger and merger negotiations, (2) our outside counsel,
Cravath, Swaine & Moore, described the terms of the proposed transaction, as
well as the fiduciary obligations of directors in considering the proposed
transaction, and (3) our financial advisor, Goldman, Sachs & Co., reported on
the financial aspects of the merger and delivered an oral opinion (confirmed in
writing on November 9, 2000) to the effect that, as of November 8, 2000 and on
the basis of and subject to the assumptions, limitations and qualifications set
forth in its written confirmation, the $32.10 per share to be received in the
merger was fair, from a financial point of view, to our shareholders. On the
evening of November 8, 2000, our Board of Directors approved the merger and
related transactions by unanimous vote of those present.
On the morning of November 9, 2000, the merger agreement and related
agreements were executed and delivered, and the transaction was publicly
announced jointly by General Dynamics and us.
9
<PAGE> 14
RECOMMENDATION OF OUR BOARD OF DIRECTORS; REASONS FOR THE MERGER
OUR BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS IN THE BEST INTEREST OF
THE COMPANY AND OUR SHAREHOLDERS. ACCORDINGLY, OUR BOARD OF DIRECTORS HAS, BY A
UNANIMOUS VOTE OF DIRECTORS PRESENT, APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND RECOMMENDS THAT OUR
SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
In deciding to approve the merger and related transactions, our Board of
Directors considered a variety of factors, including (1) the lack of day-to-day
liquidity faced by many of our shareholders in holding their shares, (2) the
premium that the merger price represented to current and historical market
values and various other valuations of the Company, (3) the opinion rendered by
Goldman, Sachs & Co. regarding the fairness of the merger consideration, from a
financial point of view, to the holders of shares of our common stock (other
than General Dynamics and its subsidiaries), (4) the ability of our Board of
Directors to enter into discussions with other parties in the event that a
possible superior proposal is made to the Company, (5) the range of alternative
strategies or transactions which might be available to us and the prices at
which those transactions might be implemented, (6) the absence of any financing
condition to General Dynamics' obligations to close the transaction and the
ability of General Dynamics to pay the merger consideration and (7) the
likelihood of satisfying the regulatory and other conditions to closing the
merger.
In deciding to approve the merger and related transactions, our Board of
Directors considered the various factors discussed above. Our Board of Directors
did not, however, assign any relative or specific weights to those factors, and
individual directors may have given different weight to different factors.
OPINION OF GOLDMAN, SACHS & CO.
On November 8, 2000, Goldman, Sachs & Co. gave us its oral opinion
(confirmed in writing on November 9, 2000) that as of such date, based upon and
subject to the considerations set forth in its written confirmation, the $32.10
per share in cash to be received by the holders of shares of our common stock
(other than General Dynamics and its subsidiaries) pursuant to the merger
agreement was fair from a financial point of view to such holders.
You should consider the following when reading the discussion of the
opinion of Goldman, Sachs & Co. below:
- The written confirmation of the opinion of Goldman, Sachs & Co. is
attached as Appendix B to this proxy statement and is incorporated by
reference. We urge you to read it carefully.
- The Goldman, Sachs & Co. opinion was necessarily based upon conditions as
they existed and could be evaluated on November 8, 2000. Although
subsequent developments may affect its opinion, Goldman, Sachs & Co. does
not have any obligation to update, revise or reaffirm its opinion.
- The Goldman, Sachs & Co. opinion does not address the merits of the
proposed merger and the other business strategies considered by our Board
of Directors, nor does it address our Board of Directors' decision to
proceed with the proposed merger.
- The Goldman, Sachs & Co. opinion does not constitute a recommendation as
to how you should vote on the proposal to approve the merger agreement.
Although Goldman, Sachs & Co. evaluated the fairness, from a financial
point of view, to the holders of our common stock (other than General Dynamics
and its subsidiaries) of the $32.10 per share to be received as merger
consideration pursuant to the merger agreement, the consideration itself was
determined through arm's length negotiations between our senior management and
counsel and the senior management and counsel of General Dynamics. We did not
provide specific instructions to, or place any limitation on, Goldman, Sachs &
Co. with respect to the procedures to be followed or factors to be considered by
Goldman, Sachs & Co. in performing its analyses or providing its opinion.
10
<PAGE> 15
In connection with its opinion, Goldman, Sachs & Co. reviewed, among other
things:
- the merger agreement;
- our annual reports to shareholders on Form 10-K for the four years ended
December 31, 1999;
- certain of our interim reports to shareholders and quarterly reports on
Form 10-Q;
- certain other communications from us to our shareholders; and
- certain internal financial analyses and forecasts for us prepared by our
management.
Goldman, Sachs & Co. also held discussions with members of our senior
management regarding their assessment of our past and current business
operations, financial conditions and future prospects. In addition, Goldman,
Sachs & Co.:
- compared certain financial and stock market information for the Company
with similar information for certain other companies, the securities of
which are publicly traded;
- reviewed the financial terms of certain recent business combinations in
the aerospace and defense industry specifically and in other industries
generally;
- reviewed the reported price and trading activity for our common stock;
and
- performed such other studies and analyses as it considered appropriate.
Goldman, Sachs & Co. relied upon the accuracy and completeness of all the
financial and other information discussed with or reviewed by it and assumed
such accuracy and completeness for purposes of rendering its opinion. Goldman,
Sachs & Co. did not make an independent evaluation or appraisal of the assets
and liabilities of the Company or any of its subsidiaries and was not furnished
with any such evaluation or appraisal. Goldman, Sachs & Co. solicited from third
parties indications of interest in acquiring all of the Company, or engaging in
a business combination or any other strategic transaction with the Company,
through April 2000. Subsequent to that process, Goldman, Sachs & Co. was not
requested to solicit and did not solicit interest from third parties with
respect to any acquisition of, or strategic transaction with, the Company.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. Goldman,
Sachs & Co. is familiar with the Company, having acted as its financial advisor
in connection with, and having participated in certain of the negotiations
leading to, the merger agreement. Goldman, Sachs & Co. has also from time to
time provided investment banking services to General Dynamics, including having
acted as agent for General Dynamics' commercial paper program and common stock
repurchase plan and as General Dynamics' financial advisor in connection with
its acquisitions of Lockheed Martin Corporation's Armament and Defense division
in January 1997, Lucent Technologies' Advanced Technology Systems division in
October 1997 and Ceridian Corporation's Computing Devices International division
in January 1998. Goldman, Sachs & Co. may also provide investment banking
services to General Dynamics in the future. Goldman, Sachs & Co. provides a full
range of financial advisory and securities services and, in the course of its
normal trading activities, may from time to time effect transactions and hold
securities, including derivative securities, of the Company or General Dynamics
for its own account and the accounts of customers.
We have agreed to pay Goldman, Sachs & Co. a customary transaction fee upon
completion of the merger. The fee will be equal to 1.125% of the aggregate
consideration paid in the merger, including the amount of our indebtedness to be
assumed or repaid by General Dynamics and its subsidiaries. If the merger is
completed, as expected, at the price of $32.10 per share of our common stock,
Goldman, Sachs & Co. would be entitled to receive a transaction fee of
approximately $5.8 million (based on an underlying value of equity of
approximately $354 million and indebtedness of $165 million as of October 1,
2000). We have also agreed to indemnify Goldman, Sachs & Co. against various
liabilities, including various liabilities under the federal securities laws.
11
<PAGE> 16
The following is a summary of the material financial analyses used by
Goldman, Sachs & Co. in connection with reaching its opinion and does not
purport to be a complete description of the analyses performed by Goldman, Sachs
& Co. The following quantitative information, to the extent it is based on
market data, is based on market data as it existed at or about November 8, 2000
and is not necessarily indicative of current market conditions. You should
understand that the order of analyses and the results of such analyses described
does not represent the relative importance or weight given to such analyses by
Goldman, Sachs & Co. The summary of financial analyses includes information
presented in tabular format. In order to understand fully the financial analyses
used by Goldman, Sachs & Co., these tables must be read together with the text
of each summary. The tables alone do not describe completely the financial
analyses.
Comparison of selected transactions in the aerospace and defense industry
Goldman, Sachs & Co. reviewed publicly available information for seven
acquisitions in the aerospace and defense industry completed since August 1992.
This analysis demonstrates how selected financial data about the merger compares
to that of recent transactions in the aerospace and defense industry. Goldman,
Sachs & Co. selected the following acquisitions for comparison:
<TABLE>
<CAPTION>
CLOSING TRANSACTION
DATE ACQUIRING COMPANY ACQUIRED COMPANY VALUE
------- ----------------- ---------------- ---------------
($ IN MILLIONS)
<S> <C> <C> <C>
05/2000 Alcoa Inc. Cordant Technologies Inc. $2,965
11/1998 Primex Technologies, Inc. CMS Group 123
10/1997 Carlyle Group United Defense, L.P. 850
02/1997 Hughes Electronics Corporation Alliant Techsystems Inc. (Marine 141
Systems Business)
12/1996 General Dynamics Corporation Lockheed Martin Corporation 450
(Armaments and Defense Systems
Businesses)
03/1995 Alliant Techsystems Inc. Hercules Incorporated (Aerospace 440
Business)
08/1992 Hughes Aircraft Company General Dynamics Corporation 450
(Missile Business)
</TABLE>
The transaction value for each selected acquisition was measured as the
total equity consideration to be paid to the acquired company's shareholders,
plus indebtedness assumed by the acquiring company. Goldman, Sachs & Co.
calculated for each selected acquisition the transaction value as a multiple of:
- acquired company sales for the latest twelve-month period prior to the
announcement of the transaction for which financial results were publicly
available;
- acquired company earnings before interest, taxes, depreciation and
amortization, which we refer to as "EBITDA", for the latest twelve-month
period prior to the announcement of the transaction for which financial
results were publicly available; and
- acquired company earnings before interest and taxes, which we refer to as
"EBIT", for the latest twelve-month period prior to the announcement of
the transaction for which financial results were publicly available.
Goldman, Sachs & Co. derived corresponding multiples for the merger based
on the merger consideration of $32.10 per share of our common stock and
management's estimates of 10.4 million shares of our common stock issued and
outstanding, 1.6 million shares of our common stock subject to options at a
weighted average exercise price of $19.95 per share and indebtedness of $164.8
million as of October 1, 2000.
12
<PAGE> 17
The following table sets forth the results of this analysis and compares
the multiples derived for the selected acquisitions to the corresponding
multiples for the merger:
<TABLE>
<CAPTION>
SELECTED ACQUISITIONS THE MERGER
----------------------------- ----------
RANGE MEAN MEDIAN
----------- ---- ------
<S> <C> <C> <C> <C>
Ratio of transaction value to:
Acquired company's sales for the latest
twelve-month period prior to
announcement.......................... 0.3 - 1.3x 0.8x 0.8x 1.0x
Acquired company's EBITDA for the latest
twelve-month period prior to
announcement.......................... 2.9 - 9.4x 6.1x 6.7x 6.7x
Acquired company's EBIT for the latest
twelve-month period prior to
announcement.......................... 5.9 - 12.0x 8.6x 8.8x 10.0x
</TABLE>
Discounted cash flow analyses
Goldman, Sachs & Co. performed discounted cash flow analyses to determine
the implied enterprise value of the Company and the implied equity value per
share of our common stock:
- utilizing the Company's management projections as of October 23, 2000 for
the remainder of year 2000 through year 2004 and discounting those
projections to the end of October 2000; and
- assuming the Company's management estimates as of October 1, 2000 of 10.4
million shares of our common stock issued and outstanding, 1.6 million
shares of our common stock subject to options at a weighted average
exercise price of $19.95 per share and indebtedness of $164.8 million.
Goldman, Sachs & Co. applied discount rates ranging from 9.0% to 13.0% per
year and terminal value multiples of management-estimated 2004 EBITDA ranging
from 4.0x to 6.0x to the Company's estimated future cash flows. The range for
discount rates was chosen by Goldman, Sachs & Co. based on estimates of cost of
capital ranges that could be applicable. Based on these discount rates and
terminal value multiples, Goldman, Sachs & Co. derived implied enterprise values
for the Company ranging from $416.5 million to $636.3 million. Goldman, Sachs &
Co. applied the same discount rates and terminal value multiples to derive
implied equity values per share of our common stock ranging from $23.64 to
$41.99.
In addition, Goldman, Sachs & Co. applied changes in annual sales growth
ranging from (2.0)% to 2.0% and changes in annual EBIT margin of (2.0)% to 2.0%
to the Company's estimated future cash flows. Based on these changes in sales
growth and EBIT margins, and assuming an 11.0% discount rate and a multiple of
management-estimated 2004 EBITDA of 5.0x, Goldman, Sachs & Co. derived implied
enterprise values for the Company ranging from $409.6 million to $644.5 million.
Goldman, Sachs & Co. applied the same methodology to derive implied equity
values per share of our common stock ranging from $23.06 to $42.68.
Comparison of selected aerospace/defense companies
Goldman, Sachs & Co. reviewed and compared financial information of the
Company to corresponding financial information, ratios and public market
multiples of selected publicly traded companies that operate in the aerospace
and defense industry, either as major U.S. defense contractors, selected defense
subcontractors, European defense contractors, shipbuilders, controls and
avionics companies, or parts and services companies. This analysis demonstrates
how the public market values our Company relative to other publicly traded
companies in the aerospace and defense industry. Goldman, Sachs & Co. selected
for comparison the
13
<PAGE> 18
following publicly traded companies which have operations that may be considered
similar to the operations of the Company:
<TABLE>
<CAPTION>
EQUITY MARKET
CAPITALIZATION
INDUSTRY SEGMENT SELECTED COMPANIES AS OF NOV. 8, 2000
---------------- ------------------ ------------------
($ IN MILLIONS)
<S> <C> <C>
Major U.S. defense contractors Boeing Company (The) $58,322
Lockheed Martin Corporation 13,176
Northrop Grumman Corporation 5,671
Raytheon Company 11,475
Selected defense subcontractors Alliant Techsystems Inc. $ 841
Harris Corporation 2,113
L-3 Communications Holdings, Inc. 2,244
Teledyne Technologies Incorporated 677
TRW Inc. 4,763
European defense contractors Alvis PLC $ 157
BAE Systems PLC 16,592
Rheinmetall AG 296
Rolls-Royce 4,129
Shipbuilders Litton Industries, Inc. $ 2,523
Newport News Shipbuilding Inc. 1,487
Controls and avionics companies Meggitt PLC $ 872
Moog Inc. 271
Woodward Governor Company (The) 461
Parts and services companies AAR Corp. $ 299
Aviall, Inc. 133
Aviation Sales Company 49
Barnes Group Inc. 345
Doncasters PLC 185
Fairchild Corporation (The) 152
Kellstrom Industries, Inc. 48
Parker-Hannifin Corporation 4,523
Triumph Group, Inc. 406
</TABLE>
All equity market capitalization data is based on the closing price per
share on November 8, 2000 and the number of shares of common stock issued and
outstanding, as disclosed in the latest publicly available financial statements.
For reference, the equity market capitalization of the Company as of November 8,
2000 was $322 million.
For General Dynamics, the Company and each selected company, Goldman, Sachs
& Co. calculated and compared, among other things:
- each company's closing price per share on November 8, 2000 as a
percentage of its 52-week high closing price per share;
- multiples of enterprise value to EBITDA for the latest twelve-month
period prior to the announcement of the transaction for which financial
results were publicly available; and
- multiples of stock price to earnings per share, which we refer to as the
"P/E multiples", for the year 2000 and 2001.
14
<PAGE> 19
<TABLE>
<CAPTION>
GENERAL
SELECTED COMPANY DYNAMICS AT THE COMPANY
-------------------------------- NOV. 8, 2000 AT NOV. 8, 2000
RANGE MEDIAN MEAN CLOSING PRICE CLOSING PRICE
------------- ------ ----- ------------- ---------------
<S> <C> <C> <C> <C> <C>
PERCENTAGE OF NOVEMBER 8,
2000 CLOSING SHARE PRICE TO
52-WEEK HIGH: 97% 97%
-------------------------------------------------------------------------------------------------------
Major U.S. defense contractors... 85%- 96% 94% 92%
Selected defense
subcontractors................. 60%- 98% 84% 83%
European defense contractors..... 63%- 84% 69% 71%
Shipbuilders..................... 95%- 98% 96% 96%
Controls and avionics
companies...................... 85%- 99% 86% 90%
Parts and services companies..... 16%- 100% 66% 64%
-------------------------------------------------------------------------------------------------------
ENTERPRISE VALUE MULTIPLES OF
EBITDA FOR LAST 12 MONTHS: 10.1x 6.3x
-------------------------------------------------------------------------------------------------------
Major U.S. defense contractors... 7.2x- 13.1x 11.3x 10.8x
Selected defense
subcontractors................. 5.4x- 13.5x 8.8x 9.2x
European defense contractors..... 3.3x- 8.9x 7.1x 6.6x
Shipbuilders..................... 6.7x- 7.7x 7.2x 7.2x
Controls and avionics
companies...................... 5.7x- 10.8x 6.0x 7.5x
Parts and services companies..... 5.2x- 9.9x 6.9x 7.1x
-------------------------------------------------------------------------------------------------------
CALENDARIZED P/E MULTIPLES FOR
2000: 17.3x 12.7x
-------------------------------------------------------------------------------------------------------
Major U.S. defense contractors... 9.0x- 31.2x 23.5x 21.8x
Selected defense
subcontractors................. 9.2x- 29.1x 20.7x 19.8x
European defense contractors..... 8.6x- 15.4x 12.9x 12.5x
Shipbuilders..................... 11.6x- 18.1x 14.8x 14.8x
Controls and avionics
companies...................... 10.6x- 13.6x 13.2x 12.5x
Parts and services companies..... 7.3x- 11.7x 10.7x 10.2x
-------------------------------------------------------------------------------------------------------
CALENDARIZED P/E MULTIPLES FOR
2001: 15.7x 10.9x
-------------------------------------------------------------------------------------------------------
Major U.S. defense contractors... 8.3x- 26.2x 18.8x 18.0x
Selected defense
subcontractors................. 9.0x- 24.0x 20.6x 17.4x
European defense contractors..... 6.7x- 22.9x 10.6x 12.7x
Shipbuilders..................... 10.6x- 11.2x 10.9x 10.9x
Controls and avionics
companies...................... 10.0x- 12.2x 11.9x 11.4x
Parts and services companies..... 3.1x- 10.4x 9.9x 8.3x
-------------------------------------------------------------------------------------------------------
</TABLE>
Earnings per share data was based on median estimates of the Institutional
Broker's Estimate System, known as IBES. Goldman, Sachs & Co. adjusted this data
to compare the companies on a standardized calendar-year basis.
Historical stock trading analysis
Goldman, Sachs & Co. reviewed the historical trading prices and volume for
our common stock. In addition, Goldman, Sachs & Co. compared the per share
consideration to be received by our shareholders pursuant to the merger
agreement to the price of our common stock at various times. Such analysis
indicated
15
<PAGE> 20
that the $32.10 per share in cash, without interest, to be paid to our
shareholders pursuant to the merger agreement represented:
- a premium of 3.5% to the $31.00 per share closing price on November 8,
2000, the day prior to announcement of the transaction;
- a premium of 8.8% to the $29.50 per share closing price on November 1,
2000, one week prior to announcement of the transaction;
- a premium of 10.9% to the $28.94 per share closing price on October 9,
2000, four weeks prior to announcement of the transaction;
- a premium of 35.2% to the $23.75 per share closing price on August 9,
2000, three months prior to announcement of the transaction;
- a premium of 62.5% to the $19.75 per share closing price on May 9, 2000,
six months prior to announcement of the transaction;
- a premium of 54.7% to the $20.75 per share closing price on November 9,
1999, twelve months prior to announcement of the transaction;
- a discount of 0.1% to the 52-week high closing price of $32.13 per share
on November 6, 2000; and
- a premium of 77.1% to the 52-week low closing price of $18.13 per share
on May 26, 2000.
Present value of potential future prices of the Company stock
Goldman, Sachs & Co. calculated the present value of a share of our common
stock plus dividends at the end of the year 2000 through the year 2004 using
assumed P/E multiples ranging from 7.0x to 13.0x. The range of P/E multiples was
chosen by Goldman, Sachs & Co. with reference to the multiples at which our
common stock has historically traded. The present values were calculated using
management earnings per share estimates for the year 2000 through 2004 and
assuming that the Company would continue to pay a regular quarterly dividend of
$0.075 per share of common stock, which would be reinvested at 12% per annum.
The projected future dividends and share prices were discounted to November 1,
2000 at a rate of 12%.
The following table sets forth the estimated present value per share of our
common stock plus dividends for the year 2000 through 2004, based on P/E
multiples ranging from 7.0x to 13.0x:
<TABLE>
<CAPTION>
P/E MULTIPLES
--------------------------
7.0x 10.0x 13.0x
------ ------ ------
<S> <C> <C> <C>
2000..................................... $17.51 $25.01 $32.52
2001..................................... 18.51 26.32 34.13
2002..................................... 20.69 29.33 37.97
2003..................................... 21.83 30.87 39.90
2004..................................... 24.38 34.42 44.46
</TABLE>
* * *
The preparation of a fairness opinion is a complex process involving
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of these methods to the particular
circumstances and, therefore, is not necessarily susceptible to partial analysis
or summary description. Selecting portions of the analyses or of the summary set
forth above, without considering the analysis as a whole, could create an
incomplete view of the processes underlying the Goldman, Sachs & Co. opinion. In
arriving at its fairness determination, Goldman, Sachs & Co. considered the
results of all such analyses and did not attribute any particular weight to any
factor or analysis considered by it; rather, Goldman, Sachs & Co. made its
determination as to fairness on the basis of its experience and professional
judgment after considering the results of all such analyses. In addition, in
performing the analyses, Goldman, Sachs & Co. made numerous assumptions with
respect to industry performance, general business, economic, market and
financial conditions and other matters. No company or transaction used in the
above analyses is directly comparable to
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<PAGE> 21
us or the merger. The analyses were prepared solely for the purposes of Goldman,
Sachs & Co. providing its opinion to our Board of Directors as to the fairness
of the merger consideration and do not propose to be appraisals or necessarily
reflect the prices at which businesses or securities may actually be sold.
Analyses based on forecasts of future results are not necessarily indicative of
actual future results, which may be significantly more or less favorable than
suggested by such analyses. Because such analyses are inherently subject to
uncertainty, being based upon numerous factors or events beyond the control of
the parties or their respective advisors, none of the Company, Goldman, Sachs &
Co. or any other person assumes responsibility if future results are materially
different from those forecast. As described above, the opinion of Goldman, Sachs
& Co. to our Board of Directors was among many factors taken into consideration
by our Board of Directors in making its determination to approve the merger
agreement.
INTERESTS OF PRIMEX DIRECTORS AND EXECUTIVE OFFICERS
When you consider the recommendations of our Board of Directors, you should
be aware that our directors and executive officers may have interests in the
merger that are different from, or in addition to, the interest of other Company
shareholders. The Company's Board of Directors was aware of these interests and
considered them when it approved the merger agreement. These interests are
summarized below.
Executive agreements
The Company is a party to an executive agreement with each of its executive
officers named below:
<TABLE>
<CAPTION>
EXECUTIVE OFFICER TITLE
----------------- -----
<S> <C>
Hascall, James G. ................... Chairman and Chief Executive Officer
DeMaire, J. Douglas.................. President
Wilson, Michael S. .................. Executive Vice President and
President, Ordnance and Tactical
Systems Division
Fischer, John E. .................... Vice President and Chief Financial
Officer
Pain, George H. ..................... Vice President, General Counsel and
Secretary
Curley, Stephen C. .................. Vice President and Treasurer
Picker, Jackson C. .................. Vice President, Human Resources and
Administration
</TABLE>
Each executive agreement provides certain benefits to the executive officer
in the event the officer's employment with the Company is terminated under any
of the following circumstances:
- the officer's employment is terminated by the Company without cause (as
defined in the executive agreement);
- the officer terminates his own employment for certain specified reasons,
including a reduction in the officer's base salary, a reduction in
responsibilities or position with the Company, relocation of his office
under certain circumstances or the failure of the Company to maintain the
officer's level of participation in certain benefits plans; or
- in the case of Messrs. Hascall, DeMaire, Fischer, Pain and Picker only,
the officer terminates his employment with the Company for any reason
within the 90-day period immediately following the expiration of the
six-month period immediately following a change in control (as defined in
the executive agreement).
The following payments and benefits are provided to the officer if his
employment is terminated under the circumstances described above:
- a lump sum payment (referred to as the "executive severance") in an
amount equal to the sum (or, in the case of termination following a
change in control, three times the sum) of (1) twelve months of the
officer's then current monthly salary and (2) an amount equal to the
greater of the average annual bonus payout to the officer under the
Company's Incentive Compensation Plan over the three years
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<PAGE> 22
immediately preceding the officer's termination or the officer's then
current target bonus under the Company's Incentive Compensation Plan;
- a lump sum payment equal to the amount (or, in the case of a change in
control, three times the amount) contributed or credited by the Company
to the officer's accounts in all defined contribution plans of the
Company during the twelve months preceding the officer's termination of
employment;
- the officer will continue to enjoy coverage under all Company medical,
dental and life insurance plans for an additional one year following
termination of employment (three years, if the termination occurs after a
change in control);
- the officer will be entitled, at the Company's expense, to outplacement
counseling and associated services in accordance with the Company's
customary practice at the time (or, if a change in control has occurred,
in accordance with such practice immediately prior to the change in
control) with respect to its senior executives who have been terminated
other than for cause;
- if the officer has an accrued vested benefit under Olin Corporation's
qualified pension plan as of the date of the change in control, and the
officer at age 55 would not qualify for subsidized early retirement from
Olin Corporation under the provisions of Olin Corporation's pension
plans, then the officer will receive a lump sum payment (on a net
after-tax basis) from the Company immediately upon the change in control
to compensate the officer for the lost subsidy; and
- in the event any excise taxes are imposed on the officer under Section
4999 of the Internal Revenue Code, an additional amount such that the
officer retains a net payment equal to that which he would have received
if no excise taxes were imposed.
The merger will be considered a change in control for purposes of the
executive agreements.
The executive agreement for Mr. Hascall is dated as of November 2, 1999.
The executive agreements for Messrs. DeMaire, Fischer, Pain and Picker are dated
as of February 29, 2000. Each of the foregoing executive agreements was amended
as of November 8, 2000 to provide that:
- the termination of employment (whether voluntary or involuntary) of each
officer effective immediately following the completion of the merger will
be treated for all purposes of the executive agreement as a termination
after a change in control (as such terms are defined in the executive
agreement) entitling the officer to receive the executive severance and
the other payments and benefits described above;
- the termination of employment (whether voluntary or involuntary) of each
officer effective immediately following the completion of the merger will
be treated for purposes of the Company's Incentive Compensation Plan as
an involuntary termination without cause, entitling them to receive an
immediate distribution of his account balances under that plan;
- each officer will be entitled to receive full payment, at the completion
of the merger, of all amounts payable under the executive agreement;
- notwithstanding anything to the contrary in the Company's Incentive
Compensation Plan, General Dynamics and the Company each agree that each
officer will be entitled to receive under the Company's Incentive
Compensation Plan at the completion of the merger an amount equal to the
sum of the officer's account balance as of the date of termination of
employment and the amount of the officer's annual bonus payable under the
Company's Incentive Compensation Plan for the year 2000, to the extent
the year 2000 bonus has not already been added to the account balance
previously paid to the officer; and
- each officer will have the opportunity, for so long as the Company
continues to provide medical coverage generally to its active employees,
to participate in the employee benefit plan or plans providing such
medical coverage on the same basis as (or to purchase the medical
coverage provided under such plans) the Company's then current active
employees, at the same cost that the Company charges its then current
active employees, if any, for such medical coverage.
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<PAGE> 23
Each of Messrs. Curley and Wilson (assuming their employment is terminated
immediately following the completion of the merger), and each of Messrs.
Hascall, DeMaire, Fischer, Pain and Picker, upon their termination of employment
immediately following the completion of the merger, will be entitled to receive
the change in control and termination payments pursuant to his executive
agreement, as described above, and pursuant to certain of the Company's benefit
plans, as described below under "Benefit plans". Pursuant to the merger
agreement, each of Messrs. Hascall, DeMaire, Fischer, Pain and Picker, the
Company and General Dynamics agreed that the cash amounts that would be payable
to each of the officers at the completion of the merger (not including any
amounts payable as reimbursement for excise taxes or gross-up payments
attributable thereto) shall be as follows, subject to the adjustments provided
below:
<TABLE>
<CAPTION>
ESTIMATED YEAR 2000
EXECUTIVE AGGREGATE AMOUNT DECLARED BONUS
--------- ---------------- -------------------
<S> <C> <C>
DeMaire, J. Douglas............................... $3,253,000 $487,000
Fischer, John E. ................................. $2,487,000 $266,000
Hascall, James G. ................................ $5,224,000 $974,000
Pain, George H. .................................. $2,704,000 $266,000
Picker, Jackson C. ............................... $2,257,000 $221,000
</TABLE>
The foregoing aggregate amounts for each officer will not be subject to
change except to the extent solely required to reflect the following:
- actual year 2000 declared bonuses under the Company's Incentive
Compensation Plan that are different from the Company's good faith
estimates of the year 2000 declared bonuses (listed in the table above)
used to determine the foregoing amounts; or
- the merger is not completed in January 2001.
The foregoing agreements by each executive officer will not impair his
rights in respect of any other benefits to be provided under his executive
agreement.
Benefit plans
In addition to the executive agreements, certain of the Company's benefit
and compensation plans provide for the acceleration or increase of benefits in
the event of a change in control of the Company. The merger will be treated as a
change in control under these plans. The following summarize the benefits
payable under these plans, subject to the completion of the merger, taking into
account recent amendments to the plans, if any, made in connection with the
merger agreement.
Pursuant to the Company's Incentive Compensation Plan:
- if the merger is completed on or before December 31, 2000, the aggregate
amount of the year 2000 declared bonuses will be based on actual
performance during the year 2000, and each participant who is eligible to
receive a year 2000 declared bonus will receive a non-prorated full-year
declared bonus for the year 2000 based on actual performance for the year
2000;
- each participant's account balance will not be immediately distributed as
a result of the merger;
- the Company will make distributions ordinarily payable in 2001 to each
participant no later than March 15, 2001, and, except in the case of a
termination of employment by the Company other than for cause, or by the
Company due to retirement, disability or death, the remaining
undistributed portion of each participant's account balance, determined
immediately following that 2001 distribution, will be distributed to each
participant in three equal annual installments on each of the first,
second and third anniversaries of the completion of the merger;
- notwithstanding the foregoing, at the sole discretion of General
Dynamics, participants may be allowed to elect, in lieu of receiving the
undistributed portion of their account balance over the three-year period
described above and continuing to be eligible for future bonuses in
respect of periods following the completion of the merger, if any, to
receive their account balance within a reasonable period of
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<PAGE> 24
time following the completion of the merger with the understanding that
the electing participants would not be eligible to participate in a bonus
program, if any, in the future, and with the further understanding that
General Dynamics may provide a bonus program to those participants who do
not make such an election;
- any additional bonuses payable in respect of performance periods
commencing after the completion of the merger will be at the discretion
of the surviving corporation; and
- the distribution of the account balances in connection with the merger
will not be taken into account for purposes of determining benefits under
the Company's PRIME Plan or Restoration Bonus Plan.
Pursuant to the Company's Restoration Bonus Plan, upon the completion of
the merger, participants will receive an immediate distribution of a bonus for
the year in which the merger is completed, pro-rated through the date of
completion of the merger.
Pursuant to the Company's Stock Plan for Nonemployee Directors, upon a
change in control of the Company, all shares and other amounts credited under
the plan to a director's stock and cash accounts will promptly be distributed to
such director.
Under the Company's 1996 Long-Term Incentive Plan, which we refer to as the
1996 LTIP, and 2000 Long-Term Incentive Plan, which we refer to as the 2000
LTIP, upon a change in control of the Company, all stock options and stock
appreciation rights then outstanding under each of these plans will become
immediately and fully exercisable, notwithstanding any vesting requirements
contained in the plans or the individual grant. In addition, each participant in
these plans holding an option to acquire shares of Company common stock will
also be deemed to hold a stock appreciation right related to such option (unless
a stock appreciation right has already been granted with respect to such
option), in which case the participant may elect to exercise either the option
or the related stock appreciation right (but not both). The deemed stock
appreciation rights will be exercisable on the same terms and conditions as the
related option. All restrictions and conditions of all restricted stock and
restricted stock units granted under the plans will, upon a change in control,
be deemed satisfied as of the date of the change in control and will be paid in
cash, and all performance awards under the 1996 LTIP and 2000 LTIP will become
vested, deemed earned in full, and promptly paid upon a change in control.
Pursuant to grants and awards previously made under the 1996 LTIP and 2000 LTIP,
each of Messrs. Hascall, DeMaire, Fischer, Pain and Picker will be entitled to
receive the following amounts (not including any amounts payable as
reimbursement for excise taxes or gross-up payments attributable thereto):
<TABLE>
<CAPTION>
EXECUTIVE AGGREGATE AMOUNT
--------- ----------------
<S> <C>
DeMaire, J. Douglas.................................. $2,237,000
Fischer, John E. .................................... $1,021,000
Hascall, James G. ................................... $3,729,000
Pain, George H. ..................................... $1,021,000
Picker, Jackson C. .................................. $ 754,000
</TABLE>
Directors and officers insurance
See "THE MERGER AGREEMENT -- Indemnification" on page 26 below.
EFFECTS OF THE MERGER
As a result of the merger, our public shareholders will not have an
opportunity to continue their equity interest in the Company as an ongoing
corporation and, therefore, will not share in the future earnings and potential
growth of the Company. Upon consummation of the merger, our shares of common
stock will no longer be traded on The Nasdaq National Market, and the
registration of our shares of common stock under the Securities Exchange Act of
1934 (the "Exchange Act") will be terminated. Furthermore, following the merger
we will no longer be a reporting company under the Exchange Act.
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<PAGE> 25
FEDERAL INCOME TAX CONSEQUENCES
This section discusses the material United States federal income tax
consequences of the merger to our shareholders whose shares of our common stock
are surrendered in the merger in exchange for the right to receive cash
consideration of $32.10 per share, without interest. The discussion below
applies only to shareholders that hold our shares as capital assets at the time
of the merger, and the discussion may not apply to shareholders that are subject
to special tax rules, such as financial institutions, insurance companies,
dealers in securities, persons that mark-to-market their securities, persons
that hold our shares as part of a "straddle", "hedge" or "synthetic security
transaction" (including a "conversion" transaction), persons with a "functional
currency" other than the U.S. dollar, retirement plans and tax-exempt
organizations, shareholders who acquired our shares pursuant to the exercise of
stock options, pursuant to participation in an employee stock purchase plan or
otherwise as compensation or shareholders that are nonresident alien
individuals, foreign corporations, foreign partnerships, foreign trusts or
foreign estates. The discussion below is based upon federal income tax laws as
now in effect and interpreted and does not take into account possible changes in
these tax laws or interpretations, any of which may be applied retroactively.
The discussion does not include any description of the tax laws of any state,
local or foreign government that may be applicable to our shareholders.
THIS SECTION DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT
MAY BE RELEVANT TO A SPECIFIC SHAREHOLDER IN LIGHT OF SUCH SHAREHOLDER'S
PARTICULAR CIRCUMSTANCES AND INCOME TAX SITUATION. EACH SHAREHOLDER SHOULD
CONSULT HIS, HER OR ITS OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF
THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS OR CHANGES TO THOSE LAWS.
For federal income tax purposes, our shareholders generally will recognize
capital gain or capital loss equal to the difference between the cash received
by the shareholder pursuant to the merger and such shareholder's adjusted tax
basis in the shares surrendered pursuant to the merger. If, at the time of the
merger, a noncorporate shareholder's holding period for our shares is more than
one year, any gain recognized generally will be subject to federal income tax at
a maximum rate of 20%.
Consideration received by our shareholders in the merger may be subject to
backup withholding at a 31% rate. Backup withholding generally will apply only
if the shareholder fails to furnish a correct social security number or other
taxpayer identification number or otherwise fails to comply with applicable
backup withholding rules and certification requirements. Corporations generally
are exempt from backup withholding. Any amounts withheld under the backup
withholding rules will be allowed as a credit against the shareholder's federal
income tax liability and may entitle the shareholder to a refund, provided the
shareholder furnishes specified required information to the Internal Revenue
Service.
DISSENTERS' RIGHTS
Under Virginia law, the Company's shareholders are not entitled to
dissenters' rights, rights of appraisal or similar rights in connection with the
merger.
APPROVALS
The waiting period required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 expired on December 15, 2000.
We are not aware of any other significant government or regulatory
approvals that need to be obtained, or waiting periods with which we need to
comply, to complete the merger. If we discover that other approvals or waiting
periods are required, we will seek to obtain or comply with them. If any
approval or action is needed, however, we may not be able to obtain it. Even if
we could obtain the approval, conditions may be placed on it that could cause us
or General Dynamics to abandon the merger even if we receive shareholder
approval.
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<PAGE> 26
SOURCE OF FUNDS
General Dynamics has informed us that the aggregate merger consideration
(including payments to be made in connection with the cancellation of options
and stock appreciation rights) of approximately $354 million to be paid to our
shareholders (and option and stock appreciation right holders) will be financed
through cash on hand, existing lines of credit or other sources of funds (or a
combination of such sources). As of December 1, 2000, General Dynamics had in
excess of $500 million of aggregate committed availability under its lines of
credit.
22
<PAGE> 27
THE MERGER AGREEMENT
This is a summary of the material provisions of the merger agreement, a
copy of which is attached as Appendix A to this proxy statement. You should
refer to the full text of the merger agreement for details of the merger and the
terms and conditions of the merger agreement.
THE MERGER
When the merger occurs, Mars Acquisition Corporation, a wholly owned
subsidiary of General Dynamics, will be merged with and into the Company. The
Company will survive the merger and will be wholly owned by General Dynamics.
In the merger, each share of our common stock (except for certain shares
held directly or indirectly by General Dynamics or the Company) outstanding
immediately before the merger will be converted into the right to receive $32.10
in cash, without interest. Each shareholder (other than General Dynamics) will
no longer have any rights with respect to the shares of our common stock, except
for the right to receive the merger consideration and any declared and unpaid
dividend with respect to such common stock.
EFFECTIVE TIME OF THE MERGER
The completion of the merger will take place no later than the third
business day following the date when the last of the conditions to the merger is
satisfied or waived, or at any other time, date or place to which General
Dynamics and we mutually agree. On the closing of the merger, we will cause
articles of merger to be filed with the Virginia State Corporation Commission,
and General Dynamics will cause a certificate of merger to be filed with the
Delaware Secretary of State. The merger will become effective upon our filing of
articles of merger with the Virginia State Corporation Commission or such later
date or time as may be set forth in such articles of merger.
PAYMENT FOR SHARES
As soon as reasonably practicable following the effective time of the
merger, General Dynamics is required to deposit, or cause to be deposited, with
its paying agent the total merger consideration.
As soon as reasonably practicable after the effectiveness of the merger,
General Dynamics' paying agent will mail to each holder of record of our common
stock a letter of transmittal and instructions for the surrender of share
certificates to the paying agent for the merger consideration. After
surrendering to the paying agent for cancellation a share certificate, together
with a properly completed letter of transmittal and all other documents and
materials required by the paying agent to be delivered in connection therewith,
the holder of such share certificate will be entitled to receive an amount equal
to the merger consideration with respect to the shares represented by such
certificate. Each surrendered share will be canceled. No interest will be paid
or accrued on the merger consideration.
In the event of a transfer of ownership of any shares of our stock not
registered in the transfer records of the Company, the merger consideration will
be paid to the transferee if the certificate representing such stock is
presented to the paying agent, accompanied by all documents required to evidence
and effect such transfer and to evidence that all applicable stock transfer
taxes have been paid.
You should not send in your share certificates until you receive a letter
of transmittal. All cash paid upon the surrender of share certificates in
accordance with the merger agreement will be deemed to have been paid in full
satisfaction of all rights pertaining to the shares, other than any rights
pertaining to any declared and unpaid dividends on Company common stock.
If your stock certificate has been lost, stolen or destroyed, you will be
entitled to obtain payment only by signing an affidavit and, if required by
General Dynamics, posting a bond in an amount sufficient to protect General
Dynamics against claims related to your share certificate.
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<PAGE> 28
REPRESENTATIONS AND WARRANTIES
The merger agreement contains customary representations and warranties by
us relating to:
- our corporate organization and similar corporate matters;
- authorization, execution, delivery, performance and enforceability of,
and required consents, approvals and authorizations relating to, the
merger agreement and related matters;
- our capital structure and our subsidiaries;
- the accuracy of our reports and financial statements filed with the SEC;
- liabilities;
- the absence of certain material adverse changes since October 1, 2000;
- litigation and compliance by us and our subsidiaries with laws and
permits;
- our and our subsidiaries' material contracts, including any government
contracts;
- our and our subsidiaries' tax returns and other tax matters;
- our and our subsidiaries' employee benefit plans;
- environmental matters affecting us and our subsidiaries;
- title to all properties and assets owned by us and our subsidiaries;
- intellectual property necessary for our or our subsidiaries' operations;
- labor matters affecting us and our subsidiaries;
- amendment to our shareholder rights agreement;
- state takeover laws; and
- brokers' fees with respect to the merger.
The merger agreement also contains customary representations and warranties
by General Dynamics and Mars Acquisition Corporation relating to:
- corporate organization and similar corporate matters;
- authorization, execution, delivery, performance and enforceability of,
and required consents, approvals and authorizations relating to, the
merger agreement and related matters;
- adequate cash resources to pay the merger consideration and consideration
to be received by the holders of Company stock options and stock
appreciation rights; and
- absence of capital ownership in the Company by General Dynamics or any of
its subsidiaries.
COVENANTS
General Dynamics and we have agreed to use our respective best efforts to
do all things to consummate and make effective the transactions contemplated by
the merger agreement.
We have agreed that during the period from the date of the merger agreement
until the closing of the merger, we will, and will cause our subsidiaries to:
- provide General Dynamics and its representatives reasonable access to our
premises, properties, books, records, contracts and other documents;
- promptly advise General Dynamics of any material development affecting us
or our subsidiaries; and
- use our best efforts to preserve our business organization intact in all
material respects and to maintain certain material Company programs and
contracts.
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<PAGE> 29
We have also agreed that during the period from the date of the merger
agreement until the closing of the merger, we will not, and will cause our
subsidiaries not to, with certain exceptions:
- amend our articles of incorporation or by-laws or file any certificate of
designation or similar instrument with respect to any shares of our
authorized but unissued capital stock;
- authorize or effect any stock split or combination or reclassification of
shares of our capital stock;
- declare or pay any dividend or distribution with respect to our capital
stock (other than the regular quarterly dividend of $0.075 per share of
our common stock and dividends payable by our subsidiaries to us or other
subsidiaries);
- issue or authorize the issuance of any shares of our capital stock (other
than in connection with the exercise of certain currently outstanding
stock options) or any other securities exercisable or exchangeable for or
convertible into shares of our capital stock;
- repurchase, redeem or otherwise acquire for value any shares of our
capital stock or any other securities exercisable or exchangeable for or
convertible into shares of our capital stock;
- merge or consolidate with any entity;
- sell, lease or otherwise dispose of any of our capital assets other than
sales, leases or other dispositions of machinery, equipment, tools,
vehicles and other operating assets no longer required in our operations
made in the ordinary course of business, consistent with past practice;
- liquidate, dissolve or effect any recapitalization or reorganization in
any form;
- acquire any interest in any business or enter into any joint venture;
- create, incur, assume or suffer to exist any indebtedness for borrowed
money (including capital lease obligations), other than indebtedness
existing prior to the date of the merger agreement, borrowings under
existing credit lines in the ordinary course of business, consistent with
past practice, and intercompany indebtedness among us and our
subsidiaries arising in the ordinary course of business, consistent with
past practice;
- create, incur, assume or suffer to exist any lien (other than certain
permitted liens) affecting any of our material assets or properties;
- except as required by changes in generally accepted accounting
principles, change any of the accounting principles or practices used by
us or revalue in any material respect any of our assets or properties,
other than write-downs of inventory or accounts receivable in the
ordinary course of business, consistent with past practice;
- except as required under the terms of any collective bargaining agreement
in effect as of the date of the merger agreement or as required by
applicable law, grant any general or uniform increase in the rates of pay
of our employees or grant any increase in the benefits under any bonus or
employee benefit plan or other arrangement, contract or commitment;
- except for any increase required under the terms of any collective
bargaining agreement or consulting, executive or employment agreement in
effect on the date of the merger agreement or as required by applicable
law, increase the compensation payable to officers and salaried employees
with a base salary in excess of $100,000 per year or increase any bonus,
insurance, pension or other benefit plan, payment or arrangement made to,
for or with any such officers or salaried employees;
- enter into any contract or commitment or engage in any transaction with
any affiliated person or entity (other than the Company or our
subsidiaries) or enter into any contract or commitment or engage in any
transaction with any unaffiliated person or entity which, to our
knowledge, is reasonably likely to have a material adverse effect on our
and our subsidiaries' business, financial condition, operations or
results of operations or our ability to consummate the merger and to
perform our obligations under the merger agreement;
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<PAGE> 30
- make any material tax election or settle or compromise any material tax
liability, except in the ordinary course of business;
- pay, discharge or satisfy any claims, liabilities or obligations other
than the payment, discharge and satisfaction in the ordinary course of
business of liabilities reflected or reserved for in our consolidated
financial statements or otherwise incurred in the ordinary course of
business, consistent with past practice; or
- settle or compromise any material pending or threatened suit, action or
proceeding.
In addition, General Dynamics and we have agreed to give all notices to
third parties and governmental entities and use our respective best efforts to
obtain all required consents and approvals. General Dynamics and we have also
agreed to promptly make a filing under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and use our respective best efforts to obtain early
termination of the applicable waiting periods. In the event either party becomes
subject to any order or injunction which prohibits the transactions contemplated
by the merger agreement, each party will use its best efforts to overturn or
lift such order or injunction. The foregoing will not require General Dynamics
to enter into any agreement or consent decree requiring it or its subsidiaries
to divest or hold separate any assets or take any other action which is
reasonably likely to have a material adverse effect on the business, financial
condition, operations or results of operations of General Dynamics or its
subsidiaries, taken as a whole.
INDEMNIFICATION
The merger agreement provides that General Dynamics will ensure that each
current and former officer and director of the Company or any of our
subsidiaries will continue to be indemnified for his or her acts or omissions
occurring at or prior to the consummation of the merger to the fullest extent
permitted by law. In addition, the merger agreement requires General Dynamics to
maintain the directors and officers insurance policies of the Company (or
equivalent policies) for at least six years after the consummation of the
merger. General Dynamics, however, will not be required to pay premiums which on
an annual basis exceed 200% of the current annual premium of such policies.
TERMINATION
The merger agreement may be terminated, whether before or after receiving
shareholder approval, and the merger may be abandoned by mutual consent or as
follows:
- the merger is not consummated by March 31, 2001;
- a court or governmental agency issues a final, nonappealable order or any
other action that prohibits consummation of the merger;
- approval of our shareholders is not obtained at our shareholder's
meeting; or
- the other party breaches or fails to perform, as applicable, any of its
representations and warranties or covenants in a manner that would breach
a condition to the merger, and such breach or failure has gone unremedied
for 30 days following notice.
In addition, General Dynamics may terminate the merger agreement if our
Board of Directors has withdrawn or amended, in any manner adverse to General
Dynamics, its recommendation and approval of the merger agreement.
NO SOLICITATION OF TRANSACTIONS
We have agreed to immediately cease any discussions or negotiations
conducted prior to the date of the merger agreement with any parties other than
General Dynamics with respect to any acquisition proposal. We and our
subsidiaries have agreed not to, and to use our best efforts to cause our
respective directors, officers, employees, agents and representatives not to,
(1) initiate or solicit any inquiries with respect to, or the making of, any
acquisition proposal or (2) engage in any negotiations with, furnish any
information to or enter into any
26
<PAGE> 31
agreement with any party relating to any acquisition proposal. Our Board of
Directors, however, may, in response to an acquisition proposal that the board
determines in good faith is reasonably likely to lead to a superior proposal,
furnish information with respect to us and our subsidiaries to the person making
such acquisition proposal pursuant to a confidentiality agreement and
participate in discussions regarding such proposal.
Under the merger agreement, "acquisition proposal" means any bona fide
proposal from any person that if consummated would result in such person
acquiring beneficial ownership of more than 20% of the consolidated assets of,
or more than 20% of the voting power in, us and our subsidiaries, taken as a
whole, pursuant to a merger, consolidation or other business combination, sale
of shares of capital stock, sale of assets, tender or exchange offer or similar
transaction involving us or any of our subsidiaries.
Under the merger agreement, "superior proposal" means any bona fide
proposal from any person that (1) if consummated, would result in such person
acquiring beneficial ownership of more than 50% of the consolidated assets of,
or more than 50% of the voting power in, us and our subsidiaries, taken as a
whole, pursuant to a merger, consolidation or other business combination, sale
of shares of capital stock, sale of assets, tender or exchange offer or similar
transaction involving us or any of our subsidiaries and (2) our Board of
Directors, after consultation with its outside legal counsel and financial
advisers, determines in its good faith business judgment is superior from a
financial view to our shareholders and is reasonably capable of being completed,
taking into account all legal, financial, regulatory and other aspects of such
proposal.
We are not, however, prohibited from taking and disclosing to our
shareholders a position contemplated by Rule 14e-2(a) under the Exchange Act or
from making any disclosure or recommendation, including a withdrawal or adverse
amendment of our Board of Directors' recommendation of the merger, to our
shareholders if our Board of Directors, after consultation with outside counsel,
determines in good faith that failure to so disclose or recommend would be
inconsistent with applicable law.
TERMINATION FEE PAYABLE TO GENERAL DYNAMICS
We have agreed to pay General Dynamics a $10 million termination fee in the
event that each of the following conditions is satisfied:
- a third party makes, or announces an intention to make a takeover
proposal to acquire more than 20% of our and our subsidiaries'
consolidated assets or 20% or more of the voting power in the Company;
- thereafter, (1) General Dynamics or the Company terminates the merger
agreement because our shareholders fail to approve the merger agreement,
(2) General Dynamics terminates the merger agreement because our Board of
Directors withdraws or adversely amends its recommendation of the merger
with General Dynamics or (3) General Dynamics or the Company terminates
the merger agreement after March 31, 2001, and a shareholder vote has not
taken place by such date; and
- the Company enters into a third party acquisition agreement or a third
party acquisition is consummated within 12 months of such termination.
Under the merger agreement, "third party acquisition" means:
- the acquisition of the Company by a person other than General Dynamics;
- the acquisition by any person other than General Dynamics of more than
50% of the consolidated assets of the Company;
- the acquisition by any person other than General Dynamics of more than
50% of the voting power in the Company and our subsidiaries;
- adoption by the Company of a plan of liquidation or declaration of an
extraordinary dividend of cash or property constituting more than 50% of
the consolidated assets of the Company; or
- purchase by the Company of more than 50% of its outstanding shares of
common stock.
27
<PAGE> 32
EMPLOYEE BENEFIT MATTERS
Subject to applicable collective bargaining agreements, until (or in
respect of the period ending on) December 31, 2001:
- General Dynamics will cause to be maintained for the employees and former
employees of the Company and its subsidiaries, benefits and benefit
levels, that are, in the aggregate, substantially similar to benefits and
benefit levels provided by the Company and its subsidiaries through any
pension or welfare plan or fringe benefit program (including, for
example, sick pay, vacation pay and tuition reimbursement) prior to the
completion of the merger, other than bonus, incentive or equity-based
compensation plans or arrangements. The foregoing will not prohibit any
change in benefits or benefit levels adopted prior to the completion of
the merger and effective on or after the completion or the merger or any
other change in benefits that would have been made by the Company in the
ordinary course during 2001 to reflect market conditions for the
provision of these benefits; and
- General Dynamics and its subsidiaries, including the surviving
corporation in the merger, will provide severance benefits and severance
compensation to the employees and former employees of the Company and its
subsidiaries that, in the aggregate, are not less favorable than the
severance benefits and severance compensation provided by the Company
under a benefit plan to such employees immediately prior to the
completion of the merger.
General Dynamics will honor, and cause the surviving corporation in the
merger to honor, in accordance with their respective terms, all of the Company's
employee benefit, compensation, employment, severance and termination plans,
programs, policies and arrangements, including any rights or benefits arising as
a result of the transactions contemplated by the merger agreement, either alone
or in combination with any other event.
Solely for purposes of eligibility and vesting under the employee benefit
plans of General Dynamics and its subsidiaries, including the surviving
corporation, any current or former employees of the Company and its subsidiaries
after the completion of the merger will be credited with their years of service
with the Company and its subsidiaries (and any predecessor entities) before the
completion of the merger, to the same extent as such employees were entitled,
before the completion of the merger, to credit for such service under any
similar benefit plan of the Company and its subsidiaries.
General Dynamics will, and will cause the surviving corporation and their
respective representatives to, afford any officer (as of the completion of the
merger) of the Company and any of his or her representatives reasonable access,
upon reasonable notice, to such books and records of the Company and the
surviving corporation as are reasonably required by such officer to determine
amounts owing to such officer under any benefit plan of the Company and its
subsidiaries.
In addition, for purposes of the Company's Incentive Compensation Plan, the
Company will be permitted to continue to accrue its annual bonuses under its
Incentive Compensation Plan in accordance with past practice, and will be
permitted to determine the amount of the year 2000 declared bonuses and allocate
such year 2000 declared bonuses to participants' accounts under the Incentive
Compensation Plan in accordance with past practice and based on actual
performance during the year 2000. All determinations and allocations in respect
of the year 2000 declared bonuses will be made in accordance with the foregoing
by the Company management as constituted prior to the completion of the merger.
The Company may communicate information in respect of the year 2000 declared
bonuses at any time as it may determine advisable or appropriate in its sole
discretion. Subject to General Dynamics' and our compliance with the foregoing
and the terms of the Incentive Compensation Plan, as amended, General Dynamics
or the Company may terminate our Incentive Compensation Plan.
28
<PAGE> 33
CONDITIONS TO THE MERGER
The obligations of General Dynamics and the Company to complete the merger
are subject to the satisfaction or waiver of various conditions, including the
following:
- obtaining the required approval of our shareholders;
- the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976;
- obtaining of all other material regulatory approvals; and
- the absence of any law, order or injunction preventing the completion of
the merger.
Each party's obligation to complete the merger is further subject to the
satisfaction or waiver of the following additional conditions:
- accuracy of the other party's representations and warranties in all
material respects as of the effective time of the merger or if such
representation or warranty relates to an earlier date, then as of the
earlier date; and
- performance by the other party in all material respects of its
obligations under the merger agreement required to be performed by it at
or prior to the consummation of the merger.
EXPENSES
The merger agreement provides that all fees and expenses incurred in
connection with the merger will be paid by the party incurring such fees or
expenses, whether or not the merger is consummated.
AMENDMENT AND WAIVER
The merger agreement may be amended only by written agreement of the
parties. After our shareholders approve the plan of merger, however, no
amendment may be made without the approval of our shareholders to the extent
such approval is required under Virginia law. Any party may waive its rights
under the merger agreement only in writing. Any such amendment or waiver may be
made at any time before the completion of the merger.
29
<PAGE> 34
OWNERSHIP OF THE COMPANY
5% SHAREHOLDERS
The following table sets forth certain information regarding actual,
beneficial and voting ownership of the Company's equity at December 15, 2000 as
to each person known by the Company to beneficially own, within the meaning of
the Exchange Act, 5% or more of the outstanding shares of our common stock. This
information is based on the Company's records and on reports filed by the
following persons with the U.S. Securities and Exchange Commission ("SEC").
<TABLE>
<CAPTION>
TITLE OF CLASS OF BENEFICIAL OWNER AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------------------------ -------------------- ----------------
<S> <C> <C>
Common Stock
Neuberger Berman, LLC............................ 1,280,661 12.3%
605 Third Avenue
New York, NY 10158
Common Stock
Boston Safe Deposit & Trust Company, N.A......... 1,067,770(a) 10.3%
135 Santilli Highway
Everett, MA 02149
Common Stock
State Street Bank and Trust Company.............. 752,630(b) 7.2%
225 Franklin Street
Boston, MA 02110
Common Stock
Artisan Partners Limited Partnership............. 675,200 6.5%
1000 North Water Street, Suite 1770
Milwaukee, WI 53202
Common Stock
Putnam Investments Management, Inc. ............. 605,250 5.8%
One Post Office Square
Boston, MA 02109
</TABLE>
---------------
(a) As trustee for the Company's PRIME Plan. These shares will be voted as
described in "THE SPECIAL MEETING -- Record date and quorum requirement" on
page 6 above.
(b) As trustee for the CEOP. These shares will be voted as described in "THE
SPECIAL MEETING -- Record date and quorum requirement" on page 6 above.
30
<PAGE> 35
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of our common stock
beneficially owned, within the meaning of the Exchange Act, by all directors and
executive officers of the Company as of the record date. Unless otherwise
indicated in the footnotes below, each person had sole voting and investment
power with respect to such shares (other than any unissued shares, the ownership
of which has been imputed to such owner).
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES(a) PERCENT OF CLASS
------------------------ -------------------- ----------------
<S> <C> <C>
S.C. Curley........................................ 58,822 *
J.D. DeMaire....................................... 194,129 1.9%
J.E. Fischer....................................... 94,103 *
J.G. Hascall....................................... 360,777 3.5%
D. Lasky........................................... 5,883 *
B. Martinez........................................ 600 *
W.B. Mitchell...................................... 0 *
G.H. Pain.......................................... 93,639 *
J.C. Picker........................................ 71,148 *
R.H. Rau(b)........................................ 22,900 *
A.W. Ruggiero...................................... 2,150 *
L.E. Salomon....................................... 0 *
M.S. Wilson........................................ 129,661 1.2%
Directors and executive officers of the Company as
a group (13 persons)............................. 1,033,812 9.9%
</TABLE>
---------------
* Less than 1%.
(a) Excluded from this table are shares of our common stock credited to deferred
accounts pursuant to certain compensation arrangements in the amounts of
7,514 shares for Mr. Martinez, 7,745 for Mr. Mitchell, 8,889 for Mr. Rau,
8,926 for Mr. Ruggiero and 6,098 for Mr. Salomon. Such shares have no voting
power.
(b) Includes 21,000 shares of our common stock held by a trust in which Mr. Rau
is co-trustee with shared voting and investment power and in which his
children are beneficiaries. Also includes 900 shares of our common stock
held by a trust in which his stepchildren are beneficiaries and his spouse
is trustee. Mr. Rau disclaims beneficial ownership of such 900 shares.
31
<PAGE> 36
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Our common stock is listed on The Nasdaq National Market under the symbol
"PRMX". The following table sets forth, for the periods indicated, dividends and
the high and low sales prices per share of our common stock as reported on the
consolidated reporting system of The Nasdaq National Market. For current price
information, shareholders are urged to consult publicly available sources.
<TABLE>
<CAPTION>
DIVIDENDS
CALENDAR PERIOD HIGH LOW DECLARED
--------------- ------ ------ ---------
<S> <C> <C> <C>
1997
First Quarter......................................... $10.56 $ 8.00 $0.075
Second Quarter........................................ 12.00 8.88 0.075
Third Quarter......................................... 17.50 11.00 0.075
Fourth Quarter........................................ 18.88 15.38 0.075
1998
First Quarter......................................... 24.75 15.63 0.075
Second Quarter........................................ 26.88 20.00 0.075
Third Quarter......................................... 25.94 15.75 0.075
Fourth Quarter........................................ 22.00 14.03 0.075
1999
First Quarter......................................... 24.75 20.00 0.075
Second Quarter........................................ 23.00 17.25 0.075
Third Quarter......................................... 22.50 18.75 0.075
Fourth Quarter........................................ 30.44 19.13 0.075
2000
First Quarter......................................... 23.00 19.25 0.075
Second Quarter........................................ 23.00 18.00 0.075
Third Quarter......................................... 30.63 21.25 0.075
Fourth Quarter (through December 15, 2000)............ 33.38 26.25 0.075
</TABLE>
On December 15, 2000, the most recent practicable date prior to the
printing of this proxy statement, the closing price of our common stock as
reported on the consolidated reporting system of The Nasdaq National Market was
$31.69. As of the record date, there were approximately 5340 holders of record
of our common stock.
The foregoing amounts have been restated, as appropriate, to reflect a
stock dividend paid in March 1999 by the Company to holders of shares of its
common stock.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained herein should be considered "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such information is subject to a number of risks and uncertainties. The
preparation of forward-looking statements requires the use of estimates of
future revenues, expenses, activity levels and economic and market conditions,
many of which are outside our control. Specific factors that could cause actual
results to differ materially from those set forth in the forward-looking
statements include: demand for commercial powder; international business
opportunities; ammunition lot acceptance; timing of contract funding; changing
economic and political conditions in the United States and in other countries;
changes in governmental laws and regulations surrounding various matters, such
as environmental remediation, contract pricing and international trading
restrictions; changes in governmental spending and budgetary policies, such as
reductions in the level of defense spending and redirection of U.S. Department
of Defense program funding; production and pricing levels of important raw
materials; lower than anticipated levels of plant utilization resulting in
production inefficiencies and higher costs, whether related to the delay of new
product introductions, improved production processes or equipment or labor
relations issues; difficulties or delays in the development, production, testing
and marketing of products; product margins and
32
<PAGE> 37
customer product acceptance; unforeseen difficulties associated with the
integration of acquired businesses; and costs and effects of legal and
administrative cases, proceedings, settlements and investigations involving the
Company. Other factors and assumptions not identified above are also involved in
the preparation of forward-looking statements, and the failure of such other
factors and assumptions to be realized may also cause actual results to differ
materially from those discussed. We assume no obligation to update such
estimates to reflect actual results, changes in assumptions or changes in other
factors affecting such estimates.
33
<PAGE> 38
ADDITIONAL INFORMATION
SOLICITATION OF PROXIES/COSTS
The Company is making this proxy solicitation. We will bear the cost of the
solicitation of proxies. We have retained Georgeson & Company, Inc. to
coordinate the solicitation of proxies. Georgeson & Company will solicit proxies
by personal interview, mail, telephone or telegram and will request brokerage
houses and other custodians, nominees and fiduciaries to forward solicitation
material to the beneficial owners of the common stock held of record by such
persons. The Company will pay Georgeson & Company a customary fee covering its
services, expected to be approximately $7,500, and will reimburse Georgeson &
Company for payments made to brokers and other nominees for their expenses in
forwarding solicitation material. Further solicitation may be made by our
directors, officers and employees personally, by telephone or otherwise, but
they will not be specifically compensated for these services.
OTHER MATTERS
Pursuant to Virginia law and the Company's by-laws, no action may be taken
at the special meeting except for actions contemplated by this proxy statement,
including the vote on the merger agreement and any motion to adjourn the special
meeting.
SHAREHOLDER PROPOSALS
If we complete the merger, we will no longer have public shareholders or
any public participation in our shareholder meetings. If we do not complete the
merger, we intend to hold our next annual shareholder meeting on May 8, 2001. In
that case, if you are still a shareholder as of the record date of such meeting,
you would continue to be entitled to attend and participate in our shareholder
meetings. Our by-laws require a shareholder who intends to nominate directors or
propose new business at any annual meeting to provide advance notice of such
intended action as well as certain additional information. Assuming we hold our
annual meeting on May 8, 2001, this by-laws provision requires shareholders to
provide us with notice of their intent to nominate directors or propose new
business at an annual meeting not less than 90 days prior to such annual
meeting. In accordance with federal securities laws, proposals to be submitted
by shareholders for consideration at our next annual meeting and inclusion in
our 2001 annual proxy statement must have been received by us at our executive
offices in St. Petersburg, Florida, not later than November 14, 2000. SEC rules
establish standards as to which shareholder proposals are required to be
included in a proxy statement for an annual meeting. We will only consider
proposals for inclusion in our proxy statement for an annual meeting that
satisfy the requirements of applicable SEC rules.
VOTING PROCEDURES
The shares represented by all valid proxies received will be voted as
specified in the proxies. Where specific choices are not indicated, the shares
represented by all valid proxies received will be voted "FOR" approval of the
merger agreement as recommended by our Board of Directors. Except for PRIME Plan
and CEOP participants, a failure to vote or a vote to abstain will have the same
effect as a vote cast "AGAINST" approval of the merger agreement. In addition,
brokers who hold ordinary shares as nominees will not have discretionary
authority to vote such shares in the absence of instructions from the beneficial
owners and a broker non-vote will have the same effect as not voting for or a
vote "AGAINST" the merger agreement.
34
<PAGE> 39
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC under
the Exchange Act. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. You may read and copy this information at the
following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. The SEC also maintains an Internet world wide
web site that contains reports, proxy statements and other information about
issuers, including the Company and General Dynamics, who file electronically
with the SEC. The address of that site is http://www.sec.gov. You can also
inspect reports, proxy statements and other information about us at the offices
of The Nasdaq Stock Market, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" information into this
document. This means that we can disclose important information to you by
referring you to another document we filed with the SEC. The information
incorporated by reference is considered to be a part of this document, except
for any information that is superseded by information that is included directly
in this document.
This document incorporates by reference the documents listed below that we
have previously filed with the SEC. It contains important information about the
Company and its financial condition.
<TABLE>
<CAPTION>
SEC FILING PERIOD
---------- ------
<S> <C>
Annual Proxy Statement...................................... Filed March 14, 2000
Annual Report on Form 10-K.................................. Filed March 20, 2000
Quarterly Report on Form 10-Q............................... Filed May 8, 2000
Quarterly Report on Form 10-Q............................... Filed August 7, 2000
Quarterly Report on Form 10-Q............................... Filed November 2, 2000
Schedule 14A containing Rule 14a-12 material................ Filed November 9, 2000
Current Report on Form 8-K.................................. Filed November 13, 2000
</TABLE>
We incorporate by reference additional documents that we may file with the
SEC between the date of this document and the date of the special meeting.
35
<PAGE> 40
You can obtain any of the documents incorporated by reference in this
document through us or from the SEC through the SEC's web site at the address
provided above. Documents incorporated by reference are available from us
without charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference into those documents. You can obtain
documents incorporated by reference in this document by requesting them in
writing to:
Gail Wilson
Corporate Communications
Primex Technologies, Inc.
10101 Ninth Street North
St. Petersburg, Florida 33716
If you would like to request documents, please do so by January 17, 2001 in
order to receive them before the special meeting.
By Order of the Board of Directors,
/s/ George H. Pain
GEORGE H. PAIN
Secretary
36
<PAGE> 41
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
GENERAL DYNAMICS CORPORATION,
MARS ACQUISITION CORPORATION
AND
PRIMEX TECHNOLOGIES, INC.
<PAGE> 42
TABLE OF CONTENTS
<TABLE>
<CAPTION>
DESCRIPTION PAGE
----------- ----
<S> <C> <C>
ARTICLE 1 THE MERGER.................................................. A-1
Section 1.1 The Merger.................................................. A-1
Section 1.2 The Closing................................................. A-1
Section 1.3 Effective Time.............................................. A-1
Section 1.4 Effects of the Merger....................................... A-1
Section 1.5 Articles of Incorporation and Bylaws........................ A-1
Section 1.6 Directors................................................... A-1
Section 1.7 Officers.................................................... A-2
Section 1.8 Conversion of Company Common Stock.......................... A-2
Section 1.9 Stock Options; Equity-Based Awards.......................... A-2
Section 1.10 Conversion of Acquisition Corporation Common Stock.......... A-3
Section 1.11 Dissenters' Rights.......................................... A-3
ARTICLE 2 STOCKHOLDER APPROVAL........................................ A-3
Section 2.1 Company Actions............................................. A-3
Section 2.2 SEC Comments................................................ A-4
ARTICLE 3 PAYMENT..................................................... A-4
Section 3.1 Surrender of Certificates................................... A-4
Section 3.2 Paying Agent; Certificate Surrender Procedures.............. A-4
Section 3.3 Transfer Books.............................................. A-4
Section 3.4 Termination of Payment Fund................................. A-5
Section 3.5 Lost Certificates........................................... A-5
Section 3.6 No Rights as Stockholder.................................... A-5
Section 3.7 Withholding................................................. A-5
Section 3.8 Escheat..................................................... A-5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... A-5
Section 4.1 Organization................................................ A-5
Section 4.2 Authorization of Transaction; Enforceability................ A-6
Section 4.3 Noncontravention; Consents.................................. A-6
Section 4.4 Capitalization.............................................. A-6
Section 4.5 Company Reports; Proxy Statement............................ A-7
Section 4.6 No Undisclosed Liabilities.................................. A-8
Section 4.7 Absence of Material Adverse Change.......................... A-8
Section 4.8 Litigation and Legal Compliance............................. A-8
Section 4.9 Contract Matters............................................ A-8
Section 4.10 Tax Matters................................................. A-10
Section 4.11 Employee Benefit Matters.................................... A-11
Section 4.12 Environmental Matters....................................... A-14
Section 4.13 Title....................................................... A-15
Section 4.14 Intellectual Property Matters............................... A-15
Section 4.15 Labor Matters............................................... A-15
Section 4.16 Rights Agreement............................................ A-15
Section 4.17 State Takeover Laws......................................... A-16
Section 4.18 Brokers' Fees............................................... A-16
Section 4.19 Representations and Warranties.............................. A-16
</TABLE>
i
<PAGE> 43
<TABLE>
<CAPTION>
DESCRIPTION PAGE
----------- ----
<S> <C> <C>
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE PARENT CORPORATION.... A-16
Section 5.1 Organization................................................ A-16
Section 5.2 Authorization of Transaction; Enforceability................ A-16
Section 5.3 Noncontravention; Consents.................................. A-17
Section 5.4 Adequate Cash Resources..................................... A-17
Section 5.5 No Capital Ownership in the Company......................... A-17
ARTICLE 6 COVENANTS................................................... A-17
Section 6.1 General..................................................... A-17
Section 6.2 Notices and Consents........................................ A-17
Section 6.3 Interim Conduct of the Company.............................. A-17
Section 6.4 Preservation of Organization................................ A-19
Section 6.5 Full Access................................................. A-19
Section 6.6 Notice of Developments...................................... A-19
Section 6.7 Nonsolicitation of Acquisition Proposals.................... A-19
Section 6.8 Indemnification............................................. A-20
Section 6.9 Public Announcements........................................ A-21
Section 6.10 Preservation of Programs and Agreements..................... A-21
Section 6.11 Actions Regarding Antitakeover Statutes..................... A-22
Section 6.12 Defense of Orders and Injunctions........................... A-22
Section 6.13 Employee Benefit Matters.................................... A-22
Section 6.14 Standstill Provisions....................................... A-23
ARTICLE 7 CONDITIONS TO THE CONSUMMATION OF THE MERGER................ A-23
Section 7.1 Conditions to the Obligations of Each Party................. A-23
Section 7.2 Conditions to the Obligation of the Company................. A-24
Section 7.3 Conditions to the Obligation of the Parent Corporation and
the Acquisition Corporation................................. A-24
Section 7.4 Frustration of Closing Conditions........................... A-24
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER........................... A-24
Section 8.1 Termination................................................. A-24
Section 8.2 Effect of Termination....................................... A-25
Section 8.3 Termination Fee............................................. A-25
ARTICLE 9 MISCELLANEOUS............................................... A-26
Section 9.1 Nonsurvival of Representations.............................. A-26
Section 9.2 Remedies.................................................... A-26
Section 9.3 Successors and Assigns...................................... A-26
Section 9.4 Amendment................................................... A-26
Section 9.5 Extension and Waiver........................................ A-26
Section 9.6 Severability................................................ A-26
Section 9.7 Counterparts................................................ A-27
Section 9.8 Descriptive Headings........................................ A-27
Section 9.9 Notices..................................................... A-27
Section 9.10 No Third Party Beneficiaries................................ A-27
Section 9.11 Entire Agreement............................................ A-28
Section 9.12 Construction................................................ A-28
Section 9.13 Submission to Jurisdiction.................................. A-28
Section 9.14 Governing Law............................................... A-28
</TABLE>
ii
<PAGE> 44
TABLE OF DEFINED TERMS
<TABLE>
<S> <C>
Acquisition Corporation..................................... Preamble
Acquisition Proposal........................................ Section 6.7(b)
Antitrust Laws.............................................. Section 4.3
Certificate................................................. Section 3.1
Closing..................................................... Section 1.2
Closing Date................................................ Section 1.2
Code........................................................ Section 4.10(f)
Coli Policy................................................. Section 4.11(j)
Company..................................................... Preamble
Company Common Stock........................................ Section 1.8(a)
Company Disclosure Letter................................... Article 4
Company Material Adverse Effect............................. Section 4.1
Company Plans............................................... Section 4.11(a)
Company SEC Documents....................................... Section 4.5(a)
Company Stock-Based Award................................... Section 1.9(a)(ii)
Company Stockholder Approval................................ Section 2.1(a)
Company Stockholders Meeting................................ Section 2.1(a)
Confidentiality Agreement................................... Section 6.5
Delaware Act................................................ Section 1.1
Effective Time.............................................. Section 1.3
Employee Pension Benefit Plan............................... Section 4.11(a)
Employee Welfare Benefit Plan............................... Section 4.11(a)
Employees................................................... Section 6.13(a)
Environmental Law........................................... Section 4.12(b)
ERISA....................................................... Section 4.11(a)
Government Contract......................................... Section 4.9(b)
Government Subcontract...................................... Section 4.9(b)
Hazardous Materials......................................... Section 4.12(c)
HSR Act..................................................... Section 4.3
Indemnified Parties......................................... Section 6.8(a)
Intellectual Property....................................... Section 4.14(b)
Lien........................................................ Section 4.3
Merger...................................................... Section 1.1
Merger Consideration........................................ Section 1.8(a)
Option Consideration........................................ Section 1.9(a)(iii)
Parent Corporation.......................................... Preamble
Parent Corporation Disclosure Letter........................ Article 5
Parent Corporation Material Adverse Effect.................. Section 6.2
Paying Agent................................................ Section 3.1
Payment Fund................................................ Section 3.2(a)
Permitted Liens............................................. Section 4.13
Proxy Statement............................................. Section 2.1(b)
Rights Agreement............................................ Section 4.16
</TABLE>
iii
<PAGE> 45
<TABLE>
<S> <C>
SAR......................................................... Section 1.9(a)
SEC......................................................... Section 2.1(b)
Securities Act.............................................. Section 4.5(a)
Securities Exchange Act..................................... Section 1.9(d)
Stock Option................................................ Section 1.9(a)
Stock Plans................................................. Section 1.9(a)
Subsidiary.................................................. Section 1.8(c)
Superior Proposal........................................... Section 6.7(b)
Surviving Corporation....................................... Section 1.1
Taxes....................................................... Section 4.10(a)
Tax Returns................................................. Section 4.10(a)
Termination Fee............................................. Section 8.3(a)
Third Party Acquisition..................................... Section 8.3(b)
Virginia Act................................................ Section 1.1
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 9, 2000 among General
Dynamics Corporation, a Delaware corporation (the "Parent Corporation"), Mars
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of
the Parent Corporation (the "Acquisition Corporation"), and Primex Technologies,
Inc., a Virginia corporation (the "Company").
The Boards of Directors of the Parent Corporation, the Acquisition
Corporation, and the Company have each determined that a business combination
among the Parent Corporation, the Acquisition Corporation and the Company is
desirable and in the best interests of the Parent Corporation, the Acquisition
Corporation and the Company and their respective stockholders. The Boards of
Directors of the Parent Corporation, the Acquisition Corporation and the Company
accordingly have each duly adopted resolutions approving this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and for other good and valuable consideration, the value, receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time (as defined in Section 1.3) the
Acquisition Corporation will be merged (the "Merger") with and into the Company
in accordance with the provisions of the Delaware General Corporation Law (the
"Delaware Act") and the Virginia Stock Corporation Act (the "Virginia Act").
Following the Merger, the Company will continue as the surviving corporation
(the "Surviving Corporation") and the separate corporate existence of the
Acquisition Corporation will cease.
Section 1.2 The Closing. Upon the terms and subject to the conditions set
forth in this Agreement, the consummation of the Merger and the other
transactions contemplated by this Agreement (the "Closing") will take place at
the offices of Jenner & Block, 601 13th Street, N.W., Washington, D.C. 20005, at
10:00 a.m., local time, no later than the third business day following the
satisfaction or waiver, to the extent permitted by applicable laws, of the
conditions set forth in Article 7 (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or,
where permitted, waiver of those conditions), or at such other date, time or
place as the Parent Corporation and the Company may agree. The date upon which
the Closing occurs is referred to in this Agreement as the "Closing Date."
Section 1.3 Effective Time. The Merger will be consummated by the filing
of articles of merger with the State Corporation Commission of Virginia in
accordance with Section 720 of the Virginia Act and a certificate of merger in
accordance with Section 252 of the Delaware Act. The time the Merger becomes
effective in accordance with Section 720 of the Virginia Act is referred to in
this Agreement as the "Effective Time."
Section 1.4 Effects of the Merger. The Merger will have the effects set
forth in Section 721 of the Virginia Act and Section 259 of the Delaware Act.
Without limiting the generality of the foregoing, as of the Effective Time, all
properties, rights, privileges, powers and franchises of the Company and the
Acquisition Corporation will vest in the Surviving Corporation and all debts,
liabilities and duties of the Company and the Acquisition Corporation will
become debts, liabilities and duties of the Surviving Corporation.
Section 1.5 Articles of Incorporation and Bylaws. At the Effective Time,
the articles of incorporation and bylaws of the Company in the respective forms
delivered by the Company to the Parent Corporation prior to the date of this
Agreement will be the articles of incorporation and bylaws of the Surviving
Corporation, until amended by the Surviving Corporation pursuant to applicable
law.
Section 1.6 Directors. The directors of the Acquisition Corporation at
the Effective Time will be the initial directors of the Surviving Corporation
and will hold office from the Effective Time until their respective
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successors are duly elected or appointed and qualified in the manner provided in
the articles of incorporation and bylaws of the Surviving Corporation or as
otherwise provided by law.
Section 1.7 Officers. The officers of the Acquisition Corporation at the
Effective Time will be the initial officers of the Surviving Corporation and
will hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the articles
of incorporation and bylaws of the Surviving Corporation or as otherwise
provided by law.
Section 1.8 Conversion of Company Common Stock.
(a) Subject to the provisions of Section 1.8(b), each share of the
Company's Common Stock, par value $1.00 per share (the "Company Common
Stock"), issued and outstanding immediately prior to the Effective Time
(other than shares of Company Common Stock held in the treasury of the
Company, held by any Subsidiary of the Company or held by the Parent
Corporation or any Subsidiary of the Parent Corporation) will, by virtue of
the Merger and without any action on the part of the holder thereof, be
canceled and converted into the right to receive, upon the surrender of the
certificate formerly representing such share, $32.10 in cash (the "Merger
Consideration"). In the event that, subsequent to the date of this
Agreement but prior to the Effective Time, (i) the outstanding shares of
Company Common Stock are changed into a different number of shares or a
different class as a result of a stock split, reverse stock split, stock
dividend, subdivision, reclassification, combination, exchange,
recapitalization or similar transaction, or (ii) there is any dividend,
other than the regular quarterly dividend of $0.075 per share of Company
Common Stock, the Merger Consideration into which each share of Company
Common Stock will be converted as a result of the Merger will be adjusted
appropriately.
(b) Each share of Company Common Stock held in the treasury of the
Company, held by any Subsidiary of the Company or held by the Parent
Corporation or any Subsidiary of the Parent Corporation immediately prior
to the Effective Time will, by virtue of the Merger and without any action
on the part of the holder thereof, be canceled and retired and will cease
to exist. For purposes of this Section 1.8(b), shares of Company Common
Stock owned beneficially or held of record by any plan, program or
arrangement sponsored or maintained for the benefit of any current or
former employee of the Company, the Parent Corporation or any of their
respective Subsidiaries will not be deemed to be held by the Company, the
Parent Corporation or any such Subsidiary, regardless of whether the
Company, the Parent Corporation or any such Subsidiary has the power,
directly or indirectly, to vote or control the disposition of such shares.
(c) The term "Subsidiary" as used in this Agreement means any
corporation, partnership, limited liability company or other business
entity 50 percent or more of the outstanding voting equity securities of
which are owned, directly or indirectly, by the Company or the Parent
Corporation, as applicable.
Section 1.9 Stock Options; Equity-Based Awards
(a)(i) The Company will take all necessary actions to cause each
option to purchase shares of Company Common Stock (a "Stock Option") and
each stock appreciation right linked to the price of Company Common Stock
(a "SAR") granted under any stock option plan, program, agreement or
arrangement of the Company or any of its Subsidiaries (collectively, the
"Stock Plans") which is outstanding and unexercised immediately prior to
the Effective Time, whether vested or unvested, to be cancelled as of the
Effective Time and to be converted at the Effective Time into the right to
receive in cash from the Company an amount equal to the product of (a) the
excess, if any, of the Merger Consideration over the exercise price per
share of Company Common Stock of such Stock Option or SAR and (b) the
number of shares of Company Common Stock subject to such Stock Option or
SAR; provided, however, that no cash payment shall be made with respect to
any SAR that is related to a Stock Option in respect of which such a cash
payment is made.
(ii) The Company will take all necessary actions to cause each right
of any kind, whether vested or unvested, contingent or accrued, to acquire
or receive shares of Company Common Stock or to receive benefits measured
by the value of a number of shares of Company Common Stock, that may be
held, awarded, outstanding, credited, payable or reserved for issuance
under the Stock Plans (including,
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without limitation, restricted stock, restricted stock units, performance
awards and deferred stock units), except for Stock Options and SARs
converted in accordance with Section 1.9(a)(i) above (each, a "Company
Stock-Based Award") outstanding immediately prior to the Effective Time to
fully vest and become immediately distributable and payable, and each
Company Stock-Based Award shall be cancelled as of the Effective Time and
converted as of the Effective Time into the right to receive in cash from
the Company an amount equal to the product of (x) the Merger Consideration
(less any applicable exercise price) and (y) the number of shares of
Company Common Stock subject to such Company Stock-Based Award.
(iii) Any cash payments required to be made pursuant to this Section
1.9(a) (the "Option Consideration") will be made (subject to applicable
withholding and payroll taxes) promptly following the Effective Time.
(b) No additional Stock Options, SARs, or other equity-based awards or
other rights to acquire Company Common Stock will be granted pursuant to
the Stock Plans or otherwise after the date of this Agreement.
(c) The Board of Directors, or applicable committee thereof, of the
Company will grant all approvals and take all other actions required
pursuant to Rules 16b-3 under the Securities Exchange Act of 1934, as
amended (together with the rules and regulations of the SEC thereunder, the
"Securities Exchange Act"), to cause the disposition in the Merger of
Company Common Stock, Stock Options and SARs to be exempt from the
provisions of Section 16(b) of the Securities Exchange Act.
Section 1.10 Conversion of Acquisition Corporation Common Stock. Each
share of the Common Stock, par value $1.00 per share, of the Acquisition
Corporation issued and outstanding immediately prior to the Effective Time will,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into one share of the Common Stock, par value $1.00 per
share, of the Surviving Corporation.
Section 1.11 Dissenters' Rights. Subject to the consummation of the
Merger on the terms and conditions contained in this Agreement, the parties
hereto confirm that the holders of shares of Company Common Stock will not have
dissenters' rights under Article 15 of the Virginia Act.
ARTICLE 2
STOCKHOLDER APPROVAL
Section 2.1 Company Actions. The Company, acting through its Board of
Directors, in accordance with applicable law, including the Virginia Act, its
Articles of Incorporation and Bylaws and the rules applicable to companies
listed on The Nasdaq Stock Market, will:
(a) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "Company Stockholders Meeting"), to be held as soon
as practicable after the date of this Agreement, for the purpose of
submitting this Agreement for approval by the holders of more than
two-thirds of the outstanding shares of Company Common Stock (the "Company
Stockholder Approval");
(b) prepare and file with the Securities and Exchange Commission (the
"SEC") as promptly as practicable after the date of this Agreement a Proxy
Statement and related materials (the "Proxy Statement") with respect to the
Company Stockholders Meeting satisfying the requirements of the Securities
Exchange Act, respond promptly to any comments raised by the SEC with
respect to the preliminary version of the Proxy Statement, and cause the
definitive version of the Proxy Statement to be mailed to its stockholders
as soon as it is legally permitted to do so; and
(c) include in the Proxy Statement (i) subject to Section 6.7(d), the
recommendation of the Board of Directors of the Company that the
stockholders of the Company vote in favor of the approval of this Agreement
and the transactions contemplated hereby and (ii) the written opinion dated
as of the date of this Agreement of Goldman, Sachs & Co., financial advisor
to the Board of Directors of the Company, to
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the effect that as of the date of this Agreement the Merger Consideration
is fair to the stockholders of the Company, other than the Parent
Corporation and its affiliates, from a financial point of view.
Section 2.2 SEC Comments. The Company will promptly advise the Parent
Corporation of receipt by the Company of, and will promptly furnish the Parent
Corporation with copies of, all comments received from the SEC with respect to
the Proxy Statement and will consult with the Parent Corporation in responding
to such comments.
ARTICLE 3
PAYMENT
Section 3.1 Surrender of Certificates. From and after the Effective Time,
each holder of a certificate that immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (a "Certificate") will be
entitled to receive in exchange therefor, upon surrender thereof to a paying
agent (the "Paying Agent") to be designated by the Parent Corporation prior to
the Effective Time with approval of the Company, which approval shall not be
unreasonably withheld, the Merger Consideration into which the shares of Company
Common Stock evidenced by such Certificate were converted pursuant to the
Merger. No interest will be payable on the Merger Consideration to be paid to
any holder of a Certificate irrespective of the time at which such Certificate
is surrendered for exchange.
Section 3.2 Paying Agent; Certificate Surrender Procedures.
(a) As soon as reasonably practicable following the Effective Time,
the Parent Corporation will deposit, or cause to be deposited, with the
Paying Agent, an amount in cash sufficient to provide all funds necessary
for the Paying Agent to make payment of the Merger Consideration pursuant
to Section 1.8 (the "Payment Fund"). Pending payment of such funds to the
holders of certificates for shares of Company Common Stock, such funds will
be held and may be invested by the Paying Agent as Parent Corporation
directs (so long as such directions do not impair the rights of holders of
Company Common Stock) in the direct obligations of the United States,
obligations for which the full faith and credit of the United States is
pledged to provide for the payment of principal and interest or commercial
paper rated of the highest quality by Moody's Investors Services, Inc. or
Standard & Poor's Corporation. Any net profit resulting from, or interest
or income produced by, such investments will be payable to the Surviving
Corporation or Parent Corporation, as Parent Corporation directs. Parent
Corporation will promptly replace any monies lost through any investment
made pursuant to this Section 3.2.
(b) As soon as reasonably practicable after the Effective Time, the
Parent Corporation will instruct the Paying Agent to mail to each record
holder of a Certificate (i) a letter of transmittal (which will specify
that delivery will be effected, and risk of loss and title to such
Certificates will pass, only upon delivery of the Certificate to the Paying
Agent and will be in such form and have such other provisions as the Parent
Corporation will reasonably specify) and (ii) instructions for use in
effecting the surrender of Certificates for the Merger Consideration.
Commencing immediately after the Effective Time, upon the surrender to the
Paying Agent of such Certificate or Certificates, together with a duly
executed and completed letter of transmittal and all other documents and
other materials required by the Paying Agent to be delivered in connection
therewith, the holder will be entitled to receive the Merger Consideration
into which the Certificate or Certificates so surrendered have been
converted in accordance with the provisions of Section 1.8.
Section 3.3 Transfer Books. The stock transfer books of the Company will
be closed at the Effective Time and no transfer of any shares of Company Common
Stock will thereafter be recorded on any of the stock transfer books. In the
event of a transfer of ownership of any Company Common Stock prior to the
Effective Time that is not registered in the stock transfer records of the
Company at the Effective Time, the Merger Consideration into which such Company
Common Stock has been converted in the Merger will be paid to the transferee in
accordance with the provisions of Section 3.2(b) only if the Certificate is
surrendered as provided in Section 3.2 and accompanied by all documents required
to evidence and effect such transfer and by evidence of payment of any
applicable stock transfer taxes.
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Section 3.4 Termination of Payment Fund. Any portion of the Payment Fund
which remains undistributed one hundred eighty (180) days after the Effective
Time will be delivered to the Parent Corporation upon demand, and each holder of
Company Common Stock who has not theretofore surrendered Certificates in
accordance with the provisions of this Article 3 will thereafter look only to
the Parent Corporation for satisfaction of such holder's claims for the Merger
Consideration.
Section 3.5 Lost Certificates. If any Certificate has 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 Parent Corporation, the posting by such person of a bond in such reasonable
amount as the Parent Corporation may direct as indemnity against any claim that
may be made against it with respect to such Certificate, the Paying Agent will
deliver in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration pursuant to Section 1.8.
Section 3.6 No Rights as Stockholder. From and after the Effective Time,
the holders of Certificates will cease to have any rights as a stockholder of
the Surviving Corporation except as otherwise provided in this Agreement or by
applicable law, and the Parent Corporation will be entitled to treat each
Certificate that has not yet been surrendered for exchange solely as evidence of
the right to receive the Merger Consideration into which the shares of Company
Common Stock evidenced by such Certificate have been converted pursuant to the
Merger; provided, however, that each holder of a Certificate that has become
entitled to any declared and unpaid dividend will continue to be entitled to
such dividend following the Effective Time, and the Surviving Corporation will
pay such dividend to such holder in the amount and on the date specified
therefor by the Board of Directors of the Company at the time of declaration
thereof.
Section 3.7 Withholding. The Parent Corporation will be entitled to
deduct and withhold from the Merger Consideration otherwise payable to any
former holder of Company Common Stock all amounts relating to federal and state
income and payroll taxes required by law to be deducted or withheld therefrom.
Section 3.8 Escheat. Neither the Parent Corporation, the Acquisition
Corporation nor the Company will be liable to any former holder of Company
Common Stock for any portion of the Merger Consideration delivered to any public
official pursuant to any applicable abandoned property, escheat or similar law.
In the event any Certificate has not been surrendered for the Merger
Consideration prior to the sixth anniversary of the Closing Date, or prior to
such earlier date as of which such Certificate or the Merger Consideration
payable upon the surrender thereof would otherwise escheat to or become the
property of any governmental entity, then the Merger Consideration otherwise
payable upon the surrender of such Certificate will, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all rights, interests and adverse claims of any person.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent Corporation and the
Acquisition Corporation that except as disclosed in the reports, schedules,
forms, statements and other documents filed by the Company with the SEC since
December 31, 1999 and publicly available prior to the date of this Agreement or
as disclosed in the letter dated as of the date of this Agreement from the
Company to the Parent Corporation (the "Company Disclosure Letter"):
Section 4.1 Organization. The Company and each of its Subsidiaries is (a)
a corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation, (b) has all requisite power and authority to
own, lease and operate its properties and to carry on its business as presently
being conducted, and (c) is in good standing under the laws of the jurisdiction
of its incorporation and is duly qualified to conduct business as a foreign
corporation in each other jurisdiction where such qualification is required,
except, in the case of clauses (b) and (c) above, where such failure,
individually or in the aggregate, is not reasonably likely to have a material
adverse effect on the business, financial condition, operations or results of
operations of the Company and its Subsidiaries taken as a whole (other than
changes or effects resulting from occurrences relating to the economy in
general, the securities markets in general or the Company's industry in
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general and not specifically relating to the Company) or the ability of the
Company to consummate the Merger and to perform its obligations under this
Agreement (a "Company Material Adverse Effect"). The Company has delivered to
the Parent Corporation correct and complete copies of its articles of
incorporation and bylaws, as presently in effect, and, upon request, will make
available to the Parent Corporation after the date of this Agreement correct and
complete copies of the articles of incorporation and bylaws, as presently in
effect, of each of its Subsidiaries.
Section 4.2 Authorization of Transaction; Enforceability. Subject to
obtaining the Company Stockholder Approval, the Company has full corporate power
and authority and has taken all requisite corporate action to enable it to
execute and deliver this Agreement, to consummate the Merger and the other
transactions contemplated hereby and to perform its obligations hereunder. The
Board of Directors of the Company, at a meeting thereof duly called and held,
has duly adopted resolutions, by more than the required vote, approving this
Agreement, the Merger and the other transactions contemplated hereby,
determining that the terms and conditions of this Agreement, the Merger and the
other transactions contemplated hereby are in the best interests of the Company
and its stockholders and recommending that the Company's stockholders approve
this Agreement. The foregoing resolutions of the Board of Directors of the
Company have not been modified, supplemented or rescinded and remain in full
force and effect as of the date of this Agreement. In connection with its
adoption of the foregoing resolutions, the Board of Directors of the Company
received the written opinion of Goldman, Sachs & Co., financial advisor to the
Board of Directors of the Company, dated as of the date of this Agreement, to
the effect that, as of such date, the Merger Consideration is fair to the
stockholders of the Company, other than the Parent Corporation and its
affiliates, from a financial point of view. The foregoing opinion has not been
modified, supplemented or rescinded prior to the date of this Agreement. The
Company will deliver to the Parent Corporation promptly after the date of this
Agreement correct and complete copies of the foregoing resolutions and opinion.
Assuming due execution and authorization by the Parent Corporation and the
Acquisition Corporation, this Agreement constitutes the valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms and conditions.
Section 4.3 Noncontravention; Consents. Except for (a) filings and
approvals necessary to comply with the applicable requirements of the Securities
Exchange Act and the "blue sky" laws and regulations of various states, (b) the
filing of a Notification and Report Form and related material with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice under the Hart-Scott-Rodino Act of 1976, as amended (the "HSR Act"), and
any other filing required pursuant to any other applicable competition, merger
control, antitrust or similar law or regulation (together with the HSR Act, the
"Antitrust Laws"), (c) the filing of articles of merger pursuant to the Virginia
Act, a certificate of merger pursuant to the Delaware Act and any applicable
documents with the relevant authorities of other jurisdictions in which the
Company or any of its Subsidiaries is qualified to do business, and (d) any
filings required under the rules and regulations of The NASDAQ Stock Market,
neither the execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby, will
constitute a violation of, be in conflict with, constitute or create (with or
without notice or lapse of time or both) a default under, give rise to any right
of termination, cancellation, amendment or acceleration with respect to, or
result in the creation or imposition of any lien, encumbrance, security interest
or other claim (a "Lien") upon any property of the Company or any of its
Subsidiaries pursuant to (i) the articles of incorporation or bylaws of the
Company or any of its Subsidiaries, (ii) any constitutional provision, law,
rule, regulation, permit, order, writ, injunction, judgment or decree to which
the Company or any of its Subsidiaries is subject or (iii) any agreement or
commitment to which the Company or any of its Subsidiaries is a party or by
which the Company, any of its Subsidiaries or any of their respective properties
is bound or subject, except, in the case of clauses (ii) and (iii) above, for
such matters which, individually or in the aggregate, are not reasonably likely
to have a Company Material Adverse Effect.
Section 4.4 Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of
the Company consists of 60,000,000 shares of Company Common Stock and
10,000,000 shares of Preferred Stock, par value $1.00 per share, none of
which shares of Preferred Stock have been issued. As of the close of
business on
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November 3, 2000, 10,401,241 shares of Company Common Stock were issued and
outstanding, 129,480 shares of Company Common Stock were reserved for
restricted stock grants or awards (including stock grants or awards to
non-employee directors), no shares were held by the Company as treasury
shares and 1,641,732 shares were reserved for issuance upon the exercise of
outstanding Stock Options. All of the issued and outstanding shares of
capital stock of the Company have been duly authorized and are validly
issued, fully paid and nonassessable.
(b) Other than Stock Options to acquire an aggregate of not more than
1,560,952 shares of Company Common Stock and not more than 80,823 shares of
Company Common Stock which are subject to restricted stock granted or
awarded (including stock grants or awards to non-employee directors) by the
Company to current and former directors, officers, employees and advisors
of the Company and its Subsidiaries, there are no outstanding or authorized
options, warrants, subscription rights, conversion rights, exchange rights
or other contracts or commitments that could require the Company or any of
its Subsidiaries to issue, sell or otherwise cause to become outstanding
any of its capital stock. There are no outstanding stock appreciation,
phantom stock, profit participation or similar rights with respect to the
Company or any of its Subsidiaries. The schedule of Stock Options and SARs
set forth in the Company Disclosure Letter sets forth a list of all
outstanding Stock Options and SARs as of the date set forth therein, the
respective exercise prices thereof or amount of such rights and the holders
thereof.
(c) Neither the Company nor any of its Subsidiaries is a party to any
voting trust, proxy or other agreement or understanding with respect to the
voting of any capital stock of the Company or any of its Subsidiaries.
(d) The Board of Directors of the Company has not declared any
dividend or distribution with respect to the Company Common Stock the
record or payment date for which is on or after the date of this Agreement
(other than any regular quarterly dividend of $0.075 per share of Company
Common Stock).
(e) All of the outstanding shares of the capital stock of each of the
Company's Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or one of its Subsidiaries, free
and clear of any Lien. Except for its Subsidiaries set forth in the Company
Disclosure Letter, the Company does not control directly or indirectly or
have any direct or indirect equity participation in any corporation,
partnership, limited liability company, joint venture or other entity.
Section 4.5 Company Reports; Proxy Statement.
(a) The Company has since December 31, 1996 filed all reports, forms,
statements and other documents (collectively, together with all financial
statements included or incorporated by reference therein, the "Company SEC
Documents") required to be filed by the Company with the SEC pursuant to
the provisions of the Securities Act of 1933, as amended (the "Securities
Act") or the Securities Exchange Act. Each of the Company SEC Documents, as
of its filing date, complied in all material respects with the applicable
requirements of the Securities Act and the Securities Exchange Act. None of
the Company SEC Documents, as of their respective filing dates, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. No Subsidiary of the Company is required to file any reports,
forms, statements or other documents pursuant to the Securities Act or the
Securities Exchange Act.
(b) Each of the consolidated financial statements (including related
notes) included in the Company SEC Documents presented fairly in all
material respects the consolidated financial condition, cash flows and
results of operations of the Company and its Subsidiaries for the
respective periods or as of the respective dates set forth therein. Each of
the financial statements (including related notes) included in the Company
SEC Documents has been prepared in accordance with United States generally
accepted accounting principles, consistently applied during the periods
involved, except (i) as noted therein, (ii) to
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the extent required by changes in United States generally accepted
accounting principles or (iii) in the case of unaudited interim financial
statements, normal recurring year-end audit adjustments.
(c) The Company has delivered to the Parent Corporation correct and
complete copies of any proposed or contemplated amendments or modifications
to the Company SEC Documents (including any exhibit documents included
therein) that have not yet been filed by the Company with the SEC.
(d) The Proxy Statement will comply in all material respects with the
applicable requirements of the Securities Exchange Act and will not, at the
time the definitive Proxy Statement is filed with the SEC and mailed to the
stockholders of the Company, contain any untrue statement of 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. No representation
or warranty is made herein by the Company with respect to any information,
if any, supplied in writing by the Parent Corporation for inclusion in the
Proxy Statement.
Section 4.6 No Undisclosed Liabilities. The Company and its Subsidiaries
have no liabilities or obligations (whether absolute or contingent, liquidated
or unliquidated, or due or to become due) except for (a) liabilities and
obligations referenced (whether by value or otherwise) or reflected in the
Company SEC Documents, (b) liabilities and obligations incurred in the ordinary
course of business, consistent with past practice, since October 1, 2000, and
(c) other liabilities and obligations which, individually or in the aggregate,
are not reasonably likely to have a Company Material Adverse Effect.
Section 4.7 Absence of Material Adverse Change. Since October 1, 2000
there has not been a Company Material Adverse Effect nor has there occurred any
event, change, effect or development which, individually or in the aggregate, is
reasonably likely to have a Company Material Adverse Effect.
Section 4.8 Litigation and Legal Compliance.
(a) As of the date of this Agreement, the Company Disclosure Letter
sets forth each instance in which the Company or any of its Subsidiaries is
(i) subject to any material unsatisfied judgment order, decree,
stipulation, injunction or charge or (ii) a party to or, to the Company's
knowledge, threatened to be made a party to any material charge, complaint,
action, suit, proceeding, hearing or, to the Company's knowledge,
investigation of or in any court or quasi-judicial or administrative agency
of any federal, state, local or foreign jurisdiction, except for judgments,
orders, decrees, stipulations, injunctions, charges, complaints, actions,
suits, proceedings, hearings and investigations which, individually or in
the aggregate, are not reasonably likely to have a Company Material Adverse
Effect. As of the date of this Agreement, there are no judicial or
administrative actions, proceedings or, to the Company's knowledge,
investigations pending or, to the Company's knowledge, threatened that
question the validity of this Agreement or any action taken or to be taken
by the Company in connection with this Agreement,
(b) Except for instances of noncompliance which, individually or in
the aggregate, are not reasonably likely to have a Company Material Adverse
Effect, and except for Environmental Laws, which are the subject of Section
4.12, the Company and its Subsidiaries are in compliance with each
constitutional provision, law, rule, regulation, permit, order, writ,
injunction, judgment or decree to which the Company or any of its
Subsidiaries is subject.
Section 4.9 Contract Matters.
(a) Neither the Company nor any of its Subsidiaries is in default or
violation of (and no event has occurred which with notice or the lapse of
time or both would constitute a default or violation) of any term,
condition or provision of any note, mortgage, indenture, loan agreement,
other evidence of indebtedness, guarantee, license, lease, agreement or
other contract, instrument or contractual obligation to which the Company
or any of its Subsidiaries is a party or by which any of their respective
assets is bound, except for any such default or failure which, individually
or in the aggregate, is not reasonably likely to have a Company Material
Adverse Effect.
(b) With respect to each contract, agreement, bid or proposal between
the Company or any of its Subsidiaries and any domestic or foreign
government or governmental agency, including any facilities
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contract for the use of government-owned facilities (a "Government
Contract"), and each contract, agreement, bid or proposal that is a
subcontract between the Company or any of its Subsidiaries and a third
party relating to a contract between such third party and any domestic or
foreign government or governmental agency (a "Government Subcontract"), (i)
the Company and each of its Subsidiaries have complied with all terms and
conditions of such Government Contract or Government Subcontract, including
all clauses, provisions and requirements incorporated expressly, by
reference or by operation of law therein, (ii) the Company and each of its
Subsidiaries have complied with all requirements of all laws, rules,
regulations or agreements pertaining to such Government Contract or
Government subcontract, including where applicable the Cost Accounting
Standards disclosure statement of the Company or such Subsidiary, (iii) all
representations and certifications executed, acknowledged or set forth in
or pertaining to such Government Contract or Government Subcontract were
complete and correct as of their effective dates and the Company and its
Subsidiaries have complied with all such representations and
certifications, (iv) neither the United States government nor any prime
contractor, subcontractor or other person or entity has notified the
Company or any of its Subsidiaries, in writing or orally, that the Company
or any of its Subsidiaries has breached or violated any law, rule,
regulation, certification, representation, clause, provision or requirement
pertaining to such Government Contract or Government Subcontract, (v)
neither the Company nor any of its Subsidiaries has received any notice of
termination for convenience, notice of termination for default, cure notice
or show cause notice pertaining to such Government Contract or Government
Subcontract, (vi) other than in the ordinary course of business, no cost
incurred by the Company or any of its Subsidiaries pertaining to such
Government Contract or Government Subcontract has been questioned or
challenged, is the subject of any audit or investigation or has been
disallowed by any government or governmental agency, and (vii) no payments
due to the Company or any of its Subsidiaries pertaining to such Government
Contract or Government Subcontract has been withheld or set off, nor has
any claim been made to withhold or set off money, and the Company and its
Subsidiaries are entitled to all progress payments received to date with
respect thereto, except for any such failure, noncompliance, inaccuracy,
breach, violation, termination, cost, investigation, disallowance or
payment which, individually or in the aggregate, is not reasonably likely
to have a Company Material Adverse Effect.
(c) To the Company's knowledge, neither the Company nor any of its
Subsidiaries, any of the respective directors, officers, employees,
consultants or agents of the Company or any of its Subsidiaries is or since
January 1, 1997 has been under administrative, civil or criminal
investigation, indictment or information by any government or governmental
agency or any audit or an investigation by the Company or any of its
Subsidiaries with respect to any alleged act or omission arising under or
relating to any Government Contract or Government Subcontract.
(d) There exist (i) no material outstanding claims against the Company
or any of its Subsidiaries, either by any government or governmental agency
or by any prime contractor, subcontractor, vendor or other person or
entity, arising under or relating to any Government Contract or Government
Subcontract, and (ii) no disputes between the Company or any of its
Subsidiaries and the United States government under the Contract Disputes
Act or any other federal statute or between the Company or any of its
Subsidiaries and any prime contractor, subcontractor or vendor arising
under or relating to any Government Contract or Government Subcontract,
except for any such claim or dispute which, individually or in the
aggregate, is not reasonably likely to have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has (i) any
interest in any pending or potential material claim against any government
or governmental agency or (ii) any interest in any pending claim against
any prime contractor, subcontractor or vendor arising under or relating to
any Government Contract or Government Subcontract, which, if adversely
determined against the Company, individually or in the aggregate, is
reasonably likely to have a Company Material Adverse Effect.
(e) Since January 1, 1997, neither the Company nor any of its
Subsidiaries has been debarred or suspended from participation in the award
of contracts with the United States government or any other government or
governmental agency (excluding for this purpose ineligibility to bid on
certain contracts due to generally applicable bidding requirements). To the
Company's knowledge, there exists no facts or
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circumstances that would warrant the institution of suspension or debarment
proceedings or the finding of nonresponsibility or ineligibility on the
part of the Company, any of its Subsidiaries or any of their respective
directors, officers or employees. No payment has been made by or on behalf
of the Company or any of its Subsidiaries in connection with any Government
Contract or Government Subcontract in violation of applicable procurement
laws, rules and regulations or in violation of, or requiring disclosure
pursuant to, the Foreign Corrupt Practices Act, as amended, except for any
such violation or failure to disclose which, individually or in the
aggregate, is not reasonably likely to have a Company Material Adverse
Effect.
(f) The Company Disclosure Letter sets forth, as of the date of this
Agreement, a list of each contract by the Company or any of its
Subsidiaries with any customer or supplier that (i) involves an obligation
of $3,000,000 or more (per annum, if applicable) or (ii) represents one of
the top three contracts (in dollar value) for any particular business unit
of the Company, provided the value of any such contract exceeds $500,000
(per annum, if applicable), and identifies the parties to the contract, the
general nature of the contract and the term and amount of each contract,
whether a prime contract, subcontract or otherwise.
Section 4.10 Tax Matters.
(a) For each taxable period beginning on or after January 1, 1997, the
Company and each of its Subsidiaries have timely filed all required
returns, declarations, reports, claims for refund or information returns
and statements, including any schedule or attachment thereto (collectively
"Tax Returns"), relating to any federal, state, local or foreign net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use, withholding,
payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other tax, fee, assessment
or charge, including any interest, penalty or addition thereto and
including any liability for the taxes of any other person or entity under
Treasury Regulation Section 1.1502-6 (or any similar state, local or
foreign law, rule or regulation), and any liability in respect of any tax
as a transferee or successor, by law, contract or otherwise (collectively
"Taxes"), and all such Tax Returns are accurate and complete in all
respects, except to the extent any such failure to file or any such
inaccuracy in any filed Tax Return, individually or in the aggregate, is
not reasonably likely to have a Company Material Adverse Effect. All Taxes
owed by the Company or any of its Subsidiaries (whether or not shown on any
Tax Return) have been paid or adequately reserved for in accordance with
generally accepted accounting principles in the financial statements of the
Company, except (i) for any Taxes related to any period prior to January 1,
1997 for which the Company would be entitled to indemnification from Olin
Corporation and are not required to be reserved in the financial statements
of the Company in accordance with generally accepted accounting principles
or (ii) except to the extent any such failure to pay or reserve,
individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect.
(b) The most recent financial statements contained in the Company SEC
Documents reflect adequate reserves in accordance with generally accepted
accounting principles for all Taxes payable by the Company and its
Subsidiaries for all Tax periods and portions thereof through the date of
such financial statements, except to the extent that any failure to so
reserve, individually or in the aggregate, is not reasonably likely to have
a Company Material Adverse Effect. No deficiency with respect to Taxes has
been proposed, asserted or assessed against the Company or any of its
Subsidiaries and no requests for waivers of the time to assess any such
Taxes are pending, except to the extent any such deficiency or request for
waiver, individually or in the aggregate, is not reasonably likely to have
a Company Material Adverse Effect.
(c) For each taxable period beginning on or after January 1, 1997,
none of the federal income Tax Returns of the Company or any of its
Subsidiaries consolidated in such Tax Returns have been examined by and
settled with the Internal Revenue Service.
(d) Except for Liens for current Taxes not yet due and payable or
which are being contested in good faith, there is no Lien affecting any of
the assets or properties of the Company or any of its Subsidiaries
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that arose in connection with any failure or alleged failure to pay any
Tax, except for Liens which, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.
(e) Neither the Company nor any of its Subsidiaries is a party to any
Tax allocation or Tax sharing agreement with any person other than the
Company or any of its Subsidiaries.
(f) No amount payable by either the Company or any of its Subsidiaries
will be subject to disallowance under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
(g) Neither the Company nor any of its Subsidiaries has made any
payments, is obligated to make any payments or is a party to any agreement
that could obligate it to make any payments as a result of the execution
and delivery of this Agreement, the obtaining of the Company Stockholder
Approval or the consummation of the Merger or any other transaction
contemplated by this Agreement (including as a result of termination of
employment on or following the Effective Time) that would not be fully
deductible by reason of Section 280G of the Code.
Section 4.11 Employee Benefit Matters.
(a) The Company Disclosure Letter lists each plan, program, agreement
or arrangement constituting a material employee welfare benefit plan (an
"Employee Welfare Benefit Plan") as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or a material
employee pension benefit plan (an "Employee Pension Benefit Plan") as
defined in Section 3(2) of ERISA, and each other material employee benefit
plan, agreement, program or arrangement or employment practice maintained
by the Company or any of its Subsidiaries with respect to any of its
current or former employees or to which the Company or any of the Company
Subsidiaries contributes or is required to contribute with respect to any
of its current or former employees (collectively, the "Company Plans").
With respect to each Company Plan:
(i) such Company Plan (and each related trust, insurance contract
or fund) has been administered in a manner consistent in all respects
with its written terms and complies in form and operation with the
applicable requirements of ERISA and the Code and other applicable laws,
except for failures of administration or compliance which, individually
or in the aggregate, are not reasonably likely to have a Company
Material Adverse Effect;
(ii) all required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's and Summary Plan
Descriptions) have been filed or distributed appropriately with respect
to such Company Plan, except for failures of filing or distribution
which, individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect;
(iii) the requirements of Part 6 of Subtitle B of Title I of ERISA
and Section 4980B of the Code have been met with respect to each such
Company Plan which is an Employee Welfare Benefit Plan, except for
failures which, individually or in the aggregate, are not reasonably
likely to have a Company Material Adverse Effect;
(iv) all material contributions, premiums or other payments
(including all employer contributions and employee salary reduction
contributions) that are required to be made under the terms of any
Company Plan have been timely made or have been reflected on the
financial statements contained in the Company's most recent Form 10-Q
filed with the SEC;
(v) each such Company Plan which is an Employee Pension Benefit
Plan intended to be a "qualified plan" under Section 401(a) of the Code
has received a favorable determination letter from the Internal Revenue
Service, and no event has occurred which could reasonably be expected to
cause the loss, revocation or denial of any such favorable determination
letter;
(vi) the Company has made available and will continue to make
available to the Parent Corporation, upon its request, correct and
complete copies of the plan documents and most recent summary plan
descriptions, the most recent determination letter received from the
Internal Revenue
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Service, the most recent Form 5500 Annual Report, the most recent
actuarial report, the most recent audited financial statements, and all
related trust agreements, insurance contracts and other funding
agreements that implement such Company Plan (but excluding the failure
to make available any such document which is not material). The
valuation summaries provided by the Company to the Parent Corporation
reasonably represent the assets and liabilities attributable to Company
Plans calculated in accordance with the Company's past practices, but
excluding any failure which, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect;
(vii) no Company Plan which is an Employee Pension Benefit Plan has
been amended in any manner which would require the posting of security
under Section 401(a)(29) of the Code or Section 307 of ERISA, except any
such action which, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect;
(viii) neither the Company nor any of its Subsidiaries has
communicated to any employee (excluding internal memoranda to
management) any plan or commitment, whether or not legally binding, to
create any additional employee benefit plan or to modify or change any
Company Plan affecting any employee or terminated employee of the
Company or any of its Subsidiaries, except any such action which,
individually or in the aggregate, is not reasonably likely to have a
Company Material Adverse Effect;
(ix) the Company Disclosure Letter includes a workers' compensation
paid loss summary through the date of this Agreement on an accident year
basis; the Company Disclosure Letter additionally includes a recent
listing of all open workers compensation claims showing claimant name,
claim number, description, paid loss and case reserve, except for any
such claim which, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect;
(x) the Company has never been nor is a party to or otherwise bound
by any advance agreement or similar arrangement with any foreign,
federal, state or local government or regulatory body relating to the
allowability, allocation or reimbursement of benefit costs or other
matters in connection with any Company Plan;
(xi) any Company Plan is by its terms able to be amended or
terminated by the Company; and
(xii) there are no liabilities or obligations relating to any
individual's current or former employment with the Company or its
Subsidiaries or related entities arising in connection with any
violation of any applicable law, except for any liabilities or
obligations which, individually or in the aggregate, is not reasonably
likely to have a Company Material Adverse Effect.
(b) With respect to each Employee Welfare Benefit Plan or Employee
Pension Benefit Plan that the Company or any of its Subsidiaries maintains
or ever has maintained, or to which any of them contributes, ever has
contributed or ever has been required to contribute:
(i) no such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been completely or partially terminated (other
than any termination which, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect), no
reportable event (as defined in Section 4043 of ERISA) for which the
30-day reporting requirement has not been waived, as to which notices
would be required to be filed with the Pension Benefit Guaranty
Corporation, has occurred but has not yet been so reported (but
excluding any failure to report which, individually or in the aggregate,
is not reasonably likely to have a Company Material Adverse Effect), and
no proceeding by the Pension Benefit Guaranty Corporation to terminate
such Employee Pension Benefit Plan (other than any Multiemployer Plan)
has been instituted;
(ii) there have been no non-exempt prohibited transactions (as
defined in Section 406 of ERISA and Section 4975 of the Code) with
respect to such plan, no fiduciary has any liability for breach of
fiduciary duty or any other failure to act or comply in connection with
the administration or investment of the assets of such plan, and no
action, suit, proceeding, hearing or, to the
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Company's knowledge, investigation with respect to the administration or
the investment of the assets of such plan (other than routine claims for
benefits) is pending or, to the Company's knowledge, threatened, but
excluding, from each of the foregoing, events or circumstances which,
individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect; and
(iii) other than routine claims for benefits, none of the Company
or any of its Subsidiaries or related entities has incurred, and the
Company has no reason to expect that the Company or any of its
Subsidiaries or related entities will incur, any liability under
Subtitle C or D Title IV of ERISA or under the Code with respect to any
Company Plan that is an Employee Pension Benefit Plan.
(c) Neither the Company nor any of its Subsidiaries presently
contributes to, nor, since January 1, 1997, have they been obligated to
contribute to, a Multiemployer Plan.
(d) Other than pursuant to a Company Plan, neither the Company nor any
of its Subsidiaries has any obligation to provide medical, health, life
insurance or other welfare benefits for current or future retired or
terminated employees, their spouses or their dependents (other than in
accordance with Section 4980B of the Code).
(e) No Company Plan contains any provision that would prohibit the
transactions contemplated by this Agreement, would give rise to any
severance, termination or other payments as a result of the transactions
contemplated by this Agreement (alone or together with the occurrence of
any other event), or would cause any payment, acceleration or increase in
benefits provided by any Company Plan as a result of the transactions
contemplated by this Agreement (alone or together with the occurrence of
any other event), but excluding from this paragraph (e) any payment or any
benefit, acceleration or increase to directors and employees, as to the top
tier employees in the amounts (based on the Company's good faith estimates
as of the date of this Agreement) and to the individuals specifically set
forth in, and as to other employees in the aggregate amount (based on the
Company's good faith estimates as of the date of this Agreement)
specifically set forth in, the Company Disclosure Letter and excluding any
non-employee or non-director payment or benefit acceleration or increase
which is not material.
(f) No individual classified as a non-employee for purposes of
receiving employee benefits (such an independent contractor, leased
employee, consultant or special consultant), regardless of treatment for
other purposes, is eligible pursuant to the terms thereof to participate in
or receive benefits under any Company Plan intended to qualify under
Section 401(a) of the Code.
(g) The provisions of Section 6.01(a) of the Distribution Agreement by
and between Olin Corporation and Company dated December 30, 1996 shall
continue to apply to affected employees following the Effective Time.
(h) The PRIME Plan does not take into account as compensation for plan
allocation purposes any bonus bank payment from the Company Incentive
Compensation Plan that may be paid on account of the Merger contemplated
herein.
(i) Certain of the Company Plans have been amended as stated in the
Company Disclosure Letter.
(j) The Company has previously provided to the Parent Corporation a
list of each Company owned life insurance policy (each a "Coli Policy").
With respect to each Coli Policy:
(i) for purposes of Code Section 264(a)(4), each Coli Policy
qualifies as a contract purchased on or before June 20, 1986, no change
has taken place prior to the date of this Agreement and will not be
taken on or before the Closing Date to affect such status, and this
status has never been challenged by the Internal Revenue Service (or any
other government agency) in any audit or any other administrative or
judicial proceeding;
(ii) the aggregate cash surrender value of the Coli Policies as of
December 31, 1999 is set forth in the materials previously disclosed to
the Parent Corporation; and
(iii) there are no loans against such policies.
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Section 4.12 Environmental Matters.
(a) Except for matters which, individually or in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect: (i) the
Company and its Subsidiaries are, and, to the Company's knowledge, since
January 1, 1997 have been in compliance in all respects with all
Environmental Laws (as defined in Section 4.12(b)) in connection with the
ownership, use, maintenance and operation of their owned, operated or
leased real property used by them and otherwise in connection with their
operations, (ii) neither the Company nor any of its Subsidiaries has any
liability, whether contingent or otherwise, under, or for any violations
of, any Environmental Law, (iii) no notices of any violation or alleged
violation of, non-compliance or alleged noncompliance with or any liability
under, any Environmental Law have been received by the Company or any of
its Subsidiaries since January 1, 1997 that are currently outstanding and
unresolved as of the date of this Agreement, and, to the Company's
knowledge, there are no other outstanding notices that are unresolved for
which the Company or any of its Subsidiaries have responsibility, (iv)
there are no administrative, civil or criminal writs, injunctions, decrees,
orders or judgments outstanding or any administrative, civil or criminal
actions, suits, claims, proceedings or, to the Company's knowledge,
investigations pending or, to the Company's knowledge, threatened, relating
to compliance with or liability under any Environmental Law affecting the
Company or any of its Subsidiaries, (v) the Company and its Subsidiaries
possess valid environmental permits required by any Environmental Law in
connection with the ownership, use, maintenance and operation of its owned,
operated and leased real property, and (vi) to the knowledge of the
Company, no material changes or alterations in the practices or operations
of the Company or any of its Subsidiaries as presently conducted are
anticipated to be required in the future in order to permit the Company and
its Subsidiaries to continue to comply in all material respects with all
applicable Environmental Laws. The Company Disclosure Letter sets forth the
amount reserved as of October 1, 2000 by the Company for compliance with
all Environmental Laws.
(b) The term "Environmental Law" as used in this Agreement means any
law, rule, regulation, permit, order, writ, injunction, judgment or decree
with respect to the preservation of the environment or the promotion of
worker health and safety, including any law, rule, regulation, permit,
order, writ, injunction, judgment or decree relating to Hazardous Materials
(as defined in Section 4.12(c)). Without limiting the generality of the
foregoing, the term will encompass each of the following statutes and the
regulations promulgated thereunder, and any similar applicable state, local
or foreign law, rule or regulation, each as amended (i) the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, (ii) the
Solid Waste Disposal Act, (iii) the Hazardous Materials Transportation Act,
(iv) the Toxic Substances Control Act, (v) the Clean Water Act, (vi) the
Clean Air Act, (vii) the Safe Drinking Water Act, (viii) the National
Environmental Policy Act of 1969, (ix) the Superfund Amendments and
Reauthorization Act of 1986, (x) Title III of the Superfund Amendments and
Reauthorization Act, (xi) the Federal Insecticide, Fungicide and
Rodenticide Act and (xii) the provisions of the Occupational Safety and
Health Act of 1970 relating to the handling of and exposure to Hazardous
Materials.
(c) The term "Hazardous Materials" as used in this Agreement means
each and every element, compound, chemical mixture, contaminant, pollutant,
material, waste or other substance (i) that is defined, determined or
identified as hazardous or toxic under any Environmental Law or (ii) the
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, storing, escaping, leaching, dumping, discarding, burying,
abandoning or disposing into the environment of which is prohibited under
any Environmental Law. Without limiting the generality of the foregoing,
the term will include (i) "hazardous substances" as defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, and regulations promulgated thereunder, each as amended, (ii)
"extremely hazardous substance" as defined in the Superfund Amendments and
Reauthorization Act of 1986, or Title III of the Superfund Amendments and
Reauthorization Act and regulations promulgated thereunder, each as
amended, (iii) "hazardous waste" as defined in the Solid Waste Disposal Act
and regulations promulgated thereunder, each as amended, (iv) "hazardous
materials" as defined in the Hazardous Materials Transportation Act and the
regulations promulgated thereunder, each as amended,
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(v) "chemical substance or mixture" as defined in the Toxic Substances
Control Act and regulation promulgated thereunder, each as amended, (vi)
petroleum and petroleum products and byproducts and (vii) asbestos.
Section 4.13 Title. The Company and its Subsidiaries has good and, in the
case of real property, marketable title to all the properties and assets
purported to be owned by them, free and clear of all Liens except (a) Liens for
current Taxes or assessments not delinquent, (b) builder, mechanic,
warehousemen, materialmen, contractor, workmen, repairmen, carrier or other
similar Liens arising and continuing in the ordinary course of business for
obligations that are not delinquent, (c) the rights, if any, of vendors having
possession of tooling of the Company and its Subsidiaries, (d) liens arising
from the receipt by the Company and its Subsidiaries of progress payments by the
United States government, (e) Liens securing rental payments under capital lease
arrangements and (f) other Liens which, individually or in the aggregate, are
not reasonably likely to have a Company Material Adverse Effect (collectively,
"Permitted Liens").
Section 4.14 Intellectual Property Matters.
(a) The Company and its Subsidiaries own or have the right to use
pursuant to valid license, sublicense, agreement or permission all items of
Intellectual Property necessary for their operations as presently conducted
and as presently proposed to be conducted, except where the failure to have
such rights, individually or in the aggregate, are not reasonably likely to
have a Company Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any charge, complaint, claim, demand or notice
alleging any interference, infringement, misappropriation or violation of
the Intellectual Property rights of any third party. Since January 1, 1997,
to the Company's knowledge, no third party has interfered with, infringed
upon, misappropriated or otherwise come into conflict with any Intellectual
Property rights of the Company or any of its Subsidiaries, except for
misappropriations and violations which, individually or in the aggregate,
are not reasonably likely to have a Company Material Adverse Effect.
(b) The term "Intellectual Property" as used in this Agreement means,
collectively, patents, patent disclosures, trademarks, service marks,
logos, trade names, copyrights and mask works, and all registrations,
applications, reissuances, continuations, continuations-in-part, revisions,
extensions, reexaminations and associated good will with respect to each of
the foregoing, computer software (including source and object codes),
computer programs, computer data bases and related documentation and
materials, data, documentation, trade secrets, confidential business
information (including ideas, formulas, compositions, inventions, know-how,
manufacturing and production processes and techniques, research and
development information, drawings, designs, plans, proposals and technical
data, financial, marketing and business data and pricing and cost
information) and all other intellectual property rights (in whatever form
or medium).
Section 4.15 Labor Matters. There are no controversies pending or, to the
Company's knowledge, threatened between the Company or any of its Subsidiaries
and any of their current or former employees or any labor or other collective
bargaining unit representing any such employee that are reasonably likely to
have a Company Material Adverse Effect or are reasonably likely to result in a
material labor strike, dispute, slow-down or work stoppage. The Company is not
aware of any organizational effort presently being made or threatened by or on
behalf of any labor union with respect to employees of the Company or any of its
Subsidiaries. To the Company's knowledge, as of the date of this Agreement no
executive, key employee or group of employees of the Company or any of its
Subsidiaries has any plan to terminate employment with the Company and its
Subsidiaries, which termination, individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect. As of the date of this
Agreement, there are no current DOL, OFCCP or EEOC audits. As of the date of
this Agreement, there are no OFCCP concilliation agreements in effect.
Section 4.16 Rights Agreement. The Company has taken all requisite action
under the Rights Agreement dated as of February 1, 2000 between the Company and
The Bank of New York (the "Rights Agreement") to cause the provisions of the
Rights Agreement or any other similar agreement not to be applicable to this
Agreement, the Merger or the other transactions contemplated hereby.
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Section 4.17 State Takeover Laws. The resolutions adopted by the Board of
Directors of the Company approving this Agreement are sufficient to cause the
provisions of Article 14 of the Virginia Act to be inapplicable to this
Agreement, the Merger and the other transactions contemplated hereby. Article
14.1 of the Virginia Act is not applicable to this Agreement, the Merger and the
other transactions contemplated hereby pursuant to Article VII, Section 5 of the
Bylaws of the Company as in effect on the date of this Agreement. To the
Company's knowledge, no other fair price, moratorium, control share acquisition
or other form of antitakeover statute, rule or regulation of any state or
jurisdiction applies or purports to apply to this Agreement, the Merger or the
other transactions contemplated hereby.
Section 4.18 Brokers' Fees. Except for the fees and expenses payable by
the Company to Goldman, Sachs & Co., neither the Company nor any of its
Subsidiaries has any liability or obligation to pay any fees or commissions to
any financial advisor, broker, finder or agent with respect to the transactions
contemplated by this Agreement. The Company has delivered to the Parent
Corporation a correct and complete copy of the engagement letter between the
Company and Goldman, Sachs & Co. relating to the transactions contemplated by
this Agreement, which letter describes the fees payable to Goldman, Sachs & Co.
in connection with this Agreement.
Section 4.19 Representations and Warranties. The representations and
warranties of the Company contained in this Agreement in the aggregate,
disregarding all qualifications and exceptions contained therein relating to
materiality or Company Material Adverse Effect, are true and correct with only
such exceptions which in the aggregate are not reasonably likely to have a
Company Material Adverse Effect. In the event a representation and warranty is
qualified by a Company Material Adverse Effect exception and there occurs a
Company Material Adverse Effect with respect thereto, such representation and
warranty shall be conclusively deemed breached without regard to whether the
Company Material Adverse Effect was or was not reasonably likely.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PARENT CORPORATION
Each of the Parent Corporation and the Acquisition Corporation, as the case
may be, represents and warrants to the Company that:
Section 5.1 Organization. Each of the Parent Corporation and the
Acquisition Corporation is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as presently being conducted. All of the outstanding
shares of the capital stock of the Acquisition Corporation have been validly
issued, are fully paid and nonassessable and are owned by the Parent Corporation
free and clear of any Lien. The Acquisition Corporation has been organized
solely for the purpose of engaging in the Merger and the other transactions
contemplated by this Agreement and has not engaged in any business other than
contemplated by this Agreement.
Section 5.2 Authorization of Transaction; Enforceability. Each of the
Parent Corporation and the Acquisition Corporation has full corporate power and
authority and has taken all requisite corporate action to enable it to execute
and deliver this Agreement, to consummate the Merger and the other transactions
contemplated hereby and to perform its obligations hereunder. Each of the Board
of Directors of the Parent Corporation and the Board of Directors of the
Acquisition Corporation has duly adopted resolutions, by the requisite majority
vote, approving this Agreement, the Merger and the other transactions
contemplated hereby and determining that the terms and conditions of this
Agreement, the Merger and the other transactions contemplated hereby are in the
best interests of the Parent Corporation and its stockholders and of the
Acquisition Corporation and its sole stockholder, as the case may be. The
foregoing resolutions of each such Board of Directors have not been modified,
supplemented or rescinded and remain in full force and effect as of the date of
this Agreement. This Agreement constitutes the valid and legally binding
obligation of each of the Parent Corporation and the Acquisition Corporation,
enforceable against the Parent Corporation and the Acquisition Corporation in
accordance with its terms and conditions.
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Section 5.3 Noncontravention; Consents. Except for (a) filings and
approvals necessary to comply with the applicable requirements of the Securities
Exchange Act and the "blue sky" laws and regulations of various states, (b) the
filing of a Notification and Report Form and related material with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice under the HSR Act and any other filing required by any other Antitrust
Law, (c) the filing of articles of merger pursuant to the Virginia Act and a
certificate of merger under the Delaware Act, and (d) any filings required under
the rules and regulations of the New York Stock Exchange, neither the execution
and delivery of this Agreement by the Parent Corporation or the Acquisition
Corporation, nor the consummation by the Parent Corporation or the Acquisition
Corporation of the transactions contemplated hereby, will constitute a violation
of, be in conflict with, or result in the breach of (i) the charter or bylaws of
the Parent Corporation or the Acquisition Corporation, (ii) any constitutional
provision, law, rule, regulation, permit, order, writ, injunction, judgment or
decree to which the Parent Corporation or the Acquisition Corporation is subject
or (iii) any material agreement or commitment to which the Parent Corporation or
the Acquisition Corporation is a party or by which either of them is bound or
subject.
Section 5.4 Adequate Cash Resources. The Parent Corporation has adequate
resources to provide the aggregate Merger Consideration and the Option
Consideration in cash in the amount and at the time required by Section 1.9 or
by Article 3.
Section 5.5 No Capital Ownership in the Company. Neither the Parent
Corporation nor any of its Subsidiaries owns any shares of Company Common Stock.
ARTICLE 6
COVENANTS
Section 6.1 General. Each of the parties will use its respective best
efforts to take all action and to do all things necessary, proper or advisable
to consummate and make effective the transactions contemplated by this
Agreement.
Section 6.2 Notices and Consents. Each of the parties prior to the
Closing Date will give all notices to third parties and governmental entities
and will use its respective best efforts to obtain all third party and
governmental consents and approvals that are required in connection with the
transactions contemplated by this Agreement. Within five business days following
the execution and delivery of this Agreement, each of the parties will file a
Notification and Report Form and related material with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
under the HSR Act, will use its respective best efforts to obtain early
termination of the applicable waiting period and will make all further filings
pursuant thereto or any other Antitrust Law that may be necessary, proper or
advisable. The foregoing two sentences will not be deemed to require the Parent
Corporation to enter into any agreement, consent decree or other commitment
requiring the Parent Corporation or any of its Subsidiaries to divest or hold
separate any assets (including any assets of the Company or any of its
Subsidiaries) or to take any other action which, individually or in the
aggregate, is reasonably likely to have a material adverse effect on the
business, financial condition, operations or results of operations of the Parent
Corporation and its Subsidiaries taken as a whole (other than changes or effects
resulting from occurrences relating to the economy in general, the securities
markets in general or the Parent Corporation's industry in general and not
specifically relating to the Parent Corporation) (a "Parent Corporation Material
Adverse Effect").
Section 6.3 Interim Conduct of the Company. Except as expressly
contemplated by this Agreement, as set forth in the Company Disclosure Letter,
as required by law or by the terms of any contract in effect on the date of this
Agreement or as the Parent Corporation may approve, which approval will not be
unreasonably withheld or delayed, from and after the date of this Agreement
through the Closing Date, the Company will, and will cause each of its
Subsidiaries to, conduct its operations in accordance with its ordinary course
of
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business, consistent with past practice, and in accordance with such covenant
will not, and will not cause or permit any of its Subsidiaries to:
(a) amend its articles of incorporation or bylaws or file any
certificate of designation or similar instrument with respect to any shares
of its authorized but unissued capital stock;
(b) authorize or effect any stock split or combination or
reclassification of shares of its capital stock;
(c) declare or pay any dividend or distribution with respect to its
capital stock (other than the regular quarterly dividend of $0.075 per
share of Company Common Stock and dividends payable by a Subsidiary of the
Company to the Company or another Subsidiary), issue or authorize the
issuance of any shares of its capital stock (other than in connection with
the exercise of currently outstanding Stock Options listed in the Company
Disclosure Letter) or any other securities exercisable or exchangeable for
or convertible into shares of its capital stock, or repurchase, redeem or
otherwise acquire for value any shares of its capital stock or any other
securities exercisable or exchangeable for or convertible into shares of
its capital stock;
(d) merge or consolidate with any entity;
(e) sell, lease or otherwise dispose of any of its capital assets,
including any shares of the capital stock of any of its Subsidiaries, other
than sales, leases or other dispositions of machinery, equipment, tools,
vehicles and other operating assets no longer required in its operations
made in the ordinary course of business, consistent with past practice;
(f) liquidate, dissolve or effect any recapitalization or
reorganization in any form;
(g) acquire any interest in any business (whether by purchase of
assets, purchase of stock, merger or otherwise) or enter into any joint
venture;
(h) create, incur, assume or suffer to exist any indebtedness for
borrowed money (including capital lease obligations), other than
indebtedness existing as of the date of this Agreement, borrowings under
existing credit lines in the ordinary course of business, consistent with
past practice, and intercompany indebtedness among the Company and its
Subsidiaries arising in the ordinary course of business, consistent with
past practice;
(i) create, incur, assume or suffer to exist any Lien (other than
Permitted Liens) affecting any of its material assets or properties;
(j) except as required as the result of changes in United States
generally accepted accounting principles, change any of the accounting
principles or practices used by it or revalue in any material respect any
of its assets or properties, other than write-downs of inventory or
accounts receivable in the ordinary course of business, consistent with
past practice;
(k) except as required under the terms of any collective bargaining
agreement in effect as of the date of this Agreement or as required by
applicable law, grant any general or uniform increase in the rates of pay
of its employees or grant any increase in the benefits under any bonus or
employee benefit plan or other arrangement, contract or commitment;
(l) except for any increase required under the terms of any collective
bargaining agreement or consulting, executive or employment agreement in
effect on the date of this Agreement or as required by applicable law,
increase the compensation payable or to become payable to officers and
salaried employees with a base salary in excess of $100,000 per year or
increase any bonus, insurance, pension or other benefit plan, payment or
arrangement made to, for or with any such officers or salaried employees;
(m) enter into any contract or commitment or engage in any transaction
with any affiliated person or entity (other than the Company or its
Subsidiaries) or enter into any contract or commitment or engage in any
transaction with any unaffiliated person or entity which, to the Company's
knowledge, is reasonably likely to have a Company Material Adverse Effect;
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(n) make any material Tax election or settle or compromise any
material Tax liability, except in the ordinary course of business;
(o) pay, discharge or satisfy any claims, liabilities or obligations
other than the payment, discharge and satisfaction in the ordinary course
of business of liabilities reflected or reserved for in the consolidated
financial statements of the Company or otherwise incurred in the ordinary
course of business, consistent with past practice;
(p) settle or compromise any material pending or threatened suit,
action or proceeding; or
(q) commit to do any of the foregoing.
Section 6.4 Preservation of Organization. Subject to compliance with the
provisions of Section 6.3, the Company will, and will cause each of its
Subsidiaries to, use its best efforts to preserve its business organization
intact in all material respects, use its reasonable efforts to keep available to
the Company and its Subsidiaries, the present officers and employees of the
Company and its Subsidiaries as a group and use its best efforts to preserve the
present relationships of the Company and its Subsidiaries with suppliers and
customers and others having business relations with the Company and its
Subsidiaries.
Section 6.5 Full Access. The Company will, and will cause its
Subsidiaries and its and their representatives to, afford the Parent Corporation
and its representatives reasonable access, upon reasonable notice at all
reasonable times to all premises, properties, books, records, contracts and
documents of or pertaining to the Company and its Subsidiaries. Notwithstanding
the foregoing, neither party will be required to provide access or to disclose
information where such access or disclosure would contravene any law or contract
or would result in the waiver of any legal privilege or work-product protection.
Any information disclosed will be subject to the provisions of the
Confidentiality Agreement, dated March 17, 2000, between the Company and the
Parent Corporation (the "Confidentiality Agreement").
Section 6.6 Notice of Developments. The Company will give prompt written
notice to the Parent Corporation of any material development affecting the
Company or any of its Subsidiaries. Each party will give prompt written notice
to the other of any material development which would give rise to a failure of a
condition set forth in Section 7.2 (in the case of the Parent Corporation or the
Acquisition Corporation) or Section 7.3 (in the case or the Company). No such
written notice of such a material development will be deemed to have amended any
of the disclosures set forth in the Company Disclosure Letter, to have qualified
the representations and warranties contained herein and to have cured any
misrepresentation or breach of warranty that otherwise might have existed
hereunder by reason of such material development.
Section 6.7 Nonsolicitation of Acquisition Proposals.
(a) The Company and each of its Subsidiaries, and each of their
respective directors, officers, employees, agents and representatives, will
immediately cease any discussions or negotiations presently being conducted
with respect to any Acquisition Proposal. The Company and its Subsidiaries
will not and will use their best efforts to cause their respective
directors, officers, employees, agents and representatives not to (i)
initiate or solicit, directly or indirectly, any inquiries with respect to,
or the making of, any Acquisition Proposal or (ii) engage in any
negotiations or discussions with, furnish any information or data to or
enter into any letter of intent, agreement in principle, acquisition
agreement or similar agreement with any party relating to any Acquisition
Proposal; provided, however, that the Board of Directors of the Company
may, in response to an Acquisition Proposal that the Board of Directors of
the Company determines in good faith is reasonably likely to lead to a
Superior Proposal, (A) furnish information with respect to the Company and
its Subsidiaries to the person making such Acquisition Proposal (and its
representatives) pursuant to a confidentiality agreement containing
provisions at least as restrictive with respect to such person as the
restrictions on the Parent Corporation contained in the Confidentiality
Agreement (as modified by Section 6.14) and (B) participate in discussions
or negotiations with the person making such Acquisition Proposal (and its
representatives) regarding such Acquisition Proposal. The Company will be
responsible for any breach of the provisions of this Section 6.7 by any
director, officer, employee, agent or representative of the Company or any
of its Subsidiaries.
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(b) The term "Acquisition Proposal" as used in this Agreement means
any bona fide proposal, whether or not in writing, made by a party that if
consummated would result in such party acquiring beneficial ownership (as
defined under Rule 13(d) promulgated under the Securities Exchange Act) of
more than 20% of the consolidated assets (determined based on book or fair
market value) of, or more than 20% of the voting power in, the Company and
its Subsidiaries, taken as a whole, pursuant to a merger, consolidation or
other business combination, sale of shares of capital stock, sale of
assets, tender or exchange offer or similar transaction involving the
Company or any of its Subsidiaries, including any single or multi-step
transaction or series of related transactions that is structured to permit
such party to acquire such beneficial ownership.
(c) The term "Superior Proposal" as used in this Agreement means any
bona fide proposal, in writing, made by a party that (i) if consummated,
would result in such party acquiring beneficial ownership of more than 50%
of the consolidated assets (determined based on book or fair market value)
of, or more than 50% of the voting power in, the Company and its
Subsidiaries, taken as a whole, pursuant to a merger, consolidation or
other business combination, sale of shares of capital stock, sale of
assets, tender or exchange offer or similar transaction involving the
Company or any of its Subsidiaries, including any single or multi-step
transaction or series of related transactions that is structured to permit
such party to acquire such beneficial ownership, and (ii) the Board of
Directors of the Company, after consultation with its outside legal counsel
and financial advisers, determines in its good faith business judgment (x)
is superior from a financial view to the stockholders of the Company and
(y) is reasonably capable of being completed, taking into account all
legal, financial, regulatory and other aspects of such proposal.
(d) Nothing contained in this Agreement will prohibit the Company from
(i) taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Securities Exchange Act or (ii) making
any disclosure or recommendation, including a withdrawal or adverse
amendment of its recommendation of the Merger that would permit the Parent
Corporation to terminate this Agreement pursuant to Section 8.1(c)(ii), to
the Company's stockholders if the Board of Directors of the Company, after
consultation with its outside legal counsel, determines in good faith that
failure to so disclose or recommend would be inconsistent with applicable
law.
Section 6.8 Indemnification.
(a) From and after the Closing Date, the Parent Corporation will cause
the Surviving Corporation to indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the Effective Time, an
officer or director of the Company or any of its present or former
Subsidiaries or corporate parents (collectively, the "Indemnified Parties")
from and against all losses, claims, damages and expenses (including
reasonable attorney's fees and expenses) arising out of or relating to
actions or omissions, or alleged actions or omissions, occurring at or
prior to the Effective Time to the fullest extent permitted from time to
time by the Virginia Act or any other applicable laws as presently or
hereafter in effect.
(b) Any determination required to be made with respect to whether any
Indemnified Party may be entitled to indemnification will, if requested by
such Indemnified Party, be made by independent legal counsel selected by
the Indemnified Party and reasonably satisfactory to the Surviving
Corporation.
(c) For a period of six years after the Closing Date, the Parent
Corporation will cause to be maintained in effect the policies of directors
and officers liability insurance and fiduciary liability insurance
currently maintained by the Company with respect to claims arising from or
relating to actions or omissions, or alleged actions or omissions,
occurring on or prior to the Closing Date. The Parent Corporation may at
its discretion substitute for such policies currently maintained by the
Company directors and officers liability insurance and fiduciary liability
insurance policies with reputable and financially sound carriers providing
for no less favorable coverage. Notwithstanding the provisions of this
Section 6.8(c), the Parent Corporation will not be obligated to make annual
premium payments with respect to such policies of insurance to the extent
such premiums exceed 200 percent of the annual premiums paid by the Company
as of the date of this Agreement. If the annual premium costs necessary to
maintain such insurance coverage exceed the foregoing amount, the Parent
Corporation will maintain
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the most advantageous policies of directors and officers liability
insurance and fiduciary liability insurance obtainable for an annual
premium equal to the foregoing amount.
(d) To the fullest extent permitted from time to time under the law of
the Commonwealth of Virginia, the Parent Corporation will cause the
Surviving Corporation to pay on an as-incurred basis the reasonable fees
and expenses of each Indemnified Party (including reasonable fees and
expenses of counsel) in advance of the final disposition of any action,
suit, proceeding or investigation that is the subject of the right to
indemnification, subject to reimbursement in the event such Indemnified
Party is not entitled to indemnification.
(e) The provisions providing for director and officer indemnification,
abrogation of liability and advancement of expenses set forth in Article
VII of the articles of incorporation of the Company, as in effect
immediately prior to the Effective Time, will apply to each Indemnified
Party with respect to all matters occurring on or prior to the Effective
Time. The foregoing will not be deemed to restrict the right of the
Surviving Corporation to modify the provisions of its articles of
incorporation relating to director and officer indemnification, abrogation
of liability or advancement of expenses with respect to events or
occurrences after the Closing Date but such modifications shall not
adversely affect the rights of the Indemnified Parties hereunder. The
Parent Corporation shall cause the Surviving Corporation to honor the
provisions of this Section 6.8(e).
(f) In the event of any action, suit, investigation or proceeding, the
Indemnified Party will be entitled to control the defense thereof with
counsel of its own choosing reasonably acceptable to the Parent
Corporation, and the Parent Corporation and the Surviving Corporation will
cooperate in the defense thereof, provided that neither the Parent
Corporation nor the Surviving Corporation will be liable for the fees of
more than one counsel for all Indemnified Parties, other than local
counsel, unless the use of a single counsel would present conflict of
interest issues which would make it impracticable for all Indemnified
Parties to be represented by a single counsel, and provided further that
neither the Parent Corporation nor the Surviving Corporation will be liable
for any settlement effected without its written consent (which consent will
not be unreasonably withheld or delayed).
(g) The rights of each Indemnified Party hereunder will be in addition
to any other rights such Indemnified Party may have under the articles of
incorporation or bylaws of the Surviving Corporation or any of their
respective Subsidiaries, under the law of the Commonwealth of Virginia or
otherwise. Notwithstanding anything to the contrary contained in this
Agreement or otherwise, the provisions of this Section 6.8 will survive the
consummation of the Merger, and each Indemnified Party will, for all
purposes, be a third party beneficiary of the covenants and agreements
contained in this Section 6.8 and, accordingly, will be treated as a party
to this Agreement for purposes of the rights and remedies relating to
enforcement of such covenants and agreements and will be entitled to
enforce any such rights and exercise any such remedies directly against the
Parent Corporation and the Surviving Corporation.
(h) Nothing in this Section 6.8 will diminish any rights or
entitlements available to any director or officer of the Company under the
Company's articles of incorporation as in effect immediately prior to the
Effective Time.
Section 6.9 Public Announcements. The initial press release announcing
the transactions contemplated by this Agreement will be a joint press release.
Thereafter, the Parent Corporation and the Company will consult with one another
before issuing any press releases or otherwise making any public announcements
with respect to the transactions contemplated by this Agreement and, except as
may be required by applicable law or by the rules and regulations of the New
York Stock Exchange or of The Nasdaq Stock Market, will not issue any such press
release or make any such announcement prior to such consultation.
Section 6.10 Preservation of Programs and Agreements. From and after the
date of this Agreement through the Closing Date, the Company will not enter into
any agreement which it knows or has reason to know is reasonably likely to cause
a major customer of the Company or any of its Subsidiaries to terminate any
material program or agreement, the overall effect of which, after taking into
account the anticipated benefits of
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the new agreement and the anticipated detriments of such termination, is
reasonably likely to have a Company Material Adverse Effect.
Section 6.11 Actions Regarding Antitakeover Statutes. If any fair price,
moratorium, control share acquisition or other form of antitakeover statute,
rule or regulation is or becomes applicable to the transactions contemplated by
this Agreement, the Board of Directors of the Company will grant such approvals
and take such other actions as may be required so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
and conditions set forth in this Agreement.
Section 6.12 Defense of Orders and Injunctions. In the event either party
becomes subject to any order or injunction of a court of competent jurisdiction
which prohibits the consummation of the transactions contemplated by this
Agreement, each party will use its best efforts to overturn or lift such order
or injunction. The foregoing will not be deemed to require the Parent
Corporation to enter into any agreement, consent decree or other commitment
requiring the Parent Corporation or any of its Subsidiaries to divest or hold
separate any assets or to take any other action which, individually or in the
aggregate, is reasonably likely to have a Parent Corporation Material Adverse
Effect.
Section 6.13 Employee Benefit Matters.
(a) Subject to applicable collective bargaining agreements, until (or
in respect of the period ending on ) December 31, 2001, Parent Corporation
shall cause to be maintained for the employees and former employees of the
Company and its Subsidiaries (the "Employees"), benefits and benefit levels
which are, in the aggregate, substantially similar to benefits and benefit
levels as provided by the Company and its Subsidiaries through any Company
Plan that is an Employee Pension Benefit Plan, an Employee Welfare Benefit
Plan, or a fringe benefit program (providing, for example, sick pay,
vacation pay and tuition reimbursement) prior to the Effective Time.
Notwithstanding the foregoing, without limitation, this Section 6.13(a)
shall not apply to any bonus, incentive, or equity-based compensation plan
or arrangement. Further, subject to Section 6.3(k), this Section 6.13(a)
shall not prohibit any change in benefits or benefit levels adopted prior
to the Effective Time and effective on or after the Effective Time or any
other change in benefits (such as a change in vendor, co-pay, deductible,
lifetime maximum, etc.) that would have been made by the Company in the
ordinary course during the 2001 year to reflect market conditions for the
provision of these benefits.
(b) The Parent Corporation will honor and will cause the Surviving
Corporation to honor, in accordance with their respective terms, the
Company Plans and all of the Company's other employee benefit,
compensation, employment, severance and termination plans, programs,
policies, and arrangements, including any rights or benefits arising as a
result of the transactions contemplated by this Agreement (either alone or
in combination with any other event).
(c) Solely for purposes of eligibility and vesting under the employee
benefit plans of the Parent Corporation and its Subsidiaries (including the
Surviving Corporation) providing benefits to any Employees after the
Effective Time, each Employee will be credited with his or her years of
service with the Company and its Subsidiaries (and any predecessor entities
thereof) before the Effective Time, to the same extent as such employee was
entitled, before the Effective Time, to credit for such service under any
similar Company Plan. Following the Effective Time, the Parent Corporation
will, or will cause its Subsidiaries to, (i) waive any pre-existing
condition limitation under any Employee Welfare Benefit Plan maintained by
the Parent Corporation or any of its Subsidiaries in which Employees and
their eligible dependents participate (except to the extent that such
pre-existing condition limitation would have been applicable under the
comparable Company Employee Welfare Benefit Plans immediately prior to the
Effective Time), and (ii) provide each Employee with credit for any
co-payments and deductibles incurred prior to the Effective Time (or such
earlier or later transition date to new Employee Welfare Benefits Plans)
for the calendar year in which the Effective Time (or such earlier or later
transaction date) occurs, in satisfying any applicable deductible or
out-of-pocket requirements under any welfare plans that the Employees
participate in after the Effective Time.
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(d) The Parent Corporation will, and will cause the Surviving
Corporation and their respective representatives to, afford any officer (as
of the Effective Time) of the Company and any of his or her representatives
reasonable access, upon reasonable notice, to such books and records of the
Company and the Surviving Corporation as are reasonably required by such
officer to determine amounts owing to such officer under any Company Plan.
(e) The Parent Corporation and the Company agree to implement the
provisions of Section 6.13(e) of the Company Disclosure Letter.
(f) Subject to applicable collective bargaining agreements,
notwithstanding any provision to the contrary contained in this Agreement,
through the period ending on December 31, 2001, the Parent Corporation and
its Subsidiaries (including the Surviving Corporation) will provide
severance benefits and severance compensation to the Employees that, in the
aggregate, are not less favorable to the Employees than those provided by
the Company under a Company Plan to the Employees immediately prior to the
Effective Time.
(g) Nothing contained herein will create any rights in any third
party, including without limitation, any right to employment or right to
any particular benefit (except as set forth in Sections 6.13(d) and (e)).
Except as specifically provided, nothing contained herein shall be
construed as prohibiting or restricting in any way the right of the Parent
Company or the Company (or any successor thereto) to modify, amend or
terminate any employee benefit plan, program or arrangement in whole or in
part at any time after the Effective Time.
(h) The Company agrees that an independent trustee, either a bank or a
trust company, will act with respect to the Merger on behalf of each
Company Plan (and its participants) that holds Company Common Stock in
accordance with the terms and conditions of such Plan.
Section 6.14 Standstill Provisions. The restrictions on the Parent
Corporation and the Acquisition Corporation contained in the Standstill
Provisions of the Confidentiality Agreement between the Parent Corporation and
the Company are hereby waived by the Company to the extent reasonably required
to permit the Parent Corporation and the Acquisition Corporation to comply with
their obligations or enforce their rights under this Agreement.
ARTICLE 7
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Section 7.1 Conditions to the Obligations of Each Party. The respective
obligation of each party to effect the Merger is subject to the satisfaction at
or prior to the Closing Date of each of the following conditions:
(a) the Company will have obtained the Company Stockholder Approval;
(b) all applicable waiting periods (and any extensions thereof) under
the HSR Act will have terminated or expired;
(c) all other consents, authorizations, orders and approvals of or
filings with any governmental commission, board or other regulatory
authority (other than in its capacity as a customer of the Company or its
Subsidiaries) required in connection with the consummation of the
transactions contemplated by this Agreement will have been obtained or
made, except where the failure to obtain or make such consents,
authorizations, orders, approvals or filings, from and after the Closing
Date, individually or in the aggregate, are not reasonably likely to have a
Company Material Adverse Effect; and
(d) no party will be subject to any order or injunction of a court of
competent jurisdiction or other legal restraint which prohibits the
consummation of the Merger.
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Section 7.2 Conditions to the Obligation of the Company. The obligation
of the Company to effect the Merger is subject to the satisfaction at or prior
to the Closing Date of each of the following conditions:
(a) the representations and warranties of each of the Parent
Corporation and the Acquisition Corporation contained herein (i) that are
qualified as to materiality will be true and correct and (ii) that are not
qualified by materiality will be true and correct in all material respects,
in each case (i) and (ii), as of the date of this Agreement and as of the
Closing Date with the same effect as though made as of the Closing Date,
except that the accuracy of representations and warranties that by their
terms speak as of a specified date will be determined as of such date; and
(b) each of the Parent Corporation and the Acquisition Corporation
will have in all material respects performed and complied with all of its
obligations under this Agreement required to be performed by it at or prior
to the Closing Date.
The Parent Corporation and the Acquisition Corporation will furnish the
Company with a customary bring down certificate with respect to the satisfaction
of the conditions set forth in Sections 7.2(a) and (b).
Section 7.3 Conditions to the Obligation of the Parent Corporation and the
Acquisition Corporation. The obligation of the Parent Corporation and the
Acquisition Corporation to effect the Merger is subject to the satisfaction at
or prior to the Closing Date of each of the following conditions:
(a) the representations and warranties of the Company contained herein
(i) that are subject to a Company Material Adverse Effect qualification
will be true and correct and (ii) that are not subject to a Company
Material Adverse Effect qualification will be true and correct, except that
this clause (ii) will be deemed satisfied so long as any failures of such
representations and warranties, taken together, are not reasonable likely
to have a Company Material Adverse Effect, in each case (i) and (ii), as of
the date of this Agreement and as of the Closing Date with the same effect
as though made as of the Closing Date, except that the accuracy of
representations and warranties that by their terms speak as of a specified
date will be determined as of such date; and
(b) the Company will have in all material respects performed and
complied with all of its obligations under this Agreement required to be
performed by it at or prior to the Closing Date.
The Company will furnish the Parent Corporation with a customary bring down
certificate with respect to the satisfaction of the conditions set forth in
Sections 7.3(a) and (b).
Section 7.4 Frustration of Closing Conditions. None of the Company, the
Parent Corporation or the Acquisition Corporation may rely on the failure of any
condition set forth in Section 7.1, 7.2 or 7.3, as the case may be, to be
satisfied if such party's breach of this Agreement has been a principal reason
that such condition has not been satisfied.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding the
receipt of the Company Stockholder Approval):
(a) with the mutual written consent of the Parent Corporation and the
Company;
(b) by the Parent Corporation or the Company if any court of competent
jurisdiction or other governmental agency has issued a final order, decree
or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the consummation of the Merger, and such order,
decree, ruling or other action is or has become nonappealable;
(c) by the Parent Corporation if (i) the Company has breached any of
its representations, warranties or covenants set forth in this Agreement,
which breach (A) would give rise to the failure of a condition set forth in
Section 7.3 and (B) is not cured within 30 days after the date written
notice of such breach is given by the Parent Corporation to the Company,
(ii) the Board of Directors of the Company
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<PAGE> 70
has withdrawn or amended in any manner adverse to the Parent Corporation
and the Acquisition Corporation its recommendation and approval of the
Merger, (iii) the Company Stockholder Approval has not been obtained at a
meeting duly called for such purpose or (iv) the Merger has not been
consummated on or before March 31, 2001; or
(d) by the Company if (i) either the Parent Corporation or the
Acquisition Corporation has breached any of its representations, warranties
or covenants set forth in this Agreement, which breach (A) would give rise
to the failure of a condition set forth in Section 7.2 and (B) is not cured
within 30 days after the date written notice of such breach is given by the
Company to the Parent Corporation, (ii) the Company Stockholder Approval
has not been obtained at a meeting called for such purpose or (iii) the
Merger has not been consummated on or before March 31, 2001.
Section 8.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1, this Agreement will
forthwith become void and will be deemed to have terminated without liability to
any party (except for any liability of any party then in willful material breach
of any covenant or agreement); provided that the provisions of the
Confidentiality Agreement and the last sentence of Section 6.5, this Section
8.2, Section 8.3 and Article 9 (other than the exception clause in Section 9.10)
of this Agreement will continue in full force and effect notwithstanding such
termination and abandonment.
Section 8.3 Termination Fee.
(a) If an Acquisition Proposal has been made to the Company or its
stockholders or any person has announced an intention to make an
Acquisition Proposal and thereafter
(i) the Parent Corporation terminates this Agreement pursuant to
Section 8.1(c)(ii) or Section 8.1(c)(iii),
(ii) the Company terminates this Agreement pursuant to Section
8.1(d)(ii), or
(iii) a vote of the stockholders of the Company does not occur and
either the Parent Corporation terminates this Agreement pursuant to
Section 8.1(c)(iv) or the Company terminates this Agreement pursuant to
Section 8.1(d)(iii)
and
(x) the Company enters into an agreement with respect to a Third
Party Acquisition within 12 months of the date of such termination, or
(y) a Third Party Acquisition occurs within 12 months after the
date of such termination,
then the Company will pay to the Parent Corporation, within one business
day following the occurrence of such event referred to in clause (x) or
clause (y), a termination fee equal to $10 million (the "Termination Fee"),
payable by wire transfer of immediately available funds to an account
designated by the Parent Corporation.
(b) The term "Third Party Acquisition" as used in this Agreement means
(i) the acquisition of the Company by merger or otherwise by any person
(including for purposes of this Section 8.3(b) any "person" or "group" as
defined in Section 13(d)(3) of the Securities Exchange Act) or entity other
than the Parent Corporation or any of its affiliates, (ii) the acquisition
by any person or entity other than the Parent Corporation or any of its
affiliates of more than 50 percent of the consolidated assets (determined
based on book or fair market value) of the Company and its Subsidiaries or
(iii) the acquisition by any person or entity other than the Parent
Corporation or any of its affiliates of more than 50 percent of the
outstanding shares of Company Common Stock, (iv) the adoption by the
Company of any plan of liquidation or the declaration by the Company of any
extraordinary dividend or distribution (including any distribution of any
shares of the capital stock of any material Subsidiary) of cash or property
constituting more than 50 percent of the consolidated assets (determined
based on book or fair market value) of the Company and its Subsidiaries or
(v) the purchase by the Company or any of its Subsidiaries of more than 50
percent of the outstanding shares of Company Common Stock.
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<PAGE> 71
(c) Except as specifically provided in this Section 8.3, each party
will bear its own expenses incurred in connection with the transactions
contemplated by this Agreement, whether or not such transactions are
consummated.
(d) The Company acknowledges that the agreements regarding the payment
of fees contained in this Section 8.3 are an integral part of the
transactions contemplated by this Agreement and that, in the absence of
such agreements, the Parent Corporation and the Acquisition Corporation
would not have entered into this Agreement. The Company accordingly agrees
that in the event the Company fails to pay the Termination Fee promptly,
the Company will in addition to the payment of such amount also pay to the
Parent Corporation all of the reasonable costs and expenses (including
reasonable attorneys' fees and expenses) incurred by the Parent Corporation
in the enforcement of its rights under this Section 8.3, together with
interest on such amount at a rate of 11 percent per annum from the date
upon which such payment was due, to and including the date of payment.
Provided that the Company was not in breach of the provisions of Section
6.7, payment of the Termination Fee will constitute full and complete
satisfaction, and will constitute the Parent Corporation's sole and
exclusive remedy for any loss, liability, damage or claim arising out of or
in connection with any such termination of this Agreement or the facts and
circumstances resulting in or related to this Agreement.
ARTICLE 9
MISCELLANEOUS
Section 9.1 Nonsurvival of Representations. The representations and
warranties contained in this Agreement will not survive the Merger or the
termination of this Agreement.
Section 9.2 Remedies. The parties agree that irreparable damage would
occur in the event that the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
will be entitled to specific performance of the terms of this Agreement, without
posting a bond or other security, this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 9.3 Successors and Assigns. No party hereto may assign or
delegate any of such party's rights or obligations under or in connection with
this Agreement without the written consent of the other parties hereto. Except
as otherwise expressly provided herein, all covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto or thereto will
be binding upon and enforceable against the respective successors and assigns of
such party and will be enforceable by and will inure to the benefit of the
respective successors and permitted assigns of such party.
Section 9.4 Amendment. This Agreement may be amended by the execution and
delivery of a written instrument by or on behalf of the Parent Corporation, the
Acquisition Corporation and the Company at any time before or after the Company
Stockholder Approval, provided that after the date of the Company Stockholder
Approval, no amendment to this Agreement will be made without the approval of
stockholders of the Company to the extent such approval is required under the
Virginia Act.
Section 9.5 Extension and Waiver. At any time prior to the Effective
Time, the parties may extend the time for performance of or waive compliance
with any of the covenants or agreements of the other parties to this Agreement
and may waive any breach of the representations or warranties of such other
parties. No agreement extending or waiving any provision of this Agreement will
be valid or binding unless it is in writing and is executed and delivered by or
on behalf of the party against which it is sought to be enforced.
Section 9.6 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
A-26
<PAGE> 72
Section 9.7 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.
Section 9.8 Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
Section 9.9 Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement will
be in writing and will be deemed to have been given when delivered personally to
the recipient or when sent to the recipient by telecopy (receipt confirmed), one
business day after the date when sent to the recipient by reputable express
courier service (charges prepaid) or three business days after the date when
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
will be sent to the Parent Corporation and the Company at the addresses
indicated below:
<TABLE>
<CAPTION>
<S> <C>
If to the Parent
Corporation: General Dynamics Corporation
3190 Fairview Park Drive
Falls Church, VA 22041-4523
Attention: David A. Savner, Esq.
Senior Vice President and
General Counsel
Facsimile No.: (703) 876-3125
With a copy (which will
not constitute notice) to: Jenner & Block
One IBM Plaza, 40th Floor
Chicago, IL 60611
Attention: Charles J. McCarthy, Esq.
Facsimile No.: (312) 840-7745
If to the Company: Primex Technologies, Inc.
10101 9th Street North
St. Petersburg, FL 33716
Attention: George H. Pain, Esq.
Vice President and
General Counsel
Facsimile No.: (727) 578-8286
With a copy (which will
not constitute notice) to: Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Robert I. Townsend, III, Esq.
Facsimile No.: (212) 474-3700
</TABLE>
or to such other address or to the attention of such other party as the
recipient party has specified by prior written notice to the sending party.
Section 9.10 No Third Party Beneficiaries. This Agreement will not confer
any rights or remedies upon any person or entity other than the Parent
Corporation, the Acquisition Corporation and the Company and their respective
successors and permitted assigns, except that the respective beneficiaries as of
the Closing Date of the provisions of Section 6.8 and Sections 6.13(d) and (e)
will, for all purposes, be third party beneficiaries of the covenants and
agreements contained therein and, accordingly, will be treated as a party to
this Agreement for purposes of the rights and remedies relating to enforcement
of such covenants and
A-27
<PAGE> 73
agreements and will be entitled to enforce any such rights and exercise any such
remedies directly against the Parent Corporation and the Surviving Corporation.
Section 9.11 Entire Agreement. This Agreement (including the
Confidentiality Agreement, the Company Disclosure Letter and the other documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, that may have related in any way to the subject
matter hereof.
Section 9.12 Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent
and no rule of strict construction will be applied against any party. The use of
the word "including" in this Agreement means "including without limitation" and
is intended by the parties to be by way of example rather than limitation. As
used in this Agreement, the qualification "to the Company's knowledge" and
clauses of similar effect will mean the actual knowledge by any executive
officer of the Company or of its Subsidiaries (or other officer or manager of
the Company or of its Subsidiaries if such officer or manager has primary
responsibility over the subject matter in question) of the existence or absence
of facts which would contradict a particular representation and warranty of the
Company.
Section 9.13 Submission to Jurisdiction. Each of the parties to this
Agreement submits to the jurisdiction of any state or federal court sitting in
Alexandria, Virginia, in any action or proceeding arising out of or relating to
this Agreement, agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court, and agrees not to bring any
action or proceeding arising out of or relating to this Agreement in any other
court. Each of the parties to this Agreement waives any defense of inconvenient
forum to the maintenance of any action or proceeding so brought and waives any
bond, surety or other security that might be required of any other party with
respect thereto.
Section 9.14 Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND THE SCHEDULES HERETO WILL BE
GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF THE COMMONWEALTH
OF VIRGINIA, EXCEPT THE DELAWARE ACT SHALL GOVERN THE CORPORATE MERGER
PROCEDURES AND EFFECT WITH RESPECT TO THE ACQUISITION CORPORATION.
A-28
<PAGE> 74
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the date first written above.
GENERAL DYNAMICS CORPORATION
By: /s/ NICHOLAS D. CHABRAJA
------------------------------------
Nicholas D. Chabraja
Chairman and Chief Executive Officer
MARS ACQUISITION CORPORATION
By: /s/ ARTHUR J. VEITCH
------------------------------------
Arthur J. Veitch
President
PRIMEX TECHNOLOGIES, INC.
By: /s/ JAMES G. HASCALL
------------------------------------
James G. Hascall
Chairman and Chief Executive Officer
A-29
<PAGE> 75
APPENDIX B
[GOLDMAN SACHS LETTERHEAD]
November 9, 2000
Board of Directors
Primex Technologies, Inc.
10101 Ninth Street North
St. Petersburg, FL 33716
Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders (other than General Dynamics Corporation ("Parent") and its
subsidiaries) of the outstanding shares of Common Stock, par value $1.00 per
share (the "Shares"), of Primex Technologies, Inc. (the "Company") of the $32.10
per Share in cash proposed to be paid by Parent in the Merger (as defined below)
pursuant to the Agreement and Plan of Merger, dated as of November 9, 2000,
among Parent, Mars Acquisition Corporation ("Mars"), a wholly-owned subsidiary
of Parent, and the Company (the "Agreement"). The Agreement provides for a
merger of Mars with and into the Company (the "Merger") pursuant to which each
outstanding Share (other than Shares owned by Parent or any subsidiary of Parent
or the Company) will be converted into the right to receive $32.10 in cash.
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company, having acted as its financial advisor in connection with, and
having participated in certain of the negotiations leading to, the Agreement. We
also have provided certain investment banking services to Parent from time to
time, including having acted as agent on Parent's commercial paper program and
its common stock repurchase plan and as financial advisor to Parent in
connection with its acquisitions of Lockheed Martin Corporation's Armament and
Defense Division in January 1997, Lucent Technologies' Advanced Technology
Systems division in October 1997 and Ceridian Corporation's Computing Devices
International division in January 1998. We may also provide investment banking
services to Parent in the future. Goldman, Sachs & Co. provides a full range of
financial advisory and securities services and, in the course of its normal
trading activities, may from time to time effect transactions and hold
securities, including derivative securities, of the Company or Parent for its
own account and for the accounts of customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company for the four years ended December 31, 1999; certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of the Company; certain other
communications from the Company to its stockholders; and certain internal
financial analyses and forecasts for the Company prepared by its management. We
also have held discussions with members of the senior management of the Company
regarding their assessment of the past and current business operations,
financial condition and future prospects of the Company. In addition, we have
reviewed the reported price and
B-1
<PAGE> 76
Primex Technologies, Inc.
November 9, 2000
Page 2
trading activity for the Shares, compared certain financial and stock market
information for the Company with similar information for certain other companies
the securities of which are publicly traded, reviewed the financial terms of
certain recent business combinations in the aerospace and defense industry
specifically and in other industries generally and performed such other studies
and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information discussed with or reviewed by us and have assumed such
accuracy and completeness for purposes of rendering this opinion. In addition,
we have not made an independent evaluation or appraisal of the assets and
liabilities of the Company or any of its subsidiaries and we have not been
furnished with any such evaluation or appraisal. We solicited preliminary
indications of interest from potential buyers of the Company through April 2000.
Subsequent to this process, we were not requested to solicit, and did not
solicit, interest from other parties with respect to the acquisition of or other
business combination with the Company. Our advisory services and the opinion
expressed herein are provided for the information and assistance of the Board of
Directors of the Company in connection with its consideration of the transaction
contemplated by the Agreement and such opinion does not constitute a
recommendation as to how any holder of Shares should vote with respect to the
Agreement and the transactions contemplated thereby.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the $32.10 per
Share in cash to be received by the holders (other than Parent and its
subsidiaries) of Shares pursuant to the Agreement is fair from a financial point
of view to such holders.
Very truly yours,
/S/ Goldman, Sachs & Co.
---------------------------------------------------------
(GOLDMAN, SACHS & CO.)
B-2
<PAGE> 77
[FORM OF PROXY]
PRIMEX TECHNOLOGIES, INC.
10101 NINTH STREET NORTH, ST. PETERSBURG, FL 33716
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPECIAL MEETING OF SHAREHOLDERS -- JANUARY 24, 2001
The undersigned appoints JAMES G. HASCALL, BOB MARTINEZ and LEON E. SALOMON,
or any of them, with full power of substitution, as proxies of the undersigned,
to represent the undersigned and to vote all shares of Primex Technologies, Inc.
common stock which the undersigned would be entitled to vote, if personally
present, at the Special Meeting of Shareholders to be held on January 24, 2001,
and at any adjournment or postponement thereof, as indicated on the reverse
side. Any proxy heretofore given by the undersigned with respect to such shares
of common stock is hereby revoked.
This Proxy, when properly executed, will be voted as directed by the
undersigned shareholder on the item listed on the reverse side. IF NO DIRECTION
IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL.
PRIMEX TECHNOLOGIES, INC.
P.O. BOX 11190
NEW YORK, N.Y. 10203-0190
(IMPORTANT: PLEASE DATE AND SIGN THE PROXY ON REVERSE SIDE)
<PAGE> 78
PLEASE DETACH HERE
You Must Detach This Portion of the Proxy Card
. Before Returning it in the Enclosed Envelope .
ITEM 1. To approve an Agreement and Plan of Merger, providing for the
merger of Mars Acquisition Corporation with and into the
Company, with the Company being the surviving corporation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
In their discretion, the proxies are authorized to vote upon such
other matters as may properly come before the meeting or any
adjournment or postponement thereof.
If You Plan to Attend the
Special Meeting Mark
Here [ ]
Change of Address and/
or Comments Mark Here [ ]
Please mark, date and sign as
your name appears hereon. If
acting as executor,
administrator, trustee,
guardian, etc., you should so
indicate when signing. If the
signer is a corporation,
please sign the full
corporate name, by a duly
authorized officer and
indicate the title of such
officer. If shares are held
jointly, each stockholder
named should sign. If you
receive more than one proxy
card, please date and sign
each card and return all
proxy cards in the enclosed
envelope.
Dated: ---------------, 200
---------------
Signature
---------------
Signature if held jointly
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE
INK. [X]
PLEASE DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE.
<PAGE> 79
[FORM OF CEOP VOTING INSTRUCTION CARD]
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
[PRIMEX TECHNOLOGIES LOGO]
OLIN CORPORATION
CONTRIBUTING EMPLOYEE OWNERSHIP PLAN
VOTING INSTRUCTION CARD
CONTROL NUMBER:
RECORD DATE SHARES:
Please be sure to sign and date this Voting Instruction Card. Date
-----------
---------------------------------
Participant sign here
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
<TABLE>
<CAPTION>
For Against Abstain
<C> <S> <C> <C> <C>
1. To approve an Agreement and Plan of [ ] [ ] [ ]
Merger, providing for the merger of
Mars Acquisition Corporation with
and into the Company, with the Com-
pany being the surviving
corporation.
MARK BOX AT RIGHT IF A COMMENT HAS BEEN NOTED ON [ ]
THE REVERSE SIDE OF THIS CARD.
PLEASE MARK, DATE, SIGN EXACTLY AS YOUR NAME APPEARS
HEREON, AND RETURN THIS FORM IN THE ENCLOSED ENVELOPE TO
EQUISERVE, PROXY TABULATION DEPT., P.O. BOX 9389, BOSTON,
MA 02205-9967.
</TABLE>
DETACH CARD DETACH CARD
RE: Olin Corporation Contributing Employee Ownership Plan ("CEOP")
Dear CEOP Participant:
The purpose of this letter is to provide you with important information
concerning your voting rights as a participant in the CEOP.
A Special Meeting of Shareholders of Primex Technologies, Inc. is scheduled
for January 24, 2001. As a participant in and a named fiduciary under the
CEOP, you have the right to direct State Street Bank and Trust Company, the
Trustee of the CEOP, how to vote the shares of Primex Technologies, Inc.
Common Stock allocated to your Stock Account. The CEOP provides that shares
of Common Stock credited to participants' accounts for which no voting
instruction is received by the Trustee will be voted by the Trustee in the
same proportion as shares of Common Stock for which the Trustee has
received instructions. The number of shares of Common Stock you are
eligible to vote is based on your balance in the CEOP on December 15, 2000,
the record date for the determination of shareholders eligible to vote.
Your instructions to the Trustee are confidential and will be known only by
State Street Bank.
(CONTINUED ON THE REVERSE)
<PAGE> 80
CONFIDENTIAL VOTING INSTRUCTIONS
--------------------------------------------------------------------------------
TO STATE STREET BANK AND TRUST COMPANY AS TRUSTEE ("TRUSTEE")
UNDER THE OLIN CORPORATION EMPLOYEE OWNERSHIP PLAN ("CEOP")
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby instruct the Trustee to vote in person, or by proxy, all shares of
Common Stock of Primex Technologies, Inc. ("PRIMEX") credited to my account as
of the record date which I am entitled to vote under the CEOP at the Special
Meeting of Shareholders of PRIMEX to be held on January 24, 2001, and at any
adjournment or postponement thereof, (a) on the matters indicated on the reverse
side hereof or, if contrary choice is not indicated, then FOR Item 1 and (b) on
any other matter which may properly come before the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name appears on the reverse side. The CEOP provides
that shares of Common Stock credited to participants' accounts for which no
written instruction is received by the Trustee will be voted in the same
proportion as shares of Common Stock for which the Trustee has received
instructions. This form constitutes a direction to so vote.
DO YOU HAVE ANY COMMENTS?
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(CONTINUED FROM THE REVERSE)
If, in addition to your CEOP participation, you own shares of Common Stock
directly in your own name or indirectly through a bank or broker, you will
receive a separate mailing. Please be sure to return each Proxy or Voting
Instruction Card in the postage paid return envelope provided with each separate
package.
We encourage you to exercise your voting rights under the CEOP. Please review
the enclosed documents carefully before deciding how to vote your shares.
Because the shares of Common Stock in the CEOP are registered in the name of
State Street Bank, as Trustee, you will not be able to vote in person at the
Special Meeting of Shareholders shares credited to your Stock Account. Please
return your instruction card, signed and dated, in the enclosed postage paid
envelope as soon as possible. Instructions received after January 22, 2001 will
not be counted.
Sincerely,
State Street Bank and Trust Company,
Trustee of the Olin Corporation Contributing Employee Ownership Plan
DELIVERY
<TABLE>
<CAPTION>
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BY REGULAR MAIL BY HAND DELIVERY BY EXPRESS MAIL
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
EquiServe EquiServe EquiServe
Proxy Tabulation Department Proxy Tabulation Department Proxy Tabulation Department
P.O. Box 9389 150 Royall Street 150 Royall Street
Boston, MA 02205-9967 Canton, MA 02021-1031 Mail Stop: 45-70-10
Canton, MA 02021-1031
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 81
[FORM OF PRIME PLAN VOTING INSTRUCTION CARD]
Please fold and detach card at perforation before mailing.
PLEASE VOTE BY MARKING THE APPROPRIATE BOXES BELOW.
THE BOARD OF DIRECTORS OF PRIMEX TECHNOLOGIES, INC. RECOMMENDS A VOTE FOR
PROPOSAL 1
1.To approve an Agreement and Plan of Merger, FOR AGAINST ABSTAIN
providing for the merger of Mars Acquisition
Corporation with and into the Company, with [ ] [ ] [ ]
the Company being the surviving corporation.
Please note:If this Voting Instruction Form is signed, but no direction is given
on the proposal, Boston Safe Deposit and Trust Company will vote
"FOR" the proposal.
(CONTINUED AND TO BE DATED AND SIGNED ON THE OTHER SIDE)
<PAGE> 82
VOTING INSTRUCTION FORM
PLEASE MARK, SIGN, DATE AND RETURN THE VOTING INSTRUCTION FORM PROMPTLY USING
THE ENCLOSED ENVELOPE
This voting instruction is requested by Boston Safe Deposit and Trust Company in
conjunction with a proxy solicitation by the Board of Directors of Primex
Technologies, Inc.
Please read the enclosed Proxy Statement for more information.
CONFIDENTIAL VOTING INSTRUCTION FORM
TO: BOSTON SAFE DEPOSIT AND TRUST COMPANY
AS TRUSTEE OF THE PRIMEX TECHNOLOGIES, INC. RETIREMENT INVESTMENT MANAGEMENT
EXPERIENCE PLAN
Please fold and detach card at perforation before mailing.
The undersigned hereby instructs Boston Safe Deposit and Trust Company, as
Trustee of the Primex Technologies, Inc. Retirement Investment Management
Experience Plan (the "PRIME Plan"), to vote in person or by proxy at the Special
Meeting of the Shareholders of Primex Technologies, Inc. to be held on January
24, 2001, and at any adjournment or postponement thereof, all shares of Common
Stock of Primex Technologies, Inc. for which the undersigned shall be entitled
to instruct, in the manner specified on the reverse side.
Boston Safe Deposit and Trust Company will vote the shares of Common Stock
represented by this Voting Instruction Form if it is properly completed, signed,
and received by Boston Safe Deposit and Trust Company before 5:00 p.m. EST on
January 19, 2001 at P.O. Box 9116, Hingham, MA 02043. Please sign exactly as
your name appears below. The PRIME Plan provides that shares of Common Stock
credited to participants' accounts for which no written instruction is received
by the Trustee will be voted by the Trustee in the same proportion as shares of
Common Stock for which the Trustee has received instructions.
Boston Safe Deposit and Trust Company makes no recommendation regarding any
voting instruction.
Date
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SIGNATURE
