<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY , 1998
REGISTRATION NO. 333-
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
RAYTHEON COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-1778500
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
----------------
141 SPRING STREET, LEXINGTON, MASSACHUSETTS 02173
(781) 862-6600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
THOMAS D. HYDE, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
RAYTHEON COMPANY
141 SPRING STREET
LEXINGTON, MASSACHUSETTS 02173
(781) 862-6600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES OF ALL COMMUNICATIONS TO:
ADAM O. EMMERICH, ESQ. KRIS F. HEINZELMAN, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ CRAVATH, SWAINE & MOORE
51 WEST 52ND STREET 825 EIGHTH AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10019
(212) 403-1000 (212) 474-1000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the Effective Date of this Registration Statement as determined by
market conditions.
----------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
(calculation table on following page)
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(1) PRICE(1)(2) FEE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(4)(7).. (3) (3) (3) (3)
- ---------------------------------------------------------------------------------------
Preferred Stock, $0.01
par value per
share(5)(7)........... (3) (3) (3) (3)
- ---------------------------------------------------------------------------------------
Class B Common Stock,
$0.01 par value per
share(6)(7)........... (3) (3) (3) (3)
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Warrants(8)............ (3) (3) (3) (3)
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Total: .............. $3,000,000,000(9) 100% $3,000,000,000(9) $885,000
</TABLE>
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(1) The proposed maximum per unit and aggregate offering prices per class of
security will be determined from time to time by the Registrant in
connection with the issuance by the Registrant of the securities
registered hereunder.
(2) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(o) under the Securities Act.
(3) Not required to be included in accordance with General Instruction II.D.
of Form S-3 under the Securities Act.
(4) Subject to note (9) below, there is being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold, from
time to time, by the Registrant. If any Debt Securities are issued at an
original issue discount, then the offering price shall be in such greater
principal amount as shall result in an aggregate initial offering price
not to exceed $3.0 billion less the dollar amount of any securities
previously issued hereunder.
(5) Subject to note (9) below, there is being registered hereunder an
indeterminate number of shares of Preferred Stock of the Company as may be
sold from time to time.
(6) Subject to note (9) below, there is being registered hereunder an
indeterminate number of shares of Class B Common Stock of the Company as
may be sold from time to time.
(7) Subject to note (9) below, there is being registered hereunder an
indeterminate principal amount of Debt Securities, and an indeterminate
number of shares of Preferred Stock and Class B Common Stock of the
Company, as shall be issuable upon conversion or redemption of Debt
Securities, Preferred Stock or Class B Common Stock of the Company, as the
case may be, or upon the exercise of Warrants of the Company registered
hereunder.
(8) Subject to note (9) below, there is being registered hereunder an
indeterminate amount and number of Warrants of the Company, representing
rights to purchase certain of the Debt Securities, Preferred Stock or
Class B Common Stock of the Company registered hereunder.
(9) In no event will the aggregate initial offering price of all securities
issued from time to time pursuant to this Registration Statement exceed
$3.0 billion or the equivalent thereof in one or more foreign currencies,
foreign currency units, or composite currencies. The aggregate amount of
Class B Common Stock registered hereunder is further limited to that which
is permissible under Rule 415(a)(4) under the Securities Act. The
securities registered hereunder may be sold separately or as units with
other securities registered hereunder.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS
SUBJECT TO COMPLETION, DATED , 1998
$3,000,000,000
RAYTHEON COMPANY
DEBT SECURITIES
PREFERRED STOCK
CLASS B COMMON STOCK
WARRANTS
----------
Raytheon Company (the "Company" or "Raytheon") may offer from time to time,
in one or more series, (i) unsecured senior debt securities (the "Senior Debt
Securities"), (ii) unsecured subordinated debt securities (the "Subordinated
Debt Securities" and, together with the Senior Debt Securities, the "Debt
Securities"), (iii) warrants to purchase Debt Securities (the "Debt Warrants"),
(iv) shares of serial preferred stock, $0.01 par value per share, in one or
more series ("Preferred Stock"), (v) warrants to purchase shares of Preferred
Stock (the "Preferred Stock Warrants"), (vi) shares of Class B common stock,
$0.01 par value per share ("Class B Common Stock"), or (vii) warrants to
purchase shares of Class B Common Stock (the "Class B Warrants"), in amounts,
at prices and on terms to be determined by market conditions at the time of
offering. The Debt Warrants, Preferred Stock Warrants and Class B Warrants are
referred to herein collectively as the "Securities Warrants." The Debt
Securities, Preferred Stock, Class B Common Stock and Securities Warrants are
referred to herein collectively as the "Offered Securities."
The specific terms of the Offered Securities with respect to which this
Prospectus is being delivered will be set forth in a supplement to this
Prospectus (a "Prospectus Supplement"), together with the terms of the offering
and sale of the Offered Securities, the initial offering price and the net
proceeds to the Company from the sale thereof. The Prospectus Supplement will
include, with regard to the particular Offered Securities, the following
information: (i) in the case of Debt Securities, the specific designation,
aggregate principal amount, ranking, authorized denomination, maturity, rate
(which may be fixed or variable) or method of calculation of interest and dates
for payment thereof, any terms for optional or mandatory redemption or payment
of additional amounts or any sinking fund provisions, any index or formula for
determining the amount of any principal, premium, or interest fund provisions,
the currency or currency unit in which any principal, premium, or interest is
payable, whether the securities are issuable in registered form or in the form
of global securities and any provisions for the conversion or exchange of such
Debt Securities; (ii) in the case of Preferred Stock, the designation, number
of shares, liquidation preference per share, initial public offering price,
dividend rate (or method of calculation thereof), dates on which dividends
shall be payable and dates from which dividends shall accrue, any redemption or
sinking fund provisions, any conversion or exchange provisions and other
rights, preferences and privileges; (iii) in the case of Class B Common Stock,
the number of shares; (iv) in the case of Securities Warrants, the
duration,exercise price and detachability; and (v) in the case of all Offered
Securities, whether such Offered Securities will be offered separately or as a
unit with other Offered Securities and the public offering price. The
Prospectus Supplement also will contain information, where applicable, about
material United States federal income tax considerations relating to, and any
listing on a securities exchange of, the Offered Securities covered by such
Prospectus Supplement.
The Debt Securities of any series may be issued with Securities Warrants. The
Debt Securities may be Senior Debt Securities or Subordinated Debt Securities.
The Senior Debt Securities, when issued, will rank on a parity with all the
unsecured and unsubordinated indebtedness of the Company, and the Subordinated
Debt Securities, when issued, will be subordinated in right of payment to all
obligations of the Company to its other creditors, except obligations ranking
on a parity with or junior to the Subordinated Debt Securities. See
"Description of Debt Securities--Subordination of Subordinated Debt
Securities."
The Company's Class B Common Stock is listed on the New York Stock Exchange
("NYSE"), the Chicago Stock Exchange ("CSE") and the Pacific Exchange ("PE").
Any Class B Common Stock offered hereby will be listed, subject to notice of
issuance, on such exchanges.
The Offered Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. See
"Plan of Distribution." If any agents of the Company, underwriters or dealers
are involved in the sale of any Offered Securities in respect of which this
Prospectus is being delivered, the names of such agents, underwriters or
dealers and any applicable commissions or discounts and the net proceeds to the
Company will be set forth in a Prospectus Supplement.
The Offered Securities may be issued in one or more series or issuances and
will be limited to $3.0 billion in aggregate public offering price (or its
equivalent, based on the applicable exchange rate, to the extent Debt
Securities are denominated in for one or more foreign currencies or currency
units). The Offered Securities may be sold for U.S. dollars, or any foreign
currency or currencies or currency units, and the principal of, premium, if
any, and any interest on, the Debt Securities may be payable in U.S. dollars,
or any foreign currency or currencies or currency units.
The Offered Securities may be offered separately or as units with other
Offered Securities, in separate series in amounts, at prices and on terms to be
determined at or prior to the time of sale. The sale of other securities under
the Registration Statement of which this Prospectus forms a part or under a
Registration Statement to which this Prospectus relates will reduce the amount
of Offered Securities which may be sold hereunder.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------
The date of this Prospectus is , 1998.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE OFFERING OF THE OFFERED SECURITIES MAY
ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE
OF THE OFFERED SECURITIES OR ANY SECURITIES THE PRICES OF WHICH MAY BE USED TO
DETERMINE PAYMENTS ON THE OFFERED SECURITIES. SPECIFICALLY, THE UNDERWRITERS
OR AGENTS SPECIFIED IN THE RELEVANT PROSPECTUS SUPPLEMENT OR PRICING
SUPPLEMENT MAY OVERALLOT IN CONNECTION WITH THE OFFERING, AND MAY BID FOR AND
PURCHASE THE OFFERED SECURITIES OR ANY SECURITIES THE PRICES OF WHICH MAY BE
USED TO DETERMINE PAYMENTS ON THE OFFERED SECURITIES IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION" IN THIS PROSPECTUS
AND "PLAN OF DISTRIBUTION" OR "UNDERWRITING" IN THE RELEVANT PROSPECTUS
SUPPLEMENT.
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS
SUPPLEMENT, AND ANY SUCH OTHER INFORMATION, OR REPRESENTATIONS, IF GIVEN OR
MADE, MUST NOT BE RELIED UPON AS HAVING BEEN SO AUTHORIZED. THE DELIVERY OF
THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT OR ANY SALE MADE
HEREUNDER OR THEREUNDER AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION
INCLUDED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING
PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY OR THEREBY IN ANY
JURISDICTION WHERE, AND TO ANY PERSON WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.
----------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder, and in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
concerning the Company may be inspected and copies may be obtained (at
prescribed rates) at the Commission's Public Reference Section, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at the worldwide web site
(http://www.sec.gov) maintained by the Commission and at the Commission's
Regional Offices located at Seven World Trade Center, 13th Floor, New York,
New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The Company's Class B Common Stock and Class A Common
Stock (as defined below) are listed on the NYSE, the CSE and the PE, where
reports, proxy statements and other information concerning the Company can
also be inspected. The offices of the NYSE are located at 20 Broad Street, New
York, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits, the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Offered Securities. As permitted by the rules and regulations
of the Commission, this Prospectus omits certain information contained in the
Registration Statement. For further information with respect to the Company
and the Offered Securities, reference is hereby made to such Registration
Statement, including the exhibits filed as a part thereof. Statements
contained in this Prospectus concerning the provisions of certain documents
filed with, or incorporated by reference in, the Registration Statement are
not necessarily complete, each such statement being qualified in all respects
by such reference. Copies of all or any part of the Registration Statement,
including the documents incorporated by reference therein or exhibits thereto,
may be obtained upon payment of the prescribed rates at the offices of the
Commission set forth above.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
1-13699) pursuant to the Exchange Act are incorporated herein by reference:
(a) The Company's Current Report on Form 8-K dated December 17, 1997; and
(b) The Company's Registration Statement on Form 8-A dated December 11,
1997 and Form 8-A/A dated December 17, 1997.
The following documents filed with the Commission pursuant to the Exchange
Act by Former Raytheon Company (as defined below, File No. 1-2833) are also
hereby incorporated by reference:
(a) Former Raytheon Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996;
(b) Former Raytheon Company's Quarterly Reports on Form 10-Q for the
periods ended March 30, 1997, June 29, 1997 and September 28, 1997;
(c) Former Raytheon Company's Current Reports on Form 8-K dated January
4, 1997, January 16, 1997, March 14, 1997, July 11, 1997, September 10,
1997, October 7, 1997 (as amended on October 28, 1997) and December 17,
1997; and
(d) Former Raytheon Company's Solicitation Statement/Prospectus on
Schedule 14A dated November 10, 1997.
All documents filed by the Company pursuant to section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Offered Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing such documents. Any statement contained herein or in a
document, all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Prospectus or any Prospectus Supplement to the extent
that a statement contained herein or in any other subsequently filed document
or portion thereof which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus or any Prospectus Supplement.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, on written or oral
request of such person, a copy of any or all of the documents incorporated by
reference herein (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference into such documents). Such written
requests should be addressed to: Secretary, Raytheon Company, 141 Spring
Street, Lexington, Massachusetts 02173. Telephone requests may be directed to
the Secretary at (781) 862-6600.
Statements made in this Prospectus, or in any Prospectus Supplement relating
to securities registered pursuant to the Registration Statement of which this
Prospectus is a part, that are not statements of historical fact are forward-
looking statements within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. Forward-looking statements are subject to a
number of risks and uncertainties. Important factors that could cause actual
results to differ materially from the Company's expectations ("cautionary
statements") are disclosed in this Prospectus and the documents incorporated
by reference herein, including, without limitation, statements under "Item 1--
Business" of Former Raytheon Company's Annual Report on Form 10-K and under
"Risk Factors" in Former Raytheon Company's Solicitation Statement/Prospectus
dated November 10, 1997.
3
<PAGE>
THE COMPANY
Raytheon is an international, high technology company that operates in the
following principal businesses: defense and commercial electronics,
engineering and construction, and aircraft. Historically, the Company's
principal businesses have included the design, manufacture and servicing of
advanced electronic devices, equipment and systems for government and
commercial use. Raytheon is a major defense contractor in the United States
and internationally.
Raytheon's defense electronics business is conducted through Raytheon
Systems Company, which combines the businesses formerly conducted by Raytheon
Electronics Systems, Raytheon TI Systems and Raytheon E-Systems, as well as
the recently merged defense business of Hughes Electronics Corporation.
Raytheon Systems Company consists of five business segments: Defense Systems;
Sensors and Electronic Systems; Command, Control and Communications (C/3/)
Systems; Intelligence, Information and Aircraft Integration Systems; and
Training and Services. Defense Systems focuses on anti-tactical ballistic
missile systems; air defense; air-to-air, surface-to-air, and air-to-ground
missiles; naval and maritime systems; ship self-defense systems; torpedoes;
strike, interdiction and cruise missiles; and advanced munitions. Sensors and
Electronic Systems focuses on ground, shipboard and airborne fire control and
surveillance systems; primary and secondary air traffic control radars;
ground, space-based, night vision, and reconnaissance sensors; and electronics
warfare and GPS systems. C/3/ Systems focuses on command, control and
communications systems; air traffic control systems; tactical radios;
satellite communication ground terminals; wide area surveillance systems;
advanced transportation systems; and simulators and simulation systems.
Intelligence, Information and Aircraft Integration Systems focuses on
information processing systems; large scale information retrieval, processing
and distribution systems; global broadcast systems; airborne surveillance and
intelligence systems integration; aircraft modification; and head-of-state
aircraft systems. Training and Services focuses on training services and
integrated training programs; technical services; and logistics and lifetime
support.
Raytheon's commercial electronics business consists of Raytheon Marine
Company and Raytheon Microelectronics. These entities produce, among other
things, marine radars and other marine electronics, transmit/receive modules
for satellite communications projects and other electronic components for a
wide range of applications. Raytheon Engineers & Constructors is one of the
largest engineering, construction, and operations and maintenance
organizations in the world. Raytheon Aircraft is a world leader in general
aviation, offering one of the most extensive product lines in the industry.
The address of the principal executive office of the Company is 141 Spring
Street, Lexington, Massachusetts 02173. The telephone number of the Company is
(781) 862-6600.
RECENT DEVELOPMENTS
On July 11, 1997, Raytheon Company, predecessor to the Company by merger
("Former Raytheon Company") consummated the acquisition of the defense systems
and electronics business of Texas Instruments Incorporated ("TI Defense"). TI
Defense, whose businesses are now conducted through Raytheon Systems Company,
is a premier supplier of advanced defense systems, including tactical
missiles, precision-guided weapons, radar, night vision systems and electronic
warfare systems.
On December 17, 1997, Former Raytheon Company completed its merger (the
"Merger") with and into HE Holdings, Inc. ("Hughes Defense"), a Delaware
corporation which consisted of the defense business of Hughes Electronics
Corporation. Immediately following the Merger, the surviving corporation
changed its name to Raytheon Company. The value of the transaction was $9.50
billion, including $4.04 billion in debt which was contributed by Hughes
Defense to certain affiliates of Hughes Electronics Corporation prior to the
Merger, and $5.46 billion in equity in the form of Class A Common Stock
distributed to stockholders of General Motors Corporation ("GM"), the former
parent of Hughes Defense. Hughes Defense, whose businesses are now conducted
through Raytheon Systems Company, is a leading supplier of defense electronics
products and services to the U.S. government, including airborne and ground-
based radar, electro-optical systems, missile and naval systems, and command
and control systems.
4
<PAGE>
USE OF PROCEEDS
Unless otherwise provided in the applicable Prospectus Supplement, the net
proceeds from the sale of the Offered Securities will be used by the Company
(i) to refinance commercial paper borrowings and/or bank borrowings, with
various maturities and bearing interest at various rates, that were incurred
in connection with the Merger, (ii) for other capital expenditures and working
capital requirements and (iii) for other general corporate purposes.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the consolidated ratio of earnings to
combined fixed charges and preferred stock dividends (a) for Former Raytheon
Company and Hughes Defense on a pro forma basis as of September 28, 1997 after
giving effect to the Merger as if it had occurred on January 1, 1996, (b) for
Former Raytheon Company and Hughes Defense on a pro forma basis as of December
31, 1996 after giving effect to the Merger as if it had occurred on January 1,
1996, and (c) on an historical basis at September 28, 1997 and at the end of
fiscal years 1996, 1995, 1994, 1993 and 1992:
<TABLE>
<CAPTION>
PRO FORMA HISTORICAL
---------------------------------------------------------------------
DECEMBER 31,
SEPTEMBER 28, DECEMBER 31, SEPTEMBER 28, ---------------------------
1997 1996 1997 1996 1995 1994 1993 1992
------------- ------------ ------------- ---- ---- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
2.7x 2.7x 4.1x 4.6x 6.0x 12.0x 18.1x 11.9x
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
consist of net earnings, taxes on income and fixed charges (less capitalized
interest) and fixed charges consist of interest expense, amortization of debt
discount and issuance expense, the portion of rents representative of an
interest factor and capitalized interest.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued under an Indenture, dated as of
July 3, 1995 (the "Senior Indenture"), between the Company and The Bank of New
York, as trustee. The Subordinated Debt Securities are to be issued under a
second Indenture, dated as of July 3, 1995 (the "Subordinated Indenture"),
also between the Company and The Bank of New York, as trustee. A copy of the
Senior Indenture has been filed with the Commission as an exhibit to the
Registration Statement and is incorporated herein by reference. In the event
the Company decides to issue Subordinated Debt Securities, the Company will
file the Subordinated Indenture either by amendment or as an exhibit to an
Exchange Act Report and such indenture shall be incorporated herein by
reference. The Senior Indenture and the Subordinated Indenture are sometimes
referred to collectively as the "Indentures." The Bank of New York is
hereinafter referred to as the "Senior Debt Trustee" when referring to it in
its capacity as trustee under the Senior Indenture, as the "Subordinated Debt
Trustee" when referring to it in its capacity as trustee under the
Subordinated Indenture, and as the "Debt Trustee" when referring to it in its
capacity as trustee under both of the Indentures. The following summaries of
certain provisions of the Senior Debt Securities, the Subordinated Debt
Securities and the Indentures do not purport to be complete and are subject to
and are qualified in their entirety by reference to all the provisions of the
Indenture applicable to a particular series of Debt Securities (the
"Applicable Indenture"), including the definitions therein of certain terms.
Wherever particular Sections, Articles or defined terms of the Applicable
Indenture are referred to, it is intended that such Sections, Articles or
defined terms shall be incorporated herein by reference. Article and Section
references used herein are references to the Applicable Indenture. Capitalized
terms not otherwise defined herein shall have the meaning given in the
Applicable Indenture.
The following sets forth certain general terms and provisions of the Debt
Securities which may be offered hereby. The particular terms of the Debt
Securities offered by any Prospectus Supplement (the "Offered Debt
Securities") will be described in the Prospectus Supplement relating to such
Offered Debt Securities (the "Applicable Prospectus Supplement").
5
<PAGE>
GENERAL
The Indentures do not limit the amount of Debt Securities that may be issued
thereunder and provide that Debt Securities may be issued thereunder from time
to time in one or more series. The Debt Securities will be unsecured
obligations of the Company.
Unless otherwise indicated in the Applicable Prospectus Supplement,
principal of, premium, if any, and interest on the Debt Securities will be
payable, and the transfer of Debt Securities will be registrable, at the
office or agency of the Company in each Place of Payment maintained by the
Company and at any other office or agency maintained by the Company for such
purpose, except that, at the option of the Company, interest may be paid by
mailing a check to the address of the Person entitled thereto as it appears on
the register for the Debt Securities (Sections 301, 305, 307 and 1002). The
Debt Securities will be issued only in fully registered form without coupons
and, unless otherwise indicated in the Applicable Prospectus Supplement, in
denominations of $1,000 or integral multiples thereof (Section 302). No
service charge will be made for any registration of transfer or exchange of
the Debt Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge imposed in connection therewith
(Section 305).
The Applicable Prospectus Supplement will describe the following terms of
the Offered Debt Securities: (i) the title of the Offered Debt Securities;
(ii) whether the Offered Debt Securities are Senior Debt Securities or
Subordinated Debt Securities; (iii) any limit on the aggregate principal
amount of the Offered Debt Securities; (iv) the Person to whom any interest on
the Offered Debt Securities is payable if other than the Person in whose name
any such Offered Debt Securities are registered; (v) the date or dates on
which the principal of the Offered Debt Securities will mature; (vi) the rate
or rates per annum (which may be fixed or variable) at which the Offered Debt
Securities will bear interest (or the manner of calculation thereof), if any,
and the date or dates from which such interest, if any, will accrue; (vii) the
dates on which such interest, if any, on the Offered Debt Securities will be
payable and the Regular Record Dates for such Interest Payment Dates; (viii)
the place or places where the principal of, premium, if any, and any interest
on the Offered Debt Securities shall be payable; (ix) any mandatory or
optional sinking funds or analogous provisions; (x) the date, if any, after
which, and the price or prices at which, the Offered Debt Securities may,
pursuant to any optional or mandatory redemption provisions, be redeemed and
the other detailed terms and provisions of any such optional or mandatory
redemption provision; (xi) the obligation of the Company, if any, to redeem or
repurchase the Offered Debt Securities at the option of the Holder; (xii) if
other than denominations of $1,000 and any integral multiple thereof, the
denominations in which the Offered Debt Securities shall be issuable; (xiii)
if other than the principal amount thereof, the portion of the principal
amount of the Offered Debt Securities that will be payable upon the
declaration of acceleration of the Maturity thereof; (xiv) the currency of
payment of principal of, premium, if any, and any interest on the Offered Debt
Securities and, if other than United States currency, the manner of
determining the equivalent thereof in United States currency for any purpose;
(xv) any index used to determine the amount of payment of principal of, and
any premium and interest on, the Offered Debt Securities; (xvi) if the Offered
Debt Securities will be issuable only in the form of a Global Security, the
Depositary or its nominee with respect to the Offered Debt Securities and the
circumstances under which the Global Security may be registered for transfer
or exchange in the name of a Person other than the Depositary or its nominee;
(xvii) the applicability, if any, of the provisions described under
"Defeasance and Covenant Defeasance"; (xviii) whether the Debt Securities are
convertible into any other securities and the terms and conditions of such
convertibility; (xix) any additional Event of Default, and in the case of any
Offered Debt Securities that are Subordinated Debt Securities, any additional
Event of Default that would result in the acceleration of the maturity
thereof; and (xx) any other terms of the Offered Debt Securities (Section
301).
Both Senior Debt Securities and Subordinated Debt Securities may be issued
as Original Issue Discount Securities to be offered and sold at a substantial
discount below their stated principal amount. "Original Issue Discount
Security" means any Debt Security which provides for an amount less than the
principal amount thereof to be due and payable upon the declaration of
acceleration of the Maturity thereof upon the occurrence of an Event of
Default and the continuation thereof (Section 101).
The Applicable Prospectus Supplement will also describe any material United
States federal income tax consequences or other special considerations
applicable to the series of Debt Securities to which such Prospectus
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Supplement relates, including those applicable to (i) Debt Securities with
respect to which payments of principal, premium, if any, or interest are
determined with reference to an index or formula (including changes in prices
of particular securities, currencies, or commodities), (ii) Debt Securities
with respect to which principal, premium, if any, or interest is payable in a
foreign or composite currency, (iii) Original Issue Discount Securities, and
(iv) variable rate Debt Securities that are exchangeable for fixed rate Debt
Securities.
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Applicable Prospectus Supplement, the
following provisions will apply to the Subordinated Debt Securities.
The payment of the principal of, premium, if any, and interest on the
Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness (as defined below) (Section
1301). Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency or
similar proceedings of the Company, the holders of all Senior Indebtedness
will be entitled to receive payment in full of all amounts due or to become
due thereon before the Holders of the Subordinated Debt Securities will be
entitled to receive any payment in respect of the principal of, premium, if
any, or interest on the Subordinated Debt Securities (Section 1302). In the
event of the acceleration of the Maturity of any Subordinated Debt Securities
of any series, the holders of all Senior Indebtedness will be entitled to
receive payment in full of all amounts due or to become due thereon before the
Holders of the Subordinated Debt Securities will be entitled to receive any
payment of the principal of, premium, if any, or interest on the Subordinated
Debt Securities of such series or on account of the purchase or other
acquisition of Subordinated Debt Securities of such series (Section 1303).
Accordingly, in case of such an acceleration, all Senior Indebtedness would
have to be repaid before any payment could be made in respect of the
Subordinated Debt Securities. No payments on account of principal, premium, if
any, or interest in respect of the Subordinated Debt Securities or on account
of the purchase or other acquisition of Subordinated Debt Securities may be
made if there shall have occurred and be continuing a default in any payment
with respect to any Senior Indebtedness, or an Event of Default with respect
to any Senior Indebtedness permitting the holders thereof to accelerate the
maturity thereof, or if any judicial proceeding shall be pending with respect
to any such default (Section 1304).
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Indebtedness
or the Subordinated Debt Securities may recover less, ratably, than holders of
Senior Indebtedness and may recover more, ratably, than Holders of the
Subordinated Debt Securities.
"Senior Indebtedness" is defined in the Subordinated Indenture to mean the
principal of, premium, if any, and interest on (i) all indebtedness of the
Company for money borrowed, other than the Subordinated Debt Securities, and
any other indebtedness of the Company represented by a note, bond, debenture
or other similar evidence of indebtedness (including indebtedness of others
guaranteed by the Company), in each case whether outstanding on the date of
execution of the Subordinated Indenture or thereafter created, incurred or
assumed and (ii) any amendments, renewals, extensions, modifications and
refundings of any such indebtedness, unless in any case in the instrument
creating or evidencing any such indebtedness or pursuant to which it is
outstanding it is provided that such indebtedness is not superior in right of
payment to the Subordinated Debt Securities. For the purposes of this
definition, "indebtedness for money borrowed" is defined as (A) any obligation
of, or any obligation guaranteed by, the Company for the repayment of borrowed
money, whether or not evidenced by bonds, debentures, notes or other written
instruments, (B) any deferred payment obligation of, or any such obligation
guaranteed by, the Company for the payment of the purchase price of property
or assets evidenced by a note or similar instrument, and (C) any obligation
of, or any such obligation guaranteed by, the Company for the payment of rent
or other amounts under a lease of property or assets if such obligation is
required to be classified and accounted for as a capitalized lease on the
balance sheet of the Company under generally accepted accounting principles
(Section 101).
The Subordinated Indenture will not limit the amount of other indebtedness,
including Senior Indebtedness, that may be issued by the Company or any of its
Subsidiaries.
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EVENTS OF DEFAULT
The Senior Indenture (with respect to any series of Senior Debt Securities
then Outstanding) and, unless otherwise provided in the Applicable Prospectus
Supplement, the Subordinated Indenture (with respect to any series of
Subordinated Debt Securities then Outstanding), define an Event of Default as
any one of the following events: (i) default in the payment of any interest on
any Debt Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 days (in the case of the
Subordinated Indenture, whether or not payment is prohibited by the
subordination provisions); (ii) default in the payment of the principal of, or
premium, if any, on any Debt Security of that series when it shall become due
and payable either at its Maturity, by declaration as authorized in the
Indentures or otherwise (in the case of the Subordinated Indenture, whether or
not payment is prohibited by the subordination provisions); (iii) failure to
deposit any sinking fund payment when and as due by the terms of a Debt
Security of that series (in the case of the Subordinated Indenture, whether or
not payment is prohibited by the subordination provisions); (iv) failure to
perform any other covenants or agreements of the Company in the Applicable
Indenture (other than covenants or agreements included in the Applicable
Indenture solely for the benefit of a series of Debt Securities thereunder
other than that series) and continuance of such default for a period of 60
days after either the Debt Trustee or the Holders of at least 25% of the
principal amount of the Outstanding Debt Securities of that series have given
written notice in the manner provided for therein specifying such failure as
provided in the Applicable Indenture; (v) certain events in bankruptcy,
insolvency or reorganization of the Company; and (vi) any other Event of
Default provided with respect to Debt Securities of that series (Section 501).
If an Event of Default occurs with respect to Debt Securities of any series,
the Debt Trustee shall give the Holders of Debt Securities of such series
notice of such default, provided, however, that in the case of a default
described in (iv) above, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof (Section 602).
If an Event of Default with respect to the Senior Debt Securities of any
series at the time Outstanding occurs and is continuing, either the Debt
Trustee or the Holders of at least 25% of the aggregate principal amount of
the Outstanding Debt Securities of that series may declare the principal
amount (or, if the Debt Securities of that series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms thereof) of all the Senior Debt Securities of that series to be due and
payable immediately. Payment of the principal of the Subordinated Debt
Securities may be accelerated only in the case of certain events of
bankruptcy, insolvency or reorganization of the Company. The Debt Trustee and
the Holders will not be entitled to accelerate the maturity of the
Subordinated Debt Securities upon the occurrence of any of the Events of
Default described above except for those described in clause (v) (i.e.,
certain events in bankruptcy, insolvency or reorganization of the Company).
Accordingly, there is no right of acceleration in the case of a default in the
performance of any other covenant with respect to the Subordinated Debt
Securities, including the payment of interest or principal. At any time after
a declaration of acceleration with respect to Debt Securities of any series
has been made, but before a judgment or decree based on acceleration has been
obtained, the Holders of a majority of the aggregate principal amount of
Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration (Section 502).
The Indentures provide that, subject to the duty of the Debt Trustee during
default to act with the required standard of care, the Debt Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such
Holders shall have offered to the Debt Trustee reasonable security or
indemnity (Section 603). Subject to such provisions for the indemnification of
the Debt Trustee and to certain other conditions, the Holders of a majority of
the aggregate principal amount of the Outstanding Debt Securities of any
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Debt Trustee, or exercising any
trust or power conferred on the Debt Trustee, with respect to the Debt
Securities of that series (Section 512).
No Holder of any series of Debt Securities will have any right to institute
any proceeding with respect to the Applicable Indenture or for any remedy
thereunder, unless: (i) such Holder previously has given to the Debt Trustee
under the Applicable Indenture written notice of a continuing Event of Default
with respect to Debt Securities of that series; (ii) the Holders of at least
25% of the aggregate principal amount of the Outstanding
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Debt Securities of that series have made written request, and offered
reasonable indemnity, to the Debt Trustee to institute such proceeding as
trustee; (iii) in the 60-day period following receipt of a written notice from
a Holder, the Debt Trustee has not received from the Holders of a majority of
the aggregate principal amount of the Outstanding Debt Securities of that
series a direction inconsistent with such request; and (iv) the Debt Trustee
shall have failed to institute such proceeding within such 60-day period
(Section 507). However, such limitations do not apply to a suit instituted by
a Holder of a Debt Security for enforcement of payment of the principal of and
premium, if any, or interest on such Debt Security on or after the respective
due dates expressed in such Debt Security (Section 508).
The Company is required to furnish to the Debt Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance (Section 1007).
Any payment default on any Debt Security regardless of amount, where the
aggregate principal amount of the series of such Debt Security exceeds $50
million, or any other default that causes acceleration of any such Debt
Security, would give rise to a cross-default under the Company's senior credit
facilities. In certain circumstances, payment defaults on Debt Securities may
give rise to cross-defaults under guarantees of the Company related to various
receivables facilities of certain subsidiaries of the Company.
DEFEASANCE AND COVENANT DEFEASANCE
The Indentures provide that, if such provision is made applicable to the
Debt Securities of any series pursuant to Section 301 of the Applicable
Indenture (which will be indicated in the Applicable Prospectus Supplement),
the Company may elect either (i) to defease and be discharged from any and all
obligations in respect of such Debt Securities then outstanding (including, in
the case of Subordinated Debt Securities, the provisions described under
"Subordination of Subordinated Debt Securities" and except for certain
obligations to register the transfer of or exchange of such Debt Securities,
replace stolen, lost or mutilated Debt Securities, maintain paying agencies
and hold monies for payment in trust) ("defeasance") or (ii) to be released
from its obligations with respect to such Debt Securities concerning the
subordination provisions described under "Subordination of Subordinated Debt
Securities" and any other covenants applicable to such Debt Securities which
are determined pursuant to Section 301 of the Applicable Indenture to be
subject to covenant defeasance ("covenant defeasance"), and the occurrence of
an event described in clause (iv) under "Events of Default" above (insofar as
with respect to covenants subject to covenant defeasance) shall no longer be
an Event of Default, in the case of either (i) or (ii) if the Company
deposits, in trust, with the Debt Trustee money or U.S. Government
Obligations, which through the payment of interest thereon and principal
thereof in accordance with their terms will provide money, in an amount
sufficient, without reinvestment, to pay all the principal of, premium, if
any, and interest on such Debt Securities on the dates such payments are due
(which may include one or more redemption dates designated by the Company) and
any mandatory sinking fund or analogous payments thereon in accordance with
the terms of such Debt Securities. Such a trust may only be established if,
among other things, (A) no Event of Default or event which with the giving of
notice or lapse of time, or both, would become an Event of Default under the
Applicable Indenture shall have occurred and be continuing on the date of such
deposit, (B) such deposit will not cause the Debt Trustee to have any
conflicting interest with respect to other securities of the Company and (C)
the Company shall have delivered an Opinion of Counsel to the effect that the
Holders will not recognize income, gain or loss for federal income tax
purposes (and, in the case of legal defeasance only, such Opinion of Counsel
must be based on a ruling of the Internal Revenue Service or other change in
applicable federal income tax law) as a result of such deposit or defeasance
and will be subject to federal income tax in the same manner as if such
defeasance had not occurred.
The Company may exercise its defeasance option with respect to such Debt
Securities notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its defeasance option, payment of such Debt
Securities may not be accelerated because of a subsequent Event of Default. If
the Company exercises its covenant defeasance option, payment of such Debt
Securities may not be accelerated by reference to a subsequent breach of any
of the covenants noted under clause (ii) in the preceding paragraph. In the
event the
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Company omits to comply with its remaining obligations with respect to such
Debt Securities under the Applicable Indenture after exercising its covenant
defeasance option and such Debt Securities are declared due and payable
because of the subsequent occurrence of any Event of Default, the amount of
money and U.S. Government Obligations on deposit with the Debt Trustee may be
insufficient to pay amounts due on the Debt Securities of such series at the
time of the acceleration resulting from such Event of Default. However, the
Company will remain liable in respect of such payments. (See Article Thirteen
and Article Fourteen of the Senior Indenture and the Subordinated Indenture,
respectively.)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Debt Trustee with the consent of the Holders of not less than a majority
of the aggregate principal amount of the Outstanding Debt Securities of all
series issued under the Indenture and affected by the modification or
amendments (voting as a single class); provided, however, that no such
modification or amendment may, without the consent of the Holders of all Debt
Securities affected thereby, among other things, (i) change the stated
Maturity of the principal of, or any installment of principal of or interest
on, any Debt Security; (ii) reduce the principal amount of, or the premium, if
any, or (except as otherwise provided in the Applicable Prospectus Supplement)
interest on, any Debt Security (including in the case of an Original Issue
Discount Debt Security the amount payable upon acceleration of the Maturity
thereof); (iii) change the place or currency of payment of principal of,
premium, if any, or interest on any Debt Security; (iv) impair the right to
institute suit for the enforcement of any payment on any Debt Security on or
after the Stated Maturity thereof (or in the case of redemption, on or after
the Redemption Date); (v) in the case of the Subordinated Indenture, modify
the subordination provisions in a manner adverse to the Holders of the
Subordinated Debt Securities; or (vi) reduce the percentage of the principal
amount of Outstanding Debt Securities of any series, the consent of whose
Holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults (Section 902).
The Holders of a majority of the aggregate principal amount of the Senior
Debt Securities or the Subordinated Debt Securities may, on behalf of all
Holders of the Senior Debt Securities or the Subordinated Debt Securities,
respectively, waive any past default under the Applicable Indenture, except a
default in the payment of principal, premium, if any, or interest or in the
performance of certain covenants (Section 513).
CERTAIN COVENANTS OF THE CORPORATION
Limitation on Liens. The Company may not, nor may it permit any Significant
Subsidiary (as defined below) to, create, incur, assume or permit to exist any
Lien (as defined below) on any property or asset (including any stock or other
securities of any Person, including any Significant Subsidiary), or on any
income or revenues or rights in respect of any thereof, unless the Debt
Securities of any series then or thereafter Outstanding shall be equally and
ratably secured. This restriction does not apply, however, to (i) Liens on
property or assets of the Company and its Subsidiaries existing on the date of
the Indenture, provided that such Liens shall secure only those obligations
which they secure as of the date of the Indenture; (ii) any Lien existing on
any property or asset prior to the acquisition thereof by the Company or any
Subsidiary, provided that (x) such Lien is not created in contemplation of or
in connection with such acquisition and (y) such Lien does not apply to any
other property or assets of the Company or any Subsidiary; (iii) Liens for
taxes not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves, to the extent
required by GAAP, have been set aside; (iv) carriers', warehousemen's,
mechanics', materialsmen's, repairmen's or other like Liens arising in the
ordinary course of business and securing obligations that are not due and
payable or which are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves, to the extent required by GAAP,
have been set aside; (v) pledges and deposits made in the ordinary course of
business in compliance with workmen's compensation, unemployment insurance and
other social security laws or regulations; (vi) deposits to secure the
performance of bids, trade contracts (other than for Indebtedness), leases
(other than capital leases), statutory obligations, surety and appeal bonds,
advance payment bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (vii) zoning
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restrictions, easements, rights-of-way, restrictions on use of real property
and other similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and do not materially
detract from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Company or any of its Subsidiaries;
(viii) Liens upon any property acquired, constructed or improved by the
Company or any Subsidiary which are created or incurred within 360 days of
such acquisition, construction or improvement to secure or provide for the
payment of any part of the purchase price of such property or the cost of such
construction or improvement, including carrying costs (but no other amounts),
provided that any such Lien shall not apply to any other property of the
Company or any Subsidiary; (ix) Liens on the property or assets of any
Subsidiary in favor of the Company; (x) extensions, renewals and replacements
of Liens referred to in paragraphs (i) through (ix) above, provided that any
such extension, renewal or replacement Lien shall be limited to the property
or assets covered by the Lien extended, renewed or replaced and that the
obligations secured by any such extension, renewal or replacement Lien shall
be in an amount not greater than the amount of the obligations secured by the
Lien extended, renewed or replaced; (xi) any Lien, of the type described in
clause (iii) of the definition below of the term "Lien," on securities imposed
pursuant to an agreement entered into for the sale or disposition of such
securities pending the closing of such sale or disposition; provided such sale
or disposition is otherwise permitted hereunder; (xii) Liens arising in
connection with any Permitted Receivables Program (to the extent the sale by
the Company or the applicable Subsidiary of its accounts receivable is deemed
to give rise to a Lien in favor of the purchaser thereof in such accounts
receivable or the proceeds thereof); (xiii) Liens on the capital stock or
assets of any Subsidiary that is not a Significant Subsidiary; and (xiv) Liens
to secure Indebtedness if, immediately after the grant thereof, the aggregate
amount of all Indebtedness secured by Liens that would not be permitted but
for this clause (xiv) does not exceed 15% of the Stockholders' Equity (as
defined below) as shown on the most recent consolidated balance sheet of the
Company filed with the Commission pursuant to the Exchange Act.
Limitation on Sale/Leaseback Transactions. Transactions involving any sale
and leaseback by the Company or any Significant Subsidiary of any Principal
Property (as defined below) are prohibited, unless the Company or any such
Significant Subsidiary, within 120 days after the effective date of the lease,
applies to the retirement of any Funded Debt (as defined below) an amount
equal to the greater of (i) the net proceeds of the sale of the property
leased or (ii) the fair market value of the property leased within 90 days
prior to the effective date of the lease. The amount to be so applied in
respect of any such transaction will be reduced, however, by the principal
amount of any Debt Securities surrendered to the Debt Trustee by the Company
for cancellation and by the principal amount of Funded Debt other than Debt
Securities, voluntarily retired by the Company, within 120 days after the
effective date of the lease, provided that no retirement may be effected by
payment on the final maturity date or pursuant to mandatory sinking fund or
prepayment provisions. This restriction does not apply, however, to the
Company or any Significant Subsidiary: (i) entering into any transaction not
involving a lease with a term of more than three (3) years; (ii) entering into
any transaction to the extent the Lien on any such property subject to such
sale and leaseback would be permitted under the covenant described above under
"Limitation on Liens" or (iii) entering into any transaction for the sale and
leaseback of any property if such lease is entered into within 180 days after
the later of the acquisition, completion of construction or commencement of
operation of such property.
Leveraged Transactions. Except for the limitations on liens and
sale/leaseback transactions referred to above and on consolidations, mergers
or transfers of the Company's assets substantially as an entirety referred to
below, the Indentures and the terms of the Debt Securities do not contain any
covenants or other provisions designed to afford holders of any Debt
Securities protection in the event of a highly leveraged transaction involving
the Company.
Applicability of Covenants. Any series of Securities may provide that either
or both of the covenants described above shall not be applicable to the
Securities of such series (Section 301).
CERTAIN DEFINITIONS
Certain terms are defined in the Indenture and are used in this Prospectus
as follows:
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"Funded Debt" means all Indebtedness that will mature, pursuant to a
mandatory sinking fund or prepayment provision or otherwise, and all
installments of Indebtedness that will fall due, more than one year from the
date of determination. In calculating the maturity of any Indebtedness, there
shall be included the term of any unexercised right of the debtor to renew or
extend such Indebtedness existing at the time of determination.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Holder" means any individual, corporation, partnership, limited liability
company, joint venture, trust, unincorporated organization or government or
any agency or political subdivision thereof in whose name a Debt Security is
registered in the security register for such Securities maintained in
accordance with the terms of the Indenture.
"Indebtedness" of any Person shall mean, as at any date of determination,
all indebtedness (including capitalized lease obligations) of such Person and
its consolidated subsidiaries at such date that would be required to be
included as a liability on a consolidated balance sheet (excluding the
footnotes thereto) of such Person prepared in accordance with GAAP.
"Lien" means, with respect to any asset of any Person, (i) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest in or on
such asset, (ii) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (iii) in the case of securities that constitute
assets of such Person, any purchase option, call or similar right of a third
party with respect to such securities.
"Permitted Receivables Program" means any receivables securitization program
pursuant to which the Company or any of the Subsidiaries sells accounts
receivable to any non-Affiliate in a "true sale" transaction; provided,
however, that any related indebtedness incurred to finance the purchase of
such accounts receivable is not includible on the balance sheet (excluding the
footnotes thereto) of the Company or any Subsidiary in accordance with GAAP
and applicable regulations of the Commission.
"Principal Property" means (i) the Company's principal office building and
(ii) any manufacturing plant or principal research facility of the Company or
any Significant Subsidiary which is located within the United States of
America or Canada, except any such principal office building, plant or
facility which the Board of Directors by resolution declares is not of
material importance to the total business conducted by the Company and its
Subsidiaries as an entirety.
"Significant Subsidiary" means, at any time, any Subsidiary that would be a
"Significant Subsidiary" at such time, as such term is defined in Regulation
S-X promulgated by the Commission, as in effect on the date of the Indenture.
"Stockholders' Equity" means, at any date of determination, the
stockholders' equity at such date of the Company and its Subsidiaries, as
determined in accordance with GAAP.
"Subsidiary" means any corporation, partnership, limited liability company,
joint venture, trust or unincorporated organization more than 50% of the
outstanding voting interest of which is owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge into any other Person or
transfer or lease its assets substantially as an entirety to any Person unless
any successor or purchaser is a corporation organized under the laws of the
United States of America, any State or the District of Columbia, and any such
successor or purchaser
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expressly assumes the Company's obligations on the Debt Securities by an
indenture supplemental to the Indentures. The Debt Trustee may receive an
Opinion of Counsel as conclusive evidence of compliance with these provisions
(Article Eight).
CONVERSION AND EXCHANGE RIGHTS
The terms, if any, on which Debt Securities of a series may be exchanged for
or converted into shares of Common Stock, Preferred Stock or any other
security, including the conversion price or exchange ratio (or the method of
calculating the same), the conversion or exchange period (or the method of
determining the same), whether conversion or exchange will be mandatory or at
the option of the holder or the Company, provisions for adjustment of the
conversion price or the exchange ratio and provisions affecting conversion or
exchange in the event of the redemption of such Debt Securities, will be set
forth in the Prospectus Supplement relating thereto.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Global Securities that will be deposited with a Depositary or its nominee
identified in the Applicable Prospectus Supplement. In such a case, one or more
Global Securities will be issued in a denomination or aggregate denominations
equal to the portion of the aggregate principal amount of Outstanding Debt
Securities of the series to be represented by such Global Security or
Securities. Unless and until it is exchanged in whole or in part for Debt
Securities in definitive registered form, a Global Security may not be
registered for transfer or exchange except as a whole by the Depositary for
such Global Security to a nominee for such Depositary and except in the
circumstances described in the Applicable Prospectus Supplement (Sections 204
and 305).
The Company expects that the following provisions will apply to depositary
arrangements with respect to any portion of a series of Debt Securities to be
represented by a Global Security. Any additional specific terms of the
depositary arrangement will be described in the applicable Prospectus
Supplement.
Upon the issuance of any Global Security, and the deposit of such Global
Security with or on behalf of the Depositary for such Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of institutions ("Participants") that have accounts
with the Depositary or its nominee. The accounts to be credited will be
designated by the underwriters or agents engaging in the distribution of such
Debt Securities or by the Company, if such Debt Securities are offered and sold
directly by the Company. Ownership of beneficial interests in a Global Security
will be limited to Participants or persons that may hold interest through
Participants. Ownership of beneficial interests by Participants in such Global
Security will be shown on, and the transfer of such beneficial interests will
be effected only through, records maintained by the Depositary for such Global
Security or by its nominee. Ownership of beneficial interests in such Global
Security by persons that hold through Participants will be shown on, and the
transfer of such beneficial interests within such Participants will be effected
only through, records maintained by such Participants. The laws of some
jurisdictions may require that certain purchasers of securities take physical
delivery of such securities in certificated form. The foregoing limitations and
such laws may impair the ability to transfer beneficial interests in such
Global Securities.
So long as the Depositary for a Global Security or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
Indentures. Unless otherwise specified in the applicable Prospectus Supplement
and except as specified below, owners of beneficial interests in such Global
Security will not be entitled to have Debt Securities of the series represented
by such Global Security registered in their names, will not receive or be
entitled to receive physical delivery of Debt Securities of such series in
certificated form and will not be considered the holders thereof for any
purposes under the Indentures. Accordingly, each person owning a beneficial
interest in such Global Security must rely on the procedures of the Depositary
and, if such person is not a Participant, on the procedures of the Participant
through which such person owns their interest, to exercise any rights of a
holder under the Indentures.
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The Depositary may grant proxies and otherwise authorize Participants to
give or take any request, demand, authorization, direction, notice, consent,
waiver or other action which a holder is entitled to give or take under the
Indentures. The Company understands that, under existing industry practices,
if the Company requests any action of holders or any owner of a beneficial
interest in such Global Security desires to give any notice or take any action
a holder is entitled to give or take under the Indentures, the Depositary
would authorize the Participants to give such notice or take such action, and
Participants would authorize beneficial owners owning through such
Participants to give such notice or take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Unless otherwise specified in the applicable Prospectus Supplement, payments
with respect to principal, premium, if any, and interest on Debt Securities
represented by a Global Security registered in the name of a Depositary or its
nominee will be made by the Company to such Depositary or its nominee, as the
case may be, as the registered owner of such Global Security.
The Company expects that the Depositary for any Debt Securities represented
by a Global Security, upon receipt of any payment of principal, premium or
interest, will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of such Depositary. The
Company also expects that payments by Participants to owners of beneficial
interests in such Global Security held through such Participants will be
governed by standing instructions and customary practices, as is now the case
with the securities held for the accounts of customers registered in "street
names," and will be the responsibility of such Participants. None of the
Company, the Trustee or any agent of the Company or the Trustee shall have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in a Global Security, or for
maintaining, supervising or reviewing any records relating to such beneficial
interests (Section 308).
Unless otherwise specified in the applicable Prospectus Supplement, a Global
Security of any series will be exchangeable for certificated Debt Securities
of the same series only if (i) the Depositary for such Global Securities
notifies the Company that it is unwilling or unable to continue as Depositary
or such Depositary ceases to be a clearing agency registered under the
Exchange Act (if so required by applicable law or regulation) and, in either
case, a successor Depositary is not appointed by the Company within 90 days
after the Company receives such notice or becomes aware of such ineligibility,
(ii) the Company in its sole discretion determines that such Global Securities
shall be exchangeable for certificated Debt Securities or (iii) there shall
have occurred and be continuing an Event of Default under the Indenture with
respect to the Debt Securities of such series. Upon any such exchange, owners
of beneficial interests in such Global Security or Securities will be entitled
to physical delivery of individual Debt Securities in certificated form of
like tenor and terms equal in principal amount to such beneficial interests,
and to have such Debt Securities in certificated form registered in the names
of the beneficial owners, which names are expected to be provided by such
Depositary's relevant Participants (as identified by such Depositary) to the
Trustee.
The following is based on information furnished to the Company:
In the event that the Depositary Trust Company ("DTC") acts as Depositary
for the Global Securities of any series, such Global Securities will be
issued as fully registered securities registered in the name of Cede & Co.
(DTC's partnership nominee). One fully registered Global Security will be
issued with respect to each $200 million (or such other amount as shall be
permitted by DTC from time to time) of principal amount of the Debt
Securities of a series, and an additional certificate will be issued with
respect to any remaining principal amount of such series.
DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its Participants deposit
with DTC. DTC also facilitates the settlement among Participants of
securities
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transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American
Stock Exchange, Inc. and the National Association of Securities Dealers,
Inc. Access to the DTC system is also available to others, such as
securities brokers and dealers and banks and trust companies that clear
through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Participants are on file with the Commission.
To facilitate subsequent transfers, the Debt Securities are registered in
the name of DTC's nominee, Cede & Co. The deposit of the Debt Securities
with DTC and their registration in the name of Cede & Co. will effect no
change in beneficial ownership. DTC has no knowledge of the actual
beneficial owners of the Debt Securities; DTC's records reflect only the
identity of the Direct Participants to whose accounts Debt Securities are
credited, which may or may not be the beneficial owners. The Participants
remain responsible for keeping account of their holdings on behalf of their
customers.
Delivery of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to beneficial owners of Debt
Securities is governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. consents or votes with respect to the Debt
Securities. Under its usual procedures, DTC mails a proxy (an "Omnibus
Proxy") to the issuer as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts the Debt Securities are credited on
the record date (identified on a list attached to the Omnibus Proxy).
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Debt Securities of a series represented by Global
Securities are being redeemed, DTC's practice is to determine by lot the
amount of the interest of each Direct Participant in such issue to be
redeemed.
To the extent that any Debt Securities provide for repayment or
repurchase at the option of the holders thereof, a beneficial owner shall
give notice of any option to elect to have its interest in the Global
Security repaid by the Company, through its Participant, to the Trustee,
and shall effect delivery of such interest in a Global Security by causing
the Direct Participant to transfer the Direct Participant's interest in the
Global Security or Securities representing such interest, on DTC's records,
to the Trustee. The requirement for physical delivery of Debt Securities in
connection with a demand for repayment or repurchase will be deemed
satisfied when the ownership rights in the Global Security or Securities
representing such Debt Securities are transferred by Direct Participants on
DTC's records.
DTC may discontinue providing its services as securities depositary with
respect to the Debt Securities at any time. Under such circumstances, in
the event that a successor securities depositary is not appointed, Debt
Security certificates are required to be printed and delivered as described
above.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that
event, Debt Security certificates will be printed and delivered as
described above.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
CONCERNING THE DEBT TRUSTEE
The Bank of New York is Debt Trustee under the Indentures. The Debt Trustee
performs services for the Company in the ordinary course of business.
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DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
general terms and provisions of the Preferred Stock to which a Prospectus
Supplement may relate. Certain other terms of any series of the Preferred
Stock offered by a Prospectus Supplement will be described in such Prospectus
Supplement and the Certificate of Designation (as defined below) for such
Preferred Stock. The description of certain provisions of the Preferred Stock
set forth below does not purport to be complete and is subject to and
qualified in its entirety by reference to the terms set forth in any such
Prospectus Supplement, the Company's Amended and Restated Certificate of
Incorporation, as amended to date (the "Amended and Restated Certificate of
Incorporation"), and the certificate of designation (a "Certificate of
Designation") relating to each series of the Preferred Stock which will be
filed with the Commission and incorporated by reference in the Registration
Statement of which this Prospectus is a part at or prior to the time of
issuance of such series of the Preferred Stock.
GENERAL
The authorized capital stock of the Company consists of 1,650,000,000 shares
of stock, of which 1,450,000,000 shares are shares of Common Stock, $0.01 par
value per share (the "Common Stock"), and of which 200,000,000 shares are
shares of Preferred Stock, $0.01 par value per share. No shares of Preferred
Stock are currently outstanding. The Board has previously authorized the
issuance of up to 4,000,000 shares of Series A Junior Participating Preferred
Stock, $0.01 par value per share (the "Series A Preferred Stock"). See
"Description of Common Stock--Stockholder Rights Plan."
The Board of Directors (the "Board") has been authorized, subject to certain
limitations set forth in the Amended and Restated Certificate of
Incorporation, to provide by resolution from time to time for the issuance of
shares of Preferred Stock in series and, by filing a Certificate of
Designation pursuant to the Delaware General Corporation Law (the "DGCL"), to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, privileges, preferences and rights
of the shares of each such series and the qualifications, limitations and
restrictions thereof. The authority of the Board with respect to each series
includes, but is not limited to, the right to:
(i) fix the designation of the series;
(ii) fix the number of shares of the series, which number the Board may
thereafter increase or decrease (subject to certain limitations);
(iii) determine whether dividends, if any, shall be cumulative or
noncumulative, and, in the case of shares of any series having cumulative
dividend rights, the date or dates or method of determining the date or
dates from which dividends on the shares of such series shall be
cumulative;
(iv) determine the rate of any dividends (or the method of determining
such dividends) payable to the holders of the shares of such series, any
conditions upon which such dividends shall be paid and the date or dates or
the method for determining the date or dates upon which such dividends
shall be payable;
(v) determine the price or prices (or the method of determining such
price or prices), the form of payment (which may be cash, property or
rights, including securities of the same or another corporation or other
entity), the period within which and the terms and conditions upon which
the shares of such series may be redeemed, in whole or in part, at the
option of the Company or at the option of the holder or holders thereof or
upon the happening of a specified event or events, if any;
(vi) determine the obligation, if any, of the Company to purchase or
redeem shares of such series pursuant to a sinking fund or otherwise and
the price or prices, the form of payment, the period within which and the
terms and conditions upon which the shares of such series shall be redeemed
or purchased, in whole or in part, pursuant to such obligation;
(vii) determine the amount payable out of the assets of the Company to
the holders of shares of the series in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Company;
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(viii) determine provisions, if any, for the conversion or exchange of
the shares of such series, at any time or times at the option of the holder
or holders thereof or the Company or upon the happening of a specified
event or events, into shares of any other class or classes or any other
series of the same or any other class or classes of stock, or any other
security, of the Company, or any other corporation or other entity, and the
price or prices or rate or rates of conversion or exchange and any
adjustments applicable thereto, and all other terms and conditions upon
which such conversion or exchange may be made;
(ix) determine the restrictions on the issuance of shares of the same
series or of any other class or series, if any; and
(x) determine the voting rights, if any, of the holders of shares of the
series.
The Preferred Stock will, upon issuance and payment therefor, be fully paid
and nonassessable and will have no preemptive rights. The rights of the
holders of each series of the Preferred Stock will be subordinate to those of
the Company's general creditors.
In the event that the Company issues any Preferred Stock pursuant to a
Prospectus Supplement, unless otherwise noted in such Prospectus Supplement,
State Street Bank and Trust Company of Boston, Massachusetts ("State Street")
will be the registrar and transfer agent for such Preferred Stock.
HUGHES SEPARATION AGREEMENT
Pursuant to the Hughes Spin-Off Separation Agreement, dated as of December
17, 1997, by and between the Company and GM (the "Hughes Separation
Agreement"), the Company has agreed that, for a period of two years from
December 17, 1997 it will not issue any class or series of capital stock,
other than Class B Common Stock eligible to vote generally in the election of
directors, unless prior to such issuance GM has determined, in its sole and
absolute discretion, which discretion must be exercised in good faith solely
to preserve the tax-free status of the spin-offs of Hughes Defense and Hughes
Network Systems, Inc. and the Merger, that such transaction would not
jeopardize the tax-free status of the spin-offs or the Merger.
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DESCRIPTION OF COMMON STOCK
INTRODUCTION
The Company is authorized to issue up to 1,450,000,000 shares of Common
Stock, which shares of Common Stock are divided into two classes consisting of
450,000,000 shares of Class A common stock, $0.01 par value per share ("Class
A Common Stock") and 1,000,000,000 shares of Class B Common Stock.
The following description of Raytheon's Common Stock is a summary and does
not purport to be complete. Reference is also made to the more detailed
provisions of, and such description is qualified in its entirety by reference
to, the Amended and Restated Certificate of Incorporation and the Amended and
Restated By-Laws, copies of which have been filed with the SEC and are
incorporated herein by reference.
In addition, the Hughes Separation Agreement limits the ability of the
Raytheon Board to take certain actions which affect the Common Stock. See
"Description of Preferred Stock--Hughes Separation Agreement."
COMMON STOCK
With respect to all matters other than the election and removal of
directors, holders of Class A Common Stock ("Class A Common Stockholders") and
holders of Class B Common Stock ("Class B Common Stockholders") will each be
entitled to a single vote per share and the approval of any such matter will
require the approval of both classes of Common Stock, each voting as a
separate class, as well as the approval of the holders of any class or series
of Preferred Stock which may be entitled to vote thereon.
With respect to the election or removal of directors only, (i) Class B
Common Stockholders will be entitled to one vote for each share of Class B
Common Stock they own, which votes shall represent in the aggregate 19.9% of
the total voting power of all holders of Common Stock entitled to vote
thereon, and (ii) Class A Common Stockholders will be entitled to such number
of votes for each share of Class A Common Stock they own as shall be necessary
to entitle the Class A Common Stockholders to vote, in the aggregate, 80.1% of
the total voting power of all holders of Common Stock entitled to vote
thereon. The Board will determine the number of votes for each share of Class
A Common Stock outstanding promptly following the fixing of a record date for
each annual or special meeting of stockholders at which directors are to be
elected or a vote with respect to removal of directors is to be taken. Except
as may be provided in connection with any Preferred Stock or as may otherwise
be required by law or the Amended and Restated Certificate of Incorporation,
the Common Stock will be the only capital stock of the Company entitled to
vote in the election and removal of directors and other matters presented to
the stockholders of the Company from time to time. A plurality of votes cast
shall elect directors. The Common Stock will not have cumulative voting
rights.
Subject to the prior rights of holders of Preferred Stock, if any, and
subject to any other provisions of the Amended and Restated Certificate of
Incorporation and of applicable law, Class A Common Stockholders and Class B
Common Stockholders are entitled to receive such dividends and other
distributions as may be lawfully declared from time to time by the Board. The
Class A Common Stockholders and Class B Common Stockholders will be entitled
to receive the same amount per share of any such dividends and other
distributions, except that Raytheon may declare a dividend or other
distribution of shares of Class A Common Stock to Class A Common Stockholders
and shares of Class B Common Stock to Class B Common Stockholders so long as,
immediately following such dividend or other distribution, the number of
shares of Class A Common Stock and Class B Common Stock then outstanding bears
the same relationship to each other as immediately prior to such dividend or
other distribution.
In the case of any split, subdivision, combination or reclassification of
either the Class A Common Stock or the Class B Common Stock, shares of the
other class will also be split, subdivided, combined or reclassified so that
the number of shares of Class A Common Stock and Class B Common Stock
outstanding immediately following such split, subdivision, combination or
reclassification will bear the same relationship to each other as immediately
prior to such split, subdivision, combination or reclassification.
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Upon any liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, Class A Common Stockholders and Class B Common
Stockholders will be entitled to receive such assets and funds of the Company
as are available for distribution to stockholders in proportion to the number
of shares held by them, respectively, without regard to class, after there
shall have been paid or set apart for payment the full amounts necessary to
satisfy any creditors and any preferential or participating rights to which
the holders of each outstanding series of Preferred Stock, if any, are
entitled by the express terms of such series. In the event of any corporate
merger, consolidation, purchase or acquisition of property or stock, or other
reorganization in which any consideration is to be received by Class A Common
Stockholders or Class B Common Stockholders, the holders of each class will
receive the same type and amount of consideration on a per share basis.
The Company may not, directly or indirectly, redeem, purchase, repurchase or
otherwise acquire for consideration any shares of Common Stock unless such
action is (i) effected ratably in accordance with the number of outstanding
shares of Class A Common Stock and Class B Common Stock, (ii) for
consideration of the same type and amount as to shares of Class A Common Stock
and shares of Class B Common Stock and (iii) not in any other way prejudicial
to the rights of the holders of one class of Common Stock in favor of the
other class of Common Stock. In the case of an offer to purchase shares of
Common Stock made by the Company to all holders of Common Stock, the Company
will purchase shares of Common Stock ratably in accordance with the number of
shares of each class of Common Stock tendered thereunder.
The outstanding shares of Common Stock, upon issuance and payment therefor,
are fully paid and nonassessable and do not have any preemptive, subscription
or conversion rights. Additional shares of authorized Common Stock may be
issued, as authorized by the Board from time to time, without stockholder
approval, except as may be required by applicable stock exchange requirements.
Except as indicated above, the rights of Class A Common Stockholders and
Class B Common Stockholders are in all respects and for all purposes and in
all circumstances identical, and the Company will not in any other manner,
directly or indirectly, take any other action or in any other fashion agree
to, facilitate, condone or support any transaction in which Class A Common
Stockholders and Class B Common Stockholders are subject to discriminatory or
unequal treatment.
CERTAIN PROVISIONS OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
AND AMENDED AND RESTATED BY-LAWS
Advance Notice of Nominations. The Amended and Restated By-Laws contain
provisions requiring that advance notice be delivered to the Company of any
business to be brought by a stockholder before an annual meeting of
stockholders and providing for certain procedures to be followed by
stockholders in nominating persons for election to the Board. To be timely,
the stockholder must give written notice to the Secretary of the Company not
later than the close of business on the 90th calendar day nor earlier than the
120th calendar day prior to the first anniversary of the preceding year's
annual meeting. In the event that the date of the annual meeting is more than
30 calendar before or more than 60 calendar days after such anniversary date,
notice by the stockholder to be timely must be delivered to the Secretary of
the Company not earlier than the close of business on the 120th calendar day
prior to such annual meeting and not later than the close of business on the
later of the 90th calendar day prior to such annual meeting or the 10th
calendar day following the calendar day on which public announcement of the
date of such meeting is first made by the Company. In the event that the
number of directors to be elected to the Board is increased and there is no
public announcement by the Company naming all of the nominees for director or
specifying the size of the increased Board at least 100 calendar days prior to
the first anniversary of the preceding year's annual meeting, a stockholder's
notice will also be considered timely (but only with respect to nominees for
any new positions created by such increase) if it is delivered to the
Secretary not later than the close of business on the 10th calendar day
following the day on which public announcement is first made by the Company.
The notice must set forth, among other things, specific information regarding
such stockholder and such business or director nominee, as described in the
Amended and Restated By-Laws. For the annual meeting of stockholders in 1998,
the first anniversary of the previous year's meeting shall be deemed to be May
31, 1998.
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Classification of Directors. The Amended and Restated Certificate of
Incorporation provides that, except as may be provided by the Amended and
Restated Certificate of Incorporation or in the resolution or resolutions
providing for the issuance of any series of Preferred Stock, the number of
directors shall be fixed from time to time by a resolution adopted by a
majority of the Board, which number shall not be fewer than three, and
provides for a classified board of directors, consisting of three classes as
nearly equal in size as possible. Each class holds office until the third
succeeding annual stockholders' meeting following the election of such class,
except that the initial terms of the three classes expire in 1998, 1999 and
2000, respectively. Subject to the rights of any class or series of stock
having a preference over the Common Stock, a director of the Company may be
removed only for cause by the affirmative vote of the holders of shares of
Common Stock, voting together as a single class in accordance with their
respective percentages of total voting power. See "--Common Stock."
No Action by Written Consent; Special Meetings. The Amended and Restated
Certificate of Incorporation provides that stockholders may not act by written
consent in lieu of a meeting. Special meetings of the stockholders may be
called by the Chairman of the Board or by the Board pursuant to a resolution
stating the purpose or purposes thereof approved by a majority of the total
number of directors the Company would have if there were no vacancies), but
may not be called by stockholders. No business other than that stated in the
notice shall be transacted at any special meeting. Under the Amended and
Restated By-laws, in the event the Company calls a special meeting for the
purpose of electing one or more directors to the Board, any stockholder may
nominate a person or persons (as the case may be), for election to such
position(s) as specified in the notice of special meeting if notice by the
stockholder is delivered to the Secretary of the Company not earlier than the
close of business on the 120th calendar day prior to such special meeting and
not later than the close of business on the later of the 90th calendar day
prior to such special meeting or the 10th calendar day following the calendar
day on which public announcement of the date of such meeting and the nominees
proposed by the Board to be elected at such meeting is first made by the
Company.
Limitation on Directors' Liability. The Amended and Restated Certificate of
Incorporation provides, as authorized by Section 102(b)(7) of the DGCL, that a
director of the Company will not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption or limitation is prohibited under the DGCL
as it currently exists or as it may be amended in the future.
The inclusion of this provision in the Amended and Restated Certificate of
Incorporation may have the effect of reducing the likelihood of derivative
litigation against directors, and may discourage or deter stockholders or
management from bringing a lawsuit against directors for breach of their duty
of care, even though such an action, if successful, might otherwise have
benefited the Company and its stockholders.
STOCKHOLDER RIGHTS PLAN
In connection with the Merger, the Board adopted the Rights Agreement, dated
as of December 15, 1997, by and between Hughes Defense and State Street, as
Rights Agent (the "Rights Agreement"). Prior to the effective date of the
Merger, the Board declared a dividend of one Right for each share of the Class
A Common Stock and the Class B Common Stock to the holders of record thereof
as of the effective date of the Merger.
The following description, which summarizes the material provisions of the
Rights Agreement, does not purport to be complete and is qualified in its
entirety by reference to, the Rights Agreement.
The Rights trade automatically with shares of Common Stock and become
exercisable only under certain circumstances as described below. The Rights
are designed to protect the interests of the Company and its stockholders
against coercive takeover tactics. The purpose of the Rights is to encourage
potential acquirers to negotiate with the Company's Board of Directors prior
to attempting a takeover and to provide the Board with
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leverage in negotiating on behalf of all stockholders the terms of any
proposed takeover. The Rights may have certain anti-takeover effects. The
Rights should not, however, interfere with any merger or other business
combination approved by the Board.
The Rights (i) will not be exercisable until the Rights' Distribution Date
(as defined below) and (ii) will expire on December 15, 2007 (the "Final
Expiration Date"), unless the Final Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by Raytheon, in each case, as
described below.
Until a Right is exercised, the holder of a Right, as such, will have no
rights as a stockholder of the Company including, without limitation, the
right to vote or receive dividends. Upon becoming exercisable, each Right will
entitle the holder thereof to purchase from the Company one one-hundredth of a
share of Series A Preferred Stock at a purchase price of $250 per Right (the
"Exercise Price"), subject to adjustment, on the terms as set forth in the
Rights Agreement. In general, the "Distribution Date" will occur, and the
Rights will become exercisable, upon the earlier of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired beneficial ownership of 15% or more of
(a) the outstanding shares of Class A Common Stock, (b) the outstanding shares
of Class B Common Stock, or (c) the aggregate voting power in the election of
directors (each, a "Triggering Holding") or (ii) 10 business days (or a later
date determined by the Board prior to any person or group becoming an
Acquiring Person) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in the beneficial ownership by a person or group of a Triggering
Holding.
In the event that any person or group of affiliated or associated persons
becomes an Acquiring Person, each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which rights become void upon
acquisition of a Triggering Holding), will thereafter have the right to
receive, upon exercise thereof at the then-current Exercise Price, that number
of shares of Class B Common Stock having a market value of two times the
Exercise Price of the Right. In the event that, at any time on or after the
date that any person has become an Acquiring Person, Raytheon is acquired in a
merger or other business combination transaction or 50% or more of
consolidated assets or earning power are sold, each holder of a Right will
thereafter have the right to receive, upon the exercise thereof at the then-
current Exercise Price, that number of shares of common stock of the acquiring
company which at the time of such transaction will have a market value of two
times the Exercise Price of the Right. At any time after any person or group
of affiliated or associated persons becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding
shares of Common Stock, the Board may exchange the Rights (other than Rights
owned by such person or group which will have become void), in whole or in
part, at an exchange ratio of one share of Class B Common Stock, or one one-
hundredth of a share of Series A Junior Participating Preferred Stock, per
Right (subject to adjustment).
At any time prior to the acquisition of a Triggering Holding of Raytheon
Common Stock, the Board may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time, on such basis and with such conditions as
the Board, in its sole discretion, may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Raytheon is subject to Section 203 of the DGCL. Generally, Section 203
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years
after the time such stockholder became an interested stockholder, unless (i)
prior to such time, the board of directors of the corporation approved either
the business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (ii) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced or (iii) at or
subsequent to such time, the business combination is approved by the board of
directors and authorized by the affirmative vote of at least
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<PAGE>
66 2/3% of the outstanding voting stock that is not owned by the interested
stockholder. For purposes of Section 203 of the DGCL, "business combination"
includes, among other things, (i) any merger or consolidation of the
corporation with the interested stockholder, (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition, except proportionately as a
stockholder of such corporation, to or with the interested stockholder of
assets of the corporation having an aggregate market value equal to 10% or
more of either the aggregate market value of all the assets of the corporation
or the aggregate market value of all the outstanding stock of the corporation,
(iii) certain transactions resulting in the issuance or transfer by the
corporation of stock of the corporation to the interested stockholder, (iv)
certain transactions involving the corporation which have the effect of
increasing the proportionate share of the stock of any class or series of the
corporation which is owned by the interested stockholder or (v) certain
transactions in which the interested stockholder receives financial benefits
provided by the corporation. An "interested stockholder" generally is any
person (other than the corporation and any direct or indirect majority-owned
subsidiary of the corporation) that (x) owns 15% or more of the outstanding
voting stock of the corporation, (y) is an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting stock
of the corporation at any time within the three-year period prior to the date
on which it is sought to be determined whether such person is an interested
stockholder or (z) is an affiliate or associate of any such person described
in (x) or (y).
STOCK EXCHANGE LISTING
Both the Class A Common Stock and the Class B Common Stock are listed on the
NYSE, CSE and PE. The trading symbols for the Class A Common Sock and Class B
Common Stock on the these exchanges are "RTNA" and "RTNB," respectively.
TRANSFER AGENT
State Street Bank and Trust Company is the Transfer Agent for the Common
Stock and the Rights Agent for the Rights.
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<PAGE>
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of Debt
Securities, Preferred Stock or Class B Common Stock. Securities Warrants may
be issued independently or together with Debt Securities or shares of
Preferred Stock or Class B Common Stock offered by any Prospectus Supplement
and may be attached to or separate from such Debt Securities or shares of
Preferred Stock or Class B Common Stock. Each series of Securities Warrants
will be issued under a separate warrant agreement (a "Securities Warrant
Agreement") to be entered into between the Company and State Street Bank and
Trust Company of Boston, Massachusetts or another bank or trust company, as
warrant agent (the "Securities Warrant Agent"), all as set forth in the
Prospectus Supplement relating to the particular issue of offered Securities
Warrants. The Securities Warrant Agent will act solely as an agent of the
Company in connection with the Securities Warrants and will not assume any
obligation or relationship of agency or trust for or with any holders of
Securities Warrants or beneficial owners of Securities Warrants. Copies of the
forms of Securities Warrant Agreements, including the forms of Securities
Warrant Certificates representing the Securities Warrants, are filed as
exhibits to the Registration Statement of which this Prospectus is a part. The
following summary of certain provisions of the Securities Warrants does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the provisions of the Securities Warrant Agreements.
The Prospectus Supplement relating to the particular issue of Securities
Warrants offered thereby will set forth the terms of such Securities Warrants,
including, where applicable: (i) the designation, aggregate principal amount,
currencies, denominations and terms of the series of Debt Securities
purchasable upon exercise of Securities Warrants to purchase Debt Securities
and the price at which such Debt Securities may be purchased upon such
exercise; (ii) the designation, number, stated value and terms (including,
without limitation, liquidation, dividend, conversion and voting rights) of
the series of Preferred Stock purchasable upon exercise of Securities Warrants
to purchase Preferred Stock and the price at which such number of shares of
Preferred Stock of such series may be purchased upon such exercise; (iii) the
number of shares of Class B Common Stock purchasable upon the exercise of
Securities Warrants to purchase Class B Common Stock and the price at which
such number of shares of Class B Common Stock may be purchased upon such
exercise; (iv) the date on which the right to exercise such Securities
Warrants shall commence and the date (the "Expiration Date") on which such
right shall expire; (v) U.S. federal income tax consequences applicable to
such Securities Warrants; and (vi) any other terms of such Securities
Warrants. Securities Warrants for the purchase of Preferred Stock and Common
Stock will be offered and exercisable for U.S. dollars only. Securities
Warrants will be issued in registered form only. The exercise price for
Securities Warrants will be subject to adjustment in accordance with the
Applicable Prospectus Supplement.
Each Securities Warrant will entitle the holder thereof to purchase such
principal amount of Debt Securities or such number of shares of Preferred
Stock or Class B Common Stock, as the case may be, at such exercise price as
shall in each case be set forth in, or calculable from, the Prospectus
Supplement relating to the offered Securities Warrants, which exercise price
may be subject to adjustment upon the occurrence of certain events as set
forth in such Prospectus Supplement. After the close of business on the
Expiration Date (or such later date to which such Expiration Date may be
extended by the Company), unexercised Securities Warrants will become void.
The place or places where, and the manner in which, Securities Warrants may be
exercised shall be specified in the Prospectus Supplement relating to such
Securities Warrants.
Prior to the exercise of any Securities Warrants to purchase Debt
Securities, holders of such Securities Warrants will not have any of the
rights of holders of the Debt Securities purchasable upon such exercise,
including the right to receive payments of principal of, premium, if any, or
interest on the Debt Securities purchasable upon such exercise or to enforce
covenants in the Applicable Indenture. Prior to the exercise of any Securities
Warrants to purchase Preferred Stock or Class B Common Stock, holders of such
Securities Warrants will not have any rights of holders of the Preferred Stock
or Class B Common Stock purchasable upon such exercise, including the right to
receive payments of dividends, if any, on the Preferred Stock or Class B
Common Stock purchasable upon such exercise or to exercise any applicable
right to vote.
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PLAN OF DISTRIBUTION
The Company may sell the Offered Securities in or outside the United States
through underwriters or dealers, directly to one or more purchasers, through
agents or a combination of any such method of sale. The Prospectus Supplement
with respect to the Offered Securities will set forth the terms of the
offering of the Offered Securities, including the name or names of any
underwriters, dealers or agents, the purchase price of the Offered Securities
and the proceeds to the Company from such sale, any delayed delivery
arrangements, any underwriting discounts and other items constituting
underwriters' compensation, the initial public offering price, any discounts
or concessions allowed or re-allowed or paid to dealers, and any securities
exchanges on which the Offered Securities may be listed.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters or dealers for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. The Offered Securities may be offered to the public
either through underwriting syndicates represented by one or more managing
underwriters or directly by one or more firms acting as underwriters. The
underwriter or underwriters with respect to a particular underwritten offering
of Offered Securities will be named in the Prospectus Supplement relating to
such offering, and if an underwriting syndicate is used, the managing
underwriter or underwriters will be set forth on the cover of such Prospectus
Supplement. Unless otherwise set forth in the Prospectus Supplement relating
thereto, the obligations of the underwriters or agents to purchase the Offered
Securities will be subject to conditions precedent, and the underwriters will
be obligated to purchase all the Offered Securities if any are purchased. The
initial public offering price and any discounts or concessions allowed or re-
allowed or paid to dealers may be changed from time to time.
If dealers are used in the sale of Offered Securities with respect to which
this Prospectus is delivered, the Company will sell such Offered Securities to
the dealers as principals. The dealers may then resell such Offered Securities
to the public at varying prices to be determined by such dealers at the time
of resale. The names of the dealers and the terms of the transaction will be
set forth in the Prospectus Supplement relating thereto.
Offered Securities may be sold directly by the Company or through agents
designated by the Company from time to time at fixed prices, which may be
changed, or at varying prices determined at the time of sale. Any agent
involved in the offer or sale of the Offered Securities with respect to which
this Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement relating
thereto. Unless otherwise indicated in the Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its
appointment.
Offered Securities may be sold directly by the Company to institutional
investors or others, who may be deemed to be underwriters within the meaning
of the Securities Act with respect to any resale thereof. The terms of any
such sales will be described in the Applicable Prospectus Supplement.
In connection with the sale of the Offered Securities, underwriters or
agents may receive compensation from the Company or from purchasers of Offered
Securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters, agents and dealers participating in
the distribution of the Offered Securities may be deemed to be underwriters,
and any discounts or commissions received by them from the Company and any
profit on the resale of the Offered Securities by them may be deemed to be
underwriting discounts or commissions under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase Offered Securities from the Company at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject only to those conditions set forth
in the Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
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<PAGE>
Some or all of the Offered Securities may be new issues of securities with
no established trading market. Any underwriters to whom Offered Securities are
sold by the Company for public offering and sale may make a market in such
Offered Securities, but such underwriters will not be obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the liquidity of or the trading markets for any Offered
Securities.
In order to facilitate the offering of the Offered Securities, any
underwriters or agents, as the case may be, involved in the offering of such
Offered Securities may engage in transactions that stabilize, maintain or
otherwise affect the price of the Offered Securities or any other securities
the prices of which may be used to determine payments on such Offered
Securities. Specifically, the underwriters or agents, as the case may be, may
overallot in connection with the offering, creating a short position in such
Offered Securities for their own account. In addition, to cover overallotments
or to stabilize the price of such Offered Securities or any such other
securities, the underwriters or agents, as the case may be, may bid for, and
purchase, such Offered Securities or any such other securities in the open
market. Finally, in any offering of such Offered Securities through a
syndicate of underwriters, the underwriting syndicate may reclaim selling
concessions allowed to an underwriter or a dealer for distributing such
Offered Securities in the offering if the syndicate repurchases previously
distributed Offered Securities in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Offered Securities above
independent market levels. The underwriters or agents, as the case may be, are
not required to engage in these activities, and may end any of these
activities at any time.
Agents, dealers and underwriters may be entitled under agreements entered
into with the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments that such agents, dealers, or
underwriters may be required to make with respect thereto.
Certain of the underwriters, dealers or agents and their affiliates may be
customers of, engage in transactions with and perform services for the Company
in the ordinary course of business.
VALIDITY OF OFFERED SECURITIES
The validity of the Offered Securities will be passed upon for the Company
by Christoph L. Hoffmann, Esq., Executive Vice President Law and Corporate
Administration and Secretary of the Company, and for any underwriters by
Cravath, Swaine & Moore of New York City. As of the date of this Prospectus,
Christoph L. Hoffmann, Esq. holds 32,977 shares of Class B Common Stock and
options to acquire 99,587 shares of Class B Common Stock of the Company.
EXPERTS
The consolidated balance sheets of Former Raytheon Company as of December
31, 1996 and 1995 and the related statements of income, stockholders' equity
and cash flows for each of the three years in the period ended December 31,
1996 and the related financial statement schedule, incorporated by reference
in this Prospectus, have been incorporated herein in reliance on the reports
of Coopers & Lybrand L.L.P., independent accountants, given on the authority
of that firm as experts in accounting and auditing.
The financial statements of TI Defense as of December 31, 1996 and 1995 and
for the three years ended December 31, 1996, incorporated by reference in this
Prospectus, have been incorporated herein in reliance on the reports of Ernst
& Young LLP, independent auditors, given on the authority of that firm as
experts in accounting and auditing.
The financial statements of Hughes Defense as of December 31, 1996 and 1995
and for each of the three years in the period ended December 31, 1996,
incorporated by reference in this Prospectus, have been incorporated herein in
reliance on the reports of Deloitte & Touche LLP, independent auditors, given
on the authority of that firm as experts in accounting and auditing.
25
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than underwriting compensation, are:
<TABLE>
<S> <C>
S.E.C. Registration Fee....................................... $ 885,000
Legal Fees and Expenses....................................... 100,000
Accounting Fees and Expenses.................................. 30,000
Trustee's Fees and Expenses................................... 20,000
Rating Agency Fees............................................ 160,000
Blue Sky Fees and Expenses.................................... 2,000
Printing and Engraving Fees................................... 90,000
Miscellaneous................................................. 18,909
----------
$1,305,909
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Delaware General Corporation Law
Under Section 145 of the DGCL, Raytheon is empowered to indemnify its
directors and officers in the circumstances therein provided. Certain portions
of Section 145 are summarized below:
Section 145(a) of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe such person's conduct
was unlawful.
Section 145(b) of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation and except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent
that the Delaware Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the
Delaware Court of Chancery or such other court shall deem proper.
Section 145(c) of the DGCL provides that to the extent that a present or
former director or officer of a corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred
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<PAGE>
to in Section 145(a) and (b), or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
therewith.
Section 145(d) of the DGCL provides that any indemnification under Section
145(a) and (b) (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the present or former director, officer, employee or agent
is proper in the circumstances because such person has met the applicable
standard of conduct set forth in Section 145(a) and (b). Such determination
shall be made, with respect to a person who is a director or officer at the
time of such determination, (1) by a majority vote of the directors who were
not parties to such action, suit or proceeding, even though less than a
quorum, or (2) by a committee of such directors designated by majority vote of
such directors, even though less than a quorum, or (3) if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion, or (4) by the stockholders.
Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the corporation as authorized in
Section 145. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon such
terms and conditions, if any, as the corporation deems appropriate.
Section 145(f) of the DGCL provides that the indemnification and advancement
of expenses provided by, or granted pursuant to, Section 145 shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
such person's official capacity and as to action in another capacity while
holding such office.
Section 145(g) of the DGCL provides that a corporation shall have the power
to purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify such person against
such liability under Section 145.
Amended and Restated Certificate of Incorporation
The Amended and Restated Certificate of Incorporation provides that no
director of Raytheon shall be personally liable to Raytheon or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption or limitation is prohibited under the DGCL
as it currently exists or as it may be amended in the future.
The Amended and Restated Certificate of Incorporation also provides that
Raytheon shall indemnify each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director or officer of
Raytheon or is or was serving at the request of Raytheon as a director or
officer of another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans
(whether the basis of such action, suit or proceeding is alleged action in an
official capacity as a director or officer or in any other capacity while
serving as a director or officer), to the fullest extent authorized by the
DGCL as it currently exists or as it may be amended in the future, against all
expense, liability and loss (including attorneys' fees, judgments, fines,
payments in settlement and excise taxes or penalties arising under the
Employee Retirement Income Security Act of 1974, as in effect from time to
time) reasonably incurred or suffered by such person. Such indemnification
shall continue as to a person who ceases to be a director or officer of
Raytheon and shall inure to the benefit of such person's heirs, executors and
administrators. Raytheon shall not be required to indemnify a person in
connection with such action, suit or proceeding initiated by such person if it
was not authorized by the Board except under limited circumstances.
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<PAGE>
The Amended and Restated Certificate of Incorporation also provides that
Raytheon shall pay the expenses of directors and officers incurred in
defending any such action, suit or proceeding in advance of its final
disposition; provided, however, that, if and to the extent that the DGCL
requires, the payment of expenses incurred by a director or officer in advance
of the final disposition of an action, suit or proceeding shall be made only
upon receipt of an undertaking by the director or officer to repay all amounts
advanced if it should be ultimately determined that the director or officer is
not entitled to be indemnified under the Amended and Restated Certificate of
Incorporation or otherwise. If a claim for indemnification or advancement of
expenses by an officer or director under the Amended and Restated Certificate
of Incorporation is not paid in full within 30 calendar days after a written
claim therefor has been received by Raytheon, the claimant may file suit to
recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled also to be paid the expense of prosecuting such claim.
It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any action, suit or
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to Raytheon) that the claimant has not
met the standard of conduct which makes it permissible under the DGCL for the
Company to indemnify the claimant for the amount claimed. Raytheon shall have
the burden of proving such defense. Neither the failure of Raytheon to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because the
claimant has met the applicable standard of conduct set forth in the DGCL, nor
an actual determination by Raytheon that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
The right to indemnification and the payment of expenses conferred on any
person by the Amended and Restated Certificate of Incorporation shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the Amended and Restated Certificate of
Incorporation or the Amended and Restated By-Laws of Raytheon, agreement, vote
of stockholders or disinterested directors or otherwise.
Any repeal or modification of the provisions of the Amended and Restated
Certificate of Incorporation described herein by the stockholders of Raytheon
will not adversely affect any limitation on the personal liability of
directors for, or any rights of directors in respect of, any cause of action,
suit or claim accruing or arising prior to the repeal or modification.
The Amended and Restated Certificate of Incorporation also provides that
Raytheon may maintain insurance to protect itself and any director, officer,
employee or agent of Raytheon or another corporation, partnership, joint
venture, trust or other enterprise against any such expense, liability or
loss, whether or not Raytheon would have the power to indemnify such person
against such expense, liability or loss under the DGCL.
Transaction Agreements
The Merger Agreement provides that Raytheon shall indemnify and defend each
individual who is or was an officer or director (as well as such individual's
heirs and legal representatives) of Raytheon or Hughes Defense or any of their
respective subsidiaries prior to the effective time of the Merger against all
losses, claims, damages, costs, expenses, liabilities or judgments or amounts
that are paid in settlement with the approval of Raytheon arising out of or in
connection with any claim, action, suit, proceeding or investigation based in
whole or in part on, or arising in whole or in part out of, (1) the fact that
such person is or was a director or officer of Raytheon or Hughes Defense,
whether pertaining to any matter existing or occurring at or prior to the
effective time of the Merger (but in the case of Hughes Defense, only insofar
as relating to the defense business of Hughes Defense) and (2) the Merger
Agreement or the transactions contemplated by that agreement, in each case to
the full extent Raytheon or Hughes Defense would have been permitted under the
DGCL, their certificates of incorporation and their by-laws to indemnify such
person.
The Merger Agreement also provides that Raytheon shall pay the expenses of
directors and officers (including their heirs and legal representatives)
reasonably incurred in defending any action or proceeding in advance of its
final disposition to the full extent permitted by law upon receipt of the
undertaking contemplated
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by Section 145(e) of the DGCL. Raytheon will use its commercially reasonable
efforts to assist in the vigorous defense of any such matter, provided that
Raytheon shall not be liable for any settlement of any claim effected without
its written consent, which consent shall not be unreasonably withheld.
Prior to the effective time of Merger, Hughes Defense entered into certain
other agreements in connection with the Merger or the transactions between GM
and certain of its affiliates which preceded the Merger. Certain provisions of
these agreements provide indemnification to certain individuals who were
directors and officers of Hughes Defense or Raytheon prior to the effective
time of the Merger, or who are currently directors or officers of the Company.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement for the Senior Debt Securities and the
Subordinated Debt Securities
**1.2 Form of Underwriting Agreement for the Preferred Stock and Class B
Common Stock
*2.1 Agreement and Plan of Merger by and between HE Holdings, Inc. and
Raytheon Company, dated as of January 16, 1997 (included as Appendix A
to the Solicitation Statement/Prospectus which forms a part of this
Registration Statement)
2.2 Hughes Spin-Off Separation Agreement dated as of December 17, 1997 by
and between HE Holdings, Inc. and General Motors Corporation
*4.1 Amended and Restated Certificate of Incorporation of Raytheon (filed as
Exhibit 3(i) to the Current Report on Form 8-K of Raytheon, dated
December 17, 1997, and incorporated herein by reference)
*4.2 Amended and Restated By-Laws of Raytheon (filed as Exhibit 3(ii) to the
Current Report on Form 8-K of Raytheon, dated December 17, 1997, and
incorporated herein by reference)
*4.3 Indenture dated as of July 3, 1995 between Raytheon Company and The Bank
of New York, Trustee (filed as an exhibit to the Registration Statement
on Form S-3, File No. 33-59241, and incorporated herein by reference)
4.4 Form of Senior Debt Securities (see Exhibit 4.3)
4.5 Form of Subordinated Debt Securities (see Exhibit 4.3)
*4.6 Rights Agreement, dated as of December 15, 1997, by and between HE
Holdings, Inc. and State Street Bank and Trust Company (filed as Exhibit
6 to the Registration Statement on Form 8-A, File No. 1-13699, and
incorporated herein by reference)
5.1 Opinion of Thomas D. Hyde, Esq., Vice President and General Counsel of
the Company
12 Statement re: computation of ratios
23.1 Consent of Thomas D. Hyde, Esq. (to be included in Exhibit 5.1)
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Ernst & Young LLP
23.4 Consent of Deloitte & Touche LLP
24 Power of Attorney (Filed herewith--see page II-6)
25.1 Form T-1 Statement of Eligibility of the Senior Debt Trustee and the
Subordinated Debt Trustee
</TABLE>
- --------
* Incorporated herein by reference.
** To be filed either by amendment or as an exhibit to an Exchange Act Report
and incorporated herein by reference.
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ITEM 17. UNDERTAKINGS.
(A) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(B) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act that is
incorporated by reference in the registration statement) shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(C) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, RAYTHEON COMPANY
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE TOWN OF LEXINGTON, COMMONWEALTH OF MASSACHUSETTS, ON THE
13TH DAY OF JANUARY, 1998.
Raytheon Company
/s/ Christoph L. Hoffmann
By __________________________________
CHRISTOPH L. HOFFMANN EXECUTIVE
VICE PRESIDENT LAW AND CORPORATE
ADMINISTRATION, AND SECRETARY
We, the undersigned officers and Directors of Raytheon Company, hereby
severally constitute and appoint Peter R. D'Angelo, Herbert Deitcher, Kenneth
H. Colburn and Thomas D. Hyde and each of them singly, our true and lawful
attorneys with full power to them, and each of them, and each of them singly,
to sign for us and in our names in the capacities indicated below, the
Registration Statement on Form S-3 filed herewith and any and all pre-
effective and post-effective amendments to said Registration Statement, and
generally to do all such things in our names and on our behalf in our
capacities as officers and Directors to enable Raytheon Company to comply with
the provisions of the Securities Act of 1933, and all requirements of the
Securities and Exchange Commission, hereby ratifying and confirming our
signature as then may be signed by our said attorneys or any of them, to said
Registration Statement and any and all amendments thereto.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW ON JANUARY 13, 1998 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Dennis J. Picard Chairman of the Board of
-------------------------------------- Directors and Chief Executive
DENNIS J. PICARD Officer (Principal Executive
Officer) and Director
/s/ Peter R. D'Angelo Executive Vice President and
-------------------------------------- Chief Financial Officer
PETER R. D'ANGELO (Principal Financial Officer)
/s/ Michele C. Heid Vice President -- Corporate
-------------------------------------- Controller and Investor
MICHELE C. HEID Relations (Principal Accounting
Officer)
/s/ Ferdinand Colloredo-Mansfeld Director
--------------------------------------
FERDINAND COLLOREDO-MANSFELD
/s/ Steven D. Dorfman Director
--------------------------------------
STEVEN D. DORFMAN
/s/ Theodore L. Eliot, Jr. Director
--------------------------------------
THEODORE L. ELIOT, JR.
/s/ Thomas E. Everhart Director
--------------------------------------
THOMAS E. EVERHART
/s/ John R. Galvin Director
--------------------------------------
JOHN R. GALVIN
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<S> <C>
/s/ Barbara B. Hauptfuhrer Director
--------------------------------------
BARBARA B. HAUPTFUHRER
/s/ Richard D. Hill Director
--------------------------------------
RICHARD D. HILL
/s/ L. Dennis Kozlowski Director
--------------------------------------
L. DENNIS KOZLOWSKI
/s/ James N. Land, Jr. Director
--------------------------------------
JAMES N. LAND, JR.
/s/ A. Lowell Lawson Director
--------------------------------------
A. LOWELL LAWSON
/s/ Charles H. Noski Director
--------------------------------------
CHARLES H. NOSKI
/s/ Thomas L. Phillips Director
--------------------------------------
THOMAS L. PHILLIPS
/s/ Warren B. Rudman Director
--------------------------------------
WARREN B. RUDMAN
/s/ Alfred M. Zeien Director
--------------------------------------
ALFRED M. ZEIEN
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX TO REGISTRATION STATEMENT ON FORM S-3
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S> <C>
1.1 Form of Underwriting Agreement for the Senior Debt
Securities and the Subordinated Debt Securities
**1.2 Form of Underwriting Agreement for the Preferred Stock and
Class B Common Stock
*2.1 Agreement and Plan of Merger by and between HE Holdings,
Inc. and Raytheon Company, dated as of January 16, 1997
(included as Appendix A to the Solicitation
Statement/Prospectus which forms a part of this Registration
Statement)
2.2 Hughes Spin-Off Separation Agreement dated as of December
17, 1997 by and between HE Holdings, Inc. and General Motors
Corporation
*4.1 Amended and Restated Certificate of Incorporation of
Raytheon (filed as Exhibit 3(i) to the Current Report on
Form 8-K of Raytheon, dated December 17, 1997, and
incorporated herein by reference)
*4.2 Amended and Restated By-Laws of Raytheon (filed as Exhibit
3(ii) to the Current Report on Form 8-K of Raytheon, dated
December 17, 1997, and incorporated herein by reference)
*4.3 Indenture dated as of July 3, 1995 between Raytheon Company
and The Bank of New York, Trustee (filed as an exhibit to
the Registration Statement on Form S-3, File No. 33-59241,
and incorporated herein by reference)
4.4 Form of Senior Debt Securities (see Exhibit 4.3)
4.5 Form of Subordinated Debt Securities (see Exhibit 4.3)
*4.6 Rights Agreement, dated as of December 15, 1997, by and
between HE Holdings, Inc. and State Street Bank and Trust
Company (filed as Exhibit 6 to the Registration Statement on
Form 8-A, File No. 1-13699, and incorporated herein by
reference)
5.1 Opinion of Thomas D. Hyde, Esq., Vice President and General
Counsel of the Company
12 Statement re: computation of ratios
23.1 Consent of Thomas D. Hyde, Esq. (to be included in Exhibit
5.1)
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Ernst & Young LLP
23.4 Consent of Deloitte & Touche LLP
24 Power of Attorney (Filed herewith--see page II-6)
25.1 Form T-1 Statement of Eligibility of the Senior Debt Trustee
and the Subordinated Debt Trustee
</TABLE>
- --------
* Incorporated herein by reference.
** To be filed either by amendment or as an exhibit to an Exchange Act Report
and incorporated herein by reference.
<PAGE>
EXHIBIT 1.1
RAYTHEON COMPANY
Debt Securities
UNDERWRITING AGREEMENT
SECTION 1. Introduction. Raytheon Company, a Delaware corporation
-------------
("Company"), proposes to issue and sell from time to time certain of its debt
-------
securities registered under the registration statement referred to in Section
2(a) ("Registered Securities"). The Registered Securities will be issued under
---------------------
an indenture, dated as of July 3, 1995 ("Indenture"), between the Company and
---------
The Bank of New York, as Trustee, in one or more series, which
series may vary as to interest rates, maturities, redemption provisions, selling
prices and other terms, with such terms for any particular series of the
Registered Securities being determined at the time of sale. Particular series of
the Registered Securities will be sold pursuant to a Terms Agreement referred to
in Section 3 for resale in accordance with terms of offering determined at the
time of sale.
The Registered Securities involved in any such offering are
hereinafter referred to as the "Securities". The firm or firms which agree to
----------
purchase the Securities are hereinafter referred to as the "Underwriters" and
------------
the representative or representatives of the Underwriters, if any, specified in
a Terms Agreement referred to in Section 3 are hereinafter referred to as the
"Representatives"; provided, however, that if the Terms Agreement does not
---------------
specify any representative of the Underwriters, the term "Representatives", as
---------------
used in this Agreement (other than in Sections 2(b), 5(e) and 6 and the second
sentence of Section 3), shall mean the Underwriters.
2. Representations and Warranties of the Company. The Company
----------------------------------------------
represents and warrants to and agrees with each Underwriter that:
(a) A registration statement (No. 333- ), including a prospectus,
relating to the Registered Securities has been filed with the Securities
and Exchange Commission ("Commission") and has become effective. Such
----------
registration statement, as amended at the time of any Terms Agreement
referred to in Section 3, is hereinafter referred to as the "Registration
------------
Statement", and the prospectus included in such Registration Statement, as
---------
supplemented as contemplated by Section 3 to reflect the terms of the
Securities and the terms of offering thereof, as first filed with the
Commission pursuant to and in accordance with Rule 424(b) under the
Securities Act of 1933, as amended ("Act"), including all material
---
incorporated by reference therein, is hereinafter referred to as the
"Prospectus".
----------
(b) On the effective date, the Registration Statement conformed in
all material respects to the requirements of the Act, the Trust Indenture
Act of 1939, as amended ("Trust Indenture Act"), and the rules and
-------------------
regulations of the Commission ("Rules and Regulations") and did not include
---------------------
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading; and on the date of each Terms Agreement referred to in
Section 3, the Registration Statement and the Prospectus will conform in
all material respects to the requirements of the Act, the
<PAGE>
2
Trust Indenture Act and the Rules and Regulations, and neither of such
documents will include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, except that the foregoing does not
apply to (i) statements in or omissions from any of such documents based
upon written information furnished to the Company by any Underwriter
through the Representatives, if any, specifically for use therein or (ii)
that part of the Registration Statement that constitutes the Statement of
Eligibility and Qualification (Form T-1) under the Trust Indenture Act.
3. Purchase and Offering of Securities. The obligation of the
------------------------------------
Underwriters to purchase the Securities will be evidenced by an exchange of
telegraphic or other written communications ("Terms Agreement") at the time the
---------------
Company determines to sell the Securities. The Terms Agreement will incorporate
by reference the provisions of this Agreement, except as otherwise provided
therein, and will specify the firm or firms which will be Underwriters, the
names of any Representatives, the principal amount to be purchased by each
Underwriter, the purchase price to be paid by the Underwriters and the terms of
the Securities not already specified in the Indenture, including, but not
limited to, interest, maturity, any redemption provision and any sinking fund
requirements and whether any of the Securities may be sold to institutional
investors pursuant to Delayed Delivery Contracts (as defined below). The Terms
Agreement will also specify the time and date of delivery and payment (such time
and date, or such other time not later than seven full business days thereafter
as the Representatives and the Company agree as the time for payment and
delivery, being herein and in the Terms Agreement referred to as the "Closing
-------
Date"), the place of delivery and payment and any details of the terms of
- ----
offering that should be reflected in the prospectus supplement relating to the
offering of the Securities. The obligations of the Underwriters to purchase the
Securities will be several and not joint. It is understood that the
Underwriters propose to offer the Securities for sale as set forth in the
Prospectus. Unless the Terms Agreement specifies that the Securities will be
issued in the form of a global security to be deposited with a depositary, as
contemplated by the Indenture, the securities delivered to the Underwriters on
the Closing Date will be in definitive fully registered form, in such
denominations and registered in such names as the Underwriters may request.
If the Terms Agreement provides for the sale of Securities pursuant to
delayed delivery contracts, the Company authorizes the Underwriters to solicit
offers to purchase Securities pursuant to delayed delivery contracts
substantially in the form of Annex I attached hereto ("Delayed Delivery
------- ----------------
Contracts") with such changes therein as the Company may authorize or approve.
- ---------
Delayed Delivery Contracts are to be with institutional investors, including
commercial and savings banks, insurance companies, pension funds, investment
companies and educational and charitable institutions. On the Closing Date, the
Company will pay, as compensation, to the Representatives for the accounts of
the Underwriters, the fee set forth in such Terms Agreement in respect of the
principal amount of Securities to be sold pursuant to Delayed Delivery Contracts
("Contract Securities"). The Underwriters will not have any responsibility in
-------------------
respect of the validity or the performance of Delayed Delivery Contracts. If
the Company executes and delivers Delayed Delivery Contracts, the Contract
Securities will be deducted from the Securities to be purchased by the several
Underwriters and the aggregate principal amount of Securities to be purchased by
each Underwriter will be reduced pro rata in proportion to the principal amount
of Securities set forth opposite each Underwriter's name in such Terms
Agreement, except to the extent that the Representatives determine
<PAGE>
3
that such reduction shall be otherwise than pro rata and so advise the Company.
The Company will advise the Representatives not later than the business day
prior to the Closing Date of the principal amount of Contract Securities.
4. Certain Agreements of the Company. The Company agrees with the
----------------------------------
several Underwriters that it will furnish to the Representatives one signed copy
of the Registration Statement, including all exhibits, in the form in which it
became effective and of all amendments thereto, and that, in connection with
each offering of Securities:
(a) The Company will advise the Representatives promptly of any
proposal to amend or supplement the Registration Statement or the
Prospectus and will afford the Representatives a reasonable opportunity to
comment on any such proposed amendment or supplement; and the Company will
also advise the Representatives promptly of the filing of any such
amendment or supplement and of the institution by the Commission of any
stop order proceedings in respect of the Registration Statement or of any
part thereof and will use its best efforts to prevent the issuance of any
such stop order and to obtain as soon as possible its lifting, if issued.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to comply with the Act, the Company promptly
will prepare and file with the Commission an amendment or supplement which
will correct such statement or omissions or an amendment which will effect
such compliance.
(c) As soon as practicable after the date of each Terms Agreement,
the Company will make generally available to its security holders an
earnings statement covering a period of at least 12 months beginning after
the latest of (i) the effective date of the Registration Statement, (ii)
the effective date of the most recent post-effective amendment to the
Registration Statement to become effective prior to the date of such Terms
Agreement and (iii) the date of the Company's most recent Annual Report on
Form 10-K filed with the Commission prior to the date of such Terms
Agreement, which will satisfy the provisions of Section 11(a) of the Act.
(d) The Company will furnish to the Representatives copies of the
Registration Statement, including all exhibits, any related preliminary
prospectus, any related preliminary prospectus supplement, the Prospectus
and all amendments and supplements to such documents, in each case as soon
as available and in such quantities as are reasonably requested.
(e) The Company will arrange for the qualification of the Securities
for sale and the determination of their eligibility for investment under
the laws of such jurisdictions as the Representatives designate and will
continue such qualifications in effect so long as required for the
distribution.
<PAGE>
4
(f) The Company will pay all expenses incident to the performance of
its obligations under this Agreement and will reimburse the Underwriters
for any expenses (including reasonable fees and disbursements of counsel)
incurred by them in connection with qualification of the Registered
Securities for sale and determination of their eligibility for investment
under the laws of such jurisdictions as the Representatives may designate
and the printing of memoranda relating thereto, and for any fees charged by
investment rating agencies for the rating of the Securities and for
expenses incurred in distributing the Prospectus, any preliminary
prospectuses and any preliminary prospectus supplements to underwriters.
(g) For a period beginning at the time of execution of the Terms
Agreement and ending 30 days after the Closing Date, without the prior
consent of the Representatives, the Company will not offer, sell, contract
to sell or otherwise dispose of any United States dollar-denominated debt
securities issued or guaranteed by the Company and having a maturity of
more than one year from the date of issue.
5. Conditions of the Obligations of the Underwriters. The
--------------------------------------------------
obligations of the several Underwriters to purchase and pay for the Securities
will be subject to the accuracy of the representations and warranties on the
part of the Company herein, to the accuracy of the statements of the Company
officers made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) On or prior to the date of the Terms Agreement, the
Representatives shall have received a letter, dated the date of delivery
thereof, of Coopers & Lybrand L.L.P., covering such matters as are
customary for accountants' "comfort" letters for underwritten transactions
of the type contemplated by the Terms Agreement and in form and substance
reasonably satisfactory to the Representatives.
(b) If, at the date of the Terms Agreement, the financial statements
of the Defense Business of Texas Instruments Incorporated, referred to in
the report of Ernst & Young LLP dated February 18, 1997, are incorporated
by reference into the Registration Statement, then on or prior to the date
of the Terms Agreement the Representatives shall have received a letter,
dated the date of delivery thereof, of Ernst & Young LLP, covering such
matters relating to such financial statements as are customary for
accountants' "comfort" letters for underwritten transactions of the type
contemplated by the Terms Agreement and in form and substance reasonably
satisfactory to the Representatives.
(c) If, at the date of the Terms Agreement, the financial statements
of the Defense Business of Hughes Electronics Corporation, referred to in
the report of Deloitte & Touche LLP dated March 21, 1997, are incorporated
by reference into the Registration Statement, then on or prior to the date
of the Terms Agreement the Representatives shall have received a letter,
dated the date of delivery thereof, of Deloitte & Touche LLP, covering such
matters relating to such financial statements as are customary for
accountants' "comfort" letters for underwritten transactions of the type
contemplated by the Terms Agreement and in form and substance reasonably
satisfactory to the Representatives.
<PAGE>
5
(d) No stop order suspending the effectiveness of the Registration
Statement or of any part thereof shall have been issued and no proceedings
for that purpose shall have been instituted or, to the knowledge of the
Company or any Underwriter, shall be contemplated by the Commission.
(e) Subsequent to the execution of the Terms Agreement (i) there
shall not have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or properties
of the Company or its subsidiaries which, in the judgment of a majority in
interest of the Underwriters, including any Representatives, materially
impairs the investment quality of the Securities or the Registered
Securities; (ii) trading generally shall not have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the
Chicago Mercantile Exchange or the Chicago Board of Trade; (iii) trading of
any securities of the Company shall not have been suspended on any exchange
or in any over-the-counter market; (iv) there shall not have occurred any
downgrading, nor shall any notice have been given of any intended or
potential downgrading, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating organization",
as such term is defined for purposes of Rule 436(g)(2) under the Act; (v)
no banking moratorium shall have been declared by Federal or New York
authorities; and (vi) there shall not have occurred any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters, including any Representatives, the effect of
any such outbreak, escalation, declaration, calamity or emergency makes it
impractical to proceed with completion of the sale of and payment for the
Securities.
(f) The Representatives shall have received an opinion, dated the
Closing Date, of Thomas D. Hyde, Vice President and General Counsel for the
Company, to the effect that:
(i) The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, with corporate
and authority to own its properties and conduct its business as
described in the Prospectus; and the Company is duly qualified to do
business as a foreign corporation in good standing in all other
jurisdictions in which it owns or leases substantial properties or in
which the conduct of its business requires such qualification, except
where the failure to be so qualified would not have a material adverse
effect on the Company;
(ii) The Securities have been duly authorized; the Securities
other than any Contract Securities, when executed and authenticated in
accordance with the terms of the Indenture and delivered to and paid
for by the Underwriters in accordance with the Terms Agreement
(including the provisions of this Agreement), and any Contract
Securities, when executed, authenticated, issued and delivered in the
manner provided in the Indenture and sold pursuant to Delayed Delivery
Contracts, will constitute valid and legally binding obligations of
the Company entitled to the benefits provided by the Indenture;
<PAGE>
6
(iii) The execution, delivery and performance of the Indenture,
the Terms Agreement (including the provisions of this Agreement) and
any Delayed Delivery Contracts and the issuance and sale of the
Securities and compliance with the terms and provisions thereof will
not result in a breach or violation of any of the terms and provisions
of or constitute a default under (A) any order known to such counsel
of any governmental agency having jurisdiction over the Company or any
of its properties or any agreement or instrument known to such counsel
to which the Company is a party or by which the Company is bound or to
which any of the properties of the Company is subject, which would
cause a material adverse change in the financial position,
shareholders' equity or results of operations of the Company or affect
the validity of the Securities or the legal authority of the Company
to comply with the terms of the Securities, the Indenture or this
Agreement or (B) the charter or By-laws of the Company, and the
Company has full power and authority to authorize, issue and sell the
Securities as contemplated by the Terms Agreement (including the
provisions of this Agreement);
(iv) The Indenture has been duly authorized, executed and
delivered by the Company and (assuming due authorization, execution
and delivery by the Trustee) is a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms,
except (A) as such enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (B) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought;
(v) The Terms Agreement (including the provisions of this
Agreement) and any Delayed Delivery Contracts have been duly
authorized, executed and delivered by the Company; and
(vi) No authorization, approval or consent of any governmental
authority or agency is necessary in connection with the transactions
contemplated by the Terms Agreement (including the provisions of this
Agreement) except such as may be required under the Act, the Trust
Indenture Act and state securities or Blue Sky laws.
In addition, Mr. Hyde shall state that he or others working under
his supervision have participated in conferences with officers and other
representatives of the Company, outside counsel for the Company,
representatives of the independent public accountants for the Company, and
the Underwriters, at which the contents of the Registration Statement and
Prospectus and related matters were discussed and, although he is not
passing upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and Prospectus, on the basis of the foregoing and on his ongoing
representation of the Company, no facts have come to his attention that
lead him to believe that (i) such registration statement, at the time such
registration statement became effective, or the Registration Statement, as
of the date of the Terms Agreement, or any amendment or supplement to the
<PAGE>
7
Registration Statement or the Prospectus, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (ii)
that the Prospectus, as of its date and the Closing Date, contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that he need express no
opinion with respect to the financial statements, schedules and other
financial and statistical data included or incorporated by reference in the
Registration Statement or Prospectus or with respect to the Form T-1.
(g) The Representatives shall have received an opinion, dated such
Closing Date, of Wachtell, Lipton, Rosen & Katz, counsel for the Company,
who may rely as to the approval or consent of non-Federal governmental
authorities upon the opinion of Thomas D. Hyde, Esq. referred to above, to
the effect that:
(i) The Securities, other than any Contract Securities, and the
Indenture, conform, and any Contract Securities, when executed,
authenticated, issued and delivered in the manner provided in the
Indenture and sold pursuant to Delayed Delivery Contracts, will
conform in all material respects to the descriptions thereof contained
in the Prospectus;
(ii) The Indenture has been duly qualified under the Trust
Indenture Act;
(iii) The Registration Statement has become effective under the
Act, and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or any part
thereof has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated;
(iv) The registration statement relating to the Registered
Securities, as of its effective date, the Registration Statement and
the Prospectus, as of the date of the Terms Agreement, and each
amendment or supplement thereto, as of their respective effective or
mailing dates (but excluding the financial statements and schedules
and other financial and statistical data and the Form T-1 included or
incorporated by reference therein, as to which such counsel need
express no opinion) complied as to form in all material respects with
the Act, the Trust Indenture Act and the Rules and Regulations, as
applicable;
(v) Such counsel do not know of any legal or governmental
proceedings required to be described in the Prospectus which are not
described as required, nor of any contracts or documents of a
character required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement
which are not described and filed as required; and
(vi) No authorization, approval or consent of any governmental
authority or agency is necessary in connection with the transactions
<PAGE>
8
contemplated by the Terms Agreement (including the provisions of this
Agreement) except such as may be required under the Act, the Trust
Indenture Act and state securities or Blue Sky laws.
(h) The Representatives shall have received from Cravath, Swaine &
Moore, counsel for the Underwriters, to be named in the Terms Agreement
such opinion or opinions, dated the Closing Date, with respect to the
validity of the Securities, the Registration Statement, the Prospectus and
other related matters as they may require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(i) The Representatives shall have received a certificate, dated the
Closing Date, of any vice-president and a principal financial or accounting
officer of the Company in which such officers, to the best of their
knowledge after reasonable investigation, shall state that the
representations and warranties of the Company in this Agreement are true
and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date, that no stop order suspending the
effectiveness of the Registration Statement or of any part thereof has been
issued and no proceedings for that purpose have been instituted or are
contemplated by the Commission and that, subsequent to the date of the most
recent financial statements in the Prospectus, there has been no material
adverse change in the business, financial position or results of operations
of the Company and its subsidiaries except as set forth in or contemplated
by the Prospectus or as described in such certificate.
(j) The Representatives shall have received a letter, dated the
Closing Date, of Coopers & Lybrand L.L.P., which reconfirms the matters set
forth in their letter delivered pursuant to subsection (a) of this Section
and covering such matters as are customary for accountants' "comfort"
letters for underwritten transactions of the type contemplated by the Terms
Agreement and in form and substance reasonably satisfactory to the
Representatives. If Ernst & Young LLP or Deloitte & Touche LLP shall have
delivered a letter to the Representatives pursuant to subsection (b) or
(c), respectively, of this Section, the Representatives shall have received
a letter, dated the Closing Date, of Ernst &Young LLP or Deloitte & Touche
LLP, as the case may be, which reconfirms the matters set forth in their
previous letter and is in form and substance reasonably satisfactory to the
Representatives.
6. Indemnification and Contribution. (a) The Company will indemnify
---------------------------------
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating
<PAGE>
9
or defending any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company will not be liable (i) in any
such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives, if any, specifically for use therein and (ii) to
any Underwriter (or anyone controlling such Underwriter), with respect to any
preliminary prospectus or preliminary prospectus supplement, from whom the
person asserting any such loss, claim, damage or liability purchased Securities,
if a copy of the Prospectus (as then amended or supplemented if the Company
shall have furnished any amendment or supplements thereto) was not delivered by
or on behalf of such Underwriter to such person, if required by law to have been
so delivered, at or prior to the written confirmation of the sale of the
Securities to such person, and if the Prospectus (as so amended and
supplemented) would have cured the defect giving rise to such loss, claim,
damage or liability.
(b) Each Underwriter will, severally and not jointly, indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, or any related preliminary prospectus or
preliminary prospectus supplement, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Underwriter through the Representatives, if any, specifically for use therein,
and will reimburse any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under subsection (a) or (b) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party), and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such
<PAGE>
10
settlement includes an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other from the offering
of the Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by the
Underwriters. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company, to each officer of the Company
who has signed the Registration Statement and to each person, if any, who
controls the Company within the meaning of the Act.
7. Default of Underwriters. If any Underwriter or Underwriters
------------------------
default in their obligations to purchase Securities under the Terms Agreement
and the aggregate principal amount of the Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of
the total principal amount of the
<PAGE>
11
Securities, the Representatives may make arrangements satisfactory to the
Company for the purchase of such Securities by other persons, including any of
the Underwriters, but if no such arrangements are made by the Closing Date, the
nondefaulting Underwriters shall be obligated severally, in proportion to their
respective commitments under this Agreement and the Terms Agreement, to purchase
the Securities that such defaulting Underwriters agreed but failed to purchase.
If any Underwriter or Underwriters so default and the aggregate principal amount
of the Securities with respect to which such default or defaults occur exceeds
10% of the total principal amount of the Securities and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Securities by other persons are not made within 36 hours after such default,
such Terms Agreement will terminate without liability on the part of any
nondefaulting Underwriter or the Company, except as provided in Section 8. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default. The respective commitments of the
several Underwriters for the purposes of this Section shall be determined
without regard to the reduction in the respective Underwriters' obligations to
purchase the principal amounts of the Securities set forth opposite their names
in the Terms Agreement as a result of Delayed Delivery Contracts entered into by
the Company.
The foregoing obligations and agreements set forth in this Section
will not apply if the Terms Agreement specifies that such obligations and
agreements will not apply.
8. Survival of Certain Representations and Obligations. The
----------------------------------------------------
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Underwriters set
forth or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of any Underwriter, the Company or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Securities. If the Terms Agreement is
terminated pursuant to Section 7 or if for any reason the purchase of the
Securities by the Underwriters under the Terms Agreement is not consummated, the
Company shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 4 and the respective obligations of the Company and the
Underwriters pursuant to Section 6 shall remain in effect. If the purchase of
the Securities by the Underwriters is not consummated because of any failure or
refusal on the part of the Company to comply with the terms or to fulfill any of
the conditions of this Agreement (excluding the matters set forth in Section
5(d)), or if for any reason the Company shall be unable to perform its
obligations under this Agreement, the Company will reimburse the Underwriters
for all reasonable out-of-pocket expenses (including reasonable fees and
disbursements of counsel) reasonably incurred by them in connection with the
offering of the Securities.
9. Notices. All communications hereunder will be in writing and, if
--------
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to them at their addresses furnished to the Company in writing for the purpose
of communications hereunder or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 141 Spring Street, Lexington,
Massachusetts 02173, Attention of General Counsel.
<PAGE>
12
10. Successors. This Agreement will inure to the benefit of and be
-----------
binding upon the Company and such Underwriters as are identified in Terms
Agreements and their respective successors and the officers and directors and
controlling persons referred to in Section 6, and no other person will have any
right or obligation hereunder.
11. Applicable Law. This Agreement and the Terms Agreement shall be
---------------
governed by, and construed in accordance with, the laws of the State of New
York.
<PAGE>
ANNEX I
[omit in exe-
------------
cution copies]
-------------
(Three copies of this Delayed Delivery Contract should be signed and returned to
-------------------------------------------------------------------------------
the address shown below so as to arrive not later than 9:00 A.M., New York time,
- --------------------------------------------------------------------------------
on [date that is the third full business day prior to Closing Date under the
----------------------------------------------------------------------------
Terms Agreement].)
---------------
DELAYED DELIVERY CONTRACT
-------------------------
[date of initial public offering]
-------------------------------
RAYTHEON COMPANY
c/o [insert name and address]
Attention: [name].
----
Gentlemen:
The undersigned hereby agrees to purchase from Raytheon Company, a
Delaware corporation ("Company"), and the Company agrees to sell to the
undersigned, [If one delayed closing, insert -- as of the date hereof, for
------------------------------
delivery on ___________, 19__ ("Delivery Date"),]
$________ _____
principal amount of the Company's [Debt Securities/Debentures] ("Securities"),
offered by the Company's Prospectus dated _________, 19__ and a Prospectus
Supplement dated ____________, 19__ relating thereto, receipt of copies of which
is hereby acknowledged, at __% of the principal amount thereof plus accrued
interest, if any, and on the further terms and conditions set forth in this
Delayed Delivery Contract ("Contract").
[If two or more delayed closings, insert the following:
-----------------------------------------------------
The undersigned will purchase from the Company as of the date hereof,
for delivery on the dates set forth below, Securities in the principal amounts
set forth below:
Delivery Date Principal Amount
--------------- ----------------
Each of such delivery dates is hereinafter referred to as a Delivery Date.]
Payment for the Securities that the undersigned has agreed to purchase
for delivery on [the/each] Delivery Date shall be made to the Company or its
order by certified or official bank check in New York Clearing House (next day)
funds at the office of [name] at [time] _.M. on [the/such] Delivery Date upon
delivery to the undersigned of the Securities to be purchased by the undersigned
[for delivery on such
<PAGE>
Delivery Date/in definitive] fully registered form and in such denominations and
registered in such names as the undersigned may designate by written or
telegraphic communication addressed to the Company not less than five full
business days prior to [the/such] Delivery Date.
It is expressly agreed that the provisions for delayed delivery and
payment are for the sole convenience of the undersigned; that the purchase
hereunder of Securities is to be regarded in all respects as a purchase as of
the date of this Contract; that the obligation of the Company to make delivery
of and accept payment for, and the obligation of the undersigned to take
delivery of and make payment for, Securities on [the/each] Delivery Date shall
be subject only to the conditions that (1) investment in the Securities shall
not at [the/such] Delivery Date be prohibited under the laws of any jurisdiction
in the United States to which the undersigned is subject and (2) the Company
shall have sold to the Underwriters the total principal amount of the Securities
less the principal amount thereof covered by this and other similar Contracts.
The undersigned represents that its investment in the Securities is not, as of
the date hereof, prohibited under the laws of any jurisdiction to which the
undersigned is subject and which governs such investment.
Promptly after completion of the sale to the Underwriters, the Company
will mail or deliver to the undersigned at its address set forth below notice to
such effect, accompanied by [a copy/copies] of the opinions of counsel for the
Company delivered to the Underwriters in connection therewith.
This Contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
It is understood that the acceptance of any such Contract is in the
Company's sole discretion and, without limiting the foregoing, need not be on a
first-come, first-served basis. If this Contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance below and mail or
deliver one of the
<PAGE>
counterparts hereof to the undersigned at its address set forth below. This will
become a binding contract between the Company and the undersigned when such
counterpart is so mailed or delivered.
Very truly yours,
-------------------------------
(Name of Purchaser)
by
-------------------------
-------------------------
(Title of Signatory)
Accepted as of the above date.
-------------------------
RAYTHEON COMPANY
-------------------------
(Address of Purchaser)
by
-------------------------
[Title]
<PAGE>
EXHIBIT 2.2
HUGHES SPIN-OFF SEPARATION AGREEMENT,
dated as of December 17, 1997,
by and between
HE HOLDINGS, INC.
and
GENERAL MOTORS CORPORATION
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
1. Definitions............................................................... 2
-----------
2. Certain Intercompany Matters.............................................. 9
----------------------------
2.1 Capital Stock Matters............................................. 9
2.2 Publicity......................................................... 10
2.3 Further Assurances................................................ 10
3. Expenses.................................................................. 11
--------
3.1 General........................................................... 11
3.2 Certain Costs Relating to Hughes Common Stock..................... 11
3.3 Certain Transactions Costs........................................ 11
4. Covenants to Preserve Tax-Free Status Of Hughes Spin-Off.................. 12
--------------------------------------------------------
4.1 Representations and Warranties.................................... 12
4.2 Restrictions on Hughes............................................ 12
4.3 Cooperation and Other Covenants................................... 17
4.4 Indemnification for Tax Liabilities............................... 18
4.5 Procedure for Indemnification for Tax Liabilities................. 19
4.6 Arbitration....................................................... 20
4.7 Exclusive Remedies................................................ 21
5. Indemnification........................................................... 21
---------------
5.1 Indemnification by Hughes......................................... 21
5.2 Indemnification by GM............................................. 21
5.3 Other Liabilities................................................. 22
5.4 Tax Effects of Indemnification.................................... 22
5.5 Effect of Insurance Upon Indemnification.......................... 22
5.6 Procedure for Indemnification Involving Third-Party Claims........ 23
5.7 Procedure for Indemnification Not Involving Third-Party Claims.... 24
5.8 Exclusive Remedies................................................ 25
6. Miscellaneous............................................................. 25
-------------
6.1 Dispute Resolution................................................ 25
6.2 Survival.......................................................... 25
6.3 Complete Agreement................................................ 25
6.4 Authority......................................................... 25
6.5 Governing Law..................................................... 25
6.6 Consent to Exclusive Jurisdiction................................. 25
6.7 Notices........................................................... 26
6.8 Amendment and Modification........................................ 27
6.9 Binding Effect; Assignment........................................ 27
</TABLE>
-i-
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
6.10 Third Party Beneficiaries........................................... 27
6.11 Counterparts........................................................ 28
6.12 Waiver.............................................................. 28
6.13 Severability........................................................ 28
6.14 Remedies............................................................ 28
6.15 Performance......................................................... 28
6.16 References; Construction............................................ 28
</TABLE>
-ii-
<PAGE>
HUGHES SPIN-OFF SEPARATION AGREEMENT
------------------------------------
The HUGHES SPIN-OFF SEPARATION AGREEMENT ("Agreement") is made and
entered into as of December 17, 1997, by and between Hughes, a Delaware
corporation, and GM, a Delaware corporation. Capitalized terms used and not
otherwise defined herein are defined in Section 1 below.
RECITALS
--------
WHEREAS, Hughes and Raytheon desire to combine the Raytheon Business
with the Hughes Business;
WHEREAS, Hughes and Raytheon have entered into the Hughes Merger
Agreement, pursuant to which Raytheon shall merge with and into Hughes, with
Hughes as the surviving corporation, in accordance with the terms and subject to
the conditions thereof;
WHEREAS, as a condition to entering into the Hughes Merger Agreement,
Raytheon has required that GM agree that, at the time of the consummation of the
Hughes Merger, Hughes be an independent, publicly owned company, comprising the
Defense Business;
WHEREAS, in response to such requirement, GM and Raytheon have entered
into the Implementation Agreement and, as contemplated thereby, GM and Merger
Sub have entered into the Hughes Distribution Agreement, pursuant to which,
subject to certain terms and conditions contained therein, Merger Sub shall
merge with and into GM, with GM as the surviving corporation such that, among
other things, the holders of shares of GM $1 2/3 Common Stock and the holders of
shares of GM Class H Common Stock shall receive a distribution of shares of
Hughes Class A Common Stock (representing all of the outstanding common stock of
Hughes) in the Hughes Spin-Off;
WHEREAS, the parties intend that (a) the Hughes Merger constitute a
tax-free "reorganization" within the meaning of Section 368(a) of the Code and
(b) the Hughes Spin-Off qualify as a tax-free (to GM and the holders of GM
Common Stock) spin-off within the meaning of Section 355 of the Code;
WHEREAS, the parties hereto have determined that in order to accomplish
the objectives of the Hughes Spin-Off and to facilitate the consumption thereof,
it is necessary and desirable to restructure certain intercompany relationships,
allocate certain liabilities and provide mutual indemnification, all as set
forth herein;
WHEREAS, the execution and delivery of this Agreement is a condition to
GM's obligation to consummate the transactions contemplated by the Hughes
Distribution Agreement; and
WHEREAS, concurrently with the execution and delivery of this Agreement,
GM, Telecom, Delco and Hughes are entering into certain other agreements
relating to the HEC Reorganization, the Hughes Spin-Off and/or the relationships
of the parties thereafter, including, without limitation, as
-1-
<PAGE>
to matters such as taxes, indemnification, employee benefits, insurance,
intellectual property, real property, transition services and shared research
and development;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereby agree as follows:
1. DEFINITIONS.
-----------
"Active Trade or Business" means the active conduct of the trade or
business (as defined in Section 355(b)(2) of the Code) conducted by Hughes
immediately prior to the Effective Time.
"Affiliate" means a Hughes Affiliate, a GM Affiliate or a Raytheon
Affiliate, as the case may be.
"Business" means the Hughes Business, the GM Business or the Raytheon
Business, as the case may be.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions located in the State of New York are authorized or
obligated by law or executive order to close.
"Claim" has the meaning set forth in Section 5.7.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, together with the rules and regulations promulgated thereunder.
"Control" means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or otherwise.
"CPR Rules" means the Rules for Non-Administered Arbitration of Business
Disputes promulgated by the Center for Public Resources, as in effect on the
date hereof.
"DGCL" means the General Corporation Law of the State of Delaware, as in
effect on the date hereof and as the same may hereafter be amended from time to
time.
"Defense Business" has the meaning ascribed to such term in the
Separation Agreement.
"Delco" has the meaning ascribe to such term in the Separation
Agreement.
"Dispute Notice" means written notice of any dispute between GM and
Hughes arising out of or relating to this Agreement, which shall set forth, in
reasonable detail, the nature of the dispute.
-2-
<PAGE>
"Effective Time" means the date and time at which the Hughes Spin-Off
Merger becomes effective.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, together with the rules and regulations promulgated
thereunder.
"GM" means General Motors Corporation, a Delaware corporation.
"GM Affiliate" means a Person that, after giving effect to the Hughes
Spin-Off, directly or indirectly through one or more intermediaries, is
Controlled by GM.
"GM Business" means any business or operations of GM or any GM
Affiliates other than the Hughes Business.
"GM Class H Common Stock" means the Class H Common Stock, par value
$0.10 per share, of GM.
"GM Common Stock" means the GM $1 2/3 Common Stock and the GM Class H
Common Stock and, from and after the Effective Time, the New GM Class H Common
Stock.
"GM $1 2/3 Common Stock" means the Common Stock, par value $1 2/3 per
share, of GM.
"GM Disclosure Portions" means any material set forth in, or
incorporated by reference into, either the Hughes Spin-Off Registration
Statement or the Hughes Merger Registration Statement (i) relating to (A)
Hughes, the capital stock of Hughes, the Hughes Business, financial information
and data relating to Hughes (including both historical and pro forma financial
data) or (B) the GM Transactions or (ii) that otherwise does not constitute a
part of a Hughes Disclosure Portion. For purposes of clause (i)(A), Hughes
shall include Hughes only prior to the consummation of the Hughes Merger and
shall not include Hughes as the surviving corporation of the Hughes Merger.
"GM Transactions" has the meaning ascribed to such term in the Hughes
Distribution Agreement.
"GM Transfer Agent" means BankBoston, N.A., in its capacity as the
transfer agent for the GM Common Stock.
"HEC Reorganization" has the meaning ascribed to such term in the Hughes
Distribution Agreement.
"Hughes" means HE Holdings, Inc., a Delaware corporation, after giving
effect to the consummation of the HEC Reorganization, and, upon the consummation
of the Hughes Merger, the surviving corporation of the Hughes Merger.
-3-
<PAGE>
"Hughes Affiliate" means a Person that, after giving effect to the
Hughes Spin-Off, directly or indirectly through one or more intermediaries,
Controls, is Controlled by, or is under common Control with Hughes.
"Hughes Business" means the Defense Business and, upon the consummation
of the Hughes Merger, the Raytheon Business.
"Hughes Capital Stock" means all classes or series of capital stock of
Hughes.
"Hughes Class A Common Stock" means the Class A Common Stock, par value
$0.01 per share, of Hughes, as set forth in Hughes' Certificate of Incorporation
as of immediately prior to the Effective Time.
"Hughes Class B Common Stock" means the Class B Common Stock, par value
$0.01 per share, of Hughes, as set forth in Hughes' Certificate of Incorporation
as of immediately prior to the Effective Time.
"Hughes Common Stock" means Hughes Class A Common Stock and Hughes Class
B Common Stock.
"Hughes Disclosure Portions" means all material set forth in, or
incorporated by reference into, either the Hughes Spin-Off Registration
Statement or the Hughes Merger Registration Statement relating to (i) Raytheon,
the capital stock of Raytheon, the Raytheon Business, financial information and
data relating to Raytheon (including both historical and pro forma financial
data) or (ii) the Hughes Merger, plans regarding Hughes after the Hughes Merger
and other forward-looking information regarding Hughes.
"Hughes Distribution Agreement" means the Agreement and Plan of Merger
by and between GM and Merger Sub, dated as of October 17, 1997, as amended from
time to time.
"Hughes Merger" means the merger of Raytheon with and into Hughes
pursuant to the Hughes Merger Agreement, with Hughes as the surviving
corporation.
"Hughes Merger Agreement" means the Agreement and Plan of Merger by and
between Hughes and Raytheon, dated as of January 16, 1997, as amended from time
to time.
"Hughes Merger Registration Statement" means the Registration Statement
of Form S-4 filed with the SEC by Hughes relating to the shares of Hughes Class
B Common Stock to be issued in connection with the Hughes Merger, as
supplemented or amended from time to time.
"Hughes Spin-Off" means the distribution of Hughes Class A Common Stock
to the holders of GM Common Stock pursuant to the Hughes Spin-Off Merger
"Hughes Spin-Off Merger" means the merger of Merger Sub with and into GM
pursuant to the Hughes Distribution Agreement, with GM as the surviving
corporation.
-4-
<PAGE>
"Hughes Spin-Off Registration Statement" means the Registration
Statement on Form S-4 filed with the SEC by Hughes relating to the shares of
Hughes Class A Stock to be distributed in connection with the Hughes Spin-Off,
as supplemented or amended from time to time.
"Hughes Transfer Agent" means State Street Bank & Trust Company, in its
capacity as the transfer agent for the Hughes Common Stock.
"Implementation Agreement" means the Implementation Agreement by and
between GM and Raytheon, dated as of January 16, 1997, as amended from time to
time.
"Indemnifying Party" means a Person that is obligated to provide
indemnification under this Agreement.
"Indemnitee" means a Person that is entitled to seek indemnification
under this Agreement.
"Indemnity Payment" means an amount that an Indemnifying Party is
required to pay to an Indemnitee under this Agreement.
"Insurance Proceeds" means the payment received by an insured from an
insurance carrier or paid by an insurance carrier on behalf of the insured, net
of any applicable premium adjustment and tax effect.
"IRS" means Internal Revenue Service of the U.S. Department of Treasury
or any successor agency.
"Losses" means all losses, liabilities, claims, obligations, demands,
judgments, damages, dues, penalties, assessments, fines (civil or criminal),
costs, liens, expenses, forfeitures, settlements, or fees, reasonable
attorneys' fees and court costs, of any nature or kind, whether or not the same
would properly be reflected on a balance sheet, and "Loss" means any of these.
"Merger Sub" means GM Mergeco Corporation, a Delaware corporation and a
wholly-owned subsidiary of GM.
"Negotiation Period" means the period of 20 Business Days following the
initial meeting of the representatives of GM and Hughes following the receipt of
a Dispute Notice.
"New GM Class H Common Stock" has the meaning ascribed to such term in
the Hughes Distribution Agreement.
"Notice" means any notice, request, claim, demand, or other
communication under this Agreement.
"Person" means an individual, partnership, joint venture, corporation,
trust, unincorporated association, any other entity, or a government or any
department or agency or other unit thereof.
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"Prior Relationship" means the ownership relationships among GM, Hughes,
Telecom and Delco at any time prior to giving effect to the consummation of the
HEC Reorganization and the Hughes Spin-Off.
"Proposed Acquisition Transaction" means a transaction or series of
transactions as a result of which any Person or any group of related Persons
would acquire, or have the right to acquire, (i) from one or more holders of
outstanding shares of Hughes Capital Stock, a number of shares of Hughes Capital
Stock that would comprise more than 15% of (A) the value of all outstanding
shares of Hughes Capital Stock as of the date of such transaction, or in the
case of a series of transactions, the date of the last transaction of such
series, or (B) the number of the issued and outstanding shares of Hughes Class A
Common Stock or Hughes Class B Common Stock as of the date of such transaction,
or in the case of a series of transactions, the date of the last transaction of
such series, or (ii) from Hughes, all or a substantial portion of its assets or
business in exchange in whole or in part for equity interests in such Person or
group which are received by holders of Hughes Capital Stock.
"Proposed Stock Buyback Transaction" means a transaction or series of
transactions as a result of which Hughes or a Hughes Affiliate would acquire, or
have the right to acquire, one or more shares of Hughes Capital Stock.
"Proposed Stock Issuance Transaction" means a transaction or series of
transactions as a result of which any Person would acquire, or have the right to
acquire, from Hughes or a Hughes Affiliate, one or more shares of Hughes Capital
Stock.
"Raytheon" means Raytheon Company, a Delaware corporation.
"Raytheon Affiliate" means a Person that directly or indirectly through
one or more intermediaries, Controls, is Controlled by, or is under common
Control with Raytheon.
"Raytheon Business" means any business or operations of Raytheon.
"Representation Date" means any date on which Hughes Makes any
representation (i) to the IRS or to counsel selected by GM for the purpose of
obtaining a Subsequent Tax Opinion/Ruling, or (ii) to GM for the purpose of any
determination required to be made by GM pursuant to Section 4.2.
"Representation Letters" means the representation letters and any other
materials (including, without limitation, the ruling request and the related
supplemental submissions to the IRS) delivered or deliverable by GM and others
in connection with the rendering by Tax Counsel and the issuance by the IRS of
the Tax Opinions/Rulings, which to the extent related to Hughes, Raytheon or the
Surviving Corporation (as defined in the Hughes Merger Agreement) shall be in
form and substance reasonably satisfactory to Hughes and Raytheon.
"Representative" means, with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants or attorneys.
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"Request" has the meaning set forth in Section 5.7.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, together with the rules and regulations promulgated thereunder.
"Separate Counsel" has the meaning set forth in Section 5.6(b).
"Separation Agreement" means the Master Separation Agreement by and
among GM, Telecom, Delco and Hughes, dated as of December 16, 1997, as amended
from time to time.
"Service Agent" means (i) for GM, The Corporation Trust Company, with
offices on the date hereof at 1209 Orange Street, Wilmington, County of New
Castle, Delaware 19801; and (ii) for Hughes, The Corporation Trust Company, with
offices on the date hereof at 1209 Orange Street, Wilmington, County of New
Castle, Delaware.
"Subsequent Tax Opinion/Ruling" means either (i) an opinion of counsel
selected by GM, in its sole and absolute discretion, confirming, in form and
substance reasonably satisfactory to GM, that, as a consequence of the
consummation of a subsequent transaction, (A) no income, gain or loss for U.S.
federal income tax purposes will be recognized by GM, the stockholders or former
stockholders of GM, or any GM Affiliate with respect to the Hughes Spin-Off
and/or the Telecom Spin-Off, or (B) no income, gain or loss for U.S. federal
income tax purposes will be recognized by GM, Hughes, Raytheon or any of their
Affiliates, or by Hughes' stockholders (including, without limitation, GM
stockholders who become Hughes stockholders as a result of the Hughes Spin-Off),
with respect to the Hughes Merger; or (ii) an IRS private letter ruling to the
same effect.
"Subsidiary" means with respect to any specified Person, and corporation
or other legal entity of which such Person or any of its Subsidiaries Controls
or owns, directly or indirectly, more than 50% of the stock or other equity
interest entitled to vote on the election of members to the board of directors
or similar governing body; provided, however, that for the purposes of this
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Agreement, neither Hughes nor any of the Subsidiaries of Hughes shall be deemed
to be Subsidiaries of GM or of any of the Subsidiaries of GM.
"Tax" means (i) any income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code Section 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on, minimum, estimated,
or other tax, assessment, or governmental charge of any kind whatsoever imposed
by any governmental authority, including any interest, penalty, or addition
thereto, whether disputed or not; (ii) liability for the payment of any amounts
of the type described in clause (i) above arising as a result of being (or
having been) a member of any group or being (or having been) included or
required to be included in any Tax Return related thereto; and (iii) liability
for the payment of any amounts of the type described in clause (i) above as a
result of any express or implied obligation to indemnify or otherwise assume or
succeed to the liability of any other Person.
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"Tax Agreement" means the Tax Sharing Agreement by and among GM, Hughes
and Telecom, dated as of December 17, 1997, as amended from time to time,
relating to certain tax matters.
"Tax Counsel" means Kirkland & Ellis, with respect to those Tax
Opinions/Rulings deliverable to GM relating to the transactions effectuated
pursuant to the Hughes Distribution Agreement, and Weil, Gotshal & Manges LLP,
with respect to the Tax Opinions/Rulings deliverable to GM and Hughes relating
to the transactions effectuated pursuant to the Hughes Merger Agreement.
"Tax-Free Status of the Hughes Merger" means the nonrecognition of
taxable income, gain or loss for U.S. federal income tax purposes to GM, Hughes,
Raytheon and their Affiliates, and to Hughes' stockholders (including, without
limitation, GM stockholders who become Hughes stockholders as a result of the
Hughes Spin-Off) in connection with the Hughes Merger.
"Tax-Free Status of the Spin-Offs" means the nonrecognition of taxable
gain or loss for U.S. federal income tax purposes to GM, GM Affiliates and GM's
stockholders in connection with the Hughes Spin-Off and/or the Telecom Spin-Off.
"Tax Opinions/Rulings" means, collectively, the opinions of Tax Counsel
and the rulings by the IRS deliverable to GM in connection with (i) the
transactions contemplated by the Hughes Distribution Agreement and (ii) the
transactions contemplated by the Hughes Merger Agreement.
"Tax-Related Losses" means (i) all federal, state and local Taxes
(including interest and penalties thereon) imposed pursuant to any settlement,
final determination, judgment or otherwise; (ii) all accounting, legal and
other professional fees, and court costs incurred in connection with such taxes;
and (iii) all costs and expenses that may result from adverse tax consequences
to GM or GM's stockholders (including all costs, expenses and damages associated
with stockholder litigation or controversies) payable by GM or GM Affiliates.
"Telecom" has the meaning ascribed to such term in the Separation
Agreement.
"Telecom Spin-Off" means the spin-off of Telecom by Hughes to GM
included as part of the HEC Reorganization.
"Third-Party Claim" means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Person other than GM or any GM Affiliate or Hughes or any Hughes
Affiliate which gives rise to a right of indemnification hereunder.
"Voting Stock" means with respect to any Person, all classes and series
of the capital stock of such Person entitled to vote generally in the election
of directors.
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2. Certain Intercompany Matters
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2.1 Capital Stock Matters.
(a) Recognition of Stockholders. From and after the Effective Time
and until such Hughes Class A Common Stock is duly transferred in accordance
with applicable law, Hughes shall regard the Persons who were record holders of
GM $1 2/3 Common Stock and the Persons who were record holders of GM Class H
Common Stock, in each case as of immediately prior to the Effective Time, as the
record holders of Hughes Class A Common Stock, as described in and subject to
the terms of the Hughes Distribution Agreement, without requiring any action on
the part of such Persons. Hughes agrees that, subject to any transfers of such
stock, (i) each such holder shall be entitled to receive all dividends payable
on, and exercise voting rights and all other rights and privileges with respect
to, Hughes Class A Common Stock and (ii) each such holder shall be entitled,
without any action on the part of any such holder, subject to Section 2.3 of the
Hughes Merger Agreement, to receive one or more certificates representing, or
other evidence of ownership of, the shares of Hughes Class A Common Stock then
held by it.
(b) GM Representations and Warranties. GM hereby covenants to
provide to Hughes as soon as practicable after such information is available
from the GM Transfer Agent the number of shares of GM $1 2/3 Common Stock and
the number of shares of GM Class H Common Stock that were issued and outstanding
as of immediately prior to the Effective Time, and GM hereby represents and
warrants that, as of immediately prior to the Effective Time, all of such shares
will be validly issued, fully paid and nonassessable. GM hereby represents and
warrants that, as of immediately prior to the Effective Time, there will be (i)
no outstanding securities of GM or any of its Subsidiaries convertible into or
exchangeable for shares of GM $1 2/3 Common Stock or GM Class H Common Stock and
(ii) other than stock options granted pursuant to GM's employee benefit plans
and other than as provided in Article Fourth of GM's Amended and Restated
Certificate of Incorporation, no outstanding subscriptions, options, warrants,
rights or other arrangements or commitments to which GM is a party obligating GM
to issue any shares of GM $1 2/3 Common Stock or GM Class H Common Stock.
(c) Hughes Representations and Warranties. Hughes hereby represents
and warrants that, as of immediately prior to the Effective Time, (i)
102,630,503 shares of Hughes Class A Common Stock will be issued and
outstanding, (ii) all of such shares will be validly issued, fully paid and
nonassessable, (iii) all of such shares will be held of record by GM, (iv) such
shares shall represent all of the issued and outstanding Hughes Capital Stock,
and (v) there will be (x) no outstanding securities of Hughes or any of its
Subsidiaries convertible into or exchangeable for shares of Hughes Class A
Common Stock and (y) no outstanding subscription, options, warrants, rights or
other arrangements or commitments to which Hughes is a party obligating Hughes
to issue any shares of Hughes Class A Common Stock.
(d) Cooperation of Transfer Agents; Stockholder Records. GM shall
cooperate, and shall instruct the GM Transfer Agent to cooperate, with Hughes
and the Hughes Transfer
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Agent, and Hughes shall cooperate, and shall instruct the Hughes
Transfer Agent to cooperate, with GM and the GM Transfer Agent, in
connection with the Hughes Spin-Off and all other matters relating to
(i) the issuance and delivery of certificates evidencing, or other
evidence of ownership of, the shares of Hughes Class A Common Stock (and
payment of cash in lieu of any fractional shares of Hughes Class B
Common Stock as described in the Hughes Merger Agreement) to be
distributed in respect of all shares of GM $1 2/3 Common Stock and GM
Class H Common Stock outstanding as of immediately prior to the
Effective Time and (ii) the exchange of certificates evidencing, or the
issuance of other evidence of share ownership in connection with, the
recapitalization and conversion of all shares of GM Class H Common Stock
outstanding as of immediately prior to the Effective Time into shares of
New GM Class H Common Stock. Following the Effective Time, GM shall
instruct the GM Transfer Agent to distribute letters of transmittal, in
form reasonably satisfactory to GM and Hughes, to all holders of GM
Class H Common Stock as of immediately prior to the Effective Time in
connection with the exchange of certificates formerly representing
shares of GM Class H Common Stock for certificates representing, or
other evidence of ownership of, shares of New GM Class H Common Stock
and certificates representing, or other evidence of ownership of, shares
of Hughes Class A Common Stock. Following the Effective Time, GM shall
instruct the GM Transfer Agent to deliver to the Hughes Transfer Agent
true, correct and complete copies of the transfer records reflecting the
record holders of GM $1 2/3 Common Stock and GM Class H Common Stock, in
each case as of immediately prior to the Effective Time. Upon the
reasonable request of Hughes from time to time after the Effective Time
in connection with any legitimate corporate purpose, GM shall
cooperate, or shall instruct the GM Transfer Agent to cooperate, in
providing Hughes with reasonable access to all historical share,
transfer and dividend payment records with respect to the holders of GM
$1 2/3 Common Stock and GM Class H Common Stock as of immediately prior
to the Effective Time.
2.2 Publicity. Hughes, with respect to Hughes and all of the Hughes
Affiliates, and GM, with respect to GM and all of the GM Affiliates, agree to
take all commercially reasonable action to discontinue their respective uses as
promptly after the Effective Time as is commercially reasonable of any printed
material that indicates a continued Prior Relationship between or among GM and
Hughes or any of her respective Affiliates. This Section 2.2 shall not be deemed
to prohibit the use of printed material containing appropriate and accurate
references to the Prior Relationship.
2.3 Further Assurances. In addition to the actions specifically
provided for elsewhere in this Agreement, each of the parties hereto shall use
all commercially reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things commercially reasonably necessary,
proper or expeditious under applicable laws, regulations and agreements in
order to consummate and make effective the Hughes Spin-Off as promptly as
reasonable practicable. Without limiting the generality of the foregoing, each
party hereto shall cooperate with the other party, and execute and deliver, or
use all commercially reasonable efforts to cause to have executed and
delivered, all instruments, including instruments of conveyance, assignment and
transfer, and to make all filings with, and to obtain all consents, approvals
or authorizations of, any domestic or foreign governmental or regulatory
authority in order to make effective the Hughes Spin-Off.
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3. Expenses
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3.1 General. Except as otherwise provided in this Agreement, the
Separation Agreement and the other agreements contemplated thereby, all costs
and expenses of either party hereto in connection with the Hughes Spin-Off
and/or the Hughes Merger shall be paid by the party that incurs such costs and
expenses.
3.2 Certain Costs Relating to Hughes Common Stock. Hughes shall pay all
costs of printing and engraving with respect to certificates representing, or
other evidence of ownership of, Hughes Common Stock, fees of any transfer or
exchange agent engaged by Hughes, and all fees relating to listing Hughes Common
Stock on any domestic or foreign stock exchange or similar organization.
3.3 Certain Transactions Costs.
(a) Certain Merger Costs to be Paid by Hughes. Hughes shall pay
all costs and expenses relating exclusively to the Hughes Merger,
including, without limitation, all reasonable out-of-pocket costs and
expenses of printing and distributing the Hughes Merger Registration
Statement and any related materials (including any proxy or consent
solicitation statement), the fees associated with filing the Hughes Merger
Registration Statement and any related materials (including any proxy or
consent solicitation statement) with the SEC, the fees associated with
making any other federal, state, local or foreign governmental securities
law or other regulatory filings exclusively in connection with the Hughes
Merger, the fees and expenses of the Hughes Transfer Agent and any proxy or
consent solicitation agents, information agents or similar consultants
engaged by Raytheon in connection with effecting the Hughes Merger. Hughes
shall also pay, unless otherwise agreed between GM and Hughes, the fees and
expenses of Goldman, Sachs & Co. and the fees and expenses of Weil, Gotshal
& Manges LLP in connection with the Hughes Merger; provided that such
--------
fees and expenses, to the extent to be paid by Hughes after the effective
time of the Hughes Merger, shall be included as current liabilities on the
Closing Date Balance Sheet (as defined in the Separation Agreement).
(b) Certain Merger Costs to be Paid by GM. GM or one of its
subsidiaries shall pay all fees and out-of-pocket expenses of Hughes in
connection with the Hughes Merger except as contemplated by Section 3.3(a).
(c) Certain Costs to be Paid by GM. GM or one of its subsidiaries
shall pay all costs and expenses relating to the GM Transactions (other
than as provided in Section 3.2 and other than those relating exclusively
to the Hughes Merger, which are addressed in Sections 3.3(a) and 3.3(b)
above), including, without limitation, all costs and expenses relating
exclusively to the Hughes Spin-Off Merger, including, without limitation,
all reasonable out-of-pocket costs and expenses of printing and
distributing the Hughes Spin-Off Registration Statement and any related
materials (including any proxy or consent solicitation statement), the fees
associated with filing the Hughes Spin-Off Registration Statement and any
related materials (including any proxy or consent solicitation statement)
with the SEC, the fees
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associated with making any other federal, state, local or foreign
governmental securities law or other regulatory filings exclusively in
connection with the Hughes Spin-Off Merger, and the fees and expenses of
the GM Transfer Agent and any proxy or consent solicitation agents,
information agents or similar consultants engaged by GM in connection
with effecting the Hughes Spin-Off Merger.
4. Covenants To Preserve Tax-Free Status Of Hughes Spin-Off.
--------------------------------------------------------
4.1 Representations and Warranties.
(a) Hughes. Hughes hereby represents and warrants that (i) it
has examined the Tax Opinions/Rulings and the Representation Letters,
and (ii) the facts presented and the representations made therein, to
the extent descriptive of Hughes or the Hughes Business or Raytheon or
the Raytheon Business (including, without limitation, the business
purposes for the Hughes Spin-Off, Telecom Spin-Off and Hughes Merger,
the representations in the Representation Letters and Tax
Opinions/Rulings to the extent that they relate to Hughes or the Hughes
Business or Raytheon or the Raytheon Business, and the plans, proposals,
intentions and policies of Hughes or Raytheon), are true, correct and
complete in all material respects.
(b) GM. GM hereby represents and warrants that (i) it has
examined the Tax Opinions/Rulings and the Representation Letters, and
(ii) the facts presented and the representations made therein, to the
extent descriptive of GM or the GM Business (including, without
limitation, the business purposes for the Hughes Spin-Off, Telecom Spin-
Off, the representations in the Representation Letters and Tax
Opinions/Rulings to the extent that they relate to GM or the GM
Business, and the plans, proposals, intentions and policies of GM), are
true, correct and complete in all material respects.
4.2 Restrictions on Hughes.
(a) Proposed Secondary Capital Stock Transactions. Until the
first day after the two-year anniversary of the Effective Time, Hughes
shall not enter into any Proposed Acquisition Transaction or, to the
extent Hughes has the right to prohibit any Proposed Acquisition
Transaction, permit any Proposed Acquisition Transaction to occur
(whether by (i) redeeming rights under a stockholders rights plan, (ii)
finding a tender offer to be a "permitted offer" under any such plan or
otherwise causing any such plan to be inapplicable or neutralized with
respect to any Proposed Acquisition Transaction, or (iii) approving any
Proposed Acquisition Transaction, whether for purposes of Section 203 of
the DGCL or any similar corporate statute, any "fair price" or other
provision of Hughes' charter or bylaws or otherwise) unless prior to the
consummation of such Proposed Acquisition Transaction GM has determined,
in its sole and absolute discretion, which discretion shall be exercised
in good faith solely to preserve the Tax-Free Status of the Spin-Offs
and the Tax-Free Status of the Hughes Merger, that such Proposed
Acquisition Transaction would not jeopardize the Tax-Free Status of the
Spin-Offs or the Tax-Free Status of the Hughes Merger.
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The foregoing shall not prohibit Hughes from entering into a contract or
agreement to consummate any Proposed Acquisition Transaction if such contract or
agreement requires satisfaction of the above-described requirement prior to the
consummation of such Proposed Acquisition Transaction.
(b) Proposed Primary Capital Stock Transactions.
(i) Until the first day after the two-year anniversary of the
Effective Time, Hughes shall not enter into any Proposed Stock
Issuance Transaction if, as a result of such Proposed Stock Issuance
Transaction, Hughes would issue a number of shares of Hughes Capital
Stock that, when aggregated with all other shares of Hughes Capital
Stock issued pursuant to any Proposed Stock Issuance Transaction
occurring prior to or simultaneously with such Proposed Stock
Issuance Transaction, would cause (A) the number of shares of Hughes
Class A Common Stock distributed to GM stockholders in the Hughes
Spin-Off to constitute less than 80% of the total combined voting
power of all outstanding shares of Voting Stock of Hughes or (B) the
issuance of outstanding shares of any class or series of Hughes
Capital Stock other than Voting Stock of Hughes, unless prior to the
consummation of such transaction GM has determined, in its sole and
absolute discretion, which discretion shall be exercised in good
faith solely to preserve the Tax-Free Status of the Spin-Offs and the
Tax-Free Status of the Hughes Merger, that such transaction would not
jeopardize the Tax-Free Status of the Spin-Offs or the Tax-Free
Status of the Hughes Merger.
(ii) Until the first day after the two-year anniversary of the
Effective Time, Hughes shall not enter into any Proposed Stock
Buyback Transaction if, as a result of such Proposed Stock Buyback
Transaction, the then-outstanding shares of Hughes Class A Common
Stock would constitute less than 80% of the total combined voting
power of all outstanding shares of Voting Stock of Hughes, unless
prior to the consummation of such transaction GM has determined, in
its sole and absolute discretion, which discretion shall be exercised
in good faith solely to preserve the Tax-Free Status of the Spin-Offs
and the Tax-Free Status of the Hughes Merger, that such transaction
would not jeopardize the Tax-Free Status of the Spin-Offs or the Tax-
Free Status of the Hughes Merger.
(iii) For purposes of this Section 4.2(b), any option
(including an option issued to employees or in connection with the
performance of services), warrant or other security that would permit
or require a Person to acquire shares of Voting Stock of Hughes or
other Hughes Capital Stock (including the option, right or obligation
of Hughes or a Hughes Affiliate to acquire shares of Hughes Capital
Stock), or any security convertible into or exchangeable for shares
of Voting Stock of Hughes or other Hughes Capital Stock, shall be
treated as if it had been fully exercised, converted or exchanged at
the time of issuance, whether or not such security is by its terms
exercisable at such time.
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(c) Amendment to Charter and Bylaws. Until the first day after the
three-year anniversary of the Effective Time, Hughes shall make no amendments or
changes to its charter or bylaws that would affect the composition or size of
its Board of Directors, the manner in which its Board of Directors is elected,
and the duties and responsibilities of its Board of Directors unless GM has
determined, in its sole and absolute discretion, which discretion shall be
exercised in good faith solely to preserve the Tax-Free Status of the Spin-Offs
and the Tax-Free Status of the Hughes Merger, that such amendment or change
would not jeopardize the Tax-Free Status of the Spin-Offs or the Tax-Free Status
of the Hughes Merger.
(d) Continuation of Active Trade or Business. Until the first day
after the two-year anniversary of the Effective Time,
(i) Hughes shall continue to conduct the Active Trade or
Business.
(ii) Subject to the last sentence of the clause (d)(iii), Hughes
shall not (A) liquidate, dispose of, or otherwise discontinue the
conduct of any portion of the Active Trade or Business with a value in
excess of $1.0 billion or (B) dispose of any business or assets that
would cause Hughes to be operated in a manner inconsistent in any
material respect with the business purposes for the Hughes Spin-Off as
set forth in the Representation Letters and Tax Opinions/Rulings, in
each case unless GM has determined, in its sole and absolute discretion,
which discretion shall be exercised in good faith solely to preserve the
Tax-Free Status of the Spin-Offs and the Tax-Free Status of the Hughes
Merger, that such liquidation, disposition, or discontinuance would not
jeopardize the Tax-Free Status of the Spin-Offs or the Tax-Free Status
of the Hughes Merger.
(iii) Hughes shall not under any circumstances liquidate, dispose
of, or otherwise discontinue the conduct of any portion of the Active
Trade or Business if such liquidation, disposition or discontinuance
would breach Section 4.2(e). Hughes shall continue the active conduct of
the Active Trade or Business primarily through officers and employees of
Hughes or its Subsidiaries (and not primarily through independent
contractors) who are not also officers or employees of GM or of any GM
Affiliates. Notwithstanding the foregoing, (A) liquidations of any of
Hughes' Subsidiaries into Hughes or one or more Subsidiaries directly or
indirectly controlled by Hughes shall not be deemed to breach this
Section 4.2(d) and (B) Hughes shall not be prohibited from liquidating,
disposing of or otherwise discontinuing the conduct of one or more
trades or businesses that constituted part of the Active Trade or
Business, or any portion thereof, provided that, in the case of this
clause (B), the aggregate value of such trades or businesses, or
portions thereof, so liquidated, disposed of or discontinued shall not
exceed $1.0 billion (as determined as of the Effective Time). For
purposes of the preceding sentence and clause (d)(ii), asset
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retirements, sale-leaseback arrangement and discontinuances of
product lines within a trade or business the active conduct of
which is continued shall not be deemed a liquidation,
disposition or discontinuance of a trade or business or portion
thereof.
(iv) Solely for purposes of this Section 4.2(d), Hughes
shall not be treated as directly or indirectly controlling a
Subsidiary unless Hughes owns, directly or indirectly, shares of
capital stock of such Subsidiary constituting (i) 80% or more of
the total combined voting power of all outstanding shares of
Voting Stock of such Subsidiary and (ii) 80% or more of the
total number of outstanding shares of each class or series of
capital stock of such Subsidiary other than Voting Stock.
(v) The restrictions contained in this Section 4.2(d)
shall apply only to the businesses, subsidiaries and operations
of Hughes as in existence prior to the Effective Time, and shall
not be deemed to apply to those businesses, subsidiaries and
operations conducted by Raytheon prior to the Effective Time.
(e) Continuity of Business.
(i) Until the first day after the two-year anniversary
of the Effective Time, (A) Hughes shall not voluntarily dissolve
or liquidate, and (B) except in the ordinary course of business,
neither Hughes nor any Subsidiaries directly or indirectly
controlled by Hughes shall sell, transfer, or otherwise dispose
of or agree to dispose of assets (including, for such purpose,
any shares of capital stock of such Subsidiaries) that, in the
aggregate, constitute more than (x) 60% of the gross assets of
Hughes or (y) 60% of the consolidated gross assets of Hughes and
such Subsidiaries, unless prior to the consummation of such
transaction GM has determined, in its sole and absolute
discretion, which discretion shall be exercised in good faith
solely to preserve the Tax-Free Status of the Spin-Offs and the
Tax-Free Status of the Hughes Merger, that such transaction
would not jeopardize the Tax-Free Status of the Spin-Offs or the
Tax-Free Status of the Hughes Merger. The amount of gross assets
of Hughes and such Subsidiaries shall be based on the fair
market value of each such asset as of the Effective Time.
(ii) Sales, transfers or other dispositions by Hughes or
any of its Subsidiaries to Hughes or one or more Subsidiaries
directly or indirectly controlled by Hughes shall not be
included in any determinations under this Section 4.2(e) of
whether such 60% or more of the gross assets of Hughes or 60%
of the consolidated gross assets of Hughes and such Subsidiaries
have been sold, transferred or otherwise disposed of.
(iii) Solely for purposes of this Section 4.2(e), Hughes
shall not be treated as directly or indirectly controlling a
Subsidiary unless Hughes owns, directly or indirectly, shares of
capital stock of such Subsidiary constituting (A) 80% or more of
the total combined voting power of all outstanding shares of
Voting Stock of such Subsidiary and (B) 80% or more of the total
number of outstanding shares of each class or series of capital
stock of such Subsidiary other than Voting Stock.
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(iv) The restrictions contained in this Section 4.2(e)
shall apply only to the businesses, subsidiaries and operations
of Hughes as in existence prior to the Effective Time, and shall
not be deemed to apply to those businesses, subsidiaries and
operations conducted by Raytheon prior to the Effective Time.
(f) Recapitalizations, Reincorporations and Similar
Transactions.
(i) Hughes shall not propose a plan of recapitalization
or amendment to its charter or other action providing for (A)
the conversion of shares of any class of Hughes Common Stock
into a different class of Hughes Capital Stock, (B) a change in
the absolute of relative voting rights of any class of Hughes
Common Stock from the rights existing at the Effective Time, or
(C) any other action having an effect similar to that described
in clause (A) or (B), unless prior to the consummation of such
action GM has determined, in its sole and absolute discretion,
which discretion shall be exercised in good faith solely to
preserve the Tax-Free Status of the Spin-Offs and the Tax-Free
Status of the Hughes Merger, that such action would not
jeopardize the Tax-Free Status of the Spin-Offs or the Tax-Free
Status of the Hughes Merger.
(ii) A Proposed Acquisition Transaction will be
considered a recapitalization transaction subject to subsection
4.2(f)(i) if, as a result of such transaction, holders of Hughes
Common Stock immediately before the Proposed Acquisition
Transaction will own more than 50% of the common equity of the
Person (or group of related Persons) acquiring the Hughes
Capital Stock immediately after consummation of the Proposed
Acquisition Transaction, and, in such case, the Person acquiring
Hughes Capital Stock pursuant to a Proposed Acquisition
Transaction shall be treated as if such Person were Hughes for
purposes of this Section 4.2(f).
(g) Miscellaneous. Until the first day after the two-year
anniversary of the Effective Time, Hughes shall not take, or permit any of its
Subsidiaries to take, any other actions or enter into any transaction or series
of transactions or agree to enter into any other transactions that would be
reasonably likely to jeopardize the Tax-Free Status of the Spin-Offs or the
Tax-Free Status of the Hughes Merger, including any action or transaction that
would be reasonably likely to be inconsistent with any representation made in
the Representation Letters, unless prior to the consummation of such action or
transaction GM has determined, in its sole and absolute discretion, which
discretion shall be exercised in good faith solely to preserve the Tax-Free
Status of the Spin-Offs and the Tax-Free Status of the Hughes Merger, that such
action or transaction would not jeopardize the Tax-Free Status of the Spin-Offs
or the Tax-Free Status of the Hughes Merger. Notwithstanding the foregoing,
if and to the extent that any action or transaction is described in and
permitted pursuant to Sections 4.2(a)-(f) such action or transaction shall not
be prohibited by this Section 4.2(g).
(h) Permitted Actions and Transactions. Notwithstanding the
foregoing, the provisions of Section 4.2 shall not prohibit Hughes from (i)
implementing, or otherwise complying with the provisions of, any stockholders
rights plan of Hughes, (ii) consummating the Hughes Merger or any of the GM
Transactions, provided that the conditions to closing
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set forth in Sections 6.1 and 6.3 of the Hughes Merger Agreement have been
satisfied or properly waived and (iii) implementing any transaction upon which
the IRS has granted a favorable ruling in, or which is described in reasonable
detail in, any Tax Opinions/Ruling received from the IRS.
4.3 Cooperation and Other Covenants.
(a) Notice of Subsequent Hughes Actions. Each of Hughes and GM shall
furnish the other with a copy of any ruling requests or other documents
delivered to the IRS that relates to the Hughes Spin-Off, Telecom Spin-Off or
the Hughes Merger or that could otherwise be reasonably expected to have an
impact on the Tax-Free Status of the Spin-Offs or Tax-Free Status of the Hughes
Merger.
(b) Cooperation.
(i) Each of Hughes and GM shall cooperate with the other and shall
take (or refrain from taking) all such actions as the other may reasonably
request in connection with obtaining any GM determination referred to in
Section 4.2. Such cooperation shall include, without limitation, providing
any information and/or representations reasonably requested by the other
to enable either party (or counsel for such party) to obtain and maintain
any Subsequent Tax Opinion/Ruling that would permit any action described
in Section 4.2 to be taken by Hughes or a Hughes Affiliate. From and after
any Representation Date in connection with obtaining any such
determination or the receipt of a Subsequent Tax Opinion/Ruling and until
the first day after the two-year anniversary of the date of such
determination or receipt, neither party shall take (nor shall it refrain
from taking) any action that would have caused such representation to be
untrue unless the other party has determined, in its sole and absolute
discretion, which discretion shall be exercised in good faith solely to
preserve the Tax-Free Status of the Spin-Offs and the Tax-Free Status of
the Hughes Merger, that such action would not jeopardize the Tax-Free
Status of the Spin-Offs and the Tax-Free Status of the Hughes Merger.
(ii) In the event that Hughes notifies GM that it desires to take
one of the actions described in this Section 4.2 and GM concludes that
such action would jeopardize the Tax-Free Status of the Spin-Offs or the
Tax-Free Status of the Hughes Merger, GM shall, at the request of Hughes,
elect either to (i) use all commercially reasonable efforts to obtain a
Subsequent Tax Opinion/Ruling that would permit Hughes to take the
specified action, and Hughes shall cooperate in connection with such
efforts, or (ii) provide all reasonable cooperation to Hughes in
connection with Hughes obtaining such a Subsequent Tax Opinion/Ruling in
form and substance reasonably satisfactory to GM; provided, however,
-------- -------
that the reasonable costs and expenses of obtaining any such Subsequent
Tax Opinion/Ruling shall be borne by Hughes.
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(c) Notice.
(i) Until all restrictions set forth in Section 4.2 have
expired, Hughes shall give GM written notice of any intention to effect
or permit an action or transaction described in Section 4.2 and which is
prohibited thereunder at such time within a period of time reasonably
sufficient to enable GM to make the determination referred to in Section
4.2 or to prepare and seek any Subsequent Tax Opinion/Ruling in
connection with such proposed action or transaction. Each such notice
shall set forth the terms and conditions of the proposed action or
transaction, including, without limitation, as applicable, the nature of
any related action proposed to be taken by the Board of Directors of
Hughes, the approximate number of shares of Hughes Capital Stock
proposed to be transferred or issued, the approximate value of Hughes'
assets (or assets of any of Hughes' Subsidiaries) proposed to be
transferred, the proposed timetable for such action or transaction, and
the number of shares of Hughes Capital Stock otherwise then owned by the
other party to the proposed action or transaction, all with sufficient
particularity to enable GM to make any such required determination,
including information required to prepare and seek a Subsequent Tax
Opinion/Ruling in connection with such proposed action or transaction.
All information provided by Hughes to GM pursuant to this Section 4.3
shall be deemed subject to the confidentiality obligations of Article 4
of the Separation Agreement.
(ii) Promptly, but in any event within 15 days, after GM
receives such written notice from Hughes, GM shall evaluate such
information and notify Hughes in writing of such determination or of
GM's intent to seek a Subsequent Tax Opinion/Ruling and the proposed
date for submission of the request therefor, which date shall not be
more than 45 days after the date GM so notifies Hughes of GM's intent to
seek a Subsequent Tax Opinion/Ruling, provided that such 45-day period
shall be appropriately extended for any period of noncompliance by
Hughes with Section 4.3(b). GM shall notify Hughes promptly, but in any
event within two Business Days, after the receipt of a Subsequent Tax
Opinion/Ruling. If GM makes a determination that an action or
transaction described in Section 4.2 would jeopardize the Tax-Free
Status of the Spin-Offs or Tax-Free Status of the Hughes Merger, such
notice to Hughes shall set forth, in reasonable detail, the reasons
therefor and the reasons for not receiving a Subsequent Tax
Opinion/Ruling.
4.4 INDEMNIFICATION FOR TAX LIABILITIES.
(a) General. Notwithstanding any other provision of this Agreement or
any provision of any of the Tax Agreement to the contrary but subject to Section
4.4(b), Hughes shall indemnify, defend and hold harmless GM and each GM
Affiliate (or any successor to any of them) against any and all Tax-Related
Losses incurred by GM in connection with any proposed tax assessment or tax
controversy with respect to the Hughes Spin-Off or the Hughes Merger to the
extent caused by any breach by Hughes of any of its representations, warranties
or covenants, made pursuant to this Agreement. All interest or penalties
incurred
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in connection with such Tax-Related Losses shall be computed for the time period
up to and including the date that Hughes pays its indemnification obligation in
full.
(b) Exceptions to Hughes' Indemnification. If GM (i) makes a
determination pursuant to any clause of Section 4.2, on the basis of a
Subsequent Tax Opinion/Ruling or otherwise, and (ii) delivers to Hughes written
notice of such determination pursuant to Section 4.3(c), Hughes shall have no
obligation pursuant to Section 4.4(a), except to the extent that any Tax-Related
Losses so incurred resulted from the inaccuracy, incorrectness or
incompleteness of any representation provided by Hughes upon which such
Subsequent Tax Opinion/Ruling and/or determination was based.
(c) Timing and Method of Tax Indemnification Payments. Hughes shall
pay any amount due and payable to GM pursuant to this Section 4.4 on or before
the 90th day following the earlier of agreement or determination that such
amount is due and payable to GM. All payments pursuant to this Section 4.4
shall be made by wire transfer to the bank account designated by GM for such
purpose, and on the date of such wire transfer Hughes shall give GM notice of
the transfer.
4.5 PROCEDURE FOR INDEMNIFICATION FOR TAX LIABILITIES.
(a) Notice of Claim. If GM receives notice of the assertion of any
Third-Party Claim with respect to which Hughes may be obligated under Section
4.4 to provide indemnification, GM shall give Hughes notice thereof (together
with a copy of such Third-Party Claim, process or other legal pleading) promptly
after becoming aware of such Third Party Claim; provided, however, that the
-------- -------
failure of GM to give notice as provided in this Section shall not relieve
Hughes of its obligations under Section 4.4, except to the extent that Hughes is
actually prejudiced by such failure to give notice. Such notice shall describe
such Third-Party Claim in reasonable detail.
(b) Obligation of Indemnifying Party.
(i) GM and Hughes shall jointly control the defense of, and
cooperate with each other with respect to defending, any Third-Party
Claim with respect to which Hughes is obligated under Section 4.4 to
provide indemnification, provided that Hughes shall forfeit such joint
control right with respect to a particular Third-Party Claim if Hughes
or any Hughes Affiliate makes any public statement or filing, or takes
any action (including, but not limited to, the filing of any submission
or pleading, or the giving of a deposition or production of documents,
in any administrative or court proceeding) in connection with such
Third-Party Claim that is inconsistent in a material respect with any
representation or warranty made by Hughes in the Agreement, the Tax
Opinions/Rulings, the Representation Letters or the Hughes Merger
Agreement.
(ii) Hughes and GM shall exercise their rights to jointly
control the defense of any such Third-Party Claim solely for the purpose
of defeating such Third-Party
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Claim and, unless required by applicable law, neither Hughes nor GM shall
make any statements or take any actions that could reasonably result in the
shifting of liability for any Losses arising out of such Third-Party Claim
from the party making such statement or taking such action (or any of its
Affiliates) to the other party (or any of its Affiliates).
(iii) Statements made or actions taken by either Hughes or GM in
connection with the defense of any such Third-Party Claim shall not
prejudice the rights of such party in any subsequent action or proceeding
between the parties.
(iv) If either GM or Hughes fails to jointly defend any such
Third-Party Claim, the other party shall solely defend such Third-Party
Claim and the party failing to jointly defend shall use commercially
reasonable efforts to cooperate with the other party in its defense of such
Third-Party Claim; provided, however, that GM may not compromise or settle
-------- -------
any such Third-Party Claim without the prior written consent of Hughes,
which consent shall not be unreasonably withheld or delayed. All costs and
expenses of either party in connection with, and during the course of, the
joint control of the defense of any such Third-Party Claim shall be
initially paid by the party that incurs such costs and expenses. Such costs
and expenses shall be reallocated and reimbursed in accordance with the
respective indemnification obligations of the parties at the conclusion of
the defense of such Third-Party Claim.
4.6 ARBITRATION. Any dispute between the parties arising out of or
relating to this Section 4, including the interpretation of this Section 4, or
any actual or purported breach of this Section 4, shall be resolved only in
accordance with the following provisions:
(a) Negotiation. GM and Hughes shall attempt in good faith to resolve any such
dispute promptly through negotiations of the parties. In the event of any such
dispute, either party may deliver a Dispute Notice to the other party, and
within 20 Business Days after the receipt of such Dispute Notice, the
appropriate representatives of GM and Hughes shall meet to attempt to resolve
such dispute. If such dispute has not been resolved within the Negotiation
Period, or if one of the parties fails or refuses to negotiate such dispute, the
issue shall be settled by arbitration pursuant to Section 4.6(b). The results of
such arbitration shall be final and binding on the parties.
(b) Arbitration Procedure. Either party may initiate arbitration with regard
to such dispute by giving the other party written notice either (i) at any time
following the end of the Negotiation Period, or (ii) if the parties do not meet
within 20 Business Days of the receipt of the Dispute Notice, at any time
thereafter. The arbitration shall be conducted by three arbitrators in
accordance with the CPR Rules, except as otherwise provided in this Section 4.6.
Within 20 days following receipt of the written notice of arbitration, GM and
Hughes shall each appoint one arbitrator. The two arbitrators so appointed shall
appoint the third arbitrator. If either GM or Hughes shall fail to appoint an
arbitrator within such 20-day period, the arbitration shall be by the sole
arbitrator appointed by the other party. Whether selected by GM and Hughes or
otherwise, each arbitrator selected to resolve such dispute
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shall be a tax attorney who is generally recognized in the tax community
as a qualified and competent tax practitioner with experience in the tax area
involved in the issue or issues to be resolved. Such arbitrators shall be
empowered to determine whether Hughes is required to indemnify GM pursuant to
Section 4.4 and to determine the amount of the related indemnification payment.
Each of GM and Hughes shall bear 50% of the aggregate expenses of the
arbitrators. The arbitration shall be governed by the United States Arbitration
Act, 9 U.S.C. (S)(S)1-14. The place of arbitration shall be New York, New York.
The final decision of the arbitrators shall be rendered no later than one year
from the date of the written notice of arbitration.
4.7 EXCLUSIVE REMEDIES. Except for the right to pursue equitable
remedies, the remedies provided in this Section 4 shall be deemed the sole and
exclusive remedies of the parties with respect to the subject matters of the
indemnification provisions of Section 4.4.
5. INDEMNIFICATION.
---------------
5.1 INDEMNIFICATION BY HUGHES. Subject to Section 5.3, from and
after the Effective Time, Hughes shall indemnify, defend and hold harmless GM,
all GM Affiliates and each of their respective directors, officers and employees
(in their capacities as such), from and against:
(a) all Losses relating to, arising out of, or due to,
directly or indirectly, any breach by Hughes or any Hughes Affiliate of
any of the provisions of this Agreement;
(b) all Losses relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact
contained in, or incorporated by reference into, the Hughes Disclosure
Portions or the omission or alleged omission to state (whether pursuant
to direct statement or incorporation by reference) in the Hughes
Disclosure Portions a material fact required to be stated therein or
necessary to make the statements therein not misleading; and
(c) all Losses relating to or arising out of actions taken
(or omitted to be taken) by Raytheon or any Raytheon Affiliate in
violation of the Hughes Merger Agreement.
5.2 INDEMNIFICATION BY GM. Subject to Section 5.3, from and after
the Effective Time, GM shall indemnify, defend, and hold harmless Hughes, all
Hughes Affiliates, and each of their respective directors, officers and
employees (in their capacities as such), from and against:
(a) all Losses relating to, arising out of, or due to,
directly or indirectly, any breach by GM or any GM Affiliate of any of
the provisions of this Agreement;
(b) all Losses relating to, arising out of, or due to any
untrue statement or alleged untrue statement of a material fact
contained in, or incorporated by reference into, the GM Disclosure
Portions or the omission or alleged omission to state (whether pursuant
to direct statement or incorporation by reference) in the GM Disclosure
Portions a material fact required to be stated therein or necessary to
make the statements therein not misleading; and
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(c) all Losses relating to or arising out of any breach of the
representation set forth in Section 2.4(a) of the Implementation Agreement.
5.3 OTHER LIABILITIES. (a) Except as provided in Section 5.4, this Section 5
shall not be applicable to any Tax-Related Losses, which shall be governed by
Section 4 of this Agreement.
(b) This Section 5 shall not be applicable to any Losses relating to, arising
out of, or due to any breach of the provisions of any other contract, agreement
or understanding between GM or any GM Affiliate and Hughes or any Hughes
Affiliate, which Losses shall be governed by the terms of such contract,
agreement or understanding.
5.4 TAX EFFECTS OF INDEMNIFICATION. (a) Any indemnification payment made
under this Agreement shall be characterized for tax purposes as if such
payment were made immediately prior to the Effective Time, and shall therefore
be treated, to the extent permitted by law, as either (i) a distribution from
Hughes to GM or (ii) a capital contribution from GM to Hughes.
(b) The amount of any Loss or Tax-Related Losses for which indemnification is
provided under this Agreement shall be (i) increased to take account of net Tax
cost, if any, incurred by the Indemnitee arising from the receipt or accrual of
an Indemnity Payment hereunder (grossed up for such increase) and (ii) reduced
to take account of net Tax benefit, if any, realized by the Indemnitee arising
from incurring or paying such Loss or Tax-Related Losses. In computing the
amount of any such Tax cost or Tax benefit, the Indemnitee shall be deemed to
recognize all other items of income, gain, loss, deduction or credit before
recognizing any item arising from the receipt or accrual of any Indemnity
Payment hereunder or incurring or paying any indemnified Loss or Tax-Related
Losses. Any Indemnity Payment hereunder shall initially be made without regard
to this Section 5.4 and shall be increased or reduced to reflect any such net
Tax cost (including gross-up) or net Tax benefit only after the Indemnitee has
actually realized such cost or benefit. For purposes of this Agreement, an
Indemnitee shall be deemed to have "actually realized" a net Tax cost or a net
Tax benefit to the extent that, and at such time as, the amount of Taxes payable
by such Indemnitee is increased above or reduced below, as the case may be, the
amount of Taxes that such Indemnitee would be required to pay but for the
receipt or accrual of the Indemnity Payment or the incurrence or payment of such
Loss or Tax-Related Losses, as the case may be. The amount of any increase or
reduction hereunder shall be adjusted to reflect any final determination (which
shall include the execution of Form 870-AD or successor form) with respect to
the Indemnitee's liability for Taxes, any payments between GM and Hughes to
reflect such adjustment shall be made if necessary.
5.5 EFFECT OF INSURANCE UPON INDEMNIFICATION. The amount which an Indemnifying
Party is required to pay to any Indemnitee pursuant to this Section 5 shall be
reduced (including retroactively) by any Insurance Proceeds and other amounts
actually recovered by such Indemnitee in reduction of the related Loss, it being
understood and agreed that each of Hughes and GM shall use commercially
reasonable efforts to collect any such proceeds or other amounts to which it
or any of its Affiliates is entitled, without regard to whether it is the
Indemnifying Party hereunder. No Indemnitee shall be required, however, to
collect any such proceeds or other amounts prior to being entitled to
indemnification from an Indemnifying Party hereunder. If an Indemnitee
receives an Indemnity Payment in respect of a Loss and subsequently receives
Insurance Proceeds or other
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amounts in respect of such Loss, then such Indemnitee shall pay to such
Indemnifying Party an amount equal to the difference between (a) the sum of the
amount of such Indemnity Payment and the amount of such Insurance Proceeds or
other amounts actually received and (b) the amount of such Loss, in each case
adjusted (at such time as apprxopriate adjustment can be determined) to reflect
any premium adjustment attributable to such claim.
5.6 PROCEDURE FOR INDEMNIFICATION INVOLVING THIRD-PARTY CLAIMS.
(a) Notice of Claim. If any Indemnitee receives notice of the assertion of
any Third-Party Claim with respect to which an Indemnifying Party is
obligated under this Agreement to provide indemnification (other than
pursuant to Section 4), such Indemnitee shall give such Indemnifying Party
notice thereof (together with a copy of such Third-Party Claim, process or
other legal pleading) promptly after becoming aware of such Third-Party
Claim; provided, however, that the failure of any Indemnitee to give notice
-------- -------
as provided in this Section shall not relieve any Indemnifying Party of its
obligations under this Section 5, except to the extent that such
Indemnifying Party is actually prejudiced by such failure to give notice.
Such notice shall describe such Third-Party Claim in reasonable detail.
(b) Obligation of Indemnifying Party. An Indemnifying Party, at such
Indemnifying Party's own expense and through counsel chosen by such
Indemnifying Party (which counsel shall be reasonably acceptable to the
Indemnitee), may elect to defend any Third-Party Claim. If an Indemnifying
Party elects to defend a Third-Party Claim, then, within ten Business Days
after receiving notice of such Third-Party Claim (or sooner, if the nature
of such Third-Party Claim so requires), such Indemnifying Party shall notify
the Indemnitee of its intent to do so, and such Indemnitee shall cooperate
in the defense of such Third-Party Claim. Such Indemnifying Party shall pay
such Indemnitee's reasonable out-of-pocket expenses incurred in connection
with such cooperation. Such Indemnifying Party shall keep the Indemnitee
reasonably informed as to the status of the defense of such Third-Party
Claim. After notice from an Indemnifying Party to an Indemnitee of its
election to assume the defense of a Third-Party Claim, such Indemnifying
Party shall not be liable to such Indemnitee under this Section 5 for any
legal or other expenses subsequently incurred by such Indemnitee in
connection with the defense thereof other than those expenses referred to in
the preceding sentence; provided, however, that such Indemnitee shall have
-------- -------
the right to employ one law firm as counsel, together with a separate local
law firm in each applicable jurisdiction ("Separate Counsel"), to represent
such Indemnitee in any action or group of related actions (which firm or
firms shall be reasonably acceptable to the Indemnifying Party) if, in such
Indemnitee's reasonable judgment at any time, either a conflict of interest
between such Indemnitee and such Indemnifying Party exists in respect of
such claim, or there may be defenses available to such Indemnitee which are
different from or in addition to those available to such Indemnifying Party
and the representation of both parties by the same counsel would be
inappropriate, and in that event (i) the reasonable fees and expenses of
such Separate Counsel shall be paid by such Indemnifying Party (it being
understood, however, that the Indemnifying Party shall not be liable for the
expenses of more than one Separate Counsel (excluding local counsel) with
respect to any Third-Party Claim (even if against multiple Indemnitees)) and
(ii) each of such Indemnifying Party and such Indemnitee shall
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have the right to conduct its own defense in respect of such claim. If an
Indemnifying Party elects not to defend against a Third-Party Claim, or
fails to notify an Indemnitee of its election as provided in this Section 5
within the period of ten Business Days described above, the Indemnitee may
defend, compromise, and settle such Third-Party Claim and shall be entitled
to indemnification hereunder (to the extent permitted hereunder); provided,
--------
however, that no such Indemnitee may compromise or settle any such
-------
Third-Party Claim without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the Indemnifying Party shall not, without
the prior written consent of the Indemnitee, (i) settle or compromise any
Third-Party Claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the delivery by the claimant or
plaintiff to the Indemnitee of a written release from all liability in
respect of such Third-Party Claim or (ii) settle or compromise any Third-
Party Claim in any manner that would be reasonably likely to have a material
adverse effect on the Indemnitee.
(c) Joint Defense of Certain Claims. Notwithstanding the provisions of
Section 5.6(b), GM and Hughes shall jointly control the defense of, and
cooperate with each other with respect to defending, any Third-Party Claim
with respect to which each party is claiming that it is entitled to
indemnification under Section 5.1 or 5.2. If either GM or Hughes fails to
defend jointly any such Third-Party Claim, the other party shall solely
defend such Third-Party Claim and the party failing to defend jointly shall
use all commercially reasonable efforts to cooperate with the other party in
its defense of such Third Party Claim; provided, however, that neither
-------- -------
party may compromise or settle any such Third-Party Claim without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed. All costs and expenses of either party in connection
with, and during the course of, the joint control of the defense of any
such Third-Party Claim shall be initially paid by the party that incurs
such costs and expenses. Such costs and expenses shall be reallocated and
reimbursed in accordance with the respective indemnification obligations of
the parties at the conclusion of the defense of such Third-Party Claim.
5.7 PROCEDURE FOR INDEMNIFICATION NOT INVOLVING THIRD-PARTY CLAIMS. If any
Indemnitee desires to assert against an Indemnifying Party any claim for
indemnification under this Section 5 other than a Third-Party Claim (a "Claim"),
the Indemnitee shall deliver to the Indemnifying Party notice of its demand
for satisfaction of such Claim (a "Request"), specifying in reasonable detail
the amount of such Claim and the basis for asserting such Claim. Within 30 days
after the Indemnifying Party has been given a Request, the Indemnifying Party
shall either (i) satisfy the Claim requested to be satisfied in such Request by
delivering to the Indemnitee payment by wire transfer or a certified or bank
cashier's check payable to the Indemnified Party in immediately available funds
in an amount equal to the amount of such Claim, or (ii) notify the Indemnitee
that the Indemnifying Party contests such Claim by delivering to the Indemnitee
a Dispute Notice, stating that the Indemnifying Party objects to such Claim and
specifying in reasonable detail the basis for contesting such Claim. Any dispute
described in clause (ii) of this Section 5.7 shall be subject to the provisions
of Section 6.1.
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5.8 EXCLUSIVE REMEDIES. Except for the right to pursue equitable remedies, the
remedies provided in this Section 5 shall be deemed the sole and exclusive
remedies of the parties with respect to the subject matters of the
indemnification provisions of this Section 5.
6. MISCELLANEOUS.
-------------
6.1 DISPUTE RESOLUTION. GM and Hughes shall attempt in good faith to resolve
any dispute between the parties arising out of or relating to this Agreement
promptly through negotiations of the parties prior to seeking any other legal or
equitable remedy.
6.2 SURVIVAL. The representations and warranties contained in this Agreement
shall survive the effective time of the Hughes Merger until the expiration of
all applicable statutes of limitations.
6.3 COMPLETE AGREEMENT. Except as otherwise set forth in this Agreement,
this Agreement and the exhibits and schedules hereto shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede all prior and contemporaneous agreements and understandings,
whether written or oral, between the parties with respect to such subject
matter.
6.4 AUTHORITY. Each of the parties hereto represents to the other that (a) it
has the corporate power and authority to execute, deliver and perform this
Agreement, (b) the execution, delivery and performance of this Agreement by it
has been duly authorized by all necessary corporate action, (c) it has duly and
validly executed and delivered this Agreement, and (d) this Agreement is a
legal, valid and binding obligation, enforceable against it in accordance with
its terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equity principles.
6.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (other than the laws regarding
conflicts of laws) as to all matters, including matters of validity,
construction, effect, performance and remedies.
6.6 CONSENT TO EXCLUSIVE JURISDICTION. Any action, suit or proceeding arising
out of any claim that the parties cannot settle through good faith negotiations
(except any claim to which Section 4.6 applies) shall be litigated exclusively
in the state courts of Delaware. Each of the parties hereto hereby irrevocably
and unconditionally (a) submits to the jurisdiction of the state courts of
Delaware for any such action, suit or proceeding, (b) agrees not to commence any
such action, suit or proceeding except in the state courts of Delaware, (c)
waives, and agrees not to plead or to make, any objection to the venue of any
such action, suit or proceeding in the state courts of Delaware, (d) waives, and
agrees not to plead or to make, any claim that any such action, suit or
proceeding brought in the state courts of Delaware has been brought in an
improper or otherwise inconvenient forum, (e) waives, and agrees not to plead or
to make, any claim that the state courts of Delaware lack personal jurisdiction
over it, and (f) waives its right to remove any such action, suit or proceeding
to the federal courts except when such courts are vested with sole and exclusive
jurisdiction by statute. GM and Hughes shall cooperate with each other in
connection with any such
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action, suit or proceeding to obtain reliable assurances that confidential
treatment will be accorded any information that either party shall reasonably
deem to be confidential or proprietary. Each of the parties hereto irrevocably
designates and appoints its respective Service Agent as its agent to receive
service of process in any such action, suit or proceeding. Each of the parties
hereto further covenants and agrees that, until the expiration of all applicable
statutes of limitations relating to potential claims under this Agreement,
each such party shall maintain a duly appointed agent for the service of
summonses and other legal process in the State of Delaware, and shall promptly
notify the other party hereto of any change in the name or address of its
Service Agent and the name and address of any replacement for its Service Agent,
if such agent is no longer the Service Agent named herein. This Section 6.6 is
meant to comply with 6 Del. C (S) 2708.
------
6.7 NOTICES. All Notices shall be in writing and shall be deemed
given upon (a) a transmitter's confirmation of a receipt of a facsimile
transmission (but only if followed by confirmed delivery of a standard overnight
courier the following Business Day or if delivered by hand the following
Business Day), or (b) confirmed delivery of a standard overnight courier or
delivered by hand, to the parties at the following addresses:
if to GM to:
General Motors Corporation
767 Fifth Avenue
New York, NY 10153
Attention: Treasurer
Telecopy No.: (212) 418-3630
with a copy to:
General Motors Corporation
3031 West Grand Boulevard
Detroit, MI 48202
Attention: Warren G. Andersen, Esq.
Telecopy No.: (313) 974-0685
with a copy (which shall not constitute effective
notice) to:
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Attention: Robert S. Osborne, P.C.
Telecopy No.: (312) 861-2200
and with a copy (which shall not constitute effective
notice) to:
-26-
<PAGE>
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Frederick S. Green, Esq.
Telecopy No.: (212) 310-8007
If to Hughes, to:
HE Holdings, Inc.
c/o Raytheon Company
141 Spring Street
Lexington, MA 02173
Attention: Christoph L. Hoffmann, Esq.
Telecopy No.: (617) 860-2822
with a copy (which shall not constitute effective notice) to:
Wachetell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Adam O. Emmerich, Esq.
Telecopy No.: (212) 403-2000
or to such other address as either party hereto may have furnished to the other
party by a Notice in writing in accordance with this Section 6.7. Any Notice
delivered pursuant to Section 4 shall also be sent to GM's Chief Tax Officer.
6.8 AMENDMENT AND MODIFICATION. This Agreement may not be amended or
modified in any respect except by a written agreement signed by both of the
parties hereto.
6.9 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the provisions
hereof shall be binding upon the parties hereto and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Except
with respect to a merger of either party with another Person, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by either party hereto without the prior written consent of the other
party, which consent shall not be unreasonably withheld or delayed.
6.10 THIRD PARTY BENEFICIARIES. The Indemnitees and their respective
successors shall be third party beneficiaries of the indemnification provisions
of Sections 4 and 5, as applicable, and shall be entitled to enforce those
provisions, and in connection with such enforcement shall be subject to Section
6.6, in each such case as fully and to the same extent as if they were parties
to this Agreement. Except as provided in the previous sentence, nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
any legal or equitable right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement, and no Person (other than as
-27-
<PAGE>
provided in the previous sentence) shall be deemed a third party beneficiary
under or by reason of this Agreement.
6.11 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.12 WAIVER. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver
shall be effective only if it is in writing signed by the party against
which such waiver is to be asserted. Unless otherwise expressly provided in
this Agreement, no delay or omission on the part of any party in exercising
any right or privilege under this Agreement shall operate as a waiver
thereof, nor shall any waiver on the part of any party of any right or
privilege under this Agreement operate as a waiver of any other right or
privilege under this Agreement nor shall any single or partial exercise of
any right or privilege preclude any other or further exercise thereof or the
exercise of any other right or privilege under this Agreement. No failure by
either party to take any action or assert any right or privilege hereunder
shall be deemed to be a waiver of such right or privilege in the event of
the continuation or repetition of the circumstances giving rise to such
right unless expressly waived in writing by the party against whom the
existence of such waiver is asserted.
6.13 SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
6.14 REMEDIES. Each of GM and Hughes shall be entitled to enforce its
rights under this Agreement specifically, to recover damages and costs
(including reasonable attorneys' fees) caused by any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. Each of GM and Hughes acknowledges and agrees that under certain
circumstances the breach by GM or any of its Affiliates or Hughes or any of
its Affiliates of a term or provision of this Agreement will materially and
irreparably harm the other party, that money damages will accordingly not
be an adequate remedy for such breach and that the non-defaulting party, in
its sole discretion and in addition to its rights under this Agreement and
any other remedies it may have at law or in equity, may apply to any court
of law or equity of competent jurisdiction (without posting any bond or
deposit) for specific performance and/or other injunctive relief in order
to enforce or prevent any breach of the provisions of this Agreement.
6.15 PERFORMANCE. Each of the parties hereto shall use a11 commercially
reasonable efforts to cause to be performed all actions, agreements and
obligations set forth herein to be performed by any Affiliate of such party.
6.16 REFERENCES; CONSTRUCTION. The table of contents and the section and
other headings and subheadings contained in this Agreement and the Exhibits
hereto are solely for the purpose of
-28-
<PAGE>
reference, are not part of the agreement of the parties hereto, and shall not in
any way affect the meaning or interpretation of this Agreement. All references
to days or months shall be deemed references to calendar days or months. All
references to "$" shall be deemed references to United States dollars. Unless
the context otherwise requires, any reference to a "Section" or "Exhibit" shall
be deemed to refer to a section of this Agreement or an exhibit to this
Agreement. The words "hereof," "herein" and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, unless otherwise
specifically provided, they shall be deemed to be followed by the words "without
limitation." This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting or
causing the document to be drafted.
* * * * * *
-29-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date and year first written above.
HE HOLDINGS, INC.
By: /s/ Charles S. Ream
--------------------------------
Name: Charles S. Ream
Its: Vice President
GENERAL MOTORS CORPORATION
By: /s/ Warren G. Andersen
--------------------------------
Name: Warren G. Andersen
Its: Assistant Secretary
<PAGE>
EXHIBIT 5.1
[RAYTHEON COMPANY LETTERHEAD]
January 13, 1998
Raytheon Company
141 Spring Street
Lexington, MA 02173
Ladies and Gentlemen:
I am Executive Vice President Law and Corporate Administration and
Secretary of Raytheon Company, a Delaware Corporation (the "Company") and am
rendering this opinion in connection with a registration statement on Form S-3
(the "Registration Statement") of the Company being filed today with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to $3,000,000,000
aggregate initial offering price of the following Securities of the Company: (i)
unsecured senior debt securities (the "Senior Debt Securities"), (ii) unsecured
subordinated debt securities (the "Subordinated Debt Securities" and
collectively with the Senior Debt Securities, the "Debt Securities"), (iii)
warrants to purchase Debt Securities (the "Debt Warrants"), (iv) shares of
preferred stock, $0.01 par value per share, (the "Preferred Stock"), (v)
warrants to purchase shares of Preferred Stock (the "Preferred Stock Warrants"),
(vi) shares of Class B common stock, $0.01 par value per share (the "Class B
Common Stock"), and (vii) warrants to purchase shares of Class B Common Stock
(the "Class B Warrants" and collectively with the Debt Warrants and the
Preferred Stock Warrants, the "Warrants"), for issuance from time to time
pursuant to Rule 415 under the Securities Act.
As Executive Vice President Law and Corporate Administration and
Secretary of the Company, I have examined and am familiar with the Amended and
Restated Certificate of Incorporation of the Company, as amended to date. I am
also familiar with the corporate proceedings taken by the Board of Directors of
the Company to authorize the Registration Statement.
In connection with the foregoing, I have examined originals, or copies
certified or otherwise identified to my satisfaction, of such documents,
corporate records and other instruments as I have deemed necessary or
appropriate for the purpose of this opinion.
Based upon the foregoing, I am of the opinion that:
1. The Debt Securities registered under the Registration Statement, when
duly authorized, executed, authenticated and delivered against payment therefor
or upon exercise of Debt Warrants, and when the Company shall have received any
additional consideration which is payable upon such exercise, will be validly
issued and will constitute binding obligations of the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other laws affecting creditors' rights generally
from time to time in effect.
<PAGE>
2. The shares of Preferred Stock, registered under the Registration
Statement, when duly authorized and issued against payment therefor, or upon
exercise of Preferred Stock Warrants, and when the Company shall have received
any additional consideration which is payable upon such exercise, will be
validly issued, fully paid and nonassessable.
3. The shares of Class B Common Stock registered under the Registration
Statement, when duly authorized and issued for consideration having a value not
less than the par value thereof, or upon exercise of Class B Warrants, and when
the Company shall have received any additional consideration which is payable
upon such exercise, will be validly issued, fully paid and nonassessable.
4. The Warrants registered under the Registration Statement, when duly
executed and delivered against payment therefor, pursuant to a warrant agreement
or agreements duly authorized, executed and delivered by the Company and a
warrant agent, will be legally issued.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the heading "Validity
of Offered Securities" in the Prospectus constituting a part of this
Registration Statement.
Very truly yours,
/s/ Christoph L. Hoffmann
Christoph L. Hoffmann
Executive Vice President Law and Administration
and Secretary
<PAGE>
Exhibit 12.1
RAYTHEON COMPANY AND SUBSIDIARIES
STATEMENTS RE COMPUTATION OF
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(dollar amounts in millions)
<TABLE>
<CAPTION>
Historical Pro Forma
-------------------------------------------- -----------------------
Nine Months Nine Months
Fiscal Year Ended Ended
-------------------------------- September Fiscal Year September
1992 1993 1994 1995 1996 28, 1997 1996 28, 1997
------ ------ ------ ------ ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income before taxes per statements of income.... 956 1,047 900 1,192 1,083 914 1,400 1,129
Add:
- ---
Portion of rents representative of interest
factor....................................... 38 28 32 41 45 34 88 68
Interest on indebtedness...................... 48 32 49 197 256 263 754 598
------ ------ ------ ------ ------ -------- ------ -------
Income as adjusted......................... 1,042 1,107 981 1,430 1,385 1,211 2,242 1,795
====== ====== ====== ====== ====== ======== ====== =======
Fixed charges:
- -------------
Portion of rents representative of interest
factor..................................... 38 28 32 41 45 34 88 68
Interest on indebtedness...................... 48 32 49 197 256 263 754 598
Capitalized interest.......................... 1 1 1 1 3 0 0 0
------ ------ ------ ------ ------ -------- ------ -------
Fixed charges.............................. 87 61 82 239 304 297 842 666
====== ====== ====== ====== ====== ======== ====== =======
Preferred Stock:
- ---------------
Preferred Stock Dividends..................... 0 0 0 0 0 0 0 0
====== ====== ====== ====== ====== ======== ====== =======
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends..................... 11.9 18.1 12.0 6.0 4.6 4.1 2.7 2.7
====== ====== ====== ====== ====== ======== ====== =======
</TABLE>
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Raytheon Company on Form S-3 of our reports dated January 20, 1997,
except as to the information presented in Note R for which the date is February
23, 1997, on our audits of the consolidated financial statements and financial
statement schedule of Raytheon Company and Subsidiaries Consolidated as of
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996 which reports are incorporated by reference or included in
the Annual Report on Form 10-K of Raytheon Company for the year ended December
31, 1996. We also consent to the reference to our firm under the caption
"Experts".
/s/ Coopers & Lybrands L.L.P.
Boston, Massachusetts
January 12, 1998
<PAGE>
EXHIBIT 23.3
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Raytheon Company
(Raytheon) for the registration of $3,000,000,000 debt and equity securities and
to the incorporation by reference therein of our report dated February 18, 1997,
with respect to the financial statements of the Defense Business of Texas
Instruments Incorporated included in Raytheon's Current Report on Form 8-K dated
March 14, 1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Dallas, Texas
January 9, 1998
<PAGE>
Exhibit 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Raytheon Company, (the "Company") on Form S-3 of our report dated March 21, 1997
related to the financial statements of the Defense Business of Hughes
Electronics Corporation as of December 31, 1996 and 1995 and for each of the
three years in the period ended December 31, 1996, appearing in Former Raytheon
Company's (predecessor to the Company's) Solicitation Statement/Prospectus on
Schedule 14A dated November 10, 1997 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Los Angeles, California
January 12, 1998
<PAGE>
EXHIBIT 25.1
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
RAYTHEON COMPANY
(Exact name of obligor as specified in its charter)
Delaware 95-1778500
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
141 Spring Street
Lexington, Massachusetts 02173
(Address of principal executive offices) (Zip code)
______________________
Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
</TABLE>
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 12th day of January, 1998.
THE BANK OF NEW YORK
By: /s/ JAMES W.P. HALL
-------------------------------
Name: JAMES W.P. HALL
Title: VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 5,004,638
Interest-bearing balances............. 1,271,514
Securities:
Held-to-maturity securities........... 1,105,782
Available-for-sale securities......... 3,164,271
Federal funds sold and Securities pur-
chased under agreements to resell....... 5,723,829
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................34,916,196
LESS: Allowance for loan and
lease losses ..............581,177
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,334,590
Assets held in trading accounts......... 2,035,284
Premises and fixed assets (including
capitalized leases)................... 671,664
Other real estate owned................. 13,306
Investments in unconsolidated
subsidiaries and associated
companies............................. 210,685
Customers' liability to this bank on
acceptances outstanding............... 1,463,446
Intangible assets....................... 753,190
Other assets............................ 1,784,796
-----------
Total assets............................ $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices................... $27,270,824
Noninterest-bearing ......12,160,977
Interest-bearing .........15,109,847
In foreign offices, Edge and
Agreement subsidiaries, and IBFs...... 14,687,806
Noninterest-bearing .........657,479
Interest-bearing .........14,030,327
Federal funds purchased and Securities
sold under agreements to repurchase. 1,946,099
Demand notes issued to the U.S.
Treasury.............................. 283,793
Trading liabilities..................... 1,553,539
Other borrowed money:
With remaining maturity of one year
or less............................. 2,245,014
With remaining maturity of more than
one year through three years............ 0
With remaining maturity of more than
three years......................... 45,664
Bank's liability on acceptances exe-
cuted and outstanding................. 1,473,588
Subordinated notes and debentures....... 1,018,940
Other liabilities....................... 2,193,031
-----------
Total liabilities....................... 52,718,298
-----------
EQUITY CAPITAL
Common stock............................ 1,135,284
Surplus................................. 731,319
Undivided profits and capital
reserves.............................. 2,943,008
Net unrealized holding gains
(losses) on available-for-sale
securities............................ 25,428
Cumulative foreign currency transla-
tion adjustments...................... ( 16,342)
-----------
Total equity capital.................... 4,818,697
-----------
Total liabilities and equity
capital ........................... $57,536,995
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
