<PAGE>
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------
WHITTAKER CORPORATION
(NAME OF SUBJECT COMPANY)
------------------------
MEGGITT ACQUISITION INC.
MEGGITT PLC
(BIDDERS)
------------------------
COMMON STOCK, $0.01 PAR VALUE
SERIES D PARTICIPATING CONVERTIBLE PREFERRED STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
966680407
(CUSIP NUMBER OF COMMON STOCK)
------------------------
PHILIP E. GREEN
GROUP CORPORATE AFFAIRS DIRECTOR
MEGGITT PLC
FARRS HOUSE, COWGROVE
WIMBORNE, DORSET, BH21 4EL, UNITED KINGDOM
011-44-1202-847847
(NAME ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
------------------------
COPY TO:
ELLEN J. ODONER, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
------------------------
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
===============================================================================
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- -------------------------------------------------------------------------------
<S> <C>
$374,191,529.70 $74,838.31
===============================================================================
</TABLE>
* Estimated for purposes of calculating the amount of the filing fee only. The
amount assumes the purchase of 13,175,516 shares of common stock, $0.01 par
value (the 'Shares'), of Whittaker Corporation, at a price per Share of
$28.00 in cash and the purchase of 577.18 shares of Series D Participating
Convertible Preferred Stock, par value $1.00 per share (the 'Preferred
Shares'), at a price per Preferred Share of $9,142.87 in cash. Such
aggregate number of Shares represents all the Shares outstanding on a
fully-diluted basis (other than those issuable upon the conversion of the
Preferred Shares, as the holder thereof has agreed to tender the Preferred
Shares) as of June 4, 1999. Such aggregate number of Preferred Shares
represents all the Preferred Shares outstanding as of June 4, 1999. The
amount of the filing fee, calculated in accordance with Regulation 240.0-11
of the Securities Exchange Act of 1934, as amended, equals 1/50th of one
percent of the value of the transaction.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
</TABLE>
________________________________________________________________________________
<PAGE>
- -------------------
CUSIP NO. 966680407
- -------------------
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Meggitt Acquisition Inc.
- ---------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a) [x]
(b) [ ]
- ---------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------
4 SOURCES OF FUNDS (See Instructions)
AF
- ---------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO [ ]
ITEMS 2(E) OR 2(F)
N/A
- ---------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
- ---------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES [ ]
(See Instructions)
N/A
- ---------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
N/A
- ---------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON (See Instructions)
CO
- ---------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
- -------------------
CUSIP NO. 966680407
- -------------------
14D-1
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Meggitt America, Inc.
- ---------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a) [x]
(b) [ ]
- ---------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------
4 SOURCES OF FUNDS (See Instructions)
AF
- ---------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO [ ]
ITEMS 2(E) OR 2(F)
N/A
- ---------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
- ---------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES [ ]
(See Instructions)
N/A
- ---------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
N/A
- ---------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON (See Instructions)
CO
- ---------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
- -------------------
CUSIP NO. 966680407
- -------------------
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Meggitt - USA, Inc.
- ---------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a) [x]
(b) [ ]
- ---------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------
4 SOURCES OF FUNDS (See Instructions)
AF
- ---------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO [ ]
ITEMS 2(E) OR 2(F)
N/A
- ---------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
- ---------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES [ ]
(See Instructions)
N/A
- ---------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
N/A
- ---------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON (See Instructions)
CO
- ---------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
- -------------------
CUSIP NO. 966680407
- -------------------
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Meggitt International Limited
- ---------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(See Instructions) (b) [ ]
- ---------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------
4 SOURCES OF FUNDS (See Instructions)
AF
- ---------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO [ ]
ITEMS 2(E) OR 2(F)
N/A
- ---------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
England and Wales
- ---------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
- ---------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES [ ]
(See Instructions)
N/A
- ---------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
N/A
- ---------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON (See Instructions)
CO
- ---------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
- -------------------
CUSIP NO. 966680407
- -------------------
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Meggitt PLC
- ---------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [x]
(See Instructions) (b) [ ]
- ---------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------
4 SOURCES OF FUNDS (See Instructions)
BK, OO
- ---------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO [ ]
ITEMS 2(E) OR 2(F)
N/A
- ---------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
England and Wales
- ---------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
- ---------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 7 EXCLUDES CERTAIN SHARES [ ]
(See Instructions)
N/A
- ---------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 7
N/A
- ---------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON (See Instructions)
CO
- ---------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 ('this Statement') is filed
by Meggitt Acquisition Inc., a Delaware corporation (the 'Purchaser'), Meggitt
America, Inc., a Delaware corporation ('Meggitt America'), Meggitt-USA, Inc., a
Delaware corporation ('Meggitt-USA'), Meggitt International Limited, a private
limited company incorporated under the laws of England and Wales ('Meggitt
International'), and Meggitt PLC, a public limited company incorporated under
the laws of England and Wales (the 'Parent'), relating to the offer by Purchaser
to purchase all shares of common stock, $0.01 par value (the 'Shares'), of
Whittaker Corporation, a Delaware corporation (the 'Company'), at $28.00 per
Share, net to the Seller in cash, on the terms and subject to the conditions set
forth in the Offer to Purchase, dated June 15, 1999 (the 'Offer to Purchase'),
and in the related Letter of Transmittal, copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively (which collectively constitute the
'Offer'). The Offer also is for all shares of Series D Participating Convertible
Preferred Stock, $1.00 par value (the 'Preferred Shares'), of the Company, at
$9,142.87 net to the Seller in cash, on the terms and subject to the conditions
set forth in the Offer.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Whittaker Corporation, a Delaware
corporation (the 'Company'). The address of the Company's principal executive
offices is 1955 N. Surveyor Avenue, Simi Valley, California 93063.
(b) The information set forth on the cover page and under 'Introduction' in
the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d), (g) This Statement is filed by Purchaser, Meggitt America,
Meggitt-USA, Meggitt International and Parent. The information set forth on the
cover page, under 'Introduction', in Section 9 and in Schedule I of the Offer to
Purchase is incorporated herein by reference.
(e)-(f) During the last five years, none of Purchaser, Meggitt America,
Meggitt-USA, Meggitt International nor Parent nor, to their knowledge, any of
the persons listed in Schedule I to the Offer to Purchase, (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) None.
(b) The information set forth in the 'Introduction' and in Sections 9, 10
and 11 of the Offer to Purchase, is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth under 'Introduction' and in Section 12 of
the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS
(a)-(e) The information set forth in the 'Introduction' and in Sections 9,
10 and 11 of the Offer to Purchase is incorporated herein by reference.
(f)-(g) The information set forth in Section 7 of the Offer to Purchase is
incorporated herein by reference.
7
<PAGE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a)-(b) The information set forth in the 'Introduction' and in Sections 9,
10 and 11 of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
The information set forth in the 'Introduction' and in Sections 9, 10 and
11 of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in Sections 11, 12 and 16 of the Offer to
Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 9 of the Offer to Purchase and in
Exhibit (b)(3) to this Statement is incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in Section 10 of the Offer to Purchase is
incorporated herein by reference.
(b)-(d) The information set forth in Section 15 of the Offer to Purchase is
incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase, dated June 15, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement, dated June 15, 1999.
(a)(8) Text of Press Release, dated June 9, 1999.
(b)(1) Term and Revolving Credit Facility Agreement, dated June 9, 1999 for
Parent arranged by Barclays Capital and HSBC Investment Bank plc.
(b)(2) Underwriting Agreement, dated June 9, 1999, among Parent, Meggitt
Funding Limited and N M Rothschild & Sons Limited.
(b)(3) Financial Statements of Parent for the fiscal years ended December
31, 1996, 1997 and 1998 and the Notes thereto.
(c)(1) Agreement and Plan of Merger, dated as of June 9, 1999, among
Parent, Purchaser and the Company.
(c)(2) Confidentiality Agreement, dated as of March 10, 1999, executed by
Parent.
(c)(3) Letter Agreement, dated June 4, 1999, from the Company to Parent.
(c)(4) Letter, dated June 9, 1999, from Joseph F. Alibrandi to Parent.
(d) None.
(e) Not applicable.
(f) None.
8
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: June 15, 1999
MEGGITT ACQUISITION INC.
By: /S/ BENNETT F. MOORE
.................................
NAME: BENNETT F. MOORE
TITLE: VICE PRESIDENT AND
SECRETARY
MEGGITT AMERICA, INC.
By: /S/ BENNETT F. MOORE
.................................
NAME: BENNETT F. MOORE
TITLE: PRESIDENT
MEGGITT - USA, INC.
By: /S/ BENNETT F. MOORE
.................................
NAME: BENNETT F. MOORE
TITLE: PRESIDENT AND SECRETARY
MEGGITT INTERNATIONAL LIMITED
By: /S/ PHILIP E. GREEN
.................................
NAME: PHILIP E. GREEN
TITLE: DIRECTOR
MEGGITT PLC
By: /S/ PHILIP E. GREEN
.................................
NAME: PHILIP E. GREEN
TITLE: GROUP CORPORATE AFFAIRS
DIRECTOR
9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE NO.
- -------- --------
<S> <C> <C>
(a)(1) Offer to Purchase, dated June 15, 1999........................................................
(a)(2) Letter of Transmittal.........................................................................
(a)(3) Notice of Guaranteed Delivery.................................................................
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees..............
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees....................................................................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.........
(a)(7) Form of Summary Advertisement dated June 15, 1999.............................................
(a)(8) Text of Press Release, dated June 9, 1999.....................................................
(b)(1) Term and Revolving Credit Facility Agreement, dated June 9, 1999, for Parent arranged by
Barclays Capital and HSBC Investment Bank plc...............................................
(b)(2) Underwriting Agreement, dated June 9, 1999, among Parent, Meggitt Funding Limited and N M
Rothschild & Sons Limited...................................................................
(b)(3) Financial Statements of Parent for the fiscal years ended December 31, 1996, 1997 and 1998 and
the Notes thereto...........................................................................
(c)(1) Agreement and Plan of Merger, dated as of June 9, 1999, among Parent, Purchaser and the
Company.....................................................................................
(c)(2) Confidentiality Agreement, dated as of March 10, 1999, executed by Parent.....................
(c)(3) Letter Agreement, dated June 4, 1999, from the Company to Parent..............................
(c)(4) Letter, dated June 9, 1999, from Joseph F. Alibrandi to Parent................................
</TABLE>
10
STATEMENT OF DIFFERENCES
------------------------
The British pound sterling sign shall be expressed as...................... 'L'
The dagger symbol shall be expressed as ................................... 'D'
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
WHITTAKER CORPORATION
AT
$28.00 NET PER SHARE
BY
MEGGITT ACQUISITION INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
MEGGITT PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JULY 13, 1999 UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER DATED
AS OF JUNE 9, 1999, AMONG MEGGITT PLC ('PARENT'), MEGGITT ACQUISITION INC.
('PURCHASER') AND WHITTAKER CORPORATION (THE 'COMPANY'). THE OFFER IS ALSO BEING
MADE TO PURCHASE ALL SHARES OF SERIES D PARTICIPATING CONVERTIBLE PREFERRED
STOCK OF THE COMPANY AT $9,147.87 NET PER SHARE OF PREFERRED STOCK. THE BOARD OF
DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND MERGER, ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS, HAS APPROVED
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE
OFFER AND TENDER ALL OF THEIR SHARES AND PREFERRED SHARES PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF COMMON AND PREFERRED SHARES OF THE COMPANY WHICH, TOGETHER WITH ANY
COMMON AND PREFERRED SHARES THEN BENEFICIALLY OWNED BY PARENT, CONSTITUTES AT
LEAST A MAJORITY OF THE THEN OUTSTANDING COMMON SHARES ON A FULLY-DILUTED BASIS.
PARENT AND PURCHASER DO NOT CURRENTLY OWN ANY COMMON OR PREFERRED SHARES. THE
OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO
PURCHASE. SEE THE INTRODUCTION AND SECTIONS 1, 14 AND 15.
IMPORTANT
Any stockholder desiring to tender all or any portion of his Common or
Preferred Shares should either (a) complete and sign the Letter of Transmittal
(or a facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it, together with the certificate(s)
representing tendered Common or Preferred Shares and any other required
documents, to the Depositary or tender such Common or Preferred Shares pursuant
to the procedures for book-entry transfer set forth in Section 3 or (b) request
his broker, dealer, commercial bank, trust company or other nominee to effect
the transaction for him. A stockholder whose Common or Preferred Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if he desires to tender such Common or Preferred Shares.
A stockholder who desires to tender his Common or Preferred Shares and
whose certificates representing such Common or Preferred Shares are not
immediately available or who cannot comply with the other procedures on a timely
basis may tender such Common or Preferred Shares by following the procedures for
guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent or from
brokers, dealers, commercial banks and trust companies.
------------------------
The Dealer Manager for the Offer is:
ROTHSCHILD INC.
June 15, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION................................................................................................. 1
THE TENDER OFFER............................................................................................. 2
1. Terms of the Offer; Expiration Date.................................................................... 2
2. Acceptance for Payment and Payment..................................................................... 3
3. Procedures for Accepting the Offer and Tendering Shares................................................ 4
4. Withdrawal Rights...................................................................................... 7
5. Certain U.S. Federal Income Tax Consequences........................................................... 7
6. Price Range of the Shares; Dividends................................................................... 8
7. Effect of the Offer on the Market for the Shares; Stock Exchange Listings; Exchange Act Registration;
Margin Regulations................................................................................... 9
8. Certain Information Concerning the Company............................................................. 10
9. Certain Information Concerning Parent and Purchaser.................................................... 12
10. Background of the Offer; Contacts with the Company..................................................... 15
11. Purpose of the Offer and the Merger; Plans for the Company; the Merger Agreement and Other Agreements;
Other Matters........................................................................................ 16
12. Source and Amount of Funds............................................................................. 24
13. Dividends and Distributions............................................................................ 25
14. Certain Conditions of the Offer........................................................................ 26
15. Certain Legal Matters; Required Regulatory Approvals................................................... 27
16. Certain Fees and Expenses.............................................................................. 29
17. Miscellaneous.......................................................................................... 30
SCHEDULE I Directors and Executive Officers of Parent, Certain Subsidiaries and Purchaser....................
31
</TABLE>
ii
<PAGE>
To: All Holders of Shares of Common Stock
(Including the Associated Preferred
Share Purchase Rights) and Series D
Participating Convertible Preferred
Stock of Whittaker Corporation:
INTRODUCTION
Meggitt Acquisition Inc., a Delaware corporation ('Purchaser'), and an
indirect wholly-owned subsidiary of Meggitt PLC, a public limited company
incorporated under the laws of England and Wales ('Parent'), hereby offers to
purchase all shares of common stock, par value $0.01 per share (the 'Common
Stock'), of Whittaker Corporation, a Delaware corporation (the 'Company'), and
the associated preferred share purchase rights (the 'Rights' and, together with
the Common Stock, the 'Shares') issued pursuant to the Rights Agreement, dated
as of November 12, 1998, as amended on June 9, 1999, by and between the Company
and Mellon Bank, N.A. (the 'Rights Agreement'), at a price of $28.00 per Share
(the 'Share Price'), net to the seller in cash and without interest thereon,
upon the terms and subject to the conditions set forth in this Offer to Purchase
and in the related Letter of Transmittal (which, as amended or supplemented from
time to time, together constitute the 'Offer'). The Offer also is being made for
all shares of Series D Participating Convertible Preferred Stock, par value
$1.00 per share (the 'Preferred Shares'), of the Company, at a price of
$9,142.87 per Preferred Share (the 'Preferred Share Price'), net to the seller
in cash and without interest thereon, upon the terms and subject to the
conditions set forth in this Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 9, 1999 (the 'Merger Agreement'), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, for the commencement
of the Offer by Purchaser and further provides that, subject to the satisfaction
or waiver of certain conditions, Purchaser will be merged with the Company (the
'Merger'), with the surviving corporation becoming an indirect wholly-owned
subsidiary of Parent (the 'Surviving Corporation'). In the Merger, each
outstanding Share and Preferred Share (other than Shares held by the Company as
treasury stock and Shares or Preferred Shares owned by stockholders who have
properly exercised their appraisal rights under Delaware law) will be converted
at the effective time of the Merger (the 'Effective Time') into the right to
receive, in the case of a Share, the Share Price, and, in the case of a
Preferred Share, the Preferred Share Price, in cash, without interest and less
any required withholding taxes (the 'Merger Consideration').
THE BOARD OF DIRECTORS OF THE COMPANY (THE 'BOARD') UNANIMOUSLY HAS
DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE COMPANY'S STOCKHOLDERS (THE 'STOCKHOLDERS'), HAS APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER ALL OF
THEIR SHARES AND PREFERRED SHARES PURSUANT THERETO.
Credit Suisse First Boston Corporation and CIBC World Markets Corp., the
Company's financial advisors (the 'Company Financial Advisors'), have delivered
to the Company their respective written opinions, dated the date of the Merger
Agreement, that the consideration to be paid in the Offer and the Merger is fair
to the Stockholders from a financial point of view. A copy of the opinion of
each Company Financial Advisor is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the 'Schedule 14D-9')
filed with the Securities and Exchange Commission (the 'Commission') in
connection with the Offer, a copy of which is being furnished to stockholders
concurrently herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
SECTION 1 BELOW) THAT NUMBER OF SHARES AND PREFERRED SHARES (THE 'MINIMUM NUMBER
OF SHARES') WHICH, TOGETHER WITH ANY SHARES AND PREFERRED SHARES THEN
BENEFICIALLY OWNED BY PARENT, WOULD REPRESENT AT LEAST A MAJORITY OF THE SHARES
OUTSTANDING ON A FULLY-DILUTED BASIS (THE 'MINIMUM CONDITION'). THE OFFER IS
ALSO SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTIONS 1, 14 AND 15.
1
<PAGE>
The Company has represented and warranted to Parent and Purchaser that, as
of June 4, 1999, 11,440,452 Shares were issued and outstanding, an aggregate of
851,152 Shares were reserved for issuance upon exercise of outstanding options
under the Company's Long-Term Stock Incentive Plan (1989) and 1992 Stock Option
Plan for Non-Employee Directors (collectively, the 'Option Plans'), 883,912
Shares were reserved for issuance upon conversion of the 7% Convertible
Subordinated Notes due May 1, 2005 of the Company (the 'Convertible Notes') and
188,467 Shares were reserved for issuance upon conversion of the Preferred
Shares. Based on such information, Purchaser believes that the Minimum Condition
will be satisfied if a combination of Shares and Preferred Shares representing a
minimum of 6,681,992 Shares are validly tendered and not withdrawn prior to the
Expiration Date. Parent and Purchaser do not currently own any Shares or
Preferred Shares.
Mr. Joseph F. Alibrandi, the Company's President, Chief Executive Officer
and Chairman of the Board, has agreed to tender pursuant to the Offer all of the
Shares and Preferred Shares held by him as of the commencement of the Offer
(which in the case of the Preferred Shares constitute the entire series). The
Schedule 14D-9 indicates that, to the best of the Company's knowledge, all of
the Company's other executive officers and directors who own Shares currently
intend to tender all of their Shares pursuant to the Offer.
The consummation of the Merger is subject to the satisfaction or waiver of
a number of conditions, including, if required, the approval of the Merger by
the requisite vote or consent of the holders of Shares. Under the Delaware
General Corporation Law (the 'DGCL'), the stockholder vote necessary to approve
the Merger will be the affirmative vote of at least a majority of the
outstanding Shares. If, however, Purchaser acquires at least 90% of the
outstanding Shares and Preferred Shares pursuant to the Offer or otherwise,
Purchaser would be able to effect the Merger pursuant to the 'short-form' merger
provisions of Section 253 of the DGCL, without prior notice to, or any action
by, any other stockholder of the Company. In such event, Purchaser intends to
effect the Merger as promptly as practicable following the purchase of Shares
and Preferred Shares in the Offer. See Section 11.
The Company has distributed one Right for each outstanding Share pursuant
to the Rights Agreement. The Company has represented in the Merger Agreement
that it has taken all action necessary to render the Rights inapplicable to the
Offer, the Merger, the Merger Agreement and the transactions contemplated
thereby. The Company also has represented in the Merger Agreement that the
approval by the Company's Board of the Merger and the Merger Agreement is
sufficient to render inapplicable to the Merger, the Merger Agreement and the
transactions contemplated thereby the provisions of Section 203 of the DGCL or
any antitakeover provision in the Company's certificate of incorporation and
bylaws. See Section 15.
The Merger Agreement is more fully described in Section 11. Certain federal
income tax consequences of the sale of Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares and Preferred Shares
by Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses
of Rothschild Inc., as Dealer Manager (in such capacity, the 'Dealer Manager'),
ChaseMellon Shareholder Services, L.L.C., as Depositary (the 'Depositary'), and
Innisfree M&A Incorporated, as Information Agent (the 'Information Agent'),
incurred in connection with the Offer. See Section 16.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended as
required or permitted by the Merger Agreement, the terms and conditions of any
such extension or amendment), the Purchaser will accept for payment and thereby
purchase all Shares and Preferred Shares validly tendered and not withdrawn in
accordance with the procedures set forth in Section 4 on or prior to the
Expiration Date (as hereinafter defined). The term 'Expiration Date' means 12:00
midnight, New York City time, on July 13, 1999, unless and until the Purchaser,
in accordance with the Merger Agreement, shall have extended the period of time
for which the Offer is open, in which event the term 'Expiration Date' shall
mean the time and date at
2
<PAGE>
which the Offer, as so extended by the Purchaser, shall expire. In the Merger
Agreement, Parent and Purchaser have agreed that if all conditions to the Offer
are not satisfied or waived on the scheduled Expiration Date, Purchaser must
extend the Offer for additional periods; provided, however, that Purchaser is
not required to extend the Offer beyond the 60th business day after commencement
of the Offer (or, if the period of time for any applicable review process under
the Exon-Florio Act (as defined in Section 2) has not expired by such date, then
the date on which the Exon-Florio review process is completed).
Any such extension will be followed as promptly as practicable by public
announcement thereof, to be made no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date. Without
limiting the manner in which Purchaser may choose to make any public
announcement, subject to applicable law (including Rules 14d-4(c) and 14d-6(d)
under the Exchange Act, which require that material changes be promptly
disseminated to holders of Shares), Purchaser shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to the Dow Jones News Service.
If, in accordance with the Merger Agreement, Purchaser makes a material
change in the terms of the Offer or waives a material condition to the Offer,
Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the offer, other than a change in
price or a change in percentage of securities sought or a change in any dealer's
soliciting fee, will depend upon the facts and circumstances, including the
materiality, of the changes. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought or a change
in any dealer's soliciting fee, a minimum ten business day period from the date
of such change is generally required to allow for adequate dissemination to
stockholders. Accordingly, if prior to the Expiration Date, Purchaser (with the
approval of the Company as required by the Merger Agreement) decreases the
number of Shares or Preferred Shares being sought, or increases or decreases the
consideration offered pursuant to the Offer, and if the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day from
the date that notice of such increase or decrease is first published, sent or
given to holders of Shares and Preferred Shares, the Offer will be extended at
least until the expiration of such ten business day period. For purposes of the
Offer, a 'business day' means any day other than a Saturday, Sunday or a federal
holiday and consists of the time period from 12:01 a.m. through 12:00 midnight,
New York City time.
In the Merger Agreement, the Company has agreed to furnish Purchaser with
the Company's stockholder list and security position listings for the purpose of
disseminating the Offer to holders of Shares and Preferred Shares. This Offer to
Purchase and the related Letter of Transmittal and, if required, other relevant
materials will be mailed to record holders of Shares and Preferred Shares and
will be furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares and Preferred Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. For purposes of Sections 2, 3 and 4
of this Offer to Purchase, references to 'Shares' shall include the Preferred
Shares unless the context otherwise requires.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended in accordance with the Merger Agreement, the
terms and conditions of the Offer as so extended or amended), Purchaser will
purchase, by accepting for payment, and will pay for, all Shares validly
tendered and not withdrawn (as permitted by Section 4) prior to the Expiration
Date, promptly after the Expiration Date, if the conditions to the Offer set
forth in Section 14 have each been satisfied or waived, including without
limitation the expiration or termination of the waiting periods applicable to
the acquisition of Shares and Preferred Shares pursuant to the Offer under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the 'HSR
Act'), and compliance with the requirements of Section 721 of the Defense
Production Act of 1950 (the 'Exon-Florio Act'), as discussed in Section 15. In
addition, subject to applicable rules of the Commission, Purchaser expressly
3
<PAGE>
reserves the right to delay acceptance for payment of, or payment for, Shares
pending receipt of any regulatory or governmental approvals specified in
Section 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) share certificates for
such Shares ('Share Certificates') or confirmation (a 'Book-Entry Confirmation')
of the book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company (the 'Book-Entry Transfer Facility'), pursuant to the
procedures set forth in Section 3, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer, and (iii) any other documents required by the Letter
of Transmittal.
The term 'Agent's Message' means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of the Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance of such Shares for payment pursuant to the Offer. In all cases, upon
the terms and subject to the conditions of the Offer, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering stockholders
for the purpose of receiving payment from Purchaser and transmitting payment to
validly tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE
PURCHASE PRICE FOR SHARES BE PAID BY PURCHASER BY REASON OF ANY DELAY IN MAKING
SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Share Certificates are submitted representing more Shares than are
tendered, Share Certificates representing unpurchased or untendered Shares will
be returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility pursuant to the procedures set forth in Section 3,
such Shares will be credited to an account maintained within the Book-Entry
Transfer Facility), as promptly as practicable following the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, Purchaser shall increase the
consideration offered to holders of Shares pursuant to the Offer, such increased
consideration shall be paid to all holders of Shares that are purchased pursuant
to the Offer, whether or not such Shares were tendered prior to such increase in
consideration.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of Purchaser's subsidiaries or affiliates the
right to purchase all or any portion of the Shares tendered pursuant to the
Offer, but any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer or prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
Valid Tender of Shares. Except as set forth below, in order for Shares to
be validly tendered pursuant to the Offer, (i) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter of
Transmittal must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase on or prior to the Expiration Date
and either Share Certificates representing tendered Shares must be received by
the Depositary, or such Shares must be tendered pursuant to the procedure for
book-entry transfer set forth below and a Book-Entry Confirmation must be
received by the Depositary, in each case on or prior to the Expiration Date, or
(ii) the guaranteed delivery procedures set forth below must be complied with.
4
<PAGE>
The method of delivery of Share Certificates and the Letter of Transmittal
and all other required documents, including delivery through the Book-Entry
Transfer Facility, is at the election and sole risk of the tendering
stockholder. The Shares will be deemed delivered only when actually received by
the Depositary (including, in the case of a book-entry transfer, by Book-Entry
Confirmation). If delivery is by mail, registered mail with return receipt
requested, properly insured, is recommended. In all cases, sufficient time
should be allowed to ensure timely delivery.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of the
Book-Entry Transfer Facility may make book-entry delivery of Shares by causing
the Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer into the Depositary's account
at the Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer, and
any other required documents must, in any case, be transmitted to and received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
'Eligible Institution'), unless the Shares tendered thereby are tendered (i) by
a registered holder of Shares who has not completed either the box labeled
'Special Payment Instructions' or the box labeled 'Special Delivery
Instructions' on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instruction 1 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made to, or
Share Certificates for unpurchased Shares are to be issued or returned to, a
person other than the registered holder, then the tendered certificates must be
endorsed or accompanied by appropriate stock powers, signed exactly as the name
or names of the registered holder or holders appear on the Share Certificates,
with the signatures on the Share Certificates or stock powers guaranteed by an
Eligible Institution as provided in the Letter of Transmittal. See Instructions
1 and 5 of the Letter of Transmittal.
If the Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date, or the procedures for book-entry transfer
cannot be completed on a timely basis, such Shares may nevertheless be tendered
if all of the following guaranteed delivery procedures are duly complied with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation)
representing all tendered Shares, in proper form for transfer together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal
5
<PAGE>
are received by the Depositary, within three New York Stock Exchange
('NYSE') trading days after the date of execution of such Notice of
Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in such Notice of Guaranteed
Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering stockholders at the same
time, and will depend upon when Share Certificates or Book-Entry Confirmations
of such Shares are received into the Depositary's account at the Book-Entry
Transfer Facility.
Backup Federal Tax Withholding. UNDER THE FEDERAL INCOME TAX LAWS, THE
DEPOSITARY WILL BE REQUIRED TO WITHHOLD 31% OF THE AMOUNT OF ANY PAYMENTS MADE
TO CERTAIN STOCKHOLDERS PURSUANT TO THE OFFER. TO PREVENT BACKUP FEDERAL INCOME
TAX WITHHOLDING ON PAYMENTS MADE TO CERTAIN STOCKHOLDERS WITH RESPECT TO THE
PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER
MUST PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER IDENTIFICATION NUMBER AND
CERTIFY, UNDER PENALTY OF PERJURY, THAT HE IS NOT SUBJECT TO BACKUP FEDERAL
INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE
LETTER OF TRANSMITTAL. SEE INSTRUCTION 10 OF THE LETTER OF TRANSMITTAL.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints Purchaser and any Purchaser designee, and each
of them, as such stockholder's attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by Purchaser and with respect to any and
all other Shares and other securities or rights issued or issuable in respect of
such Shares on or after the date of this Offer to Purchase. All such powers of
attorney and proxies shall be considered irrevocable and coupled with an
interest in the tendered Shares. Such appointment will be effective when, and
only to the extent that, Purchaser accepts such Shares for payment. Upon payment
by Purchaser for the Shares, all powers of attorney and proxies given by such
stockholder with respect to such Shares and such other securities or rights
prior to such payment will be revoked, without further action, and no subsequent
powers of attorney and proxies may be given by such stockholder (and, if given,
will not be deemed effective). The designees of Purchaser will, with respect to
the Shares for which such appointment is effective, be empowered to exercise all
voting and other rights of such stockholder as they in their sole discretion may
deem proper at any annual or special meeting of the Company's stockholders, or
any adjournment or postponement thereof. Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon the
payment for such Shares, Purchaser or its designee must be able to exercise full
voting, consent and other rights with respect to such Shares and other
securities, including voting at any meeting of the Company's stockholders.
Determination of Validity. All questions as to the form of documents and
validity, eligibility (including time of receipt) and acceptance for payment of
any tender of Shares will be determined by Purchaser, in its discretion, whose
determination shall be final and binding on all parties. Purchaser reserves the
right to reject any or all tenders determined by it not to be in proper form or
the acceptance of or payment for which may, in the opinion of Purchaser's
counsel, be unlawful. Purchaser also reserves the right (subject to the
provisions of the Merger Agreement) to waive any of the conditions of the Offer
or any defect or irregularity in any tender of Shares of any particular
stockholder whether or not similar defects or irregularities are waived in the
case of other stockholders.
Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding. No tender of Shares will be deemed to have been validly made until
all defects and irregularities with respect to such tender have been cured or
waived. None of Purchaser, Parent or any of their affiliates or assigns, if any,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be under any duty to give any
6
<PAGE>
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time on or prior to the Expiration
Date and, unless theretofore accepted for payment as provided herein, may also
be withdrawn at any time after August 13, 1999. A withdrawal of Shares will also
constitute a withdrawal of the associated Rights. Rights may not be withdrawn
unless the associated Shares are also withdrawn.
If, for any reason whatsoever, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of Purchaser, retain tendered Shares and such Shares may
not be withdrawn except to the extent that the tendering stockholder is entitled
to and duly exercises withdrawal rights as described in this Section 4. Any such
delay will be by an extension of the Offer to the extent required by law.
In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn, and (if Share
Certificates have been tendered) the name of the registered holder of the Shares
as set forth in the Share Certificate, if different from that of the person who
tendered such Shares. If Share Certificates have been delivered or otherwise
identified to the Depositary, then prior to the physical release of such
certificates, the tendering stockholder must submit the serial numbers shown on
the particular certificates evidencing the Shares to be withdrawn and the
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Shares tendered for the account of the
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer set forth in Section 3, the notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares, in which case a notice of withdrawal
will be effective if delivered to the Depositary by any method of delivery
described in the first sentence of this paragraph. Withdrawals of Shares may not
be rescinded. Any Shares properly withdrawn will be deemed not validly tendered
for purposes of the Offer, but may be retendered at any subsequent time prior to
the Expiration Date by following any of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its discretion, whose
determination shall be final and binding. None of Purchaser, Parent or any of
their affiliates or assigns, if any, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES. The following is a general
summary of certain U.S. federal income tax consequences of the Offer and the
Merger relevant to a beneficial holder of Shares whose Shares are tendered and
accepted for payment pursuant to the Offer or whose Shares are converted to cash
in the Merger (a 'Holder'). The discussion is based on the Internal Revenue Code
of 1986, as amended (the 'Code'), regulations issued thereunder, judicial
decisions and administrative rulings, all of which are subject to change,
possibly with retroactive effect. The following does not address the U.S.
federal income tax consequences to all categories of Holders that may be subject
to special rules (e.g., holders who acquired their Shares pursuant to the
exercise of employee stock options or other compensation arrangements with the
Company, foreign holders, insurance companies, tax-exempt organizations, dealers
in securities and persons who have acquired the Shares as part of a straddle,
hedge, conversion transaction or other integrated investment), nor does it
address the federal income tax consequences to persons who do not hold the
Shares as 'capital assets' within the meaning of Section 1221 of the Code
(generally, property
7
<PAGE>
held for investment). Holders should consult their own tax advisors regarding
the U.S. federal, state, local and foreign income and other tax consequences of
the Offer and the Merger.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign income and other
tax laws. In general, a Holder who sells Shares pursuant to the Offer or has
Shares converted into the right to receive cash pursuant to the Merger will
recognize gain or loss for federal income tax purposes equal to the difference,
if any, between the amount of cash received and the Holder's adjusted tax basis
in the Shares sold pursuant to the Offer or converted into the right to receive
cash pursuant to the Merger. Gain or loss will be determined separately for each
block of Shares (i.e., Shares acquired at the same cost in a single transaction)
tendered pursuant to the Offer or converted into the right to receive cash
pursuant to the Merger. Such gain or loss will be long-term capital gain or loss
if the Holder has held the Shares for more than one (1) year at the time of the
consummation of the Offer or the Merger. Capital gains recognized by an
individual investor (or an estate or certain trusts) upon a disposition of a
Share that has been held for more than one year generally will be subject to a
maximum tax rate of 20% or, in the case of a Share that has been held for one
year or less, will be subject to tax at ordinary income rates. Certain
limitations apply to the use of capital losses.
Holders who receive cash pursuant to the exercise of appraisal rights with
respect to their Shares generally will be subject to the same treatment as that
described above for Holders who receive cash for Shares pursuant to the Offer
and Merger.
6. PRICE RANGE OF THE SHARES; DIVIDENDS. According to the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1998 (the 'Company
1998 Annual Report'), the Shares are listed and traded principally on the NYSE
and the Pacific Exchange, Inc. (the 'PXE'). The Preferred Shares are not listed
or traded on any exchange. The following table sets forth, for the periods
indicated, the reported high and low sale prices for the Shares on the NYSE
Composite Tape.
<TABLE>
<CAPTION>
SHARES
--------------
HIGH LOW
---- ---
<S> <C> <C>
1997
First Quarter................................................................................ $14 1/4 $11 5/8
Second Quarter............................................................................... 11 7/8 9 1/8
Third Quarter................................................................................ 11 3/4 10 1/2
Fourth Quarter............................................................................... 15 3/16 10 7/16
1998
First Quarter................................................................................ 12 3/4 7 1/8
Second Quarter............................................................................... 15 13/16 12 1/2
Third Quarter................................................................................ 15 7/8 12 15/16
Fourth Quarter............................................................................... 14 15/16 12 15/16
1999
First Quarter................................................................................ 17 3/4 11 7/8
Second Quarter............................................................................... 24 7/16 17 3/16
Third Quarter (through June 14, 1999)........................................................ 27 9/16 23 15/16
</TABLE>
On June 8, 1999, the last full day of trading prior to the announcement of
the Merger, the reported closing price on the NYSE Composite Tape for the Shares
was $26 7/8 per Share. On June 14, 1999, the last full day of trading prior to
the commencement of the Offer, the reported closing price on the NYSE Composite
Tape for the Shares was $27 1/2 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A
CURRENT MARKET QUOTATION FOR THE SHARES.
The Company did not declare or pay any cash dividends with respect to the
Shares during any of the periods indicated in the table. On May 1, 1999, the
Company paid a dividend of $3.25 per Preferred Share to holders of record as of
April 30, 1999. Under the terms of the Merger Agreement, the Company is not
permitted to declare or pay dividends with respect to the Shares without the
prior written consent of Parent, and Parent does not intend to consent to any
such declaration or payment.
8
<PAGE>
The Purchaser believes, based upon publicly available information, that as
of the date of this Offer to Purchase, the Rights are listed on the NYSE and on
the PXE. The Rights are attached to the Shares and are not traded separately. As
a result, the sale prices per Share set forth above are the high and low sale
prices per Share and associated Right during such periods.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE
LISTINGS; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS.
Effect of the Offer on the Market for the Shares. The purchase of Shares
pursuant to the Offer will reduce the number of Shares that might otherwise
trade publicly and could adversely affect the liquidity and market value of the
remaining Shares held by the public. The purchase of Shares pursuant to the
Offer can also be expected to reduce the number of holders of Shares.
Stock Exchange Listings. According to the NYSE's published guidelines, the
NYSE would consider delisting the Shares if, among other things, the number of
record holders of at least 100 Shares should fall below 1,200, the number of
publicly held Shares (exclusive of holdings of officers, directors, their
immediate families and other concentrated holdings of 10% or more ('NYSE
Excluded Holdings')) should fall below 600,000 or the aggregate market value of
publicly held Shares (exclusive of NYSE Excluded Holdings) should fall below
$5,000,000.
According to the PXE's published guidelines, the PXE could consider
delisting the Shares if, among other things, there were fewer than 100,000
publicly held Shares exclusive of management and other concentrated holdings,
there were fewer than 500 record holders, there were fewer than 200 holders of
record of at least 100 Shares or the aggregate market value of publicly held
Shares (exclusive of management and other concentrated holdings) should fall
below $500,000 for a six month period.
Depending upon the number of Shares acquired pursuant to the Offer, the
Shares may no longer meet the requirements for continued listing on the NYSE or
on the PXE. According to the Company 1998 Annual Report, there were
approximately 4,664 holders of record of Shares as of December 31, 1998. If,
however, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NYSE or the PXE for
continued listing and/or trading and such trading of the Shares were
discontinued, the market for the Shares could be adversely affected.
In the event that the Shares were no longer listed or traded on the NYSE or
the PXE, it is possible that the Shares would trade on another securities
exchange or in the over-the-counter market and that price quotations would be
reported by such exchange, through the Nasdaq or other sources. Such trading and
the availability of such quotations would, however, depend upon the number of
stockholders and/or the aggregate market value of the Shares remaining at such
time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Securities Exchange Act of 1934, as amended (the 'Exchange Act') as
described below and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Registration
of the Shares may be terminated upon application by the Company to the
Commission if the Shares are not listed on a 'national securities exchange' and
there are fewer than 300 record holders of Shares. Termination of registration
of the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to its stockholders and the Commission
and would make certain provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b) and the requirements of furnishing a
proxy statement in connection with stockholders' meetings pursuant to Section
14(a), no longer applicable to the Company. If the Shares are no longer
registered under the Exchange Act, the requirements of Rule 13e-3 under the
Exchange Act with respect to 'going private' transactions would no longer be
applicable to the Company. Furthermore, the ability of 'affiliates' of the
Company and persons holding 'restricted securities' of the Company to dispose of
such securities pursuant to Rule 144 promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. If, as a result of the purchase
of Shares pursuant to the Offer or the Merger, the Company is no longer required
to maintain registration of the Shares under the Exchange Act, the Purchaser
intends to cause the Company to apply for termination of such registration. See
Section 11.
9
<PAGE>
Based upon publicly available information, the Purchaser believes that, as
of the date of this Offer to Purchase, the Rights are registered under the
Exchange Act and are listed on the NYSE and on the PXE, but are attached to the
Shares and are not separately transferable.
If registration of the Shares is not terminated prior to the Merger, the
Shares will be delisted from all stock exchanges and the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
Margin Regulations. The Shares are currently 'margin securities' under the
regulations of the Board of Governors of the Federal Reserve System (the
'Federal Reserve Board'), which have the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares for the purpose of
buying, carrying or trading in securities ('Purpose Loans'). Depending upon
factors such as the number of record holders of the Shares and the number and
market value of publicly held Shares, following the purchase of Shares pursuant
to the Offer, the Shares might no longer constitute 'margin securities' for
purposes of the Federal Reserve Board's margin regulations and, therefore, could
no longer be used as collateral for Purpose Loans made by brokers. In addition,
if registration of the Shares under the Exchange Act were terminated, the Shares
would no longer constitute 'margin securities.'
8. CERTAIN INFORMATION CONCERNING THE COMPANY. According to the Company
1998 Annual Report, the Company is a Delaware corporation with its principal
executive offices located at 1955 N. Surveyor Avenue, Simi Valley, California
93063 (telephone no. 805-526-5700). The Company 1998 Annual Report indicates
that the Company's continuing operations are in the aerospace business, where it
develops, manufactures and markets proprietary fluid (pneumatic, hydraulic and
fuel) control valves and control systems and fire and overheat detection
products and systems for aircraft, land-based gas turbines, and other industrial
applications, radio frequency and high temperature cable and cable systems and
hydrogen and oxygen analyzers.
Selected Financial Information. Set forth below is certain consolidated
financial information with respect to the Company, excerpted or derived from the
Company 1998 Annual Report and its Quarterly Report on Form 10-Q for the quarter
ended April 30, 1999, each as filed with the Commission pursuant to the Exchange
Act, and, with respect to information for the six months ended April 30, 1998,
obtained from the Company.
More comprehensive financial information is included in such reports and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such reports and other documents
and all of the financial information (including any related notes) contained
therein. Such reports, documents and financial information may be inspected and
copies may be obtained from the Commission in the manner set forth below.
10
<PAGE>
WHITTAKER CORPORATION
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, YEAR ENDED OCTOBER 31,
------------------ ------------------------------
1999 1998 1998 1997 1996
------- ------- ------- -------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS*
Sales..................................................... 70,935 62,023 131,477 89,782 98,647
Operating income (loss)................................... 24,243 16,207 39,358 (10,838) 20,076
Income (loss) from continuing operations, before
extraordinary item...................................... 15,974 7,672 40,090 (28,287) 9,817
Income (loss) from discontinued operations................ -- (1,487) (773) (127,095) (26,944)
Gain (loss) on disposal of discontinued operations........ -- 10,085 9,221 (4,791) --
Extraordinary item........................................ -- -- -- (3,409) --
Net income (loss)......................................... 15,974 16,270 48,538 (163,582) (17,127)
Basic earnings (loss) per share
Continuing operations, before extraordinary item..... 1.40 0.68 3.56 (2.54) .98
Discontinued operations.............................. -- 0.77 .75 (11.83) (2.68)
Extraordinary item................................... -- -- -- (.31) --
Net income (loss).................................... 1.40 1.45 4.31 (14.68) (1.70)
Average Shares outstanding (in thousands)................. 11,410 11,205 11,264 11,144 10,065
OTHER DATA*
Working capital........................................... 52,802 (41,125) 48,509 (76,366) (65,731)
Total assets.............................................. 123,310 129,372 136,578 162,933 340,448
Long-term debt............................................ 39,000 25 60,368 222 453
Stockholders' equity (deficit)............................ 40,383 (14,453) 23,478 (30,723) 131,136
</TABLE>
- ------------
* Operating results and balance sheet items reflect the segregation of
continuing operations from discontinued operations. The 1997 loss from
continuing operations included a $15.7 million write-down of an asset held for
sale. See Notes 2 and 4 of Notes to Consolidated Financial Statements in Part
II, Item 8 of the Company 1998 Annual Report.
Other Financial Information. During the course of the discussions between
Parent and the Company that led to the execution of the Merger Agreement, the
Company provided Parent with certain information about the Company and its
financial performance which is not publicly available. This information
included, in May 1999, an updated forecast showing sales of $139.0 million and
operating income of $48.0 million for the year ending October 31, 1999. Parent
had previously received from the Company a five year forecast showing sales
growing from $139.0 million for the year ending October 31, 1999 to $217.5
million for the year ending October 31, 2003, a 56% increase over the period,
and operating income growing from $43.5 million for the year ending October 31,
1999 to $64.7 million for the year ending October 31, 2003, an increase of 49%
over the period.
The foregoing information was prepared by the Company solely for internal
use and not for publication or with a view to complying with the published
guidelines of the Commission regarding projections or with the guidelines
established by the American Institute of Certified Public Accountants and are
included in this Offer to Purchase only because they were furnished to Parent.
The foregoing information is 'forward-looking' and inherently subject to
significant uncertainties and contingencies, many of which are beyond the
control of the Company, including industry performance, general business and
economic conditions, changing competition, adverse changes in applicable laws,
regulations or rules governing environmental, tax or accounting matters and
other matters. The Company has advised Parent that although the Company believes
the assumptions used in preparing this information were reasonable when made,
such assumptions are inherently subject to significant uncertainties and
contingencies which are impossible to predict and beyond the Company's control.
Accordingly, there can be no assurance, and no representation or warranty is
made, that actual results
11
<PAGE>
will not vary materially from those reflected in the forecasts described above.
The inclusion of this information should not be regarded as an indication that
Parent, Purchaser, the Company or anyone who received this information
considered it a reliable prediction of future events, and this information
should not be relied on as such. None of Parent, Purchaser, the Company nor
their respective financial advisors assumes any responsibility for the validity,
reasonableness, accuracy or completeness of the projections, and the Company has
made no representation to Parent or Purchaser regarding the forecasts described
above. The forecasts have not been adjusted to reflect the effects of the Offer
and the Merger.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information as
of particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interests of such persons in transactions with the
Company is required to be disclosed in proxy statements distributed to the
Company's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center,
5000 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of such
information should be obtainable by mail, upon payment of the Commission's
customary charges, by writing to the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a website on
the internet at http://www.sec.gov that contains reports, proxy statements and
other information relating to the Company which have been filed via the
Commission's EDGAR System.
9. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER. Parent, a public
limited company incorporated under the laws of England and Wales, is an
international aerospace and electronics engineering company. Its businesses
consist of avionics, aerospace components, defense systems, electronic
components, electronic systems and industrial controls. Parent's ordinary shares
are listed on the London Stock Exchange. The principal executive offices of
Parent are located at Farrs House, Cowgrove, Wimborne, Dorset BH21 4EL, United
Kingdom (telephone no. 011-44-1202-847-847).
Meggitt International Limited, a direct wholly-owned subsidiary of Parent
('Meggitt International'), is a holding company for non-U.K. subsidiaries of
Parent. The principal executive offices of Meggitt International, a private
limited company incorporated under the laws of England and Wales, are located at
Farrs House, Cowgrove, Wimborne, Dorset BH21 4EL, United Kingdom (telephone no.
011-44-1202-847-847).
Meggitt-USA, Inc., a direct wholly-owned subsidiary of Meggitt
International ('Meggitt-USA'), is a holding company for U.S. subsidiaries of
Parent. The principal executive offices of Meggitt-USA, a Delaware corporation,
are located at 540 North Commercial Street, Manchester, New Hampshire 03101
(telephone no. 603-669-9971).
Meggitt America, Inc., a direct wholly-owned subsidiary of Meggitt-USA
('Meggitt America'), holds all of the outstanding capital stock of Purchaser and
has no other business activities. The principal executive offices of Meggitt
America, a Delaware corporation, are located at 540 North Commercial Street,
Manchester, New Hampshire 03101 (telephone no. 603-669-9971).
Purchaser was incorporated on May 27, 1999 under the laws of the State of
Delaware for the purpose of acquiring the Company. The principal executive
offices of Purchaser are located at 540 North Commercial Street, Manchester, New
Hampshire 03101 (telephone no. 603-669-9971). Purchaser has not, and is not
expected to, engage in any business other than in connection with its
organization, the Offer and the Merger.
The name, business address, principal occupation or employment, five year
employment history and citizenship of each director and executive officer of
Parent, Meggitt International, Meggitt-USA, Meggitt America and Purchaser are
set forth in Schedule I hereto.
12
<PAGE>
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries excerpted from Parent's consolidated
financial statements for the three years ended December 31, 1998 (the 'Parent
Financial Statements'). The following summary is qualified in its entirety by
reference to the Parent Financial Statements, a copy of which has been filed as
an exhibit to the Tender Offer Statement on Schedule 14D-1 filed with the
Commission by the Purchaser with respect to the Offer (the 'Schedule 14D-1').
Such document should be available for inspection and copies obtainable in the
manner set forth in Section 8 (except that they will not be available at the
regional offices of the Commission).
The Parent Financial Statements are presented in pounds sterling and have
been prepared in accordance with accounting principles generally accepted in the
United Kingdom ('U.K. GAAP'), which, as described below, differ in certain
significant respects from accounting principles generally accepted in the United
States ('U.S. GAAP').
13
<PAGE>
MEGGITT PLC
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------------------
1998 1997 1996
-------- -------- --------
(POUNDS STERLING IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
PROFIT AND LOSS ACCOUNT
SALES......................................................................... 293,901 265,126 256,299
Cost of sales................................................................. (174,941) (163,454) (166,984)
-------- -------- --------
GROSS PROFIT.................................................................. 118,960 101,672 89,315
Net operating expenses -- before amortisation of goodwill..................... (81,133) (69,102) (66,156)
-- amortisation of goodwill........................ (847) -- --
Provisions released........................................................... -- -- 2,440
-------- -------- --------
OPERATING PROFIT.............................................................. 36,980 32,570 25,599
EXCEPTIONAL ITEMS
Net profit on disposal of properties..................................... -- 214 --
Loss on disposal of discontinued operations.............................. -- (827) (30,749)
Provisions released...................................................... -- 827 31,399
-------- -------- --------
PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST................................. 36,980 32,784 26,249
Interest payable (net)................................................... (1,624) (1,324) (1,909)
-------- -------- --------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION................................. 35,356 31,460 24,340
Tax on profit on ordinary activities..................................... (11,587) (10,012) (7,932)
-------- -------- --------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION.................................. 23,769 21,448 16,408
Minority interest -- equity.............................................. (867) (897) (564)
-------- -------- --------
PROFIT FOR FINANCIAL YEAR..................................................... 22,902 20,551 15,844
Dividends................................................................ (11,561) (10,357) (9,175)
-------- -------- --------
RETAINED PROFIT FOR THE FINANCIAL YEAR........................................ 11,341 10,194 6,669
-------- -------- --------
Earnings per share............................................................ 10.3p 9.4p 7.3p
Earnings per share -- IIMR basis.............................................. 10.7p 9.3p 7.0p
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------------------
1998 1997 1996
-------- -------- --------
(POUNDS STERLING IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET
FIXED ASSETS
Goodwill...................................................................... 46,376 -- --
Other intangible assets....................................................... 1,883 72 307
Tangible assets............................................................... 53,600 37,906 34,954
Investments................................................................... 7,021 5,998 6,576
-------- -------- --------
108,880 43,976 41,837
CURRENT ASSETS
Stocks........................................................................ 54,681 38,375 40,545
Debtors....................................................................... 71,417 68,655 59,375
Cash at bank and in hand...................................................... 39,510 40,335 33,948
-------- -------- --------
165,608 147,365 133,868
Creditors -- amounts falling due within one year.............................. (138,206) (78,174) (72,945)
-------- -------- --------
NET CURRENT ASSETS............................................................ 27,402 69,191 60,923
-------- -------- --------
TOTAL ASSETS LESS CURRENT LIABILITIES......................................... 136,282 113,167 102,760
Creditors -- amounts falling due after more than one year..................... (41,776) (37,911) (36,390)
Provisions for liabilities and charges -- deferred tax........................ (1,678) (912) (544)
-------- -------- --------
NET ASSETS.................................................................... 92,828 74,344 65,826
-------- -------- --------
CAPITAL AND RESERVES
Called up share capital....................................................... 11,209 10,996 10,915
Share premium account......................................................... 62,269 55,077 53,601
Revaluation reserve........................................................... 1,446 1,465 2,828
Other reserves................................................................ 17,904 5,398 (2,618)
-------- -------- --------
SHAREHOLDERS FUNDS -- EQUITY.................................................. 92,828 72,936 64,726
Minority interest -- equity................................................... -- 1,408 1,100
-------- -------- --------
92,828 74,344 65,826
-------- -------- --------
</TABLE>
14
<PAGE>
Neither Purchaser nor Parent is subject to the informational filing
requirements of the Exchange Act. Accordingly, Parent does not reconcile its
consolidated financial information to U.S. GAAP. However, the differences
between U.K. GAAP and U.S. GAAP that Parent believes would have a material
effect on the Parent Financial Statements are described below.
Goodwill. Under U.K. GAAP, the policy followed by Parent prior to the
introduction of FRS 10 (which is effective for accounting periods ending on or
after December 23, 1998 and adopted by the Parent on a prospective basis) was to
write-off goodwill against shareholders' funds in the year of acquisition. In
accordance with FRS 10 the Parent capitalized goodwill arising from acquisitions
made during 1998 and this goodwill is being amortized over 20 years. Under U.S.
GAAP, intangibles arising on the acquisition of a business or an equity stake
are capitalized and amortized over their useful economic lives.
Deferred Taxation. Under the U.K. GAAP partial provision method, deferred
taxation is only provided for where timing differences are expected to reverse
in the foreseeable future. For U.S. GAAP under the liability method, deferred
taxation is provided for temporary differences between the financial reporting
basis and the tax basis of assets and liabilities at enacted tax rates.
Pensions. Under U.K. GAAP, SSAP 24 permits the use of a range of actuarial
methods and assumptions, providing the resulting annual pension expense is a
substantially level percentage of current and expected future pensionable
payroll. No specific method of amortization of variations from regular cost over
the service lives of members is required. U.S. GAAP prescribes an actuarial
method (the projected unit credit method) which requires use of best estimates
of assumptions based on current market rates and amortization methods which
smooth fluctuations in pension costs due to changes in plan asset values and
projected benefit obligation arising from actuarial assumption modifications.
Except as set forth elsewhere in this Offer to Purchase: (i) neither Parent
nor Purchaser, nor, to the best knowledge of Parent or Purchaser, any of the
persons listed in Schedule I hereto or any associate or majority-owned
subsidiary of Parent or any of the persons so listed, beneficially owns or has a
right to acquire any Shares or any other equity securities of the Company; (ii)
neither Parent nor Purchaser, nor, to the knowledge of Parent or Purchaser, any
of the persons or entities referred to in clause (i) above or any of their
executive officers, directors or subsidiaries has effected any transaction in
the Shares or any other equity securities of the Company during the past 60
days; (iii) neither Parent nor Purchaser, nor, to the knowledge of Parent or
Purchaser, any of the persons listed in Schedule I hereto has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, but not limited to, the transfer or
voting thereof, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies, consents or authorizations; (iv) since November 1, 1995, the
commencement of the Company's third full fiscal year preceding the date of this
Offer to Purchase, there have been no transactions which would require reporting
under the rules and regulations of the Commission between any of Parent or
Purchaser or any of their respective subsidiaries or, to the best knowledge of
Parent or Purchaser, any of the persons listed in Schedule I hereto, on the one
hand, and the Company or any of its executive officers, directors or affiliates,
on the other hand; and (v) since November 1, 1995, the commencement of the
Company's third full fiscal year preceding the date of this Offer to Purchase,
there have been no contracts, negotiations or transactions between either of
Parent or Purchaser or any of their respective subsidiaries or, to the best
knowledge of Parent or Purchaser, any of the persons listed in Schedule I
hereto, on the one hand, and the Company or its subsidiaries or affiliates, on
the other hand, concerning a merger, consolidation or acquisition, tender offer
or other acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets of the Company.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. Between June and
November 1997, Parent investigated possible acquisitions of the Company's safety
business and of a product line of the Company's former electronics business. No
agreements were reached.
In late February 1999, Parent was contacted by one of the Company Financial
Advisors to explore Parent's interest in a possible acquisition of the Company.
15
<PAGE>
On March 10, 1999, Parent executed a confidentiality agreement with one of
the Company Financial Advisors on behalf of the Company (the 'Confidentiality
Agreement') and Parent was subsequently provided with a confidential information
memorandum about the Company.
On March 30, 1999, Parent submitted a non-binding indication of value in
the range of $24-26 per Share in cash and subsequently was invited to carry out
additional due diligence.
Parent was given additional information about the Company and, on several
occasions in April and May 1999, visited with the Company's management and
toured the Company's facilities.
On May 24, 1999, Parent submitted a letter to the Company that proposed to
offer $27.50 per Share in cash subject to conditions. Parent also commented on
the Company's proposed form of merger agreement. On May 25, 1999, Parent's
financial advisor, Rothschild Inc., was advised by the Company Financial
Advisors that the Company's Board of Directors had reviewed Parent's and other
proposals and Parent was urged to increase its price and modify certain other
terms of its proposal.
On May 26, 1999, Parent submitted a letter to the Company revising its
proposal to increase its proposed offer price to $28 per Share and waive its
financing condition.
Between May 27 and June 8, 1999, Parent, Rothschild Inc. and Parent's
counsel, Weil, Gotshal & Manges LLP, negotiated the terms of the Merger
Agreement with the Company Financial Advisors and the Company's counsel, Davis
Polk & Wardwell. On June 4, 1999, after such negotiations were substantially
completed, Parent and the Company entered into a letter agreement pursuant to
which Parent agreed to take certain preliminary steps in accordance with U.K.
market practice regarding the Rights Issue described in Section 12 below and the
Company agreed that, prior to 8:00 a.m. London time on June 9, 1999, it would
not solicit any Acquisition Proposals (as defined), furnish information to or
participate in discussions or negotiations with any person that had made or
indicated an interest in making an Acquisition Proposal or enter into any
preliminary or definitive agreement relating to an Acquisition Proposal.
The Merger Agreement was approved by the Boards of Directors of Parent and
the Company on June 8, 1999 and signed and delivered prior to public
announcement of the Rights Issue in London at approximately 7:30 a.m. London
time on June 9, 1999. The Merger Agreement was publicly announced in the U.S.
prior to the opening of business, New York time, on June 9, 1999.
Concurrently with the Merger Agreement becoming effective, Joseph F.
Alibrandi, the Company's President, Chief Executive Officer and Chairman of the
Board of Directors, delivered a letter to Parent in which he agreed to tender
pursuant to the Offer all of the Shares and Preferred Shares held by him as of
the commencement of the Offer.
On June 15, 1999, Purchaser commenced the Offer.
11. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT AND OTHER AGREEMENTS; OTHER MATTERS. The purpose of the Offer and the
Merger is to enable Purchaser to acquire control of, and the entire equity
interest in, the Company. The Offer is intended to increase the likelihood that
the Merger will be effected promptly. The purpose of the Merger is to acquire
all outstanding Shares not acquired pursuant to the Offer or otherwise.
The Offer and the Merger are intended to enhance Parent's strategy of
increasing its focus in aerospace and electronics by exploiting niche markets
where product definition and market positioning are strong.
Parent intends, as soon as possible after consummation of the Offer and in
accordance with the Merger Agreement, to obtain majority representation on the
Company's Board of Directors. Following the Merger, the Board of Directors of
the Surviving Corporation will be substantially reduced.
Operationally, the Company's two divisions, safety and controls, fit into
two of Parent's strategic business units. In the period immediately following
the Merger, the Company's two divisions will report directly to Parent's chief
executive. Subsequently, the Company's safety division will be incorporated into
Parent's avionics business unit and the existing Company management will be
retained to manage the business. Following the combination of the Company's
controls division and Parent's aerospace components business unit, the combined
entity will be managed by a combination of existing Company and Parent aerospace
components management.
16
<PAGE>
Except as noted in this Offer to Purchase, Purchaser and Parent have no
present plans or proposals that would result in an extraordinary corporate
transaction, such as a merger, reorganization, liquidation, or sale or transfer
of assets, involving the Company or any of its subsidiaries or any other
material changes in the Company's capitalization, dividend policy, corporate
structure or business.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement
and is qualified in its entirety by reference to the Merger Agreement, which is
incorporated herein by reference and a copy of which has been filed with the
Commission as an exhibit to the Schedule 14D-1. The Merger Agreement may be
examined, and copies thereof may be obtained, as set forth in Section 8 above.
General. The Merger Agreement provides for the commencement of the Offer,
upon the terms and subject to the conditions set forth therein, and further
provides for the consummation of the Merger following the satisfaction or
waiver, if permitted by applicable law, of the conditions set forth in the
Merger Agreement.
In the Merger Agreement, the Company consented to the Offer and represented
that its Board of Directors has unanimously (i) determined that the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, are fair to and in the best interests of the Company's stockholders,
(ii) approved and adopted the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, in accordance with the DGCL, and
(iii) resolved (subject to the provision described in the second paragraph of
'Other Proposals' below) to recommend that the Company's stockholders accept the
Offer and approve and adopt the Merger Agreement and the Merger. The Company
also represented that its Board of Directors had received the written opinions
of the Company Financial Advisors, each dated the date of the Merger Agreement,
that the consideration to be paid in the Offer and Merger is fair to the
Company's stockholders from a financial point of view.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the DGCL,
Purchaser will be merged with the Company at the Effective Time. Following the
Merger, the separate corporate existences of Purchaser and the Company will
cease and the Surviving Corporation will succeed to and assume all the rights
and obligations of Purchaser and the Company in accordance with the DGCL.
At the Effective Time, each Share and each Preferred Share outstanding
immediately prior to the Effective Time (other than those held by the Company as
treasury stock or owned by Parent or any of its subsidiaries immediately prior
to the Effective Time, all of which will be cancelled, and dissenting Shares, if
any) will, by virtue of the Merger, be converted into the right to receive the
Merger Consideration, payable to the holder thereof upon surrender of the
certificates representing such Shares or Preferred Shares.
Subject to the terms and conditions in the Merger Agreement, (a) if
approval of the stockholders of the Company is required under the DGCL, a
Certificate of Merger shall be duly filed with the Secretary of State of the
State of Delaware as soon as practicable after obtaining such stockholder
approval, or (b) if such stockholder approval is not required to be obtained in
order to consummate the Merger, a Certificate of Ownership and Merger shall be
duly filed with the Secretary of State of the State of Delaware as soon as
practicable after the expiration of the Offer. If a stockholder vote is required
in connection with the Merger, Parent has agreed to cause all Shares owned by
Parent, Purchaser and their affiliates to be voted in favor of the Merger. If
Purchaser and/or Parent and its affiliates are the owners of at least 90% of the
outstanding shares of each class of stock following the Offer or otherwise, the
Merger will be consummated without a meeting or vote of stockholders in
accordance with the 'short-form' merger provisions of Section 253 of the DGCL.
Stock Option Plans. The Merger Agreement provides that at, or immediately
prior to the Effective Time, each employee and director stock option to purchase
Shares outstanding under any employee or director stock option or compensation
plan or arrangement of the Company, whether or not vested or exercisable, will
be canceled, and the Company shall pay each holder of any such option at or
promptly after the Effective Time for each such option, an amount in cash equal
to (i) the product of (A) the
17
<PAGE>
excess, if any, of the Share Price over the applicable exercise price of such
option and (B) the number of Shares each holder could have purchased (assuming
full vesting of all options) had such holder exercised such option in full
immediately prior to the Effective Time minus (ii) the amount of any applicable
withholding tax.
Prior to the Effective Time, to the extent required to effect the
transactions contemplated by the Merger Agreement, the Company has agreed to
take any actions necessary with respect to its stock option or compensation
plans or arrangements, including if applicable making amendments to the terms of
such stock option or compensation plans or arrangements.
Employee Benefits. Following the Effective Time, Parent will, or will cause
the Surviving Corporation to (i) honor all obligations under the employment
agreements of the Company and (ii) pay all benefits (including any vacation,
personal or sick days) accrued through the Effective Time under employee benefit
plans, programs, policies and arrangements of the Company (including any rabbi
trust agreement) in accordance with the terms thereof. Parent has also agreed to
provide, or cause the Surviving Corporation to provide, employees of the Company
or any of its subsidiaries as of the Effective Time (the 'Continuing Employees')
for a period of not less than one year following the Effective Time with
compensation and benefits which, in the aggregate, are not less favorable than
either the compensation and benefits provided to such employees immediately
prior to the Effective Time or the compensation and benefits provided to
similarly situated employees of Parent or any affiliate of Parent. Parent,
however, has the right to terminate the employment of any Continuing Employee
following the Effective Time, provided however that for a period of one year
following the Effective Time, Parent will, or will cause the Surviving
Corporation to, establish and maintain a plan to provide severance and
termination benefits to all Continuing Employees which are no less favorable
than the severance and termination benefits provided under the Company's plans
and arrangements in effect as of the date of the Merger Agreement as disclosed
to Parent in writing prior to the date hereof. With respect to medical benefits
provided to Continuing Employees after the Effective Time, Parent agrees that it
will, or it will cause the Surviving Corporation and its subsidiaries to, waive
waiting periods and pre-existing condition requirements (to the extent waived
under the Company's plans), and will give Continuing Employees credit for any
copayments and deductibles actually paid by such employees under the Company's
medical plans during the calendar year in which the Effective Time occurs. In
addition, service with the Company shall be recognized for purposes of
eligibility under the welfare plan in which Continuing Employees participate as
well as for purposes of the programs or policies for vacation pay and sick pay
in which Continuing Employees participate.
Board Representation; Amendments and Waivers. The Merger Agreement provides
that upon Purchaser's acceptance for payment pursuant to the Offer of a number
of Shares and Preferred Shares that satisfies the Minimum Condition, Parent
shall be entitled, subject to Section 14(f) of the Exchange Act, to designate
the number of directors, rounded up to the nearest whole number, on the
Company's Board of Directors that equals the product of (i) the total number of
directors on the Company's Board of Directors and (ii) the percentage that the
number of Shares beneficially owned by Parent bears to the total number of
Shares outstanding on a fully diluted basis, and the Company shall take all
action necessary to cause Parent's designees to be elected or appointed to the
Company's Board of Directors, including, without limitation, increasing the
number of directors, and seeking and accepting resignations of incumbent
directors. At such time, the Company will also use its best efforts to cause
individuals designated by Parent to constitute the number of members, rounded up
to the nearest whole number, on (i) each committee of the Board of Directors of
the Company and (ii) each board of directors of each subsidiary of the Company
(and each committee thereof) that represents the same percentage as such
individuals represent on the Board of Directors of the Company. Notwithstanding
the foregoing, Parent and the Company will use their reasonable efforts to
ensure that at least two members of the Company's Board of Directors as of the
date of the Merger Agreement who are not employees of the Company ('Continuing
Directors') will remain members of the Company's Board of Directors until the
Effective Time.
Any provision of the Merger Agreement may be amended or waived prior to the
Effective Time if, but only if, such amendment or waiver is in writing and
signed, in the case of any amendment, by the Company and Parent or, in the case
of a waiver, by the party against whom the waiver is to be effective.
18
<PAGE>
However, following the election or appointment of Parent's designees to the
Company's Board of Directors until the Effective Time, the approval of a
majority of the Continuing Directors shall be required to authorize any
termination of the Merger Agreement by the Company, any amendment of the Merger
Agreement requiring action by the Company's Board of Directors, any extension of
time for performance of any obligation or action under the Merger Agreement by
Parent or Purchaser and any waiver of compliance with any of the agreements or
conditions contained in the Merger Agreement for the Company's benefit
(including, with respect to the Offer, any waiver of the Minimum Condition, any
change in the form of or decrease in the consideration per Share or Preferred
Share, any decrease in the number of Shares or Preferred Shares sought or the
imposition of any additional conditions).
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including,
without limitation, (i) representations and warranties by the Company as to
corporate existence and power, authority relative to the Merger Agreement and
the transactions contemplated thereby, governmental consents and approvals,
non-contravention, capitalization, public filings, financial statements,
information supplied, absence of certain changes or undisclosed material
liabilities, litigation, taxes, employee benefit and labor matters, compliance
with applicable laws, finders' fees, environmental matters, antitakeover
statutes and the Rights Agreement, intellectual property, the Year 2000 issue,
properties and defaults under contracts, and (ii) representations and warranties
by Parent (with respect to itself and Purchaser) as to corporate existence and
power, authority relative to the Merger Agreement and the transactions
contemplated thereby, governmental consents and approvals, non-contravention,
information supplied, finders' fees and financing agreements.
Conduct of Business Until the Merger. The Merger Agreement provides that,
the Company will, and will cause its subsidiaries to, carry on their respective
business in the ordinary course consistent with past practices and use all
reasonable best efforts to preserve intact their business organizations and
relationships with third parties and to keep available the services of their
current officers and employees. The Merger Agreement further provides that,
without limiting the generality of the foregoing, (a) the Company will not adopt
or propose any change in its certificate of incorporation or any material change
in its bylaws; (b) the Company will not, and will not permit any of its
subsidiaries to, adopt a plan or agreement of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
material reorganization of the Company or any of its subsidiaries (other than a
liquidation or dissolution of any such subsidiary, a merger or consolidation
between wholly-owned subsidiaries of the Company or of any such wholly-owned
subsidiary into the Company); (c) the Company will not, and will not permit any
of its subsidiaries to, make any equity investment in or acquisition of any
business of any person or any material amount of assets, except (i) for any
capital expenditure permitted by the Merger Agreement, (ii) for equity
investment in any wholly-owned subsidiary of the Company or (iii) in the
ordinary course of business consistent with past practices; (d) the Company will
not, and will not permit any of its subsidiaries to, sell, lease, license or
otherwise dispose of any assets in an amount that would be material to the
Company and its subsidiaries, taken as a whole, except (i) pursuant to existing
contracts or commitments or (ii) in the ordinary course of business consistent
with past practices; (e) the Company will not, and will not permit any of its
subsidiaries to, declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its capital stock other than
(i) dividends or other distributions paid by any of its subsidiaries to the
Company or any other subsidiary of the Company and (ii) dividends payable in
accordance with the terms of the Preferred Shares; (f) the Company will not, and
will not permit any of its subsidiaries to, issue, sell, transfer, pledge or
dispose of any shares of, or securities convertible into or exchangeable for, or
options, warrants, calls commitments or rights of any kind to acquire, any
shares of capital stock of any class or series of the Company or its
subsidiaries other than (i) issuances pursuant to the exercise of options under
the Option Plans outstanding on the date of the Merger Agreement, (ii) issuances
pursuant to the conversion of the Preferred Shares and the Convertible Notes
outstanding on the date of the Merger Agreement and (iii) issuances by any of
its subsidiaries to the Company or any other subsidiary of the Company; (g) the
Company will not, and will not permit any of its subsidiaries to, redeem,
purchase or otherwise acquire directly or indirectly any of the Company's
capital stock; (h) the Company will not, and will not permit any of its
subsidiaries to, make or commit to make any capital expenditure, except in the
ordinary course of business or pursuant to the 1999 budget
19
<PAGE>
made available to Parent; (i) the Company will not, and will not permit any of
its subsidiaries to, (i) incur or assume any long-term or short-term debt or
issue any debt securities, except for borrowings under existing lines of credit
in the ordinary course of business consistent with past practice (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except in
the ordinary course of business consistent with past practice, and except for
obligations of the wholly-owned subsidiaries of the Company; (iii) make any
loans, advances or capital contributions to, or investment in, any other person,
except in the ordinary course of business consistent with past practice and
except to wholly owned subsidiaries of the Company or to the Company; (iv)
pledge or otherwise encumber shares of capital stock of the Company or its
subsidiaries; or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create any material Lien (as defined in the Merger Agreement)
thereupon, except in the ordinary course of business consistent with past
practice; (j) except as may be required by law or as contemplated by the Merger
Agreement or as required by existing agreements or arrangements, the Company
will not, and will not permit any of its subsidiaries to, increase in any manner
the compensation or benefits under the Benefit Plans (as defined in the Merger
Agreement) of any director, officer or employee or pay any benefit not required
by any plan and arrangement as in effect as of the date of the Merger Agreement
(including, without limitation, the granting of stock appreciation rights or
performance units), in each case other than in the ordinary course of business
consistent with past practice; (k) the Company will not, and will not permit any
of its subsidiaries to, enter into any material contract, agreement, commitment
or transaction, other than in the ordinary course of business consistent with
past practice; (l) except as may be required as a result of a change in law or
in U.S. GAAP, the Company will not, and will not permit its subsidiaries to,
change materially any of the accounting principles or practices used by it; (m)
the Company will not, and will not permit any of its subsidiaries to, revalue
any material assets (including, without limitation, writing down the value of
inventory or writing-off notes or accounts receivable) other than in the
ordinary course of business consistent with past practice or as required by U.S.
GAAP; (n) the Company will not, and will not permit any of its subsidiaries to,
make or revoke any tax election, or settle or compromise any tax liability, or
change any material aspect of its method of tax accounting, in each case other
than in the ordinary course of business consistent with past practice; (o) the
Company will not, and will not permit any of its subsidiaries to, pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than in the ordinary and usual
course of business consistent with past practice or waive the benefits of, or
agree to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is a party; (p) the
Company will not, and will not permit any of its subsidiaries to, settle or
compromise any pending or threatened suit, action or claim relating the
transactions contemplated hereby; (q) the Company will not, and will not permit
any of its subsidiaries to, enter into any agreement that limits or otherwise
restricts the Company or any of its subsidiaries or any successor thereto or
that could, after the Effective Time, limit or restrict the Surviving
Corporation and its affiliates (including Parent) or any successor thereto, from
engaging or competing in any line of business or in any geographic areas; (r)
the Company will not, and will not permit any of its subsidiaries to, agree or
commit to do any of the foregoing; and (s) the Company will not, and will not
permit any of its subsidiaries to, take any action that would make any
representation or warranty of the Company hereunder inaccurate in any material
respect at, or as of any time prior to, the Effective Time.
Other Proposals. The Merger Agreement provides that the Company will not,
nor will it permit any of its subsidiaries, affiliates or representatives, to
directly or indirectly, (1) take any action to solicit, initiate or encourage
any offer or proposal for a merger or other business combination transaction
involving the acquisition of all or a material portion of the equity interest
in, or all or a material portion of the assets of, the Company and its
subsidiaries, other than transactions contemplated by the Merger Agreement (an
'Acquisition Proposal'), or (2) furnish information to or participate in any
discussions or negotiations with any person that has made or indicated an
interest in making an Acquisition Proposal; provided, however, that nothing
prohibits the Board of Directors of the Company from furnishing information to,
or entering into discussions or negotiations with, any person that has made an
unsolicited bona fide written Acquisition Proposal if, and only to the extent
that (A) the acceptance for payment of Shares pursuant to the Offer shall not
have occurred, (B) the Board of Directors of the
20
<PAGE>
Company, based on advice of outside legal counsel, determines in good faith that
failure to take such action would present a reasonable probability of violating
its fiduciary duties under applicable law, and (C) prior to taking such action,
the Company (x) provides reasonable notice to Parent to the effect that it
intends to take such action and (y) receives from such person an executed
confidentiality agreement in reasonably customary form and in any event
containing terms at least as stringent as those contained in the Confidentiality
Agreement between Parent and the Company. Prior to providing any information to
or entering into discussions or negotiations with any person in connection with
an Acquisition Proposal by such Person, the Company shall notify Parent of any
such Acquisition Proposal (including, without limitation, the material terms and
conditions thereof and of the identity of the person making it) as promptly as
practicable (but in no case later than one business day) after its receipt
thereof, and shall thereafter inform Parent on a prompt basis of the status of
any discussion or negotiations with such third party and any material changes to
the terms and conditions of such Acquisition Proposal, and shall promptly give
Parent a copy of any information delivered to such person which has not
previously been reviewed by Parent. The Merger Agreement further provides that
the Company will, and will cause its subsidiaries and the officers, directors,
employees and other agents and advisors of the Company and its subsidiaries to,
immediately cease and cause to be terminated all discussions and negotiations,
if any, that have taken place prior to the date of the Merger Agreement with any
parties with respect to any Acquisition Proposal. In addition, the Merger
Agreement provides that nothing contained therein prevents the Board of
Directors of the Company from complying with Rule 14e-1 under the Exchange Act
with respect to any Acquisition Proposal.
The Merger Agreement also provides that the Board of Directors of the
Company may not withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Parent, its approval or recommendation of the Merger
Agreement, the Offer or the Merger unless the Board of Directors of the Company,
based on advice of its outside legal counsel, determines in good faith that
failure to do so would present a reasonable probability of violating its
fiduciary duties under applicable law; provided, however, the Board of Directors
of the Company may not approve or recommend (and in connection therewith,
withdraw or modify its approval or recommendation of the Merger Agreement, the
Offer or the Merger) an Acquisition Proposal unless (i) the Company has complied
with the provisions described in this and the preceding paragraph, including,
without limitation, the requirement that it notify Parent promptly after its
receipt of any Acquisition Proposal, (ii) the Acquisition Proposal is a Superior
Proposal and (iii) it determines in good faith (based on advice of its outside
legal counsel) that the failure to do so would present a reasonable probability
of violating its fiduciary duties under applicable law. For purposes of the
Merger Agreement, 'Superior Proposal' means any Acquisition Proposal (A)
involving the acquisition of the entire equity interest in, or all or
substantially all of the assets and liabilities of, the Company and its
subsidiaries and (B) with respect to which the Board of Directors of the Company
(x) determines in good faith that such proposal, if accepted, is reasonably
likely to be consummated, taking into account all legal, financial, regulatory
and other aspects of the proposal and the person making the proposal and (y)
believes in good faith, based on the advice of its financial advisors, that such
proposal would, if consummated, result in a transaction more favorable to the
Company's stockholders from a financial point of view than the Offer and the
Merger.
Conditions of the Merger. The obligations of the Company, Parent and
Purchaser to consummate the Merger are subject to the satisfaction (or waiver by
the party for whose benefit the applicable condition exists) of the following
conditions: (a) if required by the DGCL, the Merger Agreement shall have been
approved and adopted by the stockholders of the Company in accordance with such
Law; (b) no provision of any applicable U.S. or U.K. law or regulation and no
judgment, injunction, order or decree of a U.S. or U.K. court of competent
jurisdiction shall prohibit or enjoin the consummation of the Merger; and (c)
Purchaser shall have purchased Shares or Preferred Shares pursuant to the Offer.
Termination of the Merger Agreement. The Merger Agreement may be terminated
at any time prior to the Effective Time, whether before or after approval of the
Merger Agreement by the stockholders of the Company or Parent: (1) by mutual
written agreement of the Company and Parent; (2) by either the Company or
Parent, (a) if the Offer has not been consummated on or before the 60th U.S.
business day after commencement of the Offer (or, if the period of time for any
applicable review process under the Exon-Florio Act has not expired by such
date, then the date on which the Exon-Florio Act review process is completed),
provided that the right to terminate the Merger Agreement under this clause
21
<PAGE>
shall not be available to any party whose breach of any provision of the Merger
Agreement results in the failure of the Offer to be consummated by such time; or
(b) if consummation of the Merger would violate or be prohibited by any U.S. or
U.K. law or regulation or if any injunction, judgment, order or decree of a U.S.
or U.K. court of competent jurisdiction enjoining the Company or Parent from
consummating the Merger is entered and such injunction, judgment, order or
decree shall become final and nonappealable; (3) by Parent, if prior to the
purchase of any Shares pursuant to the Offer, (a) the Board of Directors of the
Company shall have failed to recommend or withdrawn or materially modified in a
manner adverse to Parent its approval or recommendation of the Offer and the
Merger, or (b) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement with respect to any Superior
Proposal; or (4) by the Company, if, prior to purchase of any Shares pursuant to
the Offer, (a) the Company notifies Parent in writing that it intends to enter
into an agreement with respect to a Superior Proposal; (b) Parent does not make,
within one business day after receipt of the Company's notification pursuant to
clause (a), an offer that the Board of Directors of the Company determines, in
good faith based on the advice of its financial advisors, is at least as
favorable to the Company's stockholders as the Superior Proposal and (c) prior
to or simultaneously with such termination, the Company makes payment to Parent
of the amounts payable as described under 'Fees and Expenses' below.
In the event the Merger Agreement is terminated by either the Company or
Parent, the Merger Agreement will become void and have no effect, and there will
be no liability or obligation on the part of Parent, Purchaser or the Company
except with respect to certain specified provisions (including the provisions
described below under 'Fees and Expenses' and in the Confidentiality Agreement
(described below)) and except to the extent that such termination results from
the willful breach by a party to the Merger Agreement.
Fees and Expenses. The Company has agreed to pay to Parent an amount equal
to (i) $6.5 million prior to or simultaneously with the termination of the
Merger Agreement as a result of the occurrence of any of the events described in
clauses 3(a), 3(b) or 4 of the first paragraph under 'Termination of the Merger
Agreement' above (the 'Specified Clauses'); and (ii) Parent's and Purchaser's
actual and reasonable out-of-pocket expenses incurred by Parent or Purchaser in
connection with the Merger Agreement and the transactions contemplated thereby,
promptly upon receipt of reasonable documentation of such expenses, in
connection with the termination of the Merger Agreement as a result of the
occurrence of any of the following events: (A) any of the events set forth in
the Specified Clauses, (B) the Minimum Condition not having been met by the
expiration of the Offer as extended pursuant to the Merger Agreement or (C)
condition (c) set forth in Section 14 of this Offer to Purchase not having been
met as a result of a breach by the Company of its representations and warranties
set forth in the Merger Agreement provided that such breach existed as of the
date of the Merger Agreement; and further provided in the case of each of (B)
and (C) that all of the other conditions set forth in Section 14 of this Offer
to Purchase shall have been satisfied (but for those conditions which are not
satisfied in the case of clause (C) due to or resulting from the facts
constituting such breach) and Parent and Purchaser are not in material breach of
any of their representations and warranties or covenants set forth in the Merger
Agreement.
Except as described in the preceding paragraph, the Merger Agreement
provides that each party will pay its own fees and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby.
Indemnification and Insurance. The Merger Agreement provides that Parent
will indemnify each person who is at the date of the Merger Agreement, or who
has previously been, a director, officer or manager of the Company or of any of
its subsidiaries, to the fullest extent permitted by law, with respect to
liabilities based on or arising out of any facts or circumstances occurring at
or prior to the Effective Time. In addition, the Merger Agreement provides that
Parent will cause the Surviving Corporation and any of its subsidiaries to
maintain in effect for a period of six years provisions in its certificate of
incorporation and by-laws with respect to indemnification and exculpation with
respect to facts or circumstances occurring at or prior to the Effective Time to
the extent set forth in the Company's certificate of incorporation and by-laws
on the date of the Merger Agreement (provided that the
22
<PAGE>
foregoing shall not in any way restrict or preclude any sale, liquidation or
dissolution of any subsidiary of Parent at any time after the Effective Time).
The Merger Agreement further provides that Parent will, or will cause the
Surviving Corporation to, maintain for a period of six years from the Effective
Time the policies of directors' and officers' liability insurance maintained by
the Company and its subsidiaries on the date of the Merger Agreement (although
Parent may substitute therefor policies having terms no less advantageous to the
persons currently covered than the terms of such existing insurance coverage)
with respect to facts or circumstances occurring at or prior to the Effective
Time; provided, however, that in no event will Parent be required to expend in
any one year an amount in excess of 200% of the annual premiums paid by the
Company as of the date of the Merger Agreement for such insurance; and provided,
further that, if the annual premiums of such insurance coverage exceed such
amount, Parent will be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount.
CONFIDENTIALITY AGREEMENT
The following is a summary of the material provisions of the
Confidentiality Agreement and is qualified in its entirety by reference to the
full text of the Confidentiality Agreement filed with the Commission as an
exhibit to the Schedule 14D-1 and incorporated herein by reference. The
Confidentiality Agreement may be examined, and copies obtained, as set forth in
Section 8 of this Offer to Purchase.
Pursuant to the Confidentiality Agreement, Parent agreed to provide, among
other things, for the confidential treatment of discussions with the Company
regarding a possible transaction and the exchange of certain confidential
information concerning the Company. Parent further agreed that for a period of
two years from the date the Confidentiality Agreement was entered into by
Parent, Parent would not, without the prior written approval of the Company's
Board of Directors, (a) acquire or make any proposal to acquire any securities
or property of the Company, (b) propose to enter into any merger or business
combination involving the Company or purchase a material portion of the assets
of the Company, (c) participate in any solicitations of proxies with respect to
the voting of any securities of the Company, (d) participate in a 'group'
(within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any
voting securities of the Company, (e) seek to control or influence the
management, Board of Directors of the Company or policies of the Company, (f)
disclose any intention, plan or arrangement inconsistent with any of the
foregoing or (g) take any action which might require the Company to make a
public announcement regarding the possibility of a business combination or
merger.
OTHER AGREEMENTS
See Section 1 for a summary of the material terms of an agreement by Mr.
Joseph F. Alibrandi to tender pursuant to the Offer Shares and Preferred Shares
held by him and see Section 10 for a summary of the material terms of an
agreement between the Company and Parent entered into on June 4, 1999. Such
summaries are qualified in their entirety by reference to the full text of these
agreements filed with the Commission as exhibits to the Schedule 14D-1 and
incorporated herein by reference. Such agreements may be examined, and copies
obtained, as set forth in Section 8.
OTHER MATTERS
Statutory Requirements. In general, under the DGCL, a merger of two
Delaware corporations requires the adoption of a resolution by the Board of
Directors of each of the corporations desiring to merge approving an agreement
of merger containing provisions with respect to certain statutorily specified
areas and the approval of such agreement of merger by the stockholders of each
corporation by the affirmative vote of the holders of a majority of all of the
outstanding shares of stock entitled to vote on such matter. Assuming that the
number of Shares outstanding on a fully-diluted basis does not increase from the
number outstanding on June 4, 1999 and that the Minimum Condition is satisfied,
23
<PAGE>
upon consummation of the Offer Purchaser would own sufficient Shares to enable
it to satisfy the stockholder approval requirement to approve the Merger.
Purchaser intends to seek to consummate the Merger with the Company as promptly
as practicable after consummation of the Offer.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company would
have certain rights under Section 262 of the DGCL to dissent and demand
appraisal of, and payment in cash of the fair value of, their Shares. Such
rights, if the statutory procedures were complied with, could lead to a judicial
determination of the fair value (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their Shares. Any such judicial determination of the fair
value of Shares could be based upon considerations other than, or in addition
to, the price paid in the Offer and the market value of the Shares, including
asset values and the investment value of the Shares. The value so determined
could be more or less than the purchase price per Share or Preferred Share
pursuant to the Offer or the consideration per Share or Preferred Share to be
paid in the Merger. THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING
STOCKHOLDERS UNDER THE DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE
PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE
DISSENTERS' RIGHTS. THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE
STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
'Going Private' Transactions. The Commission has adopted Rule 13e-3 under
the Exchange Act which is applicable to certain 'going private' transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Shares not held by it. However,
Rule 13e would be inapplicable if (i) the Shares are deregistered under the
Exchange Act prior to the Merger or other business combination or (ii) the
Merger or other business combination is consummated within one year after the
purchase of the Shares pursuant to the Offer and the amount paid per Share in
the Merger or other business combination is at least equal to the amount paid
per Share in the Offer. If applicable, Rule 13e-3 requires, among other things,
that certain financial information concerning the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the Commission and disclosed to stockholders prior to
the consummation of the transaction.
12. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by
Purchaser and Parent to consummate the Offer and the Merger and to pay related
fees and expenses is estimated to be approximately $391 million. Parent intends
to obtain the funds required by it as follows: approximately `L'78 million
(approximately $125 million) from the net proceeds of the Rights Issue described
below and the balance from the proceeds of the Facility Agreement described
below.
The following are summaries of the material terms of the Parent
Underwriting Agreement and the Facility Agreement and are qualified in their
entirety by reference to such agreements, which are incorporated by reference
and copies of which have been filed with the Commission as exhibits to the
Schedule 14D-1. Such agreements may be examined, and copies thereof may be
obtained as set forth in Section 8 above.
The Rights Issue. On June 9, 1999, Parent announced an offer to qualifying
shareholders of Parent (the 'Rights Issue') of 49,946,108 units of redeemable
convertible unsecured loan stock (the 'Stock Units') by Meggitt Funding Limited,
a wholly-owned subsidiary of Parent, at a price of 160p per Stock Unit on the
basis of two Stock Units for every nine existing ordinary shares of Parent.
Subject to approval by Parent's shareholders of the acquisition of the Company
on the terms and conditions set forth in the Merger Agreement, upon completion
of the Offer, the Stock Units will be convertible into a total of 49,946,108 new
ordinary shares of Parent (representing approximately 18.2% of the issued
ordinary share capital of Parent as enlarged by the Rights Issue) on the basis
of one new ordinary share for each Stock Unit. The Rights Issue is not being
made in the United States or in certain other jurisdictions.
On June 9, 1999, Parent, Meggitt Funding Limited and N M Rothschild & Sons
Limited (the 'Underwriter'), an affiliate of the Dealer Manager, entered into an
underwriting agreement (the 'Parent Underwriting Agreement') under which the
Underwriter has agreed to procure subscribers for
24
<PAGE>
the Stock Units and, to the extent it fails to do so, to subscribe for any Stock
Units not taken up under the Rights Issue.
The Facility Agreement. On June 9, 1999, Parent entered into a Term and
Revolving Credit Facility (the 'Facility Agreement') with Barclays Capital and
HSBC Investment Bank plc, as arrangers, and the banks identified therein
(collectively the 'Banks'). Under the Facility Agreement, the Banks have agreed
to grant to Parent a term loan, a revolving credit and bills of exchange
facility and a 364 day revolving credit facility, in each case subject to the
terms and conditions set forth in the Facility Agreement. All the facilities are
multi-currency. The term loan is in an amount of $250 million and will be used,
inter alia, to partially finance the Offer and the Merger. The term loan will
remain available for drawing until and including the date falling 180 days after
signing of the Facility Agreement. The term loan will be repayable in five
annual tranches with the first repayment to occur on the first anniversary of
the signing of the Facility Agreement and the final repayment to be made on the
fifth anniversary of the signing date of the Facility Agreement. The revolving
credit and bills of exchange facility is in the amount of $180 million and is to
be used for general long term corporate purposes (including costs and expenses
in connection with the Merger, the refinancing of existing indebtedness of
Parent and the Company and funding capital expenditure and other minor
acquisitions by Parent). The revolving credit and bills of exchange facility
will remain available for drawing on a fully revolving basis until the fifth
anniversary of the signing date of the Facility Agreement at which date it will
be repayable in full. The 364 day revolving credit facility is in the amount of
$100 million and is to be used for refinancing existing indebtedness and for
general short term corporate purposes. The 364 day revolving credit facility
shall be available for drawing on a fully revolving basis for 364 days from the
signing date of the Facility Agreement and shall be repayable in full on the
date which is 364 days after the signing date of the Facility Agreement except
where Parent has elected to convert the facility into a fixed term borrowing, in
which case it will be repaid in full after the expiration of the fixed term (up
to a maximum of 18 months after the signing date of the Facility Agreement).
Interest will be charged on advances made under the term loan, revolving credit
and bills of exchange facility and the 364 day revolving credit facility at a
rate equal to LIBOR plus the applicable margin. The applicable margin for the
term loan and revolving credit and bills of exchange facility is 0.65% and for
the 364 day revolving credit facility is 0.40%. The facilities are unsecured but
will be guaranteed by Meggitt-USA and, upon completion of the Merger and to the
extent permissible, the Company. The Facility Agreement contains certain
representations, warranties, covenants and undertakings and borrowings
thereunder are subject to certain customary conditions. Although no such
arrangements have been made, Parent presently expects that it will repay the
Facility Agreement partly from cash generated from operations and partly from
the proceeds of refinancings.
13. DIVIDENDS AND DISTRIBUTIONS. In the Merger Agreement, the Company has
agreed not to (i) take any action to cause its representation as to
capitalization to be inaccurate in any material respect, (ii) redeem, purchase
or otherwise acquire directly or indirectly any capital stock or (iii) issue or
sell additional Shares (other than issuances of Shares pursuant to the exercise
of options under the Option Plans, or issuances pursuant to the conversion of
the Preferred Shares and the Convertible Notes), or any shares of any other
class of capital stock, or any securities convertible into or exchangeable for,
or rights, warrants or options, of any kind, to acquire, any capital stock.
If, on or after the date of the Merger Agreement, the Company declares or
pays any dividend on the Shares or Preferred Shares (other than dividends
payable in accordance with the terms of the Preferred Shares) or any
distribution (including, without limitation, the issuance of additional Shares
or Preferred Shares pursuant to a stock dividend or stock split, the issuance of
other securities or the issuance of rights for the purchase of any securities)
with respect to the Shares that is payable or distributable to stockholders of
record on a date prior to the transfer into the name of Purchaser or its
nominees or transferees on the Company's stock transfer records of the Shares or
Preferred Shares purchased pursuant to the Offer, and if Shares or Preferred
Shares are purchased in the Offer, then, without prejudice to Purchaser's rights
under Section 14, (i) the purchase price per Share and per Preferred Share
payable by Purchaser pursuant to the Offer shall be reduced by the amount of any
such cash dividend or cash distribution and (ii) any such non-cash dividend,
distribution, issuance, proceeds or right to be received by the tendering
stockholders shall (a) be received and held by the tendering stockholders for
the account of Purchaser and will be required to be promptly remitted and
transferred
25
<PAGE>
by each tendering stockholder to the Depositary for the account of Purchaser,
accompanied by appropriate documentation of transfer or (b) at the direction of
Purchaser, be exercised for the benefit of Purchaser, in which case the proceeds
of such exercise will promptly be remitted to the Purchaser. Pending such
remittance and subject to applicable law, Purchaser will be entitled to all
rights and privileges as owner of any such noncash dividend, distribution,
issuance, proceeds or right and may withhold the entire purchase price or deduct
from the purchase price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer, Purchaser shall not be required to accept for payment or pay for any
Shares or Preferred Shares, and may, subject to the terms of the Merger
Agreement (which, inter alia, requires Purchaser to extend the Offer for certain
additional periods as described above if the conditions have not been
satisfied), terminate the Offer, if (i) at the Expiration Date, (A) the Minimum
Condition has not been satisfied, (B) the applicable waiting periods under the
HSR Act shall not have expired or been terminated, (C) the period of time for
any applicable review process under the Exon-Florio Act shall not have expired
or the President of the United States shall have made a determination to block
or prevent the consummation of the Offer or the Merger or (D) the Merger
Agreement and the transactions contemplated by the Merger Agreement shall not
have been approved by the holders of the ordinary shares of Parent, or (ii) at
any time on or after June 9, 1999 and prior to the acceptance for payment of
Shares or Preferred Shares, any of the following conditions exist:
(a) there shall be (i) pending any suit, action or proceeding before a
U.S. or U.K. court of competent jurisdiction, or (ii) threatened any suit,
action or proceeding by any U.S. or U.K. governmental agency, in each case,
that is reasonably likely to have a material adverse effect on the Company,
or, as a result of the transactions contemplated by the Merger Agreement,
on Parent; or
(b) there shall be any U.S. or U.K. statute, rule, regulation,
judgment, order or injunction enacted, entered, enforced, promulgated or
deemed applicable to the Offer or the Merger, other than the application to
the Offer or the Merger of applicable waiting periods under the HSR Act and
the review process under the Exon-Florio Act, that is reasonably likely to
have a material adverse effect on the Company or, as a result of the
transactions contemplated by the Merger Agreement, on Parent; or
(c) (i) the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and accurate (without giving effect
to any limitation as to 'materiality' or 'material adverse effect' set
forth therein) as of the date of consummation of the Offer as though made
on or as of such date (except for those representations and warranties that
address matters only as of a particular date or only with respect to a
specific period of time which need only be true and accurate as of such
date or with respect to such period) or (ii) the Company shall have failed
to perform or comply with any of its obligations, agreements or covenants
required by the Merger Agreement, except where the failure of such
representations and warranties to be true and accurate or the failure to
perform or comply with such covenants, individually or in the aggregate, do
not have and are not reasonably likely to have a material adverse effect
(as defined in the Merger Agreement) on the Company; or
(d) there shall have occurred (i) any general suspension of trading
in, or limitation of prices for, securities on the NYSE or the London Stock
Exchange, for a period in excess of three days (excluding suspensions or
limitations resulting solely from physical damage or interferences with
such exchanges not related to market conditions), (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or the United Kingdom (whether or not mandatory), or (iii)
any decline in either the Dow Jones Industrial Average, the Standard &
Poor's Index of 500 Industrial Companies or Financial Times Stock Exchange
100 by an amount in excess of 30% measured from the close of business on
the date of the Merger Agreement; or
(e) the Merger Agreement shall have been terminated in accordance with
its terms.
The Merger Agreement defines 'material adverse effect' with respect to any
person as a material adverse effect on the business, assets, financial condition
or results of operations of such person and its subsidiaries, taken as a whole,
except any such effect resulting from or arising in connection with (i) the
26
<PAGE>
Merger Agreement or the transactions contemplated thereby, (ii) changes or
conditions affecting the commercial or military aerospace industries generally
or (iii) changes in economic, regulatory or political conditions generally.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may, subject to the terms of the Merger Agreement, be waived by Parent and
Purchaser in whole or in part at any time and from time to time in their
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any right and each such
right shall be deemed on ongoing right which may be asserted at any time and
from time to time.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS. Except as
described in Section 14 or this Section 15, based on information provided by the
Company, none of the Company, Purchaser or Parent is aware of any license or
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by the
acquisition of Shares or Preferred Shares by Parent or Purchaser pursuant to the
Offer, the Merger or otherwise, or any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required prior to the acquisition of Shares or Preferred
Shares by Purchaser pursuant to the Offer, the Merger or otherwise. Should any
such approval or other action be required, Purchaser and Parent presently
contemplate that such approval or other action will be sought, except as
described below under 'State Antitakeover Statutes.' While, except as otherwise
described in this Offer to Purchase, Purchaser does not presently intend to
delay the acceptance for payment of, or payment for, Shares or Preferred Shares
tendered pursuant to the Offer pending the outcome of any such matter, there can
be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that failure to
obtain any such approval or other action might not result in consequences
adverse to the Company's business or that certain parts of the Company's
business might not have to be disposed of, or other substantial conditions
complied with, in the event that such approvals were not obtained or such other
actions were not taken or in order to obtain any such approval or other action.
If certain types of adverse action are taken with respect to the matters
discussed below, Purchaser could decline to accept for payment, or pay for, any
Shares and Preferred Shares tendered. See Section 14 for certain conditions to
the Offer, including conditions with respect to governmental actions.
Federal Reserve Board Regulations. Regulations G, U and X (the 'Margin
Regulations') of the Federal Reserve Board restrict the extension or maintenance
of credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly by margin stock. Such
secured credit may not be extended or maintained in an amount that exceeds the
maximum loan value of all the direct and indirect collateral securing the
credit, including margin stock and other collateral. The financing of the Offer
will not be directly or indirectly secured by the Shares or other securities
which constitute margin stock. Accordingly, all financing of the Offer will be
in full compliance with the Margin Regulations.
State Antitakeover Statues. Section 203 of the DGCL, in general, prohibits
a Delaware corporation, such as the Company, from engaging in a 'Business
Combination' (defined as a variety of transactions, including mergers) with an
'Interested Stockholder' (defined generally as a person that is the beneficial
owner of 15% or more of the outstanding voting stock of the subject corporation)
for a period of three years following the date that such person became an
Interested Stockholder unless, prior to the date such person became an
Interested Stockholder, the board of directors of the corporation approved
either the Business Combination or the transaction that resulted in the
stockholder becoming an Interested Stockholder. In the Merger Agreement the
Company has represented that, by virtue of the approval of the Company's Board
of Directors, the provisions of Section 203 of the DGCL are not applicable to
the Merger, the Merger Agreement or any of the transactions contemplated by the
Merger Agreement.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal executive
officers or principal places of business in such states. In Edgar v. MITE Corp.,
the Supreme Court of the United States (the 'Supreme Court') invalidated on
constitutional grounds the Illinois
27
<PAGE>
Business Takeover statute, which, as a matter of state securities law, made
certain corporate acquisitions more difficult. However, in 1987, in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana may,
as a matter of corporate law and, in particular, with respect to those aspects
of corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of stockholders in the State and were incorporated there.
Parent and Purchaser do not believe that the antitakeover laws and
regulations of any state other than the State of Delaware will by their terms
apply to the Offer, and, except as set forth above with respect to Section 203
of the DGCL, neither Parent nor Purchaser has attempted to comply with any state
antitakeover statute or regulations. Purchaser reserves the right to challenge
the applicability or validity of any state law purportedly applicable to the
Offer and nothing in this Offer to Purchase or any action taken in connection
with the Offer is intended as a waiver of such right. If it is asserted that any
state antitakeover statute is applicable to the Offer and an appropriate court
does not determine that it is inapplicable or invalid as applied to the Offer,
Purchaser might be required to file certain information with, or to receive
approvals from, the relevant state authorities, and Purchaser might be unable to
accept for payment or pay for Shares or Preferred Shares tendered pursuant to
the Offer or may be delayed in consummating the Offer. In such case, Purchaser
may not be obligated to accept for payment, or pay for, any Shares or Preferred
Shares tendered pursuant to the Offer. See Section 14.
Antitrust. The Offer and the Merger are subject to the HSR Act, which
provides that certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division of the
Department of Justice (the 'Antitrust Division') and the Federal Trade
Commission (the 'FTC') and certain waiting period requirements have been
satisfied.
On June 14, 1999, Parent and the Company filed their Notification and
Report Forms with respect to the Offer under the HSR Act. The waiting period
under the HSR Act with respect to the Offer will expire at 11:59 p.m., New York
City time, on June 29, 1999, unless early termination of the waiting period is
granted. However, the Antitrust Division or the FTC may extend the waiting
period by requesting additional information or documentary material from Parent
or the Company. If such a request is made, such waiting period will expire at
11:59 p.m., New York City time, on the tenth day after substantial compliance by
Parent with such request. Only one extension of the waiting period pursuant to a
request for additional information is authorized by the HSR Act. Therefore, any
waiting period may be extended only with the consent of Parent. In practice,
complying with a request for additional information or material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue. The relevant
governmental agency may also seek to prevent the consummation of the transaction
as discussed below. Purchaser will not accept for payment Shares tendered
pursuant to the Offer unless and until the waiting period requirements imposed
by the HSR Act with respect to the Offer have been satisfied. See Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the Antitrust Laws of transactions such as Purchaser's acquisition of Shares
pursuant to the Offer and the Merger. At any time before or after Purchaser's
acquisition of Shares, the Antitrust Division or the FTC could take such action
under the Antitrust Laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the acquisition of Shares or Preferred
Shares pursuant to the Offer or otherwise seeking divestiture of Shares or
Preferred Shares acquired by Purchaser or divestiture of substantial assets of
Parent or its subsidiaries. Private parties, as well as state governments, may
also bring legal action under the Antitrust Laws under certain circumstances.
Based upon an examination of information provided by the Company relating to the
businesses in which Parent and the Company are engaged, Parent and Purchaser
believe that the acquisition of Shares by Purchaser will not violate the
Antitrust Laws. Nevertheless, there can be no assurance that a challenge to the
Offer or other acquisition of Shares or Preferred Shares by Purchaser on
antitrust grounds will not be made or, if such a challenge is made, of the
result. See Section 14 for certain conditions to the Offer, including conditions
with respect to litigation and certain governmental actions.
28
<PAGE>
As used in this Offer to Purchase, 'Antitrust Laws' shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.
Exon-Florio Act. The Exon-Florio Act applies to all acquisitions proposed
or pending on or after August 23, 1988 by or with foreign persons which could
result in foreign control of persons engaged in interstate commerce in the
United States. The Exon-Florio Act empowers the President of the United States
to prohibit or suspend mergers, acquisitions or takeovers by or with foreign
persons if the President finds, after investigation, credible evidence that the
foreign person might take action that threatens to impair the national security
of the United States and that other provisions of existing law do not provide
adequate and appropriate authority to protect the national security.
The President has designated the Committee on Foreign Investment in the
United States ('CFIUS') as the agency authorized under the Exon-Florio Act to
receive notices and other information and to conduct a review process which
consists of a determination whether an investigation should be undertaken and
making any such investigation. Any determination by CFIUS that an investigation
is called for must be made within thirty days after its acceptance of written
notification concerning a proposed transaction. In the event that CFIUS
determines to undertake an investigation, such investigation must be completed
within forty-five days after such determination. Upon completion or termination
of any such investigation, CFIUS must report to the President and present its
recommendation. The President then has fifteen days in which to suspend or
prohibit the proposed transaction or to seek other appropriate relief. In order
for the President to exercise his authority to suspend or prohibit a proposed
transaction, the President must make two findings: (i) that there is credible
evidence that leads the President to believe that the foreign interest
exercising control might take action that threatens to impair national security
and (ii) that provisions of law other than the Exon-Florio Act and the
International Emergency Economic Powers Act do not in the President's judgment
provide adequate and appropriate authority for the President to protect the
national security in connection with the acquisition. Such findings are not
subject to judicial review. If the President makes such findings, he may take
action for such time as he considers appropriate to suspend or prohibit the
relevant acquisition. The President may direct the Attorney General to seek
appropriate relief, including divestment relief, in the District Courts of the
United States in order to implement and enforce the Exon-Florio Act. The
Exon-Florio Act does not obligate the parties to a proposed acquisition to
notify CFIUS of a proposed transaction. However, if notice of a proposed
acquisition is not submitted to CFIUS, then the transaction remains indefinitely
subject to review by the President under the Exon-Florio Act, unless it is
determined that CFIUS does not have jurisdiction over the transaction.
On June 11, 1999, Purchaser and the Company made a filing under the
Exon-Florio Act. There can be no assurance that CFIUS will not determine to
conduct an investigation of the proposed acquisition of the Company and, if an
investigation is commenced, there can be no assurance regarding the outcome of
such investigation. If the results of such investigation are adverse to
Purchaser, Purchaser is not obligated to accept for payment or pay for any
Shares or Preferred Shares tendered pursuant to the Offer.
16. CERTAIN FEES AND EXPENSES. Rothschild Inc. is acting as Dealer Manager
in connection with the Offer and as financial advisor to Purchaser and Parent in
connection with the proposed acquisition of the Company. Parent has agreed to
pay Rothschild Inc. for its services a cash fee equal to .85% of the aggregate
consideration paid or payable by Parent to the Company and its stockholders
(including any assumption of indebtedness) in connection with the acquisition of
the Company through, among other things, the purchase of a majority of its
capital stock or a merger. Such fee, which will amount to approximately $3.2
million based on the Merger Consideration, will be payable upon the consummation
of the Merger. Parent also agreed to pay Rothschild Inc. a retainer fee of
$50,000 and a fee of $200,000 upon execution of the Merger Agreement which will
be offset against the fee payable upon consummation of the Merger. Parent has
agreed to pay Rothschild Inc. a fee of $250,000 in the event the Company is
required to pay Parent a fee upon termination of the Merger Agreement. In
addition, Parent has agreed to reimburse Rothschild Inc. for its reasonable
out-of-pocket expenses (including the
29
<PAGE>
fees and disbursements of legal counsel) incurred in connection with the
proposed acquisition and to indemnify Rothschild Inc. against certain
liabilities and expenses in connection with the proposed acquisition, including
liabilities under the federal securities laws. Rothschild Inc. and its
affiliates have from time to time rendered, and continue to render, various
investment banking services to Parent and its affiliates for which they are paid
customary fees. In connection with the Rights Issue, Parent has agreed to pay
the Underwriter, an affiliate of Rothschild Inc., fees totalling approximately
`L'550,000 (subject to reduction to the extent notified by the Underwriter to
Parent). In the ordinary course of its business, Rothschild Inc. and their
affiliates may actively trade in the Shares for their own account and for the
account of their customers and, accordingly, may at any time hold a long or
short position in the Shares.
Innisfree M&A Incorporated has been retained by Purchaser as information
agent (the 'Information Agent') in connection with the Offer. The Information
Agent may contact holders of Shares by mail, telephone, telex, telegraph and
personal interview and may request brokers, dealers and other nominee
stockholders to forward material relating to the Offer to beneficial owners. The
Information Agent will receive customary compensation for its services in
connection with the Offer, will be reimbursed for its reasonable out-of-pocket
expenses and will be indemnified against certain liabilities and expenses,
including liabilities under the federal securities laws.
In addition, ChaseMellon Shareholder Services, L.L.C. has been retained as
the Depositary. The Depositary has not been retained to make solicitations or
recommendations in its role as Depositary. The Depositary will receive customary
compensation for its services in connection with the Offer, will be reimbursed
for its reasonable out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection therewith.
Except as set forth above, Purchaser will not pay any fees or commissions
to any broker, dealer or other person (other than the Information Agent and the
Dealer Manager) for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies and other nominees will, upon
request, be reimbursed by Purchaser for customary clerical and mailing expenses
incurred by them in forwarding materials to their customers.
17. MISCELLANEOUS. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares residing in any jurisdiction in
which the making of the Offer or the acceptance thereof would not be in
compliance with the securities, blue sky or other laws of such jurisdiction.
However, Purchaser may, in its discretion, take such action as it may deem
necessary to make the Offer in any jurisdiction and extend the Offer to holders
of Shares in such jurisdiction.
In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed to
be made on behalf of Purchaser by the Dealer Manager or one or more registered
brokers or dealers that are licensed under the laws of such jurisdiction.
Purchaser has filed with the Commission the Schedule 14D-1, together with
exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, furnishing certain additional information with respect to the
Offer, and may file amendments thereto. Such Schedule 14D-1 and any amendments
thereto, including exhibits, may be examined and copies may be obtained from the
office of the Commission in the same manner as described in Section 8 with
respect to information concerning the Company, except that they will not be
available at the regional offices of the Commission.
No person has been authorized to give any information or to make any
representation on behalf of Purchaser not contained in this Offer to Purchase or
in the Letter of Transmittal and, if given or made, any such information or
representation must not be relied upon as having been authorized. Neither the
delivery of the Offer to Purchase nor any purchase pursuant to the Offer shall,
under any circumstances, create any implication that there has been no change in
the affairs of Purchaser or the Company since the date as of which information
is furnished or the date of this Offer to Purchase.
MEGGITT PLC
MEGGITT ACQUISITION INC.
June 15, 1999
30
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, CERTAIN SUBSIDIARIES
AND PURCHASER
A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
Set forth below are the name, present principal occupation or employment
and material occupations, positions, offices or employments for the past five
years of each executive (an executive director of a U.K. company has the
function of both a director and executive officer) and non-executive director of
Parent. The business address of each such person is c/o Parent, and such person
is a citizen of the United Kingdom.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------------- -------------------------------------------------------------
<S> <C>
Sir Donald M. Spiers CB TD......................... Non-Executive Chairman. He spent many years in the Ministry
of Defence including Controller of Establishments, Research
and Nuclear Programmes and, from 1989 to 1994, Controller of
Aircraft responsible for the procurement of all aircraft for
the UK Armed Forces. He was appointed to the Board in
February 1995 and became Chairman on May 1, 1998. He is a
director of: The Air League (since September 1, 1994);
Wrightson Wood Associates Limited (since October 1, 1994);
Computing Devices Company Limited (since October 28, 1994);
Aeronautical Trusts Limited (since June 9, 1997); E.H.
Industries Limited (since January 1, 1998); Aeronautical
Trading Limited (since June 8, 1998); Messier-Dowty
International Limited (since September 1, 1998); TAG Aviation
Group (UK) Limited (since March 2, 1999); and TAG Farnborough
Airport Limited (since March 2, 1999). He was a director of:
Aeronautical Trusts Limited (up until May 22, 1995); British
Aerospace Defence Systems Limited (up until April 15, 1998);
and Smiths Industries Aerospace & Defence Systems Limited (up
until July 30, 1998).
Michael A. Stacey.................................. Chief Executive. He joined Parent in 1990 following a career
with Lucas Industries where he held a number of senior
positions culminating in the position of Managing Director,
Lucas Aerospace UK. He was appointed Chief Executive of
Parent in November 1995. He is a Fellow of the Royal
Aeronautical Society. He is a director of: Phoenix Travel
(Dorset) Limited (since July 4, 1994); Dorset Chamber of
Commerce and Industry (since October 8, 1996); The Society of
British Aerospace Companies Limited (since November 20,
1996); Dorset Training & Enterprise Council (since July 20,
1998); Sidlaw Group PLC (since November 25, 1998); and Vitec
Group PLC (since February 1, 1999). He was a director of APW
Enclosure Systems PLC (up until September 30, 1998).
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------------- -------------------------------------------------------------
<S> <C>
Sir Alan G. Cox CBE................................ Non-Executive Director. He was appointed to the Board in May
1996. He is a Chartered Accountant and was previously Chief
Executive of ASW Holdings PLC until August 23, 1996. He is a
director of: Jolly Music Limited (since November 20, 1992);
The Morgan Crucible Company PLC (since January 27, 1995);
Wales Millennium Centre (since August 30, 1996); and Wales
Millennium Centre (Theatre) Limited (since April 8, 1999). He
was a director of: Allied Steel Ltd (up until August 23,
1996); ASW Cardiff Limited (up until August 23, 1996); ASW
Ltd (up until March 23, 1996); Johnson & Nephew (Mill Street)
Ltd (up until August 23, 1996); Allied Design and Management
Services Ltd (up until August 23, 1996); and ASW Holdings PLC
(up until August 23, 1996).
Douglas B. Gemmell................................. Executive Director. He joined Parent in 1992 as Managing
Director of the Avionics business. He has over 40 years'
experience in the avionics and computer industries which
included the position of general manager of the Cheltenham
site of Smiths Aviation Division. He was appointed to the
Board in October 1997.
Eric J. Lewis...................................... Executive Director. He joined Parent in 1991 and progressed
to the position of Managing Director of the Aerospace
Components business. He was appointed to the Board on
January 5, 1999. Prior to joining Parent he held a number of
senior operational positions at AB Electronics and Lucas
Industries.
The Rt Hon Sir Richard F. Needham.................. Non-Executive Director. He was appointed to the Board in
December 1997. He was a Member of Parliament for 18 years
until 1995. Ten of those years were spent as a Minister
firstly in Northern Ireland where he became Minister for the
Economy and subsequently as Minister for Trade with
responsibility for the UK's worldwide export strategy. He is
a director of: United Kingdom - Japan 2000 Group (since July
12, 1995); Dyson Appliances Limited (since October 1, 1995);
Mivan Group Holding Limited (since October 16, 1995);
Gleneagles Hospital (UK) Limited (since November 1, 1995);
Stoney Hill Limited (since December 4, 1996); Richard Needham
Consultancy Limited (since June 12, 1997); NEC Europe Limited
(since October 1, 1997); Toughglass Holdings Limited (since
December 15, 1997); Tartan Check Limited (since December 15,
1997); Stoney Hill Farms Limited (since December 29, 1997);
Cavendish Clinic Limited (since May 20, 1998); MICE Group PLC
(since May 26, 1998); Legion Crowd Dynamics Limited (since
June 1, 1998); Merlion Healthcare Limited (since November 19,
1998); The Heart Hospital Limited (since November 20, 1998);
Wholebond Limited (since
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------------- -------------------------------------------------------------
<S> <C>
November 20, 1998); The Heart Hospital Properties Limited
(since November 20, 1998); Amber Medical Limited (since
April 28, 1999); and Tricorder Technology PLC (since May 24,
1999). He was a director of: The General Electric Company PLC
(up until August 31, 1997); and Toughglass Limited (up until
December 15, 1997).
Terence Twigger.................................... Group Finance Director. He joined Parent in 1993 and was
appointed to the Board in January 1995. He is a Chartered
Accountant and before joining Parent he spent 15 years with
Lucas Aerospace, progressing to the position of Finance
Director of Lucas Aerospace's worldwide operations. He is a
director of: Phoenix (Travel) Dorset Limited (since January
24, 1997); Axsia Limited (since February 4, 1997), TGE Group
Limited (since April 27, 1998); and Axsia Group Limited
(since April 27, 1998). He was a director of 265th Shelf
Investment Company Limited (up until May 1, 1998).
Philip E. Green.................................... Group Corporate Affairs Director. He is an executive officer
but is not on the Board. He joined Parent in 1994 as Group
Company Secretary, an office which he continues to hold. He
is a Chartered Secretary and has a law degree. Before joining
Parent he spent 14 years with British Aerospace PLC.
</TABLE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF MEGGITT INTERNATIONAL
Set forth below are the name, present principal occupation or employment
and material occupations, positions, offices or employments for the past five
years of each executive and non-executive director of Meggitt International. The
business address of each such person is c/o Parent, and such person is a citizen
of the United Kingdom.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------------- -------------------------------------------------------------
<S> <C>
Terence Twigger.................................... Director since 1995. For additional information, see Part A
of Schedule I above.
Philip E. Green.................................... Director since 1994. For additional information, see Part A
of Schedule I above.
David H. Clark..................................... Director since 1992. He has been Assistant Secretary of
Parent since 1987.
</TABLE>
33
<PAGE>
C. DIRECTORS AND EXECUTIVE OFFICERS OF MEGGITT-USA
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of each director and executive officer of Meggitt-USA. Except
for Mr. Stacey, the business address of each such person is c/o Meggitt-USA, and
such person is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------------- -------------------------------------------------------------
<S> <C>
Michael A. Stacey.................................. Director since 1995. For additional information, see Part A
of Schedule I above.
Bennett F. Moore................................... Director, President and Secretary since 1986.
Robert W. Soukup................................... Vice-President, Treasurer and Assistant Secretary since 1994.
Donna L. Hebert.................................... Controller and Assistant Treasurer since 1994.
</TABLE>
D. DIRECTORS AND EXECUTIVE OFFICERS OF MEGGITT AMERICA
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of each director and executive officer of Meggitt America. The
business address of each such person is c/o Meggitt-USA, and such person is a
citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------------- -------------------------------------------------------------
<S> <C>
Bennett F. Moore................................... Director and President since 1995. For additional
information, see Part C of Schedule I above.
Robert W. Soukup................................... Director, Secretary and Treasurer since 1995. For additional
information, see Part C of Schedule I above.
Donna L. Hebert.................................... Assistant Treasurer since 1995. For additional information,
see Part C of Schedule I above.
</TABLE>
E. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of each director and executive officer of Purchaser. Except for
Mr. Stacey, the business address of each such person is c/o Meggitt-USA, and
such person is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------------- -------------------------------------------------------------
<S> <C>
Michael A. Stacey.................................. Director and President. For additional information, see Part
A of Schedule I above.
Bennett F. Moore................................... Director, Vice-President and Secretary. For additional
information, see Part C of Schedule I above.
Robert W. Soukup................................... Director, Vice-President and Treasurer. For additional
information, see Part C of Schedule I above.
</TABLE>
34
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
ChaseMellon Shareholder Services, L.L.C. Reorganization Department ChaseMellon Shareholder Services, L.L.C.
Reorganization Department 85 Challenger Road Reorganization Department
P.O. Box 3301 Mail Stop -- Reorg 120 Broadway
South Hackensack, Ridgefield Park, 13th Floor
New Jersey 07606 New Jersey 07660 New York, New York 10271
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
Confirm Facsimile By Telephone:
(201) 296-4860
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below, and will be furnished promptly at the
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[INNISFREE M & A INCORPORATED LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022
Telephone: (212) 750-5833
CALL TOLL-FREE: (888) 750-5834
BANKS AND BROKERS CALL COLLECT: (212) 750-5833
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
ROTHSCHILD INC.
1251 Avenue of the Americas
New York, New York 10020
CALL TOLL-FREE: (800) 753-5151 (EXT. 3611)
IN NEW YORK CITY CALL: (212) 403-3611
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
WHITTAKER CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 15, 1999
OF
MEGGITT ACQUISITION INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY
OF
MEGGITT PLC
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON JULY 13, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
ChaseMellon Shareholder Services, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
ChaseMellon Shareholder Services, L.L.C. Reorganization Department ChaseMellon Shareholder
Reorganization Department 85 Challenger Road Services, L.L.C.
P.O. Box 3301 Mail Stop--Reorg Reorganization Department
South Hackensack, Ridgefield Park, NJ 07660 120 Broadway
NJ 07606 13th Floor
New York, NY 10271
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
Confirm Facsimile By Telephone
(201) 296-4860
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN
AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used by stockholders of Whittaker
Corporation if certificates for Shares (as such term is defined below) are to be
forwarded herewith or, unless an Agent's Message (as defined in Instruction 2
below) is utilized, if delivery of Shares is to be made by book-entry transfer
to an account maintained by the Depositary at the Book-Entry Transfer Facility
(as defined in and pursuant to the procedures set forth in the Offer to
Purchase). Stockholders who deliver Shares by book-entry transfer are referred
to herein as 'Book-Entry Stockholders' and other stockholders who deliver shares
are referred to herein as 'Certificate Stockholders.'
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver either the certificates for, or a Book-Entry Confirmation (as
defined in Section 2 of the Offer to Purchase) with respect to, their Shares and
all other documents required hereby to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) must tender their Shares
pursuant to the guaranteed delivery procedures set forth in Section 3 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: ...........................................
Account Number: ............. Transaction Code Number: .............
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s): ...........................................
Window Ticket No. (if any): ...............................................
Date of Execution of Notice of Guaranteed Delivery: .......................
Name of Institution which Guaranteed Delivery: ............................
If delivered by Book-Entry Transfer, check box: [ ]
Name of Tendering Institution: .............................................
Account Number: .............. Transaction Code Number: ..............
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- -------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------
TOTAL SHARES
-----------------------------------------------
</TABLE>
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares
represented by Share certificates delivered to the Depositary are being
tendered hereby. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF
TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Meggitt Acquisition Inc., a Delaware
corporation ('Purchaser') and an indirect wholly-owned subsidiary of Meggitt
PLC, a public limited company incorporated under the laws of England and Wales
('Parent'), the above-described shares of common stock, par value $0.01 per
share (the 'Common Stock'), including the preferred share purchase rights
associated therewith issued pursuant to the Rights Agreement, as amended on
June 9, 1999 (as defined in the Offer of Purchase) (the 'Rights' and, together
with the Common Stock, the 'Shares'), of Whittaker Corporation, a Delaware
corporation (the 'Company'), pursuant to Purchaser's offer to purchase all
Common Shares at a price of $28.00 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
the Offer to Purchase, dated June 15, 1999, and in this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the 'Offer'). The Offer also is being made for all
shares of Series D Participating Convertible Preferred Stock, par value $1.00
per share (the 'Preferred Shares'), at a price of $9,142.87 per Preferred Share,
net to the seller in cash
<PAGE>
and without interest thereon, upon the terms and subject to the conditions set
forth in the Offer. The undersigned understands that Purchaser reserves the
right to transfer or assign, in whole at any time, or in part from time to time,
to one or more of its affiliates, the right to purchase all or any portion of
the Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer. Receipt of the
Offer is hereby acknowledged.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of June 9, 1999 (the 'Merger Agreement'), among Parent, Purchaser and the
Company.
The Company has distributed one Right for each outstanding Share pursuant
to the Rights Agreement. The Rights are currently evidenced by and trade with
certificates evidencing the Common Stock. The Company has taken such action so
as to make the Rights Agreement inapplicable to Purchaser and Parent in
connection with the Merger Agreement and the transactions contemplated thereby.
Upon the terms and subject to the conditions of the Offer, subject to, and
effective upon, acceptance for payment of, and payment for, the Shares tendered
herewith in accordance with the terms of the Offer, the undersigned hereby
sells, assigns and transfers to, or upon the order of, Purchaser all right,
title and interest in and to, and any and all claims in respect of or arising or
having arisen as a result of the undersigned's status as a holder of, all the
Shares that are being tendered hereby (and any and all non-cash dividends,
distributions, rights, other Shares or other securities issued or issuable in
respect thereof on or after June 15, 1999 (collectively, 'Distributions')) and
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares (and all
Distributions), with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
certificates for such Shares (and any and all Distributions), or transfer
ownership of such Shares (and any and all Distributions) on the account books
maintained by the Book-Entry Transfer Facility, together, in any such case, with
all accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares (and any and all Distributions) for transfer
on the books of the Company and (iii) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares (and any and all
Distributions), all in accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Bennett Moore and Robert Soukup in their respective capacities as
officers of Purchaser, and any individual who shall thereafter succeed to any
such office of Purchaser, and each of them, the attorneys-in-fact and proxies of
the undersigned, each with full power of substitution, to vote at any annual or
special meeting of the Company's stockholders or any adjournment or postponement
thereof or otherwise in such manner as each such attorney-in-fact and proxy or
his substitute shall in his sole discretion deem proper with respect to, to
execute any written consent concerning any matter as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, and to otherwise act as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, all of the
Shares (and any and all Distributions) tendered hereby and accepted for payment
by Purchaser. This appointment will be effective if and when, and only to the
extent that, Purchaser accepts such Shares for payment pursuant to the Offer.
This power of attorney and proxy are irrevocable and are granted in
consideration of the acceptance for payment of such Shares in accordance with
the terms of the Offer. Such acceptance for payment shall, without further
action, revoke any prior powers of attorney and proxies granted by the
undersigned at any time with respect to such Shares (and any and all
Distributions), and no subsequent powers of attorney, proxies, consents or
revocations may be given by the undersigned with respect thereto (and, if given,
will not be deemed effective). Purchaser reserves the right to require that, in
order for Shares or other securities to be deemed validly tendered, immediately
upon Purchaser's acceptance for payment of such Shares, Purchaser must be able
to exercise full voting, consent and other rights with respect to such Shares
(and any and all Distributions), including voting at any meeting of the
Company's stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that the undersigned owns the Shares
tendered hereby within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'), that the
tender of the tendered Shares complies with Rule 14e-4 under the Exchange Act,
and that when the same are accepted for payment by Purchaser, Purchaser will
acquire good, marketable and unencumbered title thereto and to all
Distributions, free and clear of all liens, restrictions, charges and
encumbrances and the same will not be subject to any adverse claims. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby and all
Distributions. In addition, the
<PAGE>
undersigned shall remit and transfer promptly to the Depositary for the account
of Purchaser all Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer, and, pending such
remittance and transfer or appropriate assurance thereof, Purchaser shall be
entitled to all rights and privileges as owner of each such Distribution and may
withhold the entire purchase price of the Shares tendered hereby or deduct from
such purchase price the amount or value of such Distribution as determined by
Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer, this tender is irrevocable.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions of the Offer (and if
the Offer is extended or amended, the terms or conditions of any such extension
or amendment). Without limiting the foregoing, if the price to be paid in the
Offer is amended in accordance with the terms of the Merger Agreement, the price
to be paid to the undersigned will be the amended price notwithstanding the fact
that a different price is stated in this Letter of Transmittal. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
Purchaser may not be required to accept for payment any of the Shares tendered
hereby.
Unless otherwise indicated herein in the box entitled 'Special Payment
Instructions,' please issue the check for the purchase price of all Shares
purchased and/or return any certificates for Shares not tendered or accepted for
payment in the name(s) of the registered holder(s) appearing above under
'Description of Shares Tendered.' Similarly, unless otherwise indicated under
'Special Delivery Instructions,' please mail the check for the purchase price of
all Shares purchased and/or return any certificates for Shares not tendered or
not accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under 'Description of
Shares Tendered.' In the event that the boxes entitled 'Special Payment
Instructions' and 'Special Delivery Instructions' are both completed, please
issue the check for the purchase price of all Shares purchased and/or return any
certificates evidencing Shares not tendered or not accepted for payment (and any
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return any such certificates (and any accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
in the box entitled 'Special Payment Instructions,' please credit any Shares
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that Purchaser has no obligation, pursuant to the
'Special Payment Instructions,' to transfer any Shares from the name of the
registered holder thereof if Purchaser does not accept for payment any of the
Shares so tendered.
[ ] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, DESTROYED OR STOLEN AND SEE INSTRUCTION 11.
NUMBER OF SHARES REPRESENTED BY LOST, DESTROYED OR STOLEN CERTIFICATES:
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares accepted
for payment is to be issued in the name of someone other than the undersigned,
if certificates for Shares not tendered or not accepted for payment are to be
issued in the name of someone other than the undersigned or if Shares tendered
hereby and delivered by book-entry transfer that are not accepted for payment
are to be returned by credit to an account maintained at the Book-Entry Transfer
Facility other than the account indicated above.
Issue check and/or Share certificate(s) to:
Name: .........................................................................
(PLEASE PRINT)
Address: ......................................................................
(INCLUDE ZIP CODE)
...............................................................................
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
Credit Shares delivered by book-entry transfer and not purchased to the
Book-Entry Transfer Facility account.
...............................................................................
(ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed, ONLY if certificates for Shares not tendered or not accepted
for payment and/or the check for the purchase price of Shares accepted for
payment is to be sent to someone other than the undersigned or to the
undersigned at an address other than that shown under 'Description of Shares
Tendered.'
Mail check and/or Share certificates to:
Name: .........................................................................
(PLEASE PRINT)
Address: ......................................................................
(INCLUDE ZIP CODE)
...............................................................................
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(SEE SUBSTITUTE FORM W-9)
<PAGE>
IMPORTANT -- SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
...............................................................................
...............................................................................
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated: ................................................................. , 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s): .......................................................................
................................................................................
(PLEASE PRINT)
Name of Firm: ..................................................................
Capacity (full title): .........................................................
(SEE INSTRUCTION 5)
Address: .......................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ................................................
Taxpayer Identification or
Social Security Number: ........................................................
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ..........................................................
Name(s): .......................................................................
................................................................................
(PLEASE PRINT)
Title: .........................................................................
Name of Firm: ..................................................................
Address: .......................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number: ................................................
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's systems whose name
appears on a security position listing as the owner of the Shares) of Shares
tendered herewith, unless such registered holder(s) has (have) completed either
the box entitled 'Special Payment Instructions' or the box entitled 'Special
Delivery Instructions' on the Letter of Transmittal or (b) if such Shares are
tendered for the account of a financial institution (including most commercial
banks, savings and loan associations and brokerage houses) that is a participant
in the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(each, an 'Eligible Institution'). In all other cases, all signatures on this
Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed by stockholders of the
Company either if Share certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if delivery of Shares is to be made by book-entry
transfer pursuant to the procedures set forth herein and in Section 3 of the
Offer to Purchase. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees or an
Agent's Message (in connection with book-entry transfer) and any other required
documents, must be received by the Depositary at one of its addresses set forth
herein prior to the Expiration Date and either (i) certificates representing
tendered Shares must be received by the Depositary at one of such addresses
prior to the Expiration Date or (ii) Shares must be delivered pursuant to the
procedures for book-entry transfer set forth herein and in Section 3 of the
Offer to Purchase and a Book-Entry Confirmation must be received by the
Depositary prior to the Expiration Date or (b) the tendering stockholder must
comply with the guaranteed delivery procedures set forth herein and in Section 3
of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot comply with the book-entry
transfer procedures on a timely basis may tender their Shares by properly
completing and duly executing the Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth herein and in Section 3 of the Offer to
Purchase.
Pursuant to such guaranteed delivery procedures, (i) such tender must be
made by or through an Eligible Institution, (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form provided by
Purchaser, must be received by the Depositary, as provided below, on or prior to
the Expiration Date and (iii) the certificates for all tendered Shares, in
proper form for transfer (or a Book-Entry Confirmation with respect to all
tendered Shares), together with a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
documents required by this Letter of Transmittal must be received by the
Depositary within three trading days after the date of execution of such Notice
of Guaranteed Delivery. A 'trading day' is any day on which the New York Stock
Exchange is open for business.
The term 'Agent's Message' means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, which are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against the participant.
The signatures on this Letter of Transmittal cover the Shares tendered
hereby.
THE METHOD OF DELIVERY OF CERTIFICATES REPRESENTING THE SHARES, THIS LETTER
OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER. THE SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
<PAGE>
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering stockholders, by executing
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under 'Description of
Shares Tendered' is inadequate, the number of Shares tendered and the Share
certificate numbers with respect to such Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer). If fewer than all the Shares evidenced by any Share
certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares that are to be tendered in the box entitled 'Number of
Shares Tendered.' In any such case, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificates will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date or the
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any Share certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of the authority of such person so to act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share certificates or
separate stock powers are required unless payment or certificates for Shares not
tendered or not accepted for payment are to be issued in the name of a person
other than the registered holder(s). Signatures on any such Share certificates
or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by certificates listed and
transmitted hereby, the Share certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on the Share certificates. Signature(s) on any
such Share certificates or stock powers must be guaranteed by an Eligible
Institution as set forth in Instruction 1 hereto.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the transfer and
sale of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or if
certificates for Shares not tendered or not accepted for payment are to be
registered in the name of, any person other than the registered holder(s), or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such other person) payable
on account of the transfer to such other person will be deducted from the
purchase price of such Shares purchased unless evidence satisfactory to
Purchaser of the payment of such taxes, or exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share certificates evidencing the
Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares accepted for payment is to be issued in the name of, and/or
Share certificates for Shares not accepted for payment or not tendered are to be
issued in the name of and/or returned to, a person other than the signer of this
Letter of Transmittal or if a check is to be sent, and/or such certificates are
to be returned, to a person other than the signer of this Letter of Transmittal,
or to an address other than that shown above, the appropriate boxes on this
Letter of Transmittal should be completed. Any stockholder(s) delivering Shares
by book-entry transfer may request that Shares not purchased be credited to such
account maintained at the Book-Entry Transfer Facility as such stockholder(s)
may designate in the box entitled 'Special Payment Instructions.' If no such
instructions are given,
<PAGE>
any such Shares not purchased will be returned by crediting the account at the
Book-Entry Transfer Facility designated above as the account from which such
Shares were delivered.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent at their address and phone number set forth at
the end of this Letter of Transmittal.
9. WAIVER OF CONDITIONS. Subject to the Merger Agreement, Purchaser
reserves the absolute right in its sole discretion to waive, at any time or from
time to time, any of the specified conditions of the Offer, in whole or in part,
in the case of any Shares tendered.
10. BACKUP WITHHOLDING. UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY
WILL BE REQUIRED TO WITHHOLD 31% OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN
STOCKHOLDERS PURSUANT TO THE OFFER. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING ON PAYMENTS MADE TO CERTAIN STOCKHOLDERS WITH RESPECT TO THE
PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER
MUST PROVIDE THE DEPOSITARY WITH HIS CORRECT TAXPAYER IDENTIFICATION NUMBER
('TIN') AND CERTIFY, UNDER PENALTY OF PERJURY, THAT HE IS NOT SUBJECT TO
BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the federal income tax liability
of the person subject to the backup withholding, provided that the required
information is given to the IRS. If backup withholding results in an overpayment
of tax, a refund can be obtained by the stockholder upon filing an income tax
return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed 'Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9' for additional guidance on which
number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
<PAGE>
Certain stockholders (including, among others, most corporations and
certain foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed 'Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9' for more instructions.
11. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any certificate(s)
representing Shares has (have) been lost, destroyed or stolen, the stockholder
should promptly notify the Depositary by checking the box immediately preceding
the special payment/special delivery instructions and indicating the number of
Shares lost. The stockholder will then be instructed as to the steps that must
be taken in order to replace the Share certificate(s). This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost, destroyed or stolen Share certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) TOGETHER WITH
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN
AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE EXPIRATION
DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES FOR
GUARANTEED DELIVERY.
IMPORTANT TAX INFORMATION
Under the federal income tax laws, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
such stockholder's correct TIN on Substitute Form W-9 below. If a tendering
stockholder is subject to backup withholding, such stockholder must cross out
item (2) of Part 2 (the Certification box) on the Substitute Form W-9. If the
Depositary is not provided with the correct TIN, the stockholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding.
Certain stockholders (including, among others, most corporations, and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that stockholder must submit a statement, signed under
penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Depositary. Exempt stockholders, other than
foreign individuals, should furnish their TIN, write 'Exempt' on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed 'Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9' for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
income tax. Rather, the amount of the backup withholding can be credited against
the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding of federal income tax on payments made to
certain stockholders with respect to Shares purchased pursuant to the Offer, the
stockholder is required to notify the Depositary of such stockholder's correct
TIN by completing the form contained herein certifying that the TIN provided on
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN).
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed 'Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9' for additional guidance on which number to
report. If the tendering stockholder has not been issued a TIN and has applied
for a number or intends to apply for a number in the near future, such
stockholder should
<PAGE>
write 'Applied For' in the space provided for in the TIN in Part 1, and sign and
date the Substitute Form W-9. If 'Applied For' is written in Part 1 and the
Depositary is not provided with a TIN within sixty (60) days, the Depositary
will withhold 31% on all payments of the purchase price until a TIN is provided
to the Depositary.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT Social Security Number
FORM W-9 AND CERTIFY BY SIGNING AND DATING BELOW. (If awaiting TIN
DEPARTMENT OF THE TREASURY write 'Applied For')
INTERNAL REVENUE SERVICE OR
PAYOR'S REQUEST FOR Employer Identification Number
TAXPAYER IDENTIFICATION Employer Indentification Number
NUMBER ('TIN') (If awaiting TIN
write 'Applied For')
- -----------------------------------------------------------------------------------------------------------------------------
PART 2 -- CERTIFICATE -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued
for me), and
(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified
by the Internal Revenue Service (the 'IRS') that I am subject to backup withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
Certification Instructions -- You must cross out item (2) above if you have been notified by the IRS that you are currently
subject to backup withholding because of under-reporting interest or dividends on your tax returns. However, if after being
notified by the IRS that you are subject to backup withholding, you receive another notification from the IRS that you are
no longer subject to backup withholding, do not cross out such item (2). (Also see instructions in the enclosed Guidelines).
- -----------------------------------------------------------------------------------------------------------------------------
SIGNATURE .............................. DATE ............................. , 1999 PART 3 -- Awaiting TIN
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Officer or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a Taxpayer Identification Number to the Depositary by the time of
payment, 31% of all reportable payments made to me thereafter will be withheld,
but that such amounts will be refunded to me if I provide a certified Taxpayer
Identifiation Number to the Depositary within sixty (60) days.
<TABLE>
<S> <C>
Signature ................................. Date ............................
</TABLE>
- -------------------------------------------------------------------------------
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and other tender offer materials may be
directed to the Information Agent at its address and telephone number set forth
below:
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
501 Madison Avenue, 20th Floor
New York, New York 10022
CALL TOLL FREE: (888) 750-5834
BANKS AND BROKERS CALL COLLECT: (212) 750-5833
THE DEALER MANAGER FOR THE OFFER IS:
[LOGO]
ROTHSCHILD INC.
1251 Avenue of the Americas
New York, New York 10020
CALL TOLL FREE: (800) 753-5151 (EXT. 3611)
IN NEW YORK CITY CALL: (212) 403-3611
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
WHITTAKER CORPORATION
TO
MEGGITT ACQUISITION INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY
OF
MEGGITT PLC
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON JULY 13, 1999, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates
representing shares of common stock, par value $0.01 per share (the 'Common
Stock'), including the preferred share purchase rights associated therewith
issued pursuant to the Rights Agreement, as amended on June 9, 1999 (as
defined in the Offer to Purchase) (the 'Rights' and, together with the Common
Stock, the 'Shares'), of Whittaker Corporation, a Delaware corporation (the
'Company'), or certificates representing shares of Series D Participating
Convertible Preferred Stock, par value $1.00 per share, of the Company, are
not immediately available, if the procedure for book-entry transfer cannot be
completed prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase), or if time will not permit all required documents to reach the
Depositary prior to the Expiration Date. Such form may be delivered by hand,
transmitted by facsimile transmission or mailed to the Depositary. See
Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
ChaseMellon Shareholder Services, L.L.C. Reorganization Department ChaseMellon Shareholder
Reorganization Department 85 Challenger Road Services, L.L.C.
P.O. Box 3301 Mail Stop -- Reorg Reorganization Department
South Hackensack, Ridgefield Park, NJ 07660 120 Broadway
NJ 07606 13th Floor
New York, NY 10271
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
Confirm Facsimile By Telephone:
(201) 296-4860
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an 'Eligible Institution'
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Meggitt Acquisition Inc., a Delaware
corporation ('Purchaser'), and an indirect wholly-owned subsidiary of Meggitt
PLC, a public limited company incorporated under the laws of England and Wales
('Parent'), upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase, dated June 15, 1999 (the 'Offer to Purchase'),
and the related Letter of Transmittal (which, together with any amendments and
supplements thereto, constitute the 'Offer'), receipt of which is hereby
acknowledged, the number of shares set forth below of common stock, par value
$0.01 per share (the 'Common Stock'), including the preferred share purchase
rights associated therewith issued pursuant to the Rights Agreement, as
amended on June 9, 1999 (as defined in the Offer to Purchase) (the 'Rights'
and, together with the Common Stock, the 'Shares'), of Whittaker Corporation,
a Delaware corporation (the 'Company'), pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
Number of Shares: ........................................................
Certificate Nos. (if available):
.........................................................................
.........................................................................
Check box if Shares will be tendered by book-entry transfer:
Account Number: ..........................................................
Dated: ............................................................ , 1999
Name(s) of Record Holder(s): .............................................
.........................................................................
.........................................................................
PLEASE PRINT
Address(es): .............................................................
.........................................................................
.........................................................................
ZIP CODE
Area Code and Tel. No.:
.........................................................................
.........................................................................
Signature(s): ............................................................
.........................................................................
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, guarantees to deliver to the Depositary
either certificates representing the Shares tendered hereby, in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, in each case with delivery
of a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message, and any
other documents required by the Letter of Transmittal, within three NYSE trading
days (as defined in the Offer to Purchase) after the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the same time period stated
herein. Failure to do so could result in a financial loss to such Eligible
Institution.
<TABLE>
<S> <C>
Name of Firm: .................................... ...............................................................
AUTHORIZED SIGNATURE
Address: ......................................... Name: ........................................................
PLEASE PRINT
.................................................. Title: .......................................................
ZIP CODE
Area Code & Tel. No: ............................. Date: .................................................. , 1999
</TABLE>
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD
BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
ROTHSCHILD INC.
1251 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
OFFER TO PURCHASE FOR CASH
ALL SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
WHITTAKER CORPORATION
AT
$28.00 NET PER SHARE
BY
MEGGITT ACQUISITION INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY
OF
MEGGITT PLC
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON JULY 13, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
June 15, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by Meggitt Acquisition Inc., a Delaware corporation
('Purchaser'), and an indirect wholly-owned subsidiary of Meggitt PLC, a public
limited company incorporated under the laws of England and Wales ('Parent'), to
act as Dealer Manager in connection with Purchaser's offer to purchase all
shares of common stock, par value $0.01 per share (the 'Common Stock'),
including the preferred stock purchase rights associated therewith issued
pursuant to the Rights Agreement, as amended on June 9, 1999 (as defined in the
Offer to Purchase) (the 'Rights' and, together with the Common Stock, the
'Shares'), of Whittaker Corporation, a Delaware corporation (the 'Company'),
at a price of $28.00 per Share, net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated June 15, 1999 (the 'Offer to Purchase'), and in the related Letter of
Transmittal (which, together with any amendments and supplements thereto,
constitute the 'Offer') enclosed herewith. The Offer also is being made for all
shares of Series D Participating Convertible Preferred Stock,
par value $1.00 per share (the 'Preferred Shares'), at a purchase price of
$9,142.87 per Preferred Share, net to the seller in cash and without interest
thereon, upon the terms and subject to the conditions set forth in the Offer
to Purchase. Please furnish copies of the enclosed materials to those of your
clients for whose accounts you hold Shares registered in your name or
in the name of your nominee.
The Offer is conditioned upon, among other things, there being validly
tendered and not properly withdrawn prior to the Expiration Date (as defined in
the Offer to Purchase) that number of Shares and Preferred Shares which,
together with any Shares or Preferred Shares beneficially owned by Parent,
constitutes at least a majority of the then outstanding Shares on a
fully-diluted basis. The Offer is also subject to the other conditions set forth
in the Offer to Purchase. See the Introduction and Sections 1, 14 and 15 of the
Offer to Purchase.
<PAGE>
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase dated June 15, 1999;
2. Letter of Transmittal for your use in accepting the Offer and
tendering Shares and for the information of your clients;
3. Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Shares and all other required documents cannot be
delivered to the Depositary, or if the procedures for book-entry transfer
cannot be completed, by the Expiration Date;
4. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
6. A return envelope addressed to ChaseMellon Shareholder Services,
L.L.C. (the 'Depositary').
Upon the terms and subject to the conditions of the Offer, Purchaser will
accept for payment and pay for Shares which are validly tendered prior to the
Expiration Date and not theretofore properly withdrawn when, as and if Purchaser
gives oral or written notice to the Depositary of Purchaser's acceptance of such
Shares for payment pursuant to the Offer. Payment for Shares purchased pursuant
to the Offer will in all cases be made only after timely receipt by the
Depositary of (i) certificates for such Shares, or timely confirmation of a
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company, pursuant to the procedures described in Section 2 of
the Offer to Purchase, (ii) a properly completed and duly executed Letter of
Transmittal (or a properly completed and manually signed facsimile thereof) or
an Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry transfer and (iii) all other documents required by the Letter of
Transmittal.
Purchaser will not pay any fees or commissions to any broker or dealer or
other person (other than the Depositary and the Information Agent as described
in the Offer to Purchase) for soliciting tenders of Shares pursuant to the
Offer. Purchaser will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for customary mailing and handling costs
incurred by them in forwarding the enclosed materials to their customers.
Purchaser will pay or cause to be paid all stock transfer taxes applicable
to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JULY 13, 1999, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer of Shares, and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of Transmittal and in
the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents or to complete the
procedures for delivery by book-entry transfer prior to the expiration of the
Offer, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
2
<PAGE>
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent at the address and telephone number set forth on the back
cover of the Offer to Purchase.
Very truly yours,
ROTHSCHILD INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE
AGENT OF PURCHASER, PARENT, THE COMPANY, THE INFORMATION AGENT, THE DEPOSITARY,
OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON
TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION
WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
WHITTAKER CORPORATION
AT
$28.00 NET PER SHARE
BY
MEGGITT ACQUISITION INC.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY
OF
MEGGITT PLC
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON JULY 13, 1999 UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
June 15, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated June 15,
1999 (the 'Offer to Purchase'), and the related Letter of Transmittal (which,
together with any amendments and supplements thereto, collectively constitute
the 'Offer') in connection with the offer by Meggitt Acquisition Inc., a
Delaware corporation ('Purchaser') and an indirect wholly-owned subsidiary of
Meggitt PLC, a public limited company incorporated under the laws of England and
Wales ('Parent'), to purchase for cash all shares of common stock, par value
$0.01 per share (the 'Shares'), of Whittaker Corporation, a Delaware corporation
(the 'Company'), at a purchase price of $28.00 per Share net to you in cash (the
'Share Price'). The Offer also is being made for all shares of Series D
Participating Convertible Preferred Stock, par value $1.00 per share (the
'Preferred Shares'), of the Company, at a purchase price of $9,142.87 per
Preferred Share, net to the seller in cash. WE ARE THE HOLDER OF RECORD OF
SHARES HELD FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS
THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE ENCLOSED LETTER OF
TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY
YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender any or all of
the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $28.00 per Share net to you in cash, without
interest.
2. The Offer is being made for all outstanding Shares and all
outstanding Preferred Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined in the Offer to Purchase) and the transactions
contemplated thereby, including the Offer and the Merger (each as defined
in the Offer to Purchase), and has unanimously determined that the Offer
and the Merger are fair to, and in the best interests of, the Company's
stockholders and unanimously recommends that the stockholders accept the
Offer and tender their Shares and Preferred Shares pursuant to the Offer.
4. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on July 13, 1999, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not properly withdrawn prior to the Expiration Date
(as defined in the Offer to Purchase) that number
<PAGE>
of Shares and Preferred Shares which, together with any Shares or
Preferred Shares beneficially owned by Parent, constitutes at least
a majority of the then outstanding Shares on a fully-diluted basis.
The Offer is also subject to the other conditions set forth in the Offer to
Purchase. See the Introduction and Sections 1, 14 and 15 of the Offer to
Purchase.
6. Any stock transfer taxes applicable to the sale of Shares to
Purchaser pursuant to the Offer will be paid by Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
Except as disclosed in the Offer to Purchase, Purchaser is not aware of any
state in which the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. In any jurisdiction in
which the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form attached to
this letter. An envelope to return your instructions to us is enclosed. If you
authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the attachment to this letter. Your instructions should
be forwarded to us in ample time to permit us to submit a tender on your behalf
prior to the expiration of the Offer.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share certificates for, or of Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to, such Shares,
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase)),
and any other documents required by the Letter of Transmittal. Accordingly,
payment might not be made to all tendering stockholders at the same time, and
will depend upon when Share certificates or Book-Entry Confirmations of such
Shares are received into the Depositary's account at the Book-Entry Transfer
Facility (as defined in the Offer to Purchase).
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE
ALL SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
WHITTAKER CORPORATION
AT
$28.00 NET PER SHARE IN CASH
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated June 15, 1999 and the related Letter of Transmittal in
connection with the Offer by Meggitt Acquisition Inc., a Delaware corporation
and an indirect wholly-owned subsidiary of Meggitt PLC, a public limited company
incorporated under the laws of England and Wales, to purchase for cash all
shares of common stock, par value $0.01 per share (the 'Shares'), and all shares
of Series D Participating Convertible Preferred Stock, par value $1.00 per
share, of Whittaker Corporation, a Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the
Offer.
Number of Shares to Be Tendered*
<TABLE>
<S> <C>
................................................ Shares
Dated: ......................................... , 1999 ........................................................
........................................................
SIGNATURE(S)
........................................................
........................................................
PRINT NAME(S)
........................................................
........................................................
ADDRESS(ES)
........................................................
AREA CODE AND TELEPHONE NUMBER
........................................................
TAX ID OR SOCIAL SECURITY NUMBER
</TABLE>
- ------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYOR. -- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payor.
<TABLE>
<S> <C>
- ----------------------------------------------------------
Give the
For this type of account: SOCIAL
SECURITY
number of --
- ----------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under State law
8. Sole proprietorship account The owner(4)
</TABLE>
<TABLE>
<S> <C>
- ----------------------------------------------------------
For this type of account: Give the EMPLOYER
IDENTIFICATION
number of --
- ----------------------------------------------------------
9. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name of
a public entity (such as a
state or local government,
school district, or prison)
that receives agricultural
program payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate or pension trust.
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
A corporation.
A financial institution.
An organization exempt from tax under section 501(a), an individual
retirement plan or a custodial account under Section 403(b)(7).
The United States or any agency or instrumentality thereof.
A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
An international organization or any agency or instrumentality thereof.
A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
A real estate investment trust.
A common trust fund operated by a bank under section 584(a).
An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
An entity registered at all times under the Investment Company Act of 1940.
A foreign central bank of issue.
PAYMENTS NOT GENERALLY SUBJECT TO BACKUP WITHHOLDING
Payment of dividends and patronage dividends not generally subject to backup
withholding include the following:
Payments to nonresident aliens subject to withholding under section 1441.
Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
Payments of patronage dividends where the amount renewed is not paid in
money.
Payments made by certain foreign organizations.
Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payor's trade or business and you have not provided your
correct taxpayer identification number to the payor.
Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
Payments described in section 6049(b)(5) to non-resident aliens.
Payments on tax-free covenant bonds under section 1451.
Payments made by certain foreign organizations.
Payments made to a nominee.
EXEMPT PAYEE DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE 'EXEMPT' ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYOR. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments, other than interest, dividends and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 604lA(a),
6045 and 6050A.
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payors
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payors must be given the numbers whether or not recipients are
required to file tax returns. Payors must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payor. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payor, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDER. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated as of
June 15, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal,
and is being made to all holders of Shares. The Offer is not being made to (nor
will tenders be accepted from or on behalf of) holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction or any administrative or
judicial action pursuant thereto.
Notice of Offer to Purchase
All Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
Whittaker Corporation
at
$28.00 Net Per Share in Cash
by
Meggitt Acquisition Inc.
an indirect wholly-owned subsidiary of
Meggitt PLC
Meggitt Acquisition Inc., a Delaware corporation ("Purchaser"), and an
indirect wholly-owned subsidiary of Meggitt PLC, a public limited company
incorporated under the laws of England and Wales ("Parent"), hereby offers to
purchase all shares of common stock, par value $0.01 per share (the "Common
Stock"), of Whittaker Corporation, a Delaware corporation (the "Company"), and
the associated preferred share purchase rights (the "Rights" and, together with
the Common Stock, the "Shares") issued pursuant to the Rights Agreement, dated
as of November 12, 1998, as amended, by and between the Company and Mellon Bank,
N.A. (the "Rights Agreement"), at a price of $28.00 per Share (the "Share
Price"), net to the seller in cash and without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase and in the
related Letter of Transmittal (which together constitute the "Offer"). The Offer
also is being made for all shares of Series D Participating Convertible
Preferred Stock, par value $1.00 per share (the "Preferred Shares"), at a price
of $9,142.87 per Preferred Share (the "Preferred Share Price"), net to the
seller in cash and without interest thereon, upon the terms and subject to the
conditions set forth in the Offer. All references to "Shares" set forth herein
shall include the Preferred Shares unless the context otherwise requires.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JULY 13, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not properly withdrawn prior to the Expiration Date (as defined
below) that number of Shares (collectively, the "Minimum Number of Shares")
which, together with any Shares or Preferred Shares then beneficially owned by
Parent, would represent a majority of the then outstanding Shares on a
fully-diluted basis.
The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of June 9, 1999, among the Company, Parent and
Purchaser. The purpose of the Offer is to acquire control of the Company. Parent
and Purchaser do not currently own any Shares or Preferred Shares.
The Board of Directors of the Company has unanimously determined that the
Offer and the Merger Agreement are fair to, and in the best interests of, the
Company's stockholders (the "Stockholders"), has unanimously approved the Offer
and the Merger Agreement and recommends that the Stockholders accept the Offer
and tender their Shares pursuant thereto.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to ChaseMellon Shareholder
Services, L.L.C., as Depositary (the "Depositary"), of Purchaser's acceptance of
such Shares for payment pursuant to the Offer. In all cases, upon the terms and
subject to the conditions of the Offer, payment for Shares purchased pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering Stockholders for the purpose
of receiving payment from Purchaser and transmitting payment to validly
tendering Stockholders.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates
representing such Shares or timely confirmation of the book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility"), pursuant to the procedures set forth in the
Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry transfer and (iii) any other documents required by the Letter of
Transmittal.
<PAGE>
If, prior to the Expiration Date, Purchaser shall increase the
consideration offered to Stockholders pursuant to the Offer, such increased
consideration shall be paid to all holders of Shares that are purchased pursuant
to the Offer, whether or not such Shares were tendered prior to such increase in
consideration. Under no circumstances will interest on the purchase price for
Shares be paid by Purchaser by reason of any delay in making such payment.
The term "Expiration Date" means 12:00 midnight, New York City time, on
July 13, 1999, unless and until Purchaser, in accordance with the Merger
Agreement, shall have exercised its right to extend the period of time for which
the Offer is open, in which event the term "Expiration Date" shall mean the time
and date at which the Offer, as so extended by Purchaser, shall expire. Any such
extension will be followed by a public announcement thereof by no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
right of a tendering Stockholder to withdraw such Shares. Without limiting the
manner in which Purchaser may choose to make any public announcement, Purchaser
currently intends to make announcements by issuing a press release to the Dow
Jones News Service.
Except as otherwise provided below or as provided by applicable law,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time on or prior to the Expiration
Date and, unless theretofore accepted for payment as provided herein, may also
be withdrawn at any time after August 13, 1999.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses set
forth on the back cover of the Offer to Purchase. Any such notice of withdrawal
must specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of the
Shares to be withdrawn, if different from the name of the person who tendered
the Shares. If certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution (as defined in the Offer to Purchase), the signatures on
the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer as
set forth in the Offer, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares and otherwise comply with such Book-Entry Transfer
Facility's procedures.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in the Offer.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination shall be final and binding.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 under the Securities Exchange Act of 1934, as amended, is contained in the
Offer to Purchase and is incorporated herein by reference.
The Company has agreed to provide Purchaser with the Company's stockholder
lists and security position listings for the purpose of disseminating the Offer
to Stockholders. The Offer to Purchase, the related Letter of Transmittal and
other materials will be mailed to record holders of Shares and will be furnished
to brokers, dealers, banks and similar persons whose names, or the names of
whose nominees, appear on the stockholder lists or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information and should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer documents may be directed
to the Information Agent, at the address and telephone number set forth below,
and copies will be furnished promptly at Purchaser's expense. Purchaser will not
pay any fees or commissions to any broker or dealer or other person other than
the Depositary and the Information Agent for soliciting tenders of Shares
pursuant to the Offer.
The Information Agent for the Offer is:
[Innisfree logo]
501 Madison Avenue, 20th Floor
New York, New York 10022
Call Toll-Free: (888) 750-5834
Banks and Brokers call collect: (212) 750-5833
The Dealer Manager for the Offer is:
ROTHSCHILD INC.
1251 Avenue of the Americas
New York, New York 10020
Call Toll-Free: (800) 753-5151 (Ext. 3611)
Banks and Brokers call collect: (212) 403-3611
June 15, 1999
<PAGE>
- -------------------------------------------------------------------------------
PRN MEGGITT PLC PROPOSED ACQUISITION OF WHITTAKER CORPORATION
JUNE 9, 1999 8:33
- --------------------------------------------------------------------------------
NEW YORK, June 9 / PRNewswire / -- The Board of Meggitt PLC (London: MGGT)
is pleased to announce that it has agreed with the Board of Whittaker
Corporation (NYSE: WKR) the execution of a definitive merger agreement under
which Meggitt will acquire the whole of the fully diluted common stock of
Whittaker at $28 per share, valuing Whittaker at approximately $380 million.
Meggitt will publish a tender offer document shortly.
Meggitt PLC is a British aerospace and electronics company with
significant aerospace operations in the United States, particularly in
Southern California. Meggitt has a market capitalization of $670 million. In
1998 Meggitt had sales of $470 million and operating profit of $62 million.
SOURCE Meggitt PLC
<PAGE>
AGREEMENT
DATED 9th June, 1999
U.S.$530,000,000
TERM AND REVOLVING CREDIT FACILITY
FOR
MEGGITT PLC
ARRANGED BY
BARCLAYS CAPITAL
HSBC INVESTMENT BANK plc
ALLEN & OVERY
London
<PAGE>
INDEX
Clause Page
1. Interpretation..................................................1
2. The Facilities.................................................16
3. Purpose........................................................17
4. Conditions Precedent...........................................18
5. Advances.......................................................19
6. Bills..........................................................21
7. Bills Procedure................................................22
8. Repayment......................................................24
9. Prepayment and Cancellation....................................25
10. Interest.......................................................27
11. Optional Currencies............................................30
12. Payments.......................................................31
13. Taxes..........................................................32
14. Market Disruption..............................................35
15. Increased Costs................................................36
16. Illegality and Mitigation......................................38
17. Guarantee......................................................38
18. Representations and Warranties.................................42
19. Undertakings...................................................46
20. Default........................................................52
21. The Agent and the Arrangers....................................56
22. Fees...........................................................60
23. Expenses.......................................................61
24. Stamp Duties...................................................62
25. Indemnities....................................................62
26. Evidence and Calculations......................................63
27. Amendments and Waivers.........................................63
28. Changes to the Parties.........................................64
29. Disclosure of Information......................................67
30. Set-Off........................................................68
31. Pro Rata Sharing...............................................68
32. Severability...................................................69
33. Counterparts...................................................69
34. Notices........................................................69
35. Language.......................................................70
36. Jurisdiction...................................................70
37. Governing Law..................................................71
<PAGE>
Schedule Page
1. Banks and Commitments...........................................73
2. Conditions Precedent............................................74
Part I - Conditions Precedent...................................74
Part II - To be delivered before Merger Completion Advances.....76
Part III - To be delivered by an Additional Borrower............77
Part IV - To be delivered by an Additional Guarantor............78
3. Calculation of the MLA Cost.....................................80
4. Form of Request.................................................82
5. Form of Bill....................................................83
6. Forms of Accession Documents....................................84
Part I - Novation Certificate...................................84
Part II - Borrower Accession Agreement..........................86
Part III - Guarantor Accession Agreement........................87
7. Timetables......................................................88
Signatories.........................................................91
* Delete as appropriate.
** Complete only if the Request is for Tranche B Advances and the requested Term
is of an optional duration.
<PAGE>
THIS AGREEMENT is dated 9th June, 1999 between:
(1) MEGGITT plc (Registered No. 432989 (the "Company");
(2) THE SUBSIDIARIES OF THE COMPANY listed in Part I of Schedule 1 as
original guarantors (the "Original Guarantors");
(3) BARCLAYS CAPITAL and HSBC INVESTMENT BANK plc as arrangers (in this
capacity the "Arrangers");
(4) THE FINANCIAL INSTITUTIONS listed in Part II of Schedule 1 as banks;
and
(5) HSBC INVESTMENT BANK plc as agent (in this capacity the "Agent").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement:
"Acceptance Commission Rate"
means 0.65 per cent. per annum.
"Additional Borrower"
means a member of the Group which becomes a Borrower in accordance with
Clause 28.4 (Additional Borrowers).
"Additional Guarantors"
means a member of the Group which becomes a Guarantor in accordance
with Clause 28.5 (Additional Guarantors).
"Advance"
means a Tranche A Advance, a Tranche B Advance or a Tranche C Advance.
"Affiliate"
means a Subsidiary or a holding company (as defined in Section 736
of the Companies Act 1985) of a person and any other Subsidiary of
that Holding Company.
"Agent's Spot Rate of Exchange"
means the spot rate of exchange as determined by the Agent for the
purchase of the relevant Optional Currency in the London foreign
exchange market with Dollars at the relevant time on a particular day.
"Banks"
means those banks listed in Part II of Schedule 1 and their respective
successors and assigns which are for the time being participating in
the Facilities.
<PAGE>
2
"Bidco"
means the wholly owned subsidiary of the Company which makes the Offer.
"Bill"
means a Sterling bill of exchange substantially in the form of
Schedule 5.
"Borrower"
means the Company (whether in its capacity as a borrower or guarantor
as the context may require) and each Additional Borrower.
"Borrower Accession Agreement"
means a letter substantially in the form of Part II of Schedule 6
with such amendments as the Agent may approve or reasonably require.
"Borrowings"
means, in relation to any person, at any time, any indebtedness in
respect of:
(a) the principal amount of moneys borrowed and any net debit
balances at banks after application of applicable account
pooling arrangements;
(b) the principal amount of any debenture, bond, note, loan stock,
commercial paper or other securities;
(c) the principal amount raised under acceptance credit facilities
other than acceptances relating to the purchase or sale of
goods in the ordinary course of trading;
(d) capital of any person to the extent treated as a borrowing by
the auditors of such person;
(e) counter-indemnity or similar obligations of that person in
respect of documentary credits, guarantees or similar
instruments issued by any person to support the Borrowings of
any person;
(f) any negotiable instrument, whether as drawer, issuer,
acceptor, endorser or otherwise, but excluding liabilities on
negotiable instruments discounted in the ordinary course of
trading;
(g) receivables sold or discounted other than receivables sold or
discounted in the ordinary course of trading;
(h) the acquisition cost of any asset to the extent payable before
or after the time of acquisition or possession by the party
liable where the advance or deferred payment was arranged
primarily as a method of raising finance or financing the
acquisition of that asset;
(i) the capitalised element of any rental payments under finance
leases (whether in respect of land, machinery, equipment or
otherwise) entered into primarily as a method of raising
finance or financing the acquisition of the asset leased;
<PAGE>
3
(j) (for the purposes of Clause 20.5 (Cross default) only) the net
settlement amount of any liability under any swap, hedging or
similar treasury instrument, as determined in accordance with
the document evidencing that liability;
(k) principal amounts raised under any other transaction having
the commercial effect of a borrowing or the raising of money;
or
(l) any guarantee, indemnity or similar assurance given to support
any of the indebtedness of a type specified in this definition
of any person,
but no particular indebtedness shall be taken into account more than
once (so that for example, a guarantee shall be excluded to the extent
that the indebtedness guaranteed thereby is already taken into
account).
"Business Day"
means a day (other than a Saturday or Sunday) on which banks and the
interbank and foreign exchange markets are open for business in:
(a) London and, if a payment is required in Dollars, New York; and
(b) (in respect of a day on which a payment in an Optional
Currency except euros is required hereunder) the principal
financial centre of the country of such Optional Currency,
and, in relation to a payment or rate fixing in or other matter
relating to euros, a day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer System (TARGET) is
operating.
"Code"
means the United States Internal Revenue Code of 1986, as amended and
any rule or regulation issued thereunder from time to time in effect.
"Commitment"
means, in respect of a Bank, the aggregate of its Tranche A Commitment,
Tranche B Commitment and Tranche C Commitment in each case to the
extent not cancelled or reduced under this Agreement.
"Control Event"
has the meaning given to it in Clause 9.5 (Mandatory Prepayment on
change of control).
"Controlled Group"
means all members of a controlled group of corporations and all trades
or businesses (whether or not incorporated) under common control which,
together with any Obligor, are treated as a single employer under
Section 414 (b) or (c) of the Code.
<PAGE>
4
"CULS"
means the interest bearing guaranteed redeemable convertible unsecured
loan stock of Meggitt Funding Limited, constituted by a deed poll dated
on or about the date of this Agreement made by Meggitt Funding Limited
and the Company.
"Dangerous Substance"
means any radioactive emissions and any natural or artificial substance
(in whatever form) the generation, transportation, storage, treatment,
use or disposal of which (whether alone or in combination with any
other substance) gives rise to a risk of causing harm to man or any
other living organism or damaging the Environment or public health or
welfare, including (without limitation) any controlled, special,
hazardous, toxic, radioactive or dangerous waste.
"Default"
means an Event of Default or an event which, with the giving of notice
or expiry of any grace period specified in Clause 20 (Default) (or any
combination of the foregoing), would constitute an Event of Default.
"Dollars" or "U.S.$"
means the lawful currency of the United States of America.
"EBDR"
means, in relation to any Bills, the arithmetic mean (rounded upwards,
if necessary, to the nearest 1/64) of the respective rates notified to
the Agent by each of the Reference Banks quoting (provided that at
least two Reference Banks are quoting) as the rate at which Eligible
Bills of an equivalent aggregate face amount and tenor to those Bills
can be discounted in the London discount market by that Reference Bank
at or about 11.00 a.m. on the relevant Utilisation Date.
"Eligible Bill"
means a Sterling bill of exchange eligible for rediscounting at the
Bank of England.
"EMU"
means Economic and Monetary Union as contemplated in the Treaty on
European Union.
"EMU Legislation"
means legislative measures of the European Union for the introduction
of changeover to or operation of the euro in one or more member states.
"Environment"
means all, or any of, the following media, the air (including the air
within buildings and the air within other natural or man-made
structures above or below ground), water (including, without
limitation, ground and surface water) and land (including, without
limitation, surface and sub-surface soil).
<PAGE>
5
"Environmental Claim"
means any claim by any person:
(a) in respect of any loss or liability suffered or incurred by
that person as a result of or in connection with any violation
of Environmental Law; or
(b) that arises as a result of or in connection with Environmental
Contamination and that could give rise to any remedy or
penalty (whether interim or final) that may be enforced or
assessed by private or public legal action or administrative
order or proceedings.
"Environmental Contamination"
means each of the following and their consequences:
(a) any release, discharge, emission, leakage or spillage of any
Dangerous Substance at or from any site owned, occupied or
used by any member of the Group into any part of the
Environment; or
(b) any accident, fire, explosion or sudden event at any site
owned, occupied or used by any member of the Group which is
directly or indirectly caused by or attributable to any
Dangerous Substance; or
(c) any other pollution of the Environment.
"Environmental Law"
means all laws, regulations, codes of practice, circulars, guidance
notices and the like having legal effect concerning the protection of
human health, the Environment, the conditions of the work place or the
generation, transportation, storage, treatment or disposal of Dangerous
Substances.
"Environmental Licence"
means any permit, licence, authorisation, consent or other approval
required by any Environmental Law.
"euro" or "euros"
means the single currency of the European Union as constituted by the
Treaty on European Union and as referred to in the EMU Legislation.
"ERISA"
means the U.S. Employee Retirement Income Security Act of 1974, as
amended, and any rule or regulation issued thereunder from time to
time.
"Event of Default"
means an event specified as such in Clause 20.1 (Events of Default).
<PAGE>
6
"Facility"
means any of the facilities designated as Tranche A, Tranche B or
Tranche C in Clause 2.1 (Facilities).
"Facility Office"
means, subject to Clause 28.2 (Transfers and change of Facility Office
by Banks), the office(s) notified by a Bank to the Agent:
(a) on or before the date it becomes a Bank; or
(b) by not less than five Business Days' notice,
as the office(s) through which it will perform all or any of its
obligations under this Agreement.
"Fee Letters"
means:
(a) the letter dated on or about the date of this Agreement
between the Agent and the Company; and
(b) the letter dated 24th May, 1999 between the Arrangers and the
Company,
in each case setting out the amount of various fees referred to in
Clause 22 (Fees).
"Final Maturity Date"
means the date five years after the date of this Agreement.
"Finance Document"
means this Agreement, each Fee Letter, a Bill, a Novation Certificate,
a Borrower Accession Agreement, a Guarantor Accession Agreement or any
other document designated as such by the Agent and the Company.
"Finance Party"
means an Arranger, a Bank or the Agent.
"Group"
means the Company and its Subsidiaries.
"Guarantors"
means the Company, each Original Guarantor and each Additional
Guarantor.
"Hedging Strategy"
means a hedging strategy for the Group on the terms set out in a letter
dated 1st June, 1999 from the Company to the Agent and countersigned by
the Agent on behalf of the Arrangers, as amended from time to time with
the prior written consent of the Majority Banks.
<PAGE>
7
"Interest Period"
in respect of a Tranche A Advance or a Term-out Advance, has the
meaning given to it in Clause 10.1 (Selection of Interest Periods for
Tranche A Advances and Term-out Advances) or, in respect of overdue
amounts, Clause 10.4 (Default Interest).
"LIBOR"
in relation to any Advance or unpaid sum, means the rate determined by
the Agent to be either:
(i) the percentage rate per annum of the offered quotations in the
required currency and for the required period which appear on
the page of the Reuter Money Rates Service Screen which
displays an average British Bankers Association Interest
Settlement Rate (being currently "LIBOR01" and subsequent
pages) (or such other page or service as may replace such
page(s)) for the purpose of displaying an average British
Bankers Association Interest Settlement Rate for such currency
as the Agent, after consultation with the Company, shall
select) as at 11.00 a.m. on the Rate Fixing Day for such
period; or
(ii) in the case of the Term or the first Interest Period of an
Offer Closing Advance or if in any case no such display rate
is then available, the arithmetic mean (rounded upwards, if
necessary, to the nearest four decimal places) of the
respective rates notified to the Agent by each of the
Reference Banks quoting (provided that at least two Reference
Banks are quoting) as the rate at which it is offered deposits
in the required currency and for the required period by prime
banks in the London interbank market at or about 11.00 a.m.
(or in the case of the Term or the first Interest Period of an
Offer Closing Advance, 1.00 p.m.) on the Rate Fixing Day for
such period,
and, for the purpose of this definition, "required currency" means, in
relation to such Advance or unpaid sum, the currency in which such
Advance or unpaid sum will be denominated during the required period
and "required period" means the applicable Interest Period for a
Tranche A Advance or a Term-out Advance, the Term of such Advance for
Tranche B Advances or Tranche C Advances (except Term-out Advances) or
the period in respect of which LIBOR falls to be determined in relation
to such unpaid sum.
"Majority Banks"
means, at any time:
(a) if any Advances are outstanding, Banks with an aggregate
Original Dollar Amount of Advances at that time of more than
66 2/3 per cent. of the aggregate Original Dollar Amount of
all Advances then outstanding; or
(b) if no Advances are outstanding, Banks whose Commitments then
aggregate more than 66 2/3 per cent. of the Total Commitments
(or if the Total Commitments have been reduced to zero,
aggregated more than 66 2/3 per cent. of the Total Commitments
immediately before the reduction).
"Mandatory Cost"
means:
<PAGE>
8
(a) the cost of compliance with the cash ratio deposit
requirements of the Bank of England and the amount of fees
payable to the Financial Services Authority during its term or
Interest Period, determined in accordance with Schedule 3; and
(b) any other applicable regulatory or central bank requirement
relating to any utilisation made through a branch in the
jurisdiction of the currency concerned.
"Margin"
means:
(a) 0.65 per cent. per annum in respect of a Term A Advance or a
Tranche B Advance; or
(b) 0.40 per cent. per annum in respect of a Tranche C Advance.
"Maturity Date"
means the last day of the Term of an Advance under either Tranche B or
Tranche C or a Bill under Tranche B.
"Merger"
means the merger between Bidco and the Target on the terms set out in
the Merger Agreement.
"Merger Agreement"
means the Agreement and Plan of Merger dated on or about the date of
this Agreement between Bidco, the Target and the Company as the same
may be amended or varied from time to time (with the consent of the
Majority Banks, if required, under this Agreement).
"Multiemployer Plan"
means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA
to which any Obligor or any member of the Controlled Group has an
obligation to contribute.
"Novation Certificate"
has the meaning given to it in Clause 28.3 (Procedure for novations).
"Obligor"
means each Borrower and each Guarantor.
"Offer"
means the tender offer for the Shares made or to be made by Bidco on
the terms and conditions referred to in the Merger Agreement and set
out in the Offer Documents.
"Offer Closing Advance"
means any Advances utilised in Dollars within 3 Business Days of the
Unconditional Date for the purpose of financing the acquisition of
those Shares to be acquired by Bidco pursuant to the Offer, where the
Request for such Advance is delivered to the Agent after 3 p.m. on the
third Business Day before the Utilisation Date of such Advances.
<PAGE>
9
"Offer Documents"
means the Statement on Schedule 14D-1, and the exhibits thereto, to be
filed with the U.S. Securities and Exchange Commission with respect to
the Offer.
"Optional Currency"
means, in relation to any Advance or proposed Advance, Sterling, euros,
Swiss Francs or any other currency (other than Dollars) approved in
writing by the Banks which is readily available and freely transferable
in the London foreign exchange market in sufficient amounts to fund
that Advance.
"Original Dollar Amount"
means:
(a) the principal amount of an Advance denominated in Dollars; or
(b) the principal amount of an Advance denominated in an Optional
Currency or a Bill, translated into Dollars on the basis of
the Agent's Spot Rate of Exchange on the date of receipt by
the Agent of the Request for that Advance.
"Original Group Accounts"
means the audited consolidated accounts of the Group for the year ended
31st December, 1998.
"Party"
means a party to this Agreement.
"PBGC"
means the Pension Benefit Guaranty Corporation referred to and defined
in ERISA, or any successor thereto.
"Permitted Security Interest"
means:
(a) any Security Interest created with the prior written consent
of the Majority Banks;
(b) any lien arising by operation of law (or by an agreement
evidencing the same) in the ordinary course of business of the
relevant member of the Group;
(c) any Security Interest arising out of title retention
provisions in a supplier's standard conditions of supply of
goods acquired by the relevant member of the Group in the
ordinary course of its business;
(d) any Security Interest existing at the date hereof and
disclosed in writing to the Agent by the Company prior to the
date hereof provided the principal amount secured thereby, as
so disclosed, is not exceeded;
(e) any Security Interest over the assets of any company which
becomes a Subsidiary of the Company after the date hereof,
provided that:
<PAGE>
10
(i) such Security Interest is in existence prior to the
date that it becomes a Subsidiary and is created
otherwise than in contemplation of becoming a
Subsidiary;
(ii) the principal amount secured thereby immediately
prior to it becomes a Subsidiary of the Company is
not thereafter exceeded; and
(iii) unless otherwise agreed by the Majority Banks, the
Company will use all reasonable endeavours to
discharge or procure the discharge of such Security
Interest as soon as reasonably practicable after it
becomes a member of the Group;
(f) any Security Interest over any assets (or documents of title
thereto) which are acquired by the Company or any Subsidiary
of the Company subject to such Security Interest, provided
that:
(i) the principal amount secured thereby immediately
prior to such asset being acquired is not thereafter
exceeded; and
(ii) unless otherwise agreed by the Majority Banks, the
Company will use all reasonable endeavours to
discharge or procure the discharge of such Security
Interest as soon as reasonably practicable after such
acquisition; and
(g) any other Security Interest over any asset of the Company or
any Subsidiary of the Company so long as the lower of the
aggregate amount of the indebtedness secured by such Security
Interest and the book value of the asset subject to the
indebtedness does not exceed when aggregated with, as
relevant, the aggregate amount of the indebtedness secured by
or the book value of any other assets the subject of Security
Interests permitted under this paragraph (g), 'L'20,000,000
or its equivalent in other currencies.
"Plan"
means an "employee benefit plan" as defined in section 3(3) of ERISA
which is maintained, or to which there is an obligation to pay or
contribute, by any Obligor or any member of the Controlled Group.
"Prescribed Time"
means the time set opposite the number of a sub-Clause or paragraph
of Clauses 5 (Advances) and 6 (Bills) under the heading "Time" in
Schedule 7.
"Press Release"
means the press release referred to in Part II of Schedule 2 to be made
by or on behalf of Bidco on or about the date of this Agreement
announcing an intention to make the Offer.
"Principal Subsidiary"
means:
(a) any Additional Borrower;
<PAGE>
11
(b) any Guarantor (other than the Company); and
(c) any other Subsidiary of the Company:
(i) whose profits (before interest, taxation and before
exceptional and extraordinary items and any taxation
relating thereto) are 10 per cent. or more of the
consolidated net profits of the Group (before
interest, taxation and before exceptional and
extraordinary items and any taxation relating
thereto); or
(ii) whose gross assets are 10 per cent. or more of the
consolidated gross assets of the Group,
all as shown (in the case of any Subsidiary) in its most recent annual
accounts and (in the case of the Group) in the most recent annual
consolidated accounts of the Group after, for this purpose, deducting
from each set of figures amounts attributable to minorities.
"Qualifying Bank"
means a bank or financial institution which is:
(a) a bank as defined in Section 840A of the Income and
Corporation Taxes Act 1988 which is within the charge to
corporation tax as regards any interest received by it under
this Agreement and which is beneficially entitled to that
interest; or
(b) resident (as such term is defined in the appropriate double
taxation treaty) in a country with which the United Kingdom
has an appropriate double taxation treaty under which that
institution is entitled to exemption from United Kingdom tax
on interest and is entitled to apply under the Double Taxation
Relief (Taxes on Income) (General) Regulations 1970 to have
interest paid to its Facility Office without withholding or
deduction for or on account of United Kingdom taxation (and
does not carry on business in the United Kingdom through a
permanent establishment with which the investments under this
Agreement in respect of which the interest is paid is
effectively connected) and for this purpose "double taxation
treaty" means any convention or agreement between the
government of the United Kingdom and any other government for
the avoidance of double taxation and the prevention of fiscal
evasion with respect to taxes on income and capital gains.
"Rate Fixing Day"
means:
(a) the Utilisation Date for a Bill or an Advance denominated in
Sterling (or, in the case of a Tranche A Advance or Term-out
Advance denominated in Sterling, the first day of each
applicable Interest Period); or
(b) (subject to paragraph (c) below) the second Business Day
before the Utilisation Date for an Advance denominated in a
currency other than Sterling (or, in the case of a Tranche A
Advance or Term-out Advance denominated in a currency other
than Sterling, the first day of each applicable Interest
Period) or
(c) in the case of the Term or the first Interest Period of an
Offer Closing Advance, the Business Day before the Utilisation
Date of such Offer Closing Advance.
<PAGE>
12
"Reference Banks"
means, subject to Clause 28.6 (Reference Banks), the principal London
offices of Barclays Bank PLC and Midland Bank plc.
"Reportable Event"
means a reported event as defined in Section 4043 of ERISA and the
regulations issued under such section with respect of a Plan,
excluding, however, such events as to which the PBGC by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified
within 30 days of the occurrence of such event, provided, however, that
a failure to meet the minimum funding standard of Section 412 of the
Code and of Section 302 of ERISA shall be a Reportable Event regardless
of the issuance of any such waiver of the notice requirement in
accordance with either Section 4043(a) of ERISA or Section 412(d) of
the Code.
"Request"
means a request made by a Borrower to utilise a Facility, substantially
in the form of Schedule 4.
"Requested Amount"
means the amount requested in a Request.
"Restricted Transaction"
means any transaction which is a Class 1 transaction as defined in
Chapter 10 of the Listing Rules of the London Stock Exchange as at 11th
January, 1999.
"Security Interest"
means any mortgage, charge, pledge, lien or other security interest
securing any obligation of any person or any other security interest
having a similar effect.
"Shares"
means all the Target's outstanding common stock and Series D
Participating Convertible Preferred Stock.
"Single Employer Plan"
means a "single employer plan" as defined in Section 4001(a)(15) of
ERISA which is maintained by any Obligor or any member of the
Controlled Group for employees of the Company or any member of the
Controlled Group.
"Subsidiary"
means:
(a) a subsidiary within the meaning of Section 736 of the
Companies Act 1985, as amended by Section 144 of the Companies
Act 1989; and
(b) for the purposes of Clauses 19.2 and 19.16 only, a subsidiary
undertaking within the meaning of Section 258 of the Companies
Act 1985 (as inserted by Section 21 of the Companies Act
1989).
<PAGE>
13
"Syndication Period"
means the period ending on the date the Arrangers notify the Company
that general syndication of the Facilities is completed.
"Target"
means Whittaker Corporation (incorporated in Delaware with Federal
Employer Number 95-4033076).
"Term"
means the period selected by a Borrower in a Request for which the
relevant Tranche B Advance, Tranche C Advance or Bill is to be
outstanding.
"Term-out Advances" means the Tranche C Advances, if any, drawn under
Clause 8.3(b) (Repayment of Tranche C Advances).
"Total Commitments"
means the aggregate of the Tranche A Total Commitments, Tranche B Total
Commitments and Tranche C Total Commitments from time to time.
"Tranche A Advance"
means a cash advance made by a Bank under Tranche A.
"Tranche A Commitment"
means, in respect of a Bank, the amount in Dollars set opposite the
name of that Bank in Column 1 of Part II of Schedule 1 to the extent
not cancelled or reduced under this Agreement.
"Tranche A Commitment Period"
means the period from and including the date of this Agreement to and
including the date 180 days after the date of this Agreement or, if
earlier, the date on which the Offer lapses, terminates or is
withdrawn.
"Tranche A Total Commitments"
means the aggregate for the time being of the Tranche A Commitments,
being U.S.$250,000,000 at the date of this Agreement.
"Tranche B Advance"
means a cash advance made by a Bank under Tranche B.
"Tranche B Commitment"
means, in respect of a Bank, the amount in Dollars set opposite the
name of that Bank in Column 2 of Part II of Schedule 1 to the extent
not cancelled or reduced under this Agreement.
<PAGE>
14
"Tranche B Total Commitments"
means the aggregate for the time being of the Tranche B Commitments,
being U.S.$180,000,000 at the date of this Agreement.
"Tranche C Advance"
means a cash advance made by a Bank under Tranche C.
"Tranche C Availability Period"
means the period from and including the date of this Agreement up to
and including the date which is 364 days after the date of this
Agreement.
"Tranche C Commitment"
means, in respect of a Bank, the amount in Dollars set opposite the
name of that Bank in Column 3 of Part II of Schedule 1 to the extent
not cancelled or reduced under this Agreement.
"Tranche C Term Date"
means the last day of the Tranche C Availability Period or, if that day
is not a Business Day, the preceding Business Day.
"Tranche C Term-out Option"
means the option available to the Borrowers to draw Term-out Advances
under Tranche C pursuant to Clause 8.3(b) (Repayment of Tranche C
Advances).
"Tranche C Total Commitments"
means the aggregate for the time being of the Tranche C Commitments,
being U.S.$100,000,000 at the date of this Agreement.
"Transaction Documents"
means the Finance Documents, the Offer Documents and the Merger
Agreement.
"UK" or "United Kingdom"
means the United Kingdom of Great Britain and Northern Ireland.
"Unconditional Date"
means the date on which the Offer expires (being either its scheduled
expiration date or any extended expiration date) and on which there
have been validly tendered in accordance with the terms of the Offer
and not withdrawn, a number of shares of the common stock of the Target
that, together with the shares then beneficially owned by the Company,
represent at least a majority of the shares of the common stock of the
Target on a fully diluted basis.
"United States"
means the United States of America.
<PAGE>
15
"U.S. Borrower"
means a Borrower which is incorporated in the United States.
"Utilisation"
means:
(a) in the case of a Utilisation comprising Advances, all the
Advances made or to be made; or
(b) in the case of a Utilisation comprising Bills, all the Bills
accepted or to be accepted,
following the giving by a Borrower of a Request for those Advances
or Bills.
"Utilisation Date"
means:
(a) in the case of an Advance, the date for the making of the
relevant Advance; and
(b) in the case of a Bill, the date for the acceptance of the
relevant Bill.
1.2 Construction
(a) In this Agreement, unless the contrary intention appears, a reference
to:
(i) "assets" includes properties, revenues and rights of every
description;
an "authorisation" includes an authorisation, consent,
approval, resolution, licence, exemption, filing, registration
and notarisation;
"Barclays Capital" is a reference to Barclays Capital, the
investment banking division of Barclays Bank PLC (and all such
references shall include Barclays Bank PLC);
"material adverse effect" means anything which is likely to
have a material adverse effect on the financial condition of
the Group taken as a whole such that the Company is likely to
be unable to comply with its payment obligations under the
Finance Documents;
a "month" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day
in the next calendar month, except that, if there is no
numerically corresponding day in the month in which that
period ends, that period shall end on the last Business Day in
that calendar month;
a "principal amount" in relation to a Bill is a reference to
the face amount of that Bill;
a "regulation" includes any regulation, rule, official
directive, request or guideline (whether or not having the
force of law but if not, being something which persons are
accustomed to comply with) of any governmental body, agency,
department or regulatory, self-regulatory or other authority
or organisation;
<PAGE>
16
(ii) a provision of a law is a reference to that provision as
amended or re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a
schedule to this Agreement;
(iv) a person includes its successors and permitted assigns;
(v) a Finance Document or another document is a reference to that
Finance Document or that other document as amended, novated or
supplemented; and
(vi) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance
Document has the same meaning in that Finance Document or notice as in
this Agreement.
(c) The index to and the headings in this Agreement are for convenience
only and are to be ignored in construing this Agreement.
2. THE FACILITIES
2.1 Facilities
The Banks grant to the Borrowers the following facilities:
(a) a committed multicurrency term loan facility, to be designated
as Tranche A, under which the Banks will, when requested by a
Borrower, make Advances to that Borrower;
(b) a committed multicurrency revolving credit facility, to be
designated as Tranche B, comprising:
(i) a multicurrency advance facility under which the
Banks will, when requested by a Borrower, make
Advances to that Borrower on a revolving basis; and
(ii) a Sterling bankers' acceptance facility under which
the Banks will, when requested by a Borrower, accept
Bills drawn by that Borrower on a revolving basis;
and
(c) a committed multicurrency revolving 364 day credit facility,
with an option to draw Term-out Advances, to be designated as
Tranche C, under which the Banks will, when requested by a
Borrower, make Advances to that Borrower,
in all cases subject to the terms of this Agreement.
2.2 Overall facility limit
(a) The aggregate Original Dollar Amount of all outstanding Utilisations:
(i) under Tranche A, shall not at any time exceed the Tranche A
Total Commitments at that time;
<PAGE>
17
(ii) under Tranche B, shall not at any time exceed the Tranche B
Total Commitments at that time; and
(iii) under Tranche C, shall not at any time exceed the Tranche C
Total Commitments at that time.
(b) The aggregate Original Dollar Amount of:
(i) Tranche A Advances made by a Bank shall not at any time exceed
its Tranche A Commitment at that time;
(ii) Tranche B Advances made by a Bank and Bills accepted by that
Bank shall not at any time exceed its Tranche B Commitment at
that time; and
(iii) Tranche C Advances made by a Bank shall not at any time exceed
its Tranche C Commitment at that time.
2.3 Number of Requests and Utilisations
(a) No more than one Request may be delivered on any one day but, subject
to paragraphs (b) and (c) below, that Request may specify any number
and type of Utilisations from either Tranche A or Tranche B or Tranche
C or all of them.
(b) No more than 10 Utilisations may be outstanding at any time.
(c) No more than 5 currencies may be utilised under the Facilities at any
time.
2.4 Syndication Period
Notwithstanding any other provision of this Agreement no Borrower will
deliver a Request or interest period selection notice during the
Syndication Period, specifying a Term or an Interest Period which would
exceed one month.
2.5 Nature of a Finance Party's rights and obligations
(a) The obligations of a Finance Party under the Finance Documents are
several. Failure of a Finance Party to carry out those obligations does
not relieve any other Party of its obligations under the Finance
Documents. No Finance Party is responsible for the obligations of any
other Finance Party under the Finance Documents.
(b) The rights of a Finance Party under the Finance Documents are divided
rights. A Finance Party may, except as otherwise stated in the Finance
Documents, separately enforce those rights.
3. PURPOSE
(a) Each Utilisation will be applied:
(i) in the case of Tranche A in or towards:
(1) financing the acquisition of those of the Shares
to be acquired by Bidco pursuant to the Offer;
<PAGE>
18
(2) financing the consideration payable by Bidco upon
completion of the Merger in accordance with the
Merger Agreement; or
(3) financing fees and expenses of the Group in relation
to the Offer and the Merger;
(ii) in the case of Tranche B:
(1) the purposes specified in paragraph (a)(i) above;
(2) in or towards refinancing existing indebtedness of
the Group including the Target or Subsidiaries of the
Target once the Target becomes a member of the Group;
or
(3) for general long term corporate purposes of the
Group; and
(iii) in the case of Tranche C:
(1) in or towards refinancing existing indebtedness of
the Group; or
(2) for general short term corporate purposes of the
Group.
(b) Without affecting the obligations of any Borrower in any way, no
Finance Party is bound to monitor or verify the application of the
proceeds of any Utilisation.
4. CONDITIONS PRECEDENT
4.1 Documentary conditions precedent
The obligations of each Bank to participate in the first Utilisation
are subject to the condition precedent that the Agent has notified the
Company and the Banks that it has received all of the documents set out
in Part I of Schedule 2 in form and substance satisfactory to the Agent
(acting reasonably). The Agent will promptly notify the Company upon
such receipt.
4.2 Further specific conditions precedent
(a) The obligations of each Bank to participate in the first Utilisation
are also subject to the conditions precedent that the Agent has
received evidence in form and substance satisfactory to it (acting
reasonably) that:
(i) the Company has received (or will receive simultaneously with
the first Utilisation) net proceeds of not less than
'L'70,000,000 pursuant to subscriptions for CULS; and
(ii) such proceeds have been applied in full by the Company in or
towards the purposes specified in Clause 3(a)(i)(1) (or will
be so applied simultaneously with the disbursement of the
first Utilisation).
(b) The obligations of each Finance Party to any Borrower to participate in
any Utilisation the purpose of which is to finance payments due by
Bidco upon completion of the Merger are subject to the further
conditions precedent specified in Part II of Schedule 2.
<PAGE>
19
4.3 Further general conditions precedent
The obligations of each Bank to participate in any Utilisation are
subject to the further conditions precedent that:
(a) the representations and warranties in Clause 18
(Representations and Warranties) to be repeated on those dates
are correct and will be correct immediately after the
Utilisation;
(b) in the case of Tranche A, no Default or Control Event is
outstanding or would result from the Utilisation;
(c) in the case of Tranche B or Tranche C, no Event of Default is
outstanding or would result from the Utilisation;
(d) in the case of Tranche B or Tranche C, if, immediately
following the making of the relevant Utilisation, the amount
of either Tranche B Total Commitments or Tranche C Total
Commitments drawn by the Borrowers will have been increased,
no Default or Control Event is outstanding or would result
from the Utilisation; and
(e) the Utilisation would not cause Clause 2.2 (Overall facility
limit) to be contravened.
5. ADVANCES
5.1 Receipt of Requests
A Borrower may borrow Advances under Tranche A, Tranche B or Tranche C
if the Agent receives, not later than the Prescribed Time, a duly
completed Request.
5.2 Completion of Requests for Tranche A Advances
A Request for Tranche A Advances will not be regarded as having been
duly completed unless:
(a) the Utilisation Date is a Business Day during the Tranche A
Commitment Period;
(b) only one currency is specified for each separate Advance and
the Requested Amount for each separate Advance is:
(i) if the currency is Dollars, a minimum of U.S.
$25,000,000 and an integral multiple of
U.S.$5,000,000;
(ii) if the currency is an Optional Currency, such
comparable and convenient minimum and integral
multiples as are agreed between the Company and the
Agent before delivery of that Request; or
(iii) such other amount as the Company and the Agent may
agree;
(c) only one Interest Period for each separate Tranche A Advance
is specified which is a period of one month, two, three or six
months (or, in any case, such other period as all the Banks
may previously have agreed for the purposes of such
Utilisation); and
(d) the payment instructions comply with Clause 12.1 (Place of
Payment).
<PAGE>
20
5.3 Completion of Requests for Tranche B Advances
A Request for Tranche B Advances will not be regarded as having been
duly completed unless:
(a) the Utilisation Date is a Business Day;
(b) only one currency is specified for each separate Utilisation
and the Requested Amount for each separate Utilisation is:
(i) if the currency is Dollars, a minimum of
U.S.$15,000,000 and an integral multiple of
U.S.$5,000,000; or
(ii) if the currency is an Optional Currency, such
comparable and convenient minimum and integral
multiples as are agreed between the Company and the
Agent before delivery of that Request; or
(iii) such other amount as the Agent and the Company may
agree;
(c) only one Term for each separate Tranche B Advance is specified
which:
(i) does not overrun the Final Maturity Date; and
(ii) is a period of one week, one month, two, three or six
months (or such other period as all the Banks may
previously have agreed for the purposes of such
Utilisation); and
(d) the payment instructions comply with Clause 12.1 (Place of
Payment).
5.4 Completion of Requests for Tranche C Advance
A request for Tranche C Advances will not be regarded as having been
duly completed unless:
(a) the Utilisation Date is a Business Day during the Tranche C
Availability Period;
(b) only one currency is specified for each Utilisation and the
Requested Amount for each separate Utilisation is:
(i) if the currency is Dollars, a minimum of
U.S.$15,000,000 and an integral multiple of
U.S.$5,000,000; or
(ii) if the currency is an Optional Currency, such
comparable and convenient minimum and integral
multiples as are agreed between the Company and the
Agent before delivery of that Request; or
(iii) such other amount as the Agent and the Company may
agree;
(c) only one Term or, in the case of Term-out Advances, Interest
Period, for each separate Advance is specified which:
<PAGE>
21
(i) does not overrun the Tranche C Term Date (other than
a Term-out Advance); and
(ii) is a period of one month, two, three or six months
(which, in the case of Term-out Advances only, does
not overrun the date six months after the Tranche C
Term Date (or, in any case, such other period as all
the Banks may previously have agreed for the purposes
of such Utilisation; and
(d) the payment instructions comply with Clause 12.1 (Place of
Payment).
5.5 Amount of each Bank's Advance
The amount of a Bank's Advance will be the proportion of the Requested
Amount which:
(a) in the case of a Tranche A Advance, its Tranche A Commitment
bears to Tranche A Total Commitments;
(b) in the case of a Tranche B Advance, its Tranche B Commitment
bears to the Tranche B Total Commitments; and
(c) in the case of a Tranche C Advance, its Tranche Commitment
bears to the Tranche C Total Commitments
in each case on the date of receipt of the relevant Request.
5.6 Notification of the Banks
The Agent shall, not later than the Prescribed Time, notify each Bank
of the details of the requested Advances and the amount of its Advance.
5.7 Payment of Proceeds
Subject to the terms of this Agreement, each Bank shall make its
Advance available to the Agent for the Borrower for value on the
relevant Utilisation Date.
6. BILLS
6.1 Receipt of Requests
A Borrower may request the acceptance of Bills under Tranche B by
delivery to the Agent, not later than the Prescribed Time, a duly
completed Request.
6.2 Form of Requests
A Request will not be regarded as being duly completed unless:
(a) the Utilisation Date is a Business Day;
(b) the Requested Amount is a minimum of 'L'15,000,000 and an
integral multiple of 'L'5,000,000 or such other amount as
the Agent and the Company may agree;
(c) only one Term is specified which:
<PAGE>
22
(i) does not overrun the Final Maturity Date; and
(ii) is a period of not less than 14 days nor more than
187 days; and
(d) the payment instructions comply with Clause 12.1 (Place of
Payment).
6.3 Amount of Bills to be accepted by each Bank
The aggregate principal amount of the Bills to be accepted by a Bank
will be the proportion of the Requested Amount which its Tranche B
Commitment bears to the Tranche B Total Commitments on the date of
receipt of the relevant Request.
6.4 Notification of the Banks
The Agent shall, not later than the Prescribed Time, notify each Bank
of the details of the requested Bills and the aggregate principal
amount of the Bills to be accepted by it.
6.5 Advances as an alternative
(a) If any Bank is not willing to accept any Bills, then it may, not later
than the Prescribed Time, notify the Agent accordingly and the Agent
shall promptly thereafter notify the Company.
(b) If a Bank notifies the Agent in accordance with paragraph (a) above,
then, subject to the terms of this Agreement, the Bank shall instead
make a Tranche B Advance in accordance with Clause 5 (Advances) in
Sterling on the relevant Utilisation Date in a principal amount equal
to the aggregate principal amount of the Bills which it would otherwise
have been obliged to accept pursuant to this Clause 6 (Bills) and for a
Term equal to the Term of those Bills.
6.6 Acceptance of Bills
(a) The Agent shall, not later than the Prescribed Time, deliver Bills to
each Bank which is to accept Bills completed in accordance with Clause
7.1 (Holding and completion of Bills).
(b) Each Bank shall accept the Bills so delivered to it.
(c) The Agent shall, not later than the Prescribed Time, notify the
Borrower and each Bank of the applicable EBDR.
(d) Subject to the terms of this Agreement, each Bank shall pay to the
Agent for the Borrower an amount equal to:
(i) the amount which the Bank would have received as the proceeds
of discounting if it had discounted the Bills accepted by it
at the applicable EBDR; less
(ii) acceptance commission calculated at the Acceptance Commission
Rate on the aggregate principal amount of those Bills.
7. BILLS PROCEDURE
7.1 Holding and completion of Bills
(a) Subject to sub-clause 7.1(c) below, the Borrower shall ensure that the
Agent receives, by no later than the Prescribed Time, Bills which
shall:
<PAGE>
23
(i) be drawn by the Borrower in its own favour and endorsed by it
in blank;
(ii) be undated;
(iii) have the Maturity Date, the drawee and the face amount left
blank; and
(iv) be claused as specified in the Request (which must be in a
manner which complies with the Bank of England's requirements
for Eligible Bills at that time).
(b) Subject to the terms of this Agreement, the Agent shall:
(i) date each Bill with its Utilisation Date;
(ii) insert in each Bill the name of the Bank on which it is drawn,
its face amount and its Maturity Date; and
(iii) deliver the requisite number of completed Bills to the Banks
for acceptance in accordance with this Agreement.
(c) Each Borrower hereby appoints the Agent as its attorney to draw,
endorse and deliver Bills complying with the requirements of sub-clause
7.1(a) and (b) on behalf of such Borrower to implement the relevant
drawing in satisfaction of that Borrower's obligations thereunder.
7.2 Rounding of principal amount of Bills
The Agent may round the principal amount of the relevant Bills to be
accepted by each Bank to ensure that each Bill has a principal amount
of not more than 'L'5,000,000.
7.3 Discounting of Bills
Each Bank may arrange for a Bill accepted by it to be discounted on its
behalf in the London discount market or elsewhere or discount the Bill
itself.
7.4 Information relating to Bills
Each Borrower shall, promptly on request by a Finance Party through the
Agent, supply to the Agent for that Finance Party any information
relating to any Bill (including the underlying trade transaction for
that Bill) as that Finance Party may reasonably require or which may be
required by the Bank of England or any other fiscal or monetary
authority in the U.K.
7.5 Eligible Bills
A Borrower shall ensure that each Bill drawn by it and accepted by a
Bank is, assuming that the relevant Bank is a bank whose acceptances
are then being treated as eligible acceptances by the Bank of England,
eligible for rediscounting at the Bank of England.
7.6 Indemnity
The Agent shall indemnify each Borrower and hold it harmless against
all or any proceedings, action, claims and demands which may be brought
or made against the Borrower and all losses, costs, charges, damages
and expenses ("Losses") the Borrower may incur or sustain or for which
the Borrower may become liable by reason of the completion by the Agent
of the
<PAGE>
24
Bills otherwise than in accordance with instructions given under
the Request or by reason of the theft, loss, misappropriation or
conversion of the Bills whilst in the Agent's possession provided that
this indemnity shall only apply to the extent that such Losses arise
from the negligence or wilful misconduct of the Agent.
8. REPAYMENT
8.1 Repayment of Tranche A Advances
The Borrowers shall repay the Tranche A Advances in full by five
instalments. The instalments shall be paid on the dates set out in
Column (1) below and in the case of the first four instalments shall
have an Original Dollar Amount equal as nearly possible (rounded
upwards if necessary) to the amount set opposite the date of the
relevant instalment in Column (2) below. The fifth instalment shall be
paid on the Final Maturity Date and shall comprise all Tranche A
Advances which then remain outstanding.
<TABLE>
<CAPTION>
(1) (2)
Repayment Date Original Dollar Amount of
Repayment Instalment
<S> <C>
The first anniversary of the date of this U.S.$20,000,000
Agreement.
The second anniversary of the date of this U.S.$30,000,000
Agreement.
The third anniversary of the date of this U.S.$40,000,000
Agreement.
The fourth anniversary of the date of this U.S.$60,000,000
Agreement.
The Final Maturity Date. The balance of the Tranche A Advances then
outstanding.
</TABLE>
8.2 Repayment of Tranche B Advances
Each Borrower shall repay each Tranche B Advance made to it in full on
its Maturity Date to the Agent for the relevant Bank but since Tranche
B is available on a revolving basis amounts repaid may be reborrowed or
redrawn subject to the terms of this Agreement. No Tranche B Advance
may be outstanding after the Final Maturity Date.
8.3 Repayment of Tranche C Advances
(a) Each Borrower shall repay each Tranche C Advance made to it in full on
its Maturity Date to the Agent for the relevant Bank but since Tranche
C is available on a revolving basis amounts repaid may be reborrowed
subject to the terms of this Agreement. Subject to paragraph (b) below,
no Tranche C Advance may be outstanding after the Tranche C Term Date.
(b) At any time and from time to time prior to the Tranche C Term Date, any
Borrower may, by delivery of a duly completed Request to the Agent
under Clause 5 (Advances) (who shall send a copy of the same to the
Banks), elect to draw one or more Advances (each a "Term-out Advance")
under Tranche C with a Maturity Date after the Tranche C Term Date.
<PAGE>
25
No Term-out Advance, once repaid or prepaid, may be reborrowed (other
than under Clause 10.6) (Optional Currency).
(c) No Tranche C Advance, other than a Term-out Advance, may be outstanding
after the Tranche C Term Date. No Term-out Advance may be outstanding
after the date falling six months after the Tranche C Term Date.
8.4 Payment of Bills
Each Borrower shall pay an amount equal to the principal amount of each
Bill drawn by it on its Maturity Date to the Agent for the relevant
Bank but since Tranche B is available on a revolving basis amounts paid
may be redrawn or reborrowed subject to the terms of this Agreement. No
Bill may be outstanding after the Final Maturity Date.
9. PREPAYMENT AND CANCELLATION
9.1 Automatic Cancellation of the Tranche A Total Commitments
The Tranche A Commitment of each Bank shall be automatically cancelled
at close of business in London on the last day of the Tranche A
Commitment Period or, if earlier, when fully drawn.
9.2 Automatic Cancellation of the Tranche B Total Commitments
The Tranche B Commitment of each Bank shall be automatically cancelled
at the close of business in London on the Final Maturity Date.
9.3 Automatic Cancellation of the Tranche C Total Commitments
Without prejudice to the Term-Out Advances then outstanding, the
Tranche C Commitment of each Bank shall be automatically cancelled at
the close of business in London on the last day of the Tranche C Term
Date.
9.4 Voluntary Cancellation
The Company may, by giving not less than 5 Business Day's prior notice
to the Agent, cancel the unutilised portion of the Tranche A Total
Commitments, Tranche B Total Commitments and/or Tranche C Total
Commitments in whole or in part (but, if in part, in an aggregate
minimum amount of U.S.$25,000,000 and an integral multiple of
U.S.$5,000,000). Any cancellation shall be applied against Tranche A,
Tranche B and/or Tranche C in such proportions as the Company may
designate in the notice of cancellation. Any cancellation in part shall
be applied against the relevant Commitment of each Bank pro rata in
relation to the Tranche concerned.
9.5 Voluntary prepayment of Advances
(a) Any Borrower may, by giving not less than five Business Days' prior
notice to the Agent, prepay without premium or penalty (but subject to
payment of any amounts payable under Clause 25.2(c)) the whole or any
part of the Tranche A Advances or the Tranche B Advances or the Tranche
C Advances (but if in part in a minimum Original Dollar Amount of
U.S.$25,000,000 or, if more, integral multiples in an Original Dollar
Amount of U.S.$5,000,000).
<PAGE>
26
(b) Any prepayment of Advances will:
(i) be applied pro rata to all the Tranche A Advances, Tranche B
Advances or, as the case may be, Tranche C Advances made by
the Banks; and
(ii) (in the case of a prepayment of Tranche A Advances) be applied
pro rata in reduction of the repayment instalments specified
in Clause 8.1(a) (Repayment of Tranche A Advances).
9.6 Mandatory prepayment on change of control
If at any time any single person or group of persons acting in concert
(as defined in the City Code on Takeovers and Mergers), acquires
control (as defined in Section 416 of the Income and Corporation Taxes
Act 1988) after the date of this Agreement of the Company (a "Control
Event") then the Agent shall, if instructed to do so by the Majority
Banks, by notice to the Company:
(a) call for prepayment of all Utilisations on a date which is the
earlier of (1) the date 30 days after the date on which the
Company notifies the Agent of the Control Event or (2) the
date which is 45 days after the day on which the Control Event
occurred (the "Prepayment Date") and the Borrowers shall on
the Prepayment Date (i) prepay all Advances in full together
with all other amounts payable by any of them under this
Agreement and (ii) immediately perform their obligations under
Clause 8.4 (Payment of Bills); and/or
(b) cancel the Total Commitments in full, with effect on the
Prepayment Date.
9.7 Mandatory Prepayment by Additional Borrowers
If any Additional Borrower ceases to be a Subsidiary of the Company it
shall forthwith prepay all Advances made to it together with all
amounts payable by it under this Agreement, immediately perform its
obligations under Clause 8.4 (Payment of Bills) and thereupon cease to
be a Borrower.
9.8 Removal of Borrowers
Any Additional Borrower in respect of which no Advance or Bill is
outstanding hereunder (including any other amounts outstanding in
relation thereto) may, at the request of the Company cease to be a
Borrower hereunder by entering into a supplemental agreement to this
Agreement in such form as the Agent may reasonably require which shall
discharge that Borrower's obligations hereunder.
9.9 Right of prepayment and cancellation
If any Borrower is required to pay or is notified by any Bank in
writing that it will be required to pay any amount to a Bank under
Clause 13 (Taxes) or Clause 15 (Increased Costs), or if circumstances
exist such that a Borrower will be required to pay any amount to a Bank
under Clause 13 (Taxes), the Company may, whilst the circumstances
giving rise or which will give rise to the requirement continue, serve
a notice of prepayment and cancellation on that Bank through the Agent.
On the date falling five Business Days after the date of service of the
Notice:
<PAGE>
27
(a) each Borrower shall prepay any Advances made to it by that
Bank together with all other amounts payable by it to that
Bank under this Agreement;
(b) each Borrower shall immediately perform its obligations under
Clause 8.4 (Payment of Bills) in respect of all outstanding
Bills accepted by that Bank; and
(c) the Bank's Tranche A Commitment, Tranche B Commitment and
Tranche C Commitment shall be cancelled on the date of service
of the notice.
9.10 Miscellaneous provisions
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Agent shall notify the Banks promptly of receipt of
any such notice.
(b) All prepayments under this Agreement shall be made together with
accrued interest on the amount prepaid and any other amounts due under
this Agreement in respect of that prepayment.
(c) No prepayment or cancellation is permitted except in accordance with
the express terms of this Agreement.
(d) No amount repaid under Clause 8.1 (Repayment of Tranche A Advances) or
prepaid under Clause 9.5 (Voluntary Prepayment of Advances) or Clause
9.9 (Right of prepayment and cancellation) may subsequently be
re-borrowed. Subject to the terms of this Agreement, any amount prepaid
in respect of Tranche B or Tranche C (other than Term-out Advances)
under Clause 9.7 (Mandatory Prepayment by Additional Borrowers) may be
reborrowed by other Borrowers. No amount of the Tranche A Total
Commitments, Tranche B Total Commitments or Tranche C Total Commitments
cancelled under this Agreement may subsequently be reinstated.
9.11 Discounted amount
If under this Agreement any Borrower is required, in relation to any
Bill, to comply with its obligations under Clause 8.4 (Payment of
Bills) before the Maturity Date of that Bill by reason of Clause 16.1
(Illegality), then the amount (the "Discounted Amount") payable by that
Borrower will be such amount (calculated by the Agent) as would be
necessary to ensure that the relevant Bank would receive, on the
Maturity Date of that Bill, the face amount of the Bill assuming that
the amount received were deposited on the Business Day of receipt of
that amount by 12 noon from (and including) that date up to (but
excluding) the original Maturity Date accruing interest at the rate at
which that Bank bids for Sterling deposits for that period from prime
banks in the London interbank market at or about 10.00 a.m. on the date
of receipt.
10. INTEREST
10.1 Selection of Interest Periods for Tranche A Advances and Term-out
Advances
The life of each Tranche A Advance or Term-out Advance will be divided
into successive periods (each an "Interest Period") for the calculation
of interest. The first Interest Period will be the period selected in
the Request for that Tranche A Advance or Term-out Advance (as
applicable) and each subsequent Interest Period will be the period
selected by the Borrower by notice to the Agent received not later than
the Prescribed Time (being one, two,
<PAGE>
28
three or six months or in any case such other period as the Borrower
and all the Banks may agree from time to time) except that:
(a) if no such selection notice is received by the Prescribed Time
the Interest Period concerned will be three months; and
(b) Interest Periods in respect of Advances in an Original Dollar
Amount not less than the amount of each repayment instalment
specified in Clause 8.1 (Repayment of the Tranche A Advances)
must end on the date for the payment of each such repayment
instalment.
10.2 Interest rate for all Advances
The rate of interest on each Tranche A Advance or Term-out Advance for
each applicable Interest Period and each Tranche B Advance or Tranche C
Advance for its Term is the rate per annum determined by the Agent to
be the aggregate of:
(a) the Margin;
(b) LIBOR; and
(c) the Mandatory Cost.
10.3 Due dates
Except as otherwise provided in this Agreement, accrued interest on
each Advance is payable by the relevant Borrower:
(a) in the case of a Tranche A Advance or Term-out Advance, on the
last day of each Interest Period applicable to that Advance;
and
(b) in the case of a Tranche B Advance or a Tranche C Advance, on
its Maturity Date,
and also, in the case of any Advance with an Interest Period or a Term
longer than six months, at six monthly intervals after its Utilisation
Date for so long as the Interest Period or Term is outstanding.
10.4 Default interest
(a) If a Borrower fails to pay any amount payable by it under this
Agreement, it shall forthwith on demand by the Agent pay interest on
the overdue amount from the due date up to the date of actual payment,
both before and after judgment, at a rate (the "default rate")
determined by the Agent to be one per cent per annum above the higher
of:
(i) the rate on the overdue amount under Clause 10.2 (Interest
rate for all Advances) immediately before the due date (if of
principal); and
(ii) the rate which would have been payable if the overdue amount
had, during the period of non-payment, constituted a Tranche B
Advance in the currency of the overdue amount for such
successive Interest Periods or Terms of such duration as the
Agent may determine (each a "Designated Term").
<PAGE>
29
(b) The default rate will be determined on each Business Day or the first
day of, or two Business Days before the first day of, the relevant
Designated Term, as appropriate.
(c) If the Agent determines that deposits in the currency of the overdue
amount are not at the relevant time being made available by the
Reference Banks to leading banks in the London interbank market, the
default rate will be determined by reference to the cost of funds to
the Agent from whatever sources it selects after consultation with the
Reference Banks.
(d) Default interest will be compounded at the end of each Designated Term.
10.5 Change of currency
(a) If a Tranche A Advance or a Term-out Advance is to be continued during
its next Interest Period in a different currency (the "new currency")
from that in which it is currently denominated, the Tranche A Advance
or Term-out Advance shall be repaid by the relevant Borrower in full at
the end of its current Interest Period in the currency in which it is
then denominated and, subject to the terms of this Agreement, shall be
forthwith re-advanced by the Banks in the new currency.
(b) If the new currency is Dollars, the amount of each Bank's participation
in that Tranche A Advance or Term-out Advance will be its participation
in the Original Dollar Amount of that Tranche A Advance or Term-out
Advance for that Interest Period.
(c) If the new currency is an Optional Currency, the amount of each Bank's
participation in that Tranche A Advance or Term-out Advance will be
determined by converting into the new currency its participation in the
Original Dollar Amount of that Tranche A Advance or Term-out Advance on
the basis of the Agent's Spot Rate of Exchange three Business Days
before the commencement of that Interest Period.
10.6 Same Optional Currency
(a) If a Tranche A Advance or Term-out Advance is to be continued during
its next Interest Period in the same Optional Currency as that in which
it is denominated during its current Interest Period, there shall be
calculated the difference between the amount of the Tranche A Advance
or Term-out Advance (in that Optional Currency) for the current
Interest Period and for the next Interest Period. The amount of the
Tranche A Advance or Term-out Advance for the next Interest Period will
be determined by notionally converting into that Optional Currency the
Original Dollar Amount of the Tranche A Advance or Term-out Advance on
the basis of the Agent's Spot Rate of Exchange three Business Days
before the commencement of that Interest Period.
(b) At the end of the current Interest Period (but subject always to
paragraph (c) below):
(i) if the amount of the Tranche A Advance or Term-out Advance for
the next Interest Period is less than for the preceding
Interest Period, the relevant Borrower shall repay the
difference; or
(ii) if the amount of the Tranche A Advance or Term-out Advance for
the next Interest Period is greater, each Bank shall forthwith
make available to the Agent for the relevant Borrower its
participation in the difference.
(c) If the Agent's Spot Rate of Exchange for the next Interest Period shows
an appreciation or depreciation of the Optional Currency against
Dollars of less than five per cent. when
<PAGE>
30
compared with the Original Exchange Rate, no amounts are payable in
respect of the difference. In this Clause 10.6 and in Clause 10.7
(Prepayments and repayments) "Original Exchange Rate" means the Agent's
Spot Rate of Exchange used for determining the amount of the Optional
Currency for the Interest Period which is the later of the following:
(i) the Interest Period during which the Tranche A Advance or
Term-out Advance was first denominated in that Optional
Currency if the Tranche A Advance or Term-out Advance has
since then remained denominated in that Optional Currency; and
(ii) the most recent Interest Period immediately prior to which a
difference was required to be paid under this Clause 10.6.
10.7 Prepayments and repayments
If a Tranche A Advance or Term-out Advance is to be repaid or prepaid
by reference to an Original Dollar Amount, the Optional Currency amount
to be repaid or prepaid shall be determined by reference to the Agent's
Spot Rate of Exchange last used for determining the Optional Currency
amount of that Tranche A Advance or Term-out Advance under this Clause
10 or, if applicable, the Original Exchange Rate.
10.8 Notification of rates of interest
The Agent will promptly notify each relevant Party of the determination
of a rate of interest under this Agreement.
11. OPTIONAL CURRENCIES
11.1 Change of Currency
If, before 9.00 a.m. on the Rate Fixing Date of an Advance to be
denominated in an Optional Currency other than Sterling, the Agent
receives notice from a Bank that:
(a) it is unable to fund the Advance in that Optional Currency by
reason of any circumstance affecting the London interbank
market generally; or
(b) the advance by the Bank of the proposed Optional Currency
might contravene any law or regulation applicable to that
Bank,
then:
(i) the Agent shall promptly and in any event before 9.30am on
that day notify the relevant Borrower;
(ii) unless the Agent receives notice from the Borrower by
10.00a.m. on that day, the Advance shall not be made;
(iii) if the Agent receives a notice under sub-paragraph (ii) above,
the Advance will be denominated instead in U.S. Dollars in an
amount equal to its Original Dollar Amount; and
(iv) the Borrower shall forthwith on demand indemnify the Bank
concerned against any broken funding loss or liability
incurred by it as a consequence of the occurrence of any such
event and the operation of this Clause 11.1.
<PAGE>
31
11.2 Notification of rates and amounts
The Agent shall notify each relevant Party of any applicable Agent's Spot
Rate of Exchange or Original Dollar Amount promptly after it is
ascertained.
12. PAYMENTS
12.1 Place of Payment
All payments by a Borrower or a Bank under this Agreement shall be made
to the Agent to its account at such office or bank in the principal
financial centre of the country of the currency concerned as it may
notify to the Borrower or Bank for this purpose.
12.2 Funds
Payments under this Agreement to the Agent shall be made for value on the
due date at such times and in such funds as the Agent may specify to the
Party concerned as being customary at the time for the settlement of
transactions in the relevant currency in the place for payment.
12.3 Distribution
(a) Each payment received by the Agent under this Agreement for another Party
shall, subject to paragraphs (b) and (c) below, be made available by the
Agent to that Party by payment (on the date and in the currency and funds
of receipt) to its account with such bank in the principal financial
centre of the country of the relevant currency as it may notify to the
Agent for this purpose by not less than five Business Days' prior notice.
(b) The Agent may apply any amount received by it for a Borrower in or
towards payment (on the date and in the currency and funds of receipt) of
any amount due from a Borrower under this Agreement or in or towards the
purchase of any amount of any currency to be so applied.
(c) Where a sum is to be paid under this Agreement to the Agent for the
account of another Party, the Agent is not obliged to pay that sum to
that Party until it has established that it has actually received that
sum. The Agent may, however, assume that the sum has been paid to it in
accordance with this Agreement and, in reliance on that assumption, make
available to that Party a corresponding amount. If the sum has not been
made available but the Agent has paid a corresponding amount to another
Party, that Party shall forthwith on demand refund the corresponding
amount to the Agent together with interest on that amount from the date
of payment to the date of receipt, calculated at a rate reasonably
determined by the Agent to reflect its cost of funds.
12.4 Currency
(a) A repayment or prepayment of a Utilisation is payable in the currency in
which the Advance is denominated.
(b) Interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated.
(c) Amounts payable in respect of costs, expenses, taxes and the like are
payable in the currency in which they are incurred.
<PAGE>
32
(d) Any other amount payable under this Agreement is, except as otherwise
provided in this Agreement, payable in Dollars.
12.5 Set-off and counterclaim
All payments made by a Borrower under this Agreement shall be made
without set-off or counterclaim.
12.6 Non-Business Days
(a) If a payment under this Agreement is due on a day which is not a Business
Day, the due date for that payment shall instead be the next Business Day
in the same calendar month (if there is one) or the preceding Business
Day (if there is not).
(b) During any extension of the due date for payment of any principal under
this Agreement interest is payable on the principal at the rate payable
on the original due date.
12.7 Partial payments
(a) If the Agent receives a payment insufficient to discharge all the amounts
then due and payable by a Borrower under this Agreement, the Agent shall
apply that payment towards the obligations of the Borrower under this
Agreement in the following order:
(i) first, in or towards payment pro rata of any unpaid costs, fees
and expenses of the Agent under this Agreement;
(ii) secondly, in or towards payment pro rata of any accrued fees due
but unpaid under Clause 22 (Fees);
(iii) thirdly, in or towards payment pro rata of any interest due but
unpaid under this Agreement;
(iv) fourthly, in or towards payment pro rata of any principal due but
unpaid under this Agreement; and
(v) fifthly, in or towards payment pro rata of any other sum due but
unpaid under this Agreement.
(b) The Agent shall, if so directed by all the Banks, vary the order set out
in sub-paragraphs (a)(ii) to (v) above.
(c) Paragraphs (a) and (b) above shall override any appropriation made by any
Obligor.
13. TAXES
13.1 Gross-up
(a) All payments by an Obligor under the Finance Documents shall be made free
and clear of and without deduction for or on account of any taxes, except
to the extent that the Obligor is required by law to make payment subject
to any taxes. Subject to paragraph (b) below, if any tax or amounts in
respect of tax must be deducted from any amounts payable or paid by an
Obligor, or paid or payable by the Agent to a Finance Party, under the
Finance Documents, the Obligor shall pay such additional amounts as may
be necessary to ensure that the relevant
<PAGE>
33
Finance Party receives a net amount equal to the full amount which it
would have received had payment not been made subject to tax.
(b) A Borrower is not obliged to pay any additional amount pursuant to
paragraph (a) above in respect of any deduction which would not have been
required if the relevant Finance Party had completed a declaration, claim
or exemption or other form which it is able to complete.
13.2 Tax receipts
All taxes required by law to be deducted or withheld by an Obligor from
any amounts paid or payable under the Finance Documents shall be paid by
the relevant Obligor when due and the Obligor concerned shall, within 15
days of the payment being made, deliver to the Agent for the relevant
Bank evidence satisfactory to that Bank (including all relevant tax
receipts received by it) that the payment has been duly remitted to the
appropriate authority.
13.3 Qualifying Bank
If:
(a) at the date of this Agreement any Bank is not a Qualifying Bank;
or
(b) a Bank ceases to be a Qualifying Bank other than as a direct
result of the introduction of, suspension, withdrawal or
cancellation of, or change in, or change in the official
interpretation, administration or official application of, any
law or regulation having the force of law or any published
practice or published concession of the UK Inland Revenue or any
other relevant taxing or fiscal authority in any jurisdiction
with which the relevant Bank has a connection, occurring after
the date of this Agreement; or
(c) on the date of any novation under Clause 28 (Changes to the
Parties) a New Bank (as such term is defined in that Clause) is
not a Qualifying Bank,
then no Obligor shall be liable to pay to that Bank under Clause 13.1
(Gross-up) any amount in respect of taxes levied or imposed by the UK or
any taxing authority of or in the UK in excess of the amount it would
have been obliged to pay if that Bank had been a Qualifying Bank.
13.4 U.S. Taxes
(a) No U.S. Borrower shall be required to pay any additional amount pursuant
to Clause 13.1 (Gross-up) in respect of United States taxes (including,
without limitation, federal, state, local or other income taxes), branch
profits or franchise taxes with respect to a sum payable by it pursuant
to this Agreement to a Bank if:
(i) on the date such Bank becomes a Party to this Agreement or has
designated a new Facility Office either:
(1) in the case of a Bank which is not a United States person
(as such term is defined in Section 7701(a)(30) of the
Code), such Bank is not entitled to submit a Form 1001 or
Form W-8 (relating to such Bank and claiming a complete
exemption from withholding on interest payable pursuant to
this Agreement) (or successor forms including a Form W-8BEN)
or a Form 4224 (or successor forms including a Form W-8EC1)
with respect to interest payable pursuant to this Agreement; or
<PAGE>
34
(2) such Bank is subject to such tax by reason of any connection
between the jurisdiction imposing such tax and the Bank or
its Facility Office other than a connection arising solely
from this Agreement or any transaction contemplated hereby;
or
(ii) such Bank has (unless the relevant U.S. Borrower failed to make a
request referred to in paragraph (b) or (c) below) failed to
submit any form, certificate or other information with respect to
such sum payable that it was required to file pursuant to
paragraph (b) or (c) below and is entitled to file under
applicable law.
(b) If a Bank is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) it shall (if and to the extent that it
is entitled to do so under applicable law) submit, as soon as reasonably
practicable, (i) after it has become a Party to this Agreement or (ii)
designated a new Facility Office or, (iii) as the case may be, after
there is any U.S. Borrower, and before any payment is made under this
Agreement after an event described in (i), (ii) or (iii) of this
paragraph (b) has occurred, in duplicate to each U.S. Borrower duly
completed and signed copies of either Form 1001 (or successor form
including a Form W-8BEN) of the United States Internal Revenue Service
(relating to such Bank and claiming complete exemption from withholding
on all amounts (to which such withholding would otherwise apply) to be
received by such Bank, including fees, pursuant to this Agreement in
connection with any borrowing by such U.S. Borrower) as a result of a tax
treaty concluded with the United States or Form 4224 (or successor form
including a Form W-8EC1)of the United States Internal Revenue Service
(relating to all amounts (to which such withholding would otherwise
apply) to be received by such Bank, including fees, pursuant to this
Agreement in connection with any borrowing by such U.S. Borrower).
Thereafter and from time to time upon the reasonable request of a U.S.
Borrower, such Bank shall (if and to the extent that it is entitled to do
so under applicable law) submit to such U.S. Borrower such additional
duly completed and signed copies of one or the other such forms (or such
successor forms as shall be adopted from time to time by the relevant
United States taxation authorities) or any additional information, in
each case as may be required under then current United States law or
regulations to claim the inapplicability of or exemption from United
States withholding taxes on payments in respect of all amounts (to which
such withholding would otherwise apply) to be received by such Bank,
including fees, pursuant to this Agreement in connection with any
borrowing by such U.S. Borrower.
(c) If a Bank is a United States person (as such term is defined in Section
7701(a)(30) of the Code) it shall, as soon as practicable after it has
become a Party to this Agreement or designated a new Facility Office or,
as the case may be, after there is any U.S. Borrower, and thereafter upon
the reasonable request of a U.S. Borrower, submit in duplicate to such
U.S. Borrower a certificate to the effect that it is such a United States
person and shall (if and to the extent that it is entitled to do so under
applicable law) upon the reasonable request of a U.S. Borrower submit any
additional information that may be necessary to avoid United States
withholding taxes on all payments, including fees, (to which such
withholding would otherwise apply) to be received pursuant to this
Agreement in connection with any borrowing by such U.S. Borrower.
13.5 Collecting Agents Rules
Each Bank represents to the Agent that, in the case of a Bank which is a
Bank, on the date of this Agreement and, in the case of a Bank which
becomes a Bank after the date of this Agreement, on the date it becomes a
Bank, in relation to the Facilities, it is:
<PAGE>
35
(a) either:
(i) not resident in the United Kingdom for United Kingdom tax
purposes; or
(ii) a bank as defined in section 840A of the Income and Corporation
Taxes Act 1988 and resident in the United Kingdom; and
(b) beneficially entitled to the principal and interest payable by the
Agent to it under this Agreement,
(or, if it is not able to make those representations, will ensure that it
assigns, transfers or novates its rights in respect of each Advance then
made (or, if made later, when made) to an entity in respect of which both
representations are correct) and, if it is able to make those
representations on the date of this Agreement or the date it becomes a
Bank, shall forthwith notify the Agent if either representation ceases to
be correct.
13.6 Tax Credit
(a) If an Obligor makes a payment pursuant to Clause 13.1 (Gross-up) for the
account of any Finance Party and such Finance Party has received or been
granted a credit against, or relief or remission or repayment of, any tax
paid or payable by it (a "Tax Credit") which is attributable to that
payment or the corresponding payment under the Finance Document such
Finance Party shall, to the extent that it can do so without prejudice to
the retention of the amount of such credit, relief, remission or
repayment, pay to the Obligor concerned such amount as the Finance Party
shall have reasonably determined to be attributable to such payments and
which will leave the Finance Party (after such payment) in no better or
worse position than it would have been if the Obligor concerned had not
been required to make any deduction or withholding.
(b) Nothing in this Clause 13.4 shall interfere with the right of a Finance
Party to arrange its tax affairs in whatever manner it thinks fit and
without limiting the foregoing no Finance Party shall be under any
obligation to claim a Tax Credit or to claim a Tax Credit in priority to
any other claims, relief, credit or deduction available to it. No Finance
Party shall be obliged to disclose any information relating to its tax
affairs or any computations in respect thereof.
14. MARKET DISRUPTION
14.1 Market disturbance
Notwithstanding anything to the contrary herein contained, if and each
time that prior to or on a Utilisation Date relative to an Advance to be
made (or the first day of any Interest Period in the case of an
outstanding Tranche A Advance or Term-out Advance) or Bill to be drawn
hereunder:
(a) in the case of Advances, it is not possible to determine LIBOR in
accordance with paragraph (i) of the definition of LIBOR and only
one or no Reference Bank supplies a rate for the purposes of
determining LIBOR in accordance with paragraph (ii) of such
definition or the Agent is notified by the Majority Banks that by
reason of circumstances affecting the London interbank market
generally, adequate and fair means do not exist for ascertaining
the LIBOR applicable to such Advance during its Interest Period
or Term or LIBOR does not adequately represent the cost of
funding to the Banks; or
<PAGE>
36
(b) in the case of Bills, the Agent shall have been notified by the
Majority Banks that the Bills do not comply with the then current
Bank of England regulations for Sterling bankers' acceptances or
that, by reason of circumstances affecting the London discount
market generally, adequate and fair means do not exist for
ascertaining the EBDR applicable to such Bill,
the Agent shall promptly give written notice of such notification to the
Company and to each of the Banks.
14.2 Alternative Rates
If the Agent gives a notice under Clause 14.1 (Market Disturbance):
(a) the Company and the Banks may (through the Agent) agree that
(except in the case of any Interest Period for a Tranche A
Advance or a Term-out Advance other than the first) the Advances
or Bills concerned shall not be borrowed or accepted; and
(b) during the period of 21 days after the giving of any notice by
the Agent pursuant to Clause 14.1 (Market disturbance), the Agent
(in consultation with the Banks) shall at the Company's request
negotiate with the Company in good faith with a view to
ascertaining whether a substitute basis (a "Substitute Basis")
may be agreed for the making of further Utilisations and/or the
maintaining of any existing Utilisations. If a Substitute Basis
is agreed by all the Banks and the Company it shall apply in
accordance with its terms from the Utilisation Date of each
Utilisation which is drawndown thereafter. The Agent shall not
agree any Substitute Basis on behalf of any Bank without any
prior consent of that Bank and such Substitute Basis shall be
reviewed by the Agent (acting on the instructions of the Banks)
on a monthly basis; and
(c) in the absence of an agreement under (a) above or a Substitute
Basis:
(i) if Clause 14.1(b) applies, the Banks which were to accept
Bills will make Tranche B Advances in Sterling to the Borrower
concerned in their place in an amount equal to the amount of
the Bills to be accepted;
(ii) the Interest Period or Term of the Advances concerned (which
includes any Advance made as a result of the operation of
sub-clause 14.2(c)(i) above) shall be one month; and
(iii) during the Interest Period or Term of each Advance the rate
of interest applicable to such Advance shall be the
applicable Margin plus applicable Mandatory Costs plus the
rate per annum notified by each Bank concerned to the Agent
before the last day of such Interest Period or Term to be
that which expresses as a percentage rate per annum the cost
to such Bank of funding such Advances from whatever sources
it may reasonably select.
15. INCREASED COSTS
15.1 Increased costs
(a) Subject to Clause 15.2 (Exceptions), the Company shall within 5 Business
Days of demand by a Finance Party pay that Finance Party the amount of
any increased cost incurred by it as a
<PAGE>
37
result of any change in or introduction of any law or regulation
(including any relating to taxation or reserve asset, special deposit,
cash ratio, liquidity or capital adequacy requirements or any other form
of banking or monetary control).
(b) In this Agreement "increased cost" means:
(i) an additional cost incurred by a Finance Party or any of its
holding companies as a result of it performing, maintaining or
funding its obligations under, this Agreement; or
(ii) that portion of an additional cost incurred by a Finance Party or
any of its holding companies in making, funding or maintaining
all or any advances comprised in a class of advances formed by or
including the Advances made or to be made by it under this
Agreement as is attributable to it making, funding or maintaining
its Advances; or
(iii) a reduction in any amount payable to a Finance Party or the
effective return to a Finance Party under this Agreement or on
its capital (or the capital of any of its holding companies); or
(iv) the amount of any payment made by a Finance Party, or the amount
of interest or other return foregone by a Finance Party,
calculated by reference to any amount received or receivable by a
Finance Party from any other Party under this Agreement.
15.2 Exceptions
Clause 15.1 (Increased costs) does not apply to any increased cost:
(a) compensated for by the payment of the Mandatory Cost;
(b) attributable to any tax or amounts in respect of tax which must
be deducted from any amounts payable or paid by a Borrower or
paid or payable by the Agent to a Bank under the Finance
Documents;
(c) which is, or is attributable to, any tax on the overall net
income, profits or gains of a Bank or any of its holding
companies (or the overall net income, profits or gains of a
division or branch of the Bank or any of its holding companies);
(d) arising directly out of the implementation by the applicable
authorities having jurisdiction over such Bank and/or its
Facility Office of the matters set out in the statement of the
Basle Committee on Banking Regulations and Supervisory Practices
dated July 1988 and entitled "International Convergence of
Capital Measurement and Capital Standards", or the directives of
the European Council (as amended or supplemented prior to the
date of this Agreement) of 17th April, 1989 on the own funds of
credit institutions (89/229/EEC) and of 18th December, 1989 on
the solvency ratio for credit institutions (89/647/EEC), in each
case to the extent and according to the timetable provided for
therein.
<PAGE>
38
16. ILLEGALITY AND MITIGATION
16.1 Illegality
If it becomes unlawful in any jurisdiction for a Bank to give effect to
any of its obligations as contemplated by this Agreement or to fund or
maintain any Advance or Bill, then the Bank may notify the Company
through the Agent accordingly and thereupon:
(a) each Borrower shall, to the extent required and within the period
allowed or if no period is allowed, forthwith, repay any Advances
made to it by that Bank together with all other amounts payable
by it to that Bank under this Agreement;
(b) each Borrower shall, to the extent required and within the period
allowed or if no period is allowed, forthwith, perform its
obligations under Clause 8.3 (Payment of Bills) in respect of all
outstanding Bills accepted by that Bank; and
(c) the Bank's Tranche A Commitment, Tranche B Commitment and Tranche
C Commitment shall be cancelled.
16.2 Mitigation
Notwithstanding the provisions of Clauses 13 (Taxes), 15 (Increased
Costs) and 16.1 (Illegality), if in relation to a Bank or (as the case
may be) the Agent circumstances arise which would result in:
(a) any deduction, withholding or payment of the nature referred to
in Clause 13 (Taxes); or
(b) any increased cost of the nature referred to in Clause 15
(Increased Costs); or
(c) a notification pursuant to Clause 16.1 (Illegality),
then without in any way limiting, reducing or otherwise qualifying the
rights of such Bank or the Agent, such Bank shall promptly upon becoming
aware of the same notify the Agent thereof (whereupon the Agent shall
promptly notify the Company) and such Bank shall use reasonable
endeavours to transfer its participation in the Facility and its rights
hereunder and under the Finance Documents to another financial
institution or Facility Office not affected by the circumstances having
the results set out in (a), (b) or (c) above and shall otherwise take
such reasonable steps as may be open to it to mitigate the effects of
such circumstances provided that such Bank shall not be under any
obligation to take any such action if, in its bona fide written opinion,
to do so would or would be likely to have a material adverse effect upon
its business, operation or financial condition or would involve it in any
unlawful activity or any activity that is contrary to any request,
guidance or directive of any competent authority (whether or not having
the force of law) or (unless indemnified to its satisfaction) would
involve it in any expense or tax disadvantage.
17. GUARANTEE
17.1 Guarantee
Each Guarantor irrevocably and unconditionally:
<PAGE>
39
(a) as principal obligor and notwithstanding the release of any other
Obligor or any other person under the terms of any composition or
arrangement with any creditors of any member of the Group,
guarantees to each Finance Party prompt performance by each
Borrower of all its obligations under the Finance Documents;
(b) undertakes with each Finance Party that whenever a Borrower does
not pay any amount when due under or in connection with any
Finance Document, such Guarantor shall forthwith on demand by the
Agent pay that amount as if such Guarantor instead of the
relevant Borrower were expressed to be the principal obligor; and
(c) indemnifies each Finance Party on demand against any loss or
liability suffered by it if any obligation guaranteed by that
Guarantor is or becomes unenforceable, invalid or illegal.
17.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate
balance of all sums payable by the Borrowers under the Finance Documents,
regardless of any intermediate payment or discharge in whole or in part.
17.3 Reinstatement
(a) Where any discharge (whether in respect of the obligations of any Obligor
or any security for those obligations or otherwise) is made in whole or
in part or any arrangement is made on the faith of any payment, security
or other disposition which is avoided or must be restored on insolvency,
liquidation or otherwise without limitation, the liability of the
Guarantors under this Clause 17 shall continue as if the discharge or
arrangement had not occurred (but only to the extent that such payment,
security or other disposition is avoided or restored).
(b) Each Finance Party may concede or compromise any claim that any payment,
security or other disposition is liable to avoidance or restoration.
17.4 Waiver of defences
The obligations of the Guarantors under this Clause 17 will not be
affected by any act, omission, matter or thing which, but for this
provision, would reduce, release or prejudice any of its obligations
under this Clause 17 or prejudice or diminish those obligations in whole
or in part, including (whether or not known to it or any Finance Party):
(a) any time or waiver granted to, or composition with, any Obligor
or other person;
(b) the taking, variation, compromise, exchange, renewal or release
of, or refusal or neglect to perfect, take up or enforce, any
rights against, or security over assets of, any Obligor or other
person or any non-presentation or non-observance of any formality
or other requirement in respect of any instrument or any failure
to realise the full value of any security;
(c) any incapacity or lack of powers, authority or legal personality
of or dissolution or change in the members or status of any
Obligor or any other person;
<PAGE>
40
(d) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to
that Finance Document in this Clause 17 shall include each
variation or replacement;
(e) any unenforceability, illegality or invalidity of any obligation
of any person under any Finance Document or any other document or
security, to the intent that each Guarantor's obligations under
this Clause 17 shall remain in full force and its guarantee be
construed accordingly, as if there were no unenforceability,
illegality or invalidity; and
(f) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of any Obligor
under a Finance Document resulting from any insolvency,
liquidation or dissolution proceedings or from any law,
regulation or order so that each such obligation shall for the
purposes of each Guarantor's obligations under this Clause 17
shall be construed as if there were no such circumstance.
17.5 Immediate recourse
Each Guarantor waives any right it may have of first requiring any
Finance Party (or any trustee or agent on its behalf) to proceed against
or enforce any other rights or security or claim payment from any person
before claiming from that Guarantor under this Clause 17.
17.6 Appropriations
(a) Until all amounts which may be or become payable by the Borrowers under
or in connection with the Finance Documents have been irrevocably paid in
full, each Finance Party (or any trustee or agent on its behalf) may:
(i) refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and no Guarantor shall be
entitled to the benefit of the same; and
(ii) hold in a suspense account any moneys received from a Guarantor
or on account of that Guarantor's liability under this Clause 17.
(b) If:
(i) the amount of any moneys in the suspense account referred to
in sub-paragraph (a)(ii) equals or exceeds the maximum
amount which may be or become payable under the Finance
Documents; and
(ii) the relevant Finance Party is satisfied that payment of the
moneys in discharge of all amounts which are or may be
outstanding under the Finance Documents will not be
subsequently clawed-back, avoided or restored,
then each Finance Party (or its trustee or agent on its behalf)
shall apply those moneys in discharge of all amounts outstanding
under the Finance Documents.
<PAGE>
41
17.7 Non-competition
Until all amounts which may be or become payable by the Borrowers under
or in connection with the Finance Documents have been paid in full, no
Guarantor shall, after a claim has been made or by virtue of any payment
or performance by it under this Clause 17:
(a) be subrogated to any rights, security or moneys held, received or
receivable by any Finance Party (or any trustee or agent on its
behalf) or be entitled to any right of contribution or indemnity
in respect of any payment made or moneys received on account of
any Guarantor's liability under this Clause 17;
(b) claim, rank, prove or vote as a creditor of any Borrower or its
estate in competition with any Finance Party (or any trustee or
agent on its behalf); or
(c) receive, claim or have the benefit of any payment, distribution
or security from or on account of any Borrower, or exercise any
right of set-off as against any Borrower.
Each Guarantor shall hold in trust for and forthwith pay or transfer to
the Agent for the Finance Parties any payment or distribution or benefit
of security received by it contrary to this Clause 17.7.
17.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by any
other security now or hereafter held by any Finance Party.
17.9 Limitation on guarantee of U.S. Guarantors
Notwithstanding any other provision of this Clause 17, the obligations of
each Guarantor incorporated in the United States (a "U.S. Guarantor")
under this Clause 17 shall be limited to a maximum aggregate amount equal
to the largest amount that would not render its obligations hereunder
subject to avoidance as a fraudulent transfer or conveyance under Section
548 of Title 11 of the United States Bankruptcy Code or any applicable
provisions of comparable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other
liabilities of such U.S. Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding,
however, any liabilities of such U.S. Guarantor in respect of
intercompany indebtedness to the Borrowers or Affiliates of the Borrowers
to the extent that such indebtedness would be discharged in an amount
equal to the amount paid by such U.S. Guarantor hereunder) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
contribution, reimbursement, indemnity or similar rights of such U.S.
Guarantor pursuant to (a) applicable law or (b) any agreement providing
for an equitable allocation among such U.S. Guarantor and other
Affiliates of the Borrowers of obligations arising under guarantees by
such parties.
17.10 Release of Guarantee
(a) The Company may from time to time deliver a request to the Agent for a
Guarantor (other than the Company) to be released as a Guarantor.
(b) Each request under paragraph (a) above shall be accompanied by a
certificate addressed to the Finance Parties from a director of the
Company:
<PAGE>
42
(i) certifying that no Default is subsisting or would result from the
proposed release;
(ii) setting out in reasonable detail calculations demonstrating that
the Company will continue to be in compliance with Clause 19.11
(Subsidiary Borrowings) after the release of the Guarantor.
(c) As soon as reasonably practicable following receipt of a certificate
complying with paragraph (b) above the Agent shall, if it has not
received notice of any Default that is subsisting, execute on behalf of
the Finance Parties such documents as are required to effect the release
of the relevant Guarantor.
(d) The Guarantor concerned shall cease to be a Guarantor on the date the
release document referred to in paragraph (c) above is executed by the
Agent.
18. REPRESENTATIONS AND WARRANTIES
18.1 Representations and warranties
(a) Each Obligor makes the representations and warranties set out in this
Clause 18 (Representations and Warranties) to each Finance Party (but in
the case of an Obligor other than the Company only in respect of
themselves).
(b) The representations and warranties set out in this Clause 18
(Representations and Warranties) which relate to Bidco shall not apply to
Bidco after completion of the Merger.
18.2 Status
(a) It is a limited liability company and Bidco is a corporation, duly
incorporated and validly existing under the laws of the jurisdiction of
its incorporation; and
(b) each member of the Group has the power to own its assets and carry on its
business as it is being conducted.
18.3 Powers and authority
It and Bidco has the power to enter into and perform, and has taken all
necessary action to authorise the entry into, performance and delivery
of, the Transaction Documents to which it is or will be a party and the
transactions contemplated by those Transaction Documents.
18.4 Legal validity
Each Transaction Document to which it or Bidco is or will be a party
constitutes, or when executed in accordance with its terms will
constitute, its legal, valid and binding obligations enforceable in
accordance with its terms subject, as to matters of law, to the
qualifications contained in the legal opinions referred to in Schedule 2.
18.5 Non-conflict
The entry into and performance by it and Bidco of, and the transactions
contemplated by, the Transaction Documents do not and will not conflict
with:
(a) any law or regulation or judicial or official order; or
<PAGE>
43
(b) the constitutional documents of any member of the Group; or
(c) any document which is binding upon any member of the Group or any
asset of any member of the Group, to an extent or in a manner
which would have a material adverse effect.
18.6 No default
(a) No Event of Default is outstanding or would result from any Utilisation;
and
(b) no other event is outstanding which constitutes (or, with the giving of
notice, lapse of time, determination of materiality or the fulfilment of
any other applicable condition or any combination of the foregoing, is
reasonably likely to constitute) a default under any document which is
binding on any member of the Group or any asset of any member of the
Group to an extent or in a manner which is reasonably likely to have a
material adverse effect.
18.7 Authorisations
All authorisations required in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Transaction Documents have been obtained or effected
(as appropriate) and are in full force and effect.
18.8 Accounts
(a) In the case of the Company, the audited consolidated accounts of the
Group most recently delivered to the Agent (which, at the date of this
Agreement, are the Original Group Accounts):
(i) have been prepared in accordance with accounting principles and
practices generally accepted in the United Kingdom consistently
applied; and
(ii) fairly represent the consolidated financial condition of the
Group as at the date to which they were drawn up,
and, excluding for this purpose only any reduction in tangible net worth
or interest cover or any increased indebtedness immediately following the
acquisition of the Target directly resulting from the acquisition, as at
the date of this Agreement or, in the case of audited accounts delivered
to the Agent after the date of this Agreement, the date such accounts are
delivered to the Agent there has been no change in the consolidated
financial condition of the Group since the date to which those accounts
were drawn up which would be reasonably likely to have a material adverse
effect.
(b) In the case of each Additional Borrower, its accounts most recently
delivered to the Agent under Clause 19.2(a)(ii):
(i) have been prepared in accordance with accounting principles and
practices generally accepted in the place of its incorporation
consistently applied; and
(ii) fairly represent its financial condition as at the date to which
they were drawn up.
<PAGE>
44
18.9 Litigation
No litigation, arbitration or administrative proceedings in relation to
any member of the Group are current or, to its knowledge, pending or
threatened, which is reasonably likely to have a material adverse effect.
18.10 Information Memorandum
(a) The information contained in the information memorandum referred to in
Clause 19.15 (Syndication) (the "Information Memorandum") supplied by the
Company or on its behalf was true in all material respects as at its
date, opinions expressed in the Information Memorandum by or on behalf of
any member of the Group were honestly held, all projections in the
Information Memorandum were based on assumptions reasonably made, and all
such opinions and assumptions were provided in good faith and after
reasonable enquiry as to their accuracy.
(b) To the best of its knowledge, having made all reasonable enquiries, the
Information Memorandum did not omit as at that date any material
information which, if disclosed, could reasonably be expected to
adversely affect the decision of a person considering whether to enter
into this Agreement.
(c) Since the date of the material contained in the Information Memorandum,
so far as the Company is aware after making all reasonable enquiries,
nothing has occurred or come to light which renders any of the
information, expressions of opinion or intention, forecasts, projections
or conclusions and contained in the Information Memorandum inaccurate or
misleading to a material extent.
(d) In accordance with the obligations of the Company in Clause 19.14
(Syndication), the Company shall represent, on the date five Business
Days (the "relevant date") after the date on which the Arrangers notify
the Company that syndication of the Facilities has closed, that (except
as disclosed in writing by the Company to the Agent on or before the
relevant date) the Information Memorandum remains true and accurate in
all material respects and that opinions expressed in the Information
Memorandum remain honestly held and that the projections therein continue
to be based on assumptions reasonably made, such opinions and assumptions
being provided in good faith and after reasonable enquiry as to their
accuracy.
18.11 Security Interests
No Security Interest exists over the assets of any member of the Group
which would cause a breach of Clause 19.7 (Negative pledge).
18.12 Year 2000
Any reprogramming required to permit the proper functioning, in and
following the Year 2000 of (a) the Group's computer systems and (b)
equipment containing embedded microchips (including, systems and
equipment supplied by others or with which the Group's systems interface)
and the testing of all such systems and equipment, as so reprogrammed,
has been completed or will be completed in all material respects by 31st
August, 1999 (or, in the case of Target and its Subsidiaries, by 30th
September, 1999). The cost to the Group of such reprogramming and testing
and of the reasonably foreseeable consequences of Year 2000 to the Group
in respect of the matters referred to in the previous sentence
(including, without limitation, reprogramming errors and the failure of
others' systems or equipment) will not result in a Default or a material
adverse effect.
<PAGE>
45
18.13 Environmental Matters
(a) Subject to sub-paragraph (c) below, each member of the Group has obtained
all material Environmental Licences required for the carrying on of its
business as currently conducted and has at all times on and from the date
this representation and warranty is first made in relation to it complied
in all material respects with (i) the terms and conditions of such
Environmental Licences and (ii) all other applicable Environmental Laws,
in each case, where failure to comply with such Environmental Licences
and Environmental Laws is reasonably likely to have a material adverse
effect. There are to its knowledge no circumstances currently existing
which would prevent or interfere with such compliance in the future (to
the extent any such failure to comply would have a material adverse
effect).
(b) There is no Environmental Claim pending or to the best of its knowledge
threatened, and to the best of its knowledge, having made all reasonable
enquiries, there are no past or present acts, omissions, events or
circumstances that would be reasonably likely to form the basis of any
Environmental Claim (including, without limitation, any arising out of
the generation, storage, transport, disposal or release of any Dangerous
Substance), against any member of the Group which if adversely determined
would have a material adverse effect.
(c) The representations and warranties in paragraphs (a) and (b) above shall
not apply to the Target and its Subsidiaries during the period ending on
the date three months after the date on which the Target becomes a
Subsidiary of the Company.
18.14 ERISA
Each member of the Controlled Group has fulfilled its obligations under
the minimum funding standards of ERISA and the Code with respect to each
Plan. Each member of the Controlled Group is in compliance with the
applicable provisions of ERISA, the Code and any other applicable United
States Federal or State law with respect to each Plan except where such
non-fulfilment or non compliance could not reasonably be expected to have
a material adverse effect. Each Plan complies in all material respects
with all applicable requirements of law and regulations, no Reportable
Event has occurred with respect to any Plan, and no steps have been taken
to reorganise or terminate any Single Employer Plan or by Obligors to
effect a complete or partial withdrawal from any Multiemployer Plan
except where such non compliance, Reportable Event, reorganisation,
termination or withdrawal could not reasonably be expected to have a
material adverse effect. No member of the Controlled Group has (a) sought
a waiver of the minimum funding standard under Section 412 of the Code in
respect of any Plan, (b) failed to make any contribution or payment to
any Single Employer Plan or Multiemployer Plan, or made any material
amendment to any Plan, and no other event, transaction or condition has
occurred which has resulted or could result in the imposition of a lien
or the posting of a bond or other security under ERISA or the Code or (c)
incurred any material, actual liability under Title I or Title IV of
ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA, except where any such event in (a), (b) or (c) could not
reasonably be expected to have a material adverse effect.
18.15 U.S. Borrowers
(a) No U.S. Borrower is an investment company under the United States
Investment Company Act of 1940, as amended, or is exempt from the
provisions of that Act pursuant to an exemption under that Act, all of
the conditions of which have been and are being fulfilled.
<PAGE>
46
(b) None of the transactions contemplated in this Agreement (including,
without limitation, the borrowings hereunder and the use of the proceeds
thereof) will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934 (or any regulations issued pursuant
thereto, including, without limitation, Regulations G, T, U and X).
18.16 Times for making representations and warranties
The representations and warranties set out in this Clause 18:
(a) (except in the case of Clause 18.10 (Information Memorandum)) in
the case of the Company and the Original Guarantors, are made on
the date of this Agreement;
(b) (except in the case of Clause 18.10 (Information Memorandum)) in
the case of an Obligor which becomes a Party after the date of
this Agreement, will be deemed to be made by that Obligor on the
date it executes a Borrower Accession Agreement or, as the case
may be a Guarantor Accession Agreement (subject to any
disclosures agreed in writing by the Majority Banks before such
date);
(c) (except in the case of Clause 18.10 (Information Memorandum) and,
after 31st January, 2000, Clause 18.12 (Year 2000)) are deemed to
be repeated by each Obligor on:
(i) the date of each Request;
(ii) the first day of each Interest Period; and
(iii) each Utilisation Date with reference to the facts and
circumstances then existing; and
(d) (in the case of Clause 18.10 (Information Memorandum)) is made by
each Obligor on the date on which the Information Memorandum is
approved in writing by the Company (such approval not to be
unreasonably withheld or delayed).
19. UNDERTAKINGS
19.1 Duration
The undertakings in this Clause 19 (Undertakings) will remain in force
from the date of this Agreement for so long as any amount is or may be
outstanding under this Agreement or any Commitment is in force.
19.2 Financial Information
Each Borrower shall supply to the Agent in sufficient copies for all the
Banks:
(a) as soon as the same are available (and in any event within 180
days of the end of each of its financial years):
(i) in the case of the Company, the audited consolidated
accounts of the Group for that financial year; and
(ii) in the case of each Borrower (other than the Company), its
accounts for that financial year, which accounts shall be
audited if required by applicable law;
<PAGE>
47
(b) in the case of the Company, as soon as the same are available
(and in any event within 120 days of the end of the first
half-year of each of its financial years) the unaudited
consolidated accounts of the Group for that half-year;
(c) in the case of the Company, together with the accounts specified
in paragraphs (a)(i) and (b) above, a certificate signed by two
of its senior officers on its behalf:
(i) setting out in reasonable detail computations establishing
compliance with Clause 19.16 (Financial covenants) as at the
date to which those accounts were drawn-up;
(ii) identifying the Principal Subsidiaries on the basis of those
accounts; and
(iii) certifying that no Default is outstanding or, if a Default
is outstanding, specifying the Default and the steps, if
any, being taken to remedy it; and
(d) in the case of the Company, together with the accounts specified
in paragraph (a)(i) above, a certificate signed by its auditors:
(i) setting out in reasonable detail compositions establishing
compliance with Clause 19.16 (Financial covenants) as at the
date to which those accounts were drawn up; and
(ii) identifying the Principal Subsidiaries on the basis of those
accounts.
19.3 Information - Miscellaneous
The Company shall supply to the Agent:
(a) all documents despatched by it to all its shareholders (or any
class of them) or its creditors generally (or any class of them)
at the same time as they are despatched;
(b) promptly upon becoming aware of them, details of any litigation,
arbitration or administrative proceedings which are current,
threatened or pending, and which would, in the opinion of the
Directors of the Company be reasonably likely to be adversely,
determined and, if adversely determined, have a material adverse
effect; and
(c) promptly, such further information in the possession or control
of any member of the Group regarding its financial condition as
any Finance Party through the Agent may reasonably request,
in sufficient copies for all of the Banks, if the Agent so requests,
provided that the Company shall be under no obligation to supply:
(i) its or any of its Subsidiaries management accounts;
(ii) any information the supply of which would be contrary to its
obligations under its undertaking given to the Stock Exchange in
London or any other confidentiality obligation binding on the
Company or any of its Subsidiaries; or
<PAGE>
48
(iii) any information which is, in the Company's reasonable opinion,
unpublished price-sensitive information within the meaning of the
Company Securities (Insider Dealing) Act 1985.
19.4 Notification of Default and Control Event
(a) The Company shall notify the Agent of any Default (and the steps, if any,
being taken to remedy it) promptly upon becoming aware of it.
(b) The Company shall notify the Agent in writing of any Control Event within
14 days after the Company becomes aware of such Control Event.
19.5 Authorisations
Each Obligor shall promptly:
(a) obtain, maintain and comply with the terms of; and
(b) at the Agent's reasonable request, supply certified copies to the
Agent of,
any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability of,
any Finance Document.
19.6 Pari passu ranking
Each Obligor shall procure that its obligations under the Finance
Documents do and will rank at least pari passu with all its other present
and future unsecured obligations, except for obligations which from time
to time are mandatorily preferred by law applying to companies generally.
19.7 Negative pledge
No Obligor shall, and the Company shall procure that no other member of
the Group will, create or permit to subsist any Security Interest on any
of its assets other than Permitted Security Interests.
19.8 Disposals
No Obligor shall, and the Company shall procure that no other member of
the Group will, either in a single transaction or in a series of
connected transactions, and whether voluntarily or involuntarily, sell,
transfer, grant or lease or otherwise dispose of all or any part of its
assets where:
(a) the transaction or series of connected transactions concerned
constitute a Restricted Transaction; and
(b) the aggregate market value of the assets to be disposed of
pursuant to such Restricted Transaction exceeds 'L'30,000,000
or its equivalent in other currencies.
19.9 Acquisitions
No Obligor shall, and the Company shall procure that no other member of
the Group will, either in a single transaction or a series of connected
transactions, acquire any assets where:
<PAGE>
49
(a) the transaction or series of connected transactions concerned
constitute a Restricted Transaction; and
(b) the aggregate value of the cash and non-cash consideration
(as valued by the Company's auditors) payable by the Group
in respect of such Restricted Transaction exceeds
'L'30,000,000 or its equivalent in other currencies.
19.10 Change of business
Save for disposals permitted by this Agreement, the Company shall procure
that no substantial change is made to the general nature of the Group's
business as it is conducted on the date of this Agreement and assuming
that the acquisition of the Target is completed in accordance with the
Offer Documents and the Merger Agreement.
19.11 Subsidiary Borrowings
The Company shall procure that no member of the Group which is not a
Guarantor has or incurs any Borrowing other than:
(a) any Borrowings incurred with the prior written consent of the
Majority Banks; or
(b) any Borrowings from the Company or any other member of the
Group; or
(c) any currency Borrowings subject to back to back currency
deposits used for the purposes of currency hedging; or
(d) any Borrowings of any company which becomes a new
Subsidiary of the Company after the date hereof, provided that
(i) the amount of such Borrowings is not increased over the
amount outstanding at the date it becomes a Subsidiary, and
(ii) all such Borrowings are repaid in full within six months
of the date on which such company became a Subsidiary; or
(e) Borrowings of Meggitt Funding Limited pursuant to the
CULS, provided that all the CULS are converted into ordinary
shares in Meggitt Funding Limited within 5 Business Days after
the Unconditional Date; or
(f) any other Borrowings, provided that (excluding for this
purpose Borrowings permitted under sub-clauses (a) to (e)
above) the maximum aggregate principal amount of such
Borrowings does not exceed 'L'40,000,000 or its equivalent
in other currencies.
19.12 The Offer and the Merger
(a) The Company shall not, and shall procure that Bidco and each other
member of the Group will not amend, waive or vary any Offer Document or
the Merger Agreement (or agree to any of the foregoing) in any respect
which would:
(i) result in the aggregate cash consideration payable by the
Group in respect of the Offer and the Merger exceeding the sum
of US$330,000,000 and the net proceeds applied in accordance
with Clause 4.2(a)(ii);
<PAGE>
50
(ii) result in the "Minimum Condition" (as defined in the
Merger Agreement) being reduced below a majority of the common
stock of Target on a fully diluted basis;
(iii) waive or dispense with any requirement for any material
authorisation or regulatory waiting period pursuant to the
Offer Documents or the Merger Agreement; or
(iv) result in any amendment, waiver or variation of or to any
of the conditions specified in Annex I of the Merger Agreement
in a manner and to an extent which could reasonably be
expected to materially and adversely affect the interests of
the Finance Parties under the Finance Documents.
(b) The Company shall not, and shall procure that Bidco and no other member
of the Group will, issue or allow to be issued any press release or other
publicity, the text of which has not previously been agreed with the
Arrangers (such agreement not to be unreasonably withheld or delayed),
which makes reference to the Facilities or any Finance Party unless the
publicity is required by law, any applicable regulation or any stock
exchange (in which case the Company shall (i) notify the Agent and the
Arrangers as soon as it becomes aware that the publicity is required and
(ii) consult with the Arrangers in good faith as to the contents of the
publicity).
(c) The Company shall, and shall ensure that Bidco and each other member of
the Group will, comply in all material respects with all applicable laws
and regulations in relation to the Offer and the Merger.
(d) The Company will procure that the Merger is completed in the manner
contemplated in the Merger Agreement as soon as practicable after the
Unconditional Date and in any event within 120 days after the
Unconditional Date.
(e) The Company will procure that the Target becomes a Guarantor in
accordance with Clause 28.5 within ten Business Days after the date on
which the Merger is completed.
(f) The Company shall ensure that within 5 Business Days of the Unconditional
Date the CULS are converted into ordinary shares in Meggitt Funding
Limited and those ordinary shares are exchanged for ordinary shares in
the Company, in each case in accordance with the deed poll constituting
the CULS.
19.13 Insurance
Each Obligor will, and the Company shall procure that each of its
Subsidiaries will, effect insurances over and in respect of its assets
and business against such risks and to such extent and in such a manner
as is usual for companies carrying on such a business in the country
concerned.
19.14 Syndication
At the request of the Arrangers, the Company will assist the Arrangers in
syndicating the Facilities, including (a) the preparation with the
Arrangers of a confidential information memorandum and the supply of
other marketing and financial materials reasonably required for use in
syndication and (b) direct contact, including the hosting of one or more
bank meetings, between senior management of the Company on the one hand
and potential Banks and prospective participants (in each case chosen by
the Arrangers in consultation with the
<PAGE>
51
Company) on the other hand, and comply with all reasonable requests for
information from potential Banks and participants made through the
Arrangers.
19.15 Hedging Strategy
The Company shall procure that the Hedging Strategy is implemented
substantially in accordance with its terms.
19.16 Financial covenants
(a) In this Clause 19.16:
"Cash and Investments" means cash in hand, cash at bank, deposits,
negotiable or other readily marketable investments or securities and
other investments of a similar nature;
"Net Debt" at any time, means the aggregate consolidated Borrowings of
the Group from sources external to the Group, less all Cash and
Investments of the Group;
"Net Interest Costs" means, in respect of any 12 month period of the
Group, the sum of (a) the amount of interest and similar charges payable
by the Group during such financial period determined by reference to the
latest audited annual consolidated accounts or the latest interim
financial statements of the Company less (b) the amount of interest
received or receivable and any similar income of the Group during such
financial period determined as aforesaid;
"EBITA" means, in respect of any 12 month period of the Group, Profit
Before Net Interest adjusted to eliminate any deduction for amortisation.
"EBITDA" means, in respect of any 12 month period of the Group, Profit
Before Net Interest adjusted to eliminate any deduction for depreciation
or amortisation.
"Profit Before Net Interest" means, in respect of any 12 month period of
the Group, the consolidated pre-tax profits of the Group for that period
but before deducting Net Interest Costs and before crediting or deducting
(as the case may be):
(a) amounts applicable to minorities, dividends or exceptional items; and
(b) items under (i) operating profits or losses of discontinued operations or
operations under review, (ii) provisions for profits or losses on
operations to be discontinued, (iii) profits or losses on disposal of
discontinued operations or (iv) provisions released against such items,
all as classified in or determined by reference to the latest financial
statements provided under Clause 19.2(a) or (b) and after annualising the
contribution to EBITDA of any company (including the Target) that becomes
a member of the Group after the beginning of any such 12 month period.
"Ratio Period" means each period of 12 months ending on 30th June and
31st December in each year.
(b) All the terms used in paragraph (a) above are to be calculated in
accordance with the accounting principles applied in connection with the
Original Group Accounts.
<PAGE>
52
(c) If there is a dispute as to any interpretation of or computation for
paragraph (a) above, the interpretation or computation of the Company's
auditors will prevail.
(d) The Company shall procure that:
(i) Interest Cover
the ratio of EBITA to Net Interest Costs is not less than
3.00:1 in any Ratio Period; and
(ii) Debt/EBITDA
the ratio of Net Debt (as determined on the last day of each
Ratio Period in respect of which this ratio is tested) to
EBITDA shall not, in respect of any Ratio Period which ends in
a period set out in Column (1) below, exceed the ratio set
opposite such period in Column (2) below:
<TABLE>
<CAPTION>
Column (1) Column (2)
Period Ratio
<S> <C>
Up to and including 30th June, 2000 3.5:1
Thereafter 3.0:1
</TABLE>
20. DEFAULT
20.1 Events of Default
Each of the events set out in Clauses 20.2 (Non-Payment) to 20.17
(Material adverse effect) (inclusive) is an Event of Default (whether or
not caused by any reason whatsoever outside the control of any Obligor or
any other person).
20.2 Non-payment
An Obligor does not pay any amount payable by it under the Finance
Documents at the place at and in the currency in which it is expressed to
be payable except where the failure to pay is due solely to technical or
administrative problems or delays in the transmission of funds which are
beyond the Obligor's control and payment is made within three Business
Days of the due date.
20.3 Breach of other obligations
(a) Any Obligor fails to comply with any of Clauses 19.6 (pari passu
ranking), 19.7 (Negative Pledge), 19.8 (Disposals), 19.9 (Acquisitions),
19.10 (Change of business), 19.11 (Subsidiary Borrowings), 19.12 (the
Offer and the Merger) or 19.16 (Financial covenants).
(b) An Obligor does not comply with any provision of the Finance Documents
(other than those referred to in Clause 20.2 (Non-Payment) and paragraph
(a) above) and such failure (if capable of remedy before the expiry of
such period) continues unremedied for a period of 30 days from the
earlier of (i) the date on which the Agent gives notice to the Company
requiring the same to be remedied and (ii) the date on which an Obligor
becomes aware of the same.
<PAGE>
53
20.4 Misrepresentation
A representation, warranty or statement made or repeated by any Obligor
in or in connection with any Finance Document or in any document
delivered by or on behalf of any Obligor under or in connection with any
Finance Document is incorrect in any material respect when made or deemed
to be made or repeated.
20.5 Cross-default
(a) Any Borrowings of a member of the Group are not paid when due or within
any applicable grace period provided in the documentation therefor; or
(b) any Borrowings of a member of the Group become prematurely due and
payable or are placed on demand (or become capable of being declared
prematurely due and payable or placed on demand) in each case as a result
of an event of default (howsoever described) under the document relating
to those Borrowings; or
(c) any Security Interest securing Borrowings over any asset of a member of
the Group becomes enforceable,
except that this Clause 20.5 shall not apply to:
(i) Borrowings of Group members the principal or settlement
amounts of which are in aggregate 'L'10,000,000 or less;
or
(ii) during the period of three months beginning on the date the
Target becomes a member of the Group, Borrowings of the Target
or its Subsidiaries outstanding as at the date it became a
member of the Group; or
(iii) during the period of three months starting on the date of this
Agreement, any Borrowings in a principal amount not exceeding
U.S.$60,000,000 under the 7 year private placement with certain
United States investors maturing in April 2000, to the extent
any circumstances described in paragraph (b) above are caused
by the execution of this Agreement, the Utilisation of all or
any part of the Total Commitments or the acquisition of the
Target pursuant to the Offer Documents and the Merger Agreement
and provided that any such Borrowings which are declared
prematurely due and payable are repaid within 5 Business Days
of becoming due and payable.
20.6 Insolvency
(a) An Obligor or a Principal Subsidiary is, or is deemed for the purposes of
any law to be, unable to pay its debts as they fall due, or to be
insolvent, or admits inability to pay its debts as they fall due;
(b) an Obligor or a Principal Subsidiary suspends making payments on all or
any class of its debts or announces an intention to do so, or a
moratorium is declared in respect of any of its indebtedness; or
(c) an Obligor or a Principal Subsidiary by reason of financial difficulties,
begins negotiations with all of its creditors or any class of them with a
view to the readjustment or rescheduling of any of its indebtedness.
<PAGE>
54
20.7 Administration
(a) Any meeting of an Obligor or any Principal Subsidiary is convened for the
purpose of considering any resolution to present an application for an
administration order; or
(b) an Obligor or any Principal Subsidiary passes a resolution to present an
application for an administration order; or
(c) an application for an administration order in relation to an Obligor or
any Principal Subsidiary is presented to the court and either (i) such
Obligor or such Principal Subsidiary does not apply to the court within 7
days after the presentation of such petition requesting the court to
refuse such petition or (ii) it does so apply but such petition is not
refused by such court within 21 days after such application for the
refusal of such petition; or
(d) an Obligor or any Principal Subsidiary has an administration order made
in relation to it.
20.8 Compositions etc.
An Obligor or any Principal Subsidiary has any voluntary arrangement
proposed in relation to it under Section 1 of the Insolvency Act 1986 or
enters into any other composition, scheme of arrangement, compromise or
arrangement involving an Obligor or such Principal Subsidiary and their
respective creditors generally (other than for the purposes of
reconstruction or amalgamation which is on a solvent basis and does not
involve any Obligor or which is otherwise upon terms and within such
period as may previously have been approved in writing by the Majority
Banks).
20.9 Winding up
(a) Any meeting of the shareholders of an Obligor or any Principal Subsidiary
is convened for the purpose of considering any resolution for (or to
petition for) its winding up (other than in connection with a
reconstruction or amalgamation which is on a solvent basis and does not
involve any Obligor or which is otherwise upon terms and within such
period as may previously have been approved in writing by the Majority
Banks); or
(b) An Obligor or any Principal Subsidiary passes any resolution for its
winding up other than a resolution previously approved in writing by the
Majority Banks (other than in connection with a reconstruction or
amalgamation which is on a solvent basis and does not involve any Obligor
or which is otherwise upon terms and within such period as may previously
have been approved in writing by the Majority Banks); or
(c) A petition for the winding up of an Obligor or any Principal Subsidiary
is presented to the court and either (i) such Obligor or such Principal
Subsidiary does not apply to the court within 7 days after the
presentation of such petition requesting the court to refuse such
petition, or (ii) it does so apply but such petition is not refused by
such court within 21 days after such application for the refusal of such
petition; or
(d) An Obligor or any Principal Subsidiary becomes subject to a winding up
order.
20.10 Appointment of receivers and managers
(a) Any liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or the like is
appointed in respect of an Obligor or any Principal Subsidiary or any
material part of its assets or undertaking; or
<PAGE>
55
(b) the directors of an Obligor or any Principal Subsidiary request the
appointment of a liquidator, trustee in bankruptcy, judicial custodian,
compulsory manager, receiver, administrative receiver, administrator or
the like.
20.11 Creditors' process
Any attachment, sequestration, distress or execution affects any material
asset of an Obligor or any Principal Subsidiary and is not discharged
within 21 days.
20.12 Analogous proceedings
There occurs, in relation to an Obligor or any Principal Subsidiary, any
event anywhere which is analogous with any of those mentioned in Clauses
20.6 (Insolvency) to 20.9 (Winding up) (inclusive).
20.13 Unlawfulness
It is or becomes unlawful for any Obligor to perform any of its
obligations under the Transaction Documents unless, in the case of any
Guarantor, the provisions of Clause 20.14 apply and such Guarantor is
replaced in accordance with those provisions.
20.14 Guarantee
The guarantee of any Guarantor (other than the Company) under Clause 17:
(a) is not effective (unless replaced by a guarantee granted in
accordance with Clause 28.5 by either a Subsidiary or
Subsidiaries which can demonstrate equal or greater Profit
Before Net Interest (as defined in Clause 19.6(a)) and equal or
greater gross assets (in each case by reference to the most
recent annual or interim financial statements of the relevant
Subsidiary) or by another replacement Guarantor(s) acceptable
to the Majority Banks within 5 Business Days of such guarantee
becoming ineffective); or
(b) is alleged by any Obligor to be ineffective for any reason.
Where a Guarantor is replaced in accordance paragraph (a) above, it shall
cease to be a Guarantor for the purposes of this Agreement (including,
but not limited to, Clause 19.11) on the date the replacement Guarantor
becomes a Guarantor.
20.15 Ownership
Any Guarantor or Borrower (other than the Company) ceases to be (directly
or indirectly) a wholly owned Subsidiary of the Company other than
pursuant to a disposal in accordance with the terms of this Agreement.
20.16 Cessation of business
Any Obligor or Principal Subsidiary ceases, or threatens to cease, to
carry on all or a substantial part of its business other than by reason
of:
(a) the transfer of such business to an Obligor or from a Principal
Subsidiary which is not an Obligor to another Principal
Subsidiary which is not an Obligor;
<PAGE>
56
(b) a disposal permitted by this Agreement; or
(c) a reconstruction or amalgamation which is on a solvent basis
and does not involve any Obligor or which is otherwise on terms
and within such period as may previously have been approved in
writing by the Majority Banks.
20.17 Material adverse effect
Any change occurs in the financial condition of the Group taken as a
whole which, in the reasonable opinion of the Majority Banks is
reasonably likely to have a material adverse effect.
20.18 Acceleration
On and at any time after the occurrence of an Event of Default while
such event is continuing the Agent may, and shall if so directed by
the Majority Banks, by notice to the Company:
(a) cancel the Total Commitments; and/or
(b) declare that each Borrower's obligations under Clause 8.3
(Payment of Bills) in respect of all outstanding Bills are
immediately due and payable, whereupon they shall become
immediately due and payable; and/or
(c) demand that all the Advances, together with accrued interest,
and all other amounts accrued under this Agreement be
immediately due and payable, whereupon they shall become
immediately due and payable; and/or
(d) demand that all the Advances be payable on demand, whereupon
they shall immediately become payable on demand.
21. THE AGENT AND THE ARRANGERS
21.1 Appointment and duties of the Agent
Each Finance Party (other than the Agent) irrevocably appoints the
Agent to act as its agent under and in connection with the Finance
Documents, and irrevocably authorises the Agent on its behalf to
perform the duties and to exercise the rights, powers and discretions
that are specifically delegated to it under or in connection with the
Finance Documents, together with any other incidental rights, powers
and discretions. The Agent shall have only those duties which are
expressly specified in this Agreement. Those duties are solely of a
mechanical and administrative nature.
21.2 Role of the Arrangers
Except as otherwise provided in this Agreement, no Arranger has any
obligations of any kind to any other Party under or in connection with
any Finance Document.
21.3 Relationship
The relationship between the Agent and the other Finance Parties is that
of agent and principal only. Nothing in this Agreement constitutes the
Agent as trustee or fiduciary for
<PAGE>
57
any other Party or any other person and the Agent need not hold in trust
any moneys paid to it for a Party or be liable to account for interest on
those moneys.
21.4 Majority Banks' directions
The Agent will be fully protected if it acts in accordance with the
instructions of the Majority Banks in connection with the exercise of any
right, power or discretion or any matter not expressly provided for in
the Finance Documents. Any such instructions given by the Majority Banks
will be binding on all the Banks. In the absence of such instructions the
Agent may act as it considers to be in the best interests of all the
Banks.
21.5 Delegation
The Agent may act under the Finance Documents through its personnel and
agents.
21.6 Responsibility for documentation
Neither the Agent nor any Arranger is responsible to any other Party for:
(a) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(b) the collectability of amounts payable under any Finance
Document; or
(c) the accuracy of any statements (whether written or oral)
made in or in connection with any Finance Document.
21.7 Default
(a) The Agent is not obliged to monitor or enquire as to whether or not a
Default has occurred. The Agent will not be deemed to have knowledge of
the occurrence of a Default. However, if the Agent receives notice from a
Party referring to this Agreement, describing the Default and stating
that the event is a Default, it shall promptly notify the Banks.
(b) The Agent may require the receipt of security satisfactory to it whether
by way of payment in advance or otherwise, against any liability or loss
which it will or may incur in taking any proceedings or action arising
out of or in connection with any Finance Document before it commences
these proceedings or takes that action.
21.8 Exoneration
(a) Without limiting paragraph (b) below, the Agent will not be liable to any
other Party for any action taken or not taken by it under or in
connection with any Finance Document, unless directly caused by its gross
negligence or wilful misconduct.
(b) No Party may take any proceedings against any officer, employee or agent
of the Agent in respect of any claim it might have against the Agent or
in respect of any act or omission of any kind (including negligence or
wilful misconduct) by that officer, employee or agent in relation to any
Finance Document.
<PAGE>
58
21.9 Reliance
The Agent may:
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of,
the proper person;
(b) rely on any statement made by a director or employee of any
person regarding any matters which may reasonably be assumed to
be within his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional
advisers selected by it (including those in the Agent's
employment and those representing a Party other than the
Agent).
21.10 Credit approval and appraisal
Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance
Document, each Bank confirms that it:
(a) has made its own independent investigation and assessment of
the financial condition and affairs of each Obligor and its
related entities in connection with its participation in this
Agreement and has not relied exclusively on any information
provided to it by the Agent or the Arrangers in connection with
any Finance Document; and
(b) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while
any amount is or may be outstanding under the Finance Documents
or any Commitment is in force.
21.11 Information
(a) The Agent shall promptly forward to the person concerned the original or
a copy of any document which is delivered to the Facility Agent by a
Party for that person.
(b) The Agent shall promptly supply a Bank with a copy of each document
received by the Agent under Clause 4 (Conditions Precedent), 28.5
(Additional Borrowers) or 28.6 (Additional Guarantors) upon the request
and at the expense of that Bank.
(c) Except where this Agreement specifically provides otherwise, the Agent is
not obliged to review or check the accuracy or completeness of any
document it forwards to another Party.
(d) Except as provided above, the Agent has no duty:
(i) either initially or on a continuing basis to provide any
Bank with any credit or other information concerning the
financial condition or affairs of any Obligor or any related
entity of any Obligor whether coming into its possession or
that of any of its related entities before, on or after the
date of this Agreement; or
(ii) unless specifically requested to do so by a Bank in
accordance with this Agreement, to request any certificates
or other documents from any Obligor.
<PAGE>
59
21.12 The Agent and the Arrangers individually
(a) If it is also a Bank, each of the Agent and the Arrangers has the same
rights and powers under this Agreement as any other Bank and may exercise
those rights and powers as though it were not the Agent or the Arrangers.
(b) Each of the Agent and Arrangers may:
(i) carry on any business with any Obligor or its related entities;
(ii) act as agent or trustee for, or in relation to any financing
involving, any Obligor or its related entities; and
(iii) retain any profits or remuneration in connection with its
activities under this Agreement or in relation to any of the
foregoing.
21.13 Indemnities
(a) Without limiting the liability of any Borrower under the Finance
Documents, each Bank shall forthwith on demand indemnify the Agent for
its proportion of any liability or loss incurred by the Agent in any way
relating to or arising out of its acting as the Agent, except to the
extent that the liability or loss arises directly from the Agent's
negligence or wilful misconduct.
(b) A Bank's proportion of the liability or loss set out in paragraph (a)
above is the proportion which the Dollar Sterling Amount of its
Advance(s) and Bills (if any) bears to the Original Dollar Amount of all
Advances or Bills outstanding on the date of the demand. If, however, no
Advances or Bills are outstanding on the date of demand, then the
proportion will be the proportion which its Commitment bears to the Total
Commitments at the date of demand or, if the Total Commitments have been
cancelled, bore to the Total Commitments immediately before being
cancelled.
(c) The Company shall forthwith on demand reimburse each Bank for any payment
made by it under paragraph (a) above except to the extent it arises out
of the Bank's negligence or wilful misconduct.
21.14 Compliance
(a) The Agent may refrain from doing anything which might, in its opinion,
constitute a breach of any law or regulation or be otherwise actionable
at the suit of any person, and may do anything which, in its opinion, is
necessary or desirable to comply with any law or regulation of any
jurisdiction.
(b) Without limiting paragraph (a) above, the Agent need not disclose any
information relating to any Borrower or any of its related entities if
the disclosure might, in the opinion of the Agent, constitute a breach of
any law or regulation or any duty of secrecy or confidentiality or be
otherwise actionable at the suit of any person.
21.15 Resignation of Agent
(a) Notwithstanding its irrevocable appointment, the Agent may resign by
giving notice to the Banks and the Company, in which case the Agent may
forthwith appoint one of its Affiliates as successor Agent or, failing
that, the Majority Banks may, with the approval of the
<PAGE>
60
Company such approval not to be unreasonably withheld or delayed, appoint
a successor Agent.
(b) If the appointment of a successor Agent is to be made by the Majority
Banks but they have not, within 30 days after notice of resignation,
appointed a successor Agent which accepts the appointment and has been
approved by the Company such approval not to be unreasonably withheld or
delayed, the retiring Agent may, following consultation with the Company,
appoint a successor Agent.
(c) The resignation of the retiring Agent and the appointment of any
successor Agent will both become effective only upon the successor Agent
notifying all the Parties that it accepts the appointment and provided
the successor Agent has, if required under paragraph (a) above, been
approved by the Company. On giving the notification and receiving such
approval, the successor Agent will succeed to the position of the
retiring Agent and the term "Agent" will mean the successor Agent.
(d) The retiring Agent shall, at its own cost, make available to the
successor Agent such documents and records and provide such assistance as
the successor Agent may reasonably request for the purposes of performing
its functions as the Agent under this Agreement.
(e) Upon its resignation becoming effective, this Clause 21 shall continue to
benefit the retiring Agent in respect of any action taken or not taken by
it under or in connection with the Finance Documents while it was the
Agent, and, subject to paragraph (d) above, it shall have no further
obligation under any Finance Document.
21.16 Banks
The Agent may treat each Bank as a Bank, entitled to payments under this
Agreement and as acting through its Facility Office(s) until it has
received notice from the Bank to the contrary by not less than five
Business Days prior to the relevant payment.
21.17 Chinese Wall
In acting as Agent or Arranger, the agency and syndications division of
each of the Agent and Arranger shall be treated as a separate entity from
its other divisions and departments. Any information acquired by the
Agent or any Arranger otherwise than in the capacity of Agent or Arranger
through its agency and syndications division may be treated as
confidential by the Agent or Arranger and shall not be deemed to be
information possessed by the Agent or Arranger in their capacity as such.
22. FEES
22.1 Commitment fee
(a) The Company shall pay to the Agent for distribution to each Bank pro rata
to, as the case may be, the proportion its Tranche A Commitment bears to
the Tranche A Total Commitments or its Tranche B Commitment bears to the
Tranche B Total Commitments or its Tranche C Commitment bears to the
Tranche C Total Commitment from time to time a commitment fee at the rate
of:
(i) 0.125 per cent. per annum on any undrawn, uncancelled amount
of the Tranche A Total Commitments on each day until the
last day of the Tranche A Commitment Period;
<PAGE>
61
(ii) 0.30 per cent. per annum on any undrawn, uncancelled amount
of the Tranche B Total Commitments on each day; and
(iii) 0.125 per cent. per annum on any undrawn, uncancelled amount
of the Tranche C Total Commitments on each day until the
Tranche C Term Date.
(b) Commitment fee is calculated and accrues on a daily basis and is
payable quarterly in arrear with the first payment due three months
after the date of this Agreement. Accrued commitment fee is also
payable to the Agent for the relevant Bank(s) on the cancelled amount
of its Tranche A Commitment, Tranche B Commitment or Tranche C
Commitment at the time the cancellation takes effect.
22.2 Agent's fee
The Company shall pay to the Agent for its own account an agency fee in
the amounts and on the dates agreed in the relevant Fee Letter.
22.3 Arrangement fee
The Company shall pay to the Arrangers an arrangement fee in the amount
and on the dates specified in the relevant Fee Letter.
22.4 VAT
Any fee referred to in this Clause 22 or Clause 23 (Expenses) is
exclusive of any value added or similar tax. If any value added tax is
so chargeable, it shall be paid by the Company at the same time as it
pays the relevant fee subject (where applicable) to it having received
a valid tax invoice.
23. EXPENSES
23.1 Initial and special costs
The Company shall within 5 Business Days of demand pay the Agent and
the Arrangers the amount of all reasonable out-of-pocket costs and
expenses (including legal fees) reasonably incurred by either of them
in connection with:
(a) the negotiation, preparation, printing and execution of:
(i) this Agreement and any other documents referred to in
this Agreement;
(ii) any other Finance Document (other than a Novation
Certificate) executed after the date of this
Agreement;
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf
of a Borrower and relating to a Transaction Document or a
document referred to in any Transaction Document;
(c) the release of any Guarantor under Clause 17.10 (Release of
Guarantor); and
(d) any other matter, not of an ordinary administrative nature,
arising out of or in connection with a Finance Document.
<PAGE>
62
23.2 Enforcement costs
The Company shall forthwith on demand pay to each Finance Party the
amount of all costs and expenses (including legal fees) properly
incurred by it:
(a) in connection with the enforcement of, or the preservation of
any rights under, any Finance Document; or
(b) in investigating any possible Default of which an Obligor has
given notice or the Majority Banks have reasonable grounds for
believing has occurred.
24. STAMP DUTIES
The Company shall pay and forthwith on demand indemnify each Finance
Party against any liability it incurs in respect of any stamp,
registration and similar tax which is or becomes payable in connection
with the entry into, performance or enforcement of any Finance Document
other than a Novation Certificate.
25. INDEMNITIES
25.1 Currency indemnity
(a) If a Finance Party receives an amount in respect of a Borrower's
liability under the Finance Documents or if that liability is converted
into a claim, proof, judgment or order in a currency other than the
currency (the "contractual currency") in which the amount is expressed
to be payable under the relevant Finance Document:
(i) that Borrower shall indemnify that Finance Party as an
independent obligation against any loss or liability arising
out of or as a result of the conversion;
(ii) if the amount received by that Finance Party, when converted
into the contractual currency at a market rate in the usual
course of its business, is less than the amount owed in the
contractual currency, the Borrower concerned shall forthwith
on demand pay to that Finance Party an amount in the
contractual currency equal to the deficit; and
(iii) the Borrower shall pay to the Finance Party concerned on
demand any exchange costs and taxes payable in connection with
any such conversion.
(b) Each Borrower waives any right it may have in any jurisdiction to pay
any amount under the Finance Documents in a currency other than that in
which it is expressed to be payable.
25.2 Other indemnities
The Company shall forthwith on demand indemnify each Finance Party
against any loss or liability which that Finance Party incurs as a
consequence of:
(a) the occurrence of any Event of Default;
(b) the operation of Clause 20.18 (Acceleration) or Clause 31 (Pro
Rata Sharing);
<PAGE>
63
(c) any payment of principal or an overdue amount being received
from any source otherwise than, in the case of Tranche A
Advances or Term-out Advances, on the last day of applicable
Interest Periods and, in the case of Tranche B Advances or
Tranche C Advances, on its Maturity Date (and, for the
purposes of this paragraph (c), the Maturity Date of an
overdue amount is the last day of each Designated Term (as
defined in Clause 10.4 (Default interest))); or
(d) (other than by reason of negligence or default by a Finance
Party) a Utilisation not being effected after the Borrower has
delivered a Request for that Utilisation.
The Company's liability in each case includes any loss of margin or
other loss or expense on account of funds borrowed, contracted for or
utilised to fund any amount payable under any Finance Document, any
amount repaid or prepaid or any Advance or Bill. However, the Company
is only required to indemnify a Finance Party against loss of Margin
for the unexpired portion of the Interest Period or Term in which the
relevant amount is received, after taking into account the amount that
Finance Party certifies it was able to earn by redeploying the amount
received by it for the same period in the ordinary course of business.
26. EVIDENCE AND CALCULATIONS
26.1 Accounts
Accounts maintained by a Finance Party in connection with this
Agreement are prima facie evidence of the matters to which they relate.
26.2 Certificates and determinations
Any certification or determination by a Finance Party of a rate or
amount under this Agreement is, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
26.3 Calculations
Interest (including any applicable Mandatory Cost) and the fee payable
under Clause 22.1 (Commitment fee) accrue from day to day and are
calculated on the basis of the actual number of days elapsed and a year
of 360 days, or, in the case of interest payable on an amount
denominated in Sterling, 365 days (or, in any case where market
practice differs, in accordance with market practice). Acceptance
commission is calculated on the basis of the number of days in the
relevant Term and a year of 365 days.
27. AMENDMENTS AND WAIVERS
27.1 Procedure
(a) Subject to Clause 27.2 (Exceptions), any term of the Finance Documents
may be amended or waived with the agreement of the Company, the
Majority Banks and the Agent. The Agent may effect, on behalf of the
Majority Banks, an amendment to which they have agreed.
(b) The Agent shall promptly notify the other Parties of any amendment or
waiver effected under paragraph (a) above, and any such amendment or
waiver shall be binding on all the Parties.
<PAGE>
64
27.2 Exceptions
An amendment or waiver which relates to:
(a) the definition of "Majority Banks" in Clause 1.1;
(b) an extension of the date for, or a decrease in an amount or a
change in the currency of, any payment under the Finance
Documents;
(c) an increase in a Bank's Commitment;
(d) the incorporation of additional borrowers and/or drawers or a
change in the guarantee of the Guarantors otherwise than in
accordance with Clauses 17.10 (Release of Guarantor), 20.14
(Guarantee) and 28.5 (Additional Borrowers);
(e) a term of a Finance Document which expressly requires the
consent of each Bank; or
(f) Clause 31 (Pro Rata Sharing) or this Clause 27 (Amendments
and Waivers),
may not be effected without the consent of each Bank.
27.3 Waivers and remedies cumulative
The rights of each Party under the Finance Documents:
(i) may be exercised as often as necessary;
(ii) are cumulative and not exclusive of its rights under the
general law; and
(iii) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver
of that right.
28. CHANGES TO THE PARTIES
28.1 Transfers by Obligors
No Obligor may assign, transfer, novate or dispose of any of, or any
interest in, its rights and/or obligations under this Agreement.
28.2 Transfers by Banks
(a) A Bank (the "Existing Bank") may at any time assign, transfer or novate
any of its rights and/or obligations under this Agreement to another
person (the "New Bank") provided that:
(i) in the case of a partial assignment, transfer or novation of
rights and/or obligations, a minimum amount of U.S.$7,500,000
in aggregate (unless to an Affiliate or to a Bank or the Agent
and the Company agree otherwise) must be assigned, transferred
or novated; and
(ii) after the Syndication Period, the prior written consent of the
Company is required for any such assignment, transfer or
novation which is not to another Bank or to an Affiliate of
any Bank (provided that the Company may not unreasonably
withhold or
<PAGE>
65
delay its consent and will be deemed to have consented to
any such assignment, transfer or novation if it has not
been expressly refused in writing by the Company within
10 Business Days of a written request to the Company for
such consent); and
(iii) except in the case of an assignment, transfer or novation to
an Affiliate, a rateable proportion of each of Tranche A,
Tranche B and Tranche C must be assigned, transferred or
novated (unless the Agent agrees otherwise).
(b) A transfer of obligations will be effective only if either:
(i) the obligations are novated in accordance with Clause 28.3
(Procedure for novations); or
(ii) the New Bank gives notice to the Company and confirms to the
Agent and the Borrowers' Agent that it undertakes to be bound
by the terms of this Agreement as a Bank in form and substance
satisfactory to the Agent. On the transfer becoming effective
in this manner the Existing Bank shall be relieved of its
obligations under this Agreement to the extent that they are
transferred to the New Bank.
(c) After the Syndication Period, a Bank may only sub-contract an
obligation hereunder with the consent of the Company (such consent not
to be unreasonably withheld or delayed).
(d) On each occasion an Existing Bank assigns, transfers or novates any of
its rights and/or obligations under this Agreement, the New Bank shall,
on the date the assignment, transfer and/or novation takes effect, pay
to the Agent for its own account a fee of U.S.$1,000.
(e) An Existing Bank is not responsible to a New Bank for:
(i) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(ii) the collectability of amounts payable under any Finance
Document; or
(iii) the accuracy of any statements (whether written or oral) made
in connection with any Finance Document.
(f) Each New Bank confirms to the Existing Bank and the other Finance
Parties that it:
(i) has made its own independent investigation and assessment of
the financial condition and affairs of each Obligor and its
related entities in connection with its participation in this
Agreement and has not relied exclusively on any information
provided to it by the Existing Bank in connection with any
Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities
while any amount is or may be outstanding under this Agreement
or any Commitment is in force.
(g) Nothing in any Finance Document obliges an Existing Bank to:
(i) accept a re-transfer from a New Bank of any of the rights
and/or obligations assigned, transferred or novated under this
Clause; or
<PAGE>
66
(ii) support any losses incurred by the New Bank by reason of the
non-performance by any Obligor of its obligations under this
Agreement or otherwise.
(h) Any reference in this Agreement to a Bank includes a New Bank but
excludes a Bank if no amount is or may be owed to or by it under this
Agreement and its Commitment has been cancelled or reduced to nil.
28.3 Procedure for novations
(a) A novation is effected if:
(i) the Existing Bank and the New Bank deliver to the Agent a duly
completed certificate, substantially in the form of Part I of
Schedule 6 (a "Novation Certificate"); and
(ii) the Agent executes it.
(b) Each Party (other than the Existing Bank and the New Bank) irrevocably
authorises the Agent to execute any duly completed Novation Certificate
on its behalf.
(c) To the extent that they are expressed to be the subject of the novation
in the Novation Certificate:
(i) the Existing Bank and the other Parties (the "existing
Parties") will be released from their obligations to each
other (the "discharged obligations");
(ii) the New Bank and the existing Parties will assume obligations
towards each other which differ from the discharged
obligations only insofar as they are owed to or assumed by the
New Bank instead of the Existing Bank;
(iii) the rights of the Existing Bank against the existing Parties
and vice versa (the "discharged rights") will be cancelled;
and
(iv) the New Bank and the existing Parties will acquire rights
against each other which differ from the discharged rights
only insofar as they are exercisable by or against the New
Bank instead of the Existing Bank,
all on the date of execution of the Novation Certificate by the Agent
or, if later, the date specified in the Novation Certificate.
28.4 Additional Borrowers
(a) If the Company wishes one of its wholly owed Subsidiaries to become an
Additional Borrower, then it may (if all the Banks have approved the
identity of the Additional Borrower in writing) deliver to the Agent
the documents listed in Part III of Schedule 2, in each case in form
and substance satisfactory to the Agent.
(b) On delivery of a Borrower Accession Agreement, executed by the relevant
Subsidiary and the Company, the Subsidiary concerned will become an
Additional Borrower. However, it may not utilise either of the
Facilities until the Agent confirms to the other Finance Parties and
the Company that it has received all the documents referred to in
paragraph (a) above in form and substance satisfactory to it. The Agent
will promptly give that confirmation upon such receipt.
<PAGE>
67
(c) Delivery of a Borrower Accession Agreement, executed by the Subsidiary
and the Company, constitutes confirmation by that Subsidiary and the
Company that the representations and warranties set out in Clause 18
(Representations and Warranties) and to be made by them on the date of
the Borrower Accession Agreement are correct, as if made with reference
to the facts and circumstances then existing.
28.5 Additional Guarantors
(a) (i) Subject to paragraph (b) below, a Subsidiary of the
Company may become an Additional Guarantor by delivering to
the Agent a Guarantor Accession Agreement, duly executed by
that company.
(ii) Upon execution and delivery of a Guarantor Accession
Agreement, the relevant Subsidiary will become an Additional
Guarantor.
(iii) The Company shall procure that, at the same time as a
Guarantor Accession Agreement is delivered to the Agent, there
is also delivered to the Agent all those other documents
listed in Part IV of Schedule 2, in each case in form and
substance satisfactory to the Agent.
(b) The execution of a Guarantor Accession Agreement constitutes
confirmation by the Subsidiary concerned that the representations and
warranties set out in Clause 18 (Representations and Warranties) to be
made by it on the date of the Guarantor Accession Agreement are
correct, as if made with reference to the facts and circumstances then
existing.
28.6 Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of
which it is an Affiliate) ceases to be one of the Banks, the Agent
shall (in consultation with the Company) appoint another Bank or an
Affiliate of a Bank to replace that Reference Bank.
28.7 Register
The Agent shall keep a register of all the Parties and shall supply any
other Party (at that Party's expense) with a copy of the register on
request.
29. DISCLOSURE OF INFORMATION
A Bank may disclose to one of its Affiliates or any person with whom it
is proposing to enter, or has entered into, any kind of transfer,
participation or other agreement in relation to this Agreement:
(a) a copy of any Finance Document; and
(b) any information which that Bank has acquired under or in
connection with any Finance Document,
Provided that a Bank shall not disclose any such information to a
person other than one of its Affiliates unless that person has provided
that Bank with a confidentiality undertaking.
<PAGE>
68
30. SET-OFF
A Finance Party may set off any matured obligation owed by an Obligor
under this Agreement (to the extent beneficially owned by that Finance
Party) against any obligation (whether or not matured) owed by that
Finance Party to that Obligor, regardless of the place of payment,
booking branch or currency of either obligation. If the obligations are
in different currencies, the Finance Party may convert either
obligation at a market rate of exchange in its usual course of business
for the purpose of the set-off. If either obligation is unliquidated or
unascertained, the Finance Party may set off in an amount estimated by
it in good faith to be the amount of that obligation.
31. PRO RATA SHARING
31.1 Redistribution
If any amount owing by an Obligor under this Agreement to a Finance
Party (the "recovering Finance Party") is discharged by payment,
set-off or any other manner other than through the Agent in accordance
with Clause 12 (Payments) (a "recovery"), then:
(a) the recovering Finance Party shall, within three Business
Days, notify details of the recovery to the Agent;
(b) the Agent shall determine whether the recovery is in excess of
the amount which the recovering Finance Party would have
received had the recovery been received by the Agent and
distributed in accordance with Clause 12 (Payments);
(c) subject to Clause 31.3 (Exception), the recovering Finance
Party shall, within three Business Days of demand by the
Agent, pay to the Agent an amount (the "redistribution") equal
to the excess;
(d) the Agent shall treat the redistribution as if it were a
payment by the Borrower concerned under Clause 12 (Payments)
and shall pay the redistribution to the Finance Parties (other
than the recovering Finance Party) in accordance with Clause
12.7 (Partial payments); and
(e) after payment of the full redistribution, the recovering
Finance Party will be subrogated to the portion of the claims
paid under paragraph (d) above, and that Obligor will owe the
recovering Finance Party a debt which is equal to the
redistribution, immediately payable and of the type originally
discharged.
31.2 Reversal of redistribution
If under Clause 31.1 (Redistribution):
(a) a recovering Finance Party must subsequently return a
recovery, or an amount measured by reference to a
recovery, to an Obligor; and
(b) the recovering Finance Party has paid a redistribution
in relation to that recovery,
each Finance Party shall, within three Business Days of demand by the
recovering Finance Party through the Agent, reimburse the recovering
Finance Party all or the appropriate portion of the redistribution paid
to that Finance Party. Thereupon the subrogation in Clause 31.1(e) will
operate in reverse to the extent of the reimbursement.
<PAGE>
69
31.3 Exception
A recovering Finance Party need not pay a redistribution to the extent
that it would not, after the payment, have a valid claim against the
Obligor concerned in the amount of the redistribution pursuant to
Clause 31.1(e) (Redistribution).
32. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid
or unenforceable in any jurisdiction, that shall not affect:
(a) the legality, validity or enforceability in that jurisdiction
of any other provision of the Finance Documents; or
(b) the legality, validity or enforceability in other
jurisdictions of that or any other provision of the Finance
Documents.
33. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this
has the same effect as if the signatures on the counterparts were on a
single copy of this Agreement.
34. NOTICES
34.1 Giving of notices
All notices or other communications under or in connection with this
Agreement shall be given in writing or by facsimile. Any such notice
will be deemed to be given as follows:
(a) if in writing, when delivered; and
(b) if by facsimile, when received.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will
only be deemed to be given on the next working day in that place.
Facsimile Requests are to be confirmed by the relevant Borrower in
writing (but may be relied upon by the Agent and the Banks irrespective
of receipt of such confirmation).
34.2 Addresses for notices
(a) The address and facsimile number of each Party (other than the Agent)
for all notices under or in connection with this Agreement are:
(i) that notified by that Party for this purpose to the Agent on
or before it becomes a Party; or
(ii) any other notified by that Party for this purpose to the Agent
by not less than five Business Days' notice.
(b) The address and facsimile numbers of the Agent are HSBC Loan
Syndication, Execution and Agency, Vintners Place, 68 Upper Thames
Street, London EC4V 3BJ, Facsimile No. 0171
<PAGE>
70
336 9372/9293 or such other as the Agent may notify to the other
Parties by not less than five Business Days' notice.
(c) The Agent shall, promptly upon request from any Party, give to that
Party the address or facsimile number of any other Party applicable at
the time for the purposes of this Clause.
35. LANGUAGE
(a) Any notice given under or in connection with any Finance Document
shall be in English.
(b) All other documents provided under or in connection with any Finance
Document shall be:
(i) in English; or
(ii) if not in English, accompanied by a certified English
translation and, in this case, the English translation shall
prevail unless the document is a statutory or other official
document.
36. JURISDICTION
36.1 Submission
(a) For the benefit of each Finance Party, each Obligor agrees that the
courts of England have jurisdiction to settle any disputes in
connection with any Finance Document and accordingly submits to the
jurisdiction of the English courts.
(b) Without prejudice to paragraph (a) above, each Obligor agrees that any
New York State court or Federal court sitting in New York City has
jurisdiction to settle any disputes in connection with any Finance
Document and accordingly submits to the jurisdiction of those courts.
36.2 Service of process
Without prejudice to any other mode of service, each Obligor:
(a) irrevocably appoints:
(i) (other than an Obligor incorporated in England and
Wales) the Company as its agent for service of
process relating to any proceedings before the
English courts in connection with any Finance
Document (and the Company irrevocably accepts this
appointment); and
(ii) Meggitt USA, Inc. as its agent for service of process
in relation to any proceedings before any courts in
the State of New York in connection with any Finance
Document (and Meggitt USA, Inc. irrevocably accepts
this appointment);
(b) agrees that failure by a process agent to notify the Obligor
of the process will not invalidate the proceedings concerned;
(c) consents to the service of process relating to any such
proceedings by prepaid posting of a copy of the process to its
address for the time being applying under Clause 34.2
(Addresses for notices); and
<PAGE>
71
(d) agrees that if the appointment of any person mentioned in
paragraph (a) above ceases to be effective, the relevant
Obligor shall immediately appoint a further person in England
or New York, as appropriate, to accept service of process on
its behalf in England or New York, as appropriate, and,
failing such appointment within 15 days, the Agent is entitled
to appoint such a person by notice to the Company.
36.3 Forum convenience and enforcement abroad
Each Obligor:
(a) waives objection to the English and New York courts on grounds
of inconvenient forum or otherwise as regards proceedings in
connection with a Finance Document; and
(b) agrees that a judgment or order of an English and New York
court in connection with a Finance Document is conclusive and
binding on it and may be enforced against it in the courts of
any other jurisdiction.
36.4 Non-exclusivity
Nothing in this Clause 36 limits the right of a Finance Party to bring
proceedings against an Obligor in connection with any Finance Document:
(a) in any other court of competent jurisdiction; or
(b) concurrently in more than one jurisdiction.
36.5 WAIVER OF RIGHT TO TRIAL BY JURY
EACH OF THE PARTIES IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY (WHETHER IN NEW YORK OR
ELSEWHERE) OF ANY CLAIM, DEMAND OR CAUSE OF ACTION RELATING IN ANY WAY
TO THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE,
AND AGREES THAT ANY PARTY MAY FILE A COPY OF THIS SECTION WITH ANY
COURT AS EVIDENCE OF THE WAIVER OF ITS JURY TRIAL RIGHTS.
37. GOVERNING LAW
This Agreement is governed by English law.
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.
<PAGE>
72
SCHEDULE 1
PART I
ORIGINAL GUARANTORS
Meggitt USA, Inc., incorporated in Delaware, U.S.A. and registered on 8th
December, 1980 with Federal Employer Identification Number 95-3639799.
<PAGE>
73
PART II
BANKS AND COMMITMENTS
<TABLE>
<CAPTION>
Column 1 Column 2 Column 3
Bank Tranche A Tranche B Tranche C
Commitments Commitments Commitments
U.S.$ U.S.$ U.S.$
<S> <C> <C> <C>
Barclays Bank PLC 125,000,000 90,000,000 50,000,000
HSBC Investment Bank plc 125,000,000 90,000,000 50,000,000
----------- ----------- -----------
Total 250,000,000 180,000,000 100,000,000
=========== =========== ===========
</TABLE>
<PAGE>
74
SCHEDULE 2
CONDITIONS PRECEDENT
PART I
TO BE DELIVERED BEFORE THE FIRST DRAWING
1. A copy of the memorandum and articles of association and certificate of
incorporation (or equivalent) of the Company, each Original Guarantor
and Bidco.
2. (a) A copy of a resolution of the board of directors (or
equivalent) of the Company, each Original Guarantor and Bidco:
(i) approving the terms of, and the transactions
contemplated by the Transaction Documents to which it
is party and resolving that it execute such
Transaction Documents;
(ii) authorising a specified person or persons to execute
such Transaction Document on its behalf; and
(iii) (in the case of the Company) authorising a specified
person or persons, on its behalf, to sign and endorse
Bills and to sign and/or despatch all other documents
and notices (including Requests) to be signed and/or
despatched by it under or in connection with this
Agreement;
(b) a specimen of the signature of each person (an
"Authorised Signatory") authorised by the
resolutions referred to in paragraph (a) above; and
(c) a certificate from a director of the Company certifying that
the borrowing of the Total Commitments by the Borrowers in
full will not cause any borrowing limit binding on any Obligor
to be exceeded; and
(d) a certificate of an Authorised Signatory of the Company
certifying that each copy document specified in Part I of this
Schedule 2 is correct, complete and in full force and effect
as at a date no earlier than the date of this Agreement.
3. (a) A copy of the circular sent to shareholders in the Company
in relation to the Offer, the Merger and the CULS;
(b) a certified copy of a shareholders' resolution of the Company
approving the Offer, the Merger and the CULS.
4. Evidence that the Company has received underwriting commitments on
terms acceptable to the Arrangers which will generate net proceeds of
not less than 'L' 70,000,000 in respect of the CULS.
5. Certified copies of:
(a) the Press Release;
(b) the Offer Documents; and
<PAGE>
75
(c) the Merger Agreement.
6. A certificate from a director of the Company certifying that the
Unconditional Date has occurred.
7. The Original Group Accounts.
8. Evidence of cancellation of all commitments under the Company's
'L' 115,000,000 (in aggregate) bilateral facilities with each of
Midland Bank plc, Den Danske Bank Aktieselskab, Barclays Bank PLC, N.M.
Rothschild and Sons Limited, The Chase Manhattan Bank and Banque
Paribas, together with an irrevocable direction from the Company to the
Agent to repay all outstanding amounts under those facilities out of
the proceeds of the first Utilisation.
9. A legal opinion addressed to the Finance Parties from Allen & Overy in
relation to English, New York and Delaware law.
<PAGE>
76
SCHEDULE 2
CONDITIONS PRECEDENT
PART II
TO BE DELIVERED BEFORE MERGER
COMPLETION ADVANCES
The conditions referred to in Clause 4.2(b) are that the Agent has received a
certificate from a director of the Company:
(a) certifying that completion of the Merger has occurred in
accordance with the Merger Agreement; and
(b) specifying which (if any) of the conditions to the Merger
specified in the Merger Agreement has been amended, varied or
waived.
<PAGE>
77
SCHEDULE 2
CONDITIONS PRECEDENT
PART III
TO BE DELIVERED BY AN ADDITIONAL BORROWER
1. A Borrower Accession Agreement, duly executed by the Additional
Borrower and the Company;
2. A copy of the memorandum and articles of association and certificate of
incorporation (or equivalent) of the Additional Borrower;
3. A copy of a resolution of the board of directors (or equivalent) of the
Additional Borrower:
(i) approving the terms of, and the transactions contemplated by,
the Borrower Accession Agreement and resolving that it execute
the Borrower Accession Agreement;
(ii) authorising a specified person or persons to execute the
Borrower Accession Agreement on its behalf; and
(iii) authorising a specified person or persons, on its behalf, to
sign and endorse Bills and to sign and/or despatch all other
documents and notices (including Requests) to be signed and/or
despatched by it under or in connection with this Agreement;
4. A certificate from a director of the Additional Borrower that the
borrowing by it of the Total Commitments in full would not cause any
borrowing limit binding on it to be breached.
5. A copy of any other authorisation or other document, opinion or
assurance which the Agent reasonably considers to be necessary in
connection with the entry into and performance of, and the transactions
contemplated by, the Borrower Accession Agreement or for the validity
and enforceability of any Finance Document;
6. A specimen of the signature of each person authorised by the resolution
referred to in paragraph 3 above;
7. The latest audited accounts of the Additional Borrower (if any);
8. A legal opinion of Allen & Overy, legal advisers to the Agent and, if
applicable, other lawyers approved by the Agent in the place of
incorporation of the Additional Borrower, addressed to the Finance
Parties; and
9. A certificate of an Authorised Signatory of the Additional Borrower
certifying that each copy document specified in Part III of this
Schedule 2 is correct, complete and in full force and effect as at a
date no earlier than the date of the Borrower Accession Agreement.
<PAGE>
78
PART IV
TO BE DELIVERED BY AN ADDITIONAL GUARANTOR
1. A Guarantor Accession Agreement, duly executed under seal by the
Additional Guarantor.
2. A copy of the memorandum and articles of association and certificate of
incorporation (or other equivalent constitutional documents) of the
Additional Guarantor.
3. A copy of a resolution of the board of directors (or equivalent) of the
Additional Guarantor:
(i) approving the terms of, and the transactions contemplated by,
the Guarantor Accession Agreement and resolving that it
execute the Guarantor Accession Agreement as a deed;
(ii) authorising a specified person or persons to execute the
Guarantor Accession Agreement as a deed; and
(iii) authorising a specified person or persons, on its behalf, to
sign and/or despatch all documents to be signed and/or
despatched by it under or in connection with this Agreement.
4. If the lawyers referred to in paragraph 10 below advise it to be
necessary or desirable, a copy of a resolution, signed by all the
holders of the issued or allotted shares in the Additional Guarantor,
approving the terms of, and the transactions contemplated by, the
Guarantor Accession Agreement.
5. A copy of a resolution of the Board of Directors (or equivalent) of
each corporate shareholder in the Additional Guarantor:
(i) approving the terms of the resolution referred to in paragraph
4 above (if any); and
(ii) authorising a specified person or persons to sign the
resolution on its behalf.
6. A certificate of a director of the Additional Guarantor certifying that
the borrowing of the Total Commitments in full by the Borrowers would
not cause any borrowing limit binding on it to be exceeded.
7. A copy of any other authorisation or other document, opinion or
assurance which the Agent considers to be necessary or desirable in
connection with the entry into and performance of, and the transactions
contemplated by, the Guarantor Accession Agreement or for the validity
and enforceability of any Finance Document.
8. A specimen of the signature of each person authorised by the
resolutions referred to in paragraphs 3 and 5 above.
9. A copy of the latest audited accounts of the Additional Guarantor
(if any).
10. A legal opinion of Allen & Overy, legal advisers to the Agent, and, if
applicable, other lawyers approved by the Agent in the place of
incorporation of the Additional Guarantor addressed to the Finance
Parties.
<PAGE>
79
11. A certificate of an Authorised Signatory of the Additional Guarantor
certifying that each copy document specified in Part IV of this
Schedule 2 is correct, complete and in full force and effect as at a
date no earlier than the date of the Guarantor Accession Agreement.
<PAGE>
80
SCHEDULE 3
CALCULATION OF THE MANDATORY COST
(a) The Mandatory Cost for an Advance is the rate determined by the Agent
to be equal to the arithmetic mean (rounded upward, if necessary, to
four decimal places) of the respective rates notified by each of the
Reference Banks to the Agent and calculated in accordance with the
following formulae:
in relation to an Advance denominated in Sterling:
BY + S(Y-Z) + F x 0.01% per annum = Mandatory Cost
----------------------
100-(B + S)
in relation to any other Advance:
F x 0.01% per annum = Mandatory Cost
--------
300
where on the day of application of the formula:
B is the percentage of the Reference Bank's eligible liabilities
(in excess of any stated minimum) which the Bank of England
requires the Reference Bank to hold on a non-interest-bearing
deposit account in accordance with its cash ratio
requirements;
Y is the rate at which Sterling deposits are offered by the
Reference Bank to leading banks in the London interbank market
at or about 11.00 a.m. on that day for the relevant period;
S is the percentage of the Reference Bank's eligible liabilities
which the Bank of England requires the Reference Bank to place
as a special deposit;
Z is the interest rate per annum allowed by the Bank of England
on special deposits; and
F is the charge payable by the Reference Bank to the Financial
Services Authority under paragraph 2.02 or 2.03 (as
appropriate) of the Fees Regulations but where for this
purpose, the figure in paragraph 2.02b and 2.03b will be
deemed to be zero expressed in pounds per 'L' 1 million of
the fee base of the Reference Bank.
(b) For the purposes of this Schedule 3:
(i) "eligible liabilities" and "special deposits" have the
meanings given to them at the time of application of the
formula by the Bank of England; and
(ii) "fee base" has the meaning given to it in the Fees
Regulations;
(iii) "Fees Regulations" means:
(1) prior to 31st March, 1999, the Banking Supervision
(Fees) Regulations 1998; and
<PAGE>
81
(2) on and after 31st March, 1999, any regulations
governing the payment of fees for banking
supervision.
(iv) "relevant period" in relation to each Term or Interest Period,
means:
(A) if it is three months or less, that Term or Interest
Period; or
(B) if it is more than three months, three months.
(c) In the application of the formula, B, Y, S and Z are included in the
formula as figures and not as percentages, e.g. if B = 0.5% and Y =
15%, BY is calculated as 0.5 x 15.
(d) If a Reference Bank does not supply a rate to the Agent, the applicable
Mandatory Cost will be determined on the basis of the rate(s) supplied
by the remaining Reference Banks.
(e) (i) The formula is applied on the first day of each relevant
period comprised in the relevant Term or Interest Period.
(ii) Each rate calculated in accordance with the formula is, if
necessary, rounded upward to four decimal places.
(f) If the Agent determines that a change in circumstances has rendered, or
will render, the formula inappropriate, the Agent (after consultation
with the Banks) shall notify the Company of the manner in which the
Mandatory Cost will subsequently be calculated. The manner of
calculation so notified by the Agent shall, in the absence of manifest
error, be binding on all the Parties.
<PAGE>
82
SCHEDULE 4
FORM OF REQUEST
To: [AGENT]
From: [BORROWER]
Date: [ ]
Meggitt PLC - U.S.$530,000,000 Term and Revolving Credit Agreement
dated
[ ], 1999
1. We wish to utilise Tranche A* and/or*/Tranche B* and/or */Tranche C by
way of Advances* and/or*/Bills* as follows:
(a) Utilisation Date: Tranche A: [ ]*
Tranche B: [ ]*
Tranche C: [ ]*
(b) Requested Amount: Tranche A: [ ]*
(including currency): Tranche B: [ ]*
Tranche C: [ ]*
(c) Interest Period*: Tranche A: [ ]* /Term-out
Advance [ ]*
Term*/alternative Term:** Tranche B: [ ]*
Tranche C: [ ]*
(d) Clausing (for Bills):
(e) Payment Instructions: Tranche A: [ ]*
Tranche B: [ ]*
Tranche C: [ ]*
(f) Initial Interest Period
(for Term-out Advances only)*
(g) Maturity Date
(for Term-out Advances only)* Tranche C [ ]*
We confirm that each condition specified in Clause 4.3 (Further
conditions precedent) is satisfied on the date of this Request and this
Utilisation would not cause any borrowing limit binding on us or any
other Obligor to be exceeded.
By:
[BORROWER]
Authorised Signatory
- --------------------
* Delete as appropriate.
** Complete only if the Request is for Tranche B Advances and the requested
Term is of an optional duration.
<PAGE>
83
SCHEDULE 5
FORM OF BILL
Face of Bill
No. for 'L'..............
....................19....
To
On.................19... pay against this Bill of Exchange to our order the
sum of ............................... for value received against [ ].
Accepted by:
For and on behalf of For and on behalf of
[ACCEPTING BANK] [BORROWER]
..................... ....................
Authorised Signatory Authorised Signatory
Reverse of Bill
For and on behalf of
[BORROWER]
.................... .....................
Authorised Signatory Authorised Signatory
<PAGE>
84
SCHEDULE 6
FORMS OF ACCESSION DOCUMENTS
PART I
NOVATION CERTIFICATE
To: [AGENT]
From: [THE EXISTING BANK] and [THE NEW BANK] Date: [ ]
Meggitt plcU.S.$530,000,000 Term and Revolving Credit Agreement dated
[ ], 1999
We refer to Clause 28.4 (Procedure for novations).
1. We [ ] (the "Existing Bank") and [ ] (the "New Bank") agree to the
Existing Bank and the New Bank novating all the Existing Bank's rights
and obligations referred to in the Schedule in accordance with Clause
28.4 (Procedure for novations).
2. The specified date for the purposes of Clause 28.4(c) is [date of
novation].
3. The Facility Office and address for notices of the New Bank for the
purposes of Clause 34.2 (Addresses for notices) are set out in the
Schedule.
4. This Novation Certificate is governed by English law.
<PAGE>
85
THE SCHEDULE
Rights and obligations to be novated
[Details of the rights and obligations of the Existing Bank to be novated].
<TABLE>
<S> <C> <C>
[New Bank]
[Facility Office Address for notices]
[Existing Bank] [New Bank] [AGENT]
By: By: By:
Date: Date: Date:
</TABLE>
<PAGE>
86
SCHEDULE 6
PART II
BORROWER ACCESSION AGREEMENT
To: [AGENT]
From: [PROPOSED BORROWER] and Meggitt plc
[Date]
Meggitt plc - U.S.$530,000,000 Term and Revolving Credit Agreement
dated [ ], 1999 (the "Credit Agreement")
We refer to Clause 28.4 (Additional Borrowers).
[Name of company] of [Registered Office] (Registered no. [ ]) (the "Proposed
Borrower") agrees to become an Additional Borrower and to be bound by the terms
of the Credit Agreement as an Additional Borrower in accordance with Clause 28.4
(Additional Borrowers).
The address for notices of the Proposed Borrower for the purposes of Clause 34.2
(Addresses for notices) is:
[
]
This Agreement is governed by English law.
By:
[PROPOSED BORROWER]
Authorised Signatory
By:
Meggitt plc
Authorised Signatory
<PAGE>
87
PART III
GUARANTOR ACCESSION AGREEMENT
To: [AGENT] as Agent
From: [PROPOSED GUARANTOR]
Date: [ ]
Meggitt plc - U.S.$530,000,000 Term and Revolving Credit Agreement dated
[ ], 1999 (the "Credit Agreement")
We refer to Clause 26.5 (Additional Guarantors).
We, [name of company] of [Registered Office] (Registered no. [ ]) agree
to become an Additional Guarantor and to be bound by the terms of the Credit
Agreement as an Additional Guarantor in accordance with Clause 28.5 (Additional
Guarantors).
Our address for notices for the purposes of Clause 34.2 (Addresses for notices)
is:
[
]
This Deed is governed by English law.
Executed as a deed by ) Director
[PROPOSED GUARANTOR] )
acting by ) Director/Secretary
and )
<PAGE>
88
SCHEDULE 7
TIMETABLES
In this Schedule 7:
<TABLE>
<S> <C>
D-[x] = x Business Days before the relevant Utilisation Date
A = Agent
B = Bank
</TABLE>
CLAUSE 5 - TRANCHE A ADVANCES OR TERM-OUT ADVANCES
<TABLE>
<CAPTION>
Clause Event Time
<S> <C> <C>
5.1 A receives Request (or D 8.30 a.m. (in respect
selection notice for of Sterling)
Interest Period) D-3 3.00 p.m. (in
respect of other
Currencies)
D-1 9.00 a.m. (in
respect of the first
Interest Period of an
Offer Closing Advance)
5.6 A notifies B's of As soon as practicable
details of Request (or
selection notice for
Interest Period) and, in
the case of a Request,
the amount of each B's
Advance
</TABLE>
CLAUSE 5 - TRANCHE B ADVANCES OR TRANCHE C ADVANCES
<TABLE>
<CAPTION>
Clause Event Times
<S> <C> <C>
5.1 A receives Request D 8.30 a.m. (in respect
of Sterling)
D-3 3.00 p.m. (in
respect of other
Currencies)
D-1 9.00 a.m. (in
respect of an Offer
Closing Advance)
5.5 A notifies B's of details As soon as practicable
of Request and
</TABLE>
<PAGE>
89
<TABLE>
<S> <C>
the amount
of each B's Advance
</TABLE>
<PAGE>
90
CLAUSE 6 - BILLS
<TABLE>
<CAPTION>
Clause Event Time
<S> <C> <C>
6.1 A Receives Request D-1 12 noon
6.4 A notifies B's of details of D-1 3 p.m.
Request and Bills to be
accepted by each B
7.1(a) Borrower delivers Bills to A D-1 4 p.m.
(unless 7.1(c) applies)
6.5(a) B notifies A it does not wish D-1 5 p.m.
to accept Bills
6.6(a) A delivers Bills to B's D-11.00 a.m.
6.6(c) A notifies B's of EBDR As soon as practicable.
</TABLE>
<PAGE>
91
SIGNATORIES
Company
MEGGITT plc
By: TERRY TWIGGER
Original Guarantors
MEGGITT USA, INC.
By: TERRY TWIGGER
Arrangers
BARCLAYS CAPITAL
By: SEAN BOYLAN
HSBC INVESTMENT BANK plc
By: JOHN HAIRE
Agent
HSBC INVESTMENT BANK plc
By: JOHN HAIRE
Banks
BARCLAYS BANK PLC
By: SEAN BOYLAN
HSBC INVESTMENT BANK plc
By: JOHN HAIRE
<PAGE>
CONFORMED COPY
Dated 9 June 1999
(1) MEGGITT FUNDING LIMITED
- and -
(2) MEGGITT PLC
- and -
(3) N M ROTHSCHILD & SONS LIMITED
--------------------------------------------------------
UNDERWRITING AGREEMENT
--------------------------------------------------------
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
Tel: 0171-638 1111
Fax: 0171-972 7990
ASC/SYW/1159404
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
CLAUSE PAGE
<S> <C>
1. DEFINITIONS AND INTERPRETATION..........................................3
2. CONDITIONS..............................................................8
3. APPLICATION TO THE STOCK EXCHANGE.......................................9
4. OBLIGATIONS OF THE COMPANY AND MEGGITT..................................9
5. OVERSEAS SHAREHOLDERS..................................................10
6. ALLOTMENT AND REGISTRATION.............................................11
7. SALE OF CERTAIN RIGHTS TO SUBSCRIBE....................................12
8. STOCK UNITS NOT TAKEN UP...............................................13
9. UNDERWRITING...........................................................14
10. FEES, COMMISSIONS AND EXPENSES.........................................15
11. WARRANTIES.............................................................17
12. INDEMNITY..............................................................18
13. ANNOUNCEMENTS..........................................................19
14. GENERAL................................................................20
15. NOTICES................................................................21
16. COUNTERPARTS...........................................................22
17. GOVERNING LAW..........................................................22
SCHEDULE 1....................................................................23
Delivery of Documents.........................................................23
SCHEDULE 2....................................................................25
Warranties....................................................................25
SCHEDULE 3....................................................................31
Certificate...................................................................31
<PAGE>
THIS AGREEMENT is made the 9th June 1999
BETWEEN:-
(1) MEGGITT FUNDING LIMITED (No. 35311) whose registered office is at
Jardine House, Clifton, St Peter Port, Guernsey GY1 2PH (the "COMPANY");
(2) MEGGITT PLC (No. 432989) whose registered office is at Farrs House,
Cowgrove, Wimborne, Dorset BH21 4EL ("MEGGITT"); and
(3) N M ROTHSCHILD & SONS LIMITED (No. 925279) whose registered office is at
New Court, St Swithin's Lane, London EC4P 4DU.
RECITALS:-
(A) Meggitt has conditionally agreed pursuant to the Merger Agreement to
effect the Acquisition.
(B) Meggitt is proposing to finance the Acquisition:
(i) by means of the bank facilities to be made available to Meggitt
pursuant to the Facility Agreement; and
(ii) by means of the Issue.
(C) The Company is proposing to offer to Qualifying Holders (other than
Excluded Holders) Stock Units for subscription by way of rights at the
Issue Price on the basis of 2 Stock Units for every 9 Ordinary Shares
held at the close of business on the Record Date.
(D) Subject to the passing of the Resolution, the Directors will have
authority and be empowered under sections 80 and 95 of the Act to allot
the New Ordinary Shares immediately following conversion of the Stock
Units into Meggitt Funding Ordinary Shares and full acceptance of the
Offer and to do so otherwise than in compliance with section 89 of the
Act.
(E) This agreement sets out the terms and conditions upon and subject to
which the Underwriter is willing to underwrite the Issue.
THE PARTIES AGREE AS FOLLOWS:-
1. DEFINITIONS AND INTERPRETATION
1.1 In this agreement (including the recitals and the schedules), the
following words and expressions shall, unless the context otherwise
requires, have the following meanings:-
"ACCEPTANCE DATE" means the date which is specified in the Provisional
Allotment Letter as being the final day for acceptance and payment in
full under the Issue;
-3-
<PAGE>
"ACCOUNTS" means the published annual report and audited accounts of the
Group as at and for the financial year ended on the Accounts Date;
"ACCOUNTS DATE" means 31 December 1998;
"ACQUISITION" means the proposed acquisition of Whittaker by Meggitt by
way of the Tender Offer and Merger as described in the Circular;
"ACT" means the Companies Act 1985;
"ADMISSION" means the admission of the Stock Units, nil paid to the
Official List becoming effective within the meaning of paragraph 7.1 of
the Listing Rules;
"AUDITORS" means Deloitte & Touche of Queen Anne House, 69 - 71 Queen
Square, Bristol BS1 4JP;
"AUSTRALIAN HOLDERS" means Qualifying Holders with registered addresses
in the Commonwealth of Australia, its states, territories or
possessions;
"BROKERS" means Merrill Lynch International;
"CANADA" means Canada, its provinces, territories or possessions;
"CIRCULAR" means the circular to shareholders of the Company in the
agreed form containing inter alia details of the Issue and constituting
a Prospectus;
"DEALING DAY" means a day upon which dealings in domestic securities may
take place on and with the authority of the Stock Exchange;
"DEED POLL" means the deed poll constituting the Stock Units, the terms
of which are summarised in the Circular, to be executed by the Company
and Meggitt;
"DIRECTORS" means the existing directors of Meggitt listed in the
Circular;
"EGM CONDITION" means the condition of the approval of the shareholders
of Meggitt in relation to the Merger, the Tender Offer and associated
documentation, such condition being a condition of the Tender Offer
being consummated;
"EGM DATE" means 5 July 1999;
"ENLARGED GROUP" means the Group as enlarged by the acquisition of the
Whittaker Group;
"EXCLUDED HOLDERS" means Qualifying Holders with registered addresses in
the United States of America, Canada, Australia and the Republic of
Ireland;
"EXTRAORDINARY GENERAL MEETING" means the extraordinary general meeting
of Meggitt to be convened for the EGM Date pursuant to the notice of
meeting set out in the Circular;
-4-
<PAGE>
"FACILITY AGREEMENT" means the credit agreement dated 9 June 1999,
between Meggitt, Barclays Capital and HSBC Investment Bank plc as
arrangers (as defined therein), HSBC Investment Bank plc as agent (as
defined therein) and the banks and other financial institutions named in
it as banks as described more fully in the Circular;
"FORM OF PROXY" means the form of proxy, for use by Meggitt
shareholders, or form of direction, for use by members of the Profit
Sharing Share Scheme, in the agreed form for use in connection with the
Extraordinary General Meeting;
"FSA" means the Financial Services Act 1986;
"GROUP" means Meggitt and its subsidiaries and subsidiary undertakings
and the expression "GROUP COMPANY" means any one of them;
"INDEMNIFIED PERSONS" means the Underwriter, each other member of the
Underwriter Group and all of their respective directors, officers and
employees, each of whom shall be an "INDEMNIFIED PERSON" for the
purposes of this agreement;
"ISSUE" means the proposed offer by way of rights of the Stock Units to
Qualifying Shareholders as described in the Circular;
"ISSUE DOCUMENTS" means the Circular, the Form of Proxy and the
Provisional Allotment Letter;
"ISSUE PRICE" means 160p per Stock Unit;
"LISTING RULES" means the rules and regulations made by the Stock
Exchange pursuant to Part IV of the FSA and contained in the Stock
Exchange's publication of the same name;
"MERGER" means the merger of Meggitt Acquisition Inc. with Whittaker in
accordance with the laws of the state of Delaware, to be effected
pursuant to the Merger Agreement;
"MERGER AGREEMENT" means the agreement and plan of Merger dated as of 9
June 1999, entered into by Meggitt, Meggitt Acquisition Inc. and
Whittaker providing for the Merger of Meggitt Acquisition Inc. with
Whittaker, as amended, modified, supplemented, or replaced from time to
time by agreement between the parties to it and as described more fully
in the Circular;
"MEGGITT ACQUISITION INC." means an indirect, wholly-owned subsidiary of
Meggitt, incorporated in the state of Delaware, which will be merged
with Whittaker upon the Merger becoming effective;
"MEGGITT FUNDING ORDINARY SHARES" means the ordinary shares of 5p each
in the capital of the Company;
"NEW ORDINARY SHARES" means the new Ordinary Shares to be issued,
credited as fully paid, in connection with the Offer in exchange for
Meggitt Funding Ordinary Shares;
-5-
<PAGE>
"NORTH AMERICAN HOLDERS" means Qualifying Holders with registered
addresses in the United States or Canada;
"OFFER" means the offer by Meggitt for the Meggitt Funding Ordinary
Shares, details of which are contained in the Circular, to be completed
on conversion of the Stock Units and satisfied by the issue of New
Ordinary Shares;
"OFFICIAL LIST" means the Official List of the Stock Exchange;
"ORDINARY SHARES" means ordinary shares of 5p each in the capital of
Meggitt;
"PRESS ANNOUNCEMENT" means the announcement in the agreed form to be
released on the Press Announcement Date by Meggitt giving details of the
Issue;
"PRESS ANNOUNCEMENT DATE" means 9 June 1999;
"PROFIT SHARING SHARE SCHEME" means the scheme operated by Meggitt
through which UK employees are able to hold shares in Meggitt;
"PROSPECTUS" means a prospectus in the agreed form to be issued by
Meggitt giving details of the Issue and constituting a prospectus for
the purposes of the Listing Rules relating to the Company and the Stock
Units;
"PROVISIONAL ALLOTMENT LETTER" means the renounceable provisional
allotment letter in the agreed form to be issued, subject as provided in
clause 5, to Qualifying Holders in accordance with their respective
entitlements under the Issue;
"QUALIFYING HOLDERS" means holders of Ordinary Shares whose names appear
on the register of members on the Record Date;
"RECEIVING BANK" means The Royal Bank of Scotland plc of PO Box 435,
Owen House, 8 Bankhead Crossway North, Edinburgh EH11 4BR;
"RECORD DATE" means the close of business on 8 June 1999;
"REPUBLIC OF IRELAND HOLDERS" means Qualifying Holders with registered
addresses in the Republic of Ireland;
"RESOLUTION" means the special resolution to be proposed at the
Extraordinary General Meeting contained in the Circular;
"STOCK EXCHANGE" means London Stock Exchange Limited;
"STOCK UNITS" the units of redeemable convertible unsecured loan stock
of 5p each in the Company to be issued pursuant to the Issue and to
become convertible into Meggitt Funding Ordinary Shares, the terms of
which stock units are contained in the Deed Poll;
-6-
<PAGE>
"TAKEN UP" has the meaning ascribed thereto in clause 8.2;
"TENDER OFFER" means the tender offer by Meggitt Acquisition, Inc. for
all the issued and outstanding Whittaker Shares;
"TENDER OFFER DOCUMENT" means the agreement setting out the terms and
conditions of the Tender Offer;
"UNDERWRITER GROUP" means the Underwriter, any parent company of the
Underwriter and any subsidiary or subsidiary undertaking of the
Underwriter or of any such parent company and any body corporate in
which any of those entities holds a qualifying capital interest (within
the meaning of paragraph 30 of Schedule 1 to the FSA);
"UNITED STATES" means the United States of America, its territories and
possessions, any State of the United States of America and the District
of Columbia;
"UNSUBSCRIBED UNITS" means any Stock Units not taken up;
"VERIFICATION NOTES" means the verification notes prepared for the
purpose of substantiating the accuracy and completeness of the contents
of the Circular;
"WARRANTIES" means the representations and warranties contained in
Schedule 2;
"WHITTAKER" means Whittaker, Inc, a US company incorporated in the State
of Delaware;
"WHITTAKER GROUP" means Whittaker and its subsidiaries and subsidiary
undertakings;
"WHITTAKER SHARES" means the issued and outstanding shares of common
stock, par value of $0.01 per share of Whittaker; and
"WORKING CAPITAL REPORT" means the report on the cashflow and working
capital projections of the Enlarged Group for the period ending 31
December 2000.
1.2 In this agreement:-
(a) references to clauses and schedules are to clauses of, and schedules to,
this agreement;
(b) words and expressions defined in the Act shall bear the same meaning;
(c) a reference to any statute or statutory provision shall be construed as
a reference to the same as it may have been, or may from time to time
be, amended, modified or re-enacted and to any subordinate legislation
made under the statute or statutory provision before the date of this
agreement;
(d) references to time of day are to London times;
(e) a reference to a person includes a body corporate, association or
partnership;
-7-
<PAGE>
(f) headings to clauses and paragraphs are included for convenience only and
shall be disregarded in the interpretation of this agreement;
(g) a reference to a document being in the "AGREED FORM" means in the form
of the draft or proof of the document signed or initialled for the
purpose of identification by or on behalf of the Company and the
Underwriter with such amendments thereto (if any) as may subsequently be
agreed between the Company and the Underwriter and so that references to
any such document shall, where appropriate, be to such document as so
amended.
2. CONDITIONS
2.1 The obligations of the Underwriter under clauses 7, 8 and 9 are
conditional in all respects upon:-
(a) the Press Announcement having been delivered to the Stock Exchange by
not later than 9.00 a.m. on the date of this agreement;
(b) the formal approval by the Stock Exchange of the Circular as a
Prospectus as required by paragraph 5.12 of the Listing Rules and the
formal approval by the Advisory and Finance Committee of the States of
Guernsey under the Control of Borrowing (Bailiwick of Guernsey)
Ordinances, 1959-1989 to the issue by the Company of the Stock Units and
the Meggitt Funding Ordinary Shares and to the circulation of the
Circular in the Bailiwick, both by not later than 6.00 p.m. on the
business day following the date of this agreement;
(c) the delivery of two copies of the Circular to the Registrar of Companies
in England and Wales as required by section 149(1) of the FSA by not
later than 6.00 p.m. on the date on which condition 2.1(b) is satisfied;
(d) subject as provided in clause 5, the Circular and Form of Proxy having
been posted to holders of existing Ordinary Shares by not later than the
date on which condition 2.1(b) is satisfied;
(e) subject as provided in clause 5, the posting of Provisional Allotment
Letters to Qualifying Holders on the date on which condition 2.1(b) is
satisfied;
(f) none of the Warranties being untrue or inaccurate at the date of this
agreement or becoming untrue or inaccurate by the time of Admission by
reference to the facts and circumstances from time to time subsisting;
(g) the Company and Meggitt complying in all material respects with their
obligations under this agreement to the extent that the same fall to be
performed prior to Admission and there not having occurred or arisen
prior to Admission any significant change or new matter as is referred
to in paragraph (a) or (b) of section 147(1) of the FSA;
-8-
<PAGE>
(h) the delivery by Meggitt to the Underwriter immediately prior to
Admission of a certificate signed by a duly authorised officer of
Meggitt in the form set out in Schedule 3 upon delivery of which
condition 2.1(f) will be deemed satisfied; and
(i) Admission taking place by not later than 9.00 a.m. on 11 June 1999.
2.2 If any of the conditions set out in clause 2.1 shall not have been
fulfilled (or waived by the Underwriter) on or before the date or time
specified for the fulfilment thereof or such later date and/or time as
the Underwriter shall agree (being not later than 9.00 a.m. on 14 June
1999) this agreement shall ipso facto cease and determine and neither
party shall have any claim against the other for any costs, damages,
compensation or otherwise hereunder except that:-
(a) such termination shall be without prejudice to any accrued rights
or obligations under this agreement;
(b) the Company, or failing the Company, Meggitt shall pay to the
Underwriter the commissions, fees and expenses specified in
clause 10 (subject as provided therein); and
(c) the provisions of clauses 12, 13, 14, 15 and 17 shall remain in
full force and effect.
2.3 The Company and Meggitt shall use their respective reasonable endeavours
to procure the fulfilment of the conditions set out in clause 2.1 by the
dates and/or times specified therein.
3. APPLICATION TO THE STOCK EXCHANGE
The Company and/or Meggitt confirm to the Underwriter that application
has been made (at the expense of Meggitt and/or the Company) through the
Brokers to the Stock Exchange for formal approval of the Circular as a
Prospectus and for the admission of the Stock Units to the Official
List. The Company and Meggitt will, in conjunction with the Underwriter,
use all reasonable endeavours (i) to obtain such approval by not later
than 6.00 p.m. on the date of this agreement, (ii) to obtain the grant
of such admission (subject only to the posting of Provisional Allotment
Letters) by not later than noon on the Press Announcement Date and (iii)
to procure that Admission takes place by not later than 9.00 a.m. on the
first Dealing Day following the Press Announcement Date and, for such
purpose, Meggitt and the Company shall supply all such information and
documentation, give all such undertakings, execute all such documents,
pay all such fees and generally do or procure to be done all such things
as may be necessary or required by the Stock Exchange for the purposes
of or in connection with the application for such approval and the grant
of such admission.
4. OBLIGATIONS OF THE COMPANY AND MEGGITT
4.1 The Company shall (and Meggitt shall procure that the Company shall)
procure that there are delivered to the Underwriter the documents
referred to in Schedule 1 at the times specified in, and otherwise in
accordance with the requirements of, that Schedule.
-9-
<PAGE>
4.2 Meggitt hereby authorises and requests the Underwriter to release the
Press Announcement to the Stock Exchange by not later than 9.00 a.m. on
the date of this agreement.
4.3 Subject to the Circular having been approved by the Stock Exchange as a
Prospectus, Meggitt shall use reasonable endeavours to procure that:-
(a) two copies of the Circular are delivered by or on behalf of the
Company to the Registrar of Companies in England and Wales for
registration pursuant to section 149 of the FSA by not later
than 6.00 p.m. on the business day following the date of this
agreement;
(b) further copies of the Circular, together with the Accounts, are
made available in accordance with paragraphs 8.4, 8.4A, 8.5,
8.6 and 8.21 of the Listing Rules;
(c) subject as provided in clause 5, the Circular and Form of Proxy
are posted to shareholders of the Company by not later than the
date on which the requirement in clause 4.3(a) is satisfied;
(d) subject to the provisional allotment of the Stock Units having
been made in accordance with clause 6.1 and subject as
otherwise provided in clause 5, Provisional Allotment Letters
are posted to Qualifying Holders on the date on which the
requirement set out in clause 4.3(a) is satisfied; and
(e) the information referred to in paragraph 4.20 of the Listing
Rules is notified to the Company Announcements Office of the
Stock Exchange as required by that paragraph.
4.4 Meggitt shall notify the Underwriter forthwith of any fact or
circumstance which occurs or arises between the date of this agreement
and Admission and which is or may constitute a significant change or new
matter for the purposes of section 147 of the FSA and, without prejudice
to clause 2, shall procure that any such change or new matter shall be
dealt with in accordance with section 147 of the FSA and paragraphs
5.14, 5.15, 5.16 and 8.20 of the Listing Rules.
4.5 Meggitt hereby undertakes not to exercise any right it may have to waive
the EGM Condition.
5. OVERSEAS SHAREHOLDERS
5.1 Save with the prior written consent of the Underwriter and as permitted
under an exemption from registration under the United States Securities
Act of 1933, as amended and any applicable State Securities Law,
Provisional Allotment Letters will not be sent to Qualifying Holders who
are North American Holders but the Circular will be sent to such
persons.
5.2 Provisional Allotment Letters will not be sent to Qualifying Holders who
are Australian Holders but Circulars will be sent to such persons solely
in connection with the EGM.
-10-
<PAGE>
5.3 Provisional Allotment Letters sent to Qualifying Holders with registered
addresses in South Africa will carry no right to renounce.
5.4 Provisional Allotment Letters will not be sent to Qualifying Holders who
are Republic of Ireland Holders but Circulars will be sent to such
persons solely in connection with the EGM.
5.5 Neither the Company nor Meggitt will exercise the right reserved by it
to reject a Provisional Allotment Letter in the circumstances set out in
paragraph 5(a) of Part II of the Circular without the consent of the
Underwriter, such consent not to be unreasonably withheld or delayed.
5.6 The Underwriter shall ensure that neither it nor its affiliates nor any
person acting on behalf of the Underwriter or its affiliates will:-
(a) engage in any directed selling efforts with respect to the
Provisional Allotment Letters, Stock Units or New Ordinary
Shares; or
(b) offer or sell Provisional Allotment Letters, Stock Units or
New Ordinary Shares by means of any form of general
solicitation or general advertising within the meaning of Rule
502(c) under the United States Securities Act of 1933 as
amended (the "SECURITIES ACT"); or
(c) offer or sell Provisional Allotment Letters, Stock Units or New
Ordinary Shares within the United States except in accordance
with Rule 903 of Regulation S under the Securities Act
("REGULATION S"), pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of
the Securities Act.
5.7 The Underwriter shall ensure that each sub-underwriter procured by it
agrees that the restrictions set out in clause 5.6 apply to it.
5.8 Terms used in clause 5.6 have the meanings given to them by Regulation S
under the Securities Act.
6. ALLOTMENT AND REGISTRATION
6.1 Subject to (i) the Circular having been approved by the Stock Exchange
as a Prospectus, (ii) the delivery of two copies thereof to the
Registrar of Companies in England and Wales in accordance with clause
4.3(a), and (iii) the Stock Exchange having agreed to admit the Stock
Units to the Official List (subject only to the posting of Provisional
Allotment Letters) Meggitt shall procure that the Stock Units are
provisionally allotted to Qualifying Holders (other than Excluded
Holders) on the date on which the Provisional Allotment Letters are
posted upon the basis and otherwise on the terms and subject to the
conditions set out in the Issue Documents. The allotment of the Stock
Units shall be made pursuant to a resolution of the board of directors
of the Company (or a duly established and authorised committee thereof).
Fractions of Stock Units shall not be allotted to Qualifying Holders.
Fractional entitlements will be aggregated and the resulting number of
Stock Units and the Stock Units attributable to Excluded Holders shall
be dealt with in accordance with clause 7.
-11-
<PAGE>
6.2 Meggitt shall procure that, by not later than the third Dealing Day
following the Acceptance Date, the provisional allotments of the Stock
Units which have been taken up are confirmed and the provisional
allotments of the Stock Units which have not been taken up are cancelled
and new allotments thereof made in favour of the persons who, pursuant
to clauses 8.4 and/or 9, subscribe for such units. Such confirmation,
cancellation and new allotment shall be made pursuant to a resolution of
the board of directors of the Company (or a duly established and
authorised committee thereof).
6.3 Meggitt shall upon the expiry of the renunciation period under the Issue
procure the registration (without registration fee) as holders of the
Stock Units of the persons entitled thereto (and in accordance with the
directions of the persons entitled thereto as to registration) and that
definitive certificates are forwarded to the persons so registered on or
before the date specified in the Circular.
6.4 On conversion of the Stock Units into Meggitt Funding Ordinary Shares
and full acceptance of the Offer resulting in the issue of the New
Ordinary Shares, the New Ordinary Shares will, when issued and fully
paid, rank pari passu in all respects with the existing issued shares:-
(a) save that they will not rank for the final dividend in respect
of the financial year ended 31 December 1998; and
(b) provided that the conversion of the Stock Units shall occur
prior to the record date for the payment of the interim
dividend in respect of the financial year ending 31 December
1999.
7. SALE OF CERTAIN RIGHTS TO SUBSCRIBE
By not later than 8.30 a.m. on the day on which Admission takes place
the Company will procure that the Underwriter is notified in writing of
the number of Stock Units which represents the aggregate of fractional
entitlements arising in respect of the Issue and of the number of Stock
Units attributable to Excluded Holders under the Issue. As soon as
practicable after Admission, but before 3.00 p.m. on the Acceptance
Date, the Underwriter will, as agent of the Company, instruct the
Brokers to endeavour to procure purchasers for so many of the rights to
such Stock Units as can be sold nil paid at a premium net of expenses
(including value added tax). As soon as reasonably practicable
thereafter, the Underwriter will account to the Company (or to the
Receiving Bank) for the net proceeds of sale (after deduction of
expenses including Brokers' commission) of so many of such rights to
Stock Units as shall have been sold nil paid against delivery to the
Underwriter (or as it may direct) of nil paid Provisional Allotment
Letters in respect of the rights to the Stock Units so sold in such
names and denominations as the Underwriter may require. Such sales will
be deemed to have been made in the first instance in respect of rights
to Stock Units attributable to Excluded Holders and, to the extent that
there are sufficient such sales, thereafter in respect of rights to
Stock Units attributable to fractional entitlements. If any of the
rights to such Stock Units are not so sold by 3.00 p.m. on the
Acceptance Date, such Stock Units will be dealt with as Stock Units not
taken up in accordance with clause 8.3. The Company will (or failing
which Meggitt will) (or will procure that the Receiving Bank will) pay
to Excluded Holders PRO RATA to their holdings of Ordinary Shares as at
the close of business on the
-12-
<PAGE>
Record Date the net proceeds received by it in respect of the sale of
rights to Stock Units attributable to Excluded Holders pursuant to this
clause 7 as soon as practicable after receipt (save that individual
amounts of less than 'L'3.00 per holding shall not be so paid but
shall be retained by the Company). The Company shall be entitled to
retain for its own use and benefit the net proceeds so received by it in
respect of the sale of rights to Stock Units representing fractional
entitlements.
8. STOCK UNITS NOT TAKEN UP
8.1 If, by 3.00 p.m. on the Acceptance Date, all the Stock Units shall have
been taken up, or are deemed to be taken up by such time pursuant to the
proviso to clause 8.2, the obligations of the Underwriter under clauses
8.4 and 9 shall thereupon terminate.
8.2 Stock Units comprised in Provisional Allotment Letters which shall have
been lodged for acceptance (whether by the person to whom they were
provisionally allotted or by renouncees of the right to accept
allotment) by 3.00 p.m. on the Acceptance Date in accordance with the
terms of the Issue Documents, accompanied by cheques (which have not,
before 3.00 p.m. on the Acceptance Date, been notified to the Receiving
Bank as not having been accepted by the drawee on first presentation) or
other remittances for the full amount payable in respect thereof are
referred to in this agreement as having been "taken up" provided that,
at the discretion of the Underwriter, the Company and Meggitt, Stock
Units shall be deemed to have been taken up by 3.00 p.m. on the
Acceptance Date if a cheque or other remittance for the full amount
payable in respect thereof (and whether or not such cheque or other
remittance shall be honoured) is received prior to 3.00 p.m. on the
Acceptance Date from an authorised person (as defined in the FSA) who
shall have identified the Stock Units concerned and undertaken to lodge
the relevant Provisional Allotment Letter duly completed in due course.
8.3 If, however, by 3.00 p.m. on the Acceptance Date any of the Stock Units
shall not have been taken up, the Company will procure that the
Underwriter is notified in writing as soon as possible thereafter and in
any event not later than 8.30 a.m. on the Dealing Day next following the
Acceptance Date of the number of Stock Units not so taken up. Meggitt,
the Company, and the Underwriter shall consult with each other as to
whether the Stock Exchange should be notified of the number of Stock
Units not taken up before the Brokers are instructed to endeavour to
procure subscribers for the Stock Units not taken up pursuant to clause
8.4. The obligation to consult under this clause 8.3 shall not prevent
the Underwriter from making its own announcement to the Stock Exchange
in respect of the number of Stock Units not taken up if it considers, in
its absolute discretion, that such an announcement should be made in
order to prevent or avoid the possibility of a breach of section 47 of
the FSA.
8.4 The Underwriter shall, as agent for the Company, instruct the Brokers to
endeavour to procure subscribers for all or as many as possible of such
Stock Units on the terms (in so far as the same are applicable) of the
Issue Documents as soon as reasonably practicable and in any event by
not later than 3.00 p.m. on the second Dealing Day next following the
Acceptance Date if a price which is not less than the aggregate of the
Issue Price and the expenses of procuring such subscription, including
any value added tax thereon, can be obtained provided that the
Underwriter may, at any time after 3.00 p.m. on the Acceptance
-13-
<PAGE>
Date, instruct the Brokers no longer to endeavour to procure any such
subscribers if it has been informed by the Brokers that, in the opinion
of the Brokers, it is unlikely that any such subscriber(s) can be so
procured at such a price by such time whereupon the Underwriter shall
not be under any obligation to endeavour to procure any such
subscribers. Forthwith upon the Underwriter notifying the Company that
any such subscribers shall have been procured on the basis described
above, the Company will procure delivery to the Underwriter of duly
receipted fully paid Provisional Allotment Letters for the Stock Units
so subscribed in such names and in such denominations as the Underwriter
shall notify to the Company and the Underwriter will, as soon as
practicable and in any event not later than the close of business on the
fifth Dealing Day following the Acceptance Date, account to the Company
(or to the Receiving Bank) for the proceeds received from subscribers
procured pursuant to this clause 8.4 (after deduction of the expenses of
procuring such subscription including any value added tax thereon). The
Company will, as soon as practicable after receipt thereof, distribute,
or cause to be distributed, such proceeds (after deduction of the Issue
Price) to the Qualifying Holders to whom the relevant Stock Units were
provisionally allotted or, in the case of Stock Units attributable to
Excluded Holders, to such Excluded Holders PRO RATA to their holdings of
Ordinary Shares at the close of business on the Record Date, save that
individual amounts of less than 'L'3.00 per holding shall be
retained by the Company.
8.5 Any transactions carried out by the Underwriter pursuant to this clause
8 will constitute transactions carried out at the Company's request and
as its agent and not for the Underwriter's own account. The Underwriter
shall, however, be entitled to receive and/or retain and/or allow the
Brokers or its other agents to retain any commission or brokerages paid
to it or its agents in connection with the implementation of any such
transactions and shall not be under any liability to account for any
benefit or advantage derived from such transactions by it or any company
connected with it. The Underwriter is not to be responsible, whether to
the Company, to Meggitt, any Qualifying Holder or any other shareholder
or otherwise, for any loss or damage to any person arising from any such
transactions or for any insufficiency or alleged insufficiency of any
dealing price at which any rights to Stock Units may be sold or
subscribers for Stock Units may be procured by it or for the timing of
any such sale or subscription unless and to the extent that the same
result from the negligence or wilful default of the Underwriter.
9. UNDERWRITING
The Underwriter shall, as agent for the Company, procure subscribers or
failing that itself subscribe on the terms and conditions and on the
basis of the information contained in the Issue Documents (except as
regards the time and method for acceptance and payment) and in reliance
upon the Warranties for any of the Stock Units notified to it as not
taken up and not subscribed pursuant to clause 8.4 and the Underwriter
shall as soon as practicable following receipt and in any event, not
later than the close of business on the fifth Dealing Day following the
Acceptance Date, pay or procure payment to the Company or such account
as Meggitt (on behalf of the Company) may nominate on reasonable notice,
as agent for the persons it procures and/or as principal as aforesaid,
(or to the Receiving Bank) of the Issue Price for such Unsubscribed
Units against delivery to the Underwriter (or as it may direct) of duly
receipted fully paid Provisional Allotment Letters in respect of any
Unsubscribed Units in such names and denominations as the Underwriter
shall require. In default of the
-14-
<PAGE>
Underwriter so doing in respect of any Unsubscribed Units, the Company
and/or Meggitt is hereby irrevocably authorised to be at liberty to
treat this agreement as the Underwriter's application for such
Unsubscribed Units on and subject to the terms and conditions and on the
basis of the information contained in the Issue Documents (except as
regards the time and method for acceptance and payment) and in reliance
upon the Warranties and to allot and issue the same to the Underwriter
on such terms and conditions and payment therefor at the Issue Price
shall be made by the Underwriter against delivery to it (or as it may
direct) of duly receipted fully paid Provisional Allotment Letters in
respect of such Unsubscribed Units in such names and denominations as
the Underwriter shall require. Upon payment as aforesaid, the
Underwriter shall be under no further liability to the Company and/or
Meggitt under this clause 9.
10. FEES, COMMISSIONS AND EXPENSES
10.1 The Company shall or, failing the Company, Meggitt shall pay to the
Underwriter for its services in underwriting the issue of the
Unsubscribed Units and otherwise in connection with the Issue:-
(a) a commission of 1 1/4 per cent. (one and one quarter per cent.)
on the aggregate Issue Price of the Stock Units in respect of
the period from (and including) the date of this agreement to
(but excluding) the date falling thirty days after the date of
this agreement out of which the Underwriter will pay:-
(i) a sub-underwriting commission of 1/2 per cent. (half
per cent.) of such amount to such sub-underwriters as
it may procure; and
(ii) a fee to the Brokers of 1/4 (one quarter per cent.);
(b) a commission of 1/8 per cent. (one eighth of one per cent.)
on the aggregate Issue Price of the Stock Units in respect
of each period of seven days or part thereof from (and
including) the date falling thirty days after the date of
this agreement to (and including) the earlier of:-
(i) the date on which the sub-underwriters (if any) are
notified in writing, or by the publication of an
announcement in the London Stock Exchange Regulatory
News Service, of the number of Stock Units (if any) to
be taken up by sub-underwriters in accordance with the
terms of any agreement such sub-underwriters may have
with the Broker; or
(ii) the second Dealing Day after the Acceptance Date; or
(iii) the date on which the Underwriter's obligations under
clauses 7, 8 and 9 terminate pursuant to clause 2 or
clause 11; and
(c) if all the obligations of the Underwriter under clauses 7, 8
and 9 become unconditional in all respects, a further
commission of 3/4 per cent. (three quarters per cent.) on
the aggregate Issue Price of the Stock Units;
-15-
<PAGE>
or, in the case of the aggregate of the commissions referred to in
clause 10.1 above save for the fee referred to in clause 10.1(a)(ii) and
the commission referred to in clause 10.1(b), such smaller amount, if
any, as the Underwriter shall notify to the Company and/or Meggitt.
The Underwriter shall procure that the Brokers will use all reasonable
endeavours to seek commitments on a tender basis from institutions and
other investors to sub-underwrite such that the commissions referred to
in clause 10.1 (save for clauses 10.1(a)(ii) and 10.1(b)) are reduced to
the greatest extent possible.
Such commissions shall be paid to the Underwriter whether or not it
shall be called upon to subscribe or procure subscribers for any of the
Stock Units under this agreement and (save for the commission in clause
10.1(c)) whether or not the obligations of the Underwriter under clauses
7, 8 and 9 of this agreement become unconditional.
Out of such commissions, the Underwriter shall pay sub-underwriting
commissions to such persons (if any) as it may procure to subscribe
Stock Units pursuant to clause 9. Such commissions shall be paid by the
Company or, failing the Company, by Meggitt to the Underwriter by not
later than 3.00 p.m. on the day upon which the Underwriter procures
payment to the Company (or to the Receiving Bank) pursuant to clause 8.4
or 9 or, as the case may be, on the second Dealing Day after the date on
which the Underwriter's obligations under clauses 7, 8 and 9 terminate
pursuant to clause 2. The Underwriter shall be entitled to deduct some
or all of such commissions from any amount otherwise payable by the
Underwriter to the Company or to Meggitt, as the case may be, under this
agreement.
10.2 The Company or, failing the Company, Meggitt shall bear all other
expenses of and incidental to this agreement and the Issue (including,
without limitation, Stock Exchange fees, registration fees, receiving
bankers' and registrars' fees, the fees of the Brokers, the costs of
printing, advertising and circulating the Press Announcement and the
Issue Documents, accounting fees and expenses, the Company's, Meggitt's
and the Underwriter's legal fees and expenses (whether or not the
Underwriter's obligations hereunder become unconditional or terminate),
the Company's, Meggitt's and the Underwriter's out-of-pocket expenses
and all stamp duty, stamp duty reserve tax and other taxes and duties
payable).
10.3 The Company or, failing the Company, Meggitt shall forthwith upon
request by the Underwriter pay or reimburse the Underwriter the amount
of any expenses for which Meggitt or the Company shall be responsible
pursuant to clause 10.2 but which the Underwriter may have paid or
incurred on behalf of the Company or Meggitt in connection with the
Issue.
10.4 Where pursuant to clause 10.2 or 10.3 or clause 12 a sum (a "RELEVANT
SUM") is to be paid or reimbursed to the Underwriter in respect of any
cost or expense paid or incurred by the Underwriter and that cost or
expense includes an amount in respect of value added tax (the "VAT
ELEMENT"), the Company or, failing the Company, Meggitt shall pay an
amount to the Underwriter in respect of the VAT Element that shall be
determined as follows:-
(a) if the Relevant Sum constitutes for value added tax purposes
payment to the Underwriter for the supply by it of goods or
services to the Company, a sum equal to
-16-
<PAGE>
the proportion of the VAT Element that the Underwriter
certifies as representing irrecoverable input tax in the hands
of the Underwriter, that certificate to be conclusive save in
the case of manifest error; and
(b) if the Relevant Sum constitutes for value added tax purposes
the reimbursement of a cost or expense incurred by the
Underwriter as agent for the Company and/or Meggitt, a sum
equal to the whole of the VAT Element,
and where a sum equal to the VAT Element has been reimbursed to the
Underwriter under paragraph (b) above, the Underwriter shall provide the
Company or, where relevant, Meggitt with an appropriate tax invoice in
respect of the supply to which the Relevant Sum relates, that is to say
a tax invoice naming the Company or, where relevant, Meggitt as the
recipient of the supply and issued either by the Underwriter or, if the
Underwriter has treated the relevant cost or expense as a disbursement
for value added tax purposes, by the person making the supply.
10.5 If the performance by the Underwriter of any of its obligations under
this agreement shall represent for value added tax purposes the making
by the Underwriter of any supply of goods or services to the Company or
Meggitt that is taxable at a positive rate, the Company or, where
relevant, Meggitt shall pay to the Underwriter, in addition to the
amounts otherwise payable by the Company to the Underwriter pursuant to
this agreement (including, without limitation, amounts payable by the
Company or, where relevant, Meggitt to the Underwriter pursuant to
clause 10.4), an amount equal to the value added tax chargeable on any
such supply, that payment to be made within seven days of the
Underwriter requesting the same and against production by the
Underwriter of a proper tax invoice
11. WARRANTIES
11.1 Meggitt warrants to the Underwriter as at the date hereof in the terms
set out in Schedule 2. Meggitt acknowledges that the Underwriter is
entering into this agreement in reliance upon each of the Warranties,
each of which has also been given as a representation and with the
intention of inducing the Underwriter to enter into this agreement. Each
of the Warranties shall be construed separately and none of the
Warranties shall be limited or restricted by reference to or inference
from the terms of any other Warranty or any other provision of this
agreement.
11.2 Meggitt undertakes to notify the Underwriter forthwith if it comes to
the knowledge of Meggitt or any of the Directors that:-
(a) any of the Warranties was untrue or inaccurate when made
and/or that any of the Warranties has ceased to be true or
accurate by reference to the facts and circumstances from time
to time subsisting;
(b) any fact, matter or circumstance has arisen or occurred or
exists which may give rise to a claim under the indemnity in
clause 12.2.
11.3 If at any time prior to Admission (i) it comes to the knowledge of the
Underwriter (whether by way of receipt of a notification pursuant to
clause 11.2 or otherwise) that any of the
-17-
<PAGE>
Warranties were at the date of this agreement untrue or inaccurate in
any material respect and/or have become untrue or inaccurate in any
material respect by reference to the facts and circumstances from time
to time subsisting and (ii) in the reasonable opinion of the
Underwriter, the fact or circumstance which has caused such Warranty to
be or become untrue or inaccurate is material in the context of the
underwriting hereunder, the Underwriter may by notice to Meggitt to be
delivered before Admission terminate its obligations under this
agreement. In such event clause 2.2 will apply as if any of the
conditions contained in clause 2.1 had not been fulfilled. Meggitt shall
have no claim against the Underwriter if, being entitled to do so, the
Underwriter gives notice of termination.
11.4 The Warranties shall remain in full force and effect notwithstanding
completion of this agreement.
12. INDEMNITY
12.1 No claim shall be made against any Indemnified Person by Meggitt and/or
the Company to recover any loss or damage which Meggitt and/or the
Company or the Directors or any other person may suffer or incur by
reason of or arising out of the carrying out or performance by the
Underwriter (or by any Indemnified Person on its behalf) of its
obligations or services hereunder or in connection with the Issue or the
publication or despatch of any of the Issue Documents unless and to the
extent that such loss or damage results from the negligence or wilful
default of the Underwriter or any Indemnified Person or any breach by
the Underwriter of any of its obligations under this agreement or the
FSA or the regulatory system (as defined in the rules of The Securities
and Futures Authority Limited).
12.2 Meggitt undertakes to the Underwriter (for itself and, on the basis that
it shall enjoy an absolute discretion as to the enforcement of any claim
under this clause 12.2, as trustee for each and every Indemnified
Person) to the fullest extent permitted by law to indemnify each
Indemnified Person and hold it and each Indemnified Person fully and
effectively indemnified against all claims, actions, demands,
liabilities and proceedings which may be made, brought, threatened or
established against any Indemnified Person (whether or not successful,
compromised or settled) by any subscriber, allottee, sub-underwriter of
any of the Stock Units or any purchaser or transferee thereof or by any
other person, governmental agency or regulatory body whatsoever and
against all losses, liabilities, costs, charges and expenses which that
Indemnified Person may pay, suffer or incur in connection therewith
(including those paid, suffered or incurred in investigating, seeking
advice as to, defending or disputing any such claim, action or demand
and in enforcing its rights under this clause) and which in any case is
occasioned by or results from or is attributable to or would not have
arisen but for (in each case whether directly or indirectly):-
(a) any breach by the Company or by Meggitt of any of their
obligations under this agreement; or
(b) the carrying out or performance by the Underwriter (or by any
Indemnified Person on its behalf) of any of its obligations or
services under this agreement or otherwise in connection with
the Issue save for any losses, liabilities, costs, charges or
expenses arising from the Underwriter's subscription for Stock
Units pursuant to clause 9; or
-18-
<PAGE>
(c) any failure or alleged failure to comply with any legal,
statutory or regulatory requirement whether of the United
Kingdom or elsewhere in relation to the Issue or the allotment
and issue of the Stock Units or the release of the Press
Announcement or the publication and despatch of the Issue
Documents; or
(d) the Issue Documents not containing or being alleged not to
contain all information required to be stated therein or any
statement therein being or being alleged to be defamatory,
untrue, inaccurate, incomplete or misleading in any respect;
or
(e) any of the Warranties being untrue or inaccurate at the date
of this agreement or having become untrue or inaccurate at any
time between the date of this agreement and Admission by
reference to the facts and circumstances from time to time
subsisting,
unless and to the extent that such losses, costs, charges or expenses
result from the negligence or wilful default of an Indemnified Person
or any breach by the Underwriter of its obligations under this
agreement or the FSA or the regulatory system (as defined in the rules
of The Securities and Futures Authority Limited).
12.3 The Underwriter shall, as soon as reasonably practicable after becoming
aware of any claim made or threatened against any Indemnified Person
which may give rise to a claim against Meggitt under clause 12.2,
notify Meggitt thereof and enter into and maintain consultation with
Meggitt on all material aspects of such claim and shall, where
practicable, take into account Meggitt's reasonable requests in
relation thereto.
12.4 If the United Kingdom Inland Revenue or any other taxing authority in
any jurisdiction brings into any charge to taxation any sum payable
under the indemnity contained in this clause 12, then the amount so
payable shall be increased by such amount as will ensure that after
deduction of the taxation so chargeable there shall remain a sum equal
to the amount that would otherwise be payable under such indemnity.
13. ANNOUNCEMENTS
13.1 Meggitt undertakes to the Underwriter that, save for the issue and
publication of the Issue Documents and the Press Announcement in
accordance with the terms of this agreement:-
(a) no public announcement or communication concerning any member
of the Group which is or may be material in the context of the
Issue or the underwriting of the Stock Units;
(b) no notice, bill, poster or document announcing the publication
or despatch of the Circular or the Provisional Allotment
Letters or the issue of the Stock Units and indicating the
essential characteristics of the Stock Units;
(c) no document relating to the admission of the Stock Units
and/or to the New Ordinary Shares to the Official List,
-19-
<PAGE>
will be published, made or despatched by or on behalf of any member of
the Group or any of their respective directors at any time between the
date hereof and the third Dealing Day after the completion of the
Tender Offer without the prior written consent of the Underwriter (such
consent not to be unreasonably withheld or delayed).
13.2 Meggitt will not, and will procure that no other member of the Group
will, at any time between the date hereof and the third Dealing Day
after the completion of the Tender Offer, enter into any commitment or
agreement, or put itself in a position where it is obliged to announce
that any commitment or agreement may be entered into, which is or may
be material in the context of the Issue or the underwriting of the
Stock Units, or issue any shares or options over shares or securities
convertible or exchangeable into shares (other than pursuant to and in
accordance with entitlements described in the Circular) or enter into
any agreement or undertaking to do the same without the prior written
consent of the Underwriter (such consent not to be unreasonably
withheld or delayed).
13.3 Meggitt undertakes to the Underwriter that, until the date of
publication of the preliminary announcement of the results of the Group
for the six months ending on 30 June 1999 (the "Publication Date"), it
will:-
(a) discuss with the Underwriter in advance any public statement
or document which relates to the Group's financial or trading
position or prospects or to any acquisition, disposal,
reorganisation, takeover, management development or any other
significant matter (similar or not to the foregoing) and which
any member of the Group proposes to make or publish before the
Publication Date;
(b) discuss with the Underwriter in advance any other information
which may be required to be notified to the Company
Announcements Office of the Stock Exchange in accordance with
paragraph 9.1 or 9.2 of the Listing Rules; and
(c) forward to the Underwriter for its comments (to which Meggitt
shall have due regard) drafts in final form of any accounts or
any public statement or document or information which any
member of the Group proposes to make or publish before the
Publication Date and which relates to any matter falling
within paragraph (a) or (b) of this clause 13.3.
13.4 The Underwriter shall be entitled to make for itself or on behalf of
any Indemnified Person, after such consultation with Meggitt as shall
be reasonably practicable in the circumstances, any announcement
concerning the Issue as may in its reasonable opinion be necessary in
order to comply with paragraph 9.1 of the Listing Rules or section 47
of the FSA.
14. GENERAL
14.1 The Company confirms that it has arranged for The Royal Bank of
Scotland plc to act as receiving bankers to the Issue and for
Computershare Services PLC to act as registrars to the Company for the
purposes of the Issue and for such persons to carry out the obligations
of the receiving bankers and registrars as provided in the Issue
Documents.
-20-
<PAGE>
14.2 No delay or omission on the part of the Underwriter in exercising any
right, power or remedy under this agreement shall impair such right,
power or remedy or operate as a waiver thereof. The single or partial
exercise of any right, power or remedy by the Underwriter under this
agreement shall not preclude any other or further exercise thereof or
the exercise of any other right, power or remedy.
14.3 The rights, powers and remedies of the Underwriter provided in this
agreement are cumulative and not exclusive of any other rights, powers
and remedies (whether provided by law or otherwise).
14.4 No variation to this agreement shall be effective unless it is in
writing and signed by or on behalf of the Company, Meggitt and the
Underwriter.
14.5 Time shall be of the essence of this agreement, both as regards the
times, dates and periods mentioned herein and any times, dates or
periods which may in accordance with the provisions of this agreement
or by mutual agreement in writing be substituted therefor.
15. NOTICES
Any notice or other communication given or made under or in connection
with the matters contemplated by this agreement shall be in writing
(not including writing on the screen of a visual display unit or other
similar device which shall not be treated as writing for the purposes
of this clause) and shall be delivered personally or sent by fax or
prepaid first class post:-
in the case of the Company and of
Meggitt to:-
Farrs House
Cowgrove
Wimborne
Dorset BH21 4EL
Fax: 01202 847819
Attention: Philip Green, Company Secretary
in the case of the Underwriter to:-
N M Rothschild & Sons Limited
New Court
St Swithin's Lane
London EC4P 4DU
Fax: 0171 280 5389
Attention: Tony Allen
and shall be deemed to have been duly given or made as follows:-
-21-
<PAGE>
(a) if sent by personal delivery, upon delivery at the address of
the relevant party;
(b) if sent by first class post, two Dealing Days after the date
of posting; and
(c) if sent by facsimile during normal office hours, when
despatched.
16. COUNTERPARTS
This agreement may be entered into in any number of counterparts and by
the parties to it on separate counterparts, each of which when executed
and delivered shall be an original, but all the counterparts shall
together constitute one and the same instrument.
17. GOVERNING LAW
17.1 This agreement shall be governed by, and construed in all respects in
accordance with, English law.
17.2 The courts of England shall have exclusive jurisdiction to hear and
decide any suit, action or proceedings, and to settle any disputes,
which may arise out of or in connection with this agreement and, for
these purposes, each party irrevocably submits to the jurisdiction of
the courts of England. Each party irrevocably waives any objection
which it may have at any time to the courts of England as the forum to
hear and decide any such suit, action or proceeding and to settle any
such dispute and agrees not to claim that the courts of England are not
a convenient or appropriate forum. Process by which any such suit,
action or proceedings are begun in England may be served on a party in
the manner provided in clause 15 provided always that nothing in this
clause 17.2 shall affect the right of a party to serve process in any
other manner permitted by law.
IN WITNESS whereof this agreement has been executed on the date first above
written.
-22-
<PAGE>
SCHEDULE 1
Delivery of Documents
1. Save to the extent that the same shall have been delivered to the
Underwriter prior to the date of this agreement, Meggitt shall procure
that the following documents are delivered to the Underwriter forthwith
upon execution of this agreement (or as soon as practicable
thereafter):-
1.1 a certified copy of the memorandum and articles of association of
Meggitt;
1.2 a certified copy of resolutions of the boards of directors of Meggitt
and/or the Company (or duly established and authorised committees
thereof) in the agreed form approving this agreement and authorising a
specified person or persons to execute this agreement on behalf of
Meggitt and of the Company, approving and authorising, inter alia, the
application for Admission and the signing of an application in the form
of Schedule 3A to the Listing Rules in respect of the Stock Units,
approving and authorising the release, publication and despatch of the
Press Announcement and the Issue Documents;
1.3 certified copies of statements in the agreed form signed by each
Director accepting responsibility for the information contained in the
Circular;
1.4 certified copies of powers of attorney in the agreed form executed by
each Director;
1.5 certified copies of letters signed by each Director and addressed to
the Stock Exchange confirming the completeness of the information
contained in the Circular in the terms required by paragraph 5.5 of the
Listing Rules;
1.6 the report on the indebtedness of the Enlarged Group as at 14 May 1999
in the form previously approved by the Underwriter;
1.7 the Working Capital Report in the form previously approved by the
Underwriter together with a signed copy of a letter from Meggitt to the
Underwriter confirming that the Working Capital of the Group is
sufficient for its present requirements;
1.8 a signed copy of a letter from the Auditors reviewing the indebtedness
report and Working Capital Report and confirming the accuracy of
certain financial information contained in the Circular;
1.9 a signed copy of a letter from the Auditors addressed to Meggitt and
the Underwriter consenting to the issue of the Circular;
1.10 signed copies of letters addressed to the Underwriter from Meggitt, the
Auditors and Meggitt's solicitors addressing the matters referred to in
paragraph 2.8 of the Listing Rules;
1.11 a certified copy of the completed Verification Notes;
1.12 a copy of the Circular bearing evidence of the formal approval thereof
by the Stock Exchange as a Prospectus;
-23
<PAGE>
2. Meggitt shall procure that a certified copy of the resolution of the
board of directors of Meggitt and/or the Company (or duly established
and authorised committees thereof) in agreed form approving and
authorising the provisional allotment of the Stock Units nil paid,
subject to Admission, and confirming that no such change or new matter
as is referred to in Section 147(a) of the FSA has occurred or between
the execution of this agreement and Admission are delivered to the
Underwriter immediately following the provisional allotment of the
Stock Units pursuant to clause 6.1.
3. The Company shall, forthwith following the confirmation of allotment
and/or the making of new allotments of the Stock Units pursuant to
clause 6.2, deliver to the Underwriter a certified copy of the
resolution of the board of directors of the Company (or a duly
established and authorised committee thereof) confirming the allotments
of the Stock Units taken up and making new allotments of the Stock
Units not taken up as referred to in clause 6.2.
4. Where the resolutions referred to in paragraphs 1.2, 2.2 and 3 of this
schedule or any of them are resolutions of a committee of the board of
directors, Meggitt shall procure that there is also delivered to the
Underwriter a certified copy of the resolution of the board of
directors appointing such committee (save to the extent that a
certified copy thereof shall previously have been delivered to the
Underwriter).
-24-
<PAGE>
SCHEDULE 2
Warranties
1. Press Announcement
1.1 All statements of fact contained in the Press Announcement are true and
accurate in all material respects and are not misleading in any
material respect.
1.2 All forecasts, estimates and expressions of opinion, intention or
expectation contained in the Press Announcement are fairly based and
have been made on reasonable grounds after due and proper enquiry and
consideration.
1.3 There are no facts known, or which could on reasonable enquiry have
been known, to any of the Directors which are not contained in the
Press Announcement, the omission of which would make any statement of
fact or any forecast, estimate or expression of opinion, intention or
expectation contained therein misleading in any material respect.
2. Circular
2.1 All statements of fact contained in the Circular are true and accurate
in all material respects and are not misleading in any material
respect.
2.2 All forecasts, estimates and expressions of opinion, intention or
expectation contained in the Circular are fairly based and have been
made on reasonable grounds after due and proper enquiry and
consideration.
2.3 There are no facts known, or which could on reasonable enquiry have
been known, to any of the Directors which are not contained in the
Circular, the omission of which would make any statement of fact or any
forecast, estimate or expression of opinion, intention or expectation
contained therein misleading in any material respect or which in the
context of the Issue are material for disclosure therein.
2.4 The Circular contains all such information as investors and their
professional advisers would reasonably require, and reasonably expect
to find there, for the purpose of making an informed assessment of:-
(a) the assets and liabilities, financial position, profits and
losses, and prospects of the Enlarged Group; and
(b) the rights attaching to the Stock Units and the New Ordinary
Shares,
in each case (i) including any such information within the knowledge of
the Directors or being reasonable to obtain by making enquiries and
(ii) having regard to the matters specified in section 146(3) of the
FSA.
2.5 There is no fact or circumstance which is not disclosed in the Circular
which Meggitt considers ought to be taken into account by the Stock
Exchange in considering the suitability for listing of the Stock Units
and the New Ordinary Shares.
-25-
<PAGE>
3. Accounts
3.1 The Accounts have been:-
(a) prepared on bases consistent with the bases upon which the
audited consolidated accounts of the Group for the year ended
31 December 1997 were prepared save as disclosed therein;
(b) prepared in accordance and comply with the Act and generally
accepted accounting principles and practices in the United
Kingdom consistently applied and all applicable Financial
Reporting Standards and Statements of Standard Accounting
Practice; and
(c) audited in accordance with the Act and all auditing standards
and guidelines issued by the Auditing Practices Board.
3.2 The Accounts give a true and fair view of the state of affairs of
Meggitt and the Group as at, and of the results and cash flows of the
Group for the period ended on, the Accounts Date and fairly set out the
assets, liabilities and reserves of the Group and either make proper
provision for or, where appropriate, include a note of all liabilities
or commitments, whether actual, deferred or contingent, of the Group as
at the Accounts Date.
4. Position since the Accounts Date
Since the Accounts Date, the Group has carried on business in the
ordinary and usual course and, save as disclosed in the Circular, there
has been no significant adverse change in the financial or trading
position or prospects of the Group taken as a whole and since the
Accounts Date no member of the Group has incurred any commitment or
liability of an onerous or unusual nature nor has any such company
become a party or otherwise subject to any contract or commitment of an
onerous or unusual nature which in either case is material for
disclosure in the context of the Issue and/or the underwriting of the
Stock Units.
5. Prior documents and announcements
In the case of each document issued and each announcement made by or on
behalf of Meggitt since the date of publication of the Accounts except
as disclosed in the Circular or in any document issued or announcement
made to the press, public or Stock Exchange after the issue of the
relevant document or announcement, each statement of fact contained
therein was when made and remains true and accurate in all material
respects and not misleading in any material respects and all forecasts,
estimates and expressions of opinion, intention or expectation
contained therein were when made and are honestly held and fairly based
and were made on reasonable grounds after due and proper enquiry and
consideration and there were no other facts known, or which on
reasonable enquiry could have been known, to the Directors, the
omission of which would make any such statement or expression therein
misleading or which were or might have been material in the context in
which the document or announcement was issued or made.
-26-
<PAGE>
6. Litigation
Save as disclosed in the Circular, no member of the Group nor, so far
as Meggitt is aware, any person for whom any member of the Group is or
may be vicariously liable is or has been involved in any civil,
criminal, arbitration or other proceedings (including, for this
purpose, any governmental, regulatory or similar investigation or
enquiry) which individually or collectively may have or have had during
the twelve months preceding the date of this agreement a significant
effect on the financial or trading position or prospects of the Group
taken as a whole or which individually or collectively are material for
disclosure in the context of the Issue and no such proceedings are
pending or threatened, so far as the Directors are aware (having made
all reasonable enquiries), there are no circumstances which are likely
to give rise to any such proceedings.
7. Capacity and compliance
7.1 As regards conversion rights, subject to the passing of the Resolution,
Meggitt, the Company and the Directors have power to enter into and
perform this agreement and, in particular, to allot and issue the Stock
Units in the manner proposed without any sanction or consent by members
of Meggitt or any class of them and there are no other consents,
authorisations or approvals required by Meggitt or the Company in
connection with the entering into and the performance of this agreement
and the allotment and issue of the Stock Units which have not been
irrevocably and unconditionally obtained.
7.2 The entering into of this agreement and the performance by Meggitt and
the Company of their obligations hereunder and the allotment and issue
of the Stock Units will comply with all agreements to which any member
of the Group is a party and will not infringe or exceed any limits,
powers or restrictions binding upon any member of the Group and/or any
of its assets or the terms of any contract, obligation or commitment of
any member of the Group.
7.3 The issue and publication of the Press Announcement and the Issue
Documents and the allotment and issue of the Stock Units in the manner
proposed will comply with the FSA, the Act, the Listing Rules, the
rules and regulations of the Stock Exchange and all other relevant laws
and regulations of the United Kingdom and elsewhere and all applicable
requirements of any regulatory body.
7.4 All statements made by or on behalf of Meggitt in connection with any
application to the London Stock Exchange for certain information to be
omitted from the Circular are true and accurate in all material
respects and are not misleading in any material respect and there are
no facts known to Meggitt or the Directors which have not been
disclosed to the London Stock Exchange in connection therewith which by
their omission make any such statements misleading in any material
respect or are material for disclosure to the London Stock Exchange in
connection therewith.
8. Default
8.1 No event or circumstance has occurred or arisen or, so far as the
Directors are aware, is about to occur or arise by reason of which any
person is, or would be, with the giving of notice and/or lapse of time
and/or a relevant determination become entitled to require
-27-
<PAGE>
repayment prior to its stated maturity, or to take any step to enforce
security for, any borrowings or indebtedness in the nature of borrowing
of Meggitt or any other member of the Group and neither Meggitt nor any
other member of the Group has received notice from any person to whom
any indebtedness which is repayable on demand is owed demanding
repayment of the same and neither Meggitt nor any of the Directors is
otherwise aware that any such person proposes to demand repayment of,
or to take any step to enforce any security for, the same, and which
would in any such case have a material adverse effect on the business,
assets or prospects of the Group taken as a whole.
8.2 No event or circumstance has occurred or arisen or, so far as the
Directors are aware, is about to occur which constitutes or results in,
or would with the giving of notice and/or lapse of time and/or the
making of a relevant determination, constitute, or result in, a default
or the acceleration or breach of any obligation under any agreement,
instrument or arrangement to which Meggitt or any other member of the
Group is a party or by which any such company or any of its properties,
revenues or assets are bound, and which would in any such case have a
material adverse effect on the businesses, assets or prospects of
Meggitt or the Group taken as a whole.
9. Shares
9.1 Save as specifically disclosed in the Circular, there are in force no
options or other agreements or arrangements which call for the issue
of, or accord to any person the right to call for the issue of, in
either case, whether conditionally or unconditionally, any shares or
other securities of Meggitt or any other member of the Group now or at
any time hereafter.
9.2 None of the shareholders of Meggitt have any rights, in their capacity
as such, in relation to the Group other than as set out in the articles
of association of Meggitt or which they have by law.
9.3 The Stock Units will, upon allotment, be free from all claims, charges,
liens, encumbrances and equities whatsoever and will, save as provided
in the Circular, rank pari passu on conversion in all respects with the
existing Ordinary Shares.
10. Insolvency
No trading member of the Group has taken any action, nor have any other
steps been taken or legal proceedings started or threatened against any
member of the Group, for its winding-up or dissolution or for it to
enter into any arrangement or composition for the benefit of creditors
or for the appointment of a receiver, trustee, administrator or similar
officer of it or any of its properties, revenues or assets.
11. Authority to carry on business
All material licences, permissions, authorisations and consents
required in any jurisdiction for the effective operation of the
businesses of the Group have been obtained and complied with and are in
full force and effect and, so far as the Directors are aware (having
made all reasonable enquiries), there are no circumstances which might
lead to any of such licences,
-28-
<PAGE>
permissions, authorisations and consents being revoked, suspended,
varied or refused renewal.
12. Working Capital Report/Statement
12.1 All information supplied by Meggitt to the Underwriter and/or the
Auditors in connection with the review of the working capital
requirements and indebtedness of the Group as set out in the Circular
was when given and to the best of Meggitt's knowledge, information and
belief remains true and accurate in all material respects and not
misleading in any material respect.
12.2 All information supplied by Meggitt to the Underwriter and/or or the
Auditors in connection with the review of the working capital
requirements and indebtedness of the Whittaker Group as set out in the
Circular to the extent that it was compiled from information made
available to Meggitt by Whittaker and its advisors has been correctly
and fairly reproduced and presented in the Circular and to the best of
Meggitt's knowledge, information and belief is true and accurate in all
material respects and not misleading in any material respect.
12.3 The Working Capital Report/Statement has been approved by the Directors
and has been made after due and careful enquiry. All statements of fact
in relation to the Group contained therein are true and accurate in all
material respects and not misleading in any material respect, all
forecasts, estimates and expressions of opinion, intention or
expectation in relation to the Group contained therein are made on
reasonable grounds after due and proper consideration and are fairly
based, there are no other facts known or which could on reasonable
enquiry have been known to the Directors the omission of which would
make any such statement or expression in the Working Capital
Report/Statement misleading in any material respect.
12.4 All statements of fact, forecasts, estimates and expressions of
opinion, intention or expectation in relation to the Whittaker Group
contained in the Working Capital Report have been based on or compiled
from information made available to Meggitt by Whittaker and its
advisors, and has been correctly and fairly reproduced and presented
and to the best of Meggitt's knowledge, information and belief is true
and accurate in all material respects and is not misleading in any
material respect and there are no other facts the omission of which
would make any such statement misleading in any material respect.
12.5 All the assumptions on which that Report/Statement is based are
assumptions which the Directors believe to be reasonable and, so far as
the Directors are aware, there are no other assumptions on which that
Report ought to have been based which have not been made and no other
fact which ought to have been taken into account in preparing the
Report.
12.6 Having regard to available bank and other facilities and the proceeds
of the Issue, the Enlarged Group will have sufficient working capital
for its present requirements, that is for not less than the next 12
months.
-29-
<PAGE>
13. Insurance
Meggitt has at all times effected such insurance as required by law and
the policies of insurance which are maintained by Meggitt afford, in
the reasonable opinion of the Directors, Meggitt adequate cover against
such risks as companies carrying on the same type of business as
Meggitt commonly cover by insurance and, so far as the Directors are
aware, there are no circumstances which are likely to lead to any
liability under such insurance being avoided by the insurers or the
premiums being increased and there is no material claim outstanding
under any such policy nor are any of the Directors aware of any
circumstances likely to give rise to any such claim.
14. US selling restrictions
14.1 None of Meggitt, the Company nor any of their affiliates nor any person
acting on behalf of Meggitt, the Company or any of their affiliates has
prior to the date hereof:-
(a) engaged in any directed selling efforts with respect to the
Provisional Allotment Letters, Stock Units or New Ordinary
Shares; or
(b) offered or sold Provisional Allotment Letters, Stock Units or
New Ordinary Shares by means of any form of general
solicitation or general advertising within the meaning of Rule
502(c) under the United States Securities Act of 1933, as
amended (the "Securities Act"); or
(c) offered or sold Provisional Allotment Letters, Stock Units or
New Ordinary Shares within the United States except in
accordance with Rule 903 of Regulation S under the Securities
Act ("Regulation S"), pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of
the Securities Act.
14.2 Terms used in warranty 14.1 have the meanings given to them by
Regulation S under the Securities Act.
14.3 So far as Meggitt is aware, there is no substantial US market interest
in the Stock Units or the New Ordinary Shares.
-30-
<PAGE>
SCHEDULE 3
Certificate
[Letterhead of Meggitt PLC]
N M Rothschild & Sons Limited
New Court
St. Swithin's Lane
London EC4P 4DU
June 1999
Dear Sirs,
Proposed Issue of 49,946,108 Stock Units of 5p each (the "Issue")
We refer to the proposed Issue and the underwriting agreement dated 9 June 1999
relating to the Issue (the "Underwriting Agreement"). Words and expressions
defined in the Underwriting Agreement have the same meanings herein.
We hereby confirm to you that:
(a) we have complied in all material respects with all our obligations
under the Underwriting Agreement which fall to be performed to date;
(b) the Stock Exchange has granted permission for the Stock Units to be
admitted to the Official List (subject only to the despatch of
Provisional Allotment Letters);
(c) the Company has complied in all material respects with its obligations
under the Underwriting Agreement to the extent that the same fall to be
performed prior to Admission;
(d) none of the Warranties was untrue or inaccurate at the date of the
Underwriting Agreement or is untrue or inaccurate so far as the
Directors and Meggitt are aware at the date of this letter by reference
to the facts and circumstances from time to time subsisting.
Yours faithfully,
..................................
Director, duly authorised,
for and on behalf of
Meggitt PLC
-31-
<PAGE>
Signed by E.J. LEWIS )
duly authorised for and on behalf of )
MEGGITT FUNDING LIMITED )
Signed by E.J. LEWIS )
duly authorised for and on behalf of )
MEGGITT PLC )
Signed by A.V. ALLEN )
duly authorised for and on behalf of )
N M ROTHSCHILD & SONS LIMITED )
-32-
</TABLE>
<PAGE>
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
Company and the Group as at the end of the financial year and of the result of
the Group for that period. In preparing those financial statements, the
directors are required to:
select suitable accounting policies and then apply them
consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Group and to enable them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
AUDITORS' REPORT TO THE MEMBERS
To the Members of Meggitt PLC
We have audited the financial statements on pages 24 to 46 which have been
prepared under the accounting policies set out on page 29.
Respective responsibilities of directors and auditors
As described above the Company's directors are responsible for the preparation
of financial statements. It is our responsibility to form an independent
opinion, based on our audit, on those statements and to report our opinion to
you.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the Company's and the Group's
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
In our opinion the financial statements give a true and fair view of the state
of affairs of the Company and the Group as at 31 December 1997 and of the profit
of the Group for the year then ended and have been properly prepared in
accordance with the Companies Act 1985.
Deloitte & Touche
Chartered Accountants and Registered Auditors, Bristol
24 April 1998
___________________________________________________________________________23___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
CONSOLIDATED PROFIT & LOSS ACCOUNT
for the year ended 31 December 1997
<TABLE>
<CAPTION>
1997 1996
Notes 'L''000 'L''000
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Turnover 2 265,126 256,299
Cost of sales (163,454) (166,984)
- -------------------------------------------------------------------------------------------------
Gross Profit 101,672 89,315
Net operating expenses 3 (69,102) (66,156)
Provisions released -- 2,440
- -------------------------------------------------------------------------------------------------
Operating Profit 4 32,570 25,599
Exceptional Items
Net profit on disposal of properties 5 214 --
Loss on disposal of discontinued operations (827) (30,749)
Provisions released 827 31,399
- -------------------------------------------------------------------------------------------------
Profit on Ordinary Activities Before Interest 32,784 26,249
Interest payable (net) 8 (1,324) (1,909)
- -------------------------------------------------------------------------------------------------
Profit on Ordinary Activities Before Taxation 31,460 24,340
Tax on profit on ordinary activities 9 (10,012) (7,932)
- -------------------------------------------------------------------------------------------------
Profit on Ordinary Activities After Taxation 21,448 16,408
Minority interests - equity 10 (897) (564)
- -------------------------------------------------------------------------------------------------
Profit for the Financial Year 20,551 15,844
Dividends 12 (10,357) (9,175)
- -------------------------------------------------------------------------------------------------
Retained Profit for the Financial Year 25 10,194 6,669
- -------------------------------------------------------------------------------------------------
Earnings per share 13 9.4p 7.3p
Earnings per share - IIMR basis 9.3p 7.0p
- -------------------------------------------------------------------------------------------------
</TABLE>
Turnover and Operating Profit for the year relate to continuing activities.
24 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
CONSOLIDATED BALANCE SHEET
as at 31 December 1997
<TABLE>
<CAPTION>
1997 1996
Notes 'L''000 'L''000
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed Assets
Intangible assets 14 72 307
Tangible assets 15 37,906 34,954
Investments 16 5,998 6,576
- -------------------------------------------------------------------------------------------------
43,976 41,837
- -------------------------------------------------------------------------------------------------
Current Assets
Stocks 17 38,375 40,545
Debtors 18 68,655 59,375
Cash at bank and in hand and short term deposits 19 40,335 33,948
- -------------------------------------------------------------------------------------------------
147,365 133,868
Creditors - amounts falling due within one year 20 (78,174) (72,945)
- -------------------------------------------------------------------------------------------------
Net Current Assets 69,191 60,923
- -------------------------------------------------------------------------------------------------
Total Assets Less Current Liabilities 113,167 102,760
Creditors - amounts falling due after more than one year 21 (37,911) (36,390)
Provisions for liabilities and charges - deferred tax 22 (912) (544)
- -------------------------------------------------------------------------------------------------
74,344 65,826
- -------------------------------------------------------------------------------------------------
Capital & Reserves
Called up share capital 23 10,996 10,915
Share premium account 25 55,077 53,601
Revaluation reserve 25 1,465 2,828
Other reserves 25 18,401 18,401
Merger reserve 25 37,619 37,619
Profit and loss account 25 36,888 27,087
- -------------------------------------------------------------------------------------------------
160,446 150,451
Goodwill reserve 25 (87,510) (85,725)
- -------------------------------------------------------------------------------------------------
Shareholders' Funds - Equity 72,936 64,726
Minority Interests - Equity 1,408 1,100
- -------------------------------------------------------------------------------------------------
74,344 65,826
- -------------------------------------------------------------------------------------------------
</TABLE>
The financial statements were approved by the Board of Directors on 24 April
1998 and signed on its behalf by:
M A Stacey Director
T Twigger Director
___________________________________________________________________________25___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
COMPANY BALANCE SHEET
as at 31 December 1997
<TABLE>
<CAPTION>
1997 1996
Notes 'L''000 'L''000
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed Assets
Tangible assets 15 417 489
Investments 16 156,816 157,478
- ----------------------------------------------------------------------------------------------
157,233 157,967
- ----------------------------------------------------------------------------------------------
Current Assets
Debtors 18 43,302 38,474
Cash at bank and in hand and short term deposits 19 18,179 12,481
- ----------------------------------------------------------------------------------------------
61,481 50,955
Creditors - amounts falling due within one year 20 (80,378) (89,325)
- ----------------------------------------------------------------------------------------------
Net Current Liabilities (18,897) (38,370)
- ----------------------------------------------------------------------------------------------
Total Assets Less Current Liabilities 138,336 119,597
Provisions for liabilities and charges - deferred tax 22 (188) --
- ----------------------------------------------------------------------------------------------
138,148 119,597
- ----------------------------------------------------------------------------------------------
Capital & Reserves
Called up share capital 23 10,996 10,915
Share premium account 25 41,013 39,537
Other reserves 25 17,556 17,556
Merger reserve 25 32,754 32,754
Profit and loss account 25 35,829 18,835
- ----------------------------------------------------------------------------------------------
138,148 119,597
- ----------------------------------------------------------------------------------------------
</TABLE>
The financial statements were approved by the Board of Directors on 24 April
1998 and signed on its behalf by:
M A Stacey Director
T Twigger Director
26 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 1997
<TABLE>
<CAPTION>
1997 1996
Notes 'L''000 'L''000
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Flow from Operating Activities 27 41,656 30,685
- ---------------------------------------------------------------------------------------------------
Returns on Investments & Servicing of Finance
Interest received 2,528 2,219
Interest paid (3,609) (3,975)
(1,081) (1,756)
Taxation (9,777) (4,951)
Capital Expenditure and Financial Investment
Purchase of tangible fixed assets (12,879) (8,556)
Sale of tangible fixed assets 28 2,144 805
(10,735) (7,751)
- ---------------------------------------------------------------------------------------------------
Cash Inflow Before Corporate Items 20,063 16,227
- ---------------------------------------------------------------------------------------------------
Acquisitions and Disposals
Purchase of subsidiary undertaking (5,220) (7,006)
Net cash/overdrafts acquired/disposed with subsidiaries -- (7,720)
Sale of businesses 28 (827) (2,299)
(6,047) (17,025)
Equity Dividends paid (9,541) (8,658)
- ---------------------------------------------------------------------------------------------------
Cash Inflow/(Outflow) before use of
Liquid Resources and Financing 4,475 (9,456)
- ---------------------------------------------------------------------------------------------------
Management of Liquid Resources
Sale of government securities -- 5,501
Reduction of other current asset investments 645 3,248
645 8,749
- ---------------------------------------------------------------------------------------------------
Financing
Issue of ordinary share capital 1,557 973
Debt due within one year:
increase in short term borrowings (15) 384
repayment of short term borrowings 895 (2,890)
Debt due beyond one year:
(decrease) in long term borrowings (35) (1,057)
2,402 (2,590)
- ---------------------------------------------------------------------------------------------------
Increase/(Decrease) in Cash in Period 30 7,522 (3,297)
- ---------------------------------------------------------------------------------------------------
</TABLE>
___________________________________________________________________________27___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
STATEMENT OF TOTAL
RECOGNISED GAINS & LOSSES
<TABLE>
<CAPTION>
1997 1996
'L''000 'L''000
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Profit for the financial year 20,551 15,844
Currency translation differences on foreign currency net investments (1,292) (2,008)
Revaluation adjustments (464) --
- -------------------------------------------------------------------------------------------------------------
Total recognised gains and losses relating to the year 18,795 13,836
- -------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE ON HISTORICAL COST
PROFITS & LOSSES
<TABLE>
<CAPTION>
1997 1996
'L''000 'L''000
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Reported profit on ordinary activities before taxation 31,460 24,340
Difference between historical cost depreciation charge and the actual
depreciation charge for the year calculated on the revalued amount 24 42
Difference between profit on disposal of property calculated on depreciated
historical cost and the actual profit on disposal calculated on the revalued amount 875 --
- -------------------------------------------------------------------------------------------------------------
Historical cost profit on ordinary activities before taxation 32,359 24,382
- -------------------------------------------------------------------------------------------------------------
Historical cost profit for the year retained after taxation,
minority interests and dividends 11,093 6,711
- -------------------------------------------------------------------------------------------------------------
</TABLE>
28 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 1997
1. Accounting Policies
Accounting Convention
The accounts are prepared in accordance with the historical cost accounting
convention, modified to include the revaluation of certain assets, and in
accordance with applicable Accounting Standards.
Basis of Consolidation
The Group financial statements consolidate the financial statements of the
Company and all subsidiaries for the financial periods ended 31 December 1997.
The results of all subsidiaries acquired during the year are included as from
their effective date of acquisition using the acquisition method of accounting.
The profit or loss on the disposal of a previously acquired business includes
the attributable amount of any purchased goodwill relating to that business.
Goodwill
Purchased goodwill and goodwill arising on consolidation are written off direct
to reserves in the year in which they arise.
Tangible Fixed Assets
Depreciation is not provided on freehold land. On other assets it is provided on
cost or revalued amounts in equal annual instalments over the estimated useful
lives of the assets as follows:
<TABLE>
<S> <C>
Freehold buildings 40 to 50 years
Long and short leasehold property over period of lease
Plant and machinery 5 to 10 years
Fixtures and fittings 3 to 10 years
Motor vehicles 4 to 5 years
</TABLE>
Investments
(i) Shares in Group companies are stated at cost less amounts written off
except for investments acquired before 1 January 1988 where Section 131
merger relief has been taken when investments are stated at the nominal
value of the shares issued in consideration.
(ii) Other investments are stated at cost less provision for permanent
diminution in value.
Stocks
Stocks are stated at the lower of cost and net realisable value. Cost represents
materials, direct labour and production overheads. Long term contracts are dealt
with in accordance with SSAP9 (revised). A prudent level of profit is taken
based on estimated percentage completion if the final outcome can be reliably
assessed.
Deferred Taxation
Deferred taxation is provided at the rate at which tax is expected to be paid on
differences arising from the inclusion of income and expenditure in taxation
computations in periods different from those in which they are included in the
financial statements to the extent that it is probable that a liability or asset
will crystallise in the future.
Foreign Currencies
Assets and liabilities expressed in foreign currencies are translated into
sterling at rates of exchange ruling at the end of the financial year. Trading
results of foreign subsidiaries are translated at rates of exchange ruling
during the year. Profits and losses arising from the translation into sterling
of the balance sheets of overseas subsidiaries and foreign currency loans held
by UK companies for the purpose of financing overseas investments are taken to
reserves. Other exchange differences are dealt with through the profit and loss
account.
Research & Development
All research and development expenditure is written off as incurred.
Pension Scheme Arrangements
The Group operates a number of contributory pension schemes and accounts for
pension costs in accordance with the requirements of SSAP24.
Defined benefit pension costs and the costs of providing other post
retirement benefits are charged to the profit and loss account on a systematic
basis over the service lives of the eligible employees in accordance with the
advice of qualified independent actuaries.
Defined contribution pension costs charged to the profit and loss account
represent contributions payable in respect of the year.
Leases
Assets held under finance leases and the related lease obligations are recorded
in the balance sheet at the fair value of the leased assets at the inception of
the leases. The excess of the lease payments over the recorded lease obligations
are treated as finance charges which are amortised over each lease term to give
a constant rate of charge on the remaining balance of the obligation. Rental
costs under operating leases are charged to profit and loss account in equal
annual amounts over the periods of the leases.
___________________________________________________________________________29___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
2. Analysis of Turnover
<TABLE>
<CAPTION>
Turnover by Segment 1997 1996
'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Aerospace 116,295 97,431
Electronics 99,930 98,060
Industrial Controls 48,901 51,699
- --------------------------------------------------------------------------------
265,126 247,190
Discontinued -- 9,109
- --------------------------------------------------------------------------------
265,126 256,299
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Turnover by Country 1997 1996 1997 1996
'L''000 'L''000 'L''000 'L''000
By Origin By Destination
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UK 150,276 134,839 95,959 85,549
Rest of Europe 33,397 45,044 67,345 78,420
North America 80,698 74,725 75,499 68,415
Rest of World 755 1,691 26,323 23,915
- --------------------------------------------------------------------------------
265,126 256,299 265,126 256,299
- --------------------------------------------------------------------------------
<CAPTION>
Analysis of Profit and Assets
Operating profit and assets 1997 1996 1997 1996
by Segment 'L''000 'L''000 'L''000 'L''000
Operating Operating
Profit/(Loss) Assets
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aerospace 19,203 14,671 30,389 29,200
Electronics 12,042 9,274 28,719 28,134
Industrial Controls 3,103 3,511 11,986 10,921
Unallocated (1,778) (1,857) 2,875 1,407
- --------------------------------------------------------------------------------
32,570 25,599 73,969 69,662
- --------------------------------------------------------------------------------
<CAPTION>
Operating profit and assets 1997 1996 1997 1996
by Country of Origin 'L''000 'L''000 'L''000 'L''000
Operating Operating
Profit/(Loss) Assets
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UK 16,454 11,236 43,728 40,545
Rest of Europe 4,091 2,918 8,060 9,770
North America 12,464 11,649 22,130 19,100
Rest of World (439) (204) 51 247
- --------------------------------------------------------------------------------
32,570 25,599 73,969 69,662
- --------------------------------------------------------------------------------
</TABLE>
Operating assets exclude cash and borrowing and deferred tax.
30 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
3. Note to the Profit & Loss Account
<TABLE>
<CAPTION>
Continuing Discontinued Total
Total Operations Operations
1997 1996 1996 1996
'L''000 'L''000 'L''000 'L''000
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Turnover 265,126 247,190 9,109 256,299
- ------------------------------------------------------------------------------------------
Cost of sales (163,454) (157,109) (9,875) (166,984)
- ------------------------------------------------------------------------------------------
Net operating expenses
Distribution costs (26,830) (26,922) (536) (27,458)
Research and development expenditure (12,673) (11,429) -- (11,429)
Administration expenses (29,760) (26,300) (1,139) (27,439)
Other operating income 161 169 1 170
- ------------------------------------------------------------------------------------------
(69,102) (64,482) (1,674) (66,156)
- ------------------------------------------------------------------------------------------
Provisions released -- -- 2,440 2,440
- ------------------------------------------------------------------------------------------
Operating profit 32,570 25,599 -- 25,599
- ------------------------------------------------------------------------------------------
</TABLE>
The total figures in 1997 relate solely to continuing operations.
<TABLE>
<CAPTION>
4. Operating Profit 1997 1996
'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Operating profit is stated after crediting:
Rents receivable 442 453
And after charging:
Depreciation and amortisation of fixed assets 7,097 7,192
Loss on disposal of fixed assets 52 61
Auditors' remuneration - audit services 450 473
- non-audit services in the UK 253 192
Hire of plant and machinery 527 714
Other operating leases 7,325 7,269
- ------------------------------------------------------------------------------------------
</TABLE>
5. Exceptional Items
A net exceptional profit of 'L'214,000 arose in 1997 relating to the disposal of
properties, analysed as follows:
<TABLE>
<CAPTION>
'L''000
<S> <C>
Profit on the sale of freehold property 2,227
Provision for the loss on disposal of freehold property and leases (1,825)
Disposal costs (188)
- --------------------------------------------------------------------------------
Net Exceptional Items 214
- --------------------------------------------------------------------------------
</TABLE>
___________________________________________________________________________31___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
<TABLE>
<CAPTION>
6. Information Regarding Employees 1997 1996
'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Employee costs during the year including directors:
Wages and salaries 77,080 77,781
Social security costs 8,682 10,124
Other pension costs 3,954 4,274
- --------------------------------------------------------------------------------
Total direct costs of employment 89,716 92,179
- --------------------------------------------------------------------------------
Average number of persons employed including directors:
Production 2,924 3,079
Selling and distribution 386 417
Administration 457 497
- --------------------------------------------------------------------------------
3,767 3,993
- --------------------------------------------------------------------------------
</TABLE>
7. Directors' Emoluments and Share Interests
Directors' Emoluments
<TABLE>
<CAPTION>
Total Emoluments
excluding Pension
Basic Bonus _________________
Salary Fees Benefits Payments Pension Pension
1997 1997 1997 1997 1997 1996 1997 1996
'L' 'L' 'L' 'L' 'L' 'L' 'L' 'L'
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Non executive chairman
K H Coates -- 46,750 -- -- 46,750 59,994 -- --
Payments in respect of notional
share gains -- 267,424
- ---------------------------------------------------------------------------------------------------------------------------
Executive directors
M A Stacey 180,557 -- 13,033 90,125 283,715 241,994 75,643 68,810
D B Gemmell 16,669 -- 1,467 7,500 25,636 -- 4,130 --
T Twigger 131,632 -- 8,544 59,096 199,272 172,635 51,126 46,875
- ---------------------------------------------------------------------------------------------------------------------------
Non executive directors
Sir Alan Cox -- 21,198 -- -- 21,198 12,366 -- --
The Rt Hon Sir Richard Needham -- 1,298 -- -- 1,298 -- -- --
Sir Donald Spiers -- 20,000 -- -- 20,000 20,000 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Former directors
J D Driver -- -- -- -- -- 18,332 -- --
H N P McCorkell -- -- -- -- -- 2,213 -- 866
Payments in respect of notional
share gains -- 210,948
P J Ryder 4,056 -- 246 -- 4,302 149,639 1,336 51,659
- ---------------------------------------------------------------------------------------------------------------------------
Total excluding notional
share gains 332,914 89,246 23,290 156,721 602,171 677,173 132,235 168,210
Total payments in respect of
notional share gains -- 478,372
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Basic salary includes payments made under the Group's Profit Related Pay scheme.
The highest paid director in 1997 was Mr M A Stacey (1996 - Mr K H Coates).
In addition to the emoluments for 1997 set out above, the executive directors
were allocated shares at an initial market value of 119.98p under the Rules of
the Profit Sharing Share Scheme as follows:
<TABLE>
<CAPTION>
Ordinary Shares of 5p each
<S> <C>
M A Stacey 861
T Twigger 669
</TABLE>
These shares have been included in the share interests shown in the table on
page 33.
Termination payments of 'L'320,947 together with a pension contribution of
'L'43,278 were paid in respect of Mr P J Ryder in the year which were provided
in full in the 1996 accounts.
32 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
7. Directors' Emoluments and Share Interests continued
Directors' Pension Benefits
<TABLE>
<CAPTION>
M A Stacey B Gemmell T Twigger
Meggitt Executive Pension Plan 'L' 'L' 'L'
--------------------------------------
<S> <C> <C> <C>
Company Payments 1996 23,983 -- 23,983
1997 24,647 4,130 24,647
--------------------------------------
Increase in accrued pension in year 1,300 467 1,300
Transfer value of the increase 14,000 6,333 8,700
Accumulated total accrued pension at 31.12.97 10,000 14,900 6,200
--------------------------------------
Funded Unapproved Retirement and Death Benefits Scheme
Company Payments 1996 44,827 -- 22,892
1997 50,996 -- 26,479
--------------------------------------
</TABLE>
Directors' Share Interests
The beneficial interests of the directors in the ordinary shares of the Company
at 31 December 1996 (or date of appointment if later) and 31 December 1997 were
as follows:
<TABLE>
<CAPTION>
Shareholdings
Ordinary Shares of 5p each
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
K H Coates 567,804 915,804
M A Stacey 83,234 79,565
Sir Alan Cox 20,202 --
The Rt Hon Sir Richard Needham 4,000 4,000
Sir Donald Spiers 9,041 8,744
T Twigger 5,472 4,596
D B Gemmell 1,314 1,310
- --------------------------------------------------------------------------------
</TABLE>
The directors' interests in options over the ordinary share capital of the
Company and movements therein during the year are set out below:
<TABLE>
<CAPTION>
Number of Options Date from
1 January 31 December Exercise which Expiry
1997* Granted 1997 Price Exercisable Date
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
M A Stacey
1984 Scheme 56,226 -- 56,226 46.13p 25.10.93 24.10.00
50,000 -- 50,000 101.83p 14.05.95 13.05.02
50,000 -- 50,000 100.50p 29.04.96 28.04.03
40,000 -- 40,000 72.50p 24.10.97 23.10.04
1996 No 2 Scheme 348,258 -- 348,258 100.50p 19.06.99 18.06.03
-- 145,833 145,833 120.00p 27.03.00 26.03.04
SAYE Scheme 4,126 -- 4,126 83.60p 01.01.99 30.06.99
- --------------------------------------------------------------------------------------
548,610 145,833 694,443
- --------------------------------------------------------------------------------------
D B Gemmell
1984 Scheme 15,000 -- 15,000 100.50p 29.04.96 28.04.03
20,000 -- 20,000 72.50p 24.10.97 23.10.04
1996 No 2 Scheme 111,940 -- 111,940 100.50p 19.06.99 18.06.03
62,500 -- 62,500 120.00p 27.03.00 26.03.04
- --------------------------------------------------------------------------------------
209,440 -- 209,440
- --------------------------------------------------------------------------------------
T Twigger
1984 Scheme 75,000 -- 75,000 72.50p 24.10.97 23.10.04
1996 No 2 Scheme 253,731 -- 253,731 100.50p 19.06.99 18.06.03
-- 106,250 106,250 120.00p 27.03.00 26.03.04
SAYE Scheme 4,798 -- 4,798 71.90p 01.01.01 30.06.01
- --------------------------------------------------------------------------------------
333,529 106,250 439,779
- --------------------------------------------------------------------------------------
</TABLE>
* or date of appointment if later.
None of the options listed above was exercised or lapsed during the year.
Between 1 January 1998 and 31 March 1998 (the latest date for which it was
practical to obtain the information) the following changes in directors'
interests occurred: as a result of PEP dividend reinvestment Mr T Twigger
acquired 46 shares, Mr M A Stacey exercised his options to acquire 196,226
shares and subsequently sold 88,625 shares, Mr T Twigger exercised his options
to acquire 75,000 shares and subsequently sold 10,570 shares and Mr D B Gemmell
exercised his options to acquire 35,000 shares and subsequently sold 5,850
shares.
The market price of the ordinary shares at 31 December 1997 was 156p and
the range during the year was 102p to 156p. Options may, in certain
circumstances, be exercised or lapse earlier than the dates shown above.
___________________________________________________________________________33___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
7. Directors' Emoluments and Share Interests continued
The directors' interests in the Restricted Share Scheme are set out below:
<TABLE>
<CAPTION>
Date from
Date of Value of Number which Expiry
Award Award'L' of Shares Exercisable Date
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
M A Stacey 29.04.96 54,250 55,823 29.04.99 29.04.03
D B Gemmell 29.04.96 21,000 21,609 29.04.99 29.04.03
T Twigger 29.04.96 33,825 34,806 29.04.99 29.04.03
- --------------------------------------------------------------------------------
</TABLE>
The awards may be exercised for a consideration of 'L'1.
The directors' interests in the Equity Participation Scheme are set out below:
<TABLE>
<CAPTION>
First date for
Date of Value of Number transfer to
Allocation Allocation'L' of Shares Directors
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
M A Stacey 27.03.97 52,500 43,568 27.03.00
D B Gemmell 27.03.97 22,500 18,672 27.03.00
T Twigger 27.03.97 38,250 31,742 27.03.00
- --------------------------------------------------------------------------------
</TABLE>
The shares may be transferred for no consideration.
In addition to the above, the following share scheme is available for executive
directors:
1996 No 1 Executive Share Option Scheme - no grants were made to directors
during the year under this Inland Revenue approved scheme.
There are currently no other schemes to benefit directors by enabling them
to acquire shares in or debentures of the Company or any other company.
<TABLE>
<CAPTION>
8. Interest 1997 1996
'L''000 'L''000
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest receivable and similar income:
Interest on bank deposits 2,166 1,778
Other income 17 175
- --------------------------------------------------------------------------------------------------------
2,183 1,953
- --------------------------------------------------------------------------------------------------------
Interest payable and similar charges:
Bank loans, overdrafts and other loans repayable within five years:
Repayable by instalments 3,163 3,324
Repayable other than by instalments 344 538
- --------------------------------------------------------------------------------------------------------
3,507 3,862
- --------------------------------------------------------------------------------------------------------
Interest payable net (1,324) (1,909)
- --------------------------------------------------------------------------------------------------------
<CAPTION>
9. Taxation on Profit on Ordinary Activities 1997 1996
'L''000 'L''000
<S> <C> <C>
United Kingdom corporation tax, based on profit for the year at 31.5% (1996 - 33%) 5,844 5,249
Deferred taxation 253 (580)
Double tax relief (93) (308)
Overseas taxation - current 3,327 3,742
- deferred 110 (69)
- --------------------------------------------------------------------------------------------------------
Taxation charge for the year 9,441 8,034
Taxation under/(over) provided in previous years 571 (102)
- --------------------------------------------------------------------------------------------------------
10,012 7,932
- --------------------------------------------------------------------------------------------------------
</TABLE>
The charge for the year has been reduced by 'L'26,000 (1996 - 'L'577,000) by
utilisation of tax losses brought forward from prior years. In the case of
subsidiary companies which are not resident in the United Kingdom for tax
purposes, provision is made for foreign taxes on profits. Provision is made for
withholding taxes on proposed dividends from overseas subsidiaries.
34 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
10. Minority Interests - Equity
Minority interests represent the share of the year's results attributable to the
minority of 'L'897,000 (1996 - 'L'564,000).
11. Profit of Parent Company
The consolidated profit attributable to the shareholders of Meggitt PLC includes
a profit, after dividends received, of 'L'25,988,000 (1996 - profit of
'L'688,000) which has been dealt with in the accounts of that Company. Meggitt
PLC has taken advantage of the legal dispensation allowing it not to publish a
separate profit and loss account.
<TABLE>
<CAPTION>
12. Dividends 1997 1996
'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Interim of 1.5p per share paid (1996 - 1.35p per share) 3,319 2,953
Final of 3.2p per share proposed (1996 - 2.85p per share) 7,038 6,222
- --------------------------------------------------------------------------------
10,357 9,175
- --------------------------------------------------------------------------------
</TABLE>
13. Earnings per Ordinary Share
The calculation of earnings per ordinary share is based on profits of
'L'20,531,000 (1996 -'L'15,844,000) and on the weighted average of 219,151,407
ordinary shares in issue during the year (1996 - 217,598,042). No material
dilution of earnings per share would arise if all outstanding share options were
exercised.
The Institute of Investment Management and Research (IIMR) has devised a
'headline' measure of earnings per share which provides an alternative measure
assessing performance excluding exceptional items.
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Earnings per share 9.4p 7.3p
Add back exceptional costs:
Profit on disposals -- (0.3p)
Profit on sale of property (0.1p) --
- --------------------------------------------------------------------------------
Earnings per share IIMR basis 9.3p 7.0p
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
14. Intangible Fixed Assets Patents &
Trademarks Licences Total
'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Group
Cost at 1 January 1997 312 538 850
Exchange rate adjustments (13) 5 (8)
Additions 1 6 7
Disposals -- (343) (343)
- --------------------------------------------------------------------------------
Cost at 31 December 1997 300 206 506
- --------------------------------------------------------------------------------
Amounts written off at 1 January 1997 217 326 543
Additional provision during the year 18 36 54
Exchange rate adjustments (7) (8) (15)
Disposals -- (148) (148)
- --------------------------------------------------------------------------------
Amounts written off at 31 December 1997 228 206 434
- --------------------------------------------------------------------------------
Net Book Value at 31 December 1997 72 -- 72
- --------------------------------------------------------------------------------
Net Book Value at 31 December 1996 95 212 307
- --------------------------------------------------------------------------------
</TABLE>
These assets represent the cost of manufacturing licences, patents and
trademarks and are being written off over the period of the agreements.
___________________________________________________________________________35___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
15. Tangible Fixed Assets
The movements in the fixed asset accounts during the year were as follows:
<TABLE>
<CAPTION>
Group Company
--------------------------------- --------------------------------
Plant Plant
Land & Equipment Land & Equipment
Buildings & Vehicles Total Buildings & Vehicles Total
'L''000 'L''000 'L''000 'L''000 'L''000 'L''000
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cost or valuation at 1 January 1997 21,073 70,664 91,737 248 1,059 1,307
Exchange rate adjustments (182) (753) (935) -- -- --
Subsidiaries acquired/(disposed)-net 8 452 460 -- -- --
Additions 1,626 11,628 13,254 -- 99 99
Disposals (3,141) (3,440) (6,581) -- (140) (140)
Intra Group transfers -- -- -- -- (18) (18)
- -------------------------------------------------------------------------------------------------------------------
Cost or valuation at 31 December 1997 19,384 78,551 97,935 248 1,000 1,248
- -------------------------------------------------------------------------------------------------------------------
At valuation 8,284 -- 8,284 -- -- --
At cost 11,100 78,551 89,651 -- -- --
- -------------------------------------------------------------------------------------------------------------------
Accumulated depreciation at 1 January 1997 6,118 50,665 56,783 63 755 818
Exchange rate adjustments (30) (515) (545) -- -- --
Subsidiaries acquired/(disposed)-net -- -- -- -- -- --
Charge for year 728 6,315 7,043 6 121 127
Disposals (97) (3,155) (3,252) -- (103) (103)
Intra Group transfers -- -- -- -- (11) (11)
- -------------------------------------------------------------------------------------------------------------------
Accumulated depreciation at 31 December 1997 6,719 53,310 60,029 69 762 831
- -------------------------------------------------------------------------------------------------------------------
Net Book Value at 31 December 1997 12,665 25,241 37,906 179 238 417
- -------------------------------------------------------------------------------------------------------------------
Net Book Value at 31 December 1996 14,955 19,999 34,954 185 304 489
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Group Company
1997 1996 1997 1996
'L''000 'L''000 'L''000 'L''000
Net book value of land and buildings -------------------- -----------------
<S> <C> <C> <C> <C>
Freehold 8,014 9,967 109 109
Long leasehold 1,358 1,394 -- --
Short leasehold 3,293 3,594 70 76
- --------------------------------------------------------------------------------
12,665 14,955 179 185
- --------------------------------------------------------------------------------
</TABLE>
The Group's freehold and long leasehold property were valued by Montagu Evans,
Chartered Surveyors on an existing use basis as at 31 December 1989.
On a historic cost basis land and buildings would be included at cost of
'L'17,847,000 (1996 - 'L'18,032,000) less depreciation of 'L'6,573,000 (1996 -
'L'5,906,000) giving a net book value of 'L'11,274,000 (1996 - 'L'12,126,000).
The net book value of the Group's fixed assets includes 'L'127,000 (1996 -
'L'98,000) in respect of assets held under finance leases and hire purchase
contracts.
36 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
16. Investments Held as Fixed Assets
<TABLE>
<CAPTION>
Group Company
------------------- ------------------
1997 1996 1997 1996
'L''000 'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares in subsidiaries (a) -- -- 156,816 157,478
Other investments (b) 5,998 6,576 -- --
- --------------------------------------------------------------------------------
5,998 6,576 156,816 157,478
- --------------------------------------------------------------------------------
(a) Shares in subsidiaries
At 1 January 1997 157,478 158,659
Intra Group transfers -- (3,447)
Disposal of subsidiaries (5) --
Amounts provided (657) (1,114)
Provisions released -- 3,380
- --------------------------------------------------------------------------------
At 31 December 1997 156,816 157,478
- --------------------------------------------------------------------------------
(b) Other investments
At 1 January 1997 6,576 3,400 -- --
Acquired -- 3,409 -- --
Amounts provided (578) (233) -- --
- --------------------------------------------------------------------------------
At 31 December 1997 5,998 6,576 -- --
- --------------------------------------------------------------------------------
</TABLE>
Other investments represent:
(i) Sunvic Holding GmbH (incorporated in Germany) representing 46% of the
issued ordinary share capital (acquired on 13 February 1996 arising from
the transfer of a controlling interest in the Sunvic Group to investment
funds managed by Schroder Venture Advisers and four senior Sunvic
managers).
The share capital at 31 December 1997 was DM 1,960,000 of which shares
totalling DM 900,000 are held by Meggitt Properties PLC. The Sunvic
Group operates principally in Germany and the Benelux countries.
Shareholders' funds at 31 December 1997 were DM 17.6 million (1996 - DM
18.5 million). The loss attributable to the shareholders for the year to 31
December 1997 was DM 0.9 million (1996 - DM 1.7 million).
(ii) TGE Group Ltd (registered in England and Wales) representing 15% of issued
ordinary share capital.
The Group has no significant influence over these investments and, as a
consequence, they are held as external investments at historical costs less
provisions.
17. Stocks
<TABLE>
<CAPTION>
Group
-------------------
1997 1996
'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Contract work in progress less provision for losses 845 1,498
Progress claims (220) (264)
- --------------------------------------------------------------------------------
Net contract work in progress 625 1,234
Raw materials and bought-in components 16,365 17,704
Manufacturing work in progress 11,372 10,884
Finished goods and goods for resale 10,013 10,723
- --------------------------------------------------------------------------------
38,375 40,545
- --------------------------------------------------------------------------------
</TABLE>
___________________________________________________________________________37___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
18. Debtors
<TABLE>
<CAPTION>
Group Company
---------------- ----------------
1997 1996 1997 1996
'L''000 'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amounts falling due within one year
Trade debtors 49,338 42,649 65 45
Amounts recoverable on contracts 1,828 1,812 -- --
Amounts owed by Group companies -- -- 37,722 35,190
Other debtors 8,316 5,067 1,311 1,016
Prepayments and accrued income 1,853 2,527 72 111
Tax recoverable 510 390 717 473
- --------------------------------------------------------------------------------
61,845 52,445 39,887 36,835
- --------------------------------------------------------------------------------
Amounts falling due after one year
Trade debtors 162 252 -- --
Other debtors 5,446 5,876 1,999 146
Tax recoverable (principally ACT) 1,202 802 1,416 1,493
- --------------------------------------------------------------------------------
6,810 6,930 3,415 1,639
- --------------------------------------------------------------------------------
68,655 59,375 43,302 38,474
- --------------------------------------------------------------------------------
</TABLE>
Other debtors includes 'L'331,000 (1996 - 'L'181,000) in respect of loans made
to the trustee of the Employee Share Ownership Plan for the purpose of
purchasing shares in the Company.
Amounts have been made available to the trustee (Mourant & Co Ltd, St Helier,
Jersey) as follows:
<TABLE>
<CAPTION>
Scheme Date of Award Value of Award Number of Shares
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Restricted Share Scheme 29.04.96 'L'272,085 279,966
Equity Participation Scheme 27.03.97 'L'360,933 299,529
</TABLE>
The shares may be transferred to the participating employees after three years.
These amounts are being amortised to the profit and loss account over the
relevant periods.
19. Cash at Bank and in Hand & Short Term Deposits
<TABLE>
<CAPTION>
Group Company
---------------- ----------------
1997 1996 1997 1996
'L''000 'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash at bank and in hand 40,335 33,247 18,179 12,481
Short term deposits -- 701 -- --
- --------------------------------------------------------------------------------
40,335 33,948 18,179 12,481
- --------------------------------------------------------------------------------
</TABLE>
20. Creditors - Amounts Falling Due Within One Year
<TABLE>
<CAPTION>
Group Company
---------------- ----------------
1997 1996 1997 1996
'L''000 'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bank loans and overdrafts (see note 21) 8,181 8,113 7,096 7,678
Other loans (see note 21) 166 272 -- --
Payments received on account 1,702 2,100 -- --
Trade creditors 22,981 21,945 199 352
Amounts owed to Group companies -- -- 61,548 70,699
UK corporation tax payable 4,780 3,930 -- --
ACT on dividends 2,658 2,221 2,533 2,201
Overseas tax 1,244 2,317 -- --
Obligations under finance leases
and hire purchase contracts 27 17 -- --
Taxation and social security 1,836 1,780 465 272
Other creditors 13,958 13,731 223 900
Accruals 13,603 10,297 1,276 1,001
Dividends 7,038 6,222 7,038 6,222
- --------------------------------------------------------------------------------
78,174 72,945 80,378 89,325
- --------------------------------------------------------------------------------
</TABLE>
38 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
21. Creditors - Amounts Falling Due After More Than One Year
<TABLE>
<CAPTION>
Group Company
---------------- ---------------
1997 1996 1997 1996
'L''000 'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
US $60 million 8% Senior Notes (maturity date April 2000) 36,364 35,088 -- --
Obligations under finance leases and hire purchase contracts 64 29 -- --
Other loans 244 299 -- --
Other creditors 1,239 974 -- --
- --------------------------------------------------------------------------------------------------
37,911 36,390 -- --
- --------------------------------------------------------------------------------------------------
Analysis of bank repayments
Bank loans and overdrafts repayable:
within one year 8,181 8,113 7,096 7,678
- --------------------------------------------------------------------------------------------------
8,181 8,113 7,096 7,678
- --------------------------------------------------------------------------------------------------
Lease and hire purchase obligations:
Amounts repayable:
within one year 27 17 -- --
between one and five years 56 19 -- --
after five years 8 10 -- --
- --------------------------------------------------------------------------------------------------
91 46 -- --
- --------------------------------------------------------------------------------------------------
Other loans repayable:
within one year 166 272 -- --
between one and two years 62 129 -- --
between two and five years 162 146 -- --
after five years 20 24 -- --
- --------------------------------------------------------------------------------------------------
410 571 -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
There are no secured loans except for lease and hire purchase obligations which
are secured by retention of title to the relevant asset.
22. Deferred Tax
<TABLE>
<CAPTION>
Group Company
'L''000 'L''000
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at 1 January 1997 544 (56)
Charged to profit and loss account 275 587
Foreign exchange movements (61) --
Movement in recoverable advance corporation tax offset against deferred tax 154 (343)
- --------------------------------------------------------------------------------------------------
Balance at 31 December 1997 912 188
- --------------------------------------------------------------------------------------------------
</TABLE>
Amounts of deferred taxation have been provided in the financial statements as
follows:
<TABLE>
<CAPTION>
Group Company
---------------- ---------------
1997 1996 1997 1996
'L''000 'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital allowances in excess of depreciation 814 675 (28) (31)
Unrelieved losses (25) (27) 559 --
Short term timing differences 680 607 -- (25)
- --------------------------------------------------------------------------------------------------
1,469 1,255 531 (56)
Less recoverable advance corporation tax (557) (711) (343) --
- --------------------------------------------------------------------------------------------------
912 544 188 (56)
- --------------------------------------------------------------------------------------------------
</TABLE>
There are unprovided tax losses of 'L'807,000 (1996 - 'L'818,000) carried
forward in respect of subsidiaries which may be set against future taxable
profits.
No potential deferred tax arising on the revaluation of assets has been
disclosed as no disposals are envisaged in the foreseeable future which would
give rise to a material liability.
There are no other unprovided amounts in respect of deferred taxation. No
provision has been made for taxation that would arise in the event of overseas
subsidiaries distributing the balance of their reserves.
The Company's deferred tax asset for 1996 has been included in other debtors.
___________________________________________________________________________39___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
23. Called Up Share Capital
<TABLE>
<CAPTION>
1997 1996
'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Ordinary shares of 5p each
Authorised: 270,000,000 shares (1996 - 270,000,000) 13,500 13,500
- --------------------------------------------------------------------------------
<CAPTION>
Nominal
No of Value
Shares 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Allotted and fully paid:
Balance at 1 January 1997 218,307,110 10,915
Issued on exercise of executive share options 1,374,960 69
Issued on exercise of SAYE share options 14,370 1
Scrip dividends 222,826 11
- --------------------------------------------------------------------------------
Balance at 31 December 1997 219,919,266 10,996
- --------------------------------------------------------------------------------
</TABLE>
The following options to subscribe for ordinary shares granted under various
share option schemes were outstanding at 31 December 1997.
(i) Meggitt PLC Savings Related Share Option Scheme:
<TABLE>
<CAPTION>
No of Exercise period
ordinary shares Exercise price ------------------
Year of grant under option per share From To
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 377,684 83.60p 1.1.99 30.6.99
1995 608,524 71.90p 1.1.01 30.6.01
- --------------------------------------------------------------------------------
</TABLE>
The options, which were granted for nil consideration, may in certain
circumstances be exercised earlier than the dates given.
(ii) Meggitt PLC 1984 Share Option Scheme:
<TABLE>
<CAPTION>
No of Exercise period
ordinary shares Exercise price ------------------
Year of grant under option per share From To
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1988 39,832 100.26p 28.04.91 27.04.98
1989 55,764 119.56p 15.05.92 14.05.99
1990 26,556 68.25p 14.05.93 13.05.00
1990 56,226 46.13p 25.10.93 24.10.00
1991 15,933 74.56p 19.04.94 18.04.01
1992 113,000 101.83p 14.05.95 13.05.02
1993 202,500 100.50p 29.04.96 28.04.03
1994 372,500 72.50p 24.10.97 23.10.04
- --------------------------------------------------------------------------------
</TABLE>
The options, which were granted for nil consideration, may in certain
circumstances be exercised earlier than the dates given.
40 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
(iii) Meggitt 1996 No 1 Executive Share Option Scheme:
<TABLE>
<CAPTION>
No of Exercise period
ordinary shares Exercise price ------------------
Year of grant under option per share From To
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 287,925 106.00p 26.09.99 25.09.06
1997 77,032 120.50p 27.03.00 26.03.07
1997 100,182 136.50p 25.09.00 24.09.07
- --------------------------------------------------------------------------------
</TABLE>
The options, which were granted for nil consideration, may in certain
circumstances be exercised earlier than the dates given.
(iv) Meggitt 1996 No 2 Executive Share Option Scheme:
<TABLE>
<CAPTION>
No of Exercise period
ordinary shares Exercise price ------------------
Year of grant under option per share From To
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 2,243,772 100.50p 19.06.99 18.06.03
1996 407,075 106.00p 26.09.99 25.09.03
1997 875,655 120.00p 27.03.00 26.03.04
1997 459,818 136.50p 25.09.00 24.09.04
- --------------------------------------------------------------------------------
</TABLE>
The options, which were granted for nil consideration, may in certain
circumstances be exercised earlier than the dates given.
(v) Meggitt PLC Discretionary Overseas Share Option Scheme:
<TABLE>
<CAPTION>
No of Exercise period
ordinary shares Exercise price ------------------
Year of grant under option per share From To
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1989 124,814 119.56p 15.05.92 14.05.99
1990 37,178 68.25p 14.05.93 13.05.00
1991 47,800 74.56p 19.04.94 18.04.01
1992 76,000 101.83p 14.05.95 13.05.02
1993 128,000 100.50p 29.04.96 28.04.03
1994 100,000 72.50p 24.10.97 23.10.04
- --------------------------------------------------------------------------------
</TABLE>
The options, which were granted for nil consideration, may in certain
circumstances be exercised earlier than the dates given.
24. Reconciliation of Movements in Shareholders' Funds
<TABLE>
<CAPTION>
1997 1996
'L''000 'L''000
- -----------------------------------------------------------------------------------
<S> <C> <C>
Profit for the financial year 20,551 15,844
Goodwill on disposals transferred to profit and loss account -- 16
Dividends (10,357) (9,175)
Other recognised losses relating to the year (1,292) (2,008)
New share capital subscribed 1,557 973
Goodwill written off - acquisitions (1,785) (4,499)
Revaluation adjustments (464) --
- -----------------------------------------------------------------------------------
Net increase in shareholders' funds 8,210 1,151
Opening shareholders' funds 64,726 63,575
- -----------------------------------------------------------------------------------
Closing shareholders' funds 72,936 64,726
- -----------------------------------------------------------------------------------
</TABLE>
___________________________________________________________________________41___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
25. Reserves
<TABLE>
<CAPTION>
Share Revaluation Other Merger Profit &
premium reserve reserves reserve loss account
'L''000 'L''000 'L''000 'L''000 'L''000
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Group
Balance at 1 January 1997 53,601 2,828 18,401 37,619 27,087
Retained profit for the financial year -- -- -- -- 10,194
Foreign currency translation adjustments -- -- -- -- (1,292)
Additional depreciation on revalued assets -- (24) -- -- 24
Premium arising on issue of shares in connection
with the exercise of executive share options
SAYE share options and scrip dividend 1,476 -- -- -- --
Revaluation adjustments -- (1,339) -- -- 875
- -------------------------------------------------------------------------------------------------------------
Balance at 31 December 1997 55,077 1,465 18,401 37,619 36,888
- -------------------------------------------------------------------------------------------------------------
Company
Balance at 1 January 1997 39,537 -- 17,556 32,754 18,835
Retained profit for the financial year -- -- -- -- 15,631
Foreign currency translation adjustments -- -- -- -- 1,363
Premium arising on issue of shares in connection
with the exercise of executive share options
SAYE share options and scrip dividend 1,476 -- -- -- --
- -------------------------------------------------------------------------------------------------------------
Balance at 31 December 1997 41,013 -- 17,556 32,754 35,829
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
1997 1996
'L''000 'L''000
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Goodwill Reserve
Balance at 1 January 1997 (85,725) (81,242)
Goodwill arising from acquisitions (1,785) (4,499)
Goodwill in respect of current disposals -- 16
- -------------------------------------------------------------------------------------------------------------
Balance at 31 December 1997 (87,510) (85,725)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
26. Commitments
<TABLE>
<CAPTION>
Capital commitments Group Company
----------------- ---------------
1997 1996 1997 1996
'L''000 'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracted for but not provided 2,281 2,722 102 --
- --------------------------------------------------------------------------------
</TABLE>
Operating lease commitments
Commitments under operating leases to pay rentals during the year following the
year of these financial statements are given in the table below, analysed
according to the period in which each lease expires.
<TABLE>
<CAPTION>
Group Company
----------------- ---------------
1997 1996 1997 1996
'L''000 'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Land and buildings:
Expiring within one year 789 704 -- --
Expiring in two to five years 2,058 1,808 37 --
Expiring thereafter 4,180 4,642 60 60
- --------------------------------------------------------------------------------
7,027 7,154 97 60
- --------------------------------------------------------------------------------
Other assets:
Expiring within one year 18 147 -- --
Expiring in two to five years 405 358 21 --
Expiring thereafter 3 21 -- --
- --------------------------------------------------------------------------------
426 526 21 --
- --------------------------------------------------------------------------------
</TABLE>
42 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
27. Reconciliation of Operating Profit to Operating Cash Flow
<TABLE>
<CAPTION>
1997 1996
'L''000 'L''000
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Profit 32,570 25,599
Depreciation and amortisation 7,097 7,192
Stock 3,234 915
Debtors (5,419) 8,143
Creditors 4,122 (11,225)
Loss on sale of fixed assets 52 61
- -------------------------------------------------------------------------------------------
Cash flow from operating activities 41,656 30,685
- -------------------------------------------------------------------------------------------
</TABLE>
28. Cash Flow relating to Exceptional Items
Capital expenditure cash flows include 'L'2,144,000 from the sale of tangible
fixed assets (1996 - 'L'805,000). Cash flow relating to the sale of businesses
comprises 'L'827,000 costs incurred with respect to businesses discontinued in
prior years.
29. Analysis of Net Debt
<TABLE>
<CAPTION>
At 1 January Cash Acquisitions/ Exchange At 31 December
1997 Flow Disposals Movement 1997
'L''000 'L''000 'L''000 'L''000 'L''000
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash 33,247 7,484 -- (396) 40,335
Overdrafts (426) 38 -- -- (388)
- ---------------------------------------------------------------------------------------------------
Net Cash 32,821 7,522 -- (396) 39,947
- ---------------------------------------------------------------------------------------------------
Bank Loans (7,959) (896) -- 895 (7,960)
HP (17) 15 (25) -- (27)
- ---------------------------------------------------------------------------------------------------
Debt due within 1 year (7,976) (881) (25) 895 (7,987)
Debt due after 1 year (35,416) 35 (48) (1,242) (36,671)
Other deposits 701 (645) -- (56) --
- ---------------------------------------------------------------------------------------------------
Current Asset Investments 701 (645) -- (56) --
- ---------------------------------------------------------------------------------------------------
Net Debt (9,870) 6,031 (73) (799) (4,711)
- ---------------------------------------------------------------------------------------------------
</TABLE>
30. Reconciliation of Net Cash Flow to Movement in Net Debt
<TABLE>
<CAPTION>
1997 1996
'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Increase/(Decrease) in cash in the year 7,522 (3,297)
(Decrease) in liquid resources (645) (8,749)
(Increase)/Decrease in debt financing (846) 3,563
- --------------------------------------------------------------------------------
Change in net debt resulting from cash flows 6,031 (8,483)
Loans acquired with subsidiaries (73) (914)
Exchange differences (799) 2,193
- --------------------------------------------------------------------------------
Movement in net debt in year 5,159 (7,204)
- --------------------------------------------------------------------------------
Net debt at 1 January 1997 (9,870) (2,666)
Net debt at 31 December 1997 (4,711) (9,870)
- --------------------------------------------------------------------------------
</TABLE>
___________________________________________________________________________43___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
31. Acquisition & Disposal of Subsidiaries
(i) The net effect on the assets and liabilities of the Group arising from the
acquisition of subsidiary undertakings is set out as follows:
<TABLE>
<CAPTION>
1997 1996
'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Net assets acquired:
Goodwill on consolidation 1,785 4,499
Tangible fixed assets 458 1,941
Working capital:
Stocks 1,064 515
Debtors 894 2,174
Creditors (604) (2,234)
Loans -- (914)
Cash -- 632
Finance leases (73) --
- --------------------------------------------------------------------------------
Consideration 3,524 6,613
- --------------------------------------------------------------------------------
</TABLE>
Analysis of net outflow of cash in respect of purchases of subsidiary companies
<TABLE>
<CAPTION>
1997 1996
'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash consideration paid including deferred consideration 5,220 7,006
- --------------------------------------------------------------------------------
Net outflow of cash and cash equivalents for acquisitions 5,220 7,006
- --------------------------------------------------------------------------------
</TABLE>
(ii) Goodwill on consolidation is 'L'1.8 million in respect of the acquisition
of Elastomeric Silicone Products.
<TABLE>
<CAPTION>
Balance Fair value
sheet at balances at
date of date of
acquisition Provisions acquisition
'L''000 'L''000 'L''000
<S> <C> <C> <C>
Fixed assets 678 (220) 458
Net current assets less long term liabilities 1,281 -- 1,281
- -------------------------------------------------------------------------------------
Net assets 1,959 (220) 1,739
- -------------------------------------------------------------------------------------
Consideration 3,524
- -------------------------------------------------------------------------------------
Goodwill on consolidation 1,785
- -------------------------------------------------------------------------------------
</TABLE>
The cumulative amount of goodwill written off to reserves to 31 December 1997
was 'L'94.3 million which includes the debit balance on the goodwill reserve
of 'L'87.5 million.
44 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
31. Acquisition & Disposal of Subsidiaries continued
(iii) The net effect on the assets and liabilities of the Group arising from the
disposal of subsidiary companies is set out as follows:
<TABLE>
<CAPTION>
1997 1996
'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Net assets sold:
Tangible fixed assets -- 2,602
Working capital:
Stocks -- 6,725
Debtors -- 10,188
Creditors -- (15,757)
Inter company loan -- 5,396
Cash and cash equivalents -- 2,956
- --------------------------------------------------------------------------------
Net effect -- 12,110
- --------------------------------------------------------------------------------
</TABLE>
32. Contingent Liabilities
The parent Company has given guarantees in respect of some property leases and
other leasing agreements together with some performance guarantees entered into
by certain subsidiaries.
The Company and various of its subsidiaries are, from time to time, parties
to legal proceedings and claims which arise in the ordinary course of business.
The directors do not anticipate that the outcome of these proceedings and
claims, either individually or in aggregate, will have a material adverse effect
upon the Group's financial position.
33. Pensions
In the UK, most employees are members either of the Meggitt Group 1990 Pension
Plan or the Meggitt Executive Pension Plan. These are defined benefit plans, the
assets of which are held in trust funds separate from the Group's finances.
The latest triennial actuarial valuations were 1 July 1995 for the Meggitt
Group 1990 Pension Plan and 6 April 1997 for the Meggitt Executive Pension Plan.
The assumptions which have the most significant effect on the results of the
valuations are those relating to the differential between the rates of return on
investments and the rates of increase in salaries. It was assumed that the
investment return would be 2.00% higher than the rate of salary increases for
the plans.
At the date of the valuations, the value of the assets of the Meggitt Group
1990 Pension Plan was'L'92 million and this was sufficient to cover 120% of the
benefits that had accrued to members, after allowing for expected future
increase in earnings. The value of the assets of the Meggitt Executive Pension
Plan was 'L'21 million and this was sufficient to cover 101% of the benefits on
a similar basis. In the July Budget the Chancellor of the Exchequer proposed the
abolition of payments of tax credits to pension schemes for dividends from UK
equities paid on or after 2 July 1997. The directors have obtained advice from
the actuary that there will be minimal impact upon the net results of the
valuations of the UK pension schemes.
The pension costs relating to the Plans are assessed in accordance with the
advice of Sedgwick Noble Lowndes Limited, consulting actuaries. They used the
projected unit method for the 1990 Plan and the attained age method for the
Executive Plan.
The pension charge in the UK for the year was 'L'1.7 million (1996 - 'L'2.3
million) after crediting the amortisation of surpluses over the average
remaining service lifetime of employees. An amount of 'L'3.7 million (1996 -
'L'3.6 million) is included in other debtors, being the excess of the amount
funded over the amount charged to the profit and loss account.
In overseas countries the Group provides pensions in accordance with
statutory requirements and local customs and practice.
In 1997 the real cost to the Group for overseas pensions was 'L'2.2 million
(1996 - 'L'1.9 million).
___________________________________________________________________________45___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
34. Group Companies
The following information is not a complete listing of all subsidiary companies
at 31 December 1997 but relates only to those subsidiaries principally affecting
the profits or assets of the Group.
<TABLE>
<CAPTION>
United Kingdom
- ----------------------------------------------------------------------------------------------
<S> <C>
Bestobell Service Company Limited Meggitt Mobrey Limited
Heatric Limited (60%) Meggitt Properties PLC*+
Meggitt Electronic Components Limited Meggitt (UK) Limited
Meggitt International Limited*+ Target Technology Limited'D'
Meggitt Investments Limited*+ Wayfarer Transit Systems Limited
<CAPTION>
Continental Europe
- ----------------------------------------------------------------------------------------------
<S> <C>
Bestobell Mobrey GmbH - Germany Mobrey SA-NV - Belgium
Endevco France SA - France Mobrey SA - France
Endevco Vertriebs GmbH - Germany Navarra de Componentes Electronicos SA - Spain
Meggitt BV - Netherlands+ Piher International GmbH - Germany
Mobrey AB - Sweden
<CAPTION>
USA
- ----------------------------------------------------------------------------------------------
<S> <C>
Avica Inc Meggitt-USA, Inc+
Endevco Corporation Piher International Corporation
Meggitt Avionics Inc Transducer Technology Inc
- ----------------------------------------------------------------------------------------------
</TABLE>
(i) The companies listed above are incorporated in the country named.
(ii) The ordinary shares of all subsidiaries were 100 per cent owned by Meggitt
PLC either directly or indirectly at 31 December 1997 unless otherwise
indicated.
(iii) Companies marked * are direct subsidiaries of Meggitt PLC.
(iv) Companies marked + are management companies. Otherwise all companies are
operating companies engaged in the Group's principal activities as
described in the Report of the Directors on page 17.
(v) 'D'Target Technology Limited was renamed Meggitt Defence Systems Limited
on 26 March 1998.
46 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
FINANCIAL CALENDAR AND SUPPLEMENTARY INFORMATION
Dividends
The proposed 1997 final dividend of 3.2p per share, if approved, will be paid on
3 July 1998 to shareholders on the register on 14 April 1998. The expected
dividend payment date for the 1998 interim dividend is 4 December 1998.
Results Announcements (provisional)
<TABLE>
<S> <C>
1998 interim results announcement September 1998
1998 full year results: preliminary announcement March 1999
report and accounts April 1999
</TABLE>
Shareholder Enquiries
Enquiries in respect of the following administrative matters should be addressed
to the Company's registrars, Computershare Services PLC, 8 Bankhead Crossway
North, Edinburgh EH11 4BR. Telephone: 0131 523 6666.
- Change of address notification.
- Lost share certificates.
- Dividend payment enquiries.
- Dividend mandate instructions. Shareholders may have their dividends paid
directly into their bank or building society accounts by completing a
dividend mandate form. Tax vouchers are sent directly to shareholders'
registered addresses.
- Amalgamation of shareholdings. Shareholders who receive more than one copy
of the Annual Report are invited to amalgamate their accounts on the share
register.
Shareholder Information
Analysis of Share Register at 31 December 1997
<TABLE>
<CAPTION>
Number of % of Total
Shareholders Shares
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Size of holdings:
1 - 999 6,082 0.7
1,000 - 9,999 2,022 2.6
10,000 - 99,999 266 3.8
100,000 - 249,999 71 4.9
250,000 - 499,999 50 7.8
500,000 - 999,999 52 16.7
1,000,000 and over 56 63.5
- ---------------------------------------------------------------------------------------
8,599 100.0
- ---------------------------------------------------------------------------------------
Types of Shareholder:
Individuals 7,669 4.4
Banks and bank nominees 669 90.3
Investment and insurance companies 60 1.0
Other 201 4.3
- ---------------------------------------------------------------------------------------
8,599 100.0
- ---------------------------------------------------------------------------------------
</TABLE>
Share Dealing Service
Barclays Stockbrokers Limited offers private individuals a low cost telephone
and postal service for dealing in shares of the Company. Commission rates start
as low as 'L'10. Details may be obtained from:
Barclays Stockbrokers Limited, Marketing Support Department, Tay House, 300 Bath
Street, Glasgow G2 4JR.
Telephone: 0345 777400 (Calls are charged at local rates from within the UK).
Personal Equity Plans (PEPs)
The Company offers both a General and a Single Company PEP, the plan manager for
which is Barclays Stockbrokers Limited. Details may be obtained from:
Barclays Stockbrokers Limited, Marketing Support Department, Tay House, 300 Bath
Street, Glasgow G2 4JR.
Telephone: 0345 777400 (Calls are charged at local rates from within the UK).
Barclays Stockbrokers Limited is a member of the London Stock Exchange, The
PEP Managers Association and regulated by the Securities and Futures Authority.
A subsidiary of Barclays PLC.
___________________________________________________________________________47___
G R O W T H T H R O U G H E N G I N E E R I N G E X C E L L E N C E
<PAGE>
FIVE YEAR RECORD
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
'L''000 'L''000 'L''000 'L''000 'L''000
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Turnover and Profit
Sales 265,126 256,299 358,152 345,481 359,735
Profit before taxation and exceptional items 31,246 23,690 18,346 14,639 23,280
Exceptional items 214 650 (39,797) 177 --
Profit/(loss) before taxation 31,460 24,340 (21,451) 14,816 23,280
- ----------------------------------------------------------------------------------------------------
Earnings and Dividends
Earnings per share 9.4p 7.3p (13.4p) 4.3p 7.1p
Earnings per share - IIMR basis 9.3p 7.0p 5.2p 4.2p 7.1p
Dividends per ordinary share 4.70p 4.20p 3.93p 3.93p 3.93p
- ----------------------------------------------------------------------------------------------------
Capital
Average capital employed 70,085 64,969 64,766 67,506 68,738
Return on average capital employed 44.9% 37.5% (33.1%) 21.9% 33.9%
- ----------------------------------------------------------------------------------------------------
Gearing Ratio
Year end net cash/borrowing as a percentage
of capital employed 6.3% 15.0% 4.1% 27.9% 30.8%
- ----------------------------------------------------------------------------------------------------
</TABLE>
This five year record shows the figures reported in each respective year and
excludes the effects of subsequent acquisitions and disposals.
48 _____________________________________________________________________________
M E G G I T T P L C A N N U A L R E P O R T & A C C O U N T S 97
<PAGE>
STATEMENT OF DIRECTORS' RESPONSIBILITIES
Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
Company and the Group as at the end of the financial year and of the result of
the Group for that period. In preparing those financial statements, the
directors are required to:
select suitable accounting policies and then apply them
consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements;
prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Group and to enable them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
[LOGO] AUDITORS' REPORT TO THE MEMBERS OF MEGGITT PLC
We have audited the financial statements on pages 24 to 46 which have been
prepared under the accounting policies set out on page 29.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The directors are responsible for preparing the annual report, including, as
described above, the financial statements. Our responsibilities, as independent
auditors, are established by statute, the Auditing Practices Board, the Listing
Rules of the London Stock Exchange, and by our profession's ethical guidance.
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you if, in our opinion, the directors' report is not
consistent with the financial statements, if the Company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law or the Listing
Rules regarding directors' remuneration and transactions with the Company and
other members of the Group is not disclosed.
We review whether the statement on page 20 reflects the compliance with those
provisions of the Combined Code specified for our review by the Stock Exchange,
and we report if it does not. We are not required to form an opinion on the
effectiveness of the corporate governance procedures or the Group's internal
controls.
We read the other information contained in the annual report, including the
corporate governance statement, and consider whether it is consistent with the
audited financial statements. We consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies with the
financial statements.
- --------------------------------------------------------------------------------
BASIS OF AUDIT OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the circumstances of the Company and the
Group, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
presentation of information in the financial statements.
- --------------------------------------------------------------------------------
OPINION
In our opinion the financial statements give a true and fair view of the state
of affairs of the Company and the Group as at 31 December 1998 and of the profit
of the Group for the year then ended and have been properly prepared in
accordance with the Companies Act 1985.
/s/ Deloitte & Touche
----------------------------
DELOITTE & TOUCHE
Chartered Accountants and Registered Auditors, Bristol
12 April 1999
23 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
[LOGO] CONSOLIDATED PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 1998
<TABLE>
<CAPTION>
Existing Acquisitions Total
------------------------ ---------------------
1998 1998 1998 1997
Notes 'L''000 'L''000 'L''000 'L''000
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Turnover 2 280,731 13,170 293,901 265,126
Cost of sales (169,642) (5,299) (174,941) (163,454)
- -------------------------------------------------------------------------------------------------------------------------
Gross Profit 111,089 7,871 118,960 101,672
Net operating expenses - before amortisation of goodwill 3 (74,562) (6,571) (81,133) (69,102)
- amortisation of goodwill (396) (451) (847) --
- -------------------------------------------------------------------------------------------------------------------------
Operating Profit 4 36,131 849 36,980 32,570
Exceptional items
Net profit on disposal of properties 5 -- -- -- 214
Loss on disposal of discontinued operations -- -- -- (827)
Provisions released -- -- -- 827
- -------------------------------------------------------------------------------------------------------------------------
Profit on Ordinary Activities Before Interest 36,131 849 36,980 32,784
Interest payable (net) 8 (1,624) (1,324)
- -------------------------------------------------------------------------------------------------------------------------
Profit on Ordinary Activities Before Taxation 35,356 31,460
Tax on profit on ordinary activities 9 (11,587) (10,012)
- -------------------------------------------------------------------------------------------------------------------------
Profit on Ordinary Activities After Taxation 23,769 21,448
Minority interests - equity 10 (867) (897)
- -------------------------------------------------------------------------------------------------------------------------
Profit for the Financial Year 22,902 20,551
Dividends 12 (11,561) (10,357)
- -------------------------------------------------------------------------------------------------------------------------
Retained Profit for the Financial Year 24 11,341 10,194
- -------------------------------------------------------------------------------------------------------------------------
Earnings per share - basic 13 10.3p 9.4p
Earnings per share - diluted 10.2p 9.3p
Earnings per share - IIMR basis 10.7p 9.3p
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Turnover and Operating Profit for the year relate to continuing activities.
24 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
[LOGO] CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AS AT 31 DECEMBER 1998 1998 1997
Notes 'L''O00 'L''O00
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed Assets
Goodwill 14 46,376 --
Other intangible assets 14 1,883 72
Tangible assets 15 53,600 37,906
Investments 16 7,021 5,998
- ------------------------------------------------------------------------------------------------
108,880 43,976
- ------------------------------------------------------------------------------------------------
Current Assets
Stocks 17 54,681 38,375
Debtors 18 71,417 68,655
Cash at bank and in hand 39,510 40,335
- ------------------------------------------------------------------------------------------------
165,608 147,365
Creditors - amounts falling due within one year 19 (138,206) (78,174)
- ------------------------------------------------------------------------------------------------
Net Current Assets 27,402 69,191
- ------------------------------------------------------------------------------------------------
Total Assets Less Current Liabilities 136,282 113,167
Creditors - amounts falling due after more than one year 20 (41,776) (37,911)
Provisions for liabilities and charges - deferred tax 21 (1,678) (912)
- ------------------------------------------------------------------------------------------------
92,828 74,344
- ------------------------------------------------------------------------------------------------
Capital & Reserves
Called up share capital 22 11,209 10,996
Share premium account 24 62,269 55,077
Revaluation reserve 24 1,446 1,465
Other reserves 24 17,904 5,398
- ------------------------------------------------------------------------------------------------
Shareholders' Funds - Equity 92,828 72,936
Minority Interests - Equity -- 1,408
- ------------------------------------------------------------------------------------------------
92,828 74,344
- ------------------------------------------------------------------------------------------------
</TABLE>
The financial statements were approved by the Board of Directors on 12 April
1999 and signed on its behalf by:
/s/ M A Stacey
------------------------
M A Stacey
Director
/s/ T Twigger
------------------------
T Twigger
Director
25 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
[LOGO] COMPANY BALANCE SHEET
<TABLE>
<CAPTION>
AS AT 31 DECEMBER 1998
1998 1997
Notes 'L''O00 'L''O00
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed Assets
Tangible assets 15 573 417
Investments 16 200,133 156,816
- ------------------------------------------------------------------------------------------------
200,706 157,233
- ------------------------------------------------------------------------------------------------
Current Assets
Debtors 18 43,585 43,302
Cash at bank and in hand 9,009 18,179
- ------------------------------------------------------------------------------------------------
52,594 61,481
Creditors - amounts falling due within one year 19 (118,447) (80,378)
- ------------------------------------------------------------------------------------------------
Net Current Liabilities (65,853) (18,897)
- ------------------------------------------------------------------------------------------------
Total Assets Less Current Liabilities 134,853 138,336
Provisions for liabilities and charges - deferred tax 21 (380) (188)
- ------------------------------------------------------------------------------------------------
134,473 138,148
- ------------------------------------------------------------------------------------------------
Capital & Reserves
Called up share capital 22 11,209 10,996
Share premium account 24 48,205 41,013
Other reserves 24 17,556 17,556
Merger reserve 24 32,754 32,754
Profit and loss account 24 24,749 35,829
- ------------------------------------------------------------------------------------------------
134,473 138,148
- ------------------------------------------------------------------------------------------------
</TABLE>
The financial statements were approved by the Board of Directors on 12 April
1999 and signed on its behalf by:
/s/ M A Stacey
------------------------------
M A Stacey
Director
/s/ T Twigger
-------------------------------
T Twigger
Director
26 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
[LOGO] CONSOLIDATED CASH FLOW STATEMENT
<TABLE>
<CAPTION>
FOR THE YEAR ENDED 31 DECEMBER 1998
1998 1997
Notes 'L''000 'L''000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash Flow from Operating Activities 26 42,667 41,656
- -----------------------------------------------------------------------------------------------------------------------------------
Returns on Investments & Servicing of Finance
Interest received 2,463 2,528
Interest paid (3,773) (3,609)
(1,310) (1,081)
Taxation (10,204) (9,777)
Capital Expenditure and Financial Investment
Purchase of tangible fixed assets (11,188) (12,879)
Sale of plant and machinery 3,488 2,144
Purchase of own shares (1,169) --
(8,869) (10,735)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash Inflow Before Corporate Items 22,284 20,063
- -----------------------------------------------------------------------------------------------------------------------------------
Acquisitions and Disposals
Purchase of subsidiary undertakings (64,087) (5,220)
Net cash/overdrafts acquired with subsidiaries 3,636 --
Sale of businesses -- (827)
(60,451) (6,047)
Equity Dividends paid 27 (6,788) (9,541)
- -----------------------------------------------------------------------------------------------------------------------------------
Cash (Outflow)/Inflow before use of
Liquid Resources and Financing (44,955) 4,475
- -----------------------------------------------------------------------------------------------------------------------------------
Management of Liquid Resources
Reduction of current asset investments -- 645
- -----------------------------------------------------------------------------------------------------------------------------------
Financing
Issue of ordinary share capital 27 507 1,557
Debt due within one year:
increase in short term borrowings 47,516 895
repayment of short term borrowings (4,134) (15)
Debt due beyond one year:
decrease in long term borrowings -- (35)
43,889 2,402
- -----------------------------------------------------------------------------------------------------------------------------------
(Decrease)/Increase in Cash in Year 29 (1,066) 7,522
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
27 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
[LOGO] STATEMENT OF TOTAL
RECOGNISED GAINS & LOSSES
<TABLE>
<CAPTION>
1998 1997
'L''000 'L''000
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Profit for the financial year 22,902 20,551
Currency translation differences on foreign currency net investments 1,261 (1,292)
Revaluation reserve -- (464)
- --------------------------------------------------------------------------------------------
Total recognised gains and losses relating to the year 24,163 18,795
- --------------------------------------------------------------------------------------------
</TABLE>
[LOGO] NOTE ON HISTORICAL COST
PROFITS & LOSSES
<TABLE>
<CAPTION>
1998 1997
'L''000 'L''000
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Reported profit on ordinary activities before taxation 35,356 31,460
Difference between historical cost depreciation charge and the actual
depreciation charge for the year calculated on the revalued amount 19 24
Difference between profit on disposal of property calculated on depreciated
historical cost and the actual profit on disposal calculated on the revalued amount -- 875
- ------------------------------------------------------------------------------------------------------------------
Historical cost profit on ordinary activities before taxation 35,375 32,359
- ------------------------------------------------------------------------------------------------------------------
Historical cost profit for the year retained after taxation,
minority interests and dividends 11,360 11,093
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
28 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
[LOGO] NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 1998
1. ACCOUNTING POLICIES
ACCOUNTING CONVENTION
The accounts are prepared in accordance with the historical cost accounting
convention, modified to include the revaluation of certain assets, and in
accordance with applicable Accounting Standards.
- --------------------------------------------------------------------------------
BASIS OF CONSOLIDATION
The Group financial statements consolidate the financial statements of the
Company and all subsidiaries for the financial periods ended 31 December 1998.
The results of all subsidiaries acquired during the year are included from their
effective date of acquisition using the acquisition method of accounting. The
profit or loss on the disposal of a previously acquired business includes the
attributable amount of any purchased goodwill relating to that business.
- --------------------------------------------------------------------------------
GOODWILL
Under the new accounting standard FRS10 (Goodwill and Intangible Assets)
goodwill arising on the acquisition of subsidiaries after 1 January 1998 has
been capitalised and is being amortised over a period of 20 years. In accordance
with the Group's accounting policy prior to FRS10, goodwill arising on
acquisitions prior to 1 January 1998 has been written off to reserves. Such
goodwill will be charged to the profit and loss account on any subsequent
disposals of the businesses to which it relates.
- --------------------------------------------------------------------------------
TANGIBLE FIXED ASSETS
Depreciation is not provided on freehold land. On other assets it is provided on
cost or revalued amounts in equal annual instalments over the estimated useful
lives of the assets as follows:
Freehold buildings 40 to 50 years
Long and short leasehold property over period of lease
Plant and machinery 5 to 10 years
Fixtures and fittings 3 to 10 years
Motor vehicles 4 to 5 years
- --------------------------------------------------------------------------------
INVESTMENTS
(i) Shares in Group companies are stated at cost less amounts written off
except for investments acquired before 1 January 1988 where Section 131
merger relief has been taken when investments are stated at the nominal
value of the shares issued in consideration.
(ii) Other investments are stated at cost less provision for permanent
diminution in value.
- --------------------------------------------------------------------------------
STOCKS
Stocks are stated at the lower of cost and net realisable value. Cost represents
materials, direct labour and production overheads. Long term contracts are dealt
with in accordance with SSAP9 (revised). A prudent level of profit is taken
based on estimated percentage completion if the final outcome can be reliably
assessed.
- --------------------------------------------------------------------------------
DEFERRED TAXATION
Deferred taxation is provided at the rate at which tax is expected to be paid on
differences arising from the inclusion of income and expenditure in taxation
computations in periods different from those in which they are included in the
financial statements to the extent that it is probable that a liability or asset
will crystallise in the future.
- --------------------------------------------------------------------------------
FOREIGN CURRENCIES
Assets and liabilities expressed in foreign currencies are translated into
sterling at rates of exchange ruling at the end of the financial year. Trading
results of foreign subsidiaries are translated at rates of exchange ruling
during the year. Profits and losses arising from the translation into sterling
of the balance sheets of overseas subsidiaries and foreign currency loans held
by UK companies for the purpose of financing overseas investments are taken to
reserves. Other exchange differences are dealt with through the profit and loss
account.
- --------------------------------------------------------------------------------
RESEARCH & DEVELOPMENT
All research and development expenditure is written off as incurred.
- --------------------------------------------------------------------------------
PENSION SCHEME ARRANGEMENTS
The Group operates a number of contributory pension schemes and accounts for
pension costs in accordance with the requirements of SSAP24. Defined benefit
pension costs and the costs of providing other post retirement benefits are
charged to the profit and loss account on a systematic basis over the service
lives of the eligible employees in accordance with the advice of qualified
independent actuaries. Defined contribution pension costs charged to the profit
and loss account represent contributions payable in respect of the year.
- --------------------------------------------------------------------------------
LEASES
Assets held under finance leases and the related lease obligations are recorded
in the balance sheet at the fair value of the leased assets at the inception of
the leases. The excess of the lease payments over the recorded lease obligations
are treated as finance charges which are amortised over each lease term to give
a constant rate of charge on the remaining balance of the obligation. Rental
costs under operating leases are charged to the profit and loss account in equal
annual amounts over the periods of the leases.
29 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
2. ANALYSIS OF TURNOVER
<TABLE>
<CAPTION>
Turnover by Segment 1998 1997
'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C>
Aerospace 126,722 116,295
Electronics 118,544 99,930
Industrial Controls 48,635 48,901
- --------------------------------------------------------------------------------
293,901 265,126
- --------------------------------------------------------------------------------
<CAPTION>
Turnover by Country By Origin By Destination
--------------------- ---------------------
1998 1997 1998 1997
'L''000 'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UK 156,399 150,276 97,943 95,959
Rest of Europe 38,964 33,397 77,857 67,345
North America 98,259 80,698 91,014 75,499
Rest of World 279 755 27,087 26,323
- --------------------------------------------------------------------------------
293,901 265,126 293,901 265,126
- --------------------------------------------------------------------------------
<CAPTION>
Analysis of Profit and Assets Operating Operating
Profit/(Loss) Assets
--------------------- ---------------------
Operating profit and assets 1998 1997 1998 1997
by Segment 'L''000 'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aerospace 20,607 19,203 33,536 30,389
Electronics 16,240 12,042 47,524 28,719
Industrial Controls 2,449 3,103 12,988 11,986
Unallocated (1,469) (1,778) 4,794 2,875
Goodwill Amortised (847) --
- --------------------------------------------------------------------------------
36,980 32,570 98,842 73,969
- --------------------------------------------------------------------------------
<CAPTION>
Operating profit and assets
by Country of Origin Operating Operating
Profit/(Loss) Assets
--------------------- ---------------------
1998 1997 1998 1997
'L''000 'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UK 16,940 16,454 52,968 43,728
Rest of Europe 3,862 4,091 20,182 8,060
North America 16,213 12,464 25,511 22,130
Rest of World (35) (439) 181 51
- --------------------------------------------------------------------------------
36,980 32,570 98,842 73,969
- --------------------------------------------------------------------------------
</TABLE>
Operating assets exclude cash and borrowing and deferred tax.
30 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
3. NOTE TO THE PROFIT & LOSS ACCOUNT
<TABLE>
<CAPTION>
Existing Acquisitions Total Total
-------- ------------ ----------------------
1998 1998 1998 1997
'L''000 'L''000 'L''000 'L''000
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Turnover 280,731 13,170 293,901 265,126
- ----------------------------------------------------------------------------------------------------------------
Cost of sales (169,642) (5,299) (174,941) (163,454)
- ----------------------------------------------------------------------------------------------------------------
Net operating expenses
Distribution costs (27,378) (2,535) (29,913) (26,830)
Research and development expenditure (16,143) (1,491) (17,634) (12,673)
Administration expenses - before amortisation of goodwill (31,336) (2,545) (33,881) (29,760)
- amortisation of goodwill (396) (451) (847) --
Other operating income 295 -- 295 161
- ----------------------------------------------------------------------------------------------------------------
Operating profit 36,131 849 36,980 32,570
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
4. OPERATING PROFIT
<TABLE>
<CAPTION>
1998 1997
'L''000 'L''000
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating profit is stated after crediting:
Rents receivable 387 442
And after charging:
Depreciation of tangible fixed assets 8,308 7,043
Amortisation of intangible fixed assets 964 54
Loss on disposal of fixed assets -- 52
Auditors' remuneration - group audit fees 501 423
- company audit fees 25 27
- other services - UK 196 253
- overseas 176 152
Hire of plant and machinery 652 527
Other operating lease rentals 7,380 7,325
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
5. EXCEPTIONAL ITEMS
A net exceptional profit of 'L'214,000 arose in 1997 relating to the
disposal of properties, analysed as follows:
<TABLE>
<CAPTION>
1998 1997
'L''000 'L''000
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Profit on the sale of freehold property -- 2,227
Provision for the loss on disposal of freehold property and leases -- (1,825)
Disposal costs -- (188)
- ----------------------------------------------------------------------------------------------------------------
Net exceptional items -- 214
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
31 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
<TABLE>
<CAPTION>
6. INFORMATION REGARDING EMPLOYEES 1998 1997
'L''000 'L''000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Employee costs during the year including directors:
Wages and salaries 90,532 77,080
Social security costs 10,012 8,682
Other pension costs 6,281 3,954
- ------------------------------------------------------------------------------------------------------------------------------------
Total direct costs of employment 106,825 89,716
- ------------------------------------------------------------------------------------------------------------------------------------
Average number of persons employed including directors:
Production 3,239 2,924
Selling and distribution 440 386
Administration 508 457
- ------------------------------------------------------------------------------------------------------------------------------------
4,187 3,767
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7. DIRECTORS' EMOLUMENTS AND SHARE INTERESTS
<TABLE>
<CAPTION>
Directors' emoluments Total Emoluments
excluding Pension
Basic -----------------
Salary Fees Benefits Bonus Pension Pension
1998 1998 1998 1998 1998 1997 1998 1997
'L' 'L' 'L' 'L' 'L' 'L' 'L' 'L'
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Non executive chairman
Sir Donald Spiers -- 41,049 -- -- 41,049 20,000 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Executive directors
M A Stacey 225,000 -- 15,966 90,000 330,966 283,715 93,486 75,643
D B Gemmell 108,000 -- 9,186 20,000 137,186 25,636 38,099 4,130
T Twigger 145,000 -- 10,652 58,000 213,652 199,272 56,371 51,126
- -----------------------------------------------------------------------------------------------------------------------------------
Non executive directors
Sir Alan Cox -- 28,692 -- -- 28,692 21,198 -- --
The Rt Hon Sir Richard Needham -- 23,000 -- -- 23,000 1,298 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Former directors
K H Coates -- 13,056 -- -- 13,056 46,750 -- --
P J Ryder -- -- -- -- -- 4,302 -- 1,336
- -----------------------------------------------------------------------------------------------------------------------------------
Total 478,000 105,797 35,804 168,000 787,601 602,171 187,956 132,235
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Basic salary includes payments made under the Group's Profit Related Pay scheme.
In addition to fees paid in 1998 'L'24,000 was paid to The Rt Hon Sir Richard
Needham in respect of his consultancy agreement regarding the provision of
advice on the Group's activities in the Asia Pacific region.
The highest paid director in 1998 was M A Stacey the aggregate of whose
emoluments, gains on share options exercised and company contributions to his
Funded Unapproved Retirement and Death Benefits Sheme was 'L'634,000 (1997 -
'L'335,000). In addition to the emoluments for 1998 set out above, the executive
directors were allocated shares at an initial market value of 241.47p under the
Rules of the Profit Sharing Share Scheme as follows:
<TABLE>
<CAPTION>
Ordinary shares of 5p each
<S> <C>
M A Stacey 595
D B Gemmell 268
T Twigger 422
</TABLE>
These shares have been included in the share interests shown in the table on
page 33.
Directors' Pension Benefits
<TABLE>
<CAPTION>
M A Stacey D B Gemmell T Twigger
Meggitt Executive Pension Plan 'L' 'L' 'L'
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Increase in accrued pension in year 1,600 2,100 1,500
Transfer value of the increase 21,000 30,000 11,400
Accumulated total accrued pension at 31 December 1998 11,900 12,300 7,900
- -----------------------------------------------------------------------------------------------------------------------
Funded Unapproved Retirement and Death Benefits Scheme
Company Payments 1997 50,996 -- 26,479
1998 71,063 15,676 33,948
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
32 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
DIRECTORS' SHARE INTERESTS
The beneficial interests of the directors in the ordinary shares of the Company
at 31 December 1997 and 31 December 1998 were as follows:-
<TABLE>
<CAPTION>
Shareholdings
Ordinary shares of 5p each
1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sir Donald Spiers 13,790 9,041
M A Stacey 138,553 83,234
Sir Alan Cox 20,202 20,202
D B Gemmell 17,916 1,314
The Rt Hon Sir Richard Needham 17,009 4,000
T Twigger 59,503 5,472
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The directors' interests in options over the ordinary share capital of the
Company and movements therein during the year are set out below:
<TABLE>
<CAPTION>
Number of options
-------------------------------------------------- Market price Date from
1 January 31 December Exercise at date of which Expiry
1998 Granted Exercised 1998 price exercise exercisable date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
M A Stacey
1984 Scheme 56,226 -- 56,226 -- 46.13p 198.00p 25.10.93 24.10.00
50,000 -- 50,000 -- 101.83p 198.00p 14.05.95 13.05.02
50,000 -- 50,000 -- 100.50p 198.00p 29.04.96 28.04.03
40,000 -- 40,000 -- 72.50p 198.00p 24.10.97 23.10.04
1996 No 1 Scheme -- 16,713 -- 16,713 179.50p -- 20.04.01 19.04.08
1996 No 2 Scheme 348,258 -- -- 348,258 100.50p -- 19.06.99 18.06.03
145,833 -- -- 145,833 120.00p -- 27.03.00 26.03.04
-- 192,200 -- 192,200 179.50p -- 20.04.01 19.04.05
SAYE Schemes 4,126 -- -- 4,126 83.60p -- 01.01.99 30.06.99
-- 1,227 -- 1,227 158.80p -- 01.10.01 31.03.02
- ------------------------------------------------------------------------------------------------------------------------------------
694,443 210,140 196,226 708,357
- ------------------------------------------------------------------------------------------------------------------------------------
D B Gemmell
1984 Scheme 15,000 -- 15,000 -- 100.50p 198.00p 29.04.96 28.04.03
20,000 -- 20,000 -- 72.50p 198.00p 24.10.97 23.10.04
1996 No 2 Scheme 111,940 -- -- 111,940 100.50p -- 19.06.99 18.06.03
62,500 -- -- 62,500 120.00p -- 27.03.00 26.03.04
SAYE Scheme 4,126 -- -- 4,126 83.60p -- 01.01.99 30.06.99
- ------------------------------------------------------------------------------------------------------------------------------------
213,566 -- 35,000 178,566
- ------------------------------------------------------------------------------------------------------------------------------------
T Twigger
1984 Scheme 75,000 -- 75,000 -- 72.50p 198.00p 24.10.97 23.10.04
1996 No 1 Scheme -- 16,713 -- 16,713 179.50p -- 20.04.01 19.04.08
1996 No 2 Scheme 253,731 -- -- 253,731 100.50p -- 19.06.99 18.06.03
106,250 -- -- 106,250 120.00p -- 27.03.00 26.03.04
-- 56,448 -- 56,448 179.50p -- 20.04.01 19.04.05
SAYE Schemes 4,798 -- -- 4,798 71.90p -- 01.01.01 30.06.01
-- 1,227 -- 1,227 158.80p -- 01.10.01 31.03.02
- ------------------------------------------------------------------------------------------------------------------------------------
439,779 74,388 75,000 439,167
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
None of the options listed above lapsed during the year. No non executive
directors held any options over the Company's shares at any time during the
relevant periods.
Between 1 January 1999 and 23 March 1999 (the latest date for which it was
practical to obtain the information) the following changes in directors'
interests occurred: as a result of PEP dividend reinvestment Mr T Twigger
acquired 38 shares, Mr M A Stacey exercised his SAYE option to acquire 4,126
shares and Mr D B Gemmell exercised his SAYE option to acquire 4,126 shares.
The market price of the ordinary shares at 30 December 1998 (the last day of
dealing for 1998) was 124p and the range during the year was 121p to 241p.
Options may, in certain circumstances, be exercised or lapse earlier than the
dates shown above.
<TABLE>
<CAPTION>
Gains made on Directors' share options Exercise Options Gain
Date Exercised 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
M A Stacey 27.03.98 196,226 232
D B Gemmell 27.03.98 35,000 40
T Twigger 27.03.98 75,000 94
- --------------------------------------------------------------------------------
306,226 366
- --------------------------------------------------------------------------------
</TABLE>
Gains were made on options granted under the Meggitt PLC 1984 Share Option
Scheme, as detailed in Directors' share interests above.
There were no gains made by directors on the exercise of share options in 1997.
33 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
7. DIRECTORS' EMOLUMENTS AND SHARE INTERESTS (CONTINUED)
The directors' interests in the Restricted Share Scheme are set out below:
<TABLE>
<CAPTION>
Date from
Date of Value of Number which Expiry
Award Award 'L' of Shares Exercisable Date
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
M A Stacey 29.04.96 54,250 55,823 29.04.99 29.04.03
D B Gemmell 29.04.96 21,000 21,609 29.04.99 29.04.03
T Twigger 29.04.96 33,825 34,806 29.04.99 29.04.03
- ---------------------------------------------------------------------------------------
</TABLE>
The awards may be exercised for a consideration of 'L'1.
The directors' interests in the Equity Participation Scheme are set out below:
<TABLE>
<CAPTION>
First date for
Date of Value of Number Transfer to
Allocation Allocation'L' of Shares Directors
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
M A Stacey 27.03.97 52,500 43,568 27.03.00
20.04.98 90,125 50,069 20.04.01
D B Gemmell 27.03.97 22,500 18,672 27.03.00
T Twigger 27.03.97 38,250 31,742 27.03.00
20.04.98 65,662 36,478 20.04.01
- -----------------------------------------------------------------------------
</TABLE>
The shares may be transferred for no consideration.
There are currently no other schemes to benefit directors by enabling them to
acquire shares in or debentures of the Company or any other company.
8. INTEREST
<TABLE>
<CAPTION>
1998 1997
'L''000 'L''000
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest receivable and similar income:
Interest on bank deposits 1,941 2,166
Other income 306 17
- ----------------------------------------------------------------------------------------------------------------
2,247 2,183
- ----------------------------------------------------------------------------------------------------------------
Interest payable and similar charges:
Bank loans, overdrafts and other loans repayable within five years:
Repayable by instalments (332) (236)
US $60 million 8% Senior Notes (2,892) (2,927)
Repayable other than by instalments (647) (344)
- ----------------------------------------------------------------------------------------------------------------
(3,871) (3,507)
- ----------------------------------------------------------------------------------------------------------------
Interest payable net (1,624) (1,324)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
9. TAXATION ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
1998 1997
'L''000 'L''000
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Kingdom corporation tax at 31% (1997 - 31.5%) based on profit for the year 8,599 5,844
Deferred taxation 216 253
Double tax relief (2,173) (93)
Overseas taxation - current 5,348 3,327
- deferred (18) 110
- ----------------------------------------------------------------------------------------------------------------
Taxation charge for the year 11,972 9,441
Taxation (over)/under provided in previous years (385) 571
- ----------------------------------------------------------------------------------------------------------------
11,587 10,012
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The charge for the year has been reduced by 'L'1,836,000 (1997 -
'L'26,000) by utilisation of tax losses brought forward from prior years. In
the case of subsidiary companies which are not resident in the United Kingdom
for tax purposes, provision is made for foreign taxes on profits. Provision is
made for withholding taxes on proposed dividends from overseas subsidiaries.
10. MINORITY INTERESTS - EQUITY
Minority interests represent the share of the year's results attributable to the
minority of 'L'867,000 (1997 - 'L'897,000).
11. PROFIT OF PARENT COMPANY
The consolidated profit attributable to the shareholders of Meggitt PLC includes
a profit, after dividends received, of 'L'481,000(1997 - profit of
'L'25,988,000) which has been dealt with in the accounts of that Company.
Meggitt PLC has taken advantage of the legal dispensation allowing it not to
publish a separate profit and loss account.
34 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
12. DIVIDENDS
<TABLE>
<CAPTION>
1998 1997
'L''000 'L''000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dividends in respect of previous years 18 --
Interim of 1.62p per share paid (1997 - 1.5p per share) 3,630 3,319
Final of 3.53p per share proposed (1997 - 3.2p per share) 7,913 7,038
- -----------------------------------------------------------------------------------------------------------------------------------
11,561 10,357
- -----------------------------------------------------------------------------------------------------------------------------------
13. EARNINGS PER ORDINARY SHARE
a) The calculation of earnings per ordinary share is based on the following:
</TABLE>
<TABLE>
<CAPTION>
1998 1998 1998 1997 1997 1997
'L''000 Number Pence 'L''000 Number Pence
('000) ('000)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Profit attributable to ordinary shareholders 22,902 222,109 10.3 20,551 219,151 9.4
- ------------------------------------------------------------------------------------------------------------------------------------
Effect of dilutive potential ordinary shares
Options -- 2,601 (0.1) -- 1,575 (0.1)
ESOP 9 (177) -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Diluted EPS
Profit attributable to ordinary shareholders 22,911 224,533 10.2 20,551 220,726 9.3
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
b) The Institute of Investment Management and Research (IIMR) has devised a
'headline' measure of earnings per share which provides an alternative measure
for assessing performance excluding exceptional items.
<TABLE>
<CAPTION>
1998 1998 1998 1997 1997 1997
'L''000 Number Pence 'L''000 Number Pence
('000) ('000)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Profit attributable to ordinary shareholders 22,902 222,109 10.3 20,551 219,151 9.4
- ----------------------------------------------------------------------------------------------------------------------------------
Add back:
Amortisation of goodwill 847 0.4 -- --
Exceptional costs:
Profit on sale of property -- -- (214) (0.1)
- ----------------------------------------------------------------------------------------------------------------------------------
Earnings per share IIMR basis 23,749 222,109 10.7 20,337 219,151 9.3
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14. INTANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Other
intangible
Goodwill assets
'L''000 'L''000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Group
Cost at 1 January 1998 -- 506
Subsidiaries acquired 46,712 1,923
Additions -- 31
Exchange rate adjustments 512 54
Disposals -- (72)
- -----------------------------------------------------------------------------------------------------------------------------------
Cost at 31 December 1998 47,224 2,442
- -----------------------------------------------------------------------------------------------------------------------------------
Amounts written off at 1 January 1998 -- 434
Subsidiaries acquired -- 69
Additional provision during the year 847 117
Exchange rate adjustments 1 11
Disposals -- (72)
- -----------------------------------------------------------------------------------------------------------------------------------
Amounts written off at 31 December 1998 848 559
- -----------------------------------------------------------------------------------------------------------------------------------
Net Book Value at 31 December 1998 46,376 1,883
- -----------------------------------------------------------------------------------------------------------------------------------
Net book value at 31 December 1997 -- 72
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Other intangible assets represent the cost of manufacturing licences, patents
and trademarks and are being written off over the period of the agreements.
35 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
15. TANGIBLE FIXED ASSETS
The movements in the fixed asset accounts during the year were as follows:
<TABLE>
<CAPTION>
Group Company
-------------------------------------- -------------------------------------
Plant Plant
Land & equipment Land & equipment
buildings & vehicles Total buildings & vehicles Total
'L''000 'L''000 'L''000 'L''000 'L''000 'L''000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cost or valuation at 1 January 1998 19,384 78,551 97,935 248 1,000 1,248
Exchange rate adjustments 350 736 1,086 -- -- --
Subsidiaries acquired 15,038 13,713 28,751 -- -- --
Additions 217 10,640 10,857 -- 290 290
Disposals (169) (6,630) (6,799) (3) (169) (172)
Intra Group transfers -- -- -- -- 41 41
- -----------------------------------------------------------------------------------------------------------------------------------
Cost or valuation at 31 December 1998 34,820 97,010 131,830 245 1,162 1,407
- -----------------------------------------------------------------------------------------------------------------------------------
At valuation 8,496 -- 8,496 -- -- --
At cost 26,324 97,010 123,334 245 1,162 1,407
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated depreciation at 1 January 1998 6,719 53,310 60,029 69 762 831
Exchange rate adjustments 69 515 584 -- -- --
Subsidiaries acquired 4,506 11,116 15,622 -- -- --
Charge for year 815 7,493 8,308 7 126 133
Disposals (30) (6,283) (6,313) (1) (129) (130)
Intra Group transfers -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated depreciation at 31 December 1998 12,079 66,151 78,230 75 759 834
- -----------------------------------------------------------------------------------------------------------------------------------
Net Book Value at 31 December 1998 22,741 30,859 53,600 170 403 573
- -----------------------------------------------------------------------------------------------------------------------------------
Net Book Value at 31 December 1997 12,665 25,241 37,906 179 238 417
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Group Company
--------------------------- ---------------------------
1998 1997 1998 1997
'L''000 'L''000 'L''000 'L''000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net book value of land and buildings
Freehold 18,398 8,014 104 109
Long leasehold 1,610 1,358 -- --
Short leasehold 2,733 3,293 66 70
- ------------------------------------------------------------------------------------------------------------------------------------
22,741 12,665 170 179
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Group's freehold and long leasehold property were valued by Montagu Evans,
Chartered Surveyors, on an existing use basis as at 31 December 1989.
On a historic cost basis land and buildings would be included at cost of
'L'33,230,000 (1997 - 'L'17,847,000) less depreciation of 'L'11,935,000 (1997 -
'L'6,573,000) giving a net book value of 'L'21,295,000 (1997 - 'L'11,274,000).
The net book value of the Group's fixed assets includes 'L'92,000 (1997 -
'L'127,000) in respect of assets held under finance leases and hire purchase
contracts.
36 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
16. INVESTMENTS HELD AS FIXED ASSETS
<TABLE>
<CAPTION>
Group Company
----------------------------- ---------------------------
1998 1997 1998 1997
'L''000 'L''000 'L''000 'L''000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares in subsidiaries (a) -- -- 200,133 156,816
Investment in own shares (b) 1,024 -- -- --
Other investments (c) 5,997 5,998 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
7,021 5,998 200,133 156,816
- -----------------------------------------------------------------------------------------------------------------------------------
(a) Shares in subsidiaries
At 1 January 1998 156,816 157,478
Acquisition of subsidiaries 43,811 --
Disposal of subsidiaries -- (5)
Amounts provided (494) (657)
- -----------------------------------------------------------------------------------------------------------------------------------
At 31 December 1998 200,133 156,816
- -----------------------------------------------------------------------------------------------------------------------------------
(b) Investment in own shares
Acquired in year 1,024 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
At 31 December 1998 1,024 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
(c) Other Investments
At 1 January 1998 5,998 6,576 -- --
Amounts provided (210) (209)
Exchange rate adjustments 209 (369) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
At 31 December 1998 5,997 5,998 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The shares in the Company (`own shares') are held by an independently managed
Employee Share Ownership Plan which was formed to purchase shares to be used to
meet certain of the Company's future obligations in respect of employee share
schemes as described in the Remuneration Report on page 21.
The Group retains the full benefit of these shares until such time as
participating employees exercise their options. During the year 846,503 ordinary
shares of the Company were purchased by the trust in respect of options granted
under the Meggitt 1996 Executive Share Option Schemes, with a market value at 30
December 1998 of 'L'1,050,000.
The trustee has also purchased shares in respect of share schemes where the
Group has had no benefit accruing to it from the dates of purchase. Amounts
owing in relation to these shares are disclosed under other debtors (see note
18).
Other investments represent:
(i) Sunvic Holdings GmbH (incorporated in Germany) representing 46% of issued
ordinary share capital (acquired on 13 February 1996 arising from the
transfer of a controlling interest in the Sunvic Group to investment funds
managed by Schroder Venture Advisers and four senior Sunvic managers).
The share capital at 31 December 1998 was DM 1,960,000 of which shares
totalling DM 900,000 were issued to Meggitt Properties PLC.
The Sunvic Group operates principally in Germany and the Benelux
countries.
Shareholders' funds at 31 December 1998 were DM 26.1 million
(1997 - DM 17.6 million). The profit attributable to the
shareholders for the year to 31 December 1998 was DM 8.5 million (1997
loss - DM 0.9 million)
(ii) TGE Group Ltd (registered in England and Wales) representing 15% of issued
ordinary share capital.
(iii) Axsia Group Ltd (registered in England and Wales) representing 15% of
issued ordinary share capital.
The Group has no significant influence over these investments and, as a
consequence, they are held as external investments at historical costs less
provisions.
17. STOCKS
<TABLE>
<CAPTION>
Group
---------------------------------
1998 1997
'L''000 'L''000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Contract work in progress less provision for losses 3,042 845
Progress claims (26) (220)
- -----------------------------------------------------------------------------------------------------------------------------------
Net contract work in progress 3,016 625
Raw materials and bought-in components 22,560 16,365
Manufacturing work in progress 14,326 11,372
Finished goods and goods for resale 14,779 10,013
- -----------------------------------------------------------------------------------------------------------------------------------
54,681 38,375
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
37 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
18. DEBTORS
<TABLE>
<CAPTION>
Group Company
-------------------------- --------------------------
1998 1997 1998 1997
'L''000 'L''000 'L''000 'L''000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amounts falling due within one year
Trade debtors 57,321 49,338 63 65
Amounts recoverable on contracts 1,007 1,828 -- --
Amounts owed by Group companies -- -- 39,696 37,722
Other debtors 4,938 8,316 536 1,311
Prepayments and accrued income 2,383 1,853 276 72
Tax recoverable 120 510 944 717
- ------------------------------------------------------------------------------------------------------------------------------------
65,769 61,845 41,515 39,887
- ------------------------------------------------------------------------------------------------------------------------------------
Amounts falling due after one year
Trade debtors 107 162 -- --
Other debtors 5,541 5,446 2,070 1,999
Tax recoverable (principally ACT) -- 1,202 -- 1,416
- ------------------------------------------------------------------------------------------------------------------------------------
5,648 6,810 2,070 3,415
- ------------------------------------------------------------------------------------------------------------------------------------
71,417 68,655 43,585 43,302
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Other debtors includes 'L'505,000 (1997 - 'L'331,000) in respect of
loans made to the trustee of the Employee Share Ownership Plan for the purpose
of purchasing shares in the Company, where the Group has had no benefit accruing
to it from the dates of award (see note 16). Amounts have been made available to
the trustee (Mourant & Co Ltd, St Helier, Jersey) as follows:
<TABLE>
<CAPTION>
Scheme Date of Award Value of Award Number of Shares
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Restricted Share Scheme 29.04.96 'L'272,085 279,966
Equity Participation Scheme 27.03.97 'L'360,933 297,529
21.04.98 'L'576,521 317,901
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The shares may be transferred to the participating employees after three years.
These amounts are being amortised to the profit and loss account over the
relevant periods.
19. CREDITORS - AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
Group Company
---------------------- ----------------------
1998 1997 1998 1997
'L''000 'L''000 'L''000 'L''000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bank loans and overdrafts (see note 20) 57,299 8,181 54,541 7,096
Other loans (see note 20) 61 166 -- --
Obligations under finance leases and hire purchase contracts 41 27 -- --
Payments received on account 1,979 1,702 -- --
Trade creditors 29,228 22,981 219 199
Amounts owed to Group companies -- -- 52,066 61,548
UK corporation tax payable 3,864 4,780 9 --
ACT on dividends 890 2,658 890 2,533
Overseas tax 2,176 1,244 -- --
Taxation and social security 2,726 1,836 212 465
Other creditors 16,938 13,958 1,218 223
Accruals 15,091 13,603 1,379 1,276
Proposed dividend 7,913 7,038 7,913 7,038
- ------------------------------------------------------------------------------------------------------------------------------------
138,206 78,174 118,447 80,378
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
38 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
20. CREDITORS - AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
Group Company
---------------------- ---------------------
1998 1997 1998 1997
'L''000 'L''000 'L''000 'L''000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
US $60 million 8% Senior Notes (maturity date April 2000) 36,145 36,364 -- --
Obligations under finance leases and hire purchase contracts 23 64 -- --
Bank loans 3,354 -- -- --
Other loans 303 244 -- --
Other creditors 1,951 1,239 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
41,776 37,911 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Analysis of bank repayments
Bank loans and overdrafts repayable:
within one year 57,299 8,181 54,541 7,096
between one and two years 3,354 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
60,653 8,181 54,541 7,096
- ------------------------------------------------------------------------------------------------------------------------------------
Finance lease and hire purchase obligations:
Amounts repayable:
within one year 41 27 -- --
between one and five years 17 56 -- --
after five years 6 8 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
64 91 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Other loans repayable:
within one year 61 166 -- --
between one and two years 78 62 -- --
between two and five years 187 162 -- --
after five years 38 20 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
364 410 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Bank loans falling due after more than one year are secured.
Finance lease and hire purchase obligations are secured by retention of title to
the relevant asset. Otherwise there are no secured loans.
21. DEFERRED TAX
<TABLE>
<CAPTION>
Group Company
-------- --------
'L''000 'L''000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at 1 January 1998 912 188
Charged to profit and loss account 210 (151)
Foreign exchange movements (1) --
Movement in recoverable advance corporation tax offset against deferred tax 557 343
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at 31 December 1998 1,678 380
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Amounts of deferred taxation have been provided in the financial statements as
follows:
<TABLE>
<CAPTION>
Group Company
------------------------ -------------------------
1998 1997 1998 1997
'L''000 'L''000 'L''000 'L''000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital allowances in excess of depreciation 1,398 814 (83) (28)
Unrelieved losses -- (25) -- 559
Short term timing differences 280 680 463 --
- -----------------------------------------------------------------------------------------------------------------------------------
1,678 1,469 380 531
- -----------------------------------------------------------------------------------------------------------------------------------
Less recoverable advance corporation tax -- (557) -- (343)
- -----------------------------------------------------------------------------------------------------------------------------------
1,678 912 380 188
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
There are unprovided tax losses of 'L'1,750,000 (1997 - 'L'807,000)
carried forward in respect of subsidiaries which may be set against future
taxable profits.
No potential deferred tax arising on the revaluation of assets has been
disclosed as no disposals are envisaged in the foreseeable future which would
give rise to a material liability.
There are no other unprovided amounts in respect of deferred taxation. No
provision has been made for taxation that would arise in the event of overseas
subsidiaries distributing the balance of their reserves.
39 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
22. Called Up Share Capital
<TABLE>
<CAPTION>
1998 1997
'L''000 'L''000
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ordinary shares of 5p each
Authorised: 270,000,000 shares (1997 - 270,000,000) 13,500 13,500
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
Nominal
No of Value
Shares 'L''000
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Allotted and fully paid:
Balance at 1 January 1998 219,919,266 10,996
Issued on exercise of executive share options 642,936 32
Issued on exercise of SAYE share options 10,921 1
Issued on acquisition of Heatric Limited minority interest 1,556,824 78
Scrip dividends 2,045,561 102
- ----------------------------------------------------------------------------------------------------------
Balance at 31 December 1998 224,175,508 11,209
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The following options to acquire ordinary shares granted under various share
option schemes were outstanding at 31 December 1998.
(i) Meggitt PLC Savings Related Share Option Scheme:
<TABLE>
<CAPTION>
No of Exercise period
ordinary shares Exercise price ------------------------
Year of grant under option per share From To
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 348,393 83.60p 01.01.99 30.06.99
1995 574,941 71.90p 01.01.01 30.06.01
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(ii) Meggitt 1998 Sharesave Scheme:
<TABLE>
<CAPTION>
No of Exercise period
ordinary shares Exercise price ------------------------
Year of grant under option per share From To
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1998 277,171 158.80p 01.10.01 31.03.02
1998 427,286 158.80p 01.10.03 31.03.04
1998 199,340 158.80p 01.10.05 31.03.06
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(iii) Meggitt PLC 1984 Share Option Scheme:
<TABLE>
<CAPTION>
No of Exercise period
ordinary shares Exercise price ------------------------
Year of grant under option per share From To
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1989 13,277 119.56p 15.05.92 14.05.99
1991 15,933 74.56p 19.04.94 18.04.01
1992 43,000 101.83p 14.05.95 13.05.02
1993 115,000 100.50p 29.04.96 28.04.03
1994 105,000 72.50p 24.10.97 23.10.04
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(iv) Meggitt 1996 No 1 Executive Share Option Scheme:
<TABLE>
<CAPTION>
No of Exercise period
ordinary shares Exercise price ------------------------
Year of grant under option per share From To
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 287,925 106.00p 26.09.99 25.09.06
1997 77,032 120.50p 27.03.00 26.03.07
1997 100,182 136.50p 25.09.00 24.09.07
1998 81,991 179.50p 20.04.01 19.04.08
1998 151,069* 121.00p 25.09.01 24.09.08
1998 22,556* 133.00p 01.10.01 30.09.08
</TABLE>
40 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
(v) Meggitt 1996 No 2 Executive Share Option Scheme:
<TABLE>
<CAPTION>
No of Exercise period
ordinary shares Exercise price ------------------------
Year of grant under option per share From To
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996 2,243,772 100.50p 19.06.99 18.06.03
1996 407,075 106.00p 26.09.99 25.09.03
1997 875,655 120.00p 27.03.00 26.03.04
1997 459,818 136.50p 25.09.00 24.09.04
1998 688,067 179.50p 20.04.01 19.04.05
1998 593,931* 121.00p 25.09.01 24.09.05
1998 78,947* 133.00p 01.10.01 30.09.05
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(vi) Meggitt PLC Discretionary Overseas Share Option Scheme:
<TABLE>
<CAPTION>
No of Exercise period
ordinary shares Exercise price ------------------------
Year of grant under option per share From To
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1989 103,569 119.56p 15.05.92 14.05.99
1990 10,622 68.25p 14.05.93 13.05.00
1991 26.556 74.56p 19.04.94 18.04.01
1992 63,000 101.83p 14.05.95 13.05.02
1993 103,000 100.50p 29.04.96 28.04.03
1994 85,000 72.50p 24.10.97 23.10.04
- ----------------------------------------------------------------------------------------------------------
</TABLE>
All the above options which were granted for nil consideration, may in certain
circumstances, be exercised earlier than the dates given.
Shares under option marked * have been purchased in the market from previously
issued share capital and are held by the trustee of the Employee Share Ownership
Plan as shown in note 16 on page 37.
23. Reconciliation of Movements in Shareholders' Funds
<TABLE>
<CAPTION>
1998 1997
'L''000 'L''000
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Profit for the financial year 22,902 20,551
Dividends (11,561) (10,357)
Other recognised gains/(losses) relating to the year 1,261 (1,292)
New share capital subscribed 7,405 1,557
Goodwill written off - prior year acquisitions (115) (1,785)
Revaluation adjustments - (464)
- ----------------------------------------------------------------------------------------------------------
Net increase in shareholders' funds 19,892 8,210
Opening shareholders' funds 72,936 64,726
- ----------------------------------------------------------------------------------------------------------
Closing shareholders' funds 92,828 72,936
- ----------------------------------------------------------------------------------------------------------
</TABLE>
41 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
24. Reserves
<TABLE>
<CAPTION>
Share Revaluation Profit and Other Merger
premium reserve loss account reserves reserve
'L''O00 'L''O00 'L''O00 'L''O00 'L''O00
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Group
Balance at 1 January 1998 55,077 1,465 36,888 18,401 37,619
Retained profit for the financial year -- -- 11,341 -- --
Foreign currency translation adjustments -- -- 1,261 -- --
Additional depreciation on revalued assets -- (19) 19 -- --
Premium arising on issue of shares in connection
with acquisition of Heatric minority 2,922 -- -- -- --
Premium arising on issue of shares in connection
with the exercise of executive share options,
SAYE share options and scrip dividend 4,270 -- -- -- --
Goodwill relating to prior year acquisitions -- -- (115) -- --
- -------------------------------------------------------------------------------------------------------------------
62,269 1,446 49,394 18,401 37,619
- -------------------------------------------------------------------------------------------------------------------
Previously eliminated goodwill -- -- (31,490) (18,401) (37,619)
- -------------------------------------------------------------------------------------------------------------------
Balance at 31 December 1998 62,269 1,446 17,904 -- --
- -------------------------------------------------------------------------------------------------------------------
Company
Balance at 1 January 1998 41,013 -- 35,829 17,556 32,754
Retained loss for the financial year -- -- (9,865) -- --
Foreign currency translation adjustments -- -- (1,215) -- --
Premium arising on issue of shares in connection
with acquisition of Heatric minority 2,922 -- -- -- --
Premium arising on issue of shares in connection
with the exercise of executive share options,
SAYE share options and scrip dividend 4,270 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Balance at 31 December 1998 48,205 -- 24,749 17,556 32,754
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
In accordance with the requirements of FRS10, goodwill which had been previously
written off to a separate goodwill reserve has been offset against other
reserves.
25. Commitments
Capital commitments
<TABLE>
<CAPTION>
Group Company
---------------- ---------------
1998 1997 1998 1997
'L''O00 'L''O00 'L''O00 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracted for but not provided 2,609 2,281 95 102
- --------------------------------------------------------------------------------
</TABLE>
Operating lease commitments
Commitments under operating leases to pay rentals during the year following the
year of these financial statements are given in the table below, analysed
according to the period in which each lease expires.
<TABLE>
<CAPTION>
Group Company
---------------- ---------------
1998 1997 1998 1997
'L''O00 'L''O00 'L''O00 'L''O00
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Land and buildings:
Expiring within one year 836 789 26 --
Expiring in two to five years 2,256 2,058 -- 37
Expiring thereafter 3,883 4,180 41 60
- --------------------------------------------------------------------------------
6,975 7,027 67 97
- --------------------------------------------------------------------------------
Other assets:
Expiring within one year 88 18 15 --
Expiring in two to five years 432 405 -- 21
Expiring thereafter 3 3 -- --
- --------------------------------------------------------------------------------
523 426 15 21
- --------------------------------------------------------------------------------
</TABLE>
42 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
26. Reconciliation of Operating Profit to Operating Cash Flow
<TABLE>
<CAPTION>
1998 1997
'L''O00 'L''O00
- --------------------------------------------------------------------------------
<S> <C> <C>
Operating profit 36,980 32,570
Depreciation and amortisation 9,272 7,097
Stocks (7,510) 3,234
Debtors 1,884 (5,419)
Creditors 2,041 4,122
Loss on disposal of fixed assets -- 52
- --------------------------------------------------------------------------------
Cash flow from operating activities 42,667 41,656
- --------------------------------------------------------------------------------
</TABLE>
27. Major non-cash transactions
During the year the following major non-cash transactions arose:
(i) as part of the acquisition of the minority interest in Heatric Limited,
Meggitt PLC issued 1,556,824 shares worth'L''3,000,000.
(ii) Meggitt PLC issued 2,045,561 shares worth'L''3,898,000 in respect of scrip
dividends.
28. Analysis of Net Debt
<TABLE>
<CAPTION>
At 1 January Cash Exchange At 31 December
1998 Flow Acquisitions Movement 1998
'L''O00 'L''000 'L''000 'L''O00 'L''O00
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash 40,335 (1,326) -- 501 39,510
Overdrafts (388) 260 -- -- (128)
- ---------------------------------------------------------------------------------------------
Net Cash 39,947 (1,066) -- 501 39,382
- ---------------------------------------------------------------------------------------------
Bank Loans (7,960) (43,367) (3,916) (1,991) (57,234)
HP (27) (14) -- -- (41)
- ---------------------------------------------------------------------------------------------
Debt due within one year (7,987) (43,381) (3,916) (1,991) (57,275)
Debt due after one year (36,671) (1) (3,282) 130 (39,824)
- ---------------------------------------------------------------------------------------------
Net Debt (4,711) (44,448) (7,198) (1,360) (57,717)
- ---------------------------------------------------------------------------------------------
</TABLE>
29. Reconciliation of Net Cash Flow to Movement in Net Debt
<TABLE>
<CAPTION>
1998 1997
'L''O00 'L''O00
- --------------------------------------------------------------------------------
<S> <C> <C>
(Decrease)/Increase in cash in the period (1,066) 7,522
(Decrease)/Increase in liquid resources -- (645)
Reduction in debt financing (43,382) (846)
- --------------------------------------------------------------------------------
Change in net debt resulting from cash flows (44,448) 6,031
Loans (acquired)/disposed with subsidiaries (7,198) (73)
Exchange differences (1,360) (799)
Movement in net debt in year (53,006) 5,159
- --------------------------------------------------------------------------------
Net debt at 1 January 1998 (4,711) (9,870)
Net debt at 31 December 1998 (57,717) (4,711)
- --------------------------------------------------------------------------------
</TABLE>
43 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
30. Acquisition of Subsidiary Undertakings
(i) The net effect on the assets and liabilities of the Group arising from the
acquisition of subsidiary undertakings is set out as follows:
<TABLE>
<CAPTION>
1998 1997
'L''O00 'L''O00
- --------------------------------------------------------------------------------
<S> <C> <C>
Net assets acquired:
Goodwill on consolidation 46,712 1,785
Intangible fixed assets 1,854 --
Tangible fixed assets 13,051 458
Stocks 8,467 1,064
Debtors 8,615 894
Creditors (9,424) (604)
Loans (7,198) --
Cash 3,636 --
Finance leases -- (73)
- --------------------------------------------------------------------------------
Minority interest 2,259 --
- --------------------------------------------------------------------------------
Consideration 67,972 3,524
- --------------------------------------------------------------------------------
</TABLE>
Analysis of net outflow of cash in respect of purchases of subsidiary
undertakings:
<TABLE>
<CAPTION>
1998 1997
'L''O00 'L''O00
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash consideration paid including deferred consideration 64,087 5,220
- --------------------------------------------------------------------------------
Net outflow of cash and cash equivalents for acquisitions 60,451 5,220
- --------------------------------------------------------------------------------
</TABLE>
(ii) Goodwill on consolidation includes'L''25.2 million in respect of the
acquisition of Vibro-Meter SA on 25 September 1998.
<TABLE>
<CAPTION>
Balance Fair value
sheet at Accounting balances at
date of policy date of
acquisition Revaluations alignment acquisition
'L''O00 'L''O00 'L''000 'L''O00
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Intangible fixed assets 1,730 -- 124 1,854
Tangible fixed assets 12,066 883 -- 12,949
Stocks 9,140 (1,180) -- 7,960
Debtors 8,167 (95) -- 8,072
Creditors (7,851) (523) -- (8,374)
Loans (7,198) -- -- (7,198)
Cash 3,636 -- -- 3,636
Deferred tax (1,674) -- 1,674 --
- ---------------------------------------------------------------------------------
18,016 (915) 1,798 18,899
- ---------------------------------------------------------------------------------
Consideration 44,089
- ---------------------------------------------------------------------------------
Goodwill on consolidation 25,190
- ---------------------------------------------------------------------------------
</TABLE>
Revaluations
The tangible fixed assets revaluation is in respect of a valuation of freehold
properties at the date of acquisition. The revaluation adjustments in respect of
stocks, debtors and creditors reflect adjustments to estimated realisable value.
Accounting policy alignment
The fair value adjustment for intangible assets relates to the restatement of
the acquired assets in accordance with the Group's amortisation policies. The
adjustment to deferred tax writes back the previously provided deferred tax on
the revaluation surplus in accordance with UK GAAP which requires a liability to
be recognised only where a disposal is envisaged. No such property disposals are
envisaged.
The profit after taxation of Vibro-Meter SA for the 12 months to
acquisition was'L''1.3 million.
In respect of the period from acquisition to 31 December Vibro-Meter SA
contributed sales of'L''9.2 million, an operating profit before goodwill
amortisation of'L''0.2 million and an operating loss after goodwill amortistion
of'L''0.1 million.
The post acquisition effect of Vibro-Meter SA on the Group
consolidated cashflow is:
<TABLE>
<CAPTION>
'L''O00 'L''O00
- --------------------------------------------------------------------------------
<S> <C> <C>
Cash flow before corporate items 592
Purchase of subsidiary undertakings (44,089)
Net cash acquired with subsidiaries 3,636
Acquisitions and disposals (40,453)
Financing 41,991
- --------------------------------------------------------------------------------
Increase in cash in period 2,130
- --------------------------------------------------------------------------------
</TABLE>
44 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
(iii) Goodwill on consolidation includes 'L'18.3 million in respect of the
acquisition of the minority interest in Heatric Limited on 22 July 1998.
<TABLE>
<CAPTION>
Fair value
balances at
date of
acquisition
'L''000
<S> <C>
Minority interest 2,259
- --------------------------------------------------------------------------------
Consideration 20,533
- --------------------------------------------------------------------------------
Goodwill on consolidation 18,274
- --------------------------------------------------------------------------------
</TABLE>
(iv) Goodwill on consolidation includes 'L'2.9 million in respect of the
acquisition of Hayes Targets on 2 February 1998.
<TABLE>
<CAPTION>
Balance Fair value
sheet at balances at
date of date of
acquisition Revaluations acquisition
'L''000 'L''000 'L''000
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Tangible fixed assets 132 (30) 102
Stocks 636 (129) 507
Debtors 543 - 543
Creditors (834) (216) (1,050)
- --------------------------------------------------------------------------------
477 (375) 102
- --------------------------------------------------------------------------------
Consideration 3,015
- --------------------------------------------------------------------------------
Goodwill on consolidation 2,913
- --------------------------------------------------------------------------------
</TABLE>
Revaluations
The revaluation adjustments in respect of fixed assets, stocks and creditors
reflect adjustments to estimated realisable value.
(v) Goodwill on consolidation includes 'L'0.3 million in respect of the
acquisition of SAMDI. No value was placed on the assets acquired.
The cumulative amount of goodwill written off to reserves to 31 December 1998
was 'L'94.4 million which arose in respect of acquisitions prior to 1
January 1998.
31. Contingent Liabilities
The parent Company has given guarantees in respect of some property leases and
other leasing agreements together with some performance guarantees entered into
by certain subsidiaries.
The Company and various of its subsidiaries are, from time to time, parties to
legal proceedings and claims which arise in the ordinary course of business.
The directors do not anticipate that the outcome of these proceedings and
claims, either individually or in aggregate, will have a material adverse effect
upon the Group's financial position.
32. Pensions
In the UK, most employees are members either of the Meggitt Group 1990 Pension
Plan or the Meggitt Executive Pension Plan. These are defined benefit plans, the
assets of which are held in trust funds separate from the Group's finances.
The latest actuarial valuation of the Meggitt Group 1990 Pension Plan carried
out as at 1 July 1998 showed that the Plan was 110% funded on estimated final
salaries using a 3% per annum gap between salaries and yields and making
allowance for the Advance Corporation Tax changes from the 1997 Budget. The
assets were valued at 'L'99 million.
The valuation of the Meggitt Executive Pension Plan was carried out as at 6
April 1997 and was 101% funded but with a 2% per annum gap between salaries and
yields. These assets were valued at 'L'21 million.
The pension costs relating to the Plans are assessed in accordance with the
advice of Sedgwick Noble Lowndes Limited, consulting actuaries. They used the
projected unit method for the 1990 Plan and the attained age method for the
Executive Plan.
The pension charge in the UK for the year was 'L'3.3 million (1997 -'L'1.7
million) after crediting the amortisation of surpluses over the average
remaining service lifetime of employees. An amount of 'L'3.4 million (1997 -
'L'3.7 million) is included in other debtors, being the excess of the amount
funded over the amount charged to the profit and loss account.
In overseas countries the Group provides pensions in accordance with statutory
requirements and local customs and practice.
In 1998 the real cost to the Group of overseas pensions contributions was 'L'3.0
million (1997 - 'L'2.2 million).
45 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
FINANCIAL REVIEW
Notes to the Financial Statements
33. Group Companies
The following information is not a complete listing of all subsidiary companies
at 31 December 1998 but relates only to those subsidiaries principally affecting
the profits or assets of the Group.
<TABLE>
<CAPTION>
United Kingdom
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Endevco UK Limited Meggitt Mobrey Limited
Heatric Limited Meggitt Properties PLC*+
Meggitt Defence Systems Limited Meggitt (UK) Limited
Meggitt Electronic Components Limited Systech Solutions Limited
Meggitt International Limited* + Wayfarer Transit Systems Limited
Meggitt Investments Limited* +
- ----------------------------------------------------------------------------------------------------------
Continental Europe
- ----------------------------------------------------------------------------------------------------------
Bestobell Mobrey GmbH - Germany Mobrey SA-NV -Belgium
Endevco France SA - France Mobrey SA - France
Endevco Vertriebs GmbH - Germany Navarra de Componentes Electronicos SA - Spain
Meggitt BV - Netherlands + Piher International GmbH - Germany
Mobrey AB - Sweden Vibro-Meter SA - Switzerland
- ----------------------------------------------------------------------------------------------------------
USA
- ----------------------------------------------------------------------------------------------------------
Avica Inc Meggitt-USA, Inc +
Endevco Corporation Piher International Corporation
Meggitt Avionics Inc Transducer Technology Inc
Meggitt Oregon Inc
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(i) The companies listed above are incorporated in the country named.
(ii) The ordinary shares of all subsidiaries were 100 per cent owned by Meggitt
PLC either directly or indirectly at 31 December 1998.
(iii) Companies marked * are direct subsidiaries of Meggitt PLC.
(iv) Companies marked + are management companies. Otherwise all companies are
operating companies engaged in the Group's principal activities as
described in the Report of the Directors on page 17.
46 MEGGITT PLC ANNUAL REPORT & ACCOUNTS 1998
<PAGE>
[CONFORMED]
AGREEMENT AND PLAN OF MERGER
dated as of
June 9, 1999
among
WHITTAKER CORPORATION,
MEGGITT PLC
and
MEGGITT ACQUISITION INC.
<PAGE>
TABLE OF CONTENTS
----------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
THE OFFER
SECTION 1.01. The Offer........................................................................1
SECTION 1.02. Company Action...................................................................2
SECTION 1.03. Directors........................................................................4
ARTICLE 2
THE MERGER
SECTION 2.01. The Merger.......................................................................5
SECTION 2.02. Conversion of Shares.............................................................5
SECTION 2.03. Surrender and Payment............................................................6
SECTION 2.04. Dissenting Shares................................................................7
SECTION 2.05. Stock Options....................................................................8
SECTION 2.06. Lost Certificates................................................................8
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. Certificate of Incorporation.....................................................9
SECTION 3.02. Bylaws...........................................................................9
SECTION 3.03. Directors and Officers...........................................................9
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Corporate Existence and Power....................................................9
SECTION 4.02. Corporate Authorization.........................................................10
SECTION 4.03. Governmental Authorization......................................................10
SECTION 4.04. Non-Contravention...............................................................10
SECTION 4.05. Capitalization of the Company...................................................11
SECTION 4.06. Capitalization of Subsidiaries..................................................12
SECTION 4.07. SEC Filings.....................................................................12
SECTION 4.08. Financial Statements............................................................12
SECTION 4.09. Disclosure Documents............................................................13
SECTION 4.10. Absence of Certain Changes......................................................13
SECTION 4.11. No Undisclosed Material Liabilities.............................................15
SECTION 4.12. Litigation......................................................................15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 4.13. Taxes...........................................................................16
SECTION 4.14. Employee Benefit Plans; ERISA; Labor............................................18
SECTION 4.15. Compliance with Laws and Court Orders...........................................20
SECTION 4.16. Finders' Fees...................................................................20
SECTION 4.17. Environmental Matters...........................................................20
SECTION 4.18. Antitakeover Statutes and Rights Agreement......................................21
SECTION 4.19. Intellectual Property...........................................................21
SECTION 4.20. Year 2000.......................................................................22
SECTION 4.21. Properties......................................................................23
SECTION 4.22. No Default......................................................................23
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 5.01. Corporate Existence and Power...................................................24
SECTION 5.02. Corporate Authorization.........................................................24
SECTION 5.03. Governmental Authorization......................................................24
SECTION 5.04. Non-Contravention...............................................................24
SECTION 5.05. Disclosure Documents............................................................25
SECTION 5.06. Finders' Fees...................................................................25
SECTION 5.07. Parent Financing Agreements.....................................................25
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.01. Conduct of the Company..........................................................26
SECTION 6.02. Stockholder Meetings; Proxy Materials...........................................29
SECTION 6.03. Access to Information...........................................................30
SECTION 6.04. Other Offers, etc...............................................................30
ARTICLE 7
COVENANTS OF PARENT
SECTION 7.01. Obligations of Merger Subsidiary................................................32
SECTION 7.02. Voting of Shares................................................................32
SECTION 7.03. Director and Officer Liability..................................................32
SECTION 7.04. Employee Benefits...............................................................33
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
SECTION 8.01. Notices of Certain Events.......................................................34
SECTION 8.02. Reasonable Best Efforts.........................................................35
SECTION 8.03. Cooperation.....................................................................35
SECTION 8.04. Public Announcements............................................................36
SECTION 8.05. Further Assurances..............................................................36
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to the Obligations of Each Party.....................................36
ARTICLE 10
TERMINATION
SECTION 10.01. Termination....................................................................37
SECTION 10.02. Effect of Termination..........................................................38
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices........................................................................38
SECTION 11.02. Entire Agreement; Non-Survival of Representations and
Warranties; Third Party Beneficiaries.................................................39
SECTION 11.03. Amendments; No Waivers.........................................................40
SECTION 11.04. Expenses.......................................................................40
SECTION 11.05. Successors and Assigns.........................................................41
SECTION 11.06. Governing Law..................................................................41
SECTION 11.07. Jurisdiction...................................................................41
SECTION 11.08. WAIVER OF JURY TRIAL...........................................................42
SECTION 11.09. Counterparts; Effectiveness....................................................42
SECTION 11.10. Captions.......................................................................42
SECTION 11.11. Specific Performance...........................................................42
SECTION 11.12. Joint and Several Liability....................................................42
SECTION 11.13. Definitions and Usage..........................................................42
Annex I
</TABLE>
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 9, 1999 among WHITTAKER
CORPORATION, a Delaware corporation (the "COMPANY"), MEGGITT PLC, a U.K. public
limited company ("PARENT"), and MEGGITT ACQUISITION INC., a Delaware corporation
and a wholly-owned subsidiary of Parent ("MERGER SUBSIDIARY").
The parties hereto agree as follows:
ARTICLE 1
THE OFFER
SECTION 1.01. The Offer. (a) Provided that nothing shall have occurred
that would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, as promptly as practicable after the date hereof, but in no
event later than five U.S. business days following the public announcement of
the execution of this Agreement, Merger Subsidiary shall commence an offer (the
"OFFER") to purchase (i) all of the Common Shares at a price of $28.00 per
Common Share ("COMMON SHARE PRICE") and (ii) all of the Preferred Shares at a
price equal to the Common Share Price times 326.531 per Preferred Share, in each
case, net to the seller in cash. The Offer shall be subject to the condition
that there shall be validly tendered in accordance with the terms of the Offer,
prior to the expiration date of the Offer and not withdrawn, a number of Shares
that, together with the Shares then beneficially owned by Parent, represents at
least a majority of the Common Shares outstanding on a fully-diluted basis (the
"MINIMUM CONDITION") and to the other conditions set forth in Annex I hereto.
Merger Subsidiary expressly reserves the right to waive any of the conditions to
the Offer and to make any change in the terms or conditions of the Offer,
provided that no change may be made that, without the prior written consent of
the Company, waives the Minimum Condition, changes the form of consideration to
be paid, decreases the price per Share or the number of Shares sought in the
Offer or imposes conditions to the Offer in addition to those set forth in Annex
I. If all of the conditions to the Offer are not satisfied or waived on any
scheduled expiration date of the Offer, Merger Subsidiary shall extend the Offer
from time to time until such conditions are satisfied or waived, provided that
Merger Subsidiary shall not be required to extend the Offer beyond the date
referred to in Section 10.01(b)(i). Subject to the foregoing and to the terms
and conditions of the Offer, Merger Subsidiary shall, and Parent shall cause it
to, accept for payment and pay for, as
<PAGE>
promptly as practicable after the expiration of the Offer, all Shares properly
tendered and not withdrawn pursuant to the Offer. "SHARES" means the Common
Shares and the Preferred Shares. "COMMON SHARES" means the outstanding shares of
common stock, par value $0.01 per share, of the Company, including the
associated rights (the "RIGHTS") issued pursuant to the rights agreement between
the Company and Mellon Bank N.A., dated as of November 12, 1998 (the "RIGHTS
AGREEMENT"). "PREFERRED SHARES" means the outstanding shares of Series D
participating convertible preferred stock, par value $1.00 per share, of the
Company.
(b) As soon as practicable on the date of commencement of the Offer, Merger
Subsidiary shall file with the Securities and Exchange Commission ("SEC") a
Tender Offer Statement on Schedule 14D-1 (the "SCHEDULE 14D-1") with respect to
the Offer, which will contain the offer to purchase and form of the related
letter of transmittal and summary advertisement (such Schedule 14D-1 and the
documents included therein pursuant to which the Offer will be made, together
with any supplements or amendments thereto, the "OFFER DOCUMENTS"). Parent and
the Company each agrees promptly to correct any information provided by it for
use in the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect. Merger Subsidiary agrees to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed
with the SEC and the Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents prior to their being
filed with the SEC or disseminated to the holders of Shares. Parent and Merger
Subsidiary shall provide the Company and its counsel with copies of any written
comments that Parent, Merger Subsidiary or their counsel may receive from the
SEC or its staff with respect to the Offer Documents promptly after receipt of
such comments.
SECTION 1.02. Company Action. (a) The Company hereby consents to the Offer
and represents that its Board of Directors, at a meeting duly called and held
has unanimously (i) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to and in the
best interests of the Company's stockholders, (ii) approved and adopted this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, in accordance with the requirements of the General Corporation Law of
the State of Delaware (the "DELAWARE LAW") and (iii) resolved (subject to
Section 6.04(b)) to recommend acceptance of the Offer and approval and adoption
of this Agreement and the Merger by its stockholders. The Company further
represents that Credit Suisse First Boston Corporation and CIBC World Markets
Corp. (the "COMPANY FINANCIAL ADVISORS") have delivered to the Company's Board
of
2
<PAGE>
Directors their respective opinions that the consideration to be paid in the
Offer and the Merger is fair to the holders of Shares from a financial point of
view. The Company also represents that it has been authorized by the Company
Financial Advisors to permit the inclusion of such opinions in their entirety in
the Schedule 14D-9 and the Proxy Statement, so long as such inclusion is in form
and substance reasonably satisfactory to the Company Financial Advisors and
their counsel. The Company has been advised by each of its directors and by each
executive officer who as of the date hereof is actually aware (to the knowledge
of the Company) of the transactions contemplated by this Agreement that each
such person intends to tender pursuant to the Offer all Shares owned by such
person. The Company will promptly furnish Parent with a list of its
stockholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Shares and lists of
securities positions of Shares held in stock depositories, in each case true and
correct as of the most recent practicable date, and will provide to Parent such
additional information (including, without limitation, updated lists of
stockholders, mailing labels and lists of securities positions) and such other
assistance as Parent or its agents may reasonably request in connection with the
Offer. Subject to the requirements of applicable law, and except for such steps
as are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the Merger, Parent and Merger Subsidiary and each of
their affiliates, associates, employees, agents and advisors shall hold in
confidence the information contained in any such lists, labels, listings or
files, shall use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated and if the Company so
requests, shall deliver, and shall use their reasonable efforts to cause their
affiliates, associates, employees, agents and advisors to deliver, to the
Company all copies and any extracts or summaries from such information then in
their possession or control.
(b) As soon as practicable after the time that the Offer is commenced, the
Company shall file with the SEC and disseminate to holders of Shares, in each
case as and to the extent required by applicable federal securities laws, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "SCHEDULE 14D-9") that shall reflect the
recommendations of the Company's Board of Directors referred to above. The
Company and Parent each agree promptly to correct any information provided by it
for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect. The Company agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule
14D-9 prior to its filing with the SEC or dissemination to holders of Shares.
The
3
<PAGE>
Company shall provide Parent and its counsel with copies of any written comments
that the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after receipt of such comments.
SECTION 1.03. Directors. (a) Effective upon the acceptance for payment
pursuant to the Offer of a number of Shares that satisfies the Minimum
Condition, Parent shall be entitled to designate the number of directors,
rounded up to the nearest whole number, on the Company's Board of Directors that
equals the product of (i) the total number of directors on the Company's Board
of Directors and (ii) the percentage that the number of Common Shares
beneficially owned by Parent bears to the total number of Common Shares
outstanding on a fully diluted basis, and the Company shall take all action
necessary to cause Parent's designees to be elected or appointed to the
Company's Board of Directors, including, without limitation, increasing the
number of directors, and seeking and accepting resignations of incumbent
directors. At such time, the Company will also use its best efforts to cause
individuals designated by Parent to constitute the number of members, rounded up
to the nearest whole number, on (i) each committee of the Board of Directors of
the Company and (ii) each board of directors of each subsidiary of the Company
(and each committee thereof) that represents the same percentage as such
individuals represent on the Board of Directors of the Company. Notwithstanding
the foregoing, the Parent and the Company shall use their reasonable efforts to
ensure that at least two members of the Company's Board of Directors as of the
date hereof who are not employees of the Company (the "CONTINUING DIRECTORS")
shall remain members of the Company's Board of Directors until the Effective
Time.
(b) The Company's obligations to appoint Parent's designees to the
Company's Board of Directors shall be subject to Section 14(f) of the 1934 Act
and Rule 14f-1 promulgated thereunder. The Company shall promptly take all
actions, and shall include in the Schedule 14D-9 such information with respect
to the Company and its officers and directors, as Section 14(f) and Rule 14f-1
require in order to fulfill its obligations under this Section. Parent shall
supply to the Company in writing and be solely responsible for any information
with respect to itself and its nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's designees pursuant to
Section 1.03(a) and until the Effective Time, the approval of a majority of the
Continuing Directors shall be required to authorize (and such authorization
shall constitute the authorization of the Company's Board of Directors and no
other action on the part of the Company, including any action by any other
director of the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement requiring action by
the
4
<PAGE>
Company's Board of Directors, any extension of time for performance of any
obligation or action hereunder by Parent or Merger Subsidiary and any waiver of
compliance with any of the agreements or conditions contained herein for the
benefit of the Company.
ARTICLE 2
THE MERGER
SECTION 2.01. The Merger. (a) Upon the terms and subject to the conditions
set forth in this Agreement, at the Effective Time, Merger Subsidiary shall be
merged (the "MERGER") with and into the Company in accordance with the Delaware
Law, whereupon the separate existence of Merger Subsidiary shall cease, and the
Company shall continue as the surviving corporation (the "SURVIVING
CORPORATION").
(b) As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger set forth herein, the Company
and Merger Subsidiary will file a certificate of merger with the Secretary of
State of the State of Delaware and make all other filings or recordings required
by Delaware Law in connection with the Merger. The Merger shall become effective
at such time as the certificate of merger is duly filed with the Secretary of
State of the State of Delaware or at such later time as is agreed by Parent and
the Company and specified in the certificate of merger (the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Merger Subsidiary, all as provided under Delaware Law.
SECTION 2.02. Conversion of Shares. At the Effective Time:
(a) each share of common stock of Merger Subsidiary outstanding immediately
prior to the Effective Time shall be converted into and become one share of
common stock of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation;
(b) each Share held by the Company as treasury stock or owned by Parent or
any of its subsidiaries immediately prior to the Effective Time shall be
canceled, and no payments shall be made with respect thereto;
5
<PAGE>
(c) except as otherwise provided in Section 2.02(b) or Section 2.04, each
Common Share outstanding immediately prior to the Effective Time shall be
converted into the right to receive $28.00 in cash or any higher price paid for
each Common Share in the Offer, without interest (the "COMMON SHARE
CONSIDERATION"); and
(d) each Preferred Share outstanding immediately prior to the Effective
Time shall be converted into the right to receive an amount equal to the Common
Share Consideration times 326.531, without interest (the "PREFERRED SHARE
CONSIDERATION" and, together with the Common Share Consideration, the "MERGER
CONSIDERATION").
SECTION 2.03. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint an agent reasonably acceptable to the Company (the
"EXCHANGE AGENT") for the purpose of exchanging certificates representing Shares
(the "CERTIFICATES") for the Merger Consideration. Immediately following the
Effective Time, Parent shall deposit with the Exchange Agent, for the benefit of
the holders of Shares, the Merger Consideration to be paid pursuant to Section
2.02 in exchange for outstanding Shares. For purposes of determining the Merger
Consideration to be made available, Parent shall assume that no holder of Shares
will perfect his right to appraisal of his Shares. Promptly after the Effective
Time, Parent will send, or will cause the Exchange Agent to send, to each holder
of Shares at the Effective Time a letter of transmittal for use in such exchange
(which shall specify that delivery of the Merger Consideration shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent).
(b) Each holder of Shares that have been converted into a right to receive
the Merger Consideration, upon surrender to the Exchange Agent of a Certificate,
together with a properly completed letter of transmittal if applicable, will be
entitled to receive the Merger Consideration payable for each Share represented
by such Certificate. Until so surrendered, each such Certificate shall, after
the Effective Time, represent for all purposes only the right to receive such
Merger Consideration, without interest thereon.
(c) If any portion of the Merger Consideration is to be paid to a person
other than the person in whose name the surrendered Certificate is registered,
it shall be a condition to such payment that the Certificate so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a person other than the
registered
6
<PAGE>
holder of such Certificate or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not applicable.
(d) At the Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers of Shares. From
and after the Effective Time, the holders of Certificates evidencing ownership
of the Shares outstanding immediately prior to the Effective Time shall cease to
have rights with respect to such Shares, except as otherwise provided for herein
or by applicable law. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, they shall be canceled and exchanged for the
Merger Consideration provided for, and in accordance with the procedures set
forth, in this Article 2.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.03(a) that remains unclaimed by the holders of
Shares six months after the Effective Time shall be returned to Parent, upon
demand, and any such holder who has not exchanged them for the Merger
Consideration in accordance with this Section 2.03 prior to that time shall
thereafter look only to Parent for payment of the Merger Consideration in
respect of such Shares. Notwithstanding the foregoing, Parent shall not be
liable to any holder of Shares for any amount paid to a public official pursuant
to applicable abandoned property, escheat or similar laws.
(f) Parent and Merger Subsidiary shall be entitled to deduct and withhold,
or cause the Exchange Agent to deduct and withhold, from the Merger
Consideration payable to a holder of Shares pursuant to the Merger any
withholding taxes as are required under the Internal Revenue Code of 1986 (the
"CODE"), or any applicable provision of state, local or foreign tax law. Parent
shall take appropriate steps to minimize such taxes. To the extent that amounts
are so withheld by Parent or Merger Subsidiary, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by Parent
or Merger Subsidiary.
(g) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.03(a) to pay for Shares for which appraisal rights
have been perfected shall be returned to Parent, upon demand.
SECTION 2.04. Dissenting Shares. (a) Notwithstanding Section 2.02, Shares
outstanding immediately prior to the Effective Time and held by a holder who has
not voted in favor of the Merger or consented thereto in writing and who has
demanded appraisal for such Shares in accordance with Delaware Law shall not be
converted into a right to receive the Merger Consideration, unless such
7
<PAGE>
holder fails to perfect, withdraws or otherwise loses its right to appraisal. If
after the Effective Time such holder fails to perfect, withdraws or loses his
right to appraisal, such Shares shall be treated as if they had been converted
as of the Effective Time into a right to receive the Merger Consideration
without any interest thereon. The Company shall give Parent prompt notice of any
demands received by the Company for appraisal of Shares, attempted withdrawals
of such demands and any other instruments served pursuant to Delaware Law and
received by the Company relating to stockholders' rights of appraisal, and
Parent shall have the right to participate in and, following consummation of the
Offer, direct all negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
SECTION 2.05. Stock Options. (a) At or immediately prior to the Effective
Time, each employee and director stock option (collectively, the "STOCK
OPTIONS") to purchase Shares outstanding under any employee or director stock
option or compensation plan or arrangement of the Company, whether or not vested
or exercisable, shall be canceled, and the Company shall pay each holder of any
such option at or promptly after the Effective Time for each such option, an
amount in cash equal to (i) the product of (A) the excess, if any, of the Common
Share Consideration over the applicable exercise price of such option and (B)
the number of Common Shares such holder could have purchased (assuming full
vesting of all options) had such holder exercised such option in full
immediately prior to the Effective Time minus (ii) the amount of any applicable
withholding tax.
(b) Prior to the Effective Time, to the extent required to effect the
transactions contemplated hereby, the Company shall take any actions necessary
with respect to its stock option or compensation plans or arrangements,
including if applicable making amendments to the terms of such stock option or
compensation plans or arrangements.
SECTION 2.06. Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will pay, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the Shares
represented by such Certificate, as contemplated by this Article 2.
8
<PAGE>
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.01. Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, provided that, at the Effective Time, Article I
of such certificate of incorporation shall be amended to read as follows: "The
name of the corporation is Whittaker Corporation."
SECTION 3.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.03. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
the Delaware Law and the certificate of incorporation and bylaws of the
Surviving Corporation, (a) the directors of Merger Subsidiary at the Effective
Time shall be the directors of the Surviving Corporation, and (b) the officers
of the Company at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent that except as otherwise
disclosed in the Disclosure Schedule:
SECTION 4.01. Corporate Existence and Power. Each of the Company and its
subsidiaries is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, and has the requisite corporate or other power
and authority and governmental approvals to own, lease and operate its
properties and to carry on its business as now conducted, except for such
matters as would not have a material adverse effect on the Company. Each of the
Company and its subsidiaries is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for such matters as would not have a material
adverse effect on the Company. The Company has heretofore delivered or made
available to Parent true and complete copies of the Company's certificate of
incorporation and bylaws as currently in effect.
9
<PAGE>
SECTION 4.02. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except as set forth in the next succeeding sentence of this Section
4.02, have been duly authorized by all necessary corporate action. The
affirmative vote of a majority of the outstanding Common Shares is the only vote
of any class or series of the Company's capital stock necessary to approve and
adopt this Agreement and the transactions contemplated by this Agreement.
Subject to the receipt of the approval described in the immediately preceding
sentence, this Agreement constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally.
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby require no action by or in respect of,
or filing with, any governmental body, agency, official or authority other than
(i) the filing of a certificate of merger with respect to the Merger with the
Delaware Secretary of State; (ii) compliance with any applicable requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR ACT"); (iii)
compliance with any applicable requirements of the Securities Act of 1933 (the
"1933 ACT"); (iv) compliance with any applicable requirements of the Securities
Exchange Act of 1934 (the "1934 ACT"); (v) compliance with any other applicable
securities or takeover laws, whether state or foreign; (vi) any actions or
filings which, if not taken or made, would not have a material adverse effect on
the Company or the transactions contemplated hereby; and (vii) any filings or
notices not required to be made or given until after the Effective Time.
SECTION 4.04. Non-Contravention. The execution, delivery and performance by
the Company of this Agreement do not, and the consummation by the Company of the
transactions contemplated hereby will not (a) assuming receipt of the approval
of stockholders referred to in Section 4.02, contravene or conflict with the
certificate of incorporation, bylaws or similar organizational documents of the
Company, (b) assuming compliance with the matters referred to in Section 4.03,
violate any applicable law, rule, regulation, judgment, injunction, order or
decree, (c) constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of the Company or any of
its subsidiaries or to a loss of any benefit to which the Company or any of its
subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of its subsidiaries or any license,
franchise, permit or other similar authorization held by the Company or any of
its subsidiaries, or (d) result in the creation or imposition of any Lien on any
asset of
10
<PAGE>
the Company or any of its subsidiaries, except in the case of clause (b), (c) or
(d), for such matters as that would not have a material adverse effect on the
Company or the transaction contemplated hereby. For purposes of this Agreement,
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance in respect of such asset.
SECTION 4.05. Capitalization of the Company. The authorized capital stock
of the Company consists of 40,000,000 shares of common stock, par value $.01 per
share ("COMMON STOCK"), and 5,000,000 shares of preferred stock, par value $1.00
per share ("PREFERRED STOCK"), of which 10,000 are designated as Series D
Participating Convertible Preferred Stock and 150,000 are designated as Series E
Participating Convertible Preferred Stock. As of the close of business on June
4, 1999, (i) 11,440,452 shares of Common Stock were issued and outstanding,
stock options to purchase an aggregate of 851,152 shares of Common Stock under
the Company's Long-Term Stock Incentive Plan (1989) and 1992 Stock Option Plan
for Non-Employee Directors (collectively, the "OPTION PLANS") were outstanding,
883,912 shares of Common Stock were reserved for issuance upon conversion of the
7% convertible subordinated notes due May 1, 2005 of the Company (the
"CONVERTIBLE NOTES"), and 188,467 shares of Common Stock were reserved for
issuance upon conversion of the Series D Participating Convertible Preferred
Stock, and (ii) 577.18 shares of Series D Participating Convertible Preferred
Stock were issued and outstanding, and 150,000 shares of Series E Participating
Cumulative Preferred Stock were reserved for issuance upon exercise of the
Rights associated with the Common Stock. All the outstanding shares of the
Company's capital stock are, and all shares which may be issued in connection
with the Option Plans, the Convertible Notes or the Preferred Shares will be,
when issued in accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and non-assessable. Except as set forth in this
Section 4.05 and for changes since June 4, 1999 resulting from the exercise of
employee and director stock options or the conversion of the Preferred Shares
and the Convertible Notes outstanding on such date, there are no outstanding (x)
shares of capital stock or other voting securities of the Company, (y)
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company or (z) options, warrants or other
rights to acquire from the Company, or other obligation of the Company to issue,
transfer or sell, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of the Company.
Except with respect to the Convertible Notes, neither the Company nor any of its
subsidiaries has any contractual obligation to repurchase, redeem or otherwise
acquire any of the securities referred to above. There are no stockholder
agreements, voting trusts or other agreements or understandings to which the
Company or any of its subsidiaries is a party or to which it is bound relating
to the voting of any shares of capital stock of the Company. Upon the Company
taking the actions referred
11
<PAGE>
to in Section 2.05(a), following the Effective Time, no holder of Stock Options
will have any right to receive shares of common stock of the Surviving
Corporation upon exercise of the Stock Options. Upon execution by the Company of
the supplemental instrument contemplated by Section 4.5(b) of the Convertible
Notes, no holder of Convertible Notes will have any right to receive shares of
common stock of the Surviving Corporation upon conversion of the Convertible
Notes.
SECTION 4.06. Capitalization of Subsidiaries. All of the outstanding shares
of capital stock of, or other ownership interests in, each subsidiary of the
Company is owned by the Company, directly or indirectly, free and clear of any
consensual Lien (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests). There are
no outstanding (i) securities of the Company or any of its subsidiaries
convertible into or exchangeable for shares of capital stock or other voting
securities or ownership interests in any subsidiary of the Company, or (ii)
options or other rights to acquire from the Company or any of its subsidiaries,
or other obligation of the Company or any of its subsidiaries to issue, any
capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any subsidiary of the Company.
SECTION 4.07. SEC Filings. (a) The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC since October 31,
1997 (the "SEC DOCUMENTS").
(b) Each SEC Document filed pursuant to the 1934 Act did not, as of its
filing date, and each SEC Document filed pursuant to the 1933 Act did not, as of
its effective date, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except to the extent that such statements have been
modified or superseded by a later filed SEC Document.
SECTION 4.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Company's Annual Report on Form 10-K for the fiscal
years ended October 31, 1997 and 1998 and its quarterly report on Form 10-Q for
its fiscal quarter ended January 31, 1999 (the "10-Q") have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated subsidiaries
12
<PAGE>
as of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended (subject to normal year-end adjustments in the
case of any unaudited interim financial statements). For purposes of this
Agreement, "BALANCE SHEET" means the consolidated balance sheet of the Company
as of January 31, 1999 set forth in the 10-Q and "BALANCE SHEET DATE" means
January 31, 1999.
SECTION 4.09. Disclosure Documents. (a) Each document required to be filed
by the Company with the SEC or required to be distributed or otherwise
disseminated to the Company's stockholders in connection with the transactions
contemplated by this Agreement (the "COMPANY DISCLOSURE DOCUMENTS"), including,
without limitation, the Schedule 14D-9 and the proxy or information statement of
the Company (the "COMPANY PROXY STATEMENT"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto, when
filed, distributed or disseminated, as applicable, will comply as to form in all
material respects with the applicable requirements of the 1934 Act.
(b) (i) The Company Proxy Statement, as supplemented or amended, if
applicable, at the time such Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, and (ii) any Company
Disclosure Document (other than the Company Proxy Statement), at the time of the
filing of such Company Disclosure Document or any supplement or amendment
thereto and at the time of any distribution or dissemination thereof, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this Section 4.09(b) will not apply to statements or
omissions included in the Company Disclosure Documents based upon information
furnished to the Company in writing by Parent specifically for use therein.
(c) The information with respect to the Company or any of its subsidiaries
that the Company furnishes to Parent in writing specifically for use in the
Offer Documents, at the time of the filing thereof, at the time of any
distribution or dissemination thereof and at the time of the consummation of the
Offer, will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
SECTION 4.10. Absence of Certain Changes. Except as disclosed in the SEC
Documents filed prior to the date of this Agreement and except as permitted by
Section 6.01, since the Balance Sheet Date, the business of the Company and
13
<PAGE>
its subsidiaries has been conducted in the ordinary course consistent with past
practices and there has not been:
(a) any event, occurrence or development which has had or is reasonably
likely to have a material adverse effect on the Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or any
repurchase, redemption or other acquisition by the Company or any of its
subsidiaries of any outstanding shares of capital stock or other equity
securities of, or other ownership interests in, the Company or any of its
subsidiaries;
(c) any amendment of any term of any outstanding security of the Company or
any of its subsidiaries that would materially increase the obligations of the
Company or such subsidiary under such security;
(d) any incurrence, assumption or guarantee by the Company or any of its
subsidiaries of any indebtedness for borrowed money other than in the ordinary
course of business consistent with past practices;
(e) any creation or assumption by the Company or any of its subsidiaries of
any Lien on any material asset of the Company or any subsidiary other than in
the ordinary course of business consistent with past practices;
(f) any making of any loan, advance or capital contribution to or
investment in any person by the Company or any of its subsidiaries other than
(i) in connection with any acquisition or capital expenditure permitted by
Section 6.01, (ii) loans, advances or capital contributions to or investments in
wholly-owned subsidiaries of the Company, (iii) loans or advances to the Company
by any of its subsidiaries or (iv) loans or advances to employees of the Company
or any of its subsidiaries made in the ordinary course of business consistent
with past practices;
(g) (i) any contract or agreement entered into by the Company or any of its
subsidiaries relating to any material acquisition or disposition of any assets
or business other than in the ordinary course of business consistent with past
practices and those contemplated by this Agreement or (ii) any modification,
amendment, assignment, termination or relinquishment by the Company or any of
its subsidiaries of any contract, license or other right that would have a
material adverse effect on the Company;
14
<PAGE>
(h) any material change in any method of accounting or accounting practice
by the Company or any of its subsidiaries, except for any such change required
by reason of a change in GAAP;
(i) any (i) employment, deferred compensation, severance, retirement or
other similar agreement entered into with any director, officer or employee of
the Company (or any amendment to any such existing agreement), (ii) grant of any
severance or termination pay to any director, officer or employee of the
Company, or (iii) change in benefits payable to any director, officer or
employee of the Company pursuant to any severance or retirement plans or
policies thereof, in each case other than in the ordinary course of business
consistent with past practices; or
(j) any agreement or commitment to take any action referred to in Section
4.10(a) through 4.10(i).
SECTION 4.11. No Undisclosed Material Liabilities. There are no liabilities
of the Company or any of its subsidiaries required to be disclosed on a balance
sheet prepared in accordance with GAAP, other than:
(a) liabilities provided for in the Balance Sheet or disclosed in the notes
thereto or in the SEC Documents filed prior to the date hereof;
(b) liabilities disclosed in, related to or arising under any agreements,
instruments or other matters disclosed in this Agreement;
(c) liabilities incurred in the ordinary course of business since the
Balance Sheet Date; or
(d) other undisclosed liabilities which, individually or in the aggregate,
would not have a material adverse effect on the Company.
SECTION 4.12. Litigation. Except as disclosed in the SEC Documents filed
prior to the date hereof, there is no action, suit, investigation or proceeding
pending against, or to the knowledge of the Company threatened against or
affecting, the Company or any of its subsidiaries or any of their respective
properties before any court or arbitrator or any governmental body, agency or
official which (a) would reasonably be expected to have a material adverse
effect on the Company or (b) as of the date hereof, questions the validity of
this Agreement or any action to be taken by the Company in connection with the
consummation of the transactions contemplated hereby or could otherwise prevent
or delay the consummation of the transactions contemplated by this Agreement.
Except as and to the extent publicly disclosed by the Company in the SEC
15
<PAGE>
Documents, none of the Company or its subsidiaries is subject to any outstanding
order, writ, injunction or decree which does or would reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the
Company.
SECTION 4.13. Taxes. (a) Except for such matters as would not have a
material adverse effect on the Company:
(i) each of the Company and its subsidiaries has timely filed (or has
had timely filed on its behalf), all Federal income and all other material
Tax Returns required by applicable law to be filed by it prior to or as of
the date hereof, and all such Tax Returns are true, accurate and complete
in all material respects.
(ii) each of the Company and its subsidiaries has paid (or has had
paid on its behalf) or, where payment is not yet due, has established (or
has had established on its behalf and for its sole benefit and recourse) in
accordance with GAAP on or before the date hereof an adequate accrual for
the payment of, all material Taxes due with respect to any monthly
accounting period ending prior to or as of the date hereof. No material
deficiency with respect to Taxes has been proposed in writing or assessed
against the Company or any of its subsidiaries. No material liens for Taxes
exist with respect to any asset of the Company or any of its subsidiaries,
except for statutory liens for Taxes not yet due.
(iii) the Federal income Tax Returns and material state income and
franchise and foreign Tax Returns of the Company and each of its
subsidiaries have been examined by and settled with the appropriate Taxing
Authority or the applicable statute of limitations has expired for all
years through 1994. All material assessments for Taxes due with respect to
such completed and settled examinations or any concluded litigation have
been fully paid.
(iv) except for customary indemnities included within leases, neither
the Company nor any of its subsidiaries has any obligation under any
agreement (either with any person or any taxing authority) with respect to
Taxes.
(v) no claim has been made by a Taxing Authority in a jurisdiction
where neither the Company nor any of its subsidiaries files Tax Returns
that the Company or any of its subsidiaries is or may be subject to income
or franchise taxation in that jurisdiction.
16
<PAGE>
(vi) no issue has been raised in writing by any Taxing Authority in
any presently pending tax audit that could have a material adverse effect
on the Company for any period after the Effective Time.
(vii) neither the Company nor any of its subsidiaries is a party to
any contract, agreement or other arrangement which provides for the payment
of any amount which would not be deductible by reason of Section 162(m) or
Section 280G of the Code.
(b) Within the past ten years, neither the Company nor any of its
subsidiaries has constituted either a "distributing corporation" or a
"controlled corporation"(within the meaning of Section 355(a)(1)(A) of the Code)
in a distribution of stock qualifying for tax-free treatment under Section 355
of the Code.
(c) Neither the Company nor within the past six years, any of its current
subsidiaries has been a member of an affiliated, consolidated, combined or
unitary group of corporations, other than any such group of which the Company
has been the common parent.
(d) The Company has made available to Parent true and complete copies of
(A) all Federal and material state and foreign income and franchise Tax Returns
of the Company and its subsidiaries for the preceding three Taxable years ending
in 1997 and (B) any audit report issued within the last three years (or
otherwise with respect to any audit or proceeding in progress) relating to
material Taxes of the Company or any of its subsidiaries.
(e) No subsidiary of the Company owns any Shares.
(f) "TAXES" shall mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, license, value added, capital, net worth,
payroll, profits, franchise, transfer and recording taxes, fees and charges, and
any other taxes, assessment or similar charges imposed by the Internal Revenue
Service or any taxing authority (whether domestic or foreign including any
state, county, local or foreign government or any subdivision or taxing agency
thereof (including a United States possession)) (a "TAXING AUTHORITY"), whether
computed on a separate, consolidated, unitary, combined or any other basis; and
such term shall include any interest whether paid or received, fines, penalties
or additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments. "TAX RETURN" shall mean
any report, return, document, declaration or other information or filing
required to be
17
<PAGE>
supplied to any Taxing Authority, including information returns, any documents
with respect to or accompanying payments of estimated Taxes, or with respect to
or accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
SECTION 4.14. Employee Benefit Plans; ERISA; Labor. (a) The Company has
provided Parent with a list identifying each material employee benefit plan
(including any plans for the benefit of directors or former directors),
arrangement, contract or agreement (including employment agreements and
severance agreements, incentive compensation, bonus, stock option, stock
appreciation rights and stock purchase plans) of any type (including plans
described in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA")), (i) which is maintained by the Company, any of its subsidiaries or
any trade or business, whether or not incorporated, which is or has been under
common control, or which is or has ever been treated as a single employer, with
the Company under Sections 414(b), (c), (m) or (o) of the Code (an "ERISA
AFFILIATE"), or would be deemed a "controlled group" within the meaning of
Section 4001(a)(14) of ERISA and (ii) which covers any current or former
employee of the Company or any of its subsidiaries and with respect to which the
Company or any of its subsidiaries has a current liability or is reasonably
likely to have a future liability (the "BENEFIT PLANS").
(b) True, correct and complete copies of the following documents, with
respect to each of the Benefit Plans, if applicable, have been made available or
delivered to Parent by the Company: (i) any plans and related trust documents,
and amendments thereto; (ii) the most recent Forms 5500 and schedules thereto;
(iii) the most recent IRS determination letter; (iv) the most recent financial
statements and actuarial valuations; (v) summary plan descriptions; and (vi) all
material written communications to employees regarding the Benefit Plans that
have the effect of amending or modifying such plans.
(c) With respect to each Benefit Plan, except as would not, individually or
in the aggregate, have a material adverse effect on the Company: (i) if intended
to qualify under Section 401(a), 401(k) or 403(a) of the Code, such plan so
qualifies, and its trust is exempt from taxation under Section 501(a) of the
Code; (ii) such plan has been administered in accordance with its terms and
applicable law; (iii) no breaches of fiduciary duty have occurred; (iv) no
prohibited transaction within the meaning of Section 406 of ERISA and Section
4975 of the Code has occurred; (v) as of the date of this Agreement, no lien
imposed under the Code or ERISA exists; and (vi) all contributions and premiums
(including PBGC premiums) due (including any extensions for such contributions
and premiums) and payments required to be made by the Company or its
subsidiaries have been made in full; and (vii) there are no material actions,
suits, arbitrations or claims
18
<PAGE>
(other than routine claims for benefits) pending or, to the knowledge of the
Company, threatened with respect to any Benefit Plan.
(d) None of the Benefit Plans has incurred any "accumulated funding
deficiency", as such term is defined in Section 412 of the Code, whether or not
waived, except as would not result in a current material liability to the
Company.
(e) Except as would not, individually or in the aggregate, have a material
adverse effect on the Company, neither the Company nor any ERISA Affiliate nor
any organization to which the Company is a successor or parent corporation,
within the meaning of Section 4069(b) of ERISA, has engaged in any transaction,
within the meaning of Section 4069 of ERISA, and except as would not result in a
material liability to the Company, neither the Company nor any ERISA Affiliate
has terminated any Benefit Plan, or incurred any outstanding liability under
Section 4062 of ERISA to the Pension Benefit Guaranty Corporation, or to a
trustee appointed under Section 4042 of ERISA since January 1, 1995.
(f) With respect to each Benefit Plan that is a "welfare plan" (as defined
in Section 3(1) of ERISA), no such plan provides medical or death benefits with
respect to current or former employees of the Company or any of its subsidiaries
beyond their termination of employment, other than on an employee-pay-all basis,
except as would not, individually or in the aggregate, have a material adverse
effect on the Company. With respect to each such Benefit Plan that is "group
health plan" within the meaning of Section 5000(b)(I) of the Code, such plans
have complied with the notice and continuation requirements of Section 4980B of
the Code ("COBRA"), Part 6 of Title I of ERISA, and the regulations thereunder
except as would not have a material adverse effect on the Company.
(g) There is no Benefit Plan that is a "multiemployer plan", as such term
is defined in Section 3(37) of ERISA, or which is covered by Section 4063 or
4064 of ERISA.
(h) Neither the Company nor any of its subsidiaries is a party to or
subject to any collective bargaining agreement and there are no collective
bargaining agreements which pertain to employees of the Company or any of its
subsidiaries. Except as would not have a material adverse effect on the Company,
no labor organization or group of employees of the Company or any of its
subsidiaries has made a pending demand for recognition or certification, and, to
the Company's knowledge, there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending
or threatened in writing to be bought or filed with the National Labor Relations
Board or any other labor relations tribunal or authority. Except as would not
have
19
<PAGE>
a material adverse effect on the Company, there has been no "mass layoff" or
"plant closing" as defined by WARN with respect to the Company within six months
of the date of this Agreement. "WARN" means the Worker Adjustment and Retraining
Notification Act and any similar state or local "plant closing" law.
(i) Except as would not have a material adverse effect on the Company,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) increase any benefits otherwise
payable under any Benefit Plan or (ii) result in the acceleration of the time of
payment or vesting of any such benefits.
(j) According to the actuarial assumptions used in the Aon Consulting
letter to the Company dated May 17, 1999, the present value of the benefits of
the Company's Employees' Pension Plan as of May 1, 1999 exceeded the market
value of the assets of such plan as of April 30, 1999 by $22,547,875.
SECTION 4.15. Compliance with Laws and Court Orders. Except as set forth in
the SEC Documents filed prior to the date hereof, and except for such matters as
would not have a material adverse effect on the Company, (i) the Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all governmental entities necessary for the lawful conduct of their
respective businesses and (ii) neither the Company nor any of its subsidiaries
is in violation of any applicable law, rule, regulation, judgment, injunction,
order or decree.
SECTION 4.16. Finders' Fees. Except for Credit Suisse First Boston
Corporation and CIBC World Markets Corp., no investment banker, broker, finder
or other intermediary is entitled to any fee or commission from the Company or
any of its subsidiaries upon consummation of the transactions contemplated by
this Agreement.
SECTION 4.17. Environmental Matters. Except as set forth in the SEC
Documents filed prior to the date hereof, and except for such matters as would
not have a material adverse effect on the Company:
(i) no written notice, request for information, order, complaint or
penalty has been received by the Company relating to any Environmental Law,
and there are no judicial, administrative or other actions, suits or
proceedings pending, nor to the knowledge of the Company, threatened which
allege a violation of any Environmental Law;
(ii) (A) the Company and each of its subsidiaries have all
environmental permits necessary for their operations to comply with all
20
<PAGE>
applicable Environmental Laws and are in compliance with the terms of such
permits and (B) there are no legal proceedings pending, nor to the
knowledge of the Company, threatened to revoke such environmental permits;
and
(iii) there has been no written environmental audit conducted within
the past five years by the Company or any of its subsidiaries of any
property currently owned or leased by the Company or any of its
subsidiaries which has not been delivered or made available to Parent prior
to the date hereof.
"ENVIRONMENTAL LAW" means any federal, state or local (including common
law), statute, code, ordinance, rule or regulation, relating to the environment,
natural resources, or the effect of the environment on public or employee health
and safety and includes, but is not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. 'SS' 9601 et
seq., the Hazardous Materials Transportation Act, 49 U.S.C. 'SS' 1801 et. seq.,
the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. 'SS' 6901 et
seq., the Clean Water Act, 33 U.S.C. 'SS' 1251 et seq., the Clean Air Act, 33
U.S.C. 'SS' 2601 et seq., the Toxic Substances Control Act, 15 U.S.C. 'SS' 2601
et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. 'SS'
136 et seq., the Oil Pollution Act of 1990, 33 U.S.C. 'SS' 2701 et seq., as such
laws have been amended or supplemented on or prior to the Effective Time, and
the regulations promulgated pursuant thereto on or prior to the Effective Time,
and all analogous state or local statutes.
SECTION 4.18. Antitakeover Statutes and Rights Agreement. (a) The Board of
Directors of the Company has approved the Merger and this Agreement, and such
approval is sufficient to render inapplicable to the Merger, this Agreement and
the transactions contemplated hereby the provisions of Section 203 of the
Delaware Law or any antitakeover provision in the Company's certificate of
incorporation and bylaws.
(b) The Company has taken all action necessary to render the Rights issued
pursuant to the Rights Agreement inapplicable to the Offer, the Merger, this
Agreement and the transactions contemplated hereby.
SECTION 4.19. Intellectual Property. (a) As of the date of this Agreement,
all Taxes, royalties, fees and other payments due and payable and necessary to
maintain the ownership or license to use, as the case may be, any registered
Intellectual Property shall have been made (except as would not reasonably be
expected to have a material adverse effect on the Company and except with
21
<PAGE>
respect to those registrations and applications that the Company has determined
to allow to lapse in the ordinary course of their business).
(b) There are no restrictions that would materially affect the use of the
Intellectual Property in the business of the Company or any of its subsidiaries
as currently conducted and the Intellectual Property as currently used by the
Company and its subsidiaries does not infringe upon or otherwise violate the
rights of any other person except as would not reasonably be expected to have a
material adverse effect on the Company.
(c) There are no actions or proceedings pending or, to the knowledge of the
Company, threatened challenging the Intellectual Property, and, to the knowledge
of the Company, no person is infringing or otherwise violating, the Intellectual
Property, except for challenges, infringements or violations which, individually
or in the aggregate, would not reasonably be expected to have a material adverse
effect on the Company.
"INTELLECTUAL PROPERTY" means all material intellectual property (and the
right associated therewith) used in connection with the business of the Company
and its subsidiaries, including the following: material trademarks, service
marks, brand names, certification marks, trade dress, assumed names, trade names
and other indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing; material patents, applications for patents (including,
without limitation, divisions, continuations, continuations-in-part and renewal
applications); material non-public information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; and material copyrighted works and registrations or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof.
SECTION 4.20. Year 2000. Except as disclosed in the SEC Documents filed
prior to the date hereof, (i) the Company and its subsidiaries have reviewed the
areas within their business and operations which could reasonably be expected to
have an "Year 2000 Problem" (that is, the risk that computer applications used
by the Company and its subsidiaries may be unable to recognize and perform
properly date-sensitive functions involving certain dates prior to and any date
after December 31, 1999) that would have a material adverse effect on the
Company and have developed a program to address on a timely basis any such
problem, and (ii) based on such review and program, the "Year 2000 Problem" will
not, or is not reasonably likely to, have a material adverse effect on the
Company.
22
<PAGE>
SECTION 4.21. Properties. The Company and its subsidiaries have good title
to, or in the case of leased property have valid leasehold interests in, all
real property reflected on the Balance Sheet or acquired after the Balance Sheet
Date, except for properties sold since the Balance Sheet Date in the ordinary
course of business consistent with past practices or where the failure to have
such good title or valid leasehold interests would not have a material adverse
effect on the Company. None of such property is subject to any Lien, except:
(a) Liens disclosed on the Balance Sheet or notes thereto or securing
liabilities reflected on the Balance Sheet or notes thereto;
(b) Liens for taxes, assessments and similar charges that are not yet due
or are being contested in good faith;
(c) mechanic's, materialman's, carrier's, repairer's and other similar
Liens arising or incurred in the ordinary course of business or that are not yet
due and payable or are being contested in good faith;
(d) Liens incurred in the ordinary course of business since the Balance
Sheet Date; or
(e) other Liens which would not have a material adverse effect on the
Company.
SECTION 4.22. No Default. There is no default or claimed default under any
contract or agreement to which the Company or any of its subsidiaries is a
party, either by the Company or any of its subsidiaries or, to the Company's
knowledge, by any other party thereto, and no event has occurred that with the
lapse of time or the giving of notice or both would constitute a default
thereunder by the Company or any of its subsidiaries or, to the Company's
knowledge, any other party, in any such case in which such default or event does
or would reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
23
<PAGE>
SECTION 5.01. Corporate Existence and Power. Each of Parent and Merger
Subsidiary is a corporation, partnership or other entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, and has the requisite corporate or other power
and authority and governmental approvals to own, lease and operate its
properties and to carry on its business as now conducted, except for such
matters as would not have a material adverse effect on Parent or the
transactions contemplated hereby. Since the date of its incorporation, Merger
Subsidiary has not engaged in any activities other than in connection with or as
contemplated by this Agreement.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Parent and Merger Subsidiary and,
subject to the approval of Parent's ordinary shareholders, have been duly
authorized by all necessary corporate action. This Agreement constitutes a valid
and binding agreement of each of Parent and Merger Subsidiary, enforceable
against Parent or Merger Subsidiary, as the case may be, in accordance with its
terms except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally.
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement and the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby require no action by or in respect of, or filing with, any governmental
body, agency, official or authority other than (i) the filing of a certificate
of merger with respect to the Merger with the Delaware Secretary of State; (ii)
compliance with any applicable requirements of the HSR Act; (iii) compliance
with any applicable requirements of the 1933 Act; (iv) compliance with any
applicable requirements of the 1934 Act; (v) compliance with any other
applicable securities laws; (vi) compliance with any applicable requirements of
Section 721 of the Defense Production Act of 1950 (the "EXON-FLORIO PROVISION");
(vii) any actions or filings which, if not taken or made, would not have a
material adverse effect on Parent or the transactions contemplated hereby; and
(viii) any filings or notices not required to be made or given until after the
Effective Time.
SECTION 5.04. Non-Contravention. The execution, delivery and performance by
Parent and Merger Subsidiary of this Agreement do not, and the consummation by
Parent and Merger Subsidiary of the transactions contemplated hereby will not
(i) contravene or conflict with the certificate of incorporation, bylaws or
similar organizational documents of Parent or Merger Subsidiary, (ii) assuming
compliance with the matters referred to in Section 5.03, violate any
24
<PAGE>
applicable law, rule, regulation, judgment, injunction, order or decree, or
(iii) constitute a default under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of Parent or Merger
Subsidiary or to a loss of any benefit to which Parent or Merger Subsidiary is
entitled under any provision of any agreement or other instrument binding upon
Parent or Merger Subsidiary or any license, franchise, permit or other similar
authorization held by Parent or Merger Subsidiary, except in the case of clause
(ii) or (iii), for such matters as would not have a material adverse effect on
Parent or the transaction contemplated hereby.
SECTION 5.05. Disclosure Documents. (a) The information with respect to
Parent and any of its subsidiaries that Parent furnishes to the Company in
writing specifically for use in any Company Disclosure Document will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading (i) in the case of the
Company Proxy Statement, as supplemented or amended, if applicable, at the time
such Company Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of the Company and at the time such stockholders vote on
adoption of this Agreement, and (ii) in the case of any Company Disclosure
Document other than the Company Proxy Statement, at the time of the filing of
such Company Disclosure Document or any supplement or amendment thereto and at
the time of any distribution or dissemination thereof.
(b) The Offer Documents, when filed, distributed or disseminated, as
applicable, will comply as to form in all material respects with the applicable
requirements of the 1934 Act and, at the time of the filing thereof, at the time
of any distribution or dissemination thereof and at the time of consummation of
the Offer, will not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made therein, in the
light of the circumstances under which they were made, not misleading, provided
that this representation and warranty will not apply to statements or omissions
included in the Offer Documents based upon information furnished to Parent or
Merger Subsidiary in writing by the Company specifically for use therein.
SECTION 5.06. Finders' Fees. Except for Rothschild Inc., whose fees will be
paid by Parent, there is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Parent who might be entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement.
SECTION 5.07. Parent Financing Agreements. Parent has delivered to the
Company true and correct copies of the executed underwriting agreement between
25
<PAGE>
Parent, a subsidiary of Parent and NM Rothschild & Sons Limited, dated as of
June 9, 1999 (the "PARENT UNDERWRITING AGREEMENT"), the circular referred to
therein in substantially the form to be sent to Parent's shareholders (the
"CIRCULAR") and the executed loan agreement between Parent, certain subsidiaries
of Parent, Barclays Capital and HSBC Investment Bank plc, as arrangers, and the
banks listed therein, dated as of June 9, 1999 (the "PARENT LOAN AGREEMENT" and
together with the Parent Underwriting Agreement, the "FINANCING AGREEMENTS").
The financing to be provided under the Financing Agreements is referred to
herein as the "FINANCING." The aggregate proceeds of the Financing will be in an
amount sufficient to acquire all the Shares in the Offer and the Merger, and to
pay all related fees and expenses. As of the date hereof, Parent knows of no
facts or circumstances that are reasonably likely to result in any of the
conditions set forth in the Financing Agreements not being satisfied.
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.01. Conduct of the Company. The Company covenants and agrees
that, from the date hereof until the Effective Time, except as expressly
provided otherwise in this Agreement (or except as disclosed in writing to
Parent prior to the date hereof), or as reasonably necessary for the Company to
fulfill its obligations hereunder, the Company and its subsidiaries shall
conduct their business in the ordinary course consistent with past practices and
shall use their reasonable best efforts to preserve intact their business
organizations and relationships with third parties and to keep available the
services of their present officers and employees. Without limiting the
generality of the foregoing, and except as otherwise contemplated hereby, from
the date hereof until the Effective Time:
(a) the Company will not adopt or propose any change in its certificate of
incorporation or any material change in its bylaws;
(b) the Company will not, and will not permit any of its subsidiaries to,
adopt a plan or agreement of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other material
reorganization of the Company or any of its subsidiaries (other than a
liquidation or dissolution of any such subsidiary, a merger or consolidation
between wholly-owned subsidiaries of the Company or of any such wholly-owned
subsidiary into the Company);
26
<PAGE>
(c) the Company will not, and will not permit any of its subsidiaries to,
make any equity investment in or acquisition of any business of any person or
any material amount of assets, except (i) for any capital expenditure permitted
by Section 6.01(h), (ii) for equity investment in any wholly-owned subsidiary of
the Company or (iii) in the ordinary course of business consistent with past
practices;
(d) the Company will not, and will not permit any of its subsidiaries to,
sell, lease, license or otherwise dispose of any assets in an amount that would
be material to the Company and its subsidiaries, taken as a whole, except (i)
pursuant to existing contracts or commitments or (ii) in the ordinary course of
business consistent with past practices;
(e) the Company will not, and will not permit any of its subsidiaries to,
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property with respect to its capital stock other than (i) dividends or
other distributions paid by any of its subsidiaries to the Company or any other
subsidiary of the Company and (ii) dividends payable in accordance with the
terms of the Preferred Shares;
(f) the Company will not, and will not permit any of its subsidiaries to,
issue, sell, transfer, pledge or dispose of any shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class or
series of the Company or its subsidiaries, other than (i) issuances pursuant to
the exercise of options under the Option Plans described in Section 4.05,
outstanding on the date hereof, (ii) issuances pursuant to the conversion of the
Preferred Shares and the Convertible Notes outstanding on the date hereof and
(iii) issuances by any of its subsidiaries to the Company or any other
subsidiary of the Company;
(g) the Company will not, and will not permit any of its subsidiaries to,
redeem, purchase or otherwise acquire directly or indirectly any of the
Company's capital stock;
(h) the Company will not, and will not permit any of its subsidiaries to,
make or commit to make any capital expenditure, except in the ordinary course of
business or pursuant to the 1999 budget made available to Parent;
(i) the Company will not, and will not permit any of its subsidiaries to,
(i) incur or assume any long-term or short-term debt or issue any debt
securities, except for borrowings under existing lines of credit in the ordinary
course of business consistent with past practice; (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except in
the ordinary course of
27
<PAGE>
business consistent with past practice, and except for obligations of the wholly
owned subsidiaries of the Company; (iii) make any loans, advances or capital
contributions to, or investment in, any other person, except in the ordinary
course of business consistent with past practice and except to wholly owned
subsidiaries of the Company or to the Company; (iv) pledge or otherwise encumber
shares of capital stock of the Company or its subsidiaries; or (v) mortgage or
pledge any of its material assets, tangible or intangible, or create any
material Lien thereupon, except in the ordinary course of business consistent
with past practice;
(j) except as may be required by law or as contemplated by this Agreement
or as required by existing agreements or arrangements, the Company will not, and
will not permit any of its subsidiaries to, increase in any manner the
compensation or benefits under the Benefit Plans of any director, officer or
employee or pay any benefit not required by any plan and arrangement as in
effect as of the date hereof (including, without limitation, the granting of
stock appreciation rights or performance units), in each case other than in the
ordinary course of business consistent with past practice;
(k) the Company will not, and will not permit any of its subsidiaries to,
enter into any material contract, agreement, commitment or transaction, other
than in the ordinary course of business consistent with past practice;
(l) except as may be required as a result of a change in law or in GAAP,
the Company will not, and will not permit any of its subsidiaries to, change
materially any of the accounting principles or practices used by it;
(m) the Company will not, and will not permit any of its subsidiaries to,
revalue any material assets (including, without limitation, writing down the
value of inventory or writing-off notes or accounts receivable) other than in
the ordinary course of business consistent with past practice or as required by
GAAP;
(n) the Company will not, and will not permit any of its subsidiaries to,
make or revoke any tax election, or settle or compromise any tax liability, or
change (or make a request to any taxing authority to change) any material aspect
of its method of accounting for tax purposes, in each case other than in the
ordinary course of business consistent with past practice;
(o) the Company will not, and will not permit any of its subsidiaries to,
pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than in the
ordinary and usual course of business consistent with past practice or waive the
benefits of, or agree to modify in any manner, any confidentiality, standstill
or similar agreement to which the Company or any of its subsidiaries is a party;
28
<PAGE>
(p) the Company will not, and will not permit any of its subsidiaries to,
settle or compromise any pending or threatened suit, action or claim relating to
the transactions contemplated hereby;
(q) the Company will not, and will not permit any of its subsidiaries to,
enter into any agreement that limits or otherwise restricts the Company or any
of its subsidiaries or any successor thereto or that could, after the Effective
Time, limit or restrict the Surviving Corporation and its affiliates (including
Parent) or any successor thereto, from engaging or competing in any line of
business or in any geographic area;
(r) the Company will not, and will not permit any of its subsidiaries to,
agree or commit to do any of the foregoing; and
(s) the Company will not, and will not permit any of its subsidiaries to
take any action that would make any representation and warranty of the Company
hereunder inaccurate in any material respect at, or as of any time prior to, the
Effective Time.
SECTION 6.02. Stockholder Meetings; Proxy Materials. (a) Unless Delaware
Law does not require a vote of stockholders of the Company for consummation of
the Merger, the Company shall cause a meeting of its stockholders (the
"STOCKHOLDER MEETING") to be duly called and held as soon as reasonably
practicable after consummation of the Offer for the purpose of voting on the
approval and adoption of this Agreement and the Merger (the "STOCKHOLDER
APPROVAL"). Subject to Section 6.04(b), the Board of Directors of the Company
shall recommend approval and adoption of this Agreement and the Merger by the
Company's stockholders. In connection with the Stockholder Meeting, the Company
(x) will promptly prepare and file with the SEC, will use its reasonable best
efforts to have cleared by the SEC and will thereafter mail to its stockholders
as promptly as practicable the Company Proxy Statement and all other proxy
materials for such meeting, (y) will use its reasonable best efforts to obtain
the Stockholder Approval and (z) will otherwise comply with all legal
requirements applicable to such meeting, in each case except if the Board of
Directors of the Company withdraws or modifies its approval or recommendation of
this Agreement and the Merger pursuant to Section 6.04(b). If after consummation
of the Offer, Parent, Merger Subsidiary or any other subsidiary of Parent shall
beneficially own at least 90% of the outstanding Shares of each class, the
parties hereto agree to take all necessary and appropriate action to cause the
Merger (or, at Parent's option, a merger on the same terms as the Merger except
that the Merger Subsidiary will be the Surviving Corporation) to be effective as
soon as practicable after the acceptance for payment and purchase of Shares
29
<PAGE>
pursuant to the Offer without a meeting of stockholders of the Company in
accordance with Delaware Law.
(b) Parent shall, as soon as practicable following the execution and
delivery of this Agreement, duly call, give notice of, convene and hold an
extraordinary general meeting of its shareholders for the purpose of approving
this Agreement and the transactions contemplated by this Agreement. Each
document filed by Parent with the London Stock Exchange and/or sent to the
shareholders of Parent in connection with such extraordinary general meeting
including, without limitation, the Circular and any amendments or supplements
thereto (the "PARENT PROXY MATERIALS") will, when so filed or dispatched, comply
as to form and content in all material respects with the requirements of
applicable law and the rules of the London Stock Exchange. Prior to filing any
Parent Proxy Material with the London Stock Exchange or sending the same to the
shareholders of Parent, Parent shall have given the Company a reasonable
opportunity to review and give comments on such material. No information
relating to the Company shall be included in the Parent Proxy Materials without
the prior consent of the Company, such consent not to be unreasonably withheld
or delayed. The Company agrees to provide such information relating to the
Company as is reasonably necessary to include in the Parent Proxy Materials.
SECTION 6.03. Access to Information. To the extent permitted by applicable
law, from the date hereof until the Effective Time, the Company will give
Parent, its counsel, financial advisors, auditors and other authorized
representatives reasonable access during normal business hours to the offices,
properties, books and records of the Company and its subsidiaries, will furnish
to Parent, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information as such
persons may reasonably request and will instruct the Company's employees,
counsel and financial advisors to cooperate with Parent in its investigation of
the business of the Company and its subsidiaries. The foregoing information
shall be held in confidence to the extent required by, and in accordance with,
the provisions of the letter agreement dated March 10, 1999 between Parent and
CIBC Oppenheimer Corp. as the Company's representative (the "CONFIDENTIALITY
AGREEMENT") which shall continue in effect.
SECTION 6.04. Other Offers, etc. (a) From the date hereof until the
termination hereof, the Company will not and will cause its subsidiaries and the
officers, directors, employees and other agents and advisors of the Company and
its subsidiaries not to, directly or indirectly, (i) take any action to solicit,
initiate or encourage any Acquisition Proposal or (ii) furnish information to or
participate in any discussions or negotiations with any person that has made or
indicated an interest in making an Acquisition Proposal; provided, however, that
nothing
30
<PAGE>
contained in this Section 6.04(a) shall prohibit the Board of Directors of the
Company from furnishing information to, or entering into discussions or
negotiations with, any person that has made an unsolicited bona fide written
Acquisition Proposal if, and only to the extent that (A) the acceptance for
payment of Shares pursuant to the Offer shall not have occurred, (B) the Board
of Directors of the Company, based on advice of outside legal counsel,
determines in good faith that failure to take such action would present a
reasonable probability of violating its fiduciary duties under applicable law,
and (C) prior to taking such action, the Company (x) provides reasonable notice
to Parent to the effect that it intends to take such action and (y) receives
from such person an executed confidentiality agreement in reasonably customary
form and in any event containing terms at least as stringent as those contained
in the Confidentiality Agreement between Parent and the Company. Prior to
providing any information to or entering into discussions or negotiations with
any person in connection with an Acquisition Proposal by such person, the
Company shall notify Parent of any such Acquisition Proposal (including, without
limitation, the material terms and conditions thereof and the identity of the
person making it) as promptly as practicable (but in no case later than one
business day) after its receipt thereof, and shall thereafter inform Parent on a
prompt basis of the status of any discussion or negotiations with such third
party and any material changes to the terms and conditions of such Acquisition
Proposal, and shall promptly give Parent a copy of any information delivered to
such person which has not previously been reviewed by Parent. The Company will,
and will cause its subsidiaries and the officers, directors, employees and other
agents and advisors of the Company and its subsidiaries to, immediately cease
and cause to be terminated all discussions and negotiations, if any, that have
taken place prior to the date hereof with any parties with respect to any
Acquisition Proposal. Nothing contained in this Agreement shall prevent the
Board of Directors of the Company from complying with Rule 14e-2 under the 1934
Act with respect to any Acquisition Proposal. For purposes of this Agreement,
"ACQUISITION PROPOSAL" means any offer or proposal for a merger or other
business combination transaction involving the acquisition of all or a material
portion of the equity interest in, or all or a material portion of the assets
of, the Company and its subsidiaries, other than the transactions contemplated
by this Agreement.
(b) The Board of Directors of the Company may not withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent, its approval or
recommendation of this Agreement, the Offer or the Merger unless the Board of
Directors of the Company, based on advice of its outside legal counsel,
determines in good faith that failure to do so would present a reasonable
probability of violating its fiduciary duties under applicable law; provided,
however, the Board of Directors of the Company may not approve or recommend (and
in connection therewith, withdraw or modify its approval or recommendation
31
<PAGE>
of this Agreement, the Offer or the Merger) an Acquisition Proposal unless (i)
the Company has complied with the terms of this Section 6.04, including, without
limitation, the requirement in Section 6.04(a) that it notify Parent promptly
after its receipt of any Acquisition Proposal, (ii) the Acquisition Proposal is
a Superior Proposal and (iii) it determines in good faith (based on advice of
its outside legal counsel) that the failure to do so would present a reasonable
probability of violating its fiduciary duties under applicable law. For purposes
of this Agreement, "SUPERIOR PROPOSAL" means any Acquisition Proposal (A)
involving the acquisition of the entire equity interest in, or all or
substantially all of the assets and liabilities of, the Company and its
subsidiaries and (B) with respect to which the Board of Directors of the Company
(x) determines in good faith that such proposal, if accepted, is reasonably
likely to be consummated, taking into account all legal, financial, regulatory
and other aspects of the proposal and the person making the proposal and (y)
believes in good faith, based on the advice of its financial advisors, that such
proposal would, if consummated, result in a transaction more favorable to the
Company's stockholders from a financial point of view than the Offer and the
Merger.
ARTICLE 7
COVENANTS OF PARENT
SECTION 7.01. Obligations of Merger Subsidiary. Parent will take all action
necessary to cause Merger Subsidiary to perform its obligations under this
Agreement and to consummate the Offer and the Merger on the terms and conditions
set forth in this Agreement.
SECTION 7.02. Voting of Shares. Parent agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the
Stockholder Meeting (if any).
SECTION 7.03. Director and Officer Liability. Parent agrees that at all
times after the Effective Time, it shall indemnify each person who is now, or
has been at any time prior to the date hereof, a director, officer or manager of
the Company or of any of its subsidiaries (individually an "INDEMNIFIED PARTY"
and collectively the "INDEMNIFIED PARTIES"), to the fullest extent permitted by
law, with respect to any claim, liability, loss, damage, judgment, fine,
penalty, amount paid in settlement or compromise, cost or expense (including
reasonable fees and expenses of legal counsel), whenever asserted or claimed,
based in whole or in part on, or arising in whole or in part out of, any facts
or circumstances occurring at or prior to the Effective Time whether commenced,
asserted or claimed before
32
<PAGE>
or after the Effective Time, including liability arising under the 1933 Act, the
1934 Act or state law. Parent shall, or shall cause the Surviving Corporation
to, maintain in effect for not less than six years after the Effective Time the
current policies of directors' and officers' liability insurance maintained by
the Company and its subsidiaries on the date hereof (provided that Parent may
substitute therefor policies with reputable and financially sound carriers
having at least the same coverage and amounts thereof and containing terms and
conditions which are no less advantageous to the persons currently covered by
such policies as the insured) with respect to facts or circumstances occurring
at or prior to the Effective Time to the extent that such liability insurance
can be maintained annually at a cost to Parent not greater than 200 percent of
the current annual premium for the current Company directors' and officers'
liability insurance; provided that if such insurance cannot be so maintained or
obtained at such costs, Parent shall maintain or obtain as much of such
insurance as can be so maintained or obtained at a cost equal to 200 percent of
the current annual premium of the Company for such insurance. Parent agrees to
pay all expenses (including fees and expenses of counsel) that may be incurred
by any Indemnified Party in successfully enforcing the indemnity or other
obligations under this Section 7.03. The rights under this Section 7.03 are in
addition to rights that an Indemnified Party may have under the certificate of
incorporation, bylaws, or other similar organizational documents of the Company
or any of its subsidiaries or the Delaware Law. The rights under this Section
7.03 shall survive consummation of the Merger and are expressly intended to
benefit each Indemnified Party. Parent agrees to cause the Surviving Corporation
and any of its subsidiaries (or their successors) to maintain in effect for a
period of six years provisions in its certificate of incorporation or bylaws or
similar organizational documents providing for indemnification and exculpation
of Indemnified Parties, with respect to facts or circumstances occurring at or
prior to the Effective Time, to the extent set forth in the Company's
certificate of incorporation and bylaws as of the date hereof; provided that the
foregoing shall not in any way restrict or preclude any sale, liquidation or
dissolution of any subsidiary of Parent at any time after the Effective Time.
SECTION 7.04. Employee Benefits. Subject to Section 2.05(a), following the
Effective Time, Parent shall, or shall cause the Surviving Corporation to (i)
honor all obligations under employment agreements of the Company and (ii) pay
all benefits (including any vacation, personal and sick days) accrued through
the Effective Time under employee benefit plans, programs, policies and
arrangements of the Company (including any rabbi trust agreement) in accordance
with the terms thereof. Parent also agrees to provide, or cause the Surviving
Corporation to provide, employees of the Company and its subsidiaries who
continue to be employed by the Company or any of its subsidiaries as of the
Effective Time ("CONTINUING EMPLOYEES") for a period of not less than one year
33
<PAGE>
following the Effective Time with compensation and benefits which, in the
aggregate, are no less favorable than either the compensation and benefits
provided to such employees immediately prior to the Effective Time or the
compensation and benefits provided to similarly situated employees of Parent or
any affiliate of Parent. Notwithstanding the foregoing, nothing herein shall
prevent Parent from terminating the employment of any Continuing Employee
following the Effective Time, provided however that for a period of one year
following the Effective Time, Parent shall, or shall cause the Surviving
Corporation to, establish and maintain a plan to provide severance and
termination benefits to all Continuing Employees which are no less favorable
than the severance and termination benefits provided under the Company's plans
and arrangements in effect as of the date of this Agreement as disclosed to
Parent in writing prior to the date hereof. With respect to medical benefits
provided to Continuing Employees after the Effective Time, Parent agrees that it
will, or it will cause the Surviving Corporation and its subsidiaries to, waive
waiting periods and pre-existing condition requirements (to the extent waived
under the Company's plans), and will give Continuing Employees credit for any
copayments and deductibles actually paid by such employees under the Company's
medical plans during the calendar year in which the Effective Time occurs. In
addition, service with the Company shall be recognized for purposes of
eligibility under the welfare plans in which Continuing Employees participate as
well as for purposes of the programs or policies for vacation pay and sick pay
in which Continuing Employees participate.
ARTICLE 8
COVENANTS OF PARENT AND THE COMPANY
SECTION 8.01. Notices of Certain Events. (a) The Company and Parent shall
promptly notify each other of:
(i) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement; and
(ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement.
(b) The Company shall promptly notify Parent of:
34
<PAGE>
(i) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or involving
or otherwise affecting the Company or any of its subsidiaries which relate
to the consummation of the transactions contemplated by this Agreement; and
(ii) the occurrence of any event or condition that becomes known to an
executive officer of the Company and causes such officer to believe that
the condition set forth in paragraph (c) of Annex I hereto will not be met.
(c) Parent shall promptly notify the Company of any actions, suits, claims,
investigations or proceedings commenced or, to its knowledge threatened against,
relating to or involving or otherwise affecting Parent or any of its
subsidiaries which relate to the consummation of the transactions contemplated
by this Agreement.
SECTION 8.02. Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, each party will use its reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the Merger and the other transactions contemplated by this Agreement.
In furtherance and not in limitation of the foregoing, each party hereto agrees
to (i) make an appropriate filing of a Notification and Report Form pursuant to
the HSR Act and (ii) complete its portion of, and jointly file, a Notification
under the Exon-Florio Provision with respect to the transactions contemplated
hereby as promptly as practicable and in any event within five business days
after the date hereof and to supply as promptly as practicable any additional
information and documentary material that may be requested pursuant to the HSR
Act and the Exon-Florio Provision, as the case may be, and to take all other
actions necessary to cause the expiration or termination of the applicable
waiting periods as soon as practicable.
SECTION 8.03. Cooperation. Without limiting the generality of Section 8.02,
Parent and the Company shall cooperate (i) in connection with the preparation of
the Company Disclosure Documents, the Offer Documents and the Circular, (ii) in
determining whether any action by or in respect of, or filing with, any
governmental body, agency or official, or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Agreement, and (iii) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing information required
in connection therewith or with the Company Disclosure Documents, the Offer
35
<PAGE>
Documents or the Circular and seeking timely to obtain any such actions,
consents, approvals or waivers.
SECTION 8.04. Public Announcements. So long as this Agreement is in effect,
Parent and the Company will consult with each other before issuing any press
release or other public statement with respect to this Agreement or the
transactions contemplated hereby and, except as may be required by applicable
law, court process or any listing agreement with or rule of any national
securities exchange or the London Stock Exchange, will not issue any such press
release or other public statement prior to such consultation and providing the
other party with a reasonable opportunity to comment thereon.
SECTION 8.05. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to the Obligations of Each Party. The obligations
of the Company, Parent and Merger Subsidiary to consummate the Merger are
subject to the satisfaction (or waiver by the party for whose benefit the
applicable condition exists) of the following conditions:
(a) if required by Delaware Law, this Agreement shall have been approved
and adopted by the stockholders of the Company in accordance with such Law;
(b) no provision of any applicable U.S. or U.K. law or regulation and no
judgment, injunction, order or decree of a U.S. or U.K. court of competent
jurisdiction shall prohibit or enjoin the consummation of the Merger; and
(c) Merger Subsidiary shall have purchased Shares pursuant to the Offer.
36
<PAGE>
ARTICLE 10
TERMINATION
SECTION 10.01. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the stockholders of the Company or Parent):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent,
(i) if the Offer has not been consummated on or before the 60th
U.S. business day after commencement of the Offer (or if the period of
time for any applicable review process under the Exon-Florio Provision
has not expired by such date, then the date on which the Exon-Florio
review process is completed), provided that the right to terminate
this Agreement pursuant to this Section 10.01(b)(i) shall not be
available to any party whose breach of any provision of this Agreement
results in the failure of the Offer to be consummated by such time; or
(ii) if consummation of the Merger would violate or be prohibited
by any U.S. or U.K. law or regulation or if any injunction, judgment,
order or decree of a U.S. or U.K. court of competent jurisdiction
enjoining the Company or Parent from consummating the Merger is
entered and such injunction, judgment, order or decree shall become
final and nonappealable;
(c) by Parent, if prior to the purchase of any Shares pursuant to the
Offer,
(i) the Board of Directors of the Company shall have failed to
recommend or withdrawn or materially modified in a manner adverse to
Parent its approval or recommendation of the Offer and the Merger, or
(ii) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement with respect to
any Superior Proposal; or
37
<PAGE>
(iii) due to the occurrence and continuation of any event that if
occurring after the commencement of the Offer would result in a
failure to satisfy any of the conditions set forth in Annex I hereto,
Parent, Merger Subsidiary or any of their affiliates shall have failed
to commence the Offer on or prior to five U.S. business days following
the date of the initial public announcement of the Offer.
(d) by the Company, if, prior to purchase of any Shares pursuant to the
Offer, (A) the Company notifies Parent in writing that it intends to enter into
an agreement with respect to a Superior Proposal in accordance with Section
6.04, provided the Company has complied in all material respects with the
provisions thereof, including the notice provision therein; (B) Parent does not
make, within one business day after receipt of the Company's notification
pursuant to clause (A), an offer that the Board of Directors of the Company
determines, in good faith based on the advice of its financial advisors, is at
least as favorable to the Company's stockholders as the Superior Proposal and
(C) prior to or simultaneously with such termination, the Company makes payment
to Parent of the amounts payable pursuant to Section 11.04(b).
The party desiring to terminate this Agreement pursuant to clauses (b), (c) or
(d) shall give written notice of such termination to the other party in
accordance with Section 11.01.
SECTION 10.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, except that (a) the
agreements contained in this Section 10.02 and in Section 11.04 and in the
Confidentiality Agreement shall survive the termination hereof and (b) no such
termination shall relieve any party of any liability or damages resulting from
any willful breach by that party of this Agreement.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given:
38
<PAGE>
if to Parent or Merger Subsidiary, to:
Meggitt PLC
Farrs House
Cowgrove
Wimborne Dorset BH21 4EL
United Kingdom
Fax: 44-1-202-847-819
Attention: Philip E. Green
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10157
Fax: 212-310-8007
Attention: Ellen J. Odoner
if to the Company, to:
Whittaker Corporation
1955 North Surveyor Avenue
Simi Valley, CA 93063-3386
Fax: 805-584-4182
Attention: Lynne M.O. Brickner
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
Attention: Christopher Mayer
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests or other communications shall be deemed received on the date of receipt
by the recipient thereof if received prior to 5 p.m. on any business day in the
place of receipt. Otherwise, any such notice, request or other communication
shall be deemed not to have been received until the next succeeding business day
in the place of receipt.
39
<PAGE>
SECTION 11.02. Entire Agreement; Non-Survival of Representations and
Warranties; Third Party Beneficiaries. (a) This Agreement and the
Confidentiality Agreement constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements, understandings and negotiations, both written and oral, among the
parties with respect to such subject matter. None of this Agreement, the
Confidentiality Agreement or any other agreement contemplated hereby or thereby
(or any provision hereof or thereof) is intended to confer on any person other
than the parties hereto or thereto any rights or remedies (except that Section
7.03 is intended to confer rights and remedies on the persons specified
therein).
(b) The representations and warranties contained herein or in any schedule,
instrument or other writing delivered pursuant hereto shall not survive the
Effective Time.
SECTION 11.03. Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived prior to the Effective Time if, but only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company and Parent or, in the case of a waiver, by the party against whom
the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.04. Expenses. (a) Except as otherwise specified in this Section
11.04 or agreed in writing by the parties, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such cost or expense.
(b) The Company agrees to pay to Parent (by wire transfer of immediately
available funds) an amount equal to
(i) $6.5 million prior to or simultaneously with the termination of
this Agreement as a result of the occurrence of any of the events set forth
in Section 10.01(c)(i), 10.01(c)(ii) or 10.01(d); and
(ii) Parent's and Merger Subsidiary's actual and reasonable
out-of-pocket expenses incurred by Parent or Merger Subsidiary in
connection with this Agreement and the transactions contemplated hereby,
promptly upon receipt of reasonable documentation of such expenses, in
connection
40
<PAGE>
with the termination of this Agreement as a result of the occurrence of any
of the following events:
(A) any of the events set forth in Section 10.01(c)(i),
10.01(c)(ii) or 10.01(d) above;
(B) the Minimum Condition not having been met by the expiration
of the Offer as extended pursuant to Section 1.01(a); or
(C) the condition set forth in paragraph (c) of Annex I hereto
not having been met as a result of a breach by the Company of its
representations and warranties set forth in this Agreement; provided
that such breach existed as of the date hereof;
provided that in each of clause (B) and (C), all of the other conditions
set forth in Annex I shall have been satisfied (but for those conditions
which are not satisfied in the case of clause (C) due to or resulting from
the facts constituting such breach) and Parent and Merger Subsidiary are
not in material breach of any of their representations and warranties or
covenants set forth in this Agreement.
Acceptance by Parent of any amounts payable pursuant to Section 11.04(b) shall
constitute conclusive evidence that this Agreement has been validly terminated.
SECTION 11.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and assigns; provided that no party may
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the written consent of the other parties hereto.
SECTION 11.06. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware, without
regard to the conflict of laws rules of such state.
SECTION 11.07. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought
against any of the parties in any federal court located in the State of Delaware
or any Delaware state court, and each of the parties hereto hereby consents to
the exclusive jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court
41
<PAGE>
or that any such suit, action or proceeding which is brought in any such court
has been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the generality of
the foregoing, each party hereto agrees that service of process upon such party
as provided in Section 11.01 shall be deemed effective service of process upon
such party.
SECTION 11.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 11.09. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
SECTION 11.10. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
SECTION 11.11. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties (a) will
waive, in any action for specific performance, the defense of adequacy of a
remedy at law and the posting of any bond in connection therewith and (b) shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement or to enforce specifically the terms and provisions of this Agreement
in any federal court located in the State of Delaware or any Delaware state
court, in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 11.12. Joint and Several Liability. Parent and Merger Subsidiary
hereby agree that they will be jointly and severally liable for all covenants,
agreements, obligations and representations and warranties made by either of
them in this Agreement.
SECTION 11.13. Definitions and Usage. (a) For purposes of this Agreement:
42
<PAGE>
"AFFILIATE" means, with respect to any person, any other person directly or
indirectly controlling, controlled by, or under common control with such person.
"BUSINESS DAY" means a day on which banks are open for business in both
London and New York.
"MATERIAL ADVERSE EFFECT" means, with respect to any person, a material
adverse effect on the business, assets, financial condition or results of
operations of such person and its subsidiaries, taken as a whole, except any
such effect resulting from or arising in connection with (i) this Agreement or
the transactions contemplated hereby, (ii) changes or conditions affecting the
commercial or military aerospace industries generally or (iii) changes in
economic, regulatory or political conditions generally.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"SUBSIDIARY" means, with respect to any person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at any time directly or indirectly owned by such person.
"U.S. BUSINESS DAY" shall have the meaning ascribed to it in Schedule 14D
under the 1934 Act.
(b) A reference in this Agreement to any statute shall be to such statute
as amended from time to time, and to the rules and regulations promulgated
thereunder.
(c) Each of the following terms is defined in the Section set forth
opposite such term:
<TABLE>
<CAPTION>
TERM SECTION
- ---- --------
<S> <C>
1933 Act.................................................................. 4.03
1934 Act.................................................................. 4.03
Acquisition Proposal...................................................... 6.04
Balance Sheet............................................................. 4.08
Balance Sheet Date........................................................ 4.08
Certificates.............................................................. 2.03
Circular.................................................................. 5.07
Code...................................................................... 2.03
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
TERM SECTION
- ---- -------
<S> <C>
Common Share Price........................................................ 1.01
Common Shares............................................................. 1.01
Common Stock.............................................................. 4.05
Company................................................................... preamble
Company Disclosure Documents.............................................. 4.09
Company Financial Advisors................................................ 1.02
Company Proxy Statement................................................... 4.09
Confidentiality Agreement................................................. 6.03
Continuing Directors...................................................... 1.03
Delaware Law.............................................................. 1.02
Effective Time............................................................ 2.01
Exchange Agent............................................................ 2.03
Exon-Florio Provision..................................................... 5.03
GAAP...................................................................... 4.08
HSR Act................................................................... 4.03
Lien...................................................................... 4.04
Merger.................................................................... 2.01
Merger Consideration...................................................... 2.02
Merger Subsidiary......................................................... preamble
Minimum Condition......................................................... 1.01
Offer..................................................................... 1.01
Offer Documents........................................................... 1.01
Option Plans.............................................................. 4.05
Parent.................................................................... preamble
Preferred Shares.......................................................... 1.01
Rights.................................................................... 1.01
Rights Agreement.......................................................... 1.01
Schedule 14D-1............................................................ 1.01
Schedule 14D-9............................................................ 1.02
SEC....................................................................... 1.01
SEC Documents............................................................. 4.07
Shares.................................................................... 1.01
Stockholder Approval...................................................... 6.02
Stockholder Meeting....................................................... 6.02
Stock Options ............................................................ 2.05
Superior Proposal......................................................... 6.04
Surviving Corporation..................................................... 2.01
Taxes..................................................................... 4.12
</TABLE>
44
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
WHITTAKER CORPORATION
By: /s/ Joseph F. Alibrandi
--------------------------
Joseph F. Alibrandi
President and Chief Executive Officer
MEGGITT PLC
By: /s/ Michael A. Stacey
--------------------------
Michael A. Stacey
Chief Executive Officer
MEGGITT ACQUISITION INC.
By: /s/ Michael A. Stacey
--------------------------
Michael A. Stacey
President
45
<PAGE>
ANNEX I
Notwithstanding any other provision of the Offer, Merger Subsidiary shall not be
required to accept for payment or pay for any Shares, and may, subject to the
terms of this Agreement, terminate the Offer, if (i) at the expiration of the
Offer, (A) the Minimum Condition has not been satisfied, (B) the applicable
waiting periods under the HSR Act shall not have expired or been terminated, (C)
the period of time for any applicable review process under the Exon-Florio
Provision shall not have expired or the President of the United States shall
have made a determination to block or prevent the consummation of the Offer or
the Merger or (D) the Merger Agreement and the transactions contemplated by the
Merger Agreement shall not have been approved by the holders of the ordinary
shares of Parent, or (ii) at any time on or after June 9, 1999 and prior to the
acceptance for payment of Shares, any of the following conditions exist:
(a) there shall be (i) pending any suit, action or proceeding before a U.S.
or U.K. court of competent jurisdiction, or (ii) threatened any suit, action or
proceeding by any U.S. or U.K. governmental agency, in each case, that is
reasonably likely to have a material adverse effect on the Company or, as a
result of the transactions contemplated by the Merger Agreement, on Parent; or
(b) there shall be any U.S. or U.K. statute, rule, regulation, judgment,
order or injunction enacted, entered, enforced, promulgated or deemed applicable
to the Offer or the Merger, other than the application to the Offer or the
Merger of applicable waiting periods under the HSR Act and the review process
under the Exon-Florio Provision, that is reasonably likely to have a material
adverse effect on the Company or, as a result of the transactions contemplated
by the Merger Agreement, on Parent; or
(c) (i) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and accurate (without giving effect to any
limitation as to "materiality" or "material adverse effect" set forth therein)
as of the date of consummation of the Offer as though made on or as of such date
(except for those representations and warranties that address matters only as of
a particular date or only with respect to a specific period of time which need
only be true and accurate as of such date or with respect to such period) or
(ii) the Company shall have failed to perform or comply with any of its
obligations, agreements or covenants required by the Merger Agreement, except
where the failure of such representations and warranties to be true and accurate
or the failure to perform or comply with such covenants, individually or in the
aggregate, do not have and are not reasonably likely to have a material adverse
effect on the Company; or
<PAGE>
(d) there shall have occurred (i) any general suspension of trading in, or
limitation of prices for, securities on the New York Stock Exchange or the
London Stock Exchange, for a period in excess of three days (excluding
suspensions or limitations resulting solely from physical damage or
interferences with such exchanges not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States or the United Kingdom (whether or not mandatory), or
(iii) any decline in either the Dow Jones Industrial Average, the Standard &
Poor's Index of 500 Industrial Companies or Financial Times Stock Exchange 100
by an amount in excess of 30% measured from the close of business on the date of
this Agreement; or
(e) this Agreement shall have been terminated in accordance with its terms.
The foregoing conditions are for the sole benefit of Parent and Merger
Subsidiary and may, subject to the terms of this Agreement, be waived by Parent
and Merger Subsidiary in whole or in part at any time and from time to time in
their discretion. The failure by Parent or Merger Subsidiary at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any right
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time.
Annex I - 2
<PAGE>
March 10, 1999
Philip Green
Group Company Secretary
Meggitt PLC
Farrs House
Cowgrove Wimbourne
Dorset, BH21 4EL
United Kingdom
Dear Mr. Green:
You have requested information regarding Whittaker Corporation (the "Company",
"us" or "we") in connection with your consideration of the possible acquisition
of the Company (a "Possible Transaction"). In consideration of our furnishing
you with the Evaluation Materials (as defined below) you agree as follows:
Confidentiality of Evaluation Materials
You will treat confidentially any information that either we or our financial
advisors, CREDIT SUISSE FIRST BOSTON CORPORATION ("CSFB") and CIBC OPPENHEIMER
CORP. ("CIBC OPPENHEIMER"), or our other representatives furnish to you in
connection with a Possible Transaction involving the Company, together with
analyses, compilations, studies or other documents prepared by you, or your
Representatives which contain or otherwise reflect such information
(collectively, the "Evaluation Materials"). The term "Representatives" of a
person shall mean the affiliates, officers, directors, employees, agents or
representatives of such person and any potential lenders to such person in
connection with such Possible Transaction.
The term "Evaluation Materials" includes information furnished to you orally or
in writing (whatever the form or storage medium) or gathered by inspection, and
regardless of whether such information is specifically identified as
"confidential". The term "Evaluation Materials" does not include information
which (i) is or becomes available to the public other than as a result of a
disclosure by you or your Representatives, or (ii) was or becomes available to
you on a non-confidential basis prior to its disclosure to you by the Company or
its Representatives from a source other than the Company or its Representatives,
provided that such source is not known by you to be prohibited from disclosing
such information to you by a contractual, legal or fiduciary obligation to the
Company or its Representatives.
<PAGE>
Use of Evaluation Materials
You will not use any of the Evaluation Materials for any purpose other than the
exclusive purpose of evaluating a Possible Transaction. The Evaluation Materials
will be kept confidential and shall not be disclosed, in whole or in part, to
any person other than your Representatives and prospective sources of financing
for the acquisition who need to know such information for the purpose of
evaluating a Possible Transaction between you and the Company. You agree to
inform each of your Representatives of the confidential nature of such
information and to direct such persons to treat such information confidentially
in accordance with this Agreement. Any other disclosure of such information may
only be made if the Company consents in writing prior to any such disclosure.
Without limiting the generality of the foregoing, in the event that a Possible
Transaction is not consummated you shall not use or allow the use of the
Evaluation Materials for any purpose. You will be responsible for any breach of
this Agreement by your Representatives and agree, at your sole expense, to take
all reasonable measures (including but not limited to court proceedings) to
restrain your Representatives from prohibited or unauthorized disclosure or use
of the Evaluation Materials.
In the event that you or any of your Representatives receive a request or are
required (by deposition, interrogatory, request for documents, subpoena, civil
investigative demand or similar process) to disclose all or any part of the
Evaluation Materials, you or your Representatives, as the case may be, agree to
(i) immediately notify the Company of the existence, terms and circumstances
surrounding such a request, (ii) consult with the Company on the advisability of
taking legally available steps to resist or narrow such request and (iii) assist
the Company in seeking a protective order or other appropriate remedy. In any
event, you will not oppose action by the Company to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Evaluation Materials. In the event that such protective order or
other remedy is not obtained or that the Company waives compliance with the
provisions hereof, (i) you or your Representatives, as the case may be, may
disclose to any tribunal only that portion of the Evaluation Materials which you
are advised by counsel is legally required to be disclosed, and shall exercise
all reasonable efforts to obtain assurance that confidential treatment will be
accorded such Evaluation Materials and (ii) you shall not be liable for such
disclosure unless disclosure to any such tribunal was caused by or resulted from
a previous disclosure by you or your Representatives not permitted by this
Agreement.
You hereby acknowledge that, in your examination of the Evaluation Materials,
you will receive material nonpublic information concerning the Company, and that
you are aware (and that your Representatives who are apprised of this matter
have been or will be advised by you) that the United States securities laws
restrict the purchase and sale of securities by persons who possess certain
nonpublic information relating to the issuer of such securities.
2
<PAGE>
Non-Disclosure
The disclosure of your possible interest in purchasing the Company could have a
material adverse effect on the Company's business if for any reason an agreement
of purchase and sale is not consummated. Accordingly, unless required by
applicable law, regulation or by the rules of the London Stock Exchange, you
agree that prior to the closing of a Possible Transaction, without the prior
written consent of the Company, you will not, and you will direct your
Representatives not to, disclose to any person either the fact that discussions
or negotiations are taking place concerning a possible transaction between you
and the Company or any of the terms, conditions or other facts with respect to
any such Possible Transaction, including the status thereof. The term "person"
as used in this letter shall be broadly interpreted to include, without
limitation, any corporation, governmental agency or body, partnership,
association or individual.
It is understood that disclosure by the Company or its representatives of your
possible interest could have a material adverse effect on your business and it
is agreed that, unless required by applicable law or the rules of the New York
Stock Exchange, there will be no disclosure to any person as defined above of
your interest, unless you give your written consent.
Return of Documents
Upon the Company's request, you shall promptly deliver to the Company or destroy
all written Evaluation Materials and any other written materials without
retaining, in whole or in part, any copies, extracts or other reproductions
(whatever the form or storage medium) of such materials, and shall certify the
destruction of such materials in writing to the Company.
No Unauthorized Contact or Solicitation
During the course of your evaluation, all inquiries and other communications are
to be made directly to CSFB or CIBC Oppenheimer or employees or representatives
of the Company specified by CSFB or CIBC Oppenheimer. Accordingly, you agree not
to directly or indirectly contact or communicate with any executive or other
employee of the Company concerning a Possible Transaction, or to seek any
information in connection therewith from such person, without the express
consent of CSFB or CIBC Oppenheimer. You also agree not to discuss with or offer
to any third party an equity participation in a Possible Transaction or any
other form of joint acquisition by you and such third party without CSFB's or
CIBC Oppenheimer's prior written consent.
Without the Company's prior written consent, you will not for a period of two
years from the date of this Agreement directly or indirectly solicit any person
employed by the Company to leave the Company's employ; provided the foregoing
shall not apply to general, untargeted searches by you or by recruiters acting
on your behalf.
3
<PAGE>
Standstill
You agree that until two years from the date of this Agreement, you will not
without the prior approval of the Board of Directors of the Company (i) acquire
or make any proposal to acquire any securities or property of the Company, (ii)
propose to enter into any merger or business combination involving the Company
or purchase a material portion of the assets of the Company, (iii) make or
participate in any solicitation of proxies to vote, or seek to advise or
influence any person with respect to the voting of any securities of the
Company, (iv) form, join or participate in a "group" (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934) with respect to any
voting securities of the Company, (v) otherwise act or seek to control or
influence the management, Board of Directors or policies of the Company, (vi)
disclose any intention, plan or arrangement inconsistent with the foregoing or
(vii) take any action which might require the Company to make a public
announcement regarding the possibility of a business combination or merger.
Except as provided above, you also agree during such period not to request the
Company (or its Representatives) to amend or waive any provision of this
paragraph.
No Representation or Warranty
Although the Company and CSFB and CIBC Oppenheimer have endeavored to include in
the Evaluation Materials information known to them which they believe to be
relevant for the purpose of your investigation, you acknowledge and agree that
none of the Company, CSFB, CIBC Oppenheimer or any of the Company's other
representatives or agents is making any representation or warranty, expressed or
implied, as to the accuracy or completeness of the Evaluation Materials, and
none of the Company, CSFB or CIBC Oppenheimer, nor any of their respective
Representatives, will have any liability to you or any other person resulting
from the use of Evaluation Materials by you or any of your Representatives. Only
those representations or warranties that are made to a purchaser in a definitive
sale agreement for the Company ("Sale Agreement") when, as, and if it is
executed, and subject to such limitations and restrictions as may be specified
in such Sale Agreement, will have any legal effect.
You also acknowledge and agree that no contract or agreement providing for the
sale of the Company shall be deemed to exist between you and the Company unless
and until a Sale Agreement has been executed and delivered by you and each of
the other parties thereto, and you hereby waive, in advance, any claims
(including, without limitation, breach of contract) in connection with the sale
of the Company unless and until a Sale Agreement has been executed and delivered
by you and each of the other parties thereto. You also agree that unless and
until a Sale Agreement between the Company and you with respect to the
acquisition of the Company has been executed and delivered by you and each of
the other parties thereto, there shall not be any legal obligation of any kind
whatsoever with respect to any such transaction by virtue of this agreement or
any other written or oral expression with respect to such transaction except, in
the case of this Agreement, for the matters specifically agreed to herein. For
purposes of this Agreement, the term "Sale Agreement" does not include an
executed letter of intent or any other preliminary written agreement, nor does
it include any oral acceptance of an offer or bid by you.
4
<PAGE>
You further understand and agree that (i) the Company, CSFB and CIBC Oppenheimer
shall be free to conduct the process for the Company's sale as they in their
sole discretion shall determine (including, without limitation, negotiating with
any of the prospective buyers and entering into a Sale Agreement without prior
notice to you or to any other person), (ii) any procedures relating to such sale
may be changed at any time without notice to you or any other person and (iii)
you shall not have any claims whatsoever against the Company, CSFB, CIBC
Oppenheimer or any of their respective Representatives arising out of or
relating to the sale of the Company (other than those as against the parties to
a Sale Agreement with you in accordance with the terms thereof).
Legal Remedy
You agree that the Company would be irreparably injured by a breach of this
Agreement by you or your Representatives and that, in such event, the Company
shall be entitled, in addition to any and all other remedies, to specific
performance and injunctive relief. In the event of litigation relating to this
agreement, the non-prevailing party in such litigation shall reimburse the
prevailing party for its reasonable legal fees and expenses incurred in
connection with such litigation, including any appeals therefrom.
Other
This Agreement constitutes the entire agreement between the parties hereto
regarding the subject matter hereof. This Agreement may be changed only by a
written agreement signed by the parties hereto or their authorized
representatives.
This Agreement shall be governed and construed in accordance with the laws of
the State of New York, without regard to the conflicts of law principles
thereof.
5
<PAGE>
Your obligation under this agreement shall expire two (2) years from the date
hereof, except as otherwise explicitly stated above. If you are in agreement
with the foregoing, please sign and return one copy of this letter, it being
understood that all counterpart copies will constitute but one agreement with
respect to the subject matter of this letter.
Very truly yours,
WHITTAKER CORPORATION
By CIBC OPPENHEIMER CORP., solely as Company's representative
By: /s/ Robert Puopolo
-----------------------------
Name: Robert Puopolo
Title: Managing Director
Accepted and agreed to as of the date hereof:
MEGGITT PLC
By: /s/Philip Green
-----------------------------
Name: Philip Green
Title: Group Company Secretary
6
<PAGE>
EXHIBIT (c)(3)
WHITTAKER CORPORATION
1955 NORTH SURVEYOR AVENUE
SIMI VALLEY, CALIFORNIA
June 4, 1999
Meggitt PLC
Farrs House
Cowgrove
Wimborne Dorset BH21 4EL
United Kingdom
Gentlemen:
Reference is made to the draft Agreement and Plan of Merger and
Disclosure Schedule appended to this letter (the "Draft Merger Agreement").
Whittaker Corporation ("Whittaker") recognizes that the proposal of
Meggitt PLC ("Meggitt") to acquire Whittaker reflected in the Draft Merger
Agreement (the "Acquisition") will be financed, in part, by an underwritten
equity rights offering and is subject to the approval of Meggitt's shareholders.
Whittaker also recognizes that U.K. market practice requires Meggitt, Merrill
Lynch, Meggitt's stockbroker, and NM Rothschild, its investment banker and
proposed underwriter, to meet with Meggitt's principal institutional
shareholders to assess their reaction to the proposed Acquisition prior to
Meggitt making a final determination to launch the rights offering and proceed
with the Acquisition.
As an inducement to Whittaker to enter into this letter agreement,
Meggitt agrees to use reasonable efforts beginning on Friday, June 4, 1999 to
arrange meetings with approximately 12 of its principal institutional
shareholders to discuss the proposed Acquisition, such meetings to be scheduled
for Monday, June 7, 1999 and Tuesday, June 8, 1999. Meggitt agrees to proceed
with any such meetings that are arranged. Meggitt will advise Whittaker on its
general perception of shareholder reaction.
As an inducement to Meggitt to enter into the agreement above,
Whittaker represents, warrants and agrees as follows:
<PAGE>
1. As of the date hereof, Whittaker's President, Chief Executive
Officer and Chairman of the Board is not aware of any facts or circumstances
that cause him to believe that Whittaker's Board of Directors will not approve
the Draft Merger Agreement (and the transactions contemplated thereby) at the
meeting referred to in paragraph 4.
2. Prior to 8:00 a.m., London time, on June 9, 1999, Whittaker will not
and will cause its subsidiaries and the officers, directors, employees and other
agents and advisors (including CIBC World Markets Corp. and Credit Suisse First
Boston) of Whittaker and its subsidiaries not to, directly or indirectly (a)
take any action to solicit, initiate or encourage any Acquisition Proposal, (b)
furnish information to or participate in any discussions or negotiations with
any person that has made or indicated an interest in making an Acquisition
Proposal or (c) enter into any preliminary or definitive agreement relating to
any Acquisition Proposal. "Acquisition Proposal" means any indication of
interest, offer or proposal for a merger or other business combination
transaction involving Whittaker or any of its subsidiaries or the acquisition of
all or a material portion of the equity interest in, or all or a material
portion of the assets of, Whittaker, other than the Acquisition.
3. Whittaker agrees to notify Meggitt promptly of its receipt of an
Acquisition Proposal, such notice to include the identity of the person making
the proposal and the material terms of the proposal.
4. Whittaker has scheduled a meeting of its Board of Directors to be
held at noon, California time, on Tuesday, June 8, 1999 to consider the Draft
Merger Agreement in the event Meggitt advises Whittaker that it is prepared to
execute the Draft Merger Agreement.
In the event of Whittaker's breach of the representation set forth in
paragraph 1 or the agreement set forth in paragraph 2, Whittaker agrees to pay
Meggitt, as liquidated damages and not as a penalty, the amount of actual and
reasonable out-of-pocket expenses (up to an aggregate of $4,000,000) incurred by
Meggitt on or before 8:00 a.m., London time, on June 9, 1999. Such payment,
which shall be made promptly following Whittaker's receipt of reasonable
documentation, shall be Meggitt's exclusive remedy for Whittaker's breach of
these provisions. Meggitt agrees that it shall not have any remedy for
Whittaker's breach of the provisions of paragraphs 3 and 4.
This letter agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to the conflict of
laws rules of such state.
2
<PAGE>
If the foregoing correctly sets forth our agreement, kindly so indicate
by signing below.
Very truly yours,
WHITTAKER CORPORATION
By: /s/ John K. Otto
---------------------------------
John K. Otto
Vice President
Accepted and Agreed:
MEGGITT PLC
By: /s/ Philip E. Green
------------------------------
Philip E. Green
Company Secretary
3
<PAGE>
Exhibit (c)(4)
June 9, 1999
Meggitt PLC
Farrs House
Cowgrove
Wimborne Dorset BH21 4EL
United Kingdom
Dear Sirs:
In consideration of your entering into the Agreement and Plan of Merger
dated as of June 9, 1999 among Whittaker Corporation, Merger Subsidiary and you
(the 'Merger Agreement'), I hereby agree that (i) I will tender, pursuant to the
terms of the Offer, all of the Shares held by me as of the commencement of the
Offer, (ii) during the term of this letter agreement I will not sell transfer or
otherwise dispose of any Shares held by me, except pursuant to the terms of the
Offer and (iii) I will not exercise any rights of appraisal under Delaware Law
for the Shares held by me. This letter agreement shall terminate in the event of
any termination of the Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Merger Agreement.
Yours truly,
JOSEPH F. ALIBRANDI
-----------------------
JOSEPH F. ALIBRANDI
