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Exhibit (d)(5)
September 11, 2000
Mr. Darrell Lowrance
Chairman & C.E.O.
Lowrance Electronics, Inc.
12000 East Skelly Drive
Tulsa, Oklahoma 74128
Dear Mr. Lowrance:
This letter, upon your execution and return, will confirm the mutual
intent of Cobra Electronics Corporation ("Cobra") and Lowrance Electronics, Inc.
(the "Company") to engage in negotiations regarding the acquisition of all of
the outstanding capital stock of the Company by Cobra (the "Transaction"). In
order to induce Cobra to undertake the time, expense and effort required to
perform the necessary due diligence and to take the other actions necessary to
complete the Transaction, the parties agree as follows:
1. Exclusivity. In consideration of Cobra's agreeing to undertake the
time and expense of performing the necessary due diligence relating to the
Transaction and to negotiate the Definitive Agreements (as defined below), the
Company agrees that until October 31, 2000 neither the Company, nor any of its
affiliates, will directly or indirectly, through any equity holder, officer,
director, trustee, agent or otherwise (collectively, "Representatives"), (i)
solicit, initiate or encourage the submission of inquiries, proposals or offers
(other than from Cobra, its affiliates and representatives) from any
corporation, partnership, person or other entity or group (collectively, a
"Person") relating in any way to any investment in the Company, any acquisition
of direct or indirect control of the Company, the purchase of any of the
Company's securities, material amount of assets (other than in the ordinary
course of business) or businesses or any business combination involving the
Company, including, without limitation, any merger, consolidation, acquisition,
purchase, re-capitalization, issuance or disposition of a material amount of
assets (other than in the ordinary course of business) of any nature which would
involve the Company or any other of the entities or assets expected to be
involved in the Transaction or which would have a similar financial result as
the Transaction (each a "Proposal"), (ii) participate in any discussions or
negotiations regarding a Proposal or furnish to any Person any information for
any purpose inconsistent with the foregoing, or (iii) otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek any of the foregoing. The Company will
immediately notify Cobra orally and in writing if any discussions or
negotiations are sought to be initiated, any inquiry or proposal is made, or any
information is requested by any Person with respect to any Proposal or proposal
which could lead to a Proposal and immediately notify Cobra of all material
terms of any Proposal. The Company represents that neither it nor any of its
affiliates is party to or bound by any agreement which would involve the Company
or any other of the entities or assets expected to be involved in the
Transaction or which would have a similar financial result as the Transaction
other than as contemplated by this Letter.
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2. Confidentiality. Each of the parties hereto reaffirms the terms of
the Confidentiality Agreement between Cobra and the Company entered into on July
28, 2000. Except as required by law or the rules of The Nasdaq Stock Market,
neither Cobra (or any of its affiliates or Representatives) nor the Company (or
any of its affiliates or Representatives) shall make, or cause to be made, any
public or other announcement with respect to this letter or the matters
contemplated by this letter, without the prior written consent of the other.
3. Access. Until October 31, 2000 and subject to the qualifications
contained in this paragraph 3, the Company and each of its affiliates and
associates will permit Cobra and its financing sources and their respective
affiliates, associates, counsel, accountants and other representatives
reasonable access during normal business hours to all the properties, assets,
management, other employees, books, records, agreements and other documents of
such entities which may be reasonable necessary to evaluate the Transaction;
provided, however, that neither Cobra nor any of its affiliates or associates
shall be permitted to visit the Company's facilities or contact the Company's
customers without the Company's prior written consent, which consent shall not
be unreasonably withheld and provided, further, that neither Cobra nor any of
its affiliates or associates shall be permitted to contact any manager or other
employee of the Company other than Darrell Lowrance, Doug Townsden or Ron Weber
without the Company's prior written consent, which consent shall not be
unreasonably withheld. Cobra agrees to conduct as much of its due diligence as
is reasonable in locations other than the Company's facilities. The Company
agrees to make available at such off-site locations all materials requested and
key management, as required.
4. Preparation of Definitive Agreements. Commencing with the signing of
this letter, the parties agree to act in good faith to negotiate and execute, on
or prior to October 31, 2000, definitive agreements acceptable in form and
substance to each of the parties hereto and any other required parties
containing terms and conditions that are customary and appropriate for
transactions of this type and all related agreements with respect to the
Transaction (the "Definitive Agreements"). Consummation of the Transaction is
subject to, among other things (i) the negotiation and execution of the
Definitive Agreements, (ii) the receipt of any necessary consents, assignments
or approvals from third parties, the making of all necessary governmental
filings and the effectiveness of all governmental registrations, (iii) all
necessary or advisable approvals of the boards of directors and shareholders of
the Company and Cobra, (iv) Cobra obtaining financing sufficient for it to have
on hand at the closing of the Transaction funds necessary to pay the amounts to
be paid by Cobra (or any of its subsidiaries) as contemplated by the Definitive
Agreements and all of its fees and expenses related to the Transaction, and (v)
prior to execution of the Definitive Agreements, the completion of a
satisfactory due diligence review of the entities, assets and properties
involved in the Transaction by Cobra and its financing sources. It is understood
that this letter constitutes a statement of mutual intentions of Cobra and the
Company and does not contain all matters upon which agreement must be reached
for the definition or consummation of the Transaction. A binding commitment with
respect to the Transaction will only result from the execution of Definitive
Agreements. In particular, this paragraph 4 is not intended to be a binding
agreement or to give rise to any legal liability between the parties. All other
paragraphs of this letter shall be fully binding.
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5. Expenses. Except as set forth in this paragraph 5, neither party
shall be responsible for the costs or expenses of the other party or for any
claims relating to the Transaction in the event that Definitive Agreements are
not executed. Without limiting any of the obligations of either party under this
letter, if (i) the Company shall breach its obligations under this letter or
(ii) the parties hereto fail to enter into the Definitive Agreements providing
for the Transaction and on or prior to November 30, 2000 the Company executes a
definitive agreement with any Person (other than Cobra, its affiliates and
representatives) resulting from a Proposal, then, in either case, the Company
shall, upon Cobra's demand, reimburse Cobra for up to $125,000 of its costs and
expenses (including all fees and expenses of outside counsel, accountants,
financing sources, investment bankers, experts and consultants to Cobra and its
affiliates) incurred by or on behalf of Cobra in connection with or related to
the due diligence, authorization, preparation, negotiation, execution and
performance of the proposed Transaction (subject to reasonable documentation).
Reimbursement payments of the Company to Cobra pursuant to the immediately
preceding sentence shall not, in any respect, serve to limit the liability of
the Company to Cobra by virtue of any breach of the binding portions of this
letter by the Company. By agreeing to this paragraph 5, Cobra does not concede
that monetary damages would be a sufficient remedy for breach by the Company of
its obligations under this letter.
6. Counterparts. This letter may be executed in one or more
counterparts each of which will be deemed an original, but all of which will be
deemed one instrument.
7. Governing Law. The provisions of this letter will be governed by
the laws of Delaware, other than those that might result in the application of
the law of another jurisdiction.
If the above meets with your approval, please so indicate by signing
this letter below.
Very truly yours,
Cobra Electronics Corporation
By: /s/ Gerald M. Laures
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Gerald M. Laures
Vice President -Finance
Accepted and agreed to
As of the date first above
Written:
Lowrance Electronics, Inc.
By: /s/ Darrell Lowrance
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Darrell Lowrance
Chairman & C.E.O.
