<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 2000
REGISTRATION NO. 333-3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
GENERAL ELECTRIC COMPANY
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW YORK 3724 14-0689340
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Identification Number)
Organization) Code Number)
</TABLE>
3135 EASTON TURNPIKE
FAIRFIELD, CONNECTICUT 06431-0001
(203) 373-2243
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------------
ROBERT E. HEALING, ESQ.
3135 EASTON TURNPIKE
FAIRFIELD, CONNECTICUT 06431-0001
(203) 373-2243
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
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<S> <C> <C>
JOHN A. MARZULLI, JR., ESQ. JAMES O. SELZER, ESQ. MORTON A. PIERCE, ESQ.
SHEARMAN & STERLING MORRISON & HECKER LLP RICHARD D. PRITZ, ESQ.
599 LEXINGTON AVENUE 2600 GRAND AVENUE DEWEY BALLANTINE LLP
NEW YORK, NY 10022 KANSAS CITY, MO 64108-4806 1301 AVENUE OF THE AMERICAS
(212) 848-4000 (816) 691-2600 NEW YORK, NY 10019
(212) 259-8000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As promptly as
practicable after this Registration Statement becomes effective and upon
consummation of the transactions described in the enclosed prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT(2) OFFERING PRICE(1) REGISTRATION FEE(2)
<S> <C> <C> <C> <C>
Common Stock, par value $0.06 per share...... Not Applicable Not Applicable $344,646,930.06 $90,986.79
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rules 457(f)(1) and (3) and Rule 457(c) of the Securities Act of
1933, as amended (the "Securities Act"), based on the product of
(i) $29.28125, the average of the high and low sales prices of Harmon
Industries, Inc. common stock on the Nasdaq National Market on July 18, 2000
and (ii) 11,770,226 shares of Harmon Industries, Inc. common stock, the
number of shares of Harmon Industries, Inc. common stock outstanding at the
close of business on July 14, 2000, assuming the exercise of all options to
purchase Harmon Industries, Inc. common stock expected to be outstanding and
exercisable prior to the date the offer is expected to be consummated.
(2) Computed in accordance with Rule 457(f) under the Securities Act to be
$90,986.79 which is equal to 0.000264 multiplied by the proposed maximum
aggregate offering price of $344,646,930.06.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS MAY BE CHANGED. WE MAY NOT SELL THESE
SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
GENERAL ELECTRIC COMPANY
OFFER TO EXCHANGE
SHARES OF COMMON STOCK
OF
GENERAL ELECTRIC COMPANY
HAVING A VALUE OF $30.00
(DETERMINED AS DESCRIBED IN THIS PROSPECTUS)
FOR
EACH OUTSTANDING SHARE
OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO
PURCHASE COMMON STOCK)
OF
HARMON INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON AUGUST 21, 2000 UNLESS EXTENDED.
On July 16, 2000, we entered into an Agreement and Plan of Merger with
Harmon. The Harmon board of directors has approved and adopted the merger
agreement, determined that this offer is fair to, and in the best interests of,
Harmon stockholders and recommended that Harmon stockholders accept this offer
and tender their shares pursuant to this offer.
Through a wholly owned subsidiary we are offering to exchange a fraction of
a share of GE common stock having a value of $30.00 for each outstanding share
of Harmon common stock, including the associated rights to purchase common
stock, that is validly tendered and not properly withdrawn. The fraction of a
share of GE common stock to be exchanged for each share of Harmon common stock
will equal $30 divided by the average of the daily volume-weighted sales prices
per share of GE common stock on the New York Stock Exchange for each of the 10
consecutive trading days ending on the second trading day before the date on
which Harmon shares are accepted for payment in the offer.
Our obligation to exchange GE common stock for Harmon common stock is
subject to the conditions listed under "The Offer--Conditions of Our Offer."
GE's common stock is listed on the New York Stock Exchange under the symbol "GE"
and Harmon's common stock is quoted on the Nasdaq National Market under the
symbol "HRMN."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities to be issued under this
prospectus or determined if this prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense.
THE DATE OF THIS PROSPECTUS IS JULY 25, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION........ 1
WHERE YOU CAN FIND MORE INFORMATION......................... 5
SUMMARY..................................................... 7
GE SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA.......... 11
HARMON SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA...... 12
SIGNIFICANT FACTORS AFFECTING OPERATING RESULTS............. 13
RECENT DEVELOPMENTS......................................... 13
COMPARATIVE PER SHARE DATA.................................. 14
THE COMPANIES............................................... 14
General Electric.......................................... 14
Four Points Acquisition, Inc.............................. 15
Harmon.................................................... 15
REASONS FOR THE OFFER....................................... 16
BACKGROUND OF THE OFFER..................................... 16
THE OFFER................................................... 17
Timing Of Our Offer....................................... 17
Extension, Termination And Amendment...................... 17
Exchange Of Harmon Shares; Delivery Of GE Common Stock.... 18
Cash Instead Of Fractional Shares Of GE Common Stock...... 19
Procedure For Tendering................................... 19
Withdrawal Rights......................................... 20
Guaranteed Delivery....................................... 21
Certain Federal Income Tax Consequences................... 22
Purpose Of Our Offer; The Merger; Appraisal Rights........ 25
Conditions Of Our Offer................................... 25
Regulatory Approvals...................................... 27
Certain Effects Of Our Offer.............................. 29
Relationships With Harmon................................. 31
Accounting Treatment...................................... 32
Fees And Expenses......................................... 32
Stock Exchange Listing.................................... 32
THE MERGER AGREEMENT........................................ 33
The Offer................................................. 33
The Merger................................................ 33
Harmon Board Of Directors................................. 34
Treatment Of Harmon Stock Options......................... 34
Covenants And Representations And Warranties.............. 35
Conditions Of Our Offer................................... 37
Conditions Of The Merger.................................. 37
Termination Of The Merger Agreement....................... 37
Termination Fees.......................................... 38
Amendments................................................ 39
THE STOCK OPTION AGREEMENT.................................. 40
THE SUPPORT AGREEMENT....................................... 42
THE CONFIDENTIALITY AGREEMENT............................... 43
INTERESTS OF CERTAIN PERSONS................................ 44
COMPARATIVE STOCK PRICES AND DIVIDENDS...................... 45
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GE Dividend Policy........................................ 45
GE Stock Repurchase Program............................... 46
DESCRIPTION OF GE CAPITAL STOCK............................. 46
Transfer Agent and Registrar.............................. 46
Stock Exchange Listing; Delisting and Deregulation of
Harmon Common Stock..................................... 46
COMPARISON OF STOCKHOLDER RIGHTS............................ 46
LEGAL MATTERS............................................... 50
EXPERTS..................................................... 50
FORWARD-LOOKING STATEMENTS.................................. 50
MISCELLANEOUS............................................... 52
</TABLE>
<TABLE>
<S> <C>
SCHEDULE I-- Directors and Executive Officers of GE and Acquiror
ANNEX A-- Agreement and Plan of Merger, dated as of July 16, 2000,
among General Electric Company, Four Points Acquisition,
Inc. and Harmon Industries, Inc.
ANNEX B-- Stock Option Agreement, dated as of July 16, 2000, between
General Electric Company and Harmon Industries, Inc.
ANNEX C-- Support Agreement, dated as of July 16, 2000, among General
Electric Company and certain stockholders of Harmon
Industries, Inc.
</TABLE>
ii
<PAGE>
THIS DOCUMENT INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT GE AND HARMON FROM DOCUMENTS FILED WITH THE SEC THAT HAVE NOT BEEN
INCLUDED IN OR DELIVERED WITH THIS DOCUMENT. THIS INFORMATION IS AVAILABLE AT
THE WEB SITE THE SEC MAINTAINS AT WWW.SEC.GOV, AS WELL AS FROM OTHER SOURCES.
SEE "WHERE YOU CAN FIND MORE INFORMATION" ON PAGE 5.
YOU ALSO MAY REQUEST COPIES OF THESE DOCUMENTS FROM US, WITHOUT CHARGE, UPON
WRITTEN OR ORAL REQUEST TO OUR INFORMATION AGENT, MORROW & CO., INC., 445 PARK
AVENUE, 5TH FLOOR, NEW YORK 10022, COLLECT AT 1-212-754-8000 OR TOLL-FREE AT
1-800-566-9061.
iii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION
Q: WHAT ARE GE AND HARMON PROPOSING?
A: We have entered into a merger agreement with Harmon pursuant to which we are
offering, through Four Points Acquisition, Inc., our wholly owned subsidiary, to
exchange a fraction of a share of GE common stock, determined as described in
response to the next question, for each outstanding share of Harmon common stock
and the associated common stock purchase right. After the offer is completed,
our subsidiary will merge with Harmon. As a result of the offer and the merger,
Harmon will become a wholly owned subsidiary of GE.
Q: WHAT WOULD I RECEIVE IN EXCHANGE FOR MY HARMON SHARES?
A: We are offering to exchange a fraction of a share of GE common stock having
a value of $30.00 for each outstanding share of common stock of Harmon that is
validly tendered and not properly withdrawn. The fraction of a share of GE
common stock which we will issue for each share of Harmon common stock that we
purchase in the offer will equal $30.00 divided by the average of the daily
volume-weighted sales prices per share of GE common stock on the New York Stock
Exchange for each of the 10 consecutive trading days ending on the second
trading day prior to the date on which the Harmon shares are accepted for
payment in the offer.
You will not receive any fractional shares of GE common stock in the offer.
Instead, you will receive cash in an amount equal to the market value of any
fractional shares you would otherwise have been entitled to receive.
Q: HOW CAN I FIND OUT THE FINAL EXCHANGE RATIO?
A: Before the offer expires, we will notify you by issuing a press release
announcing the final exchange ratio.
Q: HOW LONG WILL IT TAKE TO COMPLETE THE OFFER AND THE MERGER?
A: We hope to complete the offer in the third quarter of 2000. We expect to
complete the merger shortly after we complete the offer if we acquire 90% of the
Harmon shares in the offer. If less than 90% of the shares are tendered in the
offer, then the merger will require Harmon stockholder approval and we will
complete the merger shortly after the special meeting of Harmon stockholders to
approve the merger. We must also obtain regulatory clearance prior to completion
of the offer and the merger.
Q: WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
A: If you are the record owner of your Harmon shares and you tender your Harmon
shares directly to the exchange agent, you will not have to pay brokerage fees
or incur similar expenses. If you own your shares through a broker or other
nominee, and your broker tenders the shares on your behalf, your broker may
charge you a fee for doing so. You should consult your broker or nominee to
determine whether any charges will apply.
Q: DOES HARMON SUPPORT THE OFFER AND THE MERGER?
A: Yes, Harmon's board of directors has unanimously recommended that Harmon
stockholders accept the offer and tender their shares pursuant to the offer.
Harmon's board of directors has also approved the merger agreement and the
merger. Information about the recommendation of Harmon's board of directors is
more fully set forth in Harmon's Solicitation/Recommendation Statement on
Schedule 14D-9, which is being mailed to Harmon stockholders together with this
prospectus.
1
<PAGE>
Q: HAVE ANY HARMON STOCKHOLDERS AGREED TO TENDER THEIR SHARES?
A: Yes. We have entered into a support agreement dated July 16, 2000 whereby a
number of stockholders of Harmon, including directors, executive officers and
members of the Harmon family, have agreed to tender into the offer shares
representing approximately 12% of the outstanding common stock of Harmon as of
July 24, 2000.
Q: HAS HARMON RECEIVED A FAIRNESS OPINION IN CONNECTION WITH THE OFFER AND THE
MERGER?
A: Yes. Harmon has received an opinion from Bear Stearns & Co., Inc. dated
July 16, 2000 to the effect that, as of such date, the consideration to be
received by Harmon's stockholders in the offer and the merger is fair from a
financial point of view to such stockholders. The full text of such opinion,
which sets forth assumptions made, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as a schedule to
Harmon's Schedule 14D-9, which is being mailed to the stockholders of Harmon
with this prospectus.
Q: WHAT PERCENTAGE OF GE COMMON STOCK WILL HARMON STOCKHOLDERS OWN AFTER THE
OFFER AND THE MERGER?
A: After completion of the merger, former Harmon stockholders would own less
than 0.1% of the outstanding shares of GE common stock, assuming that the
average of the daily volume-weighted sales prices per share of GE common stock
during the pricing period prior to the expiration date is approximately $53,
which corresponds to an exchange ratio of approximately 0.57 of a share of GE
common stock for each share of Harmon common stock.
Q: WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
A: The offer is subject to several conditions, including:
- two-thirds of the outstanding Harmon shares, on a fully diluted basis,
having been validly tendered and not properly withdrawn,
- waiting periods under applicable antitrust laws having expired or been
terminated,
- the registration statement of which this prospectus is a part having been
declared effective by the SEC,
- Harmon not having breached any covenant, representation or warranty in a
manner that would, individually or in the aggregate, have a material
adverse effect on Harmon and its subsidiaries taken as a whole, and
- there not having occurred any event that is reasonably likely to be
materially adverse to Harmon and its subsidiaries, taken as a whole.
These conditions and other conditions to the offer are discussed in this
prospectus under "The Offer--Conditions Of Our Offer" beginning on page 25.
Q: HOW DO I PARTICIPATE IN YOUR OFFER?
A: To tender your shares, you should do the following:
- If you hold shares in your own name, complete and sign the enclosed letter
of transmittal and return it with your share certificates to The Bank of
New York, the exchange agent for the offer, at the appropriate address
specified on the back cover page of this prospectus before the expiration
date of the offer.
- If you hold your shares in "street name" through a broker, instruct your
broker to tender your shares before the expiration date.
2
<PAGE>
For more information on the timing of the offer, extensions of the offer
period and your rights to withdraw your shares from the offer before the
expiration date, please refer to "The Offer" beginning on page 17.
Q: WILL I BE TAXED ON THE GE COMMON STOCK THAT I RECEIVE?
A: While there can be no assurances, Harmon stockholder's receipt of GE common
stock in the offer or the merger should be tax-free for United States federal
income tax purposes (except for taxes resulting from the receipt of cash instead
of any fraction of a share of GE common stock), if:
- the offer and the merger are completed under the current terms of the
merger agreement,
- the minimum tender condition for the offer is satisfied, and
- the merger is completed promptly after the offer.
For more information on the tax consequences of the offer, please refer to
"The Offer--Certain Federal Income Tax Consequences" beginning on page 22. We
encourage you to consult your tax advisor on the consequences to you of
participation in the offer or the merger.
Q: DO THE STATEMENTS ON THE COVER PAGE REGARDING THIS PROSPECTUS BEING SUBJECT
TO CHANGE AND THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION NOT YET BEING EFFECTIVE MEAN THAT THE OFFER HAS NOT
COMMENCED?
A: No. Effectiveness of the registration statement is not necessary for the
offer to commence. The SEC recently changed its rules to permit exchange offers
to begin before the related registration statement has become effective, and we
are taking advantage of the rule changes with the goal of acquiring Harmon
faster than similar acquisitions could previously have been accomplished. We
cannot, however, accept for exchange any shares tendered in the offer until the
registration statement is declared effective by the SEC and the other conditions
to our offer have been satisfied or, where permissible, waived. The offer will
commence when we mail this prospectus and the related letter of transmittal to
Harmon stockholders.
Q: IS GE'S FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER MY SHARES IN
THE OFFER?
A: Yes. Shares of Harmon accepted in the offer will be exchanged for shares of
GE common stock and so you should consider our financial condition before you
decide to become one of our stockholders through the offer. In considering GE's
financial condition, you should review the documents incorporated by reference
in this prospectus because they contain detailed business, financial and other
information about us.
Q: WHERE CAN I FIND OUT MORE INFORMATION ABOUT GE AND HARMON?
A: You can find out information about GE and Harmon from various sources
described under "Where You Can Find More Information" on page 5.
Q: WILL HARMON CONTINUE AS A PUBLIC COMPANY?
A: No. If the merger occurs, Harmon will no longer be publicly owned. Even if
the merger does not occur, if we purchase all the tendered shares, there may be
so few remaining Harmon shareholders and publicly held Harmon shares that the
shares may no longer be eligible to be quoted on the Nasdaq or other securities
markets, there may not be a public trading market for the shares and Harmon may
cease making filings with the SEC or otherwise cease being required to comply
with SEC rules relating to publicly held companies.
3
<PAGE>
Q: IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
A: If you decide not to tender your shares in the offer and the merger occurs,
you will receive in the merger the same fraction of a GE share per Harmon share
you own as if you had tendered your shares in the offer, without interest. In
connection with the merger, Harmon stockholders have a right to dissent and
demand appraisal of their Harmon shares.
Q: WHO CAN I CALL WITH QUESTIONS ABOUT THE OFFER?
A: You can contact our information agent, Morrow & Co., Inc., collect at
1-212-754-8000 or toll-free at 1-800-566-9061.
4
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
GE and Harmon file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission under the
Securities Exchange Act of 1934. You may read and copy this information at the
following locations of the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room North East Regional Office Midwest Regional Office
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates.
The SEC also maintains a web site that contains reports, proxy statements
and other information about issuers, like GE and Harmon, who file electronically
with the SEC. The address of that site is www.sec.gov.
You may also obtain information about GE, including printer-friendly
versions of GE's SEC reports, at http://www.ge.com.
You can also inspect reports, proxy statements and other information about
GE at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
We filed a registration statement on Form S-4 to register with the SEC the
GE common stock to be issued pursuant to the offer and the merger. This
prospectus is a part of that registration statement. As allowed by SEC rules,
this prospectus does not contain all the information you can find in the
registration statement or the exhibits to the registration statement. In
addition, we also filed with the SEC a statement on Schedule TO pursuant to
Rule 14d-3 under the Securities Exchange Act of 1934 to furnish certain
information about the offer. You may obtain copies of the Form S-4 and the
Schedule TO (and any amendments to those documents) in the manner described
above.
Harmon has filed with the SEC a Solicitation/Recommendation on
Schedule 14D-9 regarding the offer. You may obtain a copy of the Schedule 14D-9
(and any amendments to that document) in the manner described above.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information contained directly in this prospectus.
This prospectus incorporates by reference the documents set forth below that GE
and Harmon have previously filed with the SEC. These documents contain important
information about GE and Harmon and their financial condition.
<TABLE>
<CAPTION>
GE SEC FILINGS PERIOD
-------------- ------
<S> <C>
Annual Report on Form 10-K...................... Year ended December 31, 1999, as filed on
March 17, 2000
Quarterly Report on Form 10-Q................... Quarter ended March 31, 2000, as filed on
May 15, 2000
Current Report on Form 8-K...................... Filed on May 1, 2000
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
HARMON SEC FILINGS PERIOD
------------------ ------
<S> <C>
Annual Report on Form 10-K...................... Year ended December 31, 1999, as filed on
March 28, 2000
Quarterly Report on Form 10-Q................... Quarter ended March 31, 2000, as filed on
May 1, 2000
Current Report on Form 8-K...................... July 17, 2000
The description of Harmon's common stock set
forth in Harmon's registration statement on Form
8-A filed pursuant to Section 12 of the
Securities Exchange At of 1934, including any
amendment or report filed with the SEC for the
purpose of updating this description............ Filed on April 14, 1999
</TABLE>
All documents filed by GE and Harmon pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 from the date of this prospectus to
the date that shares are accepted for exchange pursuant to our offer (or the
date that our offer is terminated) shall also be deemed to be incorporated
herein by reference.
DOCUMENTS INCORPORATED BY REFERENCE ARE AVAILABLE FROM US WITHOUT CHARGE
UPON REQUEST TO OUR INFORMATION AGENT, MORROW & CO., INC. 445 PARK AVENUE, 5TH
FLOOR, NEW YORK, NEW YORK 10022, COLLECT AT 1-212-754-8000 OR TOLL-FREE AT
1-800-566-9061. IF YOU REQUEST ANY INCORPORATED DOCUMENTS FROM US, WE WILL MAIL
THEM TO YOU BY FIRST CLASS MAIL, OR ANOTHER EQUALLY PROMPT MEANS, WITHIN ONE
BUSINESS DAY AFTER WE RECEIVE YOUR REQUEST.
We have not authorized anyone to give any information or make any
representation about our offer that is different from, or in addition to, that
contained in this prospectus or in any of the materials that we have
incorporated by reference into this prospectus. Therefore, if anyone does give
you information of this sort, you should not rely on it. If you are in a
jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document are unlawful, or
if you are a person to whom it is unlawful to direct these types of activities,
then the offer presented in this document does not extend to you. The
information contained in this document speaks only as of the date of this
document unless the information specifically indicates that another date
applies.
6
<PAGE>
SUMMARY
This brief summary does not contain all of the information that should be
important to you. You should carefully read this entire document and the other
documents to which this document refers you to fully understand the offer. See
"Where You Can Find More Information" on page 5.
THE OFFER (PAGE 17)
We propose to acquire Harmon. We are offering to exchange a fraction of a
share of GE common stock having a value of $30.00, determined as described
below, for each share of Harmon common stock, including the associated rights to
purchase common stock, validly tendered and not properly withdrawn. The fraction
of a share of GE common stock to be exchanged for each share of Harmon common
stock will equal $30 divided by the average of the daily volume-weighted sales
prices per share of GE common stock on the New York Stock Exchange for each of
the 10 consecutive trading days ending on the second trading day before the date
on which Harmon shares are accepted for payment in the offer.
We intend, promptly after completion of the offer, to merge Acquiror, our
wholly owned subsidiary, with and into Harmon. Each share of Harmon common stock
which has not been exchanged or accepted for exchange in the offer would be
converted in the merger into the same fraction of a share of GE common stock as
is paid in the offer.
INFORMATION ABOUT GE AND HARMON (PAGE 14)
GENERAL ELECTRIC COMPANY
3135 Easton Turnpike
Fairfield, Connecticut 06431-0001
(203) 373-2111
GE is one of the world's largest and most diversified industrial
corporations. GE has engaged in developing, manufacturing and marketing a wide
variety of products for the generation, transmission, distribution, control and
utilization of electricity since its incorporation in 1892. Over the years, GE
has developed or acquired new technologies or services that have broadened
considerably the scope of its activities.
GE's products include major appliances; lighting products; industrial
automation products; medical diagnostic imaging equipment; motors; electrical
distribution and control equipment; locomotives; power generation and delivery
products; nuclear power support services and fuel assemblies; commercial and
military aircraft jet engines; and engineered materials, such as plastics,
silicones and superabrasive industrial diamonds.
GE's services include product services; electrical product supply houses;
electrical apparatus installation, engineering, repair and rebuilding services;
and computer-related information services. Through its affiliate, the National
Broadcasting Company, Inc., GE delivers network television services, operates
television stations, and provides cable programming and distribution services.
Through another affiliate, GE Capital Services, Inc., GE offers a broad array of
financial and other services, including consumer financing, commercial and
industrial financing, real estate financing, asset management and leasing,
mortgage services, consumer savings and insurance services, specialty insurance
and reinsurance, and satellite communications.
Following completion of the merger, Harmon will become part of GE Harris
Railway Electronics, a joint venture between GE Transportation Systems ("GETS")
and Harris Corporation. GETS, headquartered in Erie, PA, is one of the major
business units of GE and is a global supplier of surface transportation products
and services including freight and passenger locomotives and maintenance
service, global railroad services such as remote monitoring and diagnostics,
railway control and
7
<PAGE>
communications systems, propulsion and auxiliary power systems for transit
vehicles and motorized drive systems for mining trucks.
Our home page on the Internet is www.ge.com. You can learn more about us by
visiting that site.
HARMON INDUSTRIES, INC.
1600 NE Coronado Dr.
Blue Springs, Missouri 64015-6236
(816) 229-3345
Harmon is a leading supplier of signal, inspection, train control and
communications products, systems and services to freight and transit railroads
throughout the world. Harmon sells its products to Class I and short line
freight railroads and to rail transit systems. Harmon designs, manufactures,
markets and services a broad line of products beneficial to the operating
efficiency and safety of its customers. The products include an extensive line
of railroad signal, train control and communications systems and related
components and services. It also provides customized asset management services
through a warehousing and distribution business.
DIVIDEND POLICY OF GE (PAGE 45)
The holders of GE common stock receive dividends if and when declared by the
GE board of directors out of legally available funds. In 1999, we paid dividends
on our common stock at a rate of approximately 44.7% of consolidated earnings,
amounting to a cash dividend of $.48 2/3 per common share. Following completion
of the offer and the merger, we expect to continue paying quarterly cash
dividends on a basis consistent with our past practice. However, the declaration
and payment of dividends will depend upon business conditions, operating results
and our board of directors consideration of other relevant factors. No assurance
can be given that we will continue to pay dividends on our common stock in the
future.
THE OFFER (PAGE 17)
CONDITIONS OF THE OFFER
Our obligation to exchange shares of our common stock for Harmon shares
pursuant to the offer is subject to several conditions referred to below under
"The Offer--Conditions Of Our Offer," including conditions that require that a
minimum of two-thirds of the outstanding shares of Harmon common stock be
tendered and that all required regulatory approvals are received.
TIMING OF THE OFFER
Our offer is currently scheduled to expire on August 21, 2000; however, we
will extend our offer from time to time as necessary until all the conditions to
the offer have been satisfied or, where permissible, waived. See "The
Offer--Extension, Termination And Amendment."
EXTENSION, TERMINATION AND AMENDMENT
If the conditions to the offer are not satisfied or waived on any scheduled
expiration date of the offer and the conditions could reasonably be expected to
be satisfied, we will extend the offer from time to time for such amount of time
as is reasonably necessary to permit such conditions to be satisfied or waived;
PROVIDED that (a) no single extension shall exceed 10 business days and (b) we
will not be required to extend the offer beyond November 30, 2000. If we extend
our offer, we will make an announcement to that effect 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 Harmon shares previously
tendered and not properly withdrawn will remain subject to the offer, subject to
your right to withdraw your Harmon shares.
8
<PAGE>
We reserve the right, in our sole discretion (subject to the provisions of
the merger agreement), at any time or from time to time, (a) to extend the offer
for any period required by any rule or regulation of the SEC applicable to the
offer and (b) if more than two-thirds but less than 90% of the outstanding
shares shall have been validly tendered pursuant to the offer as of the
scheduled or extended expiration date, to extend the offer for an aggregate
period of not more than ten business days beyond the latest expiration date that
would otherwise be permitted under clause (a) of this sentence.
We reserve the right to increase the exchange ratio or to make any other
changes in the terms and conditions of the offer; PROVIDED, HOWEVER, that
(a) the minimum condition may be amended or waived only with the prior written
consent of Harmon and (b) no change may be made that changes the form of
consideration to be paid, decreases the price per share or the number of shares
sought in the offer, imposes conditions to the offer in addition to those set
forth in the merger agreement, extends the expiration date of the offer beyond
the initial expiration date of the offer (except as provided above) or makes any
other change that is adverse to the holders of the shares, by giving oral or
written notice of such increase in the exchange ratio or other changes, delay,
termination or amendment to the exchange agent and by making a public
announcement.
We will follow any extension, termination, amendment or delay, as promptly
as practicable, with a public announcement. In the case of an extension, any
such announcement will be issued no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Securities
Exchange Act of 1934, which require that any material change in the information
published, sent or given to stockholders in connection with the offer be
promptly sent to stockholders in a manner reasonably designed to inform
stockholders of such change) and without limiting the manner in which we may
choose to make any public announcement, we assume no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
making a release to the Dow Jones News Service.
EXCHANGE OF SHARES; DELIVERY OF GE COMMON STOCK
Upon the terms and subject to the conditions of our offer (including, if the
offer is extended or amended, the terms and conditions of any extension or
amendment), we will accept for exchange, and will exchange, shares validly
tendered and not properly withdrawn as promptly as practicable after the
expiration date.
WITHDRAWAL RIGHTS
Your tender of Harmon shares pursuant to the offer is irrevocable, except
that Harmon shares tendered pursuant to the offer may be withdrawn at any time
prior to the expiration date, and, unless we previously accepted them pursuant
to the offer, may also be withdrawn at any time after September 23, 2000.
PROCEDURE FOR TENDERING SHARES
For you to validly tender Harmon shares pursuant to our offer, (a) a
properly completed and duly executed letter of transmittal (or manually executed
facsimile of that document), along with any required signature guarantees, or an
agent's message in connection with a book-entry transfer, which is explained
below, and any other required documents, must be transmitted to and received by
the exchange agent at one of its addresses set forth on the back cover of this
prospectus, and certificates for tendered Harmon shares must be received by the
exchange agent at such address, or those Harmon shares must be tendered pursuant
to the procedures for book-entry tender set forth in "The Offer" (and a
confirmation of receipt of such tender received), in each case before the
expiration date, or
9
<PAGE>
(b) you must comply with the guaranteed delivery procedures set forth in "The
Offer--Guaranteed Delivery."
APPROVAL OF THE MERGER (PAGE 37)
If at the end of the offer we have received between two-thirds and 90% of
the outstanding Harmon shares, we will effect a long-form merger as permitted
under Missouri law which would require notice to and approval by Harmon
stockholders. If at the end of the offer, however, we have received 90% or more
of the outstanding Harmon shares, we will effect a short-form merger as
permitted under Missouri law, which would not require approval by any other
stockholders of Harmon.
APPRAISAL RIGHTS (PAGE 25)
The offer does not entitle you to appraisal rights with respect to your
Harmon shares.
Harmon stockholders who did not tender their Harmon shares during the offer
would have the right under Missouri law to dissent and demand appraisal of their
Harmon shares in connection with the merger, but only if they comply with
certain statutory requirements. Information regarding these requirements will be
provided to Harmon stockholders who have not tendered their Harmon shares.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES (PAGE 22)
While there can be no assurances, the offer and the merger should qualify as
a tax-free reorganization for United States federal income tax purposes, if:
- the offer and the merger are completed under the current terms of the
merger agreement,
- the minimum tender condition for the offer is satisfied, and
- the merger is completed promptly after the offer.
Assuming that the offer and the merger qualify as a tax-free reorganization,
a Harmon stockholder's receipt of GE common stock in the offer or the merger
should be tax-free for United States federal income tax purposes (except for
taxes resulting from the receipt of cash, if any, instead of a fraction of a
share of GE common stock). The above described tax treatment of the offer and
the merger to Harmon stockholders depends on, among other things, some facts
that will not be known before the completion of the merger.
See "The Offer--Certain Federal Income Tax Consequences." That discussion
includes a summary of the tax consequences of participation in the offer and the
merger in the event they do not qualify as a tax-free reorganization. Harmon
stockholders are urged to consult their tax advisors on the consequences of
participation in the offer or the merger.
GE WILL ACCOUNT FOR THE OFFER AND THE MERGER USING THE PURCHASE METHOD
(PAGE 32)
GE will account for the offer and the merger as a purchase for financial
reporting purposes. The acquisition of Harmon would not be considered material
to GE and, accordingly, GE is not required to include pro forma financial
information in this prospectus.
10
<PAGE>
GE SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following selected financial data for each of the five years in the
period ended December 31, 1999 have been derived from GE's consolidated
financial statements, which have been audited by KPMG LLP, independent public
accountants. The financial data as of March 31, 2000 and 1999, and for each of
the three-month periods then ended, have been derived from GE's unaudited
condensed consolidated financial statements which include, in management's
opinion, all adjustments, consisting of normal recurring adjustments, necessary
to present fairly the results of operations and financial position of GE for the
periods and dates presented. This data should be read in conjunction with the
respective audited and unaudited consolidated financial statements of GE,
including the notes thereto, incorporated herein by reference.
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
MARCH 31, FOR THE YEAR ENDED DECEMBER 31,
------------------------- ---------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
----------- ----------- ---------- ---------- ---------- ---------- -----------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS DATA:
Revenues............................ $ 29,996 $ 24,165 $ 111,630 $ 100,469 $ 90,840 $ 79,179 $ 70,028
Earnings from continuing
operations........................ 2,592 2,155 10,717 9,296 8,203 7,280 6,573
Net earnings........................ 2,592 2,155 10,717 9,296 8,203 7,280 6,573
Dividends declared.................. 1,347 1,146 4,786 4,081 3,535 3,138 2,838
Earned on average share owner's
equity............................ 6.0% 5.5% 26.8% 25.7% 25.0% 24.0% 23.5%
Per Share Earnings from continuing
operations basic (post-split)..... $ .26 $ .22 $ 1.09 $ .95 $ .83 $ .73 $ .65
Net earnings basic (post-split)..... .26 .22 1.09 .95 .83 .73 .65
Net earnings diluted (post-split)... .26 .22 1.07 .93 .82 .72 .64
Dividends declared (post-split)..... $ .13 2/3 $ .11 2/3 $ .48 2/3 $ .41 2/3 $ .36 $ .31 2/3 $ .28 1/6
BALANCE SHEET DATA:
Total assets of continuing
operations........................ 421,637 361,736 405,200 355,935 304,012 272,402 228,035
Long-term borrowings................ 73,413 60,502 71,427 59,663 46,603 49,246 51,027
Shares outstanding average (in
thousands) (post-split)........... 9,870,345 9,816,728 9,833,478 9,806,995 9,824,075 9,922,182 10,102,871
</TABLE>
11
<PAGE>
HARMON SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
The following selected financial data for each of the five years in the
period ended December 31, 1999 have been derived from Harmon's consolidated
financial statements, which have been audited by KPMG LLP, independent public
accountants. The financial data as of March 31, 2000 and 1999, and for each of
the three-month periods then ended, have been derived from Harmon's unaudited
condensed consolidated financial statements which include, in management's
opinion, all adjustments, consisting of normal recurring adjustments, necessary
to present fairly the results of operations and financial position of Harmon for
the periods and dates presented. This data should be read in conjunction with
the respective audited and unaudited consolidated financial statements of
Harmon, including the notes thereto, incorporated herein by reference.
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
MARCH 31, FOR THE YEAR ENDED DECEMBER 31,
------------------------- ----------------------------------------------------
2000(A) 1999 1999 1998 1997 1996 1995
----------- ----------- -------- -------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS DATA:
Net sales.................................... $ 79,264 $ 58,953 $304,377 $265,219 $213,530 $175,440 $136,780
Cost of sales................................ 62,738 44,329 237,061 199,519 156,224 126,997 96,094
Earnings before income taxes, minority
interest and cumulative effect of
accounting change.......................... 2,447 2,021 1,879 21,049 17,583 15,105 11,180
Earnings before cumulative effect of
accounting change.......................... 1,528 1,203 846 13,402 10,961 9,330 6,886
Cumulative effect of accounting change, net
of tax ($310)(a)........................... 505 -- -- -- -- -- --
Net earnings................................. 2,033 1,203 846 13,402 10,961 9,330 6,886
Earnings before cumulative effect of
accounting change
Basic.................................... 0.13 0.11 .08 1.27 1.06 .91 .68
Diluted.................................. 0.13 0.11 .08 1.25 1.06 .91 .67
Net earnings
Basic.................................... $ 0.18 $ 0.11 $ .08 $ 1.25 $ 1.06 $ .91 $ .68
Diluted.................................. $ 0.18 $ 0.11 $ .08 $ 1.25 $ 1.06 $ .91 $ .67
BALANCE SHEET DATA:
Working capital.............................. $ 89,741 $ 75,711 $ 79,301 $ 55,864 $ 50,323 $ 33,629 $ 35,014
Net property, plant and equipment............ 34,532 29,231 33,707 26,575 24,029 17,932 14,177
Total assets................................. 272,973 199,242 270,975 162,853 135,769 104,677 86,845
Long-term debt............................... 74,700 54,891 67,896 19,540 15,456 3,412 12,090
Common stockholders' equity.................. 95,366 89,304 93,634 84,958 69,762 57,939 49,232
Shares outstanding........................... 11,378 10,895 11,369 10,662 10,437 10,244 10,208
</TABLE>
------------------------------
(a) Effective January 1, 2000, Harmon changed its method of applying certain
overhead costs to inventories. Previously, all overhead costs were applied
to inventory during the production process based on labor hours. Under the
new method, certain overhead costs are applied to purchased raw materials at
the time inventory is received based on cost of the related procurement
activities, and the remaining overhead costs are applied to inventory during
the production process. The change was made to improve the valuation of
inventory by applying overhead costs to inventory as the costs are incurred,
thereby resulting in a better matching of revenues and expenses. The change
in accounting for inventory is recorded as a cumulative effect of a change
in an accounting principle, which had the effect of increasing first quarter
2000 net income by $505 thousand (net of $310 thousand for taxes). This
change had no significant impact on the first quarter 2000 income before
cumulative effect of accounting change. The financial statements have not
been restated to reflect the accounting change. If this newly adopted policy
had been applied in the first quarter of 1999, net income would have been
increased by $121 thousand, net of tax ($0.01 per share).
12
<PAGE>
SIGNIFICANT FACTORS AFFECTING OPERATING RESULTS
Sometimes financial results reported in accordance with GAAP include unusual
or infrequent events and factors which are not expected to occur regularly in
the future. Examples of these events and factors include gains or losses on the
sale of businesses, the costs of completing major acquisitions and of other
business development activities, and the costs of business restructurings.
Certain unusual or infrequent events and transactions, as well as other
significant factors and trends, which may be helpful in understanding the past
performance and future prospects of GE and Harmon, are described briefly below.
The following discussion should be read together with the "Summary Selected
Financial Data" of GE and Harmon included on the previous pages and with the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" of Harmon contained in the annual reports and other information that
Harmon has filed with the SEC, and with the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" of GE contained in
the annual reports and other information that GE has filed with the SEC. See
"Where You Can Find More Information" on page .
In considering the Selected Historical Financial Data of GE, you should be
aware that:
- the consolidated financial statements represent the combined results of
all companies that GE directly or indirectly controls;
- results of associated companies--generally companies that are 20% to 50%
owned by GE and over which GE, directly or indirectly, has significant
influence--are included in the financial statements on a "one-line" basis;
and
- the consolidated financial statements have been restated to reflect a
two-for-one stock split, which took effect on April 28, 1997, and a
three-for-one stock split, which took effect on April 27, 2000.
In considering the Selected Financial Data of Harmon, you should be aware
that:
In 1999 Harmon initiated a restructuring plan which included the closing of
its manufacturing operations and engineering centers on the U.S. east and west
coasts. Harmon's 1999 results include $9.1 million in special charges
($5.6 million after tax) related to the restructuring program. Harmon estimates
that additional costs relating to the restructuring program will aggregate
approximately $6 to $7 million in 2000, which includes costs of $.8 million
incurred in the first quarter of 2000.
RECENT DEVELOPMENTS
GE
On July 12, 2000, Union Bank of Switzerland (UBS) and Paine Webber
Group, Inc. (PaineWebber) announced that they had entered into a definitive
merger agreement (the UBS merger agreement). GE Capital Services holds
31,523,600 shares of PaineWebber common stock and would realize a pretax gain of
about $1.4 billion if the merger is completed under the terms of the UBS merger
agreement. GE Capital Services has agreed with UBS to vote in favor of the
merger. Fifty percent of the GE Capital Services holdings of PaineWebber
securities are classified as trading securities; changes in the share price of
those securities will be recognized in earnings prior to consummation. Thus, for
example, an increase in the share price of PaineWebber from June 30, 2000 to the
price in the UBS merger agreement would result in recognition of approximately
$0.4 billion of the total pretax gain. The UBS merger agreement is subject to a
number of conditions that are not within the control of GE, resolution of which
will affect the amount and timing of proceeds, if any, realized from the
transaction. At this time, GE management is unable to predict the outcome of
these matters.
13
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth selected historical per share data for GE and
historical and equivalent per share data for Harmon.
We have based the equivalent per share data for Harmon on the GE per share
data, multiplied by 0.57. This represents the fraction of a GE share to be
issued per Harmon share based on the average of the daily volume-weighted sales
prices per GE share on the New York Stock Exchange ("NYSE") for the ten
consecutive trading days ending on July 21, 2000. The average GE price for this
period was approximately $53.
Stockholders should read the information set forth below in conjunction with
the historical consolidated financial data of GE and Harmon incorporated by
reference herein.
The offer and the merger is not a "significant business combination" for GE
under the SEC's rules and regulations. No pro forma financial information has
been included in this prospectus.
<TABLE>
<CAPTION>
HARMON
GE ----------------------
HISTORICAL HISTORICAL EQUIVALENT
---------- ---------- ----------
<S> <C> <C> <C>
QUARTER ENDED MARCH 31, 2000
EPS--basic.................................................. $ 0.26 $ 0.13 $ 0.148
EPS--diluted................................................ $ 0.26 $ 0.13 $ 0.148
Cash dividends declared per share........................... $ 0.13 2/3 $ -- $ 0.078
Book value per share (at end of period)..................... $ 4.50 $ 8.38 $ 2.565
YEAR ENDED DECEMBER 31, 1999
EPS--basic.................................................. $ 1.09 $ 0.08 $ 0.621
EPS--diluted................................................ $ 1.07 $ 0.08 $ 0.610
Cash dividends declared per share........................... $ 0.48 2/3 $ 0.12 $ 0.278
Book value per share (at end of period)..................... $ 4.32 $ 8.24 $ 2.462
</TABLE>
------------------------
Comparative Market Price Information
The following table sets forth the historical closing prices per GE share on
the NYSE and Harmon common share on the Nasdaq National Market ("Nasdaq") on
July 14, 2000, the last trading day prior to the public announcement of the
proposed transaction, and on July 24, 2000, the most recent date for which
prices were available prior to printing this document, and the equivalent
closing price per Harmon share, based on an exchange ratio of 0.57 of a GE share
per Harmon share.
<TABLE>
<CAPTION>
GE HISTORICAL HARMON HISTORICAL HARMON EQUIVALENT
------------- ----------------- -----------------
<S> <C> <C> <C>
July 14, 2000................................... $51.50 $13.19 $29.36
July 24, 2000................................... $53.75 $29.44 $30.64
</TABLE>
Additional market price information is contained on page 45 under the
caption "Comparative Stock Prices and Dividends."
THE COMPANIES
GENERAL ELECTRIC
GE is one of the world's largest and most diversified industrial
corporations. GE has engaged in developing, manufacturing and marketing a wide
variety of products for the generation, transmission, distribution, control and
utilization of electricity since its incorporation in 1892. Over the years, GE
has
14
<PAGE>
developed or acquired new technologies or services that have broadened
considerably the scope of its activities.
GE's products include major appliances; lighting products; industrial
automation products; medical diagnostic imaging equipment; motors; electrical
distribution and control equipment; locomotives; power generation and delivery
products; nuclear power support services and fuel assemblies; commercial and
military aircraft jet engines; and engineered materials, such as plastics,
silicones and superabrasive industrial diamonds.
GE's services include product services; electrical product supply houses;
electrical apparatus installation, engineering, repair and rebuilding services;
and computer-related information services. Through its affiliate, the National
Broadcasting Company, Inc., GE delivers network television services, operates
television stations, and provides cable programming and distribution services.
Through another affiliate, GE Capital Services, Inc., GE offers a broad array of
financial and other services, including consumer financing, commercial and
industrial financing, real estate financing, asset management and leasing,
mortgage services, consumer savings and insurance services, specialty insurance
and reinsurance, and satellite communications.
Following the merger, Harmon will become part of GE Harris Railway
Electronics, a joint venture between GE Transportation Systems (GETS) and Harris
Corporation. GETS, headquartered in Erie, PA, is one of the major business units
of GE and is a global supplier of surface transportation products and services
including freight and passenger locomotives and maintenance service, global
railroad services such as remote monitoring and diagnostics, railway control and
communications systems, propulsion and auxiliary power systems for transit
vehicles and motorized drive systems for mining trucks.
The name, citizenship, business address, business telephone number,
principal occupation or employment, and five-year employment history for each of
the directors and executive officers of GE and Acquiror and certain other
information are set forth in Schedule I hereto. Except as described in this
Prospectus and in Schedule I hereto, none of GE, Acquiror or, to the best
knowledge of such corporations, any of the persons listed on Schedule I to the
Offer of Purchase has during the last five years (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) been a party to any judicial or administrative proceeding (except for
matters that were dismissed without sanction or settlement) that resulted in a
judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws.
GE is headquartered at 3135 Easton Turnpike, Fairfield, Connecticut,
06431-0001, (203) 373-2211.
FOUR POINTS ACQUISITION, INC.
Four Points Acquisition, Inc. ("Acquiror") is a Missouri corporation and a
wholly owned subsidiary of GE. Acquiror was organized on July 14, 2000 solely
for the purposes of acquiring the Harmon shares tendered in the offer and
merging with Harmon in the merger. It has not carried on any activities other
than in connection with the merger agreement.
Acquiror is headquartered at 2901 East Lake Road, Erie, Pennsylvania 16531,
(814) 875-2829.
HARMON
Harmon was incorporated on September 27, 1961 under the laws of the State of
Missouri as Harmon Electronics, Inc. The present name was adopted in July 1972.
Harmon is a leading supplier of signal, inspection, train control and
communications products, systems and services to freight and transit railroads
throughout the world. Harmon sells its products to
15
<PAGE>
Class I and short line freight railroads and to rail transit systems. Harmon
designs, manufactures, markets and services a broad line of products beneficial
to the operating efficiency and safety of its customers.
Harmon is a technology leader focusing primarily on providing solutions to
the rail transportation industry in the areas of electronic signaling and train
control enabling its customers to meet their customers' need to transport people
and freight safely, faster and more cost effectively.
Harmon's products include wayside, satellite and radio-based train control
systems; rail highway grade crossing warning systems; centralized traffic
management and communication system and a variety of services, including
engineering, installation, maintenance featuring remote monitoring, and
training.
Harmon operates from numerous facilities in the U.S., as well as Canada,
England, Italy, Mexico and Australia. Harmon is headquartered at 1600 NE
Coronado Dr., Blue Springs, MO 64015-0236, (816) 229-3345.
REASONS FOR THE OFFER
At a meeting held on July 16, 2000, the Harmon board, by the unanimous vote
of the directors present, approved the merger agreement and the transactions
contemplated thereby, including the offer and the merger, and determined that
the transactions contemplated by the merger agreement, including the offer and
the merger, were fair to and in the best interests of Harmon and its
stockholders. The Harmon board has unanimously recommended that Harmon's
stockholders accept the offer and tender their shares pursuant to the offer.
Information about the recommendation of Harmon's board of directors is more
fully set forth in Harmon's Solicitation/Recommendation Statement on
Schedule 14D-9, which is being mailed to Harmon stockholders together with this
prospectus.
BACKGROUND OF THE OFFER
From time to time, in the regular course of business, GE and Harmon held
discussions regarding possible business ventures in the freight rail industry.
In June 1999 during a discussion of these topics, GE indicated its possible
interest in the acquisition of Harmon. Later that month, GE sent a letter to
Harmon in which it indicated an interest in acquiring Harmon for a price of
$28.50 per share. In October 1999, the parties signed a confidentiality
agreement and GE began a due diligence investigation of Harmon. In November
1999, after discussing their respective businesses and industry conditions, the
parties mutually agreed to terminate discussions.
In June 2000, GE and Harmon held a meeting regarding possible business
ventures in the freight rail industry at which GE again indicated it would
propose the acquisition of Harmon. On June 30, 2000, GE sent a letter to Harmon
in which it proposed the acquisition of Harmon for $30 per share in cash or GE
stock. The letter stated that the proposal would be withdrawn if it were made
public and that the proposal was non-binding.
On July 5, 2000, counsel for Harmon provided a draft merger agreement to GE
and its counsel. During the period of July 6 through July 13, GE conducted a due
diligence review of Harmon, including meetings among senior Harmon management
and representatives of GE (including senior representatives from GE
Transportation Systems). From July 8 through July 16, the parties and their
advisors negotiated the terms of the merger agreement and related agreements.
Late in the evening of July 16, 2000, Harmon and GE signed the merger
agreement and related agreements. Before the markets opened on July 17, 2000,
Harmon and GE issued a press release announcing the transaction.
On July 25, 2000, GE and the Acquiror commenced the offer.
16
<PAGE>
THE OFFER
We are offering to exchange a fraction of a share of GE common stock having
a value of $30.00, determined as described below, for each outstanding share of
Harmon common stock, including the associated rights to purchase common stock,
validly tendered and not properly withdrawn, subject to the terms and conditions
described in this prospectus and the related letter of transmittal.
The fraction of a share of GE common stock for which each share of Harmon
common stock would be exchanged in the offer will be determined by dividing
$30.00 by the average of the daily volume-weighted sales prices per share of GE
common stock on the NYSE for each of the 10 consecutive trading days in the
period ending on the second trading day before the date on which Harmon shares
are accepted for payment in the offer.
The term "expiration date" means 12:00 midnight, New York City time, on
August 21, 2000, unless we extend the period of time for which the offer is
open, in which case the term "expiration date" means the latest time and date on
which the offer, as so extended, expires.
You will not receive any fractional shares of GE common stock. Instead, you
will receive cash in an amount equal to the market value of any fractional
shares you would otherwise have been entitled to receive.
If you are the record owner of your shares and you tender your shares
directly to the exchange agent, you will not be obligated to pay any charges or
expenses of the exchange agent or any brokerage commissions. If you own your
shares through a broker or other nominee, and your broker tenders the shares on
your behalf, your broker may charge you a fee for doing so. You should consult
your broker or nominee to determine whether any charges will apply.
We are making this offer in order to acquire all of the outstanding shares
of Harmon common stock. We intend, as soon as possible after completion of the
offer, to have Acquiror merge with Harmon. The purpose of the merger is to
complete the acquisition of all of the Harmon shares not tendered and exchanged
pursuant to the offer. In the merger, each then outstanding share of Harmon
common stock (except for treasury shares of Harmon and shares that we hold for
our own account and dissenters shares) would be converted into the same fraction
of a share of GE common stock per Harmon share as is paid in the offer, without
interest.
Our obligation to exchange a fraction of a share of GE common stock for
Harmon shares pursuant to the offer is subject to several conditions referred to
below under "The Offer--Conditions Of Our Offer," including the minimum tender
condition, the regulatory approvals condition and other conditions that are
discussed below.
TIMING OF OUR OFFER
Our offer is scheduled to expire at 12:00 midnight, New York City time on
August 21, 2000. For more information, you should read the discussion under the
caption "The Offer--Extension, Termination And Amendment."
EXTENSION, TERMINATION AND AMENDMENT
If the conditions to the offer are not satisfied or waived on any scheduled
expiration date of the offer and such conditions could reasonably be expected to
be satisfied, we will extend the offer, from time to time for such amount of
time as is reasonably necessary to permit such conditions to be satisfied or
waived; PROVIDED that (a) no single extension shall exceed 10 business days and
(b) we will not be required to extend the offer beyond November 30, 2000. If we
decide to so extend our offer, we will make an announcement to that effect no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date.
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During any such extension, all Harmon shares previously tendered and not
properly withdrawn will remain subject to the offer, subject to your right to
withdraw your Harmon shares. You should read the discussion under the caption
"The Offer--Withdrawal Rights" for more details.
We reserve the right, in our sole discretion (subject to the provisions of
the merger agreement), at any time or from time to time,
(a) to extend the offer for any period required by any rule or regulation of
the SEC applicable to the offer, and
(b) if more than two-thirds but less than 90% of the outstanding shares
shall have been validly tendered pursuant to the offer as of the
scheduled or extended expiration date, to extend the offer for an
aggregate period of not more than ten business days beyond the latest
expiration date that would otherwise be permitted under clause (a) of
this sentence.
We reserve the right to increase the exchange ratio or to make any other
changes in the terms and conditions of the offer; PROVIDED, HOWEVER, that
(a) the minimum condition may be amended or waived only with the prior
written consent of Harmon, and
(b) no change may be made that changes the form of consideration to be paid,
decreases the price per share or the number of shares sought in the
offer, imposes conditions to the offer in addition to those set forth in
the merger agreement, extends the expiration date of the offer beyond the
initial expiration date of the offer (except as provided above) or makes
any other change that is adverse to the holders of the Harmon shares.
We will follow any extension, termination, amendment or delay, as promptly
as practicable, with a public announcement. In the case of an extension, any
announcement will be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration date. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the offer be promptly sent to
stockholders in a manner reasonably designed to inform stockholders of the
change) and without limiting the manner in which we may choose to make any
public announcement, we assume no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If we make a material change in the terms of our offer or the information
concerning the offer, or if we waive a material condition of the offer, we will
extend the offer to the extent required under the Exchange Act. If, prior to the
expiration date, we change the percentage of Harmon shares being sought or the
consideration offered to you, that change will apply to all holders whose Harmon
shares are accepted for exchange pursuant to our offer. If at the time notice of
that change is first published, sent or given to you, the offer is scheduled to
expire at any time earlier than the tenth business day from and including the
date that the notice is first so published, sent or given, we will extend the
offer until the expiration of that ten business-day period. For purposes of our
offer, a "business day" means any day other than a Saturday, Sunday or federal
holiday and consists of the time period from 12:01 a.m. through 12:00 midnight,
New York City time.
EXCHANGE OF HARMON SHARES; DELIVERY OF GE COMMON STOCK
Upon the terms and subject to the conditions of our offer (including, if the
offer is extended or amended, the terms and conditions of the extension or
amendment), we will accept for exchange, and will exchange, Harmon shares
validly tendered and not properly withdrawn as promptly as permitted to do so
under applicable law and will pay for the shares of Harmon common stock promptly
thereafter. In all cases, exchange of Harmon shares tendered and accepted for
exchange pursuant to the offer will
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be made only after timely receipt by the exchange agent of certificates for
those Harmon shares (or a confirmation of a book-entry transfer of those Harmon
shares in the exchange agent's account at The Depository Trust Company ("DTC")),
- a properly completed and duly executed letter of transmittal (or a
manually signed facsimile of that document), and
- any other required documents.
For purposes of the offer, we will be deemed to have accepted for exchange
Harmon shares validly tendered and not properly withdrawn when we notify the
exchange agent of our acceptance of the tenders of those Harmon shares pursuant
to the offer. The exchange agent will deliver GE common stock in exchange for
Harmon shares pursuant to the offer and cash instead of fractional shares of GE
common stock as soon as practicable after receipt of our notice. The exchange
agent will act as agent for tendering stockholders for the purpose of receiving
GE common stock and cash to be paid instead of fractional shares of GE common
stock and any additional payment pursuant to the terms of the merger agreement
from us and transmitting such stock and cash to you. You will not receive any
interest on any cash that we pay you, even if there is a delay in making the
exchange.
If we do not accept any tendered Harmon shares for exchange pursuant to the
terms and conditions of the offer for any reason, or if certificates are
submitted for more Harmon shares than are tendered, we will return certificates
for such unexchanged Harmon shares without expense to the tendering stockholder
or, in the case of Harmon shares tendered by book-entry transfer of such Harmon
shares into the exchange agent's account at DTC pursuant to the procedures set
forth below under the discussion entitled "The Offer--Procedure for Tendering,"
those Harmon shares will be credited to an account maintained within DTC, as
soon as practicable following expiration or termination of the offer.
If we increase the consideration offered to Harmon stockholders in the offer
prior to the expiration date, such increased consideration will be given to all
stockholders whose Harmon shares are tendered pursuant to the offer, whether or
not such Harmon shares were tendered or accepted for exchange prior to such
increase in consideration.
CASH INSTEAD OF FRACTIONAL SHARES OF GE COMMON STOCK
We will not issue certificates representing fractional shares of our common
stock pursuant to the offer. Instead, each tendering stockholder who would
otherwise be entitled to a fractional share of our common stock will receive
cash in an amount equal to the product obtained by multiplying (i) the
fractional share interest to which the holder would otherwise be entitled by
(ii) the closing price of the GE common stock on the NYSE (as reported in The
Wall Street Journal, or if not reported therein, any other authoritative source)
on the date Acquiror accepts Harmon shares for payment in the offer.
PROCEDURE FOR TENDERING
For you to validly tender Harmon shares pursuant to the offer, (a) a
properly completed and duly executed letter of transmittal (or manually executed
facsimile of that document), along with any required signature guarantees, or an
agent's message in connection with a book-entry transfer, and any other required
documents, must be transmitted to and received by the exchange agent at one of
its addresses set forth on the back cover of this prospectus, and certificates
for tendered Harmon shares must be received by the exchange agent at such
address or those Harmon shares must be tendered pursuant to the procedures for
book-entry tender set forth below (and a confirmation of receipt of such tender
received (we refer to this confirmation below as a "book-entry confirmation")),
in each case before the expiration date, or (b) you must comply with the
guaranteed delivery procedures set forth below.
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The term "agent's message" means a message, transmitted by DTC to, and
received by, the exchange agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the Harmon shares which are the subject of the
book-entry confirmation, that the participant has received and agrees to be
bound by the terms of the letter of transmittal and that we may enforce that
agreement against the participant.
The exchange agent will establish accounts with respect to the Harmon shares
at DTC for purposes of the offer within two business days after the date of this
prospectus, and any financial institution that is a participant in DTC may make
book-entry delivery of the Harmon shares by causing DTC to transfer such Harmon
shares into the exchange agent's account in accordance with DTC's procedure for
the transfer. However, although delivery of Harmon shares may be effected
through book-entry at DTC, the letter of transmittal (or a manually signed
facsimile thereof), 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 exchange
agent at one or more of its addresses set forth on the back cover of this
prospectus prior to the expiration date, or the guaranteed delivery procedures
described below must be followed.
Signatures on all letters of transmittal must be guaranteed by an eligible
institution, except in cases in which Harmon shares are tendered either by a
registered holder of Harmon shares who has not completed the box entitled
"Special Issuance Instructions" on the letter of transmittal or for the account
of an eligible institution.
If the certificates for Harmon shares are registered in the name of a person
other than the person who signs the letter of transmittal, or if certificates
for unexchanged Harmon shares are to be issued to a person other than the
registered holder(s), the certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names of
the registered owner or owners appear on the certificates, with the signature(s)
on the certificates or stock powers guaranteed in the manner we have described
above.
THE METHOD OF DELIVERY OF HARMON SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT YOUR OPTION AND RISK, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT.
IF DELIVERY IS BY MAIL, WE RECOMMEND REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO
ENSURE TIMELY DELIVERY.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO CASH
RECEIVED PURSUANT TO OUR OFFER, YOU MUST PROVIDE THE EXCHANGE AGENT WITH YOUR
CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY WHETHER YOU ARE SUBJECT TO
BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. SOME STOCKHOLDERS (INCLUDING, AMONG
OTHERS, ALL CORPORATIONS AND SOME FOREIGN INDIVIDUALS) ARE NOT SUBJECT TO THESE
BACKUP WITHHOLDING AND REPORTING REQUIREMENTS. IN ORDER FOR A FOREIGN INDIVIDUAL
TO QUALIFY AS AN EXEMPT RECIPIENT, THE STOCKHOLDER MUST SUBMIT A FORM W-8,
SIGNED UNDER PENALTIES OF PERJURY, ATTESTING TO THAT INDIVIDUAL'S EXEMPT STATUS.
WITHDRAWAL RIGHTS
Your tender of Harmon shares pursuant to the offer is irrevocable, except
that Harmon shares tendered pursuant to the offer may be withdrawn at any time
prior to the expiration date, and, unless we have previously accepted them
pursuant to the offer, may also be withdrawn at any time after September 23,
2000.
For your withdrawal to be effective, the exchange agent must receive from
you a written, telex or facsimile transmission notice of withdrawal at one of
its addresses set forth on the back cover of this prospectus, and your notice
must include your name, address, social security number, the certificate
number(s) and the number of Harmon shares to be withdrawn as well as the name of
the registered
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holder, if it is different from that of the person who tendered those Harmon
shares. If Harmon shares have been tendered pursuant to the procedures for
book-entry tender discussed under the caption entitled "Procedure for
Tendering," any notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawn Harmon shares and must
otherwise comply with DTC's procedures. If certificates have been delivered or
otherwise identified to the exchange agent, the name of the registered holder
and the serial numbers of the particular certificates evidencing the Harmon
shares withdrawn must also be furnished to the exchange agent, as stated above,
prior to the physical release of the certificates. We will decide all questions
as to the form and validity (including time of receipt) of any notice of
withdrawal, in our sole discretion, and our decision shall be final and binding.
A financial institution must guarantee all signatures on the notice of
withdrawal. Most banks, savings and loan associations and brokerage houses are
able to effect these signature guarantees for you. The financial institution
must be a participant in the Securities Transfer Agents Medallion Program, an
"eligible institution," unless those Harmon shares have been tendered for the
account of an eligible institution.
Neither we, the exchange agent, the information agent nor any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or will incur any liability for failure to give any
notification. Any Harmon shares properly withdrawn will be deemed not to have
been validly tendered for purposes of our offer. However, you may retender
withdrawn Harmon shares by following one of the procedures discussed under the
captions entitled "The Offer--Procedure for Tendering" or "The Offer--Guaranteed
Delivery" at any time prior to the expiration date.
GUARANTEED DELIVERY
If you wish to tender Harmon shares pursuant to our offer and your
certificates are not immediately available or you cannot deliver the
certificates and all other required documents to the exchange agent prior to the
expiration date or cannot complete the procedure for book-entry transfer on a
timely basis, your Harmon shares may nevertheless be tendered, so long as all of
the following conditions are satisfied:
(a) you make your tender by or through an eligible institution;
(b) a properly completed and duly executed notice of guaranteed delivery,
substantially in the form made available by us, is received by the
exchange agent as provided below on or prior to the expiration date; and
(c) the certificates for all tendered Harmon shares (or a confirmation of a
book-entry transfer of such securities into the exchange agent's account
at DTC as described above), in proper form for transfer, together with a
properly completed and duly executed letter of transmittal (or a manually
signed facsimile thereof), with any required signature guarantees (or, in
the case of a book-entry transfer, an agent's message) and all other
documents required by the letter of transmittal are received by the
exchange agent within three Nasdaq trading days after the date of
execution of such notice of guaranteed delivery.
You may deliver the notice of guaranteed delivery by hand or transmit it by
facsimile transmission or mail to the exchange agent and you must include a
guarantee by an eligible institution in the form set forth in that notice.
In all cases, we will exchange Harmon shares tendered and accepted for
exchange pursuant to our offer only after timely receipt by the exchange agent
of certificates for Harmon shares (or timely confirmation of a book-entry
transfer of such securities into the exchange agent's account at DTC as
described above), properly completed and duly executed letter(s) of transmittal
(or a manually signed
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facsimile(s) thereof), or an agent's message in connection with a book-entry
transfer, and any other required documents.
By executing a letter of transmittal as set forth above, you irrevocably
appoint our designees as your attorneys-in-fact and proxies, each with full
power of substitution, to the full extent of your rights with respect to your
Harmon shares tendered and accepted for exchange by us and with respect to any
and all other Harmon shares and other securities issued or issuable in respect
of the Harmon shares on or after August 21, 2000. That appointment is effective,
and voting rights will be affected, when and only to the extent that we deposit
the shares of our common stock for Harmon shares that you have tendered with the
exchange agent. All such proxies shall be considered coupled with an interest in
the tendered Harmon shares and therefore shall not be revocable. Upon the
effectiveness of such appointment, all prior proxies that you have given will be
revoked, and you may not give any subsequent proxies (and, if given, they will
not be deemed effective). Our designees will, with respect to the Harmon shares
for which the appointment is effective, be empowered, among other things, to
exercise all of your voting and other rights as they, in their sole discretion,
deem proper at any annual, special or adjourned meeting of Harmon's stockholders
or otherwise. We reserve the right to require that, in order for Harmon shares
to be deemed validly tendered, immediately upon our exchange of those Harmon
shares, we must be able to exercise full voting rights with respect to such
Harmon shares.
We will determine questions as to the validity, form, eligibility (including
time of receipt) and acceptance for exchange of any tender of Harmon shares, in
our sole discretion, and our determination shall be final and binding. We
reserve the absolute right to reject any and all tenders of Harmon shares that
we determine are not in proper form or the acceptance of or exchange for which
may, in the opinion of our counsel, be unlawful. Acquiror expressly reserves the
right to increase the exchange ratio or to make any other changes in the terms
and conditions of the offer; PROVIDED, HOWEVER, that (a) the minimum condition
may be amended or waived only with the prior written consent of Harmon and
(b) no change may be made that changes the form of consideration to be paid,
decreases the price per share or the number of shares sought in the offer,
imposes conditions to the offer in addition to those set forth in the merger
agreement, extends the expiration date of the offer beyond the initial
expiration date of the offer (except as provided above) or makes any other
change which is adverse to the holders of the shares. No tender of Harmon shares
will be deemed to have been validly made until all defects and irregularities in
tenders of Harmon shares have been cured or waived. Neither we, the exchange
agent, the information agent nor any other person will be under any duty to give
notification of any defects or irregularities in the tender of any Harmon shares
or will incur any liability for failure to give any such notification. Our
interpretation of the terms and conditions of our offer (including the letter of
transmittal and instructions thereto) will be final and binding.
The tender of Harmon shares pursuant to any of the procedures described
above will constitute a binding agreement between us and you upon the terms and
subject to the conditions of the offer.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain United States federal income
tax consequences to Harmon stockholders that exchange Harmon common stock for GE
common stock pursuant to the offer and the merger. This discussion is based on
provisions of the Internal Revenue Code of 1986, as amended, Treasury
regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all as in effect as of the date hereof and all of which
are subject to change, possibly with retroactive effect. This discussion does
not address all aspects of United States federal income taxation that may be
applicable to Harmon stockholders in light of their particular circumstances or
to Harmon stockholders subject to special treatment under United States federal
income tax law (including, without limitation, partnerships, foreign persons who
may be subject to tax under the provisions of the Foreign Investment in Real
Property Tax Act of 1980, certain financial institutions, insurance
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companies, tax-exempt entities, dealers in securities, traders in securities
that elect to apply a mark-to-market method of accounting, certain U.S.
expatriates, persons that hold Harmon common stock as part of a straddle, hedge,
conversion transaction or other integrated investment, Harmon stockholders whose
functional currency is not the United States dollar and Harmon stockholders who
acquired Harmon common stock through the exercise of employee stock options or
otherwise as compensation).
This discussion is limited to Harmon stockholders that hold their Harmon
common stock as capital assets and does not consider the tax treatment of Harmon
stockholders that hold Harmon common stock through a partnership or other
pass-through entity. Furthermore, this summary does not discuss any aspect of
state, local or foreign taxation or any aspect of the Foreign Investment in Real
Property Tax Act of 1980.
In the opinion of Cahill Gordon & Reindel, special tax counsel to GE, while
there can be no assurances, the offer and the merger should be treated for
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code (and GE and Harmon should be included as parties to
that reorganization within the meaning of Section 368(b) of the Code) if the
following factual assumptions (which we refer to as the supporting conditions)
are met:
- the offer and the merger are completed under the current terms of the
merger agreement;
- the minimum tender condition for the offer is satisfied; and
- the merger is completed promptly after the offer.
In addition to the supporting conditions, the opinion of Cahill Gordon &
Reindel has relied on factual assumptions based on representations and covenants
made by GE and Harmon, including those contained in certificates of officers of
GE and Harmon, and has also assumed the absence of changes in facts or in law
between the date of this prospectus and the effective time of the merger. If any
of those representations, covenants or assumptions is inaccurate, the tax
consequences of the offer and the merger could differ materially from those
summarized below under "Certain Federal Income Tax Consequences If the Offer and
Merger Qualify As a Reorganization." In addition, the ability to satisfy the
supporting conditions, and therefore the federal income tax consequences of the
offer and the merger, depend in part on facts that will not be available before
the completion of the merger. There can be no assurance that the merger will be
completed, or that the supporting conditions will be satisfied. If the
supporting conditions are not satisfied, the opinion of Cahill Gordon & Reindel
that the offer and merger should be treated as a reorganization cannot be relied
upon and the tax consequences of the offer and/or the merger could differ
materially from those summarized below under "The Offer--Certain Federal Income
Tax Consequences If the Offer and Merger Qualify As a Reorganization." See "The
Offer--Certain Federal Income Tax Consequences If the Offer and Merger Do Not
Qualify As a Reorganization." Cahill Gordon & Reindel's opinion neither binds
the IRS nor precludes the IRS or the courts from adopting a contrary position.
Because the parties do not intend to request a ruling from the IRS with respect
to the offer and the merger, we cannot be certain that the IRS will not
challenge the conclusions in this opinion or that a court will not sustain such
challenge.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES IF THE OFFER AND MERGER QUALIFY AS A
REORGANIZATION. Assuming that the offer and the merger qualify as a tax-free
reorganization, for federal income tax purposes:
- A holder of Harmon shares will not recognize any gain or loss upon its
exchange in the offer or the merger of its Harmon shares for GE common
stock.
- If a holder of Harmon shares receives cash instead of a fraction of a
share of GE common stock, the holder will be required to recognize gain or
loss, measured by the difference between the amount of cash received
instead of that fraction of a share and the portion of the tax basis
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of that holder's Harmon shares allocable to that fraction of a share. This
gain or loss will be capital gain or loss provided such Harmon shares were
held as a capital asset, and will be long-term capital gain or loss if the
holder had held the Harmon shares exchanged for that fraction of a share
of GE common stock for more than one year at the time such Harmon shares
are accepted in the offer or at the effective time of the merger, as the
case may be.
- A holder of Harmon shares will have a tax basis in the GE common stock
received in the offer or the merger equal to (1) the tax basis in the
Harmon shares surrendered by that holder in the offer or merger, reduced
by (2) any tax basis in such Harmon shares that is allocable to a fraction
of GE common stock for which cash is received.
- The holding period for GE common stock received in exchange for Harmon
shares in the offer or the merger will include the holding period for
Harmon shares surrendered in the offer or the merger, provided such Harmon
shares were held as a capital asset.
- Under specified circumstances, holders of Harmon shares may be entitled to
appraisal rights in connection with the merger. See "The Offer--Purpose of
Our Offer; The Merger; Appraisal Rights" below. If appraisal rights are
available and a holder of Harmon shares receives cash pursuant to the
exercise of appraisal rights, such holder will recognize gain or loss,
measured by the difference between the amount realized and such holder's
tax basis in such Harmon shares. A holder of Harmon shares who exercises
appraisal rights is urged to consult his own tax advisor.
- Harmon will not recognize gain or loss as a result of the offer and the
merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES IF THE OFFER AND MERGER DO NOT
QUALIFY AS A REORGANIZATION. The tax consequences described above are based on
factual assumptions, including the satisfaction of the supporting conditions. If
those factual assumptions are not satisfied, the federal income tax consequences
of the offer and the merger to holders of Harmon shares could differ materially
from those summarized above under "Certain Federal Income Tax Consequences If
the Offer and Merger Qualify As a Reorganization." In that event, exchanges by
Harmon stockholders pursuant to the offer and/or the merger could be taxable
transactions for federal income tax purposes depending on the particular facts
surrounding the offer and/or the merger, some of which may not be available
before the completion of the merger or later points in time. If the offer and/or
the merger is taxable, each Harmon stockholder realizing gain on the exchange of
Harmon shares for GE common stock in the offer and/or the merger, as applicable,
will recognize gain, measured by the difference between the fair market value of
the GE common stock (together with any cash instead of a fraction of GE common
stock) received by such stockholder and such stockholder's tax basis in the
Harmon shares surrendered. This gain will be capital gain provided such Harmon
shares were held as a capital asset, and will be long-term capital gain if such
stockholder had held such Harmon shares for more than one year at the time such
Harmon shares are accepted in the offer or at the effective time of the merger,
as the case may be. Each Harmon stockholder realizing loss on the exchange of
Harmon shares for GE common stock in the offer and/or the merger, as applicable,
should consult his own tax advisor concerning the treatment of such loss in
light of the wash sales rules of section 1091 of the Code.
We urge each holder of Harmon shares to consult his own tax advisor to
determine the particular United States federal, state, local or foreign income
or other tax consequences to him of participation in the offer or the merger.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY AND DOES NOT PURPORT
TO BE A COMPLETE ANALYSIS OR LISTING OF ALL POTENTIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE OFFER AND THE MERGER. HARMON STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL, STATE, LOCAL
AND FOREIGN INCOME OR OTHER TAX CONSEQUENCES OF PARTICIPATION IN THE OFFER OR
THE MERGER TO THEM.
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PURPOSE OF OUR OFFER; THE MERGER; APPRAISAL RIGHTS
PURPOSE. We are making the offer and the merger in order to acquire all of
the outstanding shares of Harmon common stock. We intend, as soon as practicable
after completion of the offer, to have Acquiror merge with and into Harmon. The
purpose of the merger is to acquire all Harmon shares not tendered and exchanged
pursuant to the offer. In the merger, each then outstanding Harmon share (except
for Harmon shares held in Harmon's treasury and Harmon shares that we hold for
our own account and dissenters shares) would be converted into the right to
receive the same fraction of a share of GE common stock as is paid in the offer.
APPROVAL OF THE MERGER. Under Sections 351.410 and 351.425 of the Missouri
General and Business Corporation Law ("MGBCL"), the approval of the board of
directors of Harmon and the affirmative vote of the holders of two-thirds of its
outstanding shares entitled to vote are required to approve and adopt a merger
and a merger agreement. The Harmon board of directors has previously approved
the merger. Accordingly, if we complete the offer (after satisfaction of the
minimum tender condition), we would have a sufficient number of Harmon shares to
approve the merger without the affirmative vote of any other holder of Harmon
shares. Therefore, unless the merger is consummated in accordance with the
short-form merger provisions under the MGBCL described below (in which case no
action by the stockholders of Harmon, other than GE, will be required to
consummate the merger), the only remaining corporate action of Harmon will be
the approval and adoption of the merger agreement by the affirmative vote of the
holders of two-thirds of the outstanding Harmon shares entitled to vote.
POSSIBLE SHORT-FORM MERGER. Section 351.447 of the MGBCL would permit the
merger to occur without a vote of Harmon's stockholders (a "short-form merger")
if GE were to acquire at least 90% of the outstanding Harmon shares in the offer
or otherwise (including as a result of purchases by GE during any subsequent
offering period). If however, GE does not acquire at least 90% of the then
outstanding Harmon shares pursuant to the offer or otherwise, and a vote of
Harmon's stockholders is required under the MGBCL, a longer period of time will
be required to effect the merger. GE has agreed in the merger agreement to
effect the merger at the earliest practicable time, and if it obtains ownership
of 90% of the outstanding Harmon shares in the offer, to effect the merger as a
short-form merger.
APPRAISAL RIGHTS. Harmon stockholders do not have appraisal rights in
connection with the offer. If at the end of the offer we have received between
two-thirds and 90% of the outstanding Harmon shares, we will effect a long-form
merger as permitted under Missouri law which would require notice to and
approval by Harmon stockholders. If at the end of the offer, however, we have
received 90% or more of the outstanding Harmon shares, we will effect a
short-form merger as permitted under Missouri law. Harmon stockholders who did
not tender their Harmon shares during the offer would have the right under
Missouri law to dissent and demand appraisal of their Harmon shares in
connection with the long-form or short-form merger, but only if they comply with
certain statutory requirements. Information regarding these requirements will be
provided to Harmon stockholders who have not tendered their Harmon shares.
CONDITIONS OF OUR OFFER
The offer is subject to a number of conditions, which are described below:
MINIMUM TENDER CONDITION
There must be validly tendered and not properly withdrawn prior to the
expiration of the offer a number of Harmon shares which will constitute at least
two-thirds of the total number of outstanding Harmon shares on a fully diluted
basis (as though all options or other securities convertible into or exercisable
or exchangeable for Harmon shares prior to the merger had been so converted,
exercised or exchanged) as of the date that we accept the Harmon shares pursuant
to our offer. Based on information supplied by Harmon, the number of Harmon
shares needed to satisfy the minimum tender condition would have been 8,059,784
as of July 24, 2000.
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ANTITRUST CONDITION
This condition requires that any applicable waiting periods under the HSR
Act or similar statutes or regulations of foreign jurisdictions have expired or
been terminated.
REGISTRATION STATEMENT EFFECTIVENESS CONDITION
The registration statement on Form S-4 of which this prospectus is a part
must have become effective under the Securities Act and not be the subject of
any stop order or proceedings seeking a stop order.
OTHER CONDITIONS OF THE OFFER
The offer is also subject to the conditions that, at the time of the
expiration date of the offer, the following shall have occurred and be
continuing:
(1) There shall not have been instituted or pending any action, proceeding
or litigation by any governmental entity which directly or indirectly
seeks to (i) prevent, prohibit, or make illegal, the acceptance for
payment, payment for or purchase of Harmon shares by GE, Acquiror or any
other affiliate of GE or the consummation of the offer, the merger or the
other transactions contemplated by the merger agreement, (ii) render
Acquiror unable to accept for payment, pay for or purchase some or all of
the Harmon shares, (iii) impose material limitations on the ability of GE
effectively to exercise full rights of ownership of the Harmon shares,
including the right to vote the Harmon shares purchased by it on all
matters properly presented to Harmon's stockholders or (iv) impose
material damages in connection with the transactions contemplated by the
merger agreement,
(2) There shall not have been any statute, rule, regulation, legislation or
interpretation enacted, promulgated, amended, issued or deemed applicable
to (i) GE, Harmon or any of their respective subsidiaries or an affiliate
of either GE or Harmon, or (ii) any transaction contemplated by the
merger agreement, by any United States or non-United States legislative
body or governmental entity with appropriate jurisdiction (other than the
routine application of the waiting period provisions of the HSR Act or
similar statutes or regulations of foreign jurisdictions applicable to
the offer or the merger) that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses
(i) through (iv) of paragraph (1) above,
(3) There shall not have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the NYSE (other than a
shortening of trading hours or any coordinated trading halt triggered
solely as a result of a specified increase or decrease in a market
index), (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, or (iii) any
limitation (whether or not mandatory) by any government or governmental
entity on the extension of credit by banks or other lending institutions,
(4) (i) The representations and warranties of Harmon contained in the merger
agreement shall be true and correct (except to the extent that the
aggregate of all breaches would not have a material adverse effect on
Harmon), at the date of the merger agreement and as of the consummation
of the offer (except to the extent the representations specifically
relate to an earlier date, in which case the representations shall be
true and correct as of that date, and subject to the material adverse
effect qualification above), (ii) Harmon shall not have failed to perform
in all material respects its covenants and obligations contained in the
merger agreement, which failure to perform has not been cured within ten
business days after giving written notice to Harmon or (iii) except as
disclosed by Harmon or in its SEC filings, no events or changes shall
have occurred since March 31, 2000 which constitute a material adverse
effect on Harmon,
(5) The Harmon board shall not have withdrawn, or modified or changed in a
manner adverse to GE and the Acquiror (including by amendment of the
Schedule 14D-9 filed by Harmon), its
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recommendation of the offer, the merger agreement or the merger or the
Harmon board shall not have resolved to do any of the foregoing, and
(6) The merger agreement shall not have been terminated in accordance with
its terms,
which in the reasonable judgment of GE, in any such case, and regardless of the
circumstances (including any action or inaction by GE) giving rise to such
condition makes it inadvisable to proceed with the offer or the acceptance for
payment of or payment for the shares.
The conditions to the offer are for the sole benefit of GE and Acquiror and
may be waived by GE and Acquiror, in whole or in part at any time and from time
to time, in the sole discretion of GE and Acquiror. The failure by GE and
Acquiror at any time to exercise any of the foregoing rights shall not be deemed
a waiver of any right and each right shall be deemed an ongoing right which may
be asserted at any time and from time to time. We may, in our sole discretion,
waive these conditions in whole or in part, other than the minimum tender
condition (which may only be waived with Harmon's prior written consent),
PROVIDED, HOWEVER, that no change may be made that changes the form of
consideration to be paid, decreases the price per share or the number of shares
sought in the offer, imposes conditions to the offer in addition to those set
forth above, extends the expiration date of the offer beyond the initial
expiration date of the offer (except as provided in the merger agreement) or
makes any other change which is adverse to the holders of the shares.
REGULATORY APPROVALS
Except as set forth herein, we are not aware of any licenses or regulatory
permits that appear to be material to the business of Harmon and its
subsidiaries, taken as a whole, and that might be adversely affected by our
acquisition of Harmon shares in the offer. In addition, except as set forth
herein, we are not aware of any filings, approvals or other actions by or with
any governmental authority or administrative or regulatory agency that would be
required for our acquisition or ownership of the Harmon shares. Should any such
approval or other action be required, we expect to seek such approval or action,
except as described under "State Takeover Laws." Should any such approval or
other action be required, we cannot be certain that we would be able to obtain
any such approval or action without substantial conditions or that adverse
consequences might not result to Harmon's or its subsidiaries' businesses, or
that certain parts of Harmon's, GE's or any of their respective subsidiaries'
businesses might not have to be disposed of or held separate in order to obtain
such approval or action. In that event, subject to the provisions of the merger
agreement, we may not be required to purchase any Harmon shares in the offer.
STATE TAKEOVER LAWS. A number of states have adopted takeover laws and
regulations that purport to be applicable to attempts to acquire securities of
corporations that are incorporated in those states or that have substantial
assets, stockholders, principal executive offices or principal places of
business in those states. To the extent that these state takeover statutes
purport to apply to the offer or the merger, we believe that those laws conflict
with U.S. federal law and are an unconstitutional burden on interstate commerce.
In 1982, the Supreme Court of the United States, in EDGAR V. MITE CORP.,
invalidated on constitutional grounds the Illinois Business Takeovers Statute,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. The reasoning in that decision is
likely to apply to certain other state takeover statutes. In 1987, however, in
CTS CORP. V. DYNAMICS CORP. OF AMERICA, the Supreme Court of the United States
held that the State of Indiana could as a matter of corporate law and, in
particular, 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, as
long as those laws were applicable only under certain conditions. Subsequently,
in TLX PURCHASER CORP. V. TELEX CORP., a federal district court in Oklahoma
ruled that the Oklahoma statutes were unconstitutional insofar as they apply to
corporations incorporated outside Oklahoma, because they would subject those
corporations to inconsistent regulations. Similarly, in TYSON FOODS, INC. V.
MCREYNOLDS, a federal district court in Tennessee ruled that four Tennessee
takeover statutes were unconstitutional as applied to
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corporations incorporated outside Tennessee. This decision was affirmed by the
United States Court of Appeals for the Sixth Circuit. In December 1988, a
federal district court in Florida held, in GRAND METROPOLITAN PLC V.
BUTTERWORTH, that the provisions of the Florida Affiliated Transactions Act and
Florida Control Share Purchaser Act were unconstitutional as applied to
corporations incorporated outside of Florida.
Harmon is incorporated under the laws of the State of Missouri. In general,
Section 351.459 of the MGBCL prevents an "interested shareholder" (generally a
person who owns or has the right to acquire 20% or more of a corporation's
outstanding voting stock, or an affiliate or associate thereof) from engaging in
a "business combination" (defined to include mergers and certain other
transactions) with a Missouri corporation for a period of five years following
the date such person became an interested shareholder unless, among other
things, prior to such date the board of directors of the corporation approved
either the business combination or the transaction in which the interested
shareholder became an interested shareholder. See "The Offer--Regulatory
Approvals--State Takeover Laws." The board of directors of Harmon has approved
the merger agreement, the stock option agreement, the support agreement, the
merger and the other transactions contemplated by such agreements, and such
approval is sufficient to render inapplicable to the merger the provisions of
Section 351.459 of the MGBCL. The board of directors has also amended the
by-laws of Harmon to add a provision stating that Section 351.407 of the MGBCL
(which relates to "control share acquisitions" as defined in Section 351.015(4)
of the MGBCL) does not apply to control share acquisitions of Harmon. Such
by-law amendment is sufficient to render the provisions of Section 351.407 of
the MGBCL inapplicable to the shares acquired in the offer or pursuant to the
option agreement, and to shares subject to the support agreement.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations that are incorporated, or have
substantial assets, shareholders, or whose business operations otherwise have
substantial economic effects in such states. Harmon, directly or through
subsidiaries, conducts business in a number of states throughout the United
States, some of which may have enacted takeover laws as described above. GE and
the Acquiror do not believe that any such takeover statutes are applicable to
the offer or the merger and have not attempted to comply with any such state
takeover statutes in connection therewith.
We reserve the right to challenge the validity or applicability of any state
law allegedly applicable to the offer or the merger, and nothing herein nor any
action that we take in connection with the offer is intended as a waiver of that
right. In the event that it is asserted that one or more takeover statutes apply
to the offer or the merger, and it is not determined by an appropriate court
that the statutes in question do not apply or are invalid as applied to the
offer or the merger, as applicable, we may be required to file certain documents
with, or receive approvals from, the relevant state authorities, and we might be
unable to accept for payment or acquire Harmon shares tendered in the offer or
be delayed in continuing or consummating the offer. In that case, we may not be
obligated to accept for purchase, or pay for, any Harmon shares tendered.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain 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 FTC and certain waiting period requirements have been satisfied. The
acquisition of Harmon shares pursuant to the offer is subject to such
requirements.
Pursuant to the requirements of the HSR Act, we have filed or will in the
near future file a Notification and Report Form with respect to the offer with
the Antitrust Division and the FTC. Under the provisions of the HSR Act
applicable to the Offer, the purchase of Shares pursuant to the offer may not be
consummated until the expiration of a 30-calendar day waiting period following
the filing by GE, unless such waiting period is earlier terminated by the FTC
and the Antitrust Division or extended by a request from the FTC or the
Antitrust Division for additional information or documentary material prior to
the expiration of the waiting period. Pursuant to the HSR Act, GE has
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or will request early termination of the waiting period applicable to the offer.
There can be no assurance, however, that the waiting period will be terminated
early. If either the FTC or the Antitrust Division were to request additional
information or documentary material from GE with respect to the offer, the
waiting period with respect to the offer would expire on the twentieth calendar
day after the date of substantial compliance with such request. Additional
delays thereafter could occur under possible agreements to effectively extend
the waiting period or under court orders that might be sought by the FTC or the
Antitrust Division to temporarily or permanently block the transaction. If the
acquisition of shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the offer may, but need not, be extended and, in any event, the
acquisition of and payment for shares will be deferred until after any
applicable waiting period, agreement or court order blocking the transaction
expires or is terminated. Any such extension of the waiting period will not give
rise to any withdrawal rights not otherwise provided for by applicable law. It
is a condition to the offer that the waiting period applicable under the HSR Act
to the offer expire or be terminated. See "The Offer--Conditions Of Our Offer."
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of shares by
Acquiror pursuant to the Offer. At any time before or after the purchase of
shares pursuant to the offer by Acquiror, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
shares pursuant to the offer or seeking the divestiture of shares purchased by
Acquiror or the divestiture of substantial assets of GE, Harmon or their
respective subsidiaries. Private parties and state attorneys general may also
bring legal action under federal or state antitrust laws under certain
circumstances. As in any case, there can be no assurance that a challenge to the
offer on antitrust grounds will not be made or, if such a challenge is made,
what the result would be.
For a description of certain conditions to the offer, including conditions
with respect to litigation and certain governmental actions and for certain
termination rights in connection with antitrust suits, see "The
Offer--Conditions Of Our Offer."
FOREIGN APPROVALS. Harmon owns property and conducts business in a number
of other foreign countries and jurisdictions. In connection with the acquisition
of the Harmon shares in the offer or the merger, the laws of certain of those
foreign countries and jurisdictions may require the filing of information with,
or the obtaining of the approval or consent of, governmental authorities in such
countries and jurisdictions. The governments in those countries and
jurisdictions might attempt to impose additional conditions on Harmon's
operations conducted in those countries and jurisdictions as a result of the
acquisition of the Harmon shares in the offer or the merger. If such approvals
or consents are found to be required, we intend to make the appropriate filings
and applications. In the event such a filing or application is made for the
requisite foreign approvals or consents, we cannot be certain that such
approvals or consents will be granted and, if such approvals or consents are
received, we cannot be certain as to the date of those approvals or consents. In
addition, we cannot be certain that we will be able to cause Harmon or its
subsidiaries to satisfy or comply with those laws or that compliance or
noncompliance will not have adverse consequences for Harmon or any subsidiary of
Harmon after purchase of the Harmon shares pursuant to the offer or the merger.
CERTAIN EFFECTS OF OUR OFFER
REDUCED LIQUIDITY; POSSIBLE DELISTING. The purchase of Harmon shares
pursuant to the offer will reduce the number of holders of Harmon shares and the
number of Harmon shares that might otherwise trade publicly and could adversely
affect the liquidity and market value of the remaining Harmon shares held by the
public. Harmon shares are included for quotation and principally traded on the
Nasdaq. Depending on the number of Harmon shares acquired pursuant to the offer,
following consummation of the offer, Harmon shares may no longer meet the
requirements of the Nasdaq for
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continued quotation. The National Association of Securities Dealers' (the
"NASD") requirements for continued inclusion in the Nasdaq, among other things,
require that an issuer have either: (i) at least 750,000 publicly held shares,
held by at least 400 stockholders of round lots, with a market value of at least
$5 million and net tangible assets of at least $4 million and at least two
registered and active market makers for the shares or (ii) at least 1,100,000
publicly held shares, held by at least 400 stockholders of round lots, with a
market value of at least $15 million and at least four registered and active
market markers, or (iii) a market capitalization of at least $50 million or
(iv) total assets and total revenue of at least $50 million each for the most
recently completed fiscal year or two of the last three most recently completed
fiscal years.
The shares might nevertheless continue to be included in the Nasdaq with
quotations published in the Nasdaq "additional list" or in one of the "local
lists," but if the number of holders of the shares were to fall below 300, the
number of publicly held shares were to fall below 500,000 or there were not at
least two registered and active market makers for the shares, the NASD's rules
provide that the shares would no longer be "qualified" for Nasdaq reporting and
the Nasdaq would cease to provide any quotations. Shares held directly or
indirectly by directors, officers or beneficial owners of more than 10% of the
shares are not considered as being publicly held for this purpose. If, following
the closing of the offer, the shares of Harmon no longer meet the requirements
of the NASD for continued inclusion in the Nasdaq or in any other tier of the
Nasdaq and the shares were no longer included in the Nasdaq or in any other tier
of the Nasdaq, the market for shares could be adversely affected.
If the shares no longer meet the requirements of the NASD for continued
inclusion in any tier of the Nasdaq, it is possible that the shares would
continue to trade in the over-the-counter market and that price quotations would
be reported by other sources. The extent of the public market for the Harmon
shares and the availability of quotations for Harmon shares would, however,
depend upon the number of holders of shares remaining at that time, the interest
in maintaining a market in Harmon shares on the part of securities firms, the
possible termination of registration of the shares under the Exchange Act, as
described below, and other factors. We cannot predict whether the reduction in
the number of Harmon shares that might otherwise trade publicly would have an
adverse or beneficial effect on the market price for, or marketability of, the
Harmon shares.
GE intends to cause the delisting of the Harmon shares from the Nasdaq
following consummation of the offer and the merger.
According to Harmon, there were, as of July 14, 2000, approximately
11,387,226 Harmon shares outstanding, held by approximately 660 holders of
record.
STATUS AS "MARGIN SECURITIES." The Harmon shares are presently "margin
securities" under the regulations of the Federal Reserve Board, which has the
effect, among other things, of allowing brokers to extend credit on the
collateral of Harmon shares. Depending on the factors similar to those described
above with respect to listing and market quotations, following consummation of
the offer, the Harmon shares may no longer constitute "margin securities" for
the purposes of the Federal Reserve Board's margin regulations, in which event
the Harmon shares would be ineligible as collateral for margin loans made by
brokers.
FINANCING OF THE OFFER AND THE MERGER. The securities required by Acquiror
to consummate the offer and the merger shall come from the treasury shares of
GE. The related fees and expenses are estimated to be approximately $350,000 for
the information agent, the exchange agent, the financial printer and other
counsel. Acquiror will obtain all of such funds from GE or its affiliates. GE
and its affiliates will provide such funds from existing resources.
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 Harmon shares pursuant to the
offer in which Acquiror seeks to acquire the remaining shares not held by it.
Acquiror
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believes that Rule 13e-3 will not be applicable to the merger. Rule 13e-3
requires, among other things, that certain financial information concerning
Harmon and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority shareholders in such
transaction be filed with the Commission and disclosed to shareholders prior to
consummation of the transaction.
PLANS FOR HARMON. It is expected that following the merger, GE will
continue to evaluate the business and operations of Harmon and GE intends to
seek additional information about Harmon during this period. Thereafter, GE
intends to review such information as part of a comprehensive review of Harmon's
business, operations, capitalization and management with a view to optimizing
Harmon's potential in conjunction with GE's businesses.
GE, through GE Transportation Systems ("GETS"), currently owns a 51%
interest in a joint venture named GE Harris Railway Electronics, LLC. Following
completion of the merger, Harmon will become part of the GE Harris Railway
Electronics joint venture.
REGISTRATION UNDER THE EXCHANGE ACT. Harmon shares are currently registered
under the Exchange Act. Harmon can terminate that registration upon application
to the SEC if the outstanding shares are not listed on a national securities
exchange and if there are fewer than 300 holders of record of Harmon shares.
Termination of registration of the Harmon shares under the Exchange Act would
reduce the information that Harmon must furnish to its stockholders and to the
SEC and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b) and the requirement of
furnishing a proxy statement in connection with stockholders meetings pursuant
to Section 14(a) and the related requirement of furnishing an annual report to
stockholders, no longer applicable with respect to Harmon shares. In addition,
if Harmon 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 Harmon. SEE "THE
OFFER--CERTAIN EFFECTS OF OUR OFFER--GOING PRIVATE TRANSACTIONS." Furthermore,
the ability of "affiliates" of Harmon and persons holding "restricted
securities" of Harmon to dispose of such securities pursuant to Rule 144 under
the Securities Act may be impaired or eliminated. If registration of the shares
under the Exchange Act were terminated, they would no longer be eligible for
Nasdaq reporting or for continued inclusion on the Federal Reserve Board's list
of "margin securities." SEE "THE OFFER--CERTAIN EFFECTS OF OUR OFFER--STATUS AS
MARGIN SECURITIES."
RELATIONSHIPS WITH HARMON
Except as set forth herein, neither we nor, to the best of our knowledge,
any of our directors, executive officers or other affiliates has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of Harmon, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or the giving or withholding
of proxies. Except as described herein, there have been no contacts,
negotiations or transactions since January 1, 1998, between us or, to the best
of our knowledge, any of our directors, executive officers or other affiliates
on the one hand, and Harmon or its affiliates, on the other hand, concerning a
merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a material
amount of assets. Neither we, nor, to the best of our knowledge, any of our
directors, executive officers or other affiliates has since January 1, 1998 had
any transaction with Harmon or any of its executive officers, directors or
affiliates that would require disclosure under the rules and regulations of the
SEC applicable to the offer.
GE and Harmon have engaged in commercial transactions in the ordinary course
of business from time to time. There are currently three financing leases and
one loan between a subsidiary of GE and Harmon. The aggregate amount of these
contracts is approximately $150,000. From time to time Harmon sells certain cab
signaling products to GETS and GE Harris, for incorporation into finished
locomotives when ordered by the final customer.
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Except as described in this prospectus, (i) none of Acquiror, GE nor, to the
best knowledge of Acquiror and GE, any of the persons listed in Schedule I to
this prospectus or any associate or majority owned subsidiary of Acquiror, GE or
any of the persons so listed, beneficially owns or has any right to acquire any
Harmon shares and (ii) none of Acquiror, GE nor, to the best knowledge of
Acquiror and GE, any of the persons or entities referred to above nor any
director, executive officer or subsidiary of any of the foregoing has effected
any transaction in the shares during the past 60 days except for the stock
option agreement and the support agreement, executed in connection with the
offer and the merger. The material terms of these are agreements are described
under "The Stock Option Agreement," and "The Support Agreement" on pages 40 and
42, respectively. On September 9, 1999, GE and Harmon entered into a
confidentiality agreement, the material terms of which are described under "The
Confidentiality Agreement."
ACCOUNTING TREATMENT
GE will account for the merger under the "purchase" method of accounting in
accordance with generally accepted accounting principles. Therefore, the total
merger consideration paid by GE in connection with the merger, together with the
direct costs of the merger, will be allocated to Harmon's assets and liabilities
based on their fair market values, with any excess being treated as goodwill.
The assets and liabilities and results of operations of Harmon will be
consolidated into the assets and liabilities and results of operations of GE
after the merger.
FEES AND EXPENSES
We have retained Morrow & Co., Inc. as information agent in connection with
the offer. The Information Agent may contact holders of Harmon 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 of Harmon shares. We will pay the information agent
$7,500 plus $6.50 per account contacted for these services in addition to
reimbursing the information agent for its reasonable out-of-pocket expenses. We
have agreed to indemnify the information agent against certain liabilities and
expenses in connection with the offer, including certain liabilities under the
U.S. federal securities laws.
In addition, we have retained The Bank of New York as the exchange agent. We
will pay the exchange agent reasonable and customary fees for its services in
connection with the offer, will reimburse the exchange agent for its reasonable
out-of-pocket expenses and will indemnify the exchange agent against certain
liabilities and expenses, including certain liabilities under the U.S. federal
securities laws.
Except as set forth above, we will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of Harmon shares pursuant
to the offer. We will reimburse brokers, dealers, commercial banks and trust
companies and other nominees, upon request, for customary clerical and mailing
expenses incurred by them in forwarding offering materials to their customers.
STOCK EXCHANGE LISTING
Our common stock is listed on the NYSE under the symbol "GE."
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THE MERGER AGREEMENT
The following description of the merger agreement describes the material
terms of the agreement but does not purport to describe all the terms of the
agreement. The complete text of the merger agreement is attached as Annex A to
this prospectus. All shareholders are urged to read the merger agreement in its
entirety because it is the legal document that governs the offer and the merger.
THE OFFER
TERMS OF THE OFFER. The merger agreement provides for the commencement by
Acquiror of this offer to exchange all outstanding shares of Harmon common stock
for shares of GE common stock having a value of $30, determined as described
below, for each outstanding share of common stock of Harmon that is validly
tendered and not properly withdrawn. The merger agreement also provides that the
fraction of a share of GE common stock into which each share of Harmon common
stock will be converted in the offer will be determined by dividing $30 by the
average of the daily volume-weighted sales prices per share of GE common stock
on the NYSE for each of the 10 consecutive trading days ending on the second
trading day prior to the date on which the Harmon shares are accepted for
payment in the offer.
The merger agreement prohibits Acquiror, without the consent of Harmon, from
amending or waiving the minimum tender condition or amending the offer to change
the form of consideration to be paid, decreasing the price per share of Harmon
common stock or the number of shares of Harmon common stock sought in the offer,
imposing additional conditions to the offer, extending the expiration date of
the offer except as described below or making any other change which is adverse
to the holders of the shares of Harmon common stock.
MANDATORY EXTENSIONS OF THE OFFER. If any of the conditions to the offer is
not satisfied or waived on any scheduled expiration date of the offer, Acquiror
will extend the offer, if such condition or conditions could reasonably be
expected to be satisfied, from time to time until such conditions are satisfied
or waived; provided that (i) no extension will exceed ten business days and
(ii) Acquiror is not required to extend the offer beyond November 30, 2000.
OPTIONAL EXTENSIONS OF THE OFFER. Acquiror will have the right to extend
the offer (i) if more than two-thirds but less than 90% of the Harmon shares
will have been validly tendered in the offer at the scheduled or extended
expiration date for an aggregate period of not more than ten business days
beyond the latest expiration date that would otherwise be permitted under clause
(ii) of this sentence and (ii) for any period required by any rule, regulation,
interpretation or position of the SEC or its staff applicable to the offer or
any period required by applicable law.
PROMPT PAYMENT FOR HARMON SHARES AFTER THE CLOSING OF THE OFFER. Subject to
the conditions of the offer, Acquiror will accept for payment all shares of
Harmon common stock validly tendered and not properly withdrawn pursuant to the
offer as soon as it is permitted to do so under applicable law and will pay for
the shares promptly thereafter.
THE MERGER
The merger agreement provides that Acquiror will be merged with and into
Harmon as promptly as practicable following the satisfaction or waiver of the
conditions set forth in the merger agreement. Under the terms of the merger
agreement, at the closing of the merger, each outstanding share of Harmon common
stock will be converted into the right to receive the same per share
consideration paid to holders of Harmon common stock who exchanged their Harmon
shares in the offer. Notwithstanding the foregoing, the merger consideration
will not be payable in respect of Harmon shares held by Harmon, GE or Acquiror
or dissenters shares.
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EFFECTIVE TIME OF THE MERGER. The merger will become effective upon the
filing of articles of merger with the Secretary of State of the State of
Missouri and the issuance of a certificate of merger by the Missouri Secretary
of State. The filing of the articles of merger will take place as soon as
practicable after satisfaction or waiver of the conditions described below under
"The Merger Agreement--Conditions Of The Merger."
ARTICLES OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS. The articles of
incorporation of Acquiror in effect at the effective time shall be the articles
of incorporation of the surviving corporation (except that such articles of
incorporation shall be amended to provide that the name of the surviving
corporation shall be the name of Harmon) until thereafter amended in accordance
with the provisions of the articles of incorporation and as provided by the
MGBCL. The by-laws of Acquiror in effect at the effective time shall be the
by-laws of the surviving corporation until thereafter amended in accordance with
the provisions of the by-laws, the articles of incorporation of the surviving
corporation and the MGBCL.
From and after the effective time and until their respective successors are
duly elected or appointed and qualified, or until their earlier death,
resignation or removal in accordance with the surviving corporation's articles
of incorporation and by-laws, (i) the directors of Acquiror at the effective
time shall be the directors of the surviving corporation and (ii) the officers
of Harmon at the effective time shall be the officers of the surviving
corporation.
HARMON BOARD OF DIRECTORS
Upon the acceptance for payment of shares of Harmon common stock pursuant to
the offer, GE will be entitled to designate a number of directors (rounded up to
the next whole number) that equals the product of (i) the total number of
directors on Harmon's board of directors and (ii) the percentage that the number
of shares beneficially owned by GE and Acquiror bears to the total number of
shares of Harmon common stock. Until the merger has become effective, Harmon's
board of directors will consist of at least two members who were directors of
Harmon prior to the consummation of the offer. The merger agreement provides
that, prior to the effective time of the merger, the affirmative vote of a
majority of the continuing Harmon directors will be required to:
- terminate the agreement on behalf of Harmon,
- amend the agreement when such amendment requires approval of Harmon's
board of directors,
- extend the time for performance of GE's or Acquiror's obligations under
the merger agreement,
- waive compliance with any agreements or conditions contained in the merger
agreement or
- approve any other action of Harmon which adversely affects the holders of
Harmon common stock.
TREATMENT OF HARMON STOCK OPTIONS
The merger agreement provides that each outstanding option to purchase
shares of Harmon common stock which has been granted under Harmon's 1990
Incentive Stock Option Plan or 1996 Long-Term Incentive Plan (together, the
"Harmon Option Plans"), whether or not vested or exercisable, shall be converted
into an option to purchase GE common stock. Each Harmon Stock Option shall be
exercisable upon the same terms and conditions as those under the applicable
Harmon Option Plan and the applicable option agreement, except that
- each Harmon Stock Option shall vest and become immediately exercisable at
the effective time of the merger,
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- each such Harmon Stock Option shall be exercisable for that whole number
of GE shares (rounded to the nearest whole share) equal to the number of
shares subject to such Harmon Stock Option immediately prior to the
effective time multiplied by the exchange ratio in the offer, and
- the option price per GE share shall be an amount equal to the option price
per share subject to such Harmon Stock Option in effect immediately prior
to the effective time divided by the exchange ratio in the offer (the
option price per share, as so determined, being rounded to the nearest
whole cent).
GE shall (i) on or prior to the effective time, reserve for issuance the
number of GE shares that will become subject to options to purchase GE shares,
(ii) from and after the effective time, upon exercise of the GE options, make
available for issuance all GE shares covered by the options, (iii) at the
effective time, assume the Harmon Option Plans, with the result that all
obligations of Harmon under the Harmon Option Plans, including with respect to
Harmon Stock Options outstanding at the effective time, shall be obligations of
GE following the effective time and (iv) as promptly as practicable after the
effective time, issue to each holder of an outstanding Harmon Stock Option a
document evidencing the above assumption by GE.
COVENANTS AND REPRESENTATIONS AND WARRANTIES
ACCESS TO INFORMATION. Harmon shall, and shall cause the subsidiaries and
its and their respective officers, directors, employees, representatives and
agents to, afford, from the date of the merger agreement to the effective time,
the officers, employees, representatives and agents of Acquiror reasonable
access during regular business hours to its officers, employees, agents,
properties, books, records and workpapers, and shall promptly furnish Acquiror
all financial, operating and other information and data as Acquiror, through its
officers, employees or agents, may reasonably request.
Except as required by law, Acquiror shall hold, and will cause its
respective officers, employees, representatives and agents to hold, any
confidential information of Harmon or any of its subsidiaries in accordance with
the confidentiality agreement between Harmon and GE.
CONDUCT OF BUSINESS PENDING MERGER. The merger agreement obligates Harmon,
until the date the nominees of GE constitute a majority of Harmon board of
directors, to conduct its operations in the ordinary and usual course of
business consistent with its past practice. The merger agreement expressly
restricts the ability of Harmon to engage in certain material transactions, such
as purchases and sales of assets or the sale or redemption of outstanding
securities of Harmon, without the prior written consent of GE, which consent
will not be unreasonably withheld or delayed.
INQUIRIES AND NEGOTIATIONS. The merger agreement provides that, except in
the circumstances described below, Harmon, the subsidiaries and their respective
officers, directors, employees, representatives and other agents or otherwise
will not directly or indirectly:
(i) solicit, initiate or knowingly encourage the submission of any
Alternative Transaction, including any Superior Proposal, or
(ii) participate in any discussions or negotiations regarding, or furnish to
any person, any non-public information with respect to, or otherwise
cooperate in any way with respect to, or assist or participate in or
facilitate any Alternative Transaction with any person, corporation,
entity or "group" (as defined in Section 13(d) of the Exchange Act)
other than GE and its affiliates, representatives and agents (each, a
"Third Party") except that Harmon may take any action referred to in
this clause (ii) if (A) the board determines in good faith (after
consultation with outside counsel) that such action is required by the
fiduciary duties of the board under applicable law, (B) the board
determines in good faith that the Alternative Transaction constitutes a
Superior Proposal, and (C) Harmon has given prior written notice to
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GE and Acquiror and entered into a customary confidentiality agreement
on terms no less favorable to Harmon than those contained in the
confidentiality agreement executed between the parties on September 9,
1999 (provided that such confidentiality agreement need not contain
terms which restrict the ability of the Third Party to make a proposal
to Harmon's board of directors).
Harmon shall promptly notify GE orally and in writing if any proposal,
offer, inquiry or other contact is received by, any information is requested
from, or any discussions or negotiations are sought to be initiated or continued
with, Harmon in respect of an Alternative Transaction, and shall, in any such
notice to GE, indicate the identity of the Third Party and the terms and
conditions of any proposals or offers or the nature of any inquiries or
contacts, and thereafter shall keep GE informed, on a reasonably current basis,
of all material developments affecting the status and terms of any such
proposals or offers or the status of any such discussions or negotiations.
Harmon shall not release any Third Party from, or waive any provision of,
any confidentiality or standstill agreement, other than any such provision that
would prevent or otherwise restrict the ability of a Third Party to make a
proposal to Harmon's board of directors. As of the date of the merger agreement,
Harmon shall cease, and shall cause the subsidiaries and the officers,
directors, employees, representatives and other agents of Harmon and the
subsidiaries, to cease, all discussions, negotiations and communications with
all Third Parties and demand the immediate return of all confidential
information previously provided to Third Parties.
"Alternative Transaction" means any bona fide written proposal or offer from
any Third Party relating to any (i) merger, consolidation, recapitalization,
tender or exchange offer, debt restructuring or similar transaction involving
Harmon, (ii) the sale of more than 20% of the common stock or other capital
stock of Harmon or (iii) sale of assets (including stock of subsidiaries)
representing more than 20% of the assets of Harmon and its subsidiaries, taken
as a whole, including a sale by any means specified in clause (i) of this
sentence.
"Superior Transaction" means a bona fide written proposal not solicited,
initiated or encouraged in violation of the merger agreement, made by a Third
Party to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, all of the equity securities of Harmon entitled to vote
generally in the election of directors or all or substantially all of the assets
of Harmon, if and only if, the board reasonably determines (after consultation
with its financial advisor and outside counsel) (i) that the proposed
transaction would be more favorable from a financial point of view to its
stockholders than the offer and the merger and the transactions contemplated
thereby taking into account at the time of determination any changes to the
terms of the merger agreement that as of that time had been proposed by GE, and
(ii) that the person or entity making such Superior Proposal is capable of
consummating the Alternative Transaction (based upon, among other things, the
availability of financing and the degree of certainty of obtaining financing,
the expectation of obtaining required regulatory approvals and the identity and
background of such person).
DUTY TO RECOMMEND THE OFFER AND THE MERGER. The merger agreement prohibits
Harmon's board of directors from approving or recommending, or proposing to
approve or recommend, any Alternative Proposal or approving, recommending or
causing Harmon to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Alternative
Proposal. However, the merger agreement provides that the Harmon board may
withdraw or modify its approval or recommendation of the offer and the merger if
the board determines in good faith (i) after consultation with outside counsel,
that such action is required by the fiduciary duties of the board under
applicable law and (ii) that the Alternative Transaction constitutes a Superior
Proposal. The merger agreement also provides that nothing in the merger
agreement shall (x) require the Harmon board to act in a manner inconsistent
with its duty of candor under applicable law, (y) limit the board's ability to
make any disclosure to Harmon's stockholders that the board determines in good
faith (after
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<PAGE>
consultation with outside counsel) is required to be made to satisfy its
fiduciary duties under applicable law or (z) limit Harmon's ability to make any
disclosure required by applicable law.
DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION. See "Interests of
Certain Persons--Directors' and Officers' Insurance; Indemnification."
FURTHER ASSURANCES. Each of the parties to the merger agreement agrees to
use all commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things reasonably necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the merger agreement as promptly as
practicable, including, without limitation, using all commercially reasonable
efforts to (i) make promptly its respective filings, and thereafter make any
other required submissions, under the HSR Act and in the other countries where a
merger filing is necessary or advisable with respect to the transactions and
(ii) obtain all permits, consents, approvals, authorizations, qualifications and
orders of governmental entities and parties to contracts with Harmon and the
subsidiaries as are necessary for the consummation of the offer and the merger.
GE agrees to use all reasonable efforts to close the offer and the merger.
TAX TREATMENT. The parties agree to use all commercially reasonable efforts
to cause the offer and merger to qualify as a "reorganization" within the
meaning of Section 368(a) of the Code and to cause their subsidiaries to not
take any action, or fail to take any action, which action or failure would be
reasonably likely to cause such tax treatment not to be obtained.
REPRESENTATIONS AND WARRANTIES. The merger agreement contains a number of
customary representations and warranties relating to each of the parties and
their ability to consummate the offer and the merger. All representations and
warranties of each party expire at the closing of the merger.
CONDITIONS OF OUR OFFER
See "The Offer--Conditions of Our Offer."
CONDITIONS OF THE MERGER
The obligations of GE, Acquiror and Harmon to consummate the merger are
subject to the satisfaction of the following conditions:
- To the extent required by applicable law the merger agreement shall have
been approved and adopted by holders of two-thirds of the outstanding
shares, in accordance with applicable law and the articles of
incorporation and by-laws of Harmon.
- No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by
any United States court or United States governmental authority which
prohibits, restrains or enjoins the consummation of the merger; and
- Acquiror shall have accepted for payment and paid for shares pursuant to
the offer, provided that GE and Acquiror may not assert this condition if
the failure to accept shares for payment resulted from a breach of the
merger agreement by GE or Acquiror.
TERMINATION OF THE MERGER AGREEMENT
TERMINATION BY MUTUAL AGREEMENT. The merger agreement may be terminated and
the offer and the merger may be abandoned at any time prior to the effective
time of the merger, whether before or after approval by the stockholders of
Harmon, by mutual action of the board of directors of GE and Harmon.
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<PAGE>
TERMINATION BY EITHER GE OR HARMON. The merger agreement may be terminated
and the offer and the merger may be abandoned at any time prior to the effective
time, whether before or after approval by the stockholders of Harmon by either
GE or Harmon if:
(1) any statute, rule, regulation, executive order, decree, ruling or
injunction existing or enacted after the date of the merger agreement of
or by any governmental entity of competent jurisdiction which makes the
consummation of the offer or the merger illegal or otherwise prevents or
prohibits the consummation of the offer or the merger shall be in effect
and shall have become final and nonappealable;
(2) Acquiror terminated the offer, or the offer shall have expired without
acceptance for payment of shares thereunder; or
(3) the acceptance for payment of shares pursuant to the offer shall not
have occurred on or prior to November 30, 2000; unless, in any case, such
event has been caused by or resulted from the breach of the merger
agreement by the party seeking such termination.
TERMINATION BY GE. The merger agreement may be terminated at and the offer
and the merger may be abandoned at any time prior to the effective time, whether
before or after approval by the stockholders of Harmon by GE if:
(1) prior to the purchase of shares in the offer, the board of directors of
Harmon shall have publicly withdrawn, modified or amended in a manner
adverse to Acquiror its approval or recommendation of the merger; or
(2) (i) Acquiror shall have failed to commence the offer within 10 business
days of the date of the merger agreement due to the failure to be
satisfied of any condition set forth in annex I to the merger agreement
and (ii) such condition could not reasonably be expected to be satisfied.
TERMINATION BY HARMON. The merger agreement may be terminated and the offer
and the merger may be abandoned at any time prior to the effective time, whether
before or after approval by the stockholders of Harmon by Harmon if:
(1) prior to acceptance for payment of shares pursuant to the offer, Harmon
shall enter into a definitive written agreement with respect to a
Superior Proposal, provided that Harmon shall have complied in all
material respects with the non-solicitation provisions (described above)
set forth in the merger agreement and the termination fee (described
below) payable under the merger agreement shall have been paid;
(2) prior to the purchase of shares in the offer, (A) GE shall have failed
to perform in all material respects its covenants and obligations
contained in the merger agreement, which failure to perform has not been
cured within ten business days after the giving of notice to GE or
(B) the representations and warranties set forth in Section 4.8 of the
merger agreement, regarding the transaction qualifying as a
"reorganization" within the meaning of section 368(a) of the Internal
Revenue Code, shall not be true in all material respects.
TERMINATION FEES
TERMINATION FEES PAYABLE BY HARMON TO GE. If a Payment Event occurs, Harmon
shall pay to GE, within two business days following such Payment Event, a fee of
$10.5 million in cash.
"Payment Event" means (x) the termination of the merger agreement by Harmon
as described under "The Merger Agreement--Termination of the Merger
Agreement--Termination by Harmon" pursuant to paragraph (1) above, (y) the
termination of the merger agreement by GE as described under "The Merger
Agreement--Termination of the Merger Agreement--Termination by GE" pursuant to
paragraph (1) above, or (z) (A) after the date of the merger agreement and prior
to the
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<PAGE>
termination of the merger agreement a third party shall have made a bona fide
proposal or offer for an Alternative Transaction and (B) within 12 months of the
date of termination of the merger agreement (other than by reason of GE's
failure to comply with or perform, or its breach of, in any material respect any
of its agreements or covenants contained therein), Harmon shall enter into an
agreement with respect to, or consummate an Alternative Transaction
(substituting 25% for 20% in the definition of Alternative Transaction).
Harmon may terminate the merger agreement and enter into a letter of intent,
agreement-in-principle, acquisition agreement or other similar agreement (each,
an "Acquisition Agreement") with respect to such Alternative Transaction
provided that, prior to any such termination, (i) Harmon has provided GE written
notice that it intends to terminate the merger agreement pursuant to
paragraph (1) under "The Merger Agreement--Termination of the Merger
Agreement--Termination by Harmon," identifying the Alternative Transaction then
determined to be more favorable and the parties thereto and delivering an
accurate description of all material terms (including any changes or adjustments
to such terms as a result of negotiations or otherwise) of the Acquisition
Agreement to be entered into for such Alternative Transaction, and (ii) at least
three full business days after Harmon has provided the notice referred to in
clause (i) above, Harmon delivers to GE (A) a written notice of termination of
the merger agreement, (B) the termination fee, (C) a written acknowledgment from
Harmon that (x) the termination of the merger agreement and the entry into the
Acquisition Agreement for the Alternative Transaction will be a Payment Event,
and (y) the Harmon stock option agreement (attached hereto as Annex B) shall be
honored in accordance with its terms and (D) a written acknowledgment from each
other party to such Alternative Transaction that it is aware of the substance of
Harmon's acknowledgment under clause (C) above and waives any right it may have
to contest the matters thus acknowledged by Harmon.
AMENDMENTS
The merger agreement may be varied, amended or supplemented at any time
before or after the approval and adoption of the merger agreement by the
stockholders of Harmon by action of the respective boards of directors of Harmon
and the Acquiror, without action by the stockholders thereof; PROVIDED that
after approval and adoption of the merger agreement by Harmon's stockholders, no
variance, amendment or supplement shall, without consent of the Harmon
stockholders, reduce the amount or alter the form of the consideration that the
holders of the capital stock of Harmon shall be shall be entitled to receive
upon the effective time. Without limiting the generality of the foregoing, the
merger agreement may only be amended, varied or supplemented by an instrument in
writing, signed by the parties to the merger agreement.
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<PAGE>
THE STOCK OPTION AGREEMENT
The following description of the stock option agreement describes the
material terms of the agreement but does not purport to describe all the terms
of the agreement. The complete text of the stock option agreement is attached as
Annex B to this prospectus. All shareholders are urged to read the stock option
agreement in its entirety.
Concurrently with the execution of the merger agreement, GE and Harmon
entered into a stock option agreement pursuant to which Harmon granted to GE an
option to purchase up to 19.9% of the Harmon common stock on a fully diluted
basis after issuance. The option has an exercise price of $30.00 per share,
payable in cash.
EXERCISABILITY
The option is exercisable only if one or more of the following payment
events occurs:
- Harmon enters into a definitive written agreement with respect to a
takeover proposal, not solicited, initiated or encouraged in violation of
the terms of the merger agreement, made by a third party to acquire all of
the common stock of Harmon or all or substantially all of the assets of
Harmon and the board of directors of Harmon determines such proposal to be
more favorable from a financial point of view to its stockholders than the
transactions contemplated in the merger agreement;
- the board of directors of Harmon publicly withdraws, modifies or amends
its approval or recommendation of the transactions contemplated in the
merger agreement in an adverse manner; or
- any third party makes a takeover proposal or offer relating to a merger or
other business combination, the sale of 25% of the common stock or other
capital stock of Harmon or the sale of assets representing more than 25%
of the assets of Harmon and within 12 months of the date of termination of
the merger agreement, Harmon enters into an agreement to consummate any
takeover proposal.
GE may no longer exercise the option after the earliest to occur of:
- the effective time of the merger;
- 12 months after the occurrence of a Payment Event; or
- termination of the merger agreement prior to the occurrence of a Payment
Event unless GE has the right to receive a termination fee following such
termination upon the occurrence of certain events, in which case GE's
option will not terminate until the later of six months from the time such
termination fee becomes payable and the expiration of the period in which
an event may occur which would result in GE having the right to receive a
termination fee.
Additionally, GE may not exercise the option if:
- an injunction or other order issued by any federal or state court that
invalidates the grant or prohibits the exercise of the option is in
effect;
- the waiting period under the HSR Act has not expired or been terminated;
or
- any approval required to be obtained under the laws of any jurisdiction
has not been obtained and is not in full force and effect.
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<PAGE>
CASH EXERCISE NOTICE
At any time the option is exercisable, GE may elect, instead of purchasing
option shares, to send a written notice to Harmon specifying a date between five
and ten business days from such notice on which Harmon will pay to GE an amount
in cash equal to the spread multiplied by such number of option shares as GE
specifies in the notice.
The spread is the excess over $30.00 of the higher of
- the highest price to be paid by any person in an alternative transaction;
or
- the closing price of the Harmon shares on the last trading day immediately
prior to the date of the above described notice.
REPURCHASE
If within 12 months after the date the merger agreement was terminated
neither GE nor any other person has acquired more than 50% of the issued and
outstanding Harmon shares, then Harmon has the right to repurchase from GE all
of the optioned Harmon shares acquired by GE, and with respect to which GE then
has beneficial ownership, at a price per share equal to the greater of:
- $30.00; or
- the average of the closing price per share of Harmon common stock on
Nasdaq for the five consecutive trading days ending on and including the
trading date immediately prior to the consummation of such repurchase of
option shares.
If at any time the option is exercisable, at GE's request Harmon will
repurchase from GE all of the optioned shares acquired by GE, and with respect
to which GE then has beneficial ownership, at a price per share equal to the
greater of:
- the aggregate option price paid by GE for all acquired shares with respect
to which GE then has beneficial ownership; and
- the spread multiplied by the number of acquired shares by GE with respect
to which GE then has beneficial ownership.
REGISTRATION RIGHTS
If GE exercises the option, it will have registration rights, subject to
certain restrictions set forth in the stock option agreement, with respect to
the option shares for a period of two years. The registration rights allow GE to
require that Harmon register GE's shares in order to permit the sale or other
disposition of the option shares.
MAXIMUM AMOUNT REALIZABLE BY GE
If GE exercises the option and then sells the stock received by GE under the
option, GE may be required to give some of the money it makes on that sale to
Harmon.
If the sum of GE's total profit from:
- the sale of the option shares;
- the amount of the termination fee received by GE under the merger
agreement;
- any amounts received in connection with the repurchase of Harmon shares by
Harmon; and
- any amounts received under a cash election notice,
exceeds $16,000,000, GE must pay to Harmon the amount in excess of $16,000,000
less the exercise price and the cost of any discounts and commissions.
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THE SUPPORT AGREEMENT
The following description of the support agreement describes the material
terms of the agreement but does not purport to describe all the terms of the
agreement. The complete text of the support agreement is attached as Annex C to
this prospectus. All shareholders are urged to read the support agreement in its
entirety.
Concurrently with the execution of the merger agreement, in order to induce
GE to enter into the merger agreement, certain Harmon stockholders who are
executive officers and directors of Harmon and members of the Harmon family
entered into a support agreement with GE.
SHARES SUBJECT TO THE SUPPORT AGREEMENT
The following stockholders entered into the support agreement with respect
to the number of shares next to their names:
<TABLE>
<CAPTION>
SHARES OWNED
NAMES DIRECT/INDIRECT OPTIONS
----- --------------- --------
<S> <C> <C>
Robert E. Harmon...................................... 426,628 10,500
Bruce M. Flohr........................................ 11,540 4,500
Emanuel Cleaver, II................................... -0- 1,500
Rodney L. Gray........................................ 21,040 7,500
Herbert M. Kohn....................................... 33,190 7,500
Gerald E. Myers....................................... 44,216 7,500
Douglass Wm. List..................................... 2,840 7,500
John A. Sprague....................................... 540 4,500
Judith C. Whittaker................................... 3,540 7,500
Bjorn E. Olsson....................................... 77,454 26,250
Raymond A. Rosewall................................... 30,000 21,000
Lloyd T. Kaiser....................................... 30,322 26,250
William P. Marberg.................................... 728 40,500
Stephen L. Schmitz.................................... 17,400 26,250
Robert F. Anderson.................................... 400 6,750
Ronald G. Breshears................................... 10,387 26,250
Robert L. Danley...................................... 1,900 9,750
Robert E. Heggestad................................... 26,685 26,250
J. Randall John....................................... 10,995 26,250
John W. Johnson....................................... 10,050 26,250
Gerald S. McKenna..................................... -0- 9,750
William J. Scheerer................................... 9,500 48,750
Russell E. Taylor..................................... -0- 9,750
Jeffery J. Utterback.................................. -0- 26,250
Silvano Brandi........................................ -0- 11,500
Dennis P. Crowley..................................... 172,096 -0-
Joseph P. Noffsinger.................................. -0- 21,500
Karen A. Arnold....................................... -0- 7,500
Alice Diane McClure................................... 275,099 -0-
Robert C. Harmon...................................... 117,075 -0-
--------- -------
Total............................................... 1,333,625 455,250
--------- -------
</TABLE>
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COVENANTS
The support agreement provides, among other things, that the stockholders
subject to the agreement:
- will tender all outstanding Harmon shares into the offer promptly after
commencement of the offer;
- will, at the time of any vote or any adjournment of any stockholder
meeting, vote all Harmon shares subject to the agreement in favor of the
approval and adoption of the merger agreement and each of the transactions
contemplated by the merger agreement;
- will vote all Harmon shares subject to the agreement against: any merger
agreement or merger other than the GE merger or other business combination
or any other takeover proposal, or any corporate action that would in any
manner impede, frustrate, prevent or nullify the GE merger, the merger
agreement or any of the other transactions contemplated by the merger
agreement;
- will revoke any and all previous proxies granted with respect to the
Harmon shares and grant an irrevocable proxy appointing GE as the
stockholder's attorney-in-fact and proxy, with full powers of
substitution;
- will not, without the prior written consent of GE, grant any proxies or
enter into any voting trust or other agreement or arrangement with respect
to the voting of any Harmon shares;
- will not sell, assign, transfer, encumber or otherwise dispose of or enter
into any contract, option or other arrangement or understanding to
transfer the Harmon shares subject to the agreement;
- will not seek or solicit any acquisition or sale, assignment, transfer,
encumbrance or other disposition or any contract, option or other
arrangement or understanding to transfer the Harmon shares subject to the
agreement and will promptly notify GE and provide all details requested by
GE if approached or solicited by any person with respect to any of the
foregoing;
- will not directly or through a representative solicit, initiate or
facilitate or encourage a third party to make a takeover proposal to
Harmon, or to engage in any negotiations regarding, or furnish to any
person any nonpublic information with respect to, or take any action to
facilitate any third party takeover proposal, except in their capacity as
representatives and agents of Harmon in accordance with the terms of the
merger agreement;
- will promptly notify GE in writing, stating the identity of the person and
the material terms of the proposal, if any person makes a proposal or
inquiry or contacts the stockholder, relating to the acquisition of
beneficial ownership of such stockholder's Harmon shares; and
- will use their reasonable best efforts to take all actions and to do all
things necessary, proper or advisable to consummate and to close the
merger.
TERMINATION
The support agreement terminates upon the termination of the merger
agreement.
THE CONFIDENTIALITY AGREEMENT
GE and Harmon entered into a customary confidentiality agreement dated as of
September 9, 1999 which contains customary standstill and release provisions.
The complete text of the confidentiality agreement is attached as an exhibit to
the Schedule TO.
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INTERESTS OF CERTAIN PERSONS
The information contained in the Information Statement attached as
Schedule I to the Schedule 14D-9 of Harmon dated July 25, 2000 is incorporated
herein by reference. Each material agreement, arrangement or understanding and
any actual or potential conflict of interest between Harmon or its affiliates
and Harmon's executive officers, directors or affiliates, or between Harmon or
its affiliates and GE or Acquiror or their respective executive officers,
directors or affiliates, is either incorporated herein by reference as a result
of the previous sentence or set forth below.
TREATMENT OF OPTIONS AND RESTRICTED STOCK UNITS. The merger agreement
provides that each outstanding option to purchase Harmon shares, whether or not
exercisable and whether or not vested, under Harmon's 1990 Incentive Stock
Option Plan or 1996 Long-Term Incentive Plan, shall be converted into an option
to purchase GE common stock. Each option so converted shall be exercisable upon
the same terms and conditions as under the applicable Harmon option plan and the
applicable option agreement issued thereunder, except that (x) each option shall
vest and become immediately exercisable at the effective time, (y) each such
option shall be exercisable for that whole number of shares of GE common stock
(rounded to the nearest whole share) equal to the number of Harmon shares
subject to the option immediately prior to the effective time multiplied by the
exchange ratio, and (z) the option price per share of GE common stock shall be
an amount equal to the option price per Harmon share subject to the option in
effect immediately prior to the effective time divided by the exchange ratio
(the option price per share, as so determined, being rounded to the nearest
whole cent).
GE shall (i) on or prior to the effective time, reserve for issuance the
number of GE shares that will become subject to options to purchase GE shares,
(ii) from and after the effective time, upon exercise of the GE options, make
available for issuance all GE shares covered by the options, (iii) at the
effective time, assume the Harmon Option Plans, with the result that all
obligations of Harmon under the Harmon Option Plans, including with respect to
Harmon Stock Options outstanding at the effective time, shall be obligations of
GE following the effective time and (iv) as promptly as practicable after the
effective time, issue to each holder of an outstanding Harmon Stock Option a
document evidencing the above assumption by GE.
DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION. The merger agreement
provides that for a period of six years from the closing date of the merger, GE
will cause the surviving corporation in the merger to provide insurance and
indemnification policy for those directors and officers of Harmon who are
currently covered under Harmon insurance and indemnification policy (the
"Indemnified Parties") that provides coverage for events occurring prior to the
effective time that is no less favorable than Harmon's existing policy, or if
substantially equivalent coverage is unavailable, the best available coverage;
provided that GE is not required to expend an amount in excess of 200% of the
annual premiums currently paid by Harmon for such insurance.
GE will cause the surviving corporation also to indemnify all Indemnified
Parties to the fullest extent permitted by applicable law with respect to all
acts and omissions arising out of such individuals' service as officers,
directors, employees or agents of Harmon or any of its subsidiaries or as
trustees or fiduciaries of any plan for the benefit of employees of Harmon or
any of its subsidiaries occurring prior to the effective time of the merger,
including the transactions contemplated by the merger agreement. In the event
that any Indemnified Party becomes involved in any action, proceeding or
investigation in connection with any matter occurring prior to the effective
time of the merger, the surviving corporation will pay, as incurred, such
Indemnified Party's reasonable legal and other expenses (including the cost of
any investigation and preparation) incurred in connection therewith. Subject to
certain notice and cooperation provisions, the surviving corporation of the
merger will pay all reasonable expenses, including attorneys' fees, that may be
incurred by an Indemnified Party in enforcing the indemnification provisions of
the merger agreement or any action involving an Indemnified Party resulting from
the transactions contemplated by the merger agreement.
44
<PAGE>
COMPARATIVE STOCK PRICES AND DIVIDENDS
GE common stock is listed and traded on the NYSE under the symbol "GE."
Harmon common stock is quoted on the Nasdaq under the symbol "HRMN."
The following table sets forth, for the periods indicated, the high and low
sales prices per share of GE common stock and Harmon common stock as reported on
the NYSE Composite Tape and the Nasdaq, and the quarterly cash dividends per
share declared with respect thereto.
<TABLE>
<CAPTION>
HARMON COMMON
GE COMMON STOCK(1) STOCK(2)
--------------------------------- -------------------------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
-------- -------- ----------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
1998
First Quarter........................................ 29.21 23.42 .10 22.00 16.33
Second Quarter....................................... 30.67 26.90 .10 26.00 19.75 .055
Third Quarter........................................ 32.29 24.21 .10 24.00 17.38
Fourth Quarter....................................... 34.65 23.00 .11 2/3 26.50 18.63 .055
1999
First Quarter........................................ 38.06 31.42 .11 2/3 23.50 19.75
Second Quarter....................................... 39.15 33.27 .11 2/3 22.63 15.50 .06
Third Quarter........................................ 40.83 34.19 .11 2/3 20.00 11.94
Fourth Quarter....................................... 53.17 38.21 .13 2/3 15.00 8.28 .06
2000
First Quarter........................................ 54.96 41.67 .13 2/3 18.38 11.13
Second Quarter....................................... 55.98 47.69 .13 2/3 19.50 10.13 .06
Third Quarter (through July 24)...................... 54.63 49.50 29.88 13.00
</TABLE>
------------------------
(1) Reflects a three-for-one stock split effective April 27, 2000.
(2) Reflects a three-for-two stock split effective March 1998.
On July 14, 2000, the last trading day prior to the announcement of the
execution of the merger agreement, the last sales price of Harmon common stock
was $13.1875 per share and the last sales price of GE common stock was $51.500
per share, as reported on the Nasdaq and the NYSE Composite Tape, respectively.
On July 24, 2000, the most recent practicable trading day prior to the printing
of this prospectus, the last sales price of Harmon common stock was $29.44 per
share and the last sales price of GE common stock was $53.75 per share.
The market prices of shares of Harmon common stock and GE common stock are
subject to fluctuation. As a result, Harmon and GE shareholders are urged to
obtain current market quotations.
On July 14, 2000, there were approximately 660 holders of record of Harmon
common stock and approximately 585,000 holders of record of GE common stock.
GE DIVIDEND POLICY
The holders of GE common stock receive dividends if and when declared by the
GE board of directors out of funds legally available therefor. GE expects to
continue paying quarterly cash dividends on GE common stock. The declaration and
payment of dividends after the merger will depend upon business conditions,
operating results and the GE board of directors' consideration of other relevant
factors.
GE declared dividends of $4.786 billion in 1999, or approximately 44.7% of
GE's 1999 consolidated earnings. Per share dividends declared of $.48 2/3 in
fiscal year 1999 increased 17% from 1998, its 24th consecutive annual increase.
45
<PAGE>
GE STOCK REPURCHASE PROGRAM
At year-end 1999, GE had purchased and placed into treasury a total of
304 million shares having an aggregate cost of $15.440 billion under a share
repurchase program begun in December 1994. In December 1999, GE's board of
directors increased the authorization to repurchase GE common stock to
$22 billion and authorized the program to continue through 2002. Such shares are
from time to time reissued upon the exercise of employee stock options,
conversion of convertible securities and for other corporate purposes. GE
intends to continue repurchases of shares in the ordinary course under its
ongoing repurchase program between the date of this document and the merger, and
during the valuation period for the merger.
DESCRIPTION OF GE CAPITAL STOCK
Set forth below is a description of the GE common stock. The following
statements are brief summaries of, and are subject to the detailed provisions
of, the GE Charter, the GE Bylaws and the relevant provisions of the New York
Corporate Law.
GE currently is authorized to issue up to 13,200,000,000 shares of common
stock, par value $.06 per share. GE is also authorized to issue up to 50,000,000
shares of preferred stock, par value $1.00 per share, in series. GE has not
issued any of this preferred stock. If preferred stock is issued, GE's board of
directors may fix the designation, relative rights, preferences and limitations
of the shares of each series.
Dividends may be paid on the GE common stock out of funds legally available
for dividends, when and if declared by GE's board of directors.
Holders of the GE common stock are entitled to share ratably in any
dividends and in any assets available for distribution on liquidation,
dissolution or winding-up, subject, if preferred stock of GE is then
outstanding, to any preferential rights of such preferred stock. Each share of
GE common stock entitles the holder thereof to one vote at all meetings of share
owners, and the votes are noncumulative. The GE common stock is not redeemable,
has no subscription or conversion rights and does not entitle the holder thereof
to any preemptive rights.
TRANSFER AGENT AND REGISTRAR
The Bank of New York is the transfer agent and registrar for the GE common
stock.
STOCK EXCHANGE LISTING; DELISTING AND DEREGISTRATION OF HARMON COMMON STOCK
It is a condition to the offer and the merger that the shares of GE common
stock issuable in the offer and the merger be approved for listing on the NYSE.
If the offer is completed, Harmon common stock may cease to be quoted on the
Nasdaq.
COMPARISON OF STOCKHOLDER RIGHTS
GE is incorporated under the laws of the State of New York, whereas Harmon
is incorporated under the laws of Missouri. If the offer is completed, Harmon
stockholders exchanging their shares in the offer, whose rights are currently
governed by the MGBCL, the articles of incorporation of Harmon and the bylaws of
Harmon, will, upon completion of the offer, become stockholders of GE, and their
rights as such will be governed by the New York Business Corporation Law (the
"NYBCL"), the GE certificate of incorporation and the bylaws of GE. The material
differences between the rights of holders of Harmon common stock and the rights
of holders of GE common stock, resulting from the differences in their governing
documents, are summarized below.
46
<PAGE>
The following summary does not purport to be a complete statement of the
rights of holders of GE common stock under the applicable provisions of the
NYBCL, the GE certificate of incorporation and the GE bylaws or the rights of
the holders of Harmon common stock under the applicable provisions of the MGBCL,
the Harmon articles of incorporation and the Harmon bylaws, or a complete
description of the specific provisions referred to herein. This summary contains
a list of the material differences but is not meant to be relied upon as an
exhaustive list or a detailed description of the provisions discussed and is
qualified in its entirety by reference to the NYBCL and MGBCL and the governing
corporate instruments of GE and Harmon, to which the holders of Harmon common
stock are referred. Copies of such governing corporate instruments of GE and
Harmon are available, without charge, to any person, including any beneficial
owner to whom this prospectus is delivered, by following the instructions listed
under "Where You Can Find More Information."
SUMMARY OF MATERIAL DIFFERENCES BETWEEN THE RIGHTS OF HARMON STOCKHOLDERS
AND THE RIGHTS OF GE STOCKHOLDERS
<TABLE>
<CAPTION>
HARMON STOCKHOLDER RIGHTS GE STOCKHOLDER RIGHTS
------------------------------------------------------ ------------------------------------
<C> <S> <C>
AUTHORIZED CAPITAL The authorized capital stock of Harmon is 50,000,000 The authorized capital stock of GE
STOCK: shares of common stock, par value $.25 per share. currently consists of 13,250,000,000
shares of capital stock, consisting
of (i) 13,200,000,000 shares of GE
common stock, par value $0.06 per
share, and (ii) 50,000,000 shares of
preferred stock, par value $1.00 per
share.
NUMBER OF DIRECTORS: The Harmon board of directors currently consists of 10 The GE board of directors currently
directors classified into three classes of directors. consists of 16 directors.
REMOVAL OF DIRECTORS: The Harmon Bylaws provide that directors can be The NYBCL provides that any or all
removed only for cause by two-thirds vote of of the directors of a corporation
stockholders. may be removed for cause and, if the
certificate of incorporation or
bylaws of the corporation provide,
without cause by vote of the
stockholders.
SHAREHOLDER RIGHTS Harmon has a shareholder rights plan. Harmon's GE does not have a shareholder
PLAN: shareholder rights plan does not apply to the offer rights plan.
and the merger or any other tender or exchange offer
for all outstanding shares of Harmon common stock or
to any merger or similar transaction approved by the
Harmon board of directors.
AMENDMENT OF CHARTER: Section 351.085 of the MBGCL states that a corporation The GE charter may be amended if the
may amend its articles of incorporation, from time to amendment is approved by a majority
time, in any and as many respects as may be desired; vote of the board of directors of GE
provided, that its articles of incorporation as and the affirmative vote of at least
amended contain only such provisions as might be a majority of outstanding
lawfully
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
HARMON STOCKHOLDER RIGHTS GE STOCKHOLDER RIGHTS
------------------------------------------------------ ------------------------------------
<C> <S> <C>
contained in original articles of incorporation if shares of GE common stock. The GE
made at the time of making such amendment, and, if a charter confers upon the GE board
change in shares or an exchange or reclassification of the power to amend or repeal the GE
shares is to be made, such provisions as may be bylaws, except that the GE board
necessary to effect such change, exchange or does not have the authority to amend
reclassification as may be desired and as is permitted or repeal any bylaw which is adopted
by the MGBCL. by the GE stockholders after April
In particular, and without limitation upon such 20, 1948, unless such authority is
general power of amendment, a corporation may amend granted to the GE board by the
its articles of incorporation from time to time so as: specific provisions of a bylaw
(i). To change its corporate name; adopted by the GE stockholders. The
(ii). To change its period of duration; GE bylaws also may be altered,
(iii). To change, enlarge or diminish its corporate amended or repealed, at any time, in
purposes; the manner provided in the GE
(iv). To fix, increase or decrease the number of its charter.
directors or to provide that the number of
directors shall be fixed by, or in the manner
provided in, the by-laws of the corporation, in
which case the corporation's articles of
incorporation , as amended, must comply with
subdivision (6) of Section 351.055 of the MGBCL,
except that they need not set forth the number
of directors which constituted the first board
of directors; provided, however, that the
corporation shall give written notice to the
secretary of state of the number of directors of
the corporation as fixed by any method, such
notice to be given within thirty calendar days
of the date when the number of directors is
fixed, and similar notice to be given whenever
the number of directors is changed;
(v). To increase or decrease the aggregate number of
shares or shares of any class which the
corporation has authority to issue;
(vi). To increase or decrease the par value of the
authorized shares of any class having a par
value, whether issued or unissued; provided,
that if the par value of issued shares is
increased, there shall be transferred to stated
capital at the time of such increase an amount
of surplus equal to the aggregate amount by
which the par value is increased;
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
HARMON STOCKHOLDER RIGHTS GE STOCKHOLDER RIGHTS
------------------------------------------------------ ------------------------------------
<C> <S> <C>
(vii). To exchange, classify, reclassify or cancel all
or any part of its shares whether issued or
unissued;
(viii). To change the designation of all or any part
of its shares whether issued or unissued, and
to change the preferences, qualifications,
limitations, restrictions and special or
relative rights including convertible rights
in respect of all or any part of its shares,
whether issued or unissued;
(ix). To change shares having a par value, whether
issued or unissued, into the same or a different
number of shares without par value, and to
change shares without par value, whether issued
or unissued, into the same or a different number
of shares having a par value;
(x). To create a new class or classes of stock and to
define the preferences, qualifications,
limitations, restrictions, and the special or
relative rights of the shares of such new class
or classes; and
(xi). To establish, limit or deny to shareholders of
any class the preemptive right to acquire
additional shares of the corporation, whether
then or thereafter authorized.
APPRAISAL RIGHTS: Harmon stockholders do not have appraisal rights in The NYBCL provides that, upon strict
connection with the offer. If at the end of the offer compliance with the applicable
we have received between two-thirds and 90% of the statutory requirements and
outstanding Harmon shares, we will effect a long-form procedures, a dissenting stockholder
merger as permitted under Missouri law which would has the right to receive payment of
require notice to and approval by Harmon stockholders. the fair value of such stockholder's
If at the end of the offer, however, we have received shares if such stockholder objects
90% or more of the outstanding Harmon shares, we will to: (i) mergers,
effect a short-form merger as permitted under Missouri (ii) consolidations,
law. Harmon stockholders who did not tender their (iii) dispositions of assets
Harmon shares during the offer would have the right requiring stockholder approval,
under Missouri law to dissent and demand appraisal of (iv) specified share exchanges, or
their Harmon shares in connection with the long-form (v) amendments to the certificate of
or short-form merger, but only if they comply with incorporation which adversely affect
certain statutory requirements. Information regarding the rights of such stockholder.
these requirements will be provided to Harmon
stockholders who have not tendered their Harmon
shares.
</TABLE>
49
<PAGE>
LEGAL MATTERS
The legality of the GE common stock offered hereby will be passed upon for
GE by Robert E. Healing, Corporate Counsel of GE. Mr. Healing beneficially owns
or has rights to acquire an aggregate of less than 0.01% of GE's common stock.
Cahill, Gordon & Reindell, special tax counsel to GE, will deliver an opinion
concerning the federal income tax consequences of the offer and the merger.
EXPERTS
KPMG LLP, independent certified public accountants, audited GE's
consolidated financial statements as of December 31, 1999 and 1998, and for each
of the years in the three-year period ended December 31, 1999. GE's annual
report on Form 10-K includes these financial statements and the auditor's
report. This prospectus incorporates the financial statements and report by
reference, relying on KPMG LLP's authority as experts in accounting and
auditing.
KPMG LLP, independent certified public accountants, audited Harmon's
consolidated financial statements as of December 31, 1999 and 1998, and for each
of the years in the three-year period ended December 31, 1999. Harmon's annual
report on Form 10-K includes these financial statements and the auditor's
report. This prospectus incorporates the financial statements and report by
reference, relying on KPMG LLP's authority as experts in accounting and
auditing.
FORWARD-LOOKING STATEMENTS
CERTAIN PROJECTED FINANCIAL DATA OF HARMON. Prior to entering into the
merger agreement, GE conducted a due diligence review of Harmon and was provided
with certain projections of Harmon's future operating performance (the
"Projections"). Harmon does not, in the ordinary course, publicly disclose
projections and the Projections were not prepared with a view to public
disclosure. Harmon has advised GE and Acquiror that the Projections were
prepared by Harmon's management based on numerous assumptions including, among
others, projections of revenues, operating income, benefits and other expenses,
depreciation and amortization, capital expenditure, continued acquisitions and
working capital requirements. No assurances can be given with respect to any of
those assumptions. The Projections do not give effect to the offer or the
potential combined operations of GE and Harmon or any alterations GE may make to
Harmon's operations or strategy after the consummation of the offer. The
information set forth below is presented for the limited purpose of giving
Harmon shareholders access to the financial projections prepared by Harmon's
management that were made available to GE and Acquiror.
HARMON INDUSTRIES, INC.
PROJECTED FINANCIAL PERFORMANCE(*)
<TABLE>
<CAPTION>
DESCRIPTION FY 2000 FY 2001 FY 2002 FY 2003
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Total Sales................................................ 411.1 555.7 690.6 753.1
Total Costs................................................ 379.9 506.0 623.1 680.1
Earnings before tax........................................ 31.2 49.7 67.5 73.1
Earnings after taxes....................................... 19.0 30.3 41.1 44.6
</TABLE>
------------------------
* All amounts in millions of US$. Excludes restructuring charges.
WHILE PRESENTED WITH NUMERICAL SPECIFICITY, THE PROJECTIONS WERE NOT
PREPARED BY HARMON IN THE ORDINARY COURSE AND ARE BASED UPON A VARIETY OF
ESTIMATES AND HYPOTHETICAL ASSUMPTIONS THAT MAY NOT BE ACCURATE, MAY NOT BE
REALIZED, AND ARE ALSO INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND
COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, EACH OF WHICH IS DIFFICULT TO
PREDICT, AND ARE, IN MOST INSTANCES, BEYOND THE CONTROL OF HARMON. ACCORDINGLY,
THERE CAN BE NO ASSURANCE THAT ANY OF THE
50
<PAGE>
PROJECTIONS WILL BE REALIZED AND THE ACTUAL RESULTS FOR THE YEARS ENDING
DECEMBER 31, 2000 TO 2003 MAY VARY MATERIALLY FROM THOSE SHOWN ABOVE.
The Projections were not prepared in accordance with generally accepted
accounting principles, and neither Harmon's nor GE's independent accountants
have examined or compiled any of the Projections or expressed any conclusion or
provided any other form of assurance with respect to these projections and
accordingly assume no responsibility for these projections. These projections
were prepared with a limited degree of precision, and were not prepared in
compliance with the published guidelines of the SEC or the guidelines
established by the American Institute of Certified Public Accountants regarding
projections, which would require a more complete presentation of data than as
shown above.
THE INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS A
REPRESENTATION EITHER BY GE, HARMON OR ACQUIROR OR ANY OTHER PERSON THAT THE
PROJECTED RESULTS WILL BE ACHIEVED. THE PROJECTIONS SHOULD BE READ IN
CONJUNCTION WITH THE HISTORICAL FINANCIAL INFORMATION OF HARMON INCLUDED ABOVE.
NONE OF GE, HARMON, ACQUIROR, OR ANY OTHER PERSON ASSUMES ANY RESPONSIBILITY FOR
THE ACCURACY OR VALIDITY OF THE FOREGOING PROJECTIONS.
FORWARD LOOKING STATEMENTS. This prospectus, including information included
or incorporated by reference in this document, contains certain forward-looking
statements concerning the financial condition, results of operations and
business of GE following the consummation of its proposed acquisition of Harmon,
the anticipated financial and other benefits of such proposed acquisition and
the plans and objectives of GE's management following such proposed acquisition,
including, without limitation, statements relating to the cost savings expected
to result from the proposed acquisition, anticipated results of operations of
the combined Harmon following the proposed acquisition, projected earnings per
share of the combined Harmon following the proposed acquisition and the
restructuring charges estimated to be incurred in connection with the proposed
acquisition. Generally, the words "will," "may," "should," "continue,"
"believes," "expects," "intends," "anticipates" or similar expressions identify
forward-looking statements.
These forward-looking statements involve certain risks and uncertainties.
Factors that could cause actual results to differ materially from those
contemplated by the forward-looking statements include, among others, the
following factors:
- cost savings expected to result from the proposed acquisition may not be
fully realized or realized within the expected time frame,
- operating results following the proposed acquisition may be lower than
expected,
- competitive pressure among companies in our industry may increase
significantly,
- costs or difficulties related to the integration of the businesses of GE
and Harmon may be greater than expected,
- adverse changes in the interest rate environment may reduce interest
margins or adversely affect asset values of the combined Harmon,
- general economic conditions, whether nationally or in the market areas in
which GE and Harmon conduct business, may be less favorable than expected,
- legislation or regulatory changes may adversely affect the businesses in
which GE and Harmon are engaged, or
- adverse changes may occur in the securities markets.
See "Where You Can Find More Information."
51
<PAGE>
MISCELLANEOUS
The offer is being made solely by this Prospectus and the related Letter of
Transmittal and is being made to holders of shares. Acquiror is not aware of any
jurisdiction where the making of the offer is prohibited by any administrative
or judicial action pursuant to any valid state statute. If Acquiror becomes
aware of any valid state statute prohibiting the making of the offer or the
acceptance of shares pursuant thereto, Acquiror will make a good faith effort to
comply with any such state statute. If, after such good faith effort, Acquiror
cannot comply with any such state statute, the offer will not be made to (nor
will tenders be accepted from or on behalf of) the holders of shares in such
state. 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 shall be deemed
to be made on behalf of Acquiror by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF ACQUIROR OR HARMON NOT CONTAINED IN THIS PROSPECTUS
OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
52
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF GE AND ACQUIROR
Set forth in the table below are the names and the present principal
occupations or employment and the name, principal business and address of any
corporation or other organization in which such occupation or employment is
conducted, and the five-year employment history of, each of the directors and
executive officers of GE. Except as indicated, each person identified below is a
United States citizen. Mr. Fresco is a citizen of Italy, Mr. Gonzalez is a
citizen of Mexico and Ms. Jung is a citizen of Canada.
GE DIRECTORS
<TABLE>
<CAPTION>
NAMES AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------- --------------------------------------------------------
<S> <C> <C>
James I. Cash, Jr. 52 Director since 1997. James E. Robison Professor of
Harvard Business School Business Administration--Graduate School of Business
Morgan Hall Administration, Harvard University, Cambridge, Mass. A
Soldiers Field Road graduate of Texas Christian University with MS and PhD
Boston, MA 02163 degrees from Purdue University, Dr. Cash joined the
faculty of Harvard Business School in 1976, where he
served as chairman of the MBA program from 1992 to 1995.
Dr. Cash is also a director of Cambridge Technology
Partners, The Chubb Corporation, Knight-Ridder, Inc.,
State Street Bank and Trust, and WinStar Corporation. He
also serves as a trustee of the Massachusetts General
Hospital and Partners Healthcare and as an overseer for
the Boston Museum of Science.
Silas S. Cathcart 73 Director 1972-1987 and since 1990. Retired Chairman of
222 Wisconsin Avenue the Board and Chief Executive Officer, Illinois Tool
Suite 103 Works, Inc., diversified products, Chicago, Ill.
Lake Forest, IL 60045 Following his graduation from Princeton in 1948, Mr.
Cathcart joined Illinois Tool Works, Inc., a
manufacturer of tools, fasteners, packaging and other
products. He was named a vice president in 1954,
executive vice president in 1962, and president and
director in 1964, and he served as chairman from 1972 to
1986. From 1987 to 1989, he served as chairman of the
board of Kidder, Peabody Group Inc. Mr. Cathcart is also
a director of Cardinal Health, Inc. and serves as a
trustee of the Buffalo Bill Historical Society.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
NAMES AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------- --------------------------------------------------------
<S> <C> <C>
Dennis D. Dammerman 54 Director since 1994. Vice Chairman of the Board and
General Electric Company Executive Officer, General Electric Company; Chairman,
3135 Easton Turnpike General Electric Capital Services, Inc. Mr. Dammerman
Fairfield, CT 06431 joined GE after graduating from the University of
Dubuque in 1967. He had financial assignments in several
GE businesses before being named vice president and
comptroller of General Electric Credit Corporation (now
GE Capital Corporation) in 1979. In 1981, he became vice
president and general manager of GE Capital's Commercial
Financial Services Department and, later that year, of
GE Capital's Real Estate Financial Services Division. He
was elected Senior Vice President for Finance of GE in
1984, a director of GE in 1994 and, in 1998, was named
Vice Chairman of the Board and Executive Officer of GE
and Chairman and CEO of GE Capital Services, Inc.
Paolo Fresco 66 Director since 1990. Chairman of the Board, Fiat SpA,
Fiat SpA automotive and industrial products, Turin, Italy. Mr.
via Nizza 250 Fresco received a law degree from the University of
10126 Torino, Italy Genoa. After practicing law in Rome, he joined GE's
Italian subsidiary, Compagnia Generale di Elettricita
(COGENEL), in 1962 as corporate counsel, becoming
president and general manager of that company in 1972.
In 1976, he joined GE's International Group and was
elected a vice president in 1977. Mr. Fresco became vice
president and general manager--Europe and Africa
Operations in 1979. In 1985, he was named vice president
and general manager--International Operations. In 1987,
he was elected senior vice president--GE International.
He became a member of the GE Board in 1990 and was
elected vice chairman of the board and executive officer
of GE in 1992. Mr. Fresco retired from GE and became
chairman of the board of Fiat SpA of Italy in 1998.
Ann M. Fudge 48 Director since 1999. President, Kraft's Maxwell House
Kraft Foods, Inc. and Post Division, and Executive Vice President, Kraft
555 South Broadway Foods, Inc., packaged foods, White Plains, N.Y. After
Tarrytown, NY 10591 graduating from Simmons College in 1973, Ms. Fudge
worked in human resources for GE until entering Harvard
University, where she obtained an MBA in 1977. She then
held marketing positions at General Mills until joining
General Foods in 1986, where she was appointed executive
vice president in 1991. In 1994, she was named president
of Kraft General Foods' Maxwell House Coffee Company,
and in 1995, executive vice president of Kraft Foods,
Inc. She became president of Kraft's Maxwell House and
Post coffee and cereal division in 1997. Ms. Fudge is a
director of Honeywell International Inc., Liz Claiborne,
Inc. and the Federal Reserve Bank of New York.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
NAMES AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------- --------------------------------------------------------
<S> <C> <C>
Claudio X. Gonzalez 65 Director since 1993. Chairman of the Board and Chief
Kimberly-Clark de Mexico, Executive Officer, Kimberly-Clark de Mexico, S.A. de
S.A. de C.V. C.V., Mexico City, and Director, Kimberly-Clark
Jose Luis Lagrange 103, Corporation, consumer and paper products. Mr. Gonzalez
Tercero Piso is a graduate of Stanford University. He was employed by
Colonia Los Morales Kimberly-Clark in 1956 and by Kimberly-Clark de Mexico,
Mexico, D.F. 11510, Mexico S.A. in 1957. He was elected vice president of
operations of Kimberly-Clark de Mexico, S.A. in 1962 and
executive vice president and managing director in 1966.
He assumed his present position in 1973. Mr. Gonzalez is
also a director of Kellogg Company, The Mexico Fund,
Inc., Planet Hollywood International, Inc., Banco
Nacional de Mexico, Grupo Carso, Grupo Industrial ALFA,
Grupo Modelo, Grupo Televisa and Telefonos de Mexico.
Andrea Jung 41 Director since 1998. President and Chief Executive
Avon Products, Inc. Officer, and Director, Avon Products, Inc., cosmetics,
1345 Avenue of the Americas New York, N.Y. Ms. Jung, a graduate of Princeton
New York, NY 10105 University, joined Avon Products, Inc., a multinational
cosmetics company, in 1994 as president, product
marketing for Avon U.S. She was elected president,
global marketing, in 1996, an executive vice president
in 1997, president and a director of the company in 1998
and chief executive officer in 1999. Previously, she was
executive vice president, Neiman Marcus and a senior
vice president for I. Magnin. Ms. Jung is also a member
of the Princeton University Board of Trustees and is a
director of Catalyst and the Cosmetic, Toiletry and
Fragrance Association.
Kenneth G. Langone 64 Director since 1999. Chairman, President and Chief
Invemed Associates, Inc. Executive Officer, Invemed Associates, Inc., investment
375 Park Avenue banking and brokerage, New York, N.Y. Mr. Langone
New York, NY 10152 received a BA from Bucknell University and an MBA from
New York University's Stern School of Business. He is
the founder of Invemed Associates, Inc., and a
co-founder, director and member of the executive
committee of Home Depot, Inc. He is also a director of
DBT Online, Inc., InterWorld Corporation, TRICON Global
Restaurants, Inc. and Unifi, Inc., as well as the New
York Stock Exchange. In addition to serving as a
director of numerous charitable organizations, Mr.
Langone is chairman of the NYU School of Medicine and
serves on the Board of Trustees of New York University
and the Board of Overseers of its Stern School of
Business.
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
NAMES AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------- --------------------------------------------------------
<S> <C> <C>
Scott G. McNealy 45 Director since 1999. Chairman, President and Chief
Sun Microsystems, Inc. Executive Officer, Sun Microsystems, Inc., supplier of
901 San Antonio Road network computing solutions, Palo Alto, Calif. After
Palo Alto, CA 94303-4900 graduating with an economics degree from Harvard
University in 1976, Mr. McNealy worked in manufacturing
for Rockwell International before entering Stanford
University, where he obtained an MBA degree in 1980.
Following Stanford, Mr. McNealy worked at FMC
Corporation and Onyx Systems before co-founding Sun
Microsystems, Inc., where he became a director and vice
president of operations in 1982. Mr. McNealy has been
chairman of the Board of Directors and chief executive
officer of Sun Microsystems since 1984.
Gertrude G. Michelson 74 Director since 1976. Former member of the Board of
Federated Department Stores Directors, Federated Department Stores, Senior Vice
151 West 34th Street President--External Affairs and former Director, R. H.
New York, NY 10001 Macy & Co., Inc., retailers, New York, N.Y. Mrs.
Michelson received a BA degree from Pennsylvania State
University in 1945 and an LLB degree from Columbia
University in 1947, at which time she joined Macy's--New
York. Mrs. Michelson was elected a vice president in
1963 and senior vice president in 1979, and she was
named senior vice president--external affairs in 1980.
She served as senior advisor to R. H. Macy & Co., Inc.
from 1992 to 1994. She is chairman emeritus of the Board
of Trustees of Columbia University and president of the
Board of Overseers, TIAA-CREF.
Sam Nunn 61 Director since 1997. Partner, King & Spalding, law firm,
King & Spalding Atlanta, Ga. After attending Georgia Institute of
191 Peachtree Street, N.E. Technology and serving in the U.S. Coast Guard, Mr. Nunn
Atlanta, Georgia 30303 received an AB degree from Emory University in 1960 and
an LLB degree from Emory Law School in 1962. He then
practiced law and served in the Georgia House of
Representatives before being elected to the United
States Senate in 1972, where he served as the chairman
and ranking member on both the Senate Armed Services
Committee and the Senate Permanent Committee on
Investigations before retiring in 1997. Mr. Nunn is also
a director of The Coca-Cola Company, Dell Computer
Corporation, Internet Security Systems Group, Inc.,
National Service Industries, Inc., Scientific-Atlanta,
Inc., Texaco Inc. and Total System Services, Inc. He
also is involved in public policy work as chairman of
the board of the Center for Strategic and International
Studies (CSIS) and the Sam Nunn School of International
Affairs at the Georgia Institute of Technology.
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
NAMES AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------- --------------------------------------------------------
<S> <C> <C>
Roger S. Penske 63 Director since 1994. Chairman of the Board and
Penske Corporation President, Penske Corporation, Detroit Diesel
13400 Outer Drive, Corporation, Penske Truck Leasing Corporation, and
West Detroit, MI 48239-4001 United Auto Group, Inc., transportation and automotive
services, Detroit, Mich. A 1959 graduate of Lehigh (Pa.)
University, Mr. Penske founded Penske Corporation in
1969. He became chairman of the board of Penske Truck
Leasing Corporation in 1982, chairman and chief
executive officer of Detroit Diesel Corporation in 1988
and chairman of the board of United Auto Group, Inc. in
1999. Mr. Penske is also vice chairman and a director of
International Speedway Corporation and a director of
Delphi Automotive Systems Corporation. He serves as a
trustee of the Henry Ford Museum and Greenfield Village,
is a director of Detroit Renaissance and is a member of
the Business Council.
Frank H.T. Rhodes 73 Director since 1984. President Emeritus, Cornell
Cornell University University, Ithaca, N.Y. An English-born naturalized
3104 Snee Building U.S. citizen, Dr. Rhodes holds bachelor of science,
Ithaca, NY 14853 doctor of philosophy and doctor of science degrees from
the University of Birmingham (U.K.). He served as
president of Cornell University from 1977 to 1995. Dr.
Rhodes was appointed by President Reagan as a member of
the National Science Board, of which he is a former
chairman, and by President Bush as a member of the
President's Education Policy Advisory Committee.
Andrew C. Sigler 68 Director since 1984. Retired Chairman of the Board and
Champion International CEO and former Director, Champion International
Corporation Corporation, paper and forest products, Stamford, Conn.
1 Champion Plaza A graduate of Dartmouth College with an MBA degree from
Stamford, CT 06921 its Amos Tuck School of Business Administration, Mr.
Sigler joined Champion Papers Inc., a predecessor of
Champion International, in 1956. He served as chairman
of the board of directors and chief executive officer of
Champion International from 1979 until his retirement in
1996. Mr. Sigler is also a director of Honeywell
International Inc. and The Chase Manhattan Corporation.
</TABLE>
I-5
<PAGE>
<TABLE>
<CAPTION>
NAMES AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------- --------------------------------------------------------
<S> <C> <C>
Douglas A. Warner III 53 Director since 1992. Chairman of the Board, President
J.P. Morgan & Co., Inc. & and Chief Executive Officer, J.P. Morgan & Co.
Morgan Guaranty Trust Co. Incorporated and Morgan Guaranty Trust Company, New
60 Wall Street York, N.Y. Following graduation from Yale University in
New York, NY 10260 1968, Mr. Warner joined Morgan Guaranty Trust Company, a
wholly owned subsidiary of J.P. Morgan & Co.
Incorporated. He was named an executive vice president
of the bank in 1987, executive vice president of the
parent in 1989 and managing director of the bank and its
parent in 1989. He was elected president and a director
of the bank and its parent in 1990 and became chairman
and chief executive officer in 1995. Mr. Warner is also
a director of Anheuser-Busch Companies, Inc., chairman
of the Board of Managers and the Board of Overseers of
Memorial Sloan-Kettering Cancer Center, a member of the
Business Council and a trustee of the Pierpont Morgan
Library.
John F. Welch, Jr. 64 Director since 1980. Chairman of the Board and Chief
General Electric Company Executive Officer, General Electric Company. A 1957
3135 Easton Turnpike graduate of the University of Massachusetts with MS and
Fairfield, CT 06431 PhD degrees from the University of Illinois, Mr. Welch
joined GE in 1960. Following managerial assignments in
the plastics and the chemical and metallurgical
businesses, he was elected a vice president in 1972. In
1973, he was named vice president and group executive of
the Components and Materials Group. He became a senior
vice president and sector executive of the Consumer
Products and Services Sector in 1977 and was elected a
vice chairman and named an executive officer in 1979.
Mr. Welch was elected Chairman and named Chief Executive
Officer in 1981. He also serves as a director of Fiat
SpA and NBC Internet, Inc.
</TABLE>
GE EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAMES AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------- --------------------------------------------------------
<S> <C> <C>
John F. Welch, Jr. 64 Director since 1980. Chairman of the Board and Chief
General Electric Company Executive Officer, General Electric Company. Mr. Welch
3135 Easton Turnpike joined GE in 1960, and was elected a Vice Chairman and
Fairfield, CT 06431 named an Executive Officer in 1979. Mr. Welch was
elected Chairman and named Chief Executive Officer in
1981.
Philip D. Ameen 51 GE Vice President and Comptroller since 1994.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
</TABLE>
I-6
<PAGE>
<TABLE>
<CAPTION>
NAMES AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------- --------------------------------------------------------
<S> <C> <C>
Francis S. Blake 50 GE Senior Vice President--Corporate Business Development
General Electric Company since July 3, 2000. Prior to that, he served in
3135 Easton Turnpike executive positions in GE's Power Systems business, most
Fairfield, CT 06431 recently as Vice President--Business Development, and
Vice President--General Counsel.
James R. Bunt 58 GE Vice President and Treasurer since 1993.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
William J. Conaty 54 GE Senior Vice President--Human Resources since 1993.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Dennis D. Dammerman 54 Vice Chairman of the Board and Executive Officer. He was
General Electric Company elected Senior Vice President for Finance of GE in 1984,
3135 Easton Turnpike a director of GE in 1994 and, in 1998, was named Vice
Fairfield, CT 06431 Chairman of the Board and Executive Officer of GE and
Chairman and CEO of GE Capital Services, Inc.
Lewis S. Edelheit 57 GE Senior Vice President--Corporate Research and
General Electric Company Development since 1992.
P.O. Box 8
Schenectady, NY 12301
Matthew J. Espe 41 GE Senior Vice President and President and CEO--GE
General Electric Company Lighting since May 16, 2000. Prior to that, Mr. Espe
Nela Park served in executive positions in GE Plastics.
Cleveland, OH 44112
Benjamin W. Heineman, Jr. 56 GE Senior Vice President, General Counsel and Secretary
General Electric Company since 1987.
3135 Easton Turnpike
Fairfield, CT 06431
Jeffrey R. Immelt 44 GE Senior Vice President and President and CEO--GE
General Electric Company Medical Systems since 1997. Prior to that, Mr. Immelt
P.O. Box 414 served in executive positions in GE Plastics.
Milwaukee, WI 53201
Lawrence R. Johnston 51 GE Senior Vice President and President and CEO--GE
General Electric Company Appliances since 1999. Prior to that, Mr. Johnston
Appliance Park served in executive positions in GE's Appliances and
Louisville, KY 40225 Medical Systems businesses.
John Krenicki, Jr. 38 GE Vice President and President and CEO--GE
General Electric Company Transportation Systems since July 14, 2000. Prior to
2901 East Lake Road that, Mr. Krenicki served in executive positions in GE's
Erie, PA 16531 Plastics and Lighting businesses.
W. James McNerney, Jr. 50 GE Senior Vice President and President and CEO--GE
General Electric Company Aircraft Engines since 1997. Prior to that,
1 Neumann Way Mr. McNerney served in executive positions in GE's
Cincinnati, OH 05215 Lighting and International businesses.
</TABLE>
I-7
<PAGE>
<TABLE>
<CAPTION>
NAMES AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------- --------------------------------------------------------
<S> <C> <C>
Robert L. Nardelli 51 GE Senior Vice President and President and CEO--GE Power
General Electric Company Systems since 1995.
1 River Road
Schenectady, NY 12345
Robert W. Nelson 59 GE Vice President--Financial Planning and Analysis since
General Electric Company 1991.
3135 Easton Turnpike
Fairfield, CT 06431
Gary M. Reiner 46 GE Senior Vice President and Chief Information Officer
General Electric Company since 1996. Prior to that, he served as GE Vice
3135 Easton Turnpike President--Corporate Business Development.
Fairfield, CT 06431
John G. Rice 43 GE Senior Vice President and Chief Operating Officer--GE
General Electric Company Power Systems since July 3, 2000. Prior to that, he
1 River Road served in executive positions in GE's Transportation
Schenectady, NY 12345 Systems and Plastics businesses.
Gary L. Rogers 55 GE Senior Vice President and President and CEO--GE
General Electric Company Plastics since 1989.
1 Plastics Avenue
Pittsfield, MA 01201
Keith S. Sherin 41 GE Senior Vice President and Chief Financial Officer
General Electric Company since 1998. Prior to that, Mr. Sherin served in
3135 Easton Turnpike financial executive positions in GE Medical Systems.
Fairfield, CT 06431
Lloyd G. Trotter 54 GE Senior Vice President and President and CEO--GE
General Electric Company Industrial Systems since 1992.
41 Woodford Avenue
Plainville, CT 06062
</TABLE>
ACQUIROR DIRECTORS AND OFFICERS
Set forth in the table below are the name and the present principal
occupations or employment and the name, principal business and address of any
corporation or other organization in which such occupation or employment is
conducted, and the five-year employment history of each of the directors and
executive officers of Acquiror. Except as indicated, each person identified
below is a United States citizen.
<TABLE>
<CAPTION>
NAMES AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------- --------------------------------------------------------
<S> <C> <C>
John Krenicki 38 Director and President of Four Points Acquisition, Inc.
Four Points Acquisition, since July 14, 2000. Mr. Krenicki has been the President
Inc. and Chief Executive Officer of GE Transportation Systems
2901 East Lake Road since July 3, 2000. Prior to that he served in executive
Erie, PA 16531 positions in GE's Plastics and Lighting businesses.
</TABLE>
I-8
<PAGE>
<TABLE>
<CAPTION>
NAMES AND CURRENT PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS AGE MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---------------------------- -------- --------------------------------------------------------
<S> <C> <C>
JoAnn Campbell 36 Vice President and Treasurer of Four Points Acquisition,
Four Points Acquisition, Inc. since July 14, 2000. Ms. Campbell has been the
Inc. Chief Financial Officer of GE Transportation Systems
2901 East Lake Road since June 1998. Prior to such time she was employed by
Erie, PA 16531 GE in its GE Plastics and GE Industrial Systems
businesses. Ms. Campbell is a citizen of Canada.
Scott Seeley 42 Secretary of Four Points Acquisition, Inc. since July
Four Points Acquisition, 14, 2000. Mr. Seeley has been the General Counsel of GE
Inc. Transportation Systems since May 2000. Prior to that he
2901 East Lake Road was employed by GE in its GE Mexico and GE Lighting
Erie, PA 16531 businesses.
</TABLE>
I-9
<PAGE>
ANNEX A
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
GENERAL ELECTRIC COMPANY,
FOUR POINTS ACQUISITION, INC.
AND
HARMON INDUSTRIES, INC.
DATED AS OF JULY 16, 2000
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C> <C>
Section 1.1 The Offer................................................... A-1
Section 1.2 Company Action.............................................. A-3
Section 1.3 Directors................................................... A-4
ARTICLE II THE MERGER........................................................ A-5
Section 2.1 The Merger.................................................. A-5
Section 2.2 Effect of the Merger........................................ A-5
Section 2.3 Closing..................................................... A-5
Section 2.4 Consummation of the Merger.................................. A-5
Articles of Incorporation; By-Laws; Directors and
Section 2.5 Officers.................................................... A-5
Section 2.6 Effect on Capital Stock..................................... A-5
Section 2.7 Exchange of Certificates.................................... A-6
Section 2.8 Stock Options............................................... A-7
Section 2.9 Dissenting Shares........................................... A-8
Section
2.10 Tax Consequences............................................ A-9
Section
2.11 Adjustment of Exchange Ratio................................ A-9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................... A-9
Section 3.1 Organization and Qualification.............................. A-9
Section 3.2 Subsidiaries................................................ A-9
Section 3.3 Authority Relative to Agreements............................ A-10
Section 3.4 Non-Contravention........................................... A-10
Section 3.5 Capitalization.............................................. A-10
Section 3.6 SEC Filings................................................. A-11
Section 3.7 Financial Statements........................................ A-11
Section 3.8 Absence of Certain Changes or Events........................ A-12
Section 3.9 Governmental Approvals...................................... A-12
Section
3.10 Compliance with Laws; No Default............................ A-12
Section
3.11 Information Supplied........................................ A-13
Section
3.12 Litigation.................................................. A-13
Section
3.13 Intellectual Property Rights................................ A-14
Section
3.14 Taxes....................................................... A-15
Section
3.15 Employee Benefit Plans...................................... A-16
Section
3.16 Environmental Matters....................................... A-18
Section
3.17 Customer Relationships...................................... A-18
Section
3.18 Certain Transactions........................................ A-18
Section
3.19 Title to Properties; Absence of Liens and Encumbrances...... A-19
Section
3.20 Insurance................................................... A-19
Section
3.21 State Takeover Statutes; Certain Charter Provisions......... A-19
Section
3.22 Rights Agreement............................................ A-19
Section
3.23 Material Contracts.......................................... A-20
Section
3.24 Opinion of Financial Advisor................................ A-20
Section
3.25 Brokers..................................................... A-21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION..........
A-21
Section 4.1 Organization and Qualification.............................. A-21
Section 4.2 Authorization of Agreement, Non-Contravention, Etc.......... A-21
Section 4.3 SEC Filings................................................. A-22
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C> <C>
Section 4.4 Financial Statements........................................ A-22
Section 4.5 Absence of Certain Changes or Events........................ A-22
Section 4.6 Parent Shares............................................... A-22
Section 4.7 Information Supplied........................................ A-22
Section 4.8 Reorganization.............................................. A-23
Section 4.9 Operations and Assets of Acquisition........................ A-23
Section
4.10 Brokers..................................................... A-23
ARTICLE V CERTAIN AGREEMENTS................................................. A-23
Section 5.1 Conduct of the Company's Business........................... A-23
Section 5.2 Stockholder Approval; Preparation of Proxy Statement........ A-25
Section 5.3 Access to Information....................................... A-25
Section 5.4 Further Assurances.......................................... A-26
Section 5.5 Inquiries and Negotiations.................................. A-26
Section 5.6 Notification of Certain Matters, Etc........................ A-28
Section 5.7 Indemnification............................................. A-28
Section 5.8 Employee Benefits........................................... A-29
Section 5.9 Section 16 Matters.......................................... A-30
Section
5.10 Tax Treatment............................................... A-30
Section
5.11 Affiliate Letters........................................... A-30
ARTICLE VI CONDITIONS TO THE MERGER.......................................... A-30
Section 6.1 Conditions to the Obligations of the Parties................ A-30
ARTICLE VII TERMINATION AND ABANDONMENT...................................... A-31
Section 7.1 Termination and Abandonment................................. A-31
Section 7.2 Effect of Termination....................................... A-31
ARTICLE VIII MISCELLANEOUS................................................... A-32
Section 8.1 Nonsurvival of Representations and Warranties............... A-32
Section 8.2 Expenses, Etc............................................... A-32
Section 8.3 Publicity................................................... A-32
Section 8.4 Execution in Counterparts................................... A-32
Section 8.5 Notices..................................................... A-32
Section 8.6 Waivers..................................................... A-33
Section 8.7 Entire Agreement............................................ A-33
Section 8.8 Applicable Law.............................................. A-34
Section 8.9 Binding Effect, Benefits.................................... A-34
Section
8.10 Assignability............................................... A-34
Section
8.11 Amendments.................................................. A-34
Section
8.12 Interpretation.............................................. A-34
</TABLE>
A-ii
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Acquisition................................................. 1
Alternative Transaction..................................... 32
Closing..................................................... 6
Closing Date................................................ 6
Code........................................................ 1
Company..................................................... 1
Company Option Plans........................................ 9
Company Plans............................................... 19
Company SEC Filings......................................... 13
Company Stock Options....................................... 9
Company Stock Plans......................................... 12
Company Stock Rights........................................ 12
Company Stockholder Approval................................ 12
Continuing Directors........................................ 4
D&O Insurance............................................... 34
Dissenting Shares........................................... 10
Dissenting Stockholder...................................... 10
Effective Time.............................................. 6
Environmental Event......................................... 21
ERISA....................................................... 19
ERISA Affiliate............................................. 20
Exchange Act................................................ 1
Exchange Agent.............................................. 7
Exchange Fund............................................... 7
Exchange Ratio.............................................. 2
Excluded Shares............................................. 7
Form S-4.................................................... 3
Governmental Entity......................................... 14
HSR Act..................................................... 14
Indemnified Liabilities..................................... 35
Indemnified Persons......................................... 34
Insurance Policies.......................................... 22
Intellectual Property....................................... 16
Licensed Intellectual Property.............................. 17
Licenses.................................................... 16
Liens....................................................... 11
Loss Contract............................................... 21
Material Adverse Effect..................................... 11
Merger...................................................... 1
Merger Consideration........................................ 7
MGBCL....................................................... 3
Minimum Condition........................................... 2
NYSE........................................................ 2
Offer....................................................... 1
Option Agreement............................................ 1
Outside Date................................................ 2
Owned Intellectual Property................................. 16
</TABLE>
A-iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Parent...................................................... 1
Parent Options.............................................. 9
Parent SEC Filings.......................................... 26
Parent Shares............................................... 2
Payment Event............................................... 33
Proxy Statement............................................. 14
Rights Agreement............................................ 13
Schedule 14D-9.............................................. 3
SEC......................................................... 3
Securities Act.............................................. 3
Shares...................................................... 1
Stockholders Meeting........................................ 30
Subsidiary.................................................. 12
Superior Proposal........................................... 32
Support Agreement........................................... 1
Surviving Corporation....................................... 1
Tax......................................................... 19
Tax Return.................................................. 19
Third Party................................................. 31
Third Party Software........................................ 16
Transaction................................................. 1
Violation................................................... 15
</TABLE>
A-iv
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 16, 2000, among GENERAL
ELECTRIC COMPANY, a New York corporation ("Parent"), FOUR POINTS
ACQUISITION, INC., a Missouri corporation and a wholly owned subsidiary of
Parent ("Acquisition"), and HARMON INDUSTRIES, INC., a Missouri corporation (the
"Company").
WHEREAS, the Board of Directors of the Company and Acquisition each has, in
light of and subject to the terms and conditions set forth herein,
(i) determined that a business combination between Parent and the Company is
fair to their respective stockholders and in the best interests of such
stockholders and (ii) accordingly has approved an exchange offer (the "Offer")
as described herein and a merger (the "Merger") of Acquisition with and into the
Company, with the Company as the Surviving Corporation (the "Surviving
Corporation"), upon the terms and subject to the conditions set forth herein;
WHEREAS, for Federal income tax purposes, it is intended that the Offer and
the Merger shall be treated as an integrated transaction (together, the
"Transaction") and shall qualify as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, in order to induce Parent to execute and deliver this Agreement,
(i) Parent and the Company are entering into a stock option agreement (the
"Option Agreement"), pursuant to which the Company is granting Parent the option
to purchase shares of common stock, par value $0.25 per share (the "Shares"), of
the Company upon the terms and subject to the conditions set forth therein and
(ii) Parent and certain stockholders of the Company are entering into a support
agreement (the "Support Agreement"), pursuant to which such stockholders have
agreed to tender their Shares into the Offer and vote for the Merger;
WHEREAS, by resolutions duly adopted, the respective Boards of Directors of
the Company and Acquisition have approved and adopted this Agreement and the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, the Company, Parent and Acquisition hereby agree as
follows:
THE OFFER
Section 1.1 THE OFFER.
(a) Provided that this Agreement has not been terminated pursuant to
the terms hereof, as promptly as reasonably practicable, but no later than
the tenth business day after the public announcement of the execution of
this Agreement (counting the business day on which such announcement is
made), Acquisition shall commence (within the meaning of Rule 14d-2 under
the Securities Exchange Act of 1934 (the "Exchange Act")), the Offer to
exchange a number of duly authorized, validly issued, fully paid and
non-assessable shares of common stock, par value $0.06 per share (the
"Parent Shares"), of Parent equal to the Exchange Ratio for each outstanding
Share, including the associated Rights issued pursuant to the Rights
Agreement (as defined herein). The "Exchange Ratio" shall mean $30 divided
by the Average Parent Price. The Exchange Ratio shall be rounded to the
nearest ten-thousandth of a share. The "Average Parent Price" shall mean the
average of the daily volume-weighted sales prices per share of the Parent
Shares on the New York Stock Exchange, Inc., (the "NYSE") (as reported by
Bloomberg Financial Markets or, if not reported thereby, any other
authoritative source) for each of the ten consecutive trading days ending on
the trading day that is two trading days prior to the date on which the
Shares are accepted for payment in the Offer.
A-1
<PAGE>
(b) The obligation of Acquisition to accept for payment and to pay for
any Shares tendered pursuant to the Offer shall be subject only to (i) the
condition that there shall be validly tendered a number of Shares which,
together with the Shares then beneficially owned by Parent (not counting any
Shares issuable pursuant to the Option Agreement), represents at least
two-thirds of the total number of outstanding Shares, assuming the exercise
of all options, rights and convertible securities issued by the Company
which may be exercised or converted prior to the Effective Time and the
issuance of all Shares that the Company is obligated to issue thereunder
(the "Minimum Condition"), and (ii) the other conditions set forth in Annex
I hereto. Acquisition expressly reserves the right to increase the Exchange
Ratio or to make any other changes in the terms and conditions of the Offer;
PROVIDED, HOWEVER, that (i) the Minimum Condition may be amended or waived
only with the prior written consent of the Company and (ii) no change may be
made that changes the form of consideration to be paid, decreases the price
per Share or the number of Shares sought in the Offer, imposes conditions to
the Offer in addition to those set forth in Annex I, extends the expiration
date of the Offer beyond the initial expiration date of the Offer (except as
provided in (c), below) or makes any other change which is adverse to the
holders of the Shares. Subject to the terms and conditions of the Offer and
this Agreement, Acquisition shall accept for payment all Shares validly
tendered and not withdrawn pursuant to the Offer as soon as it is permitted
to do so under applicable law and shall pay for such Shares promptly
thereafter. Notwithstanding anything to the contrary set forth herein, no
certificates representing fractional Parent Shares shall be issued in
connection with the exchange of Parent Shares for Shares upon consummation
of the Offer, and in lieu thereof each tendering stockholder who would
otherwise be entitled to a fractional Parent Share in the Offer will be paid
an amount in cash equal to the product obtained by multiplying (A) the
fractional share interest to which such holder would otherwise be entitled
by (B) the closing price of the Parent Shares on the NYSE (as reported in
The Wall Street Journal or, if not reported therein, any other authoritative
source) on the date Acquisition accepts Shares for payment in the Offer.
(c) The Offer shall initially be scheduled to expire 20 business days
following the commencement thereof. If the conditions to the Offer are not
satisfied or waived on any scheduled expiration date of the Offer and such
conditions could reasonably be expected to be satisfied, Parent shall cause
Acquisition to, and Acquisition shall, extend the Offer, from time to time
for such amount of time as is reasonably necessary to permit such conditions
to be satisfied or waived; PROVIDED that (i) no single extension shall
exceed 10 business days and (ii) Acquisition shall not be required to extend
the Offer beyond November 30, 2000 (the "Outside Date"). Notwithstanding the
foregoing, Acquisition may, without the consent of the Company, (i) extend
the Offer for any period required by any rule or regulation of the
Securities and Exchange Commission (the "SEC") applicable to the Offer and
(ii) if more than two-thirds but less than 90% of the outstanding Shares
shall have been validly tendered pursuant to the Offer as of the scheduled
or extended expiration date, extend the Offer for an aggregate period of not
more than ten business days beyond the latest expiration date that would
otherwise be permitted under clause (i) of this sentence.
(d) As soon as practicable on the date of commencement of the Offer,
Parent shall file with the SEC a registration statement on Form S-4 to
register the offer and sale of Parent Shares pursuant to the Offer (the
"Form S-4"). The Form S-4 will include a preliminary prospectus containing
the information required under Rule 14d-4(b) promulgated under the Exchange
Act (the "Preliminary Prospectus"). As soon as practicable on the date of
commencement of the Offer, Parent and Acquisition shall (i) file with the
SEC a Tender Offer Statement on Schedule TO with respect to the Offer which
will contain or incorporate by reference all or part of the Preliminary
Prospectus and form of the related letter of transmittal and (ii) cause the
Offer Documents to be disseminated to holders of Shares. Parent and
Acquisition agree that they shall cause the Form S-4, the Schedule TO, the
Offer to Purchase and all amendments or supplements thereto
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(which together constitute the "Offer Documents") to comply in all material
respects with the Exchange Act, the Securities Act of 1933 (the "Securities
Act") and the rules and regulations thereunder and other applicable laws.
Each of Parent, Acquisition and the Company 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, and Parent and Acquisition further agree to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the
SEC and the other 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
reasonable opportunity to review and comment on the Offer Documents prior to
the filing of such documents with the SEC. Parent and Acquisition agree to
provide the Company and its counsel with any comments Parent, Acquisition or
their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after receipt of such comments.
Section 1.2 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 (i) unanimously 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) unanimously approved and
adopted this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, in accordance with the requirements of the Missouri
General and Business Corporation Law ("MGBCL") and (iii) subject to
Section 5.5(b) of this Agreement, unanimously resolved to recommend that
stockholders of the Company accept the Offer and tender their Shares pursuant to
the Offer and approve and adopt this Agreement and the Merger. The Company
hereby consents to the inclusion in the Offer Documents of the recommendations
of the Company's Board of Directors described in this Section 1.2(a). As used
herein "unanimous" or similar formulations when used to refer to actions by the
Company Board shall mean "by the unanimous vote of the directors present, with
one director absent.
(b) As soon as practicable on the day 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,
subject to its fiduciary duties under applicable law, shall reflect the
recommendations of the Company's Board of Directors referred to above. The
Company agrees that it shall cause the Schedule 14D-9 to comply in all
material respects with the Exchange Act and the rules and regulations
thereunder and other applicable laws. The Company agrees to provide Parent
and its counsel with any comments the Company or its counsel may receive
from the SEC or its staff with respect to the Schedule 14D-9 promptly after
the receipt of such comments. The Company, Parent and Acquisition 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 an opportunity to review and comment on the
Schedule 14D-9 prior to its being filed with the SEC.
(c) 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 updated lists of stockholders,
mailing labels and lists of securities positions) and such other assistance
as Parent may reasonably request in connection with the Offer. Parent
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and Acquisition and their agents shall hold in confidence the information
contained in any such labels, listings and files, will use such information
only in connection with the Offer and the Merger and, if this Agreement
shall be terminated, will, upon request, deliver, and will use their
reasonable efforts to cause their agents to deliver, to the Company (or
destroy) all copies and any extracts or summaries from such information then
in their possession or control.
Section 1.3 DIRECTORS. (a) Effective upon the acceptance for payment of
any Shares pursuant to the Offer, Parent shall be entitled to designate the
number of directors, rounded up to the next 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 (giving effect to the election of any additional
directors pursuant to this Section) and (ii) the percentage that the number of
Shares beneficially owned by Parent and/or Acquisition (including Shares
accepted for payment) bears to the total number of Shares outstanding, 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 increasing
the number of directors, and seeking and accepting resignations of incumbent
directors. At such time, to the extent requested by Parent, the Company will
also use its best efforts to cause individuals designated by Parent to
constitute the number of members, rounded up to the next whole number, on
(i) each committee of the Board 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 provisions of this Section 1.3, the parties hereto
shall use their respective best efforts to ensure that at least two of the
members of the Company's Board of Directors shall, at all times prior to the
Effective Time, be directors of the Company who were directors of the Company on
the date hereof (the "Continuing Directors"); provided that if there shall be in
office fewer than two Continuing Directors for any reason, the Company's Board
of Directors shall cause a person designated by the remaining Continuing
Director to fill such vacancy who shall be deemed to be a Continuing Director
for all purposes of this Agreement, or if no Continuing Directors then remain,
the other directors of the Company then in office shall designate two persons to
fill such vacancies who are not officers or employees or affiliates of the
Company, Parent or Acquisition or any of their respective Subsidiaries and such
persons shall be deemed to be Continuing Directors for all purposes of this
Agreement.
(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
Exchange 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, so long as Parent shall have provided to the Company on
a timely basis the information referred to in the following sentence. 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 1.3(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 Company's Board of Directors, any
extension of time for performance of any obligation or action hereunder by
Parent or Acquisition, any waiver of compliance with any of the agreements
or conditions contained herein for the benefit of the Company, any consent
or action by the Board of Directors of the Company hereunder and any other
action of the Company hereunder which adversely affects the holders of
Shares (other than Parent or Acquisition).
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ARTICLE II
THE MERGER
Section 2.1 THE MERGER.
Subject to the terms and conditions of this Agreement, at the Effective Time
(as hereinafter defined), in accordance with this Agreement and the MGBCL,
Acquisition shall be merged with and into the Company. Following the Merger, the
separate existence of Acquisition shall cease and the Company shall continue as
the surviving corporation.
Section 2.2 EFFECT OF THE MERGER.
Upon the effectiveness of the Merger, the Surviving Corporation shall
succeed to and assume all the rights and obligations of the Company and
Acquisition in accordance with the MGBCL and the Merger shall otherwise have the
effects set forth in the applicable provisions of the MGBCL.
Section 2.3 CLOSING.
Subject to the satisfaction or waiver of the conditions to the obligations
of the parties to effect the Merger set forth herein, the consummation of the
Merger (the "Closing") will take place as promptly as practicable, but in no
event later than 10:00 a.m. on the second business day following the
satisfaction or waiver of all the conditions (other than conditions which, by
their nature are to be satisfied at closing, but subject to those conditions) to
the obligations of the parties to effect the Merger set forth herein (the
"Closing Date"), at the offices of Dewey Ballantine LLP, New York, New York
10019, unless another time, date or place is agreed to by the parties hereto.
Section 2.4 CONSUMMATION OF THE MERGER.
Upon the Closing, the parties hereto will cause the Merger to be consummated
by filing with the Secretary of State of the State of Missouri properly executed
articles of merger in accordance with the MGBCL, which shall be effective upon
the issuance of a certificate of merger by the Missouri Secretary of State (the
time of such effectiveness being the "Effective Time").
Section 2.5 ARTICLES OF INCORPORATION; BY-LAWS; DIRECTORS AND
OFFICERS. (a) The Articles of Incorporation of Acquisition in effect at the
Effective Time shall be the Articles of Incorporation of the Surviving
Corporation (except that such Articles of Incorporation shall be amended to
provide that the name of the Surviving Corporation shall be the name of the
Company) until thereafter amended in accordance with the provisions thereof and
as provided by the MGBCL. The By-Laws of Acquisition in effect at the Effective
Time shall be the By-Laws of the Surviving Corporation until thereafter amended
in accordance with the provisions thereof, the Articles of Incorporation of the
Surviving Corporation and the MGBCL.
(b) From and after the Effective Time and until their respective
successors are duly elected or appointed and qualified, or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and By-Laws, (i) the directors of
Acquisition at the Effective Time shall be the directors of the Surviving
Corporation and (ii) the officers of the Company at the Effective Time shall
be the officers of the Surviving Corporation.
Section 2.6 EFFECT ON CAPITAL STOCK.
At the Effective Time, by virtue of the Merger and without any action on the
part of any holder of Shares or any shares of capital stock of Acquisition:
(a) COMMON STOCK OF ACQUISITION. Each share of common stock, par value
$.01 per share, of Acquisition that is issued and outstanding immediately
prior to the Effective Time shall be converted into and become one fully
paid and nonassessable share of common stock, par value $.01 per share, of
the Surviving Corporation.
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(b) CANCELLATION OF EXCLUDED SHARES. Each Share that is owned by
Parent or Acquisition or held in the treasury of the Company, but not Shares
held in any Company benefit plan (collectively, the "Excluded Shares") shall
automatically be canceled and retired and shall cease to exist, and no cash
or other consideration shall be delivered or deliverable in exchange
therefor.
(c) CONVERSION OF SHARES. Each Share issued and outstanding
immediately prior to the Effective Time (other than Excluded Shares and
Dissenting Shares, as defined below) shall be converted into the right to
receive a number of duly authorized, validly issued, fully paid and
non-assessable Parent Shares equal to the Exchange Ratio or any higher
consideration paid in the Offer (the "Merger Consideration").
Section 2.7 EXCHANGE OF CERTIFICATES. (a) At the Effective Time, Parent
shall deposit, or shall cause to be deposited, with a banking or other financial
institution mutually acceptable to Parent and the Company (the "Exchange
Agent"), for the benefit of the holders of Shares, for exchange in accordance
with this Article II, certificates representing the Parent Shares to be issued
in connection with the Merger and cash in lieu of fractional shares (such cash
and certificates for Parent Shares, together with any dividends or distributions
with respect thereto (relating to record dates for such dividends or
distributions after the Effective Time), being hereinafter referred to as the
"Exchange Fund") to be issued pursuant to Section 2.6 and paid pursuant to this
Section 2.7 in exchange for outstanding Shares.
(b) Promptly after the Effective Time, Parent shall cause the Exchange
Agent to mail to each holder of record of Shares (i) a letter of transmittal
specifying that delivery shall be effected, and risk of loss and title to
such Shares shall pass, only upon delivery of the certificates representing
such shares ("Certificates") to the Exchange Agent and which letter shall be
in such form and have such other provisions as Parent may reasonably specify
and (ii) instructions for use in effecting the surrender of Certificates in
exchange for the consideration contemplated by Section 2.6 and this
Section 2.7, including cash in lieu of fractional shares. Upon surrender of
a Certificate for cancellation to the Exchange Agent together with such
letter of transmittal, duly executed and completed in accordance with the
instructions thereto, the holder of the shares represented by such
Certificate shall be entitled to receive in exchange therefor (x) a
certificate representing that number of whole Parent Shares and (y) a check
representing the amount of cash in lieu of fractional shares, if any, and
unpaid dividends and distributions, if any, that such holder has the right
to receive in respect of the Certificate surrendered pursuant to the
provisions of this Article II, after giving effect to any required
withholding tax, and the shares represented by the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued
on the cash payable to holders of Shares. In the event of a transfer of
ownership of Shares that is not registered in the transfer records of the
Company, a certificate representing the proper number of Parent Shares,
together with a check for the cash to be paid pursuant to Section 2.7 may be
issued to such a transferee if the Certificate representing such Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared with a record date after the
Effective Time on Parent Shares shall be paid with respect to any Shares
represented by a Certificate until such Certificate is surrendered for
exchange as provided herein. Following surrender of any such Certificate,
there shall be paid to the holder of the certificates representing whole
Parent Shares issued in exchange therefor, without interest, (i) at the time
of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore payable with respect to
such whole Parent Shares and not paid, less the amount of any withholding
taxes which may be required thereon, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date
subsequent to surrender
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payable with respect to such whole Parent Shares, less the amount of any
withholding taxes which may be required thereon. Parent will provide the
Exchange Agent with the cash necessary to make the payments contemplated by
this Section 2.7(c).
(d) From and after the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be
canceled and exchanged for certificates for Parent Shares and cash
deliverable in respect thereof pursuant to this Agreement in accordance with
the procedures set forth in this Article 2.
(e) No fractional Parent Shares shall be issued pursuant hereto. In
lieu of the issuance of any fractional share of Parent Shares, cash
adjustments will be paid to holders in respect of any fractional share of
Parent Shares that would otherwise be issuable, and the amount of such cash
adjustment shall be equal to the product obtained by multiplying such
stockholder's fractional share of Parent Shares that would otherwise be
issuable by the closing price per share of Parent Shares on the NYSE on the
Closing Date as reported by THE WALL STREET JOURNAL (or, if not reported
thereby, any other authoritative source).
(f) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any Parent Shares) that remains unclaimed by the
former stockholders of the Company six months after the Effective Time shall
be delivered to Parent. Any former stockholders of the Company who have not
theretofore complied with this Article II shall thereafter look only to
Parent, and Parent shall comply with such requests, made in accordance with
the terms of this Agreement, for payment of their Parent Shares, cash and
unpaid dividends and distributions on Parent Shares deliverable in respect
of each Share such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
(g) Any portion of the Merger Consideration remaining unclaimed by
holders of Shares immediately prior to such time as such amounts would
otherwise escheat to or become property of any Governmental Entity (as
defined in Section 3.9) shall, to the extent permitted by law, become the
property of the Surviving Corporation free and clear of any claims or
interest of any person previously entitled thereto. Notwithstanding the
foregoing, none of Parent, the Company, the Surviving Corporation, the
Exchange Agent or any other person shall be liable (except to the extent
provided by applicable law) to any former holder of Shares for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(h) In the event 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 the posting by
such person of a bond in such amount as the Surviving Corporation may
reasonably request as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Parent Shares
and cash deliverable in respect thereof pursuant to this Agreement.
Section 2.8 STOCK OPTIONS. (a) As of the Effective Time, each outstanding
option to purchase capital stock of the Company (the "Company Stock Options"),
whether or not exercisable and whether or not vested, under the Company's 1990
Incentive Stock Option Plan or 1996 Long-Term Incentive Plan (together, the
"Company Option Plans"), shall be converted into an option to purchase Parent
Shares. Each Company Stock Option so converted shall be exercisable upon the
same terms and conditions as under the applicable Company Option Plan and the
applicable option agreement issued thereunder, except that (x) each Company
Stock Option shall vest and become immediately exercisable at the Effective
Time, (y) each such Company Stock Option shall be exercisable for that whole
number of Parent Shares (rounded to the nearest whole share) equal to the number
of Shares subject to such Company Stock Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (z) the option price per
Parent Share shall be an amount equal to the option price per Share subject to
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such Company Stock Option in effect immediately prior to the Effective Time
divided by the Exchange Ratio (the option price per share, as so determined,
being rounded to the nearest whole cent).
(b) Parent shall (i) on or prior to the Effective Time, reserve for
issuance the number of Parent Shares that will become subject to options to
purchase Parent Shares ("Parent Options") pursuant to Section 2.8(a),
(ii) from and after the Effective Time, upon exercise of the Parent Options
in accordance with the terms thereof, make available for issuance all Parent
Shares covered thereby, (iii) at the Effective Time, assume the Company
Option Plans, with the result that all obligations of the Company under the
Company Option Plans, including with respect to Company Stock Options
outstanding at the Effective Time, shall be obligations of Parent following
the Effective Time and (iv) as promptly as practicable after the Effective
Time, issue to each holder of an outstanding Company Stock Option a document
evidencing the foregoing assumption by Parent.
(c) The parties shall take all actions so that the Company Stock
Options converted by Parent qualify following the Effective Time as
incentive stock options as defined in Section 422 of the Code to the extent
permitted under Section 422 of the Code and to the extent the Company Stock
Options qualified as incentive stock options prior to the Effective Time.
(d) Parent shall, as promptly as practicable but in any event no later
than three days after the Closing Date, file a registration statement on
Form S-8 under the Securities Act, covering the Parent Shares issuable upon
the exercise of Parent Options created upon the assumption by Parent of
Company Stock Options under Section 2.8(a), and will maintain the
effectiveness of such registration, and the current status of the prospectus
contained therein, until the exercise or expiration of such Parent Options.
(e) The parties will cooperate to take all reasonable steps necessary
to give effect to Section 2.8(a).
(f) Except as permitted by Section 5.1, the Company agrees that it will
not grant any stock options, stock appreciation rights, stock units,
deferred stock awards or other rights to acquire Shares or any other
interest in Company common stock or any other equity security of the Company
and will not take any action to accelerate the exercisability or vesting of
Company Stock Options and/or permit cash payments to holders of Company
Stock Options with respect to such Company Stock Options.
Section 2.9 DISSENTING SHARES.
Notwithstanding anything in this Agreement to the contrary, any Shares held
by a person (a "Dissenting Stockholder") who does not vote to approve the Merger
and complies with all the provisions of the MGBCL concerning the right of
holders of Shares to dissent from the Merger and require payment of fair value
(as defined in the MGBCL) for their Shares ("Dissenting Shares") shall not be
converted as described in Section 2.6, but shall be converted into the right to
receive such consideration as may be determined to be due to such Dissenting
Stockholder pursuant to the MGBCL. If, after the Effective Time, such Dissenting
Stockholder withdraws his demand or fails to perfect or otherwise loses his
rights as a Dissenting Stockholder to payment of fair value, in any case
pursuant to the MGBCL, his Shares shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration. The Company
shall give Parent (i) prompt notice of any demands for fair value for Shares
received by the Company and (ii) the opportunity to participate in and direct
all negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of Parent, make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any such demands.
All payment made to any Dissenting Stockholders shall be made by the Company out
of the Company's own funds and shall not be reimbursed by Parent or any
affiliate of Parent.
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Section 2.10 TAX CONSEQUENCES.
It is intended by the parties hereto that the Transaction shall constitute a
"reorganization" within the meaning of Section 368(a) of the Code. The parties
hereto adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(a) and 1.368-3(a) of the United States Income Tax Regulations.
Section 2.11 ADJUSTMENT OF EXCHANGE RATIO.
In the event Parent changes or establishes a record date for changing the
number of Parent Shares issued and outstanding during or after the determination
of the Exchange Radio pursuant to Section 1.1(a) and prior to the Effective Time
as a result of a stock split, stock dividend, recapitalization, subdivision,
reclassification, combination or similar transaction with respect to the
outstanding Parent Shares and the record date therefor shall be prior to the
Effective Time, the Exchange Ratio applicable to the merger or the offer or the
Offer or the Merger, as the case may be, and any other calculations based on or
relating to Parent Shares shall be appropriately adjusted to reflect such stock
split, stock dividend, recapitalization, subdivision, reclassification,
combination or similar transaction.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Acquisition that, except
as set forth in the Disclosure Schedules ("Schedules" or "Disclosure Schedules")
hereto:
Section 3.1 ORGANIZATION AND QUALIFICATION.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Missouri and has all requisite corporate
power and authority to own or lease and operate its properties and assets and to
carry on its business as it is now being conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction in which the character of its properties and assets owned or
leased or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified would not have a Material Adverse
Effect (as hereinafter defined) on the Company. As used herein, "Material
Adverse Effect" shall mean, with respect to any party, any event, circumstance,
change or effect that is, individually or in the aggregate, reasonably likely to
be materially adverse to the business, assets, financial condition or results of
operations of such party and its subsidiaries, taken as a whole, other than
effects due to (i) general economic or market conditions or (ii) matters
generally affecting the Freight Railroad or Rail Transit Railroad industries.
The Company has heretofore made available to Acquisition complete and correct
copies of its minute books and its Articles of Incorporation and By-Laws.
Section 3.2 SUBSIDIARIES. (a) Except for shares of, or other ownership
interests in, the Subsidiaries (as hereinafter defined), the Company does not
own of record or beneficially, directly or indirectly, (i) any shares of
outstanding capital stock or securities convertible into or exchangeable or
exercisable for capital stock of any other corporation or (ii) any participating
interest in any partnership, joint venture or other similar non-corporate
business enterprise. Each Subsidiary is a corporation, partnership or limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization and has all
requisite corporate, partnership or limited liability company power and
authority to own or lease and operate its properties and assets and to carry on
its business as it is now being conducted. Each Subsidiary is duly qualified as
a foreign corporation to do business, and is in good standing, in each
jurisdiction in which the character of its properties and assets owned or leased
or the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not have a Material Adverse
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Effect on the Company. The respective Articles of Incorporation and By-Laws or
other organizational documents of the Subsidiaries of the Company do not contain
any provision limiting or otherwise restricting the ability of the Company to
control its Subsidiaries. Each Subsidiary, its jurisdiction of incorporation or
organization is set forth in Section 3.2 of the Disclosure Schedules. The
Company has heretofore made available to Acquisition complete and correct copies
of the minute books and the charter and by-laws (or other organizational
documents) of all Subsidiaries.
(b) All the outstanding shares of capital stock of, or other ownership
interests in, each Subsidiary are validly issued, fully paid and
nonassessable (and no such shares have been issued in violation of any
preemptive or similar rights) and are owned by the Company or by a wholly-
owned Subsidiary of the Company, free and clear of any liens, claims,
charges, encumbrances or adverse claims ("Liens"), and there are no proxies
outstanding or restrictions on voting with respect to any such shares.
(c) For purposes of this Agreement, the term "Subsidiary" shall mean
any corporation or other business 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 the
time owned by the Company and/or one or more other Subsidiaries.
Section 3.3 AUTHORITY RELATIVE TO AGREEMENTS.
The Company has all requisite corporate power and authority to execute and
deliver this Agreement and the Stock Option Agreement and, in the case of the
Merger, subject to the approval and adoption of this Agreement by a two-thirds
vote of the stockholders of the Company (the "Company Stockholder Approval"), to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Company's Board of
Directors and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the transactions contemplated hereby,
other than, in the case of the Merger, the Company Stockholder Approval. This
Agreement has been duly executed and delivered by the Company and, subject to
such stockholder approval, constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
The Board of Directors of the Company has, as of the date of this Agreement,
(i) determined that the Offer and the Merger are in the best interests of the
Company and its shareholders, and (ii) approved this Agreement and the
transactions contemplated hereby.
Section 3.4 NON-CONTRAVENTION.
The execution and delivery of each of this Agreement and the Stock Option
Agreement by the Company do not and the consummation by the Company of the
transactions contemplated hereby and thereby will not (i) conflict with any
provision of the Articles of Incorporation or By-Laws of the Company,
(ii) except as set forth in Section 3.4 of the Disclosure Schedule, result (with
the giving of notice or the lapse of time or both) in any violation of or
default or loss of a benefit under, or permit the acceleration or termination of
any obligation under, any material mortgage, indenture, lease, agreement or
other instrument, permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company or any Subsidiary or their respective properties or (iii) result in the
creation or imposition of any material lien, charge or encumbrance of any nature
whatsoever upon any asset of the Company or any Subsidiary. Holders of the
Shares will not have appraisal rights under the MGBCL as a result of, or in
connection with, the Offer.
Section 3.5 CAPITALIZATION.
The authorized capital stock of the Company consists of 50,000,000 Shares.
At the close of business on July 14, 2000, 11,387,226 Shares were issued and
outstanding, all of which were duly and
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validly issued, are fully paid and nonassessable and were not issued in
violation of any preemptive or similar right and 30,000 Shares were held in the
Company's treasury. Each of the Company's stock option, the Director Stock
Option Plan or restricted stock plans (the "Company Stock Plans") and options to
acquire Shares or shares of restricted stock of the Company outstanding on the
date hereof (the "Company Stock Rights"), including, without limitation,
information concerning the date of vesting of such options or the lapse of
restrictions on such restricted stock, strike prices of such options and the
acceleration of such vesting or removal of such restrictions, in either case, by
virtue of the Merger or the other transactions contemplated hereby, are set
forth on Section 3.5 of the Disclosure Schedule. As of July 14, 2000, 713,279
Shares were reserved for issuance under the Company Stock Plans. Except (x) for
options to purchase an aggregate of 701,450 Shares granted pursuant to the
Company Stock Plans and (y) rights issued under the Rights Agreement, dated as
of April 26, 1999 (the "Rights Agreement"), between the Company and UMB Bank,
N.A., as rights agent, no subscription, warrant, option, convertible security,
stock appreciation or other right (contingent or other) to purchase or acquire,
or any securities convertible into or exchangeable or exercisable for, any
shares of or other interest in any class of capital stock of the Company or any
Subsidiary is authorized or outstanding and there is not any commitment of the
Company or any Subsidiary to issue any shares, warrants, options or other such
rights or to distribute to holders of any class of its capital stock any
evidences of indebtedness or assets. Neither the Company nor any Subsidiary has
any obligation (contingent or other) to purchase, redeem or otherwise acquire
any shares of its capital stock or any interest therein or to pay any dividend
or make any other distribution in respect thereof.
Section 3.6 SEC FILINGS.
The Company has made available to Acquisition true and complete copies of
each form, report, schedule, definitive proxy statement and registration
statement filed by the Company with the SEC subsequent to January 1, 1998 and on
or prior to the date hereof (collectively, the "Company SEC Filings"), which are
all forms, reports, schedules, statements and other documents (other than
preliminary material) that the Company was required to file with the SEC. The
Company SEC Filings (including, without limitation, any financial statements or
schedules included therein) (i) complied with the requirements of the Securities
Act, or the Exchange Act, as the case may be, and (ii) did not at the time of
filing (or if amended, supplemented or superseded by a filing prior to the date
hereof, on the date of that filing) contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. None of the Subsidiaries is required to
file any forms, reports, schedules, statements or other documents with the SEC.
Section 3.7 FINANCIAL STATEMENTS.
The consolidated financial statements of the Company included in the Company
SEC Filings have been prepared in accordance with generally accepted accounting
principles consistently applied and consistent with prior periods, subject, in
the case of unaudited interim consolidated financial statements, to year-end
adjustments (which consist of normal recurring accruals) and the absence of
certain footnote disclosures. The consolidated balance sheets of the Company
included in the Company SEC Filings fairly present the consolidated financial
position of the Company as of their respective dates, and the related
consolidated statements of operations, cash flows and stockholders' equity
included in the Company SEC Filings fairly present the consolidated results of
operations of the Company for the respective periods then ended, subject, in the
case of unaudited interim financial statements, to year-end adjustments (which
consist of normal recurring accruals) and the absence of certain footnote
disclosures. None of the Company and its Subsidiaries has any material
liabilities or obligations (whether absolute, accrued, contingent or otherwise),
except for those (i) that are accrued or reserved against in the Company's
financial statements (or reflected in the notes thereto) included in the Company
SEC Filings or (ii) that were incurred subsequent to December 31, 1999 in the
ordinary course of business and consistent with past practice.
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Section 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since March 31, 2000, except as expressly contemplated by this Agreement or
as set forth in Section 3.8 of the Disclosure Schedule, neither the Company nor
any Subsidiary has (i) issued any stock, bonds or other corporate securities,
(ii) borrowed any amount, guaranteed any indebtedness or incurred any material
liabilities (absolute or contingent), except in the ordinary course of business,
(iii) discharged or satisfied any lien or incurred or paid any obligation or
liability (absolute or contingent) other than current liabilities shown on the
consolidated balance sheet of the Company as of March 31, 2000 and current
liabilities incurred since the date of such balance sheet in the ordinary course
of business, (iv) declared or made any payment or distribution to stockholders,
other than regular semi-annual cash dividends, or purchased or redeemed any
shares of its capital stock or other securities, (v) mortgaged, pledged or
subjected to Lien any of its assets, tangible or intangible, other than Liens
for current real property taxes not yet due and payable and transactions in the
ordinary course, (vi) sold, assigned or transferred any of its tangible assets,
or canceled any debts or claims, except in the ordinary course of business or as
otherwise contemplated hereby, (vii) sold, assigned or transferred any patents,
trademarks, trade names, copyrights, trade secrets or other intangible assets,
(viii) made any changes in officer or executive compensation other than in the
ordinary course, (ix) waived any rights of substantial value, other than in the
ordinary course of business, (x) entered into any transaction, except in the
ordinary course of business or as otherwise contemplated hereby, (xi) take any
action that if taken after the date of this Agreement, would constitute a breach
of any of the covenants set forth in Section 5.1, other than actions
specifically identified in the Company's three year plan (as presented to
Parent), as an action to be taken at such time, and any action disclosed in a
press release issued by the Company after March 31, 2000 and prior to the date
hereof, (xii) agreed, in writing or otherwise, to take any of the actions listed
in clauses (i) through (xi) above, or (xiii) suffered any Material Adverse
Effect.
Section 3.9 GOVERNMENTAL APPROVALS.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any federal, state, local or foreign governmental or
regulatory authority ("Governmental Entity") is required to be made or obtained
by the Company in connection with the execution and delivery of this Agreement
or the Stock Option Agreement by the Company or the consummation by the Company
of the transactions contemplated hereby and thereby, except for (i) compliance
by the Company with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and similar statutes or regulations of foreign
jurisdictions, (ii) the filing of articles of merger with the Secretary of State
of the State of Missouri in accordance with the MGBCL, (iii) the filing with the
SEC of (1) a proxy statement in definitive form for distribution to the
stockholders of the Company in advance of the Stockholders Meeting in accordance
with Regulation 14A promulgated under the Exchange Act (such proxy statement, as
amended or supplemented from time to time, being herein referred to as the
"Proxy Statement"), (2) the Schedule 14D-9 and (3) such reports under and such
other compliance with the Exchange Act and Securities Act and the rules and
regulations thereunder as may be required in connection with this Agreement and
the transactions contemplated hereby and (iv) such consents, approvals, orders
or authorizations which if not obtained, or registrations, declarations or
filings which if not made, would not have a Material Adverse Effect on the
Company.
Section 3.10 COMPLIANCE WITH LAWS; NO DEFAULT. (a) Except as set forth in
Section 3.10 of the Disclosure Schedule, neither the Company nor any Subsidiary
is in default under or in violation of any order of any court, governmental
authority or arbitration board or tribunal to which the Company or such
Subsidiary is or was subject or in violation of any laws, ordinances,
governmental rules or regulations (including, but not limited to, those relating
to export controls, labor and employment matters and foreign corrupt practices)
to which the Company or any Subsidiary is or was subject, except for such
defaults or violations that, in the aggregate, are not material. Except as set
forth in Section 3.10 of the Disclosure Schedule, neither the Company nor any
Subsidiary has failed to obtain
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any licenses, permits, franchises or other governmental authorizations necessary
to the ownership of its properties or to the conduct of its business, which
failure would have a Material Adverse Effect on the Company, and, after giving
effect to the transactions contemplated hereby, all such licenses, permits,
franchises and other governmental authorizations will continue to be valid and
in full force and effect.
(b) No violation of, default or event of default under, loss of benefit
under, or right to terminate or accelerate (a "Violation") exists (and no
event has occurred which, with notice or the lapse of time or both, would
constitute a Violation) of any term, condition or provision of (x) the
certificate or articles of incorporation or by-laws (or other organizational
documents) of the Company or any of its Subsidiaries, (y) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
obligation or commitment, instrument, permit, concession, franchise or
license to which the Company or any of its Subsidiaries is now a party or by
which the Company or any of its Subsidiaries or any of their respective
properties or assets is bound except in the case of (x) and (y) for
Violations which, in the aggregate, are not material.
Section 3.11 INFORMATION SUPPLIED. (a) Each of the Schedule 14D-9 and the
other documents required to be filed by the Company with the SEC in connection
with the Offer, the Merger and the other transactions contemplated hereby,
including the Proxy Statement, and the information supplied by the Company to
Parent for inclusion or incorporation by reference in any such documents, will
comply as to form in all material respects with the requirements of the Exchange
Act and the Securities Act, as the case may be, and will not, on the date of its
filing or dissemination, as the case may be, 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 are made, not misleading.
(b) Notwithstanding the foregoing provisions of this Section 3.11, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference in the Schedule 14D-9 based on information
supplied by Parent or Acquisition expressly for inclusion or incorporation
by reference therein or based on information which is not made in or
incorporated by reference in such documents but which should have been
disclosed pursuant to Section 3.11.
Section 3.12 LITIGATION.
Section 3.12 of the Company Disclosure Schedule sets forth a complete and
accurate (a) summary description of each investigation, action, suit or
proceeding pending against the Company or any of its Subsidiaries, or to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries, at law or in equity or before or by any federal or state
commission, board, bureau, agency, regulatory or administrative instrumentality
or other Governmental Entity or any arbitratory or arbitration tribunal and
(b) a summary description of any outstanding judgment order or decree entered in
any lawsuit or proceeding imposing material obligations against the Company or
any of its Subsidiaries. There are no investigations, actions, suits or
proceedings pending against the Company or its Subsidiaries or, to the knowledge
of the Company, threatened against the Company or its Subsidiaries (or any of
their respective properties, rights or franchises), at law or in equity, or
before or by any federal or state commission, board, bureau, agency, regulatory
or administrative instrumentality or other Governmental Entity or any arbitrator
or arbitration tribunal, that would reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect on the Company, and, to the
knowledge of the Company, no development has occurred with respect to any
pending or threatened action, suit or proceeding that would reasonably be
expected to result in a Material Adverse Effect on the Company or would
reasonably be expected to prevent, materially impair or materially delay the
consummation of the transactions contemplated hereby. Neither the Company nor
any of its Subsidiaries is subject to any judgment, order or decree entered in
any lawsuit or proceeding which
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would reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect on the Company.
Section 3.13 INTELLECTUAL PROPERTY RIGHTS.
(a) "Intellectual Property" shall mean: (i) United States,
international, and foreign patents, patent applications and statutory
invention registrations, (ii) trademarks, service marks, domain names, trade
dress, logos, and other source identifiers, including registrations and
applications for registration thereof, (iii) copyrights, including
registrations and applications for registration thereof, (iv) computer
software, data, databases, and related documentation, and (v) confidential
and proprietary information, including trade secrets and know-how. "Third
Party Software" shall mean all computer software sold or licensed to the
Company by any person other than the Company or its affiliates and which is
material to the operation of the business of the Company (other than
commercially available "off the shelf" software). Company Software is
software manufactured, distributed, sold, licensed or marketed by the
Company. Software means Third Party Software and Company Software.
(b) Section 3.13 of the Disclosure Schedule sets forth a true and
complete list of all (i) patents and patent applications, registered
trademarks and trademark applications, registered copyrights and copyright
applications, Software and other Intellectual Property, in each case owned
by the Company and material to the business of the Company, and (ii) all
licenses of Intellectual Property and Software (A) to the Company from any
third party, and (B) by the Company to any third party (collectively, the
"Licenses"). For purposes of this Section 3.13(b), an item shall not be
deemed material unless its loss would decrease annual revenues by more than
$5 million.
(c) The operation of the business of the Company, and the use in
connection therewith of (i) the Intellectual Property and Software owned by
the Company (the "Owned Intellectual Property") and (ii) the Intellectual
Property and Software licensed to the Company pursuant to the Licenses or
other licenses material to the Company (the "Licensed Intellectual
Property"), do not conflict with or infringe the Intellectual Property
rights of any third party.
(d) The Company is the sole owner, free and clear of any lien or
encumbrance, of the entire right, title and interest in and to the Owned
Intellectual Property and Licenses, and is entitled to use the Owned
Intellectual Property and Licensed Intellectual Property in the ordinary
course of the business of the Company as now conducted.
(e) The Owned Intellectual Property and the Licensed Intellectual
Property include all of the Intellectual Property used in the ordinary
day-to-day conduct of the business of the Company, and there are no other
items of Intellectual Property that are material to such ordinary day-to-day
conduct of such business. The Owned Intellectual Property and, to the
knowledge of the Company, the Licensed Intellectual Property, is subsisting,
valid and enforceable, and has not been adjudged invalid or unenforceable in
whole or part.
(f) No legal proceedings have been asserted, are pending, or, to the
knowledge of the Company, threatened against the Company (i) based upon or
challenging or seeking to deny or restrict the use by the Company of any of
the Owned Intellectual Property or Licensed Intellectual Property,
(ii) alleging that the Licensed Intellectual Property is being licensed or
sublicensed in conflict with the terms of any license or other agreement, or
(iii) alleging infringement of the Intellectual Property rights of any third
party.
(g) Other than in the ordinary course of business, the Company has not
granted any license or other right to any third party with respect to the
Owned Intellectual Property or Licensed Intellectual Property. The
consummation of the transactions contemplated by this Agreement will not
result in the termination or impairment of any of the Owned Intellectual
Property.
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(h) With respect to each License: (i) such License is valid and binding
and in full force and effect and represents the entire agreement between the
respective licensor and licensee with respect to the subject matter of such
License; (ii) such License will not cease to be valid and binding and in
full force and effect on terms identical to those currently in effect as a
result of the consummation of the transactions contemplated by this
Agreement, nor will the consummation of the transactions contemplated by
this Agreement constitute a breach or default under such License or
otherwise give the licensor a right to terminate such License; (iii) the
Company has not (A) received any notice of termination or cancellation under
such License, (B) received any notice of breach or default under such
License, which breach has not been cured, and (C) granted to any other third
party any rights, adverse or otherwise, under such License that would
constitute a breach of such License; and (iv) to the Company's knowledge,
neither the Company nor any other party to such license is in breach or
default thereof in any material respect, and no event has occurred that,
with notice or lapse of time, would constitute such a breach or default or
permit termination, modification or acceleration under such license.
(i) To the knowledge of the Company, the Company Software is free of
all material viruses, worms, trojan horses and other material known
contaminants and does not contain any bugs, errors or problems of a material
nature that disrupt its operations in any material respect or have a
materially adverse impact on the operation of other software programs or
operating systems. The Company Software is free of all viruses, worms,
trojan horses and other material known contaminants, and does not contain
any bugs, errors, or problems of a material nature that disrupt its
operation or have an adverse impact on the operation of other software
programs or operating systems, except as would not have a Material Adverse
Effect. The Company has obtained all approvals necessary for exporting the
Software outside the United States and importing the Company Software into
any country in which the Company Software is now sold or licensed for use,
and all such export and import approvals in the United States and throughout
the world are valid, current, outstanding and in full force and effect. No
rights in the Company Software have been transferred to any third party
except to the customers of Company to whom the Company has licensed such
Company Software in the ordinary course of business. None of the Company
Software is licensed pursuant to an "open source" or "GNU" license, or
incorporates or is based on any computer software that is licensed pursuant
to an "open source" or "GNU" license. The Company has the right to use all
software development tools, library functions, compilers, and other Third
Party Software that is material to the business of the Company, or that is
required to operate or modify the Software.
Section 3.14 TAXES. (a) Except as set forth in Section 3.14(a) of the
Disclosure Schedule, each of the Company and its Subsidiaries has (i) timely
filed all material Tax Returns (as hereinafter defined) required to be filed by
it in respect of any Taxes (as hereinafter defined), which Tax Returns were
true, correct and complete in all material respects, (ii) timely paid all Taxes
shown on such Tax Returns, (iii) established reserves that are adequate for the
payment of all material Taxes not yet due and payable with respect to the
results of operations of the Company and the Subsidiaries through the date
hereof, and (iv) to the best knowledge of the Company, complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes and timely withheld from employee wages and paid over
to the proper governmental authorities all material amounts required to be so
withheld and paid over.
(b) (i) Except as set forth in Section 3.14(b) of the Disclosure
Schedule, there is no deficiency, claim, audit, action, suit, proceeding or
investigation now pending or threatened in writing against or with respect
to the Company or any Subsidiary in respect of any material Taxes,
(ii) there are no issues that have been raised by the relevant taxing
authority or are currently pending in connection with the examination of Tax
Returns required to have been filed by or with respect to the Company and
its Subsidiaries other than issues that, if resolved against the
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Company or its Subsidiaries, would not result in the imposition of Taxes
that are material and (iii) there are no requests for rulings or
determinations in respect of any Taxes pending between the Company or any
Subsidiary and any taxing authority.
(c) (i) Within the last five years, neither the Company nor any
Subsidiary has been a member of an affiliated group filing consolidated,
combined or unitary Tax Returns other than a group for which the Company was
the common parent and (ii) neither Company nor its Subsidiaries has any
obligation under any agreement or arrangement with any person other than the
Company and its Subsidiaries with respect to material Taxes of such other
person (including pursuant to Treasury Reg. sec. 1.1502-6).
(d) Neither the Company nor any Subsidiary has executed or entered into
(or prior to the Effective Time will execute or enter into) with the
Internal Revenue Service or any taxing authority any agreement or other
document extending or having the effect of extending the period for
assessments or collection of any material Taxes for which the Company or any
Subsidiary would be liable, which period has not since expired.
(e) For purposes of this Agreement, "Tax" (and with correlative
meaning, "Taxes") shall mean all net income, gross receipts, value-added,
capital net worth, customs, franchise, sales, use, ad valorem, property,
payroll, withholding, excise, severance, transfer, employment, alternative
or add-on minimum, stamp, occupation, premium, environmental or windfall
profits, and other taxes together with any interest and any penalties,
additions to tax or additional amounts imposed by any federal, state, local,
foreign or other taxing authority.
(f) For purposes of this Agreement, "Tax Return" means all federal,
state, local and foreign tax returns, estimates, information statements and
reports relating to Taxes.
(g) Neither the Company nor any of its affiliates has taken or agreed
to take any action or knows of any fact, circumstance, plan or intention
that is or would be reasonably likely to prevent the Transaction from
qualifying as a "reorganization" within the meaning of Section 368(a) of the
Code.
(h) Except as disclosed in Section 3.14(h) of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to any agreement,
contract, arrangement, or plan that has resulted or would result,
individually or in the aggregate, in connection with this Agreement or any
change of control of the Company or any of its Subsidiaries, in the payment
of any "excess parachute payments" within the meaning of Section 280G of the
Code; and neither the Company nor any of its Subsidiaries have made any
payments, or is a party to an agreement that could require it to make any
payments (including any deemed payment of compensation upon exercise of any
option), that would not be fully deductible by reason of Section 162(m) of
the Code.
Section 3.15 EMPLOYEE BENEFIT PLANS.
(a) Section 3.15(a) of the Disclosure Schedule sets forth a true and
correct list of each deferred compensation plan, stock option, incentive
compensation plan, equity compensation plan, "welfare plan" (within the
meaning of section 3(1) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")); "pension plan" (within the meaning of
section 3(2) of ERISA); each employment, termination or severance agreement;
and each other employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to
or required to be contributed to by the Company or any Subsidiary for the
benefit of any employee or former employee of the Company or any Subsidiary.
Such plans are referred to collectively herein as the "Company Plans".
(b) The Company has heretofore made available to Parent with respect to
each of the Company Plans true and correct copies of each of the following
documents if applicable: (i) the
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Company Plan document and any related trust agreement or other funding
arrangement, (ii) the most recent determination letter from the Internal
Revenue Service for such Plan, (iii) the most recent summary plan
description and related summaries of material modifications, (iv) the
Form 5500 tax forms for each of the last two years, and (v) the most
recently prepared actuarial report and financial statement.
(c) Each of the Company Plans is in material compliance with its terms
and the applicable provisions of applicable law, including without
limitation, the Code and ERISA and the Company and it Subsidiaries have
performed all obligations required to be performed by them thereafter; each
of the Company Plans intended to be "qualified" within the meaning of
section 401(a) of the Code has received a determination letter from the
Internal Revenue Service that the Company Plan is qualified and the Company
knows of no condition or event that would reasonably be expected to
adversely affect such status. Neither the Company, any Subsidiary, nor any
trade or business, whether or not incorporated, which together with the
Company would be deemed a "single employer" within the meaning of
Section 4001 of ERISA (an "ERISA Affiliate") has had in the previous six
years (i) any liability, contingent or otherwise, under Title IV of ERISA or
Section 412 of the Code, or (ii) an obligation to contribute to any
"multiemployer plan" (as defined in Section 3(37) of ERISA). There are no
pending, or to the knowledge of the Company, threatened or anticipated
disputes, law suits, investigations, audits, complaints or claims (other
than routine claims for benefits) by, on behalf of, with respect to or
against any of the Company Plans or any trusts related thereto except as,
would not be reasonably likely to result in any material liability to the
Company or any Subsidiary.
(d) With respect to each Company Plan, there has not occurred, and no
person or entity is contractually bound to enter into, any nonexempt
"prohibited transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA, nor any transaction that would result in a civil
penalty being imposed under Section 409 or 502(i) of ERISA, except for any
such transactions which, individually or in the aggregate, would not be
reasonably likely to result in any material liability to the Company or any
Subsidiary.
(e) All contributions, premiums or payments required to be made with
regard to any Company Plan have been made on or before their due dates, and
all such contributions have been fully deducted for income tax purposes and
have not been, nor would reasonably be expected to be, challenged or
disallowed by any governmental authority. The Company and the Subsidiaries
have accrued or reserved for all liabilities under the Company Plans as
required by GAAP or applicable non-US accounting standards and customary
practices.
(f) No union or other collective bargaining unit has been certified as
representing any of the employees of the Company or any Subsidiary, nor has
the Company or any Subsidiary agreed to recognize any union or other
collective bargaining unit. Currently there are no organizational campaigns,
petitions or other unionization activities seeking recognition of any
collective bargaining unit for employees of the Company or any Subsidiary.
There are no labor disputes pending or threatened involving strikes, work
stoppages, slowdowns or lockouts with respect to employee of the Company or
any Subsidiary. There are no grievance proceedings or claims of unfair labor
practices filed with, to the Company's knowledge, threatened to be filed
with the National Labor Relations Board against the Company or any
Subsidiary. The Company and each Subsidiary is in compliance in all material
respects with all applicable laws relating to the employment of labor,
including those relating to wages, hours, collective bargaining,
occupational safety and health standards, discrimination in employment,
withholding of taxes, worker classification, immigration, plant closings and
mass layoffs and workers' compensation.
(g) Neither the Company nor any Subsidiary is party to any agreement
with any employee the benefits of which (including, without limitation,
severance benefits) are contingent, or the
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terms of which are materially altered, upon the occurrence of a transaction
involving the Company or any Subsidiary of the nature of any of the
transactions contemplated by this Agreement.
Section 3.16 ENVIRONMENTAL MATTERS.
Except as set forth in Section 3.16 of the Disclosure Schedule, each of the
Company and the Subsidiaries conducts its business and operations in material
compliance with all applicable environmental laws, ordinances and regulations,
and to the Company's knowledge there is no claim, action, suit, proceeding,
hearing or investigation (or basis therefor), based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, or hazardous or toxic
material or waste (collectively, an "Environmental Event") by the Company or any
Subsidiary. There is no claim, action, suit, proceeding, hearing or
investigation (or basis therefor) based on or related to an Environmental Event
by the Company or any Subsidiary which would have a Material Adverse Effect on
the Company. Except as set forth in Section 3.16 of the Disclosure Schedule, to
the best knowledge of the Company, no notice or information of any material
Environmental Event was given to any person or entity that occupied any of the
premises occupied by or used by the Company or any Subsidiary prior to the date
such premises were so occupied. Without limiting the generality of the
foregoing, the Company has received no notice or information (and has no basis
to believe) that either the Company or any Subsidiary has disposed of or placed
on or in any property or facility used in its business any waste materials,
hazardous materials or hazardous substances in a manner that would give rise to
a material liability.
Section 3.17 CUSTOMER RELATIONSHIPS. (a) Neither the Company nor any
Subsidiary has, since December 31, 1999, lost, or been notified that it will
lose or suffer diminution in its relationship with any material customer, and,
to the best knowledge of the Company, no representative of any customer has
notified the Company or any Subsidiary that, in the event of a change of
ownership of the Company such as contemplated by this Agreement, the Company or
any Subsidiary would, lose or suffer diminution in its relationship with any
material customer.
(b) No contract is, and no bid outstanding as of the date of this
Agreement (if accepted or awarded) would result in, a Loss Contract, in each
case in the reasonable judgment of management as of the date of this
Agreement. For purposes of the foregoing, "Loss Contract" means any Contract
(A) with a total contract value in excess of $1,000,000 or (B) of or related
to Syseca, Inc., that, to the knowledge of Company or any Subsidiary (with
the exercise of reasonable care), has a negative Net Variable Margin as
defined in Section 3.17(b) or 3.17(c) of the Disclosure Schedule.
Schedule 3.17(b)(1) represents outstanding bids for the U.S. operations. In
the reasonable judgment of management, the Net Variable Margins shown are
reasonable expectations.
(c) Section 3.17(c) of the Disclosure Schedule sets forth with respect
to each contract that is subject to the percentage completion accounting
rules and outstanding as of March 31, 2000 with a total contract value in
excess of $1,000,000, the following: (i) job in backlog, (ii) sales,
(iii) Net Variable Margin, (iv) sales recognized to date, and (v) Net
Variable Margin to date.
(d) Section 3.17(d) of the Disclosure Schedule sets forth by product
family the year to date Net Variable Margin and the Company's backlog as of
May 2000. The analysis is a reasonable estimation of the Net Variable Margin
of the Company's freight backlog as of May 31, 2000.
Section 3.18 CERTAIN TRANSACTIONS.
Except as set forth in Section 3.18 of the Disclosure Schedule, there are no
material transactions or arrangements between the Company or any Subsidiary and
(i) any director or executive officer of the Company or (ii) any other person or
entity controlling or under common control with the Company.
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Section 3.19 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
Except as reflected in the balance sheet (including any related notes
thereto) dated December 31, 1999 included in the Company SEC Filings or as set
forth in Section 3.19 of the Disclosure Schedule or with respect to inventory or
other assets that are not material to the Company disposed of since
December 31, 1999 in the ordinary course of business and consistent with past
practice, each of the Company and the Subsidiaries has good and valid title to
all its owned assets and properties, in each case free and clear of all liens,
claims, charges, security interests or other encumbrances, other than (x) liens
for taxes not yet due or delinquent or (y) security interests securing
indebtedness not in default for the purchase price of or lease rental payments
on property purchased or leased under capital lease arrangements in the ordinary
course of business or (z) such imperfections and irregularities of title or
Liens as do not affect the use of the properties or assets subject thereto or
affected thereby or otherwise materially impair business operations at such
properties. Any real property and buildings held under lease by the Company or
any of the Subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings.
Section 3.20 INSURANCE.
Section 3.20 of the Disclosure Schedule sets forth a list of all material
insurance policies of the Company and the Subsidiaries (the "Insurance
Policies"). The Insurance Policies are in full force and effect and provide
insurance in such amounts and against such risks as are customary for companies
of similar size in the same business as the Company and the Subsidiaries.
Neither the Company nor any Subsidiary is in material breach or default, and no
event has occurred which, with notice or the lapse of time, would constitute
such a breach or default, or permit termination or modification of the policy.
All premiums with respect to the Insurance Policies have been paid, and no
notice of cancellation or termination has been received with respect to any such
Insurance Policy. With respect to each of the litigation matters set forth in
Section 3.20 of the Disclosure Schedule, no carrier of any Insurance Policy has
asserted any denial of coverage. The Insurance Policies will remain in full
force and effect and will not in any way be affected by, or terminate or lapse
by reason of, any of the transactions contemplated hereby.
Section 3.21 STATE TAKEOVER STATUTES; CERTAIN CHARTER PROVISIONS.
The Board of Directors of the Company has approved this Agreement, the Stock
Option Agreement, the Support Agreement, the Merger and the other transactions
contemplated hereby and thereby, and such approval is sufficient to render
inapplicable to the Merger the provisions of Section 351.459 of the MGBCL. The
Board of Directors has also amended the By-Laws of the Company to add a
provision stating that Section 351.407 of the MGBCL (which related to "control
share acquisitions" as defined in Section 351.015(4) of the MGBCL) does not
apply to control share acquisitions of the Company. Such By-Law amendment is
sufficient to render the provisions of Section 351.407 of the MGBCL inapplicable
to the Shares acquired in the Offer or pursuant to the Option Agreement, and to
Shares subject to the Support Agreement.
Section 3.22 RIGHTS AGREEMENT.
This Agreement constitutes "Prior Written Approval" (as defined in the
Rights Agreement) of the acquisition of beneficial ownership of Shares by Parent
and its subsidiaries, including Acquisition, pursuant to this Agreement, the
Stock Option Agreement, the Support Agreement, the Offer, the Merger and the
other transactions contemplated hereby and thereby. Accordingly, (x) none of
Parent, Acquisition or any other subsidiary of Parent is an Acquiring Person (as
defined in the Rights Agreement) by virtue of the execution of this Agreement,
the Stock Option Agreement, the Support Agreement or the consummation of the
Offer, the Merger or the other transactions contemplated hereby or thereby and
(y) a Distribution Date or a Stock Acquisition Date (as such terms are defined
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in the Rights Agreement) does not occur by reason of the execution of this
Agreement, the Stock Option Agreement, the Support Agreement or the consummation
of the Offer, the Merger or the other transactions contemplated hereby or
thereby. A correct and complete copy of the Rights Agreement, as amended to
date, has been made available to Parent.
Section 3.23 MATERIAL CONTRACTS. (a) Subsections (i) through (vii) of
Section 3.23 of the Disclosure Schedule contain a list of the following types of
contracts and agreements to which the Company or any Subsidiary is a party as of
the date hereof (such contracts, agreements and arrangements as are required to
be set forth in Section 3.23(a) of the Disclosure Schedule being the "Material
Contracts"):
(i) each contract and agreement which (A) is likely to involve consideration
of more than $5,000,000, in the aggregate, during the calendar year
ending December 31, 2000, (B) is likely to involve consideration of more
than $5,000,000, in the aggregate, over the remaining term of the such
contract, and which, in either case, cannot be canceled by the Company
or any Subsidiary without penalty or further payment and without more
than 90 days' notice;
(ii) all material broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market research,
marketing, consulting and advertising contracts and agreements to which
the Company or, to the knowledge of the Company, any Subsidiary is a
party except any such contract that can be canceled by the Company or
any Subsidiary without penalty or further payment and without more than
90 days' notice;
(iii) all management contracts (excluding contracts for employment) and
contracts with other consultants, including any contracts involving the
payment of royalties or other amounts calculated based upon the
revenues or income of the Company or any Subsidiary or income or
revenues related to any product of the Company or any Subsidiary to
which the Company or any Subsidiary is a party;
(iv) all contracts and agreements evidencing indebtedness for borrowed money
in excess of $5,000,000;
(v) all material contracts or arrangements and agreements with any
Governmental Authority to which the Company or to the knowledge of the
Company, any Subsidiary is a party;
(vi) all contracts and agreements that limit, or purport to limit, the
ability of the Company or any Subsidiary to compete in any line of
business or which any person or entity or in any geographic area or
during any period of time; and
(vii) all material contracts or arrangement that result in any person or
entity holding a power of attorney from the Company or, any Subsidiary
that relates to the Company, any Subsidiary or their respective
businesses.
(b) Neither the execution of this Agreement nor the consummation of any
transaction contemplated hereby shall constitute a default, give rise to
cancellation rights, or otherwise adversely affect any of the Company's
rights under any Material Contract. The Company has furnished or made
available to Parent true and complete copies of all Material Contracts,
including amendments thereto.
Section 3.24 OPINION OF FINANCIAL ADVISOR.
The Company has received the opinion of Bear Stearns & Co., dated July 16,
2000, to the effect that the consideration to be received in the Offer and the
Merger by the holders of Shares is fair to such holders from a financial point
of view, a copy of which opinion has been (or promptly will be) delivered to
Parent.
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Section 3.25 BROKERS.
No person is entitled to any brokerage or finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement and as a result of any action taken by or on behalf of the
Company, other than Bear Stearns & Co. pursuant to an engagement letter dated
July 12, 1999, a copy of which has been made available to Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Parent and Acquisition jointly and severally, represent and warrant to the
Company as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION.
Each of Parent and Acquisition is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation and
has all requisite corporate power and authority to own or lease and operate its
properties and assets and to carry on its business as it is now being conducted.
Each of Parent and Acquisition is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties and assets owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not prevent or materially delay consummation of the Offer and the Merger
or otherwise prevent Parent and Acquisition from performing any of their
material obligations under this Agreement.
Section 4.2 AUTHORIZATION OF AGREEMENT, NON-CONTRAVENTION, ETC.
Each of Parent and Acquisition has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by each of
Parent and Acquisition and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate and
stockholder action on the part of each of Parent and Acquisition. This Agreement
has been duly executed and delivered by each of Parent and Acquisition and
constitutes the legal, valid and binding obligation of each of Parent and
Acquisition, enforceable against each of Parent and Acquisition in accordance
with its terms. The execution and delivery of this Agreement by each of Parent
and Acquisition does not, and the consummation by Acquisition of the
transactions contemplated hereby will not, (i) conflict with any provision of
the Articles of Incorporation or By-Laws of Parent or Acquisition or
(ii) result (with the giving of notice or the lapse of time or both) in any
violation of or default under any mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent, its
subsidiaries or their respective properties other than (in the case of
clause (ii) above) such as would not prevent or materially delay consummation of
the Offer and the Merger or otherwise prevent Parent and Acquisition from
performing any of their material obligations under this Agreement. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required to be made or obtained by Parent or
Acquisition in connection with the execution and delivery of this Agreement by
Parent or Acquisition or the consummation by Parent or Acquisition of the
transactions contemplated hereby, except for (i) compliance by Parent with the
HSR Act and similar statutes or regulations of foreign jurisdictions, (ii) the
filing of articles of merger with the Secretary of State of the State of
Missouri in accordance with the MGBCL and (iii) the filing with the SEC of
(1) the Offer Documents and (2) such reports under and such other compliance
with the Exchange Act and Securities Act and the rules and regulations
thereunder as may be required in connection with this Agreement and the
transactions contemplated hereby. As of the date hereof, Parent does not
beneficially own any Shares.
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Section 4.3 SEC FILINGS.
Parent has made available to the Company true and complete copies of each
form, report, schedule, definitive proxy statement and registration statement
filed by Parent with the SEC subsequent to January 1, 1998 and on or prior to
the date hereof (collectively, the "Parent SEC Filings"), which are all forms,
reports, schedules, statements and other documents (other than preliminary
material) that Parent was required to file with the SEC. The Parent SEC Filings
(including, without limitation, any financial statements or schedules included
therein) (i) complied with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time of filing (or if
amended, supplemented or superseded by a filing prior to the date hereof, on the
date of that filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
Section 4.4 FINANCIAL STATEMENTS.
The consolidated financial statements of Parent included in the Parent SEC
Filings have been prepared in accordance with generally accepted accounting
principles consistently applied and consistent with prior periods, subject, in
the case of unaudited interim consolidated financial statements, to year-end
adjustments (which consist of normal recurring accruals) and the absence of
certain footnote disclosures. The consolidated balance sheets of Parent included
in the Parent SEC Filings fairly present the consolidated financial position of
Parent as of their respective dates, and the related consolidated statements of
operations, cash flows and stockholders' equity included in the Parent SEC
Filings fairly present the consolidated results of operations of Parent for the
respective periods then ended, subject, in the case of unaudited interim
financial statements, to year-end adjustments (which consist of normal recurring
accruals) and the absence of certain footnote disclosures.
Section 4.5 ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since December 31, 1999, Parent and its Subsidiaries, taken as a whole, have
not suffered any Material Adverse Effect.
Section 4.6 PARENT SHARES.
All of the Parent Shares issuable in exchange for Shares in the Offer and
the Merger in accordance with this Agreement will be, when so issued, duly
authorized, validly issued, fully paid and non-assessable and free of preemptive
rights. The issuance of such Parent Shares will be registered under the
Securities Act and registered or exempt from registration under applicable state
securities laws.
Section 4.7 INFORMATION SUPPLIED. (a) Each of the Offer Documents and the
other documents required to be filed by Parent with the SEC in connection with
the Offer, the Merger and the other transactions contemplated hereby, and the
information supplied by Parent to the Company in connection with the
Schedule 14D-9, will comply as to form, in all material respects, with the
requirements of the Exchange Act and the Securities Act, as the case may be, and
will not, on the date of its filing or dissemination, as the case may be,
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 are made, not
misleading.
(b) Notwithstanding the foregoing provisions of this Section 4.7, no
representation or warranty is made by Parent with respect to statements made
or incorporated by reference in the Offer Documents based on information
supplied by the Company expressly for inclusion or incorporation by
reference therein.
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Section 4.8 REORGANIZATION.
Neither Parent nor any of its affiliates has taken or agreed to take any
action or knows of any fact, circumstance, plan or intention that is or would be
reasonably likely to prevent the Transaction from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
Section 4.9 OPERATIONS AND ASSETS OF ACQUISITION.
Acquisition was formed solely for the purpose of the Merger and engaging in
the transactions contemplated hereby and has no assets or liabilities, and will
have no assets or liabilities, except as necessary for such purpose. Acquisition
has not engaged, and will not engage, in any other business or activity of any
kind or type whatsoever and has conducted and will conduct its operations only
as contemplated hereby.
Section 4.10 BROKERS.
No person is entitled any brokerage, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement and as a result of any action taken by or on behalf of Parent or
any of its subsidiaries.
ARTICLE V
CERTAIN AGREEMENTS
Section 5.1 CONDUCT OF THE COMPANY'S BUSINESS.
The Company covenants and agrees that, between the date of this Agreement
and the date designees of Parent constitute a majority of the members of the
Board of Directors of the Company, unless Parent shall otherwise consent in
writing (such consent not to be unreasonably withheld or delayed) or as set
forth in Section 5.1 of the Disclosure Schedule or as otherwise expressly
contemplated by this Agreement:
(a) the business of the Company and the Subsidiaries shall be conducted
only in, and the Company and the Subsidiaries shall not take or propose to
take any action except in, the ordinary course of business and consistent
with past practice;
(b) neither the Company nor any Subsidiary shall, directly or
indirectly, do or propose to do, any of the following: (i) issue, sell,
pledge, dispose of, grant or encumber (or permit any Subsidiary to issue,
sell, pledge, dispose of, grant or encumber) any assets of the Company or
any Subsidiary, except inventory and immaterial assets in the ordinary
course of business and consistent with past practice; (ii) except as
contemplated hereby, amend or propose to amend its Certificate or Articles
of Incorporation or By-Laws (or similar organizational documents);
(iii) split, combine, subdivide or reclassify any outstanding shares of its
capital stock, or declare, set aside or pay any dividend payable in cash,
stock, property or otherwise with respect to such shares (except for any
dividends paid in the ordinary course to the Company or to any wholly-owned
Subsidiary); (iv) redeem, purchase, acquire or offer to acquire (or permit
any Subsidiary to redeem, purchase, acquire or offer to acquire) any shares
of its capital stock; or (v) enter into any contract, agreement, commitment
or arrangement with respect to any of the matters set forth in this
paragraph (b);
(c) neither the Company nor any Subsidiary shall (i) issue, sell,
pledge or dispose of, or agree to issue, sell, pledge or dispose of, any
additional shares of, or securities convertible or exchangeable for, or any
options, warrants or rights of any kind to acquire any shares of, its
capital stock of any class or other property or assets or ownership interest
(including without limitation, any phantom interest) whether pursuant to the
Company Stock Plans or otherwise; PROVIDED that the Company may issue Shares
upon the exercise of currently outstanding Company Stock Rights that are
stock options; (ii) acquire (including without limitation, by merger,
consolidation or
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acquisition of stock or assets or any other business combination) any
corporation, partnership or other business organization or division thereof
(or any material amount of assets, other than pending acquisitions or
minority investments, in each case publicly announced prior to the date
hereof); (iii) incur any indebtedness for borrowed money or issue any debt
securities in an amount exceeding $5 Million in the aggregate, except for
working capital loans in the ordinary course of business; (iv) enter into,
terminate or modify any material contract, lease, agreement or commitment,
except in the ordinary course of business and consistent with past practice;
(v) terminate, modify, assign, waive, release or relinquish any contract
rights or amend any material rights or claims not in the ordinary course of
business, (vi) authorize, or make any commitment with respect to any capital
expenditures in excess of $500,000 in the aggregate; (vii) make or direct to
be made any capital investments or equity investments in any entity, other
than investments in any wholly-owned subsidiary, (viii) except as permitted
hereby enter into or amend any contract, agreement, commitment or
arrangement with respect to any matter set forth in this Section 5.1(c); or
(ix) settle or compromise any claim, action, suit or proceeding pending or
threatened against the Company, or, if the Company may be liable or
obligated to provide indemnification, against the Company's directors or
officers, before any court, governmental agency or arbitrator, except in the
ordinary course of business; PROVIDED that nothing herein shall require any
action that might impair or otherwise affect the obligation of any insurance
carrier under any insurance policy maintained by the Company;
(d) neither the Company nor any Subsidiary shall grant any increase in
the salary or other compensation of its employees except (i) pursuant to the
terms of employment agreements in effect on the date hereof and previously
disclosed to Parent and (ii) in the case of employees who are not executive
officers of the Company as set forth in Section 5.1(e) of the Disclosure
Schedule, in the ordinary course of business and consistent with past
practice, or grant any bonus to any employee other than bonuses that are
immaterial in amount to employees who are not executive officers or senior
level management key employees of the Company or set forth on
Section 5.1(d) of the Disclosure Schedule or enter into any employment
agreement or make any loan to or enter into any material transaction of any
other nature with any employee of the Company or any Subsidiary;
(e) neither the Company nor any Subsidiary shall (except for salary
increases for employees who are not executive officers of the Company, or
set forth on Section 5.1(d) of the Disclosure Schedule in the ordinary
course of business and consistent with past practice) adopt or amend, in any
respect, except as contemplated hereby or as may be required by applicable
law or regulation, any collective bargaining, bonus, profit sharing,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust,
fund, plan or arrangement for the benefit or welfare of any directors,
officers or employees (including, without limitation, any such plan or
arrangement relating to severance or termination pay);
(f) except as required by law, tax regulation, SEC pronouncement or
GAAP, amend any accounting policies or procedures;
(g) make any material tax election or settle or compromise any material
United States federal, state, local or other non-United States income tax
liability, except in the ordinary course of business or in a manner
consistent with past practice;
(h) neither the Company nor any Subsidiary shall take any action that
would make any representation or warranty of the Company hereunder
inaccurate in any respect at, or as of any time prior to, the Effective
Time, or omit to take any action necessary to prevent any such
representation or warranty from being inaccurate in any respect at any such
time; and
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(i) each of the Company and the Subsidiaries shall use its best
efforts, to the extent not prohibited by the foregoing provisions of this
Section 5.1, to maintain its relationships with its suppliers, customers and
employees, and if and as requested by Parent, the Company shall schedule,
and the management of the Company shall participate in, meetings of
representatives of Parent with employees of the Company or any Subsidiary;
and
(j) announce an intention, enter into any formal or informal agreement
or otherwise make a commitment, to do any of the foregoing.
Section 5.2 STOCKHOLDER APPROVAL; PREPARATION OF PROXY STATEMENT. (a) If
the Company Stockholder Approval is required by law, the Company shall, as
promptly as practicable following the expiration of the Offer, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Stockholders
Meeting") for the purpose of obtaining the Company Stockholder Approval. Subject
to the fiduciary duties of the Board under applicable law, the Company shall,
through its Board of Directors, recommend to its stockholders that the Company
Stockholder Approval be given. Notwithstanding the foregoing, if Parent or
Acquisition shall acquire beneficial ownership of at least 90% of the
outstanding Shares, the parties shall take all necessary and appropriate action
to cause the merger of Acquisition and the Company to become effective as soon
as practicable after the expiration of the Offer without a Stockholders Meeting
in accordance with the short form merger provisions of the MGBCL.
(b) If the Company Stockholder Approval is required by law, Parent
shall, as soon as practicable following the expiration of the Offer, prepare
and file with the SEC a post-effective amendment to the Form S-4 which shall
include a preliminary Proxy Statement as a prospectus and shall use all
reasonable efforts to respond to any comments of the SEC or its staff and to
cause such post-effective amendment to be declared effective, and the Proxy
Statement to be mailed to the Company's stockholders, as promptly as
practicable. Parent shall notify the Company promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its
staff for amendments or supplements to the Form S-4 or for additional
information and will supply the Company with copies of all correspondence
between Parent or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Form S-4 or the Merger.
Parent shall give the Company an opportunity to comment on any
correspondence with the SEC or its staff or any proposed material to be
included in the Form S-4 prior to transmission to the SEC or its staff and
shall not transmit any such material to which the Company reasonably
objects. If at any time prior to the Stockholders Meeting there shall occur
any event that should be set forth in an amendment or supplement to the
Form S-4, Parent shall promptly prepare and mail to the Company stockholders
such an amendment or supplement.
(c) Parent agrees to cause all Shares owned by Parent or any subsidiary
of Parent to be voted in favor of the Company Stockholder Approval.
Section 5.3 ACCESS TO INFORMATION. (a) The Company shall, and shall cause
the Subsidiaries and its and their respective officers, directors, employees,
representatives and agents to, afford, from the date hereof to the Effective
Time, the officers, employees, representatives and agents of Acquisition
reasonable access during regular business hours to its officers, employees,
agents, properties, books, records and workpapers, and shall promptly furnish
Acquisition all financial, operating and other information and data as
Acquisition, through its officers, employees or agents, may reasonably request.
(b) Except as required by law, Acquisition shall hold, and will cause
its respective officers, employees, representatives and agents to hold, any
confidential information of the Company or any of its Subsidiaries in
accordance with the Confidentiality Agreement between the Company and
Parent.
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(c) No investigation pursuant to this Section 5.3 shall affect, add to
or subtract from any representations or warranties of the parties hereto or
the conditions to the obligations of the parties hereto to effect the
Merger.
Section 5.4 FURTHER ASSURANCES. (a) Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable,
including, without limitation, using all commercially reasonable efforts to
(i) make promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act and in the other countries where a merger filing
is necessary or advisable with respect to the Transactions and (ii) obtain all
permits, consents, approvals, authorizations, qualifications and orders of
Governmental Entities and parties to contracts with the Company and the
Subsidiaries as are necessary for the consummation of the Offer and the Merger.
(b) Parent shall use all reasonable efforts to cause the Parent Shares
to be issued upon the consummation of the Offer and in the Merger and to be
issuable upon exercise of Parent Options to be approved for listing on the
NYSE, subject to official notice of issuance, as promptly as practicable
after the date hereof.
Section 5.5 INQUIRIES AND NEGOTIATIONS.
(a) From the date hereof until the Effective Time or earlier
termination of this Agreement, the Company, the Subsidiaries and their
respective officers, directors, employees, representatives and other agents
or otherwise will not, directly or indirectly (i) solicit, initiate or
knowingly encourage the submission of any Alternative Transaction, including
any Superior Proposal, or (ii) participate in any discussions or
negotiations regarding, or furnish to any person, any non-public information
with respect to, or otherwise cooperate in any way with respect to, or
assist or participate in or facilitate any Alternative Transaction with any
person, corporation, entity or "group" (as defined in Section 13(d) of the
Exchange Act) other than Parent and its affiliates, representatives and
agents (each, a "Third Party") except that the Company may take any action
referred to in this clause (ii) if (A) the Board determines in good faith
(after consultation with outside counsel) that such action is required by
the fiduciary duties of the Board under applicable law, (B) the Board
determines in good faith that the Alternative Transaction constitutes a
Superior Proposal, and (C) the Company has given prior written notice to
Parent and Acquisition and entered into a customary confidentiality
agreement on terms no less favorable to the Company that those contained in
the Confidentiality Agreement (provided that such confidentiality agreement
need not contain terms which restrict the ability of the Third Party to make
a proposal to the Company's Board of Directors). The Company shall promptly
notify Parent orally and in writing if any proposal, offer, inquiry or other
contact is received by, any information is requested from, or any
discussions or negotiations are sought to be initiated or continued with,
the Company in respect of an Alternative Transaction, and shall, in any such
notice to Parent, indicate the identity of the Third Party and the terms and
conditions of any proposals or offers or the nature of any inquiries or
contacts, and thereafter shall keep Parent informed, on a reasonably current
basis, of all material developments affecting the status and terms of any
such proposals or offers or the status of any such discussions or
negotiations. The Company shall not release any Third Party from, or waive
any provision of, any confidentiality or standstill agreement, other than
any such provision that would prevent or otherwise restrict the ability of a
Third Party to make a proposal to the Company's Board of Directors. As of
the date hereof, the Company shall cease, and shall cause the Subsidiaries
and the officers, directors, employees, representatives and other agents of
the Company and the Subsidiaries, to cease, all discussions, negotiations
and communications with all Third Parties and demand the immediate return of
all confidential information previously provided to Third Parties.
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(b) As used in this Agreement, the term "Alternative Transaction" shall
mean any bona fide written proposal or offer from any Third Party relating
to any (i) merger, consolidation, recapitalization, tender or exchange
offer, debt restructuring or similar transaction involving the Company,
(ii) sale of more than 20% of the common stock or other capital stock of the
Company or (iii) sale of assets (including stock of Subsidiaries)
representing more than 20% of the assets of the Company and its
subsidiaries, taken as a whole, including a sale by any means specified in
clause (i) of this sentence. As used in this Agreement, the term "Superior
Proposal" shall mean any bona fide written proposal, not solicited,
initiated or encouraged in violation of this Section 5.5, made by a Third
Party to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, all of the equity securities of the Company entitled
to vote generally in the election of directors or all or substantially all
of the assets of the Company, if and only if, the Board reasonably
determines (after consultation with its financial advisor and outside
counsel) (x) that the proposed transaction would be more favorable from a
financial point of view to its stockholders than the Offer and the Merger
and the transactions contemplated hereby taking into account at the time of
determination any changes to the terms of this Agreement that as of that
time had been proposed by Parent, and (y) that the person or entity making
such Superior Proposal is capable of consummating such Alternative
Transaction (based upon, among other things, the availability of financing
and the degree of certainty of obtaining financing, the expectation of
obtaining required regulatory approvals and the identity and background of
such person).
(c) Except as set forth in this Section 5.5(c), neither the Board nor
any committee thereof shall withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Acquisition, the approval or
recommendation by the Board or any such committee of this Agreement, the
Offer, the Merger or any other transaction. Notwithstanding the foregoing,
prior to the time of acceptance for payment of Shares pursuant to the Offer,
the Board may withdraw or modify its approval or recommendation of the Offer
and the Merger if the Board determines in good faith (i) after consultation
with outside counsel, that such action is required by the fiduciary duties
of the Board under applicable law and (ii) that the Alternative Transaction
constitutes a Superior Proposal. Notwithstanding the foregoing, nothing in
this Agreement shall (x) require the Board to act in a manner inconsistent
with its duty of candor under applicable law, (y) limit the Board's ability
to make any disclosure to the Company's stockholders that the Board
determines in good faith (after consultation with outside counsel) is
required to be made to satisfy its fiduciary duties under applicable law or
(z) limit the Company's ability to make any disclosure required by
applicable law.
(d) Nothing contained in this Section 5.5 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's stockholders, if the Board determines in
good faith, after having received advice from outside counsel, that such
action is required under applicable law; PROVIDED, HOWEVER, that neither the
Company nor the Board nor any committee thereof shall, except as permitted
by Section 5.5(c), withdraw or modify, or propose publicly to withdraw or
modify, its position with respect to this Agreement, the Offer, the Merger
or any other transactions or shall approve or recommend, or propose publicly
to approve or recommend, any Alternative Transaction, including a Superior
Proposal.
(e) If a Payment Event (as hereinafter defined) occurs, the Company
shall pay to Parent, within two business days following such Payment Event,
a fee of $10.5 million in cash.
(f) For purposes of this Agreement, the term "Payment Event" shall mean
(x) the termination of this Agreement by the Company pursuant to 7.1(c),
(y) the termination of this Agreement by Parent pursuant to Section 7.1(d)
or (z) (A) after the date hereof and prior to the termination of this
Agreement a third party shall have made a bona fide proposal or offer for an
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Alternative Transaction and (B) within 12 months of the date of termination
of this Agreement (other than by reason of Parent's failure to comply with
or perform, or its breach of, in any material respect any of its agreements
or covenants contained herein), the Company shall enter into an agreement
with respect to, or consummate an Alternative Transaction (substituting 25%
for 20% in the definition thereof).
(g) The Company acknowledges that the agreements contained in this
Section 5.5 are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into
this Agreement; accordingly, if the Company fails to promptly pay any amount
due pursuant to this Section 5.5, and, in order to obtain such payment,
Parent commences a suit that results in a judgment against the Company for
the fee set forth in this Section 5.5, the Company shall also pay to Parent
its reasonable costs and expenses incurred (including, without limitation,
reasonable fees and expenses of counsel) in connection with such litigation.
(h) This Section 5.5 shall survive any termination of this Agreement,
however caused and is intended to benefit Parent and shall be binding on the
successors and assigns of the Company.
(i) The Company may terminate this Agreement and enter into a letter of
intent, agreement-in-principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") with respect to such
Alternative Transaction provided that, prior to any such termination,
(i) the Company has provided Parent written notice that it intends to
terminate this Agreement pursuant to Section 7.1(d), identifying the
Alternative Transaction then determined to be more favorable and the parties
thereto and delivering an accurate description of all material terms
(including any changes or adjustments to such terms as a result of
negotiations or otherwise) of the Acquisition Agreement to be entered into
for such Alternative Transaction, and (ii) at least three full business days
after the Company has provided the notice referred to in clause (i) above,
the Company delivers to Parent (A) a written notice of termination of this
Agreement pursuant to Section 7.1(c), (B) the termination fee as provided in
Section 5.5(e), (C) a written acknowledgment from the Company that (x) the
termination of this Agreement and the entry into the Acquisition Agreement
for the Alternative Transaction will be a "Payment Event" (as defined in
this Agreement) and (y) the Company Stock Option Agreement shall be honored
in accordance with its terms and (D) a written acknowledgment from each
other party to such Alternative Transaction that it is aware of the
substance of the Company's acknowledgment under clause (C) above and waives
any right it may have to contest the matters thus acknowledged by the
Company.
Section 5.6 NOTIFICATION OF CERTAIN MATTERS, ETC. (a) The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence, or failure to occur, of any event that such
party believes would be likely to cause any of its representations or warranties
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Effective Time and (ii) any material
failure of the Company or Parent, as the case may be, or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that failure to give such notice shall not constitute a waiver of any defense
that may be validly asserted.
(b) Parent shall not take any action that would make any representation
or warranty of Parent hereunder inaccurate in any material respect at, or as
of any time prior to, the Effective Time, or omit to take any action
necessary to prevent any such representation or warranty from being
inaccurate in any material respect at any such time.
Section 5.7 INDEMNIFICATION.
(a) Parent will cause the Surviving Corporation to provide, until the
sixth anniversary of the Closing Date, the directors and officers of the
Company who are currently covered by the
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Company's existing insurance and indemnification policy an insurance and
indemnification policy that provides coverage for events occurring prior to
the Effective Time (the "D&O Insurance") that is no less favorable than the
Company's existing policy or, if substantially equivalent coverage is
unavailable, the best available coverage; PROVIDED, that Parent shall not be
required to pay an annual premium for the D&O Insurance in excess of 200% of
the last annual premium paid by the Company prior to the date hereof (which
annual premium the Company represents and warrants to be $216,000 in the
aggregate), but in such case shall purchase as much coverage as possible for
such amount.
(b) After the Effective Time, Parent will cause the Surviving
Corporation to indemnify and hold harmless each person who is now, or has
been prior to the date hereof or who becomes prior to the Effective Time, an
officer or director of the Company or any of its subsidiaries (the
"Indemnified Persons") against (i) all losses, claims, damages, costs,
expenses (including without limitation counsel fees and expenses),
settlement, payments or liabilities arising out of or in connection with any
claim, demand, action suit, proceeding or investigation based in whole or in
part on, or arising in whole or in part out of, the fact that such person is
or was an officer or director of the Company or any of its subsidiaries,
whether or not pertaining to any matter existing or occurring at or prior to
the Effective Time and whether or not asserted or claimed prior to or at or
after the Effective Time (the "Indemnified Liabilities") and (ii) all
Indemnified Liabilities based in whole or in part on, or arising in whole or
in part out of, or pertaining to, this Agreement or the transactions
contemplated hereby, in each case to the fullest extent required or
permitted under applicable law (including with respect to the advancement of
expenses). Each Indemnified Person is intended to be a third party
beneficiary of this Section 5.7 and may specifically enforce its terms. This
Section 5.7 shall not limit or otherwise adversely affect any rights any
Indemnified Person may have under any agreement with the Company or under
the Company's articles of incorporation or bylaws.
(c) This Section 5.7 shall survive the consummation of the Merger, is
intended to benefit the Indemnified Parties, and shall be binding on the
successors and assigns of Parent and the Surviving Corporation.
Section 5.8 EMPLOYEE BENEFITS. (a) From and after the Effective Time, the
Surviving Corporation and its Subsidiaries will honor in accordance with their
terms all existing employment, severance, consulting and salary continuation
agreements between the Company or any of its Subsidiaries and any current or
former executive officer or director of the Company or any of its Subsidiaries
of a type required to be filed (or described in a document filed) with the SEC
pursuant to the Exchange Act, which agreements are described on Schedule 5.8 or
included in the Company SEC Filings, subject to any modifications thereto agreed
to by any such officers or directors with the Surviving Corporation.
(b) In addition to honoring the agreements referred to in
Schedule 5.8, until the first anniversary of the Effective Time, Parent will
cause the Surviving Corporation to provide the benefits (including health
benefits, severance policies and general employment policies and procedures)
which are comparable in the aggregate, to benefits that are available to
employees of the Company and its Subsidiaries as of the date hereof,
PROVIDED that nothing in this Section 5.8(b) shall be deemed to prevent the
Surviving Corporation or any of its Subsidiaries from making any change
required by applicable law.
(c) To the extent permitted under applicable law, each employee of the
Company or its Subsidiaries shall be given credit for all service with the
Company or its Subsidiaries (or service credited by the Company or its
Subsidiaries) under all employee benefit plans, programs, policies and
arrangements maintained by Parent or the Surviving Corporation in which they
participate or in which they become participants for purposes of
eligibility, vesting and benefit accrual including,
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without limitation, for purposes of determining (i) short-term and long-term
disability benefits, (ii) severance benefits, (iii) vacation benefits and
(iv) benefits under any retirement plan; PROVIDED, HOWEVER, that no service
credit for benefit accrual purposes shall be provided under any defined
benefit pension plan or in any other circumstance that would result in
duplicative accrual of benefits for the same periods of service.
Section 5.9 SECTION 16 MATTERS.
Prior to the Effective Time, Parent and the Company shall take all such
steps as may reasonably be required to cause any dispositions of Shares
(including derivative securities with respect to the Shares) or acquisition of
Parent Shares (including derivative securities with respect to the Parent
Shares) resulting from the transactions contemplated by this Agreement by each
individual who is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to the Company to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance with
the No-Action Letter, dated January 12, 1999, issued by the SEC regarding such
matters.
Section 5.10 TAX TREATMENT.
Each of Parent, Acquisition and the Company shall, and shall cause their
respective subsidiaries to use all commercially reasonable efforts to cause the
Transaction to qualify as a "reorganization" within the meaning of
Section 368(a) of the Code and each of Parent, Acquisition and the Company
agrees that it will not take, and will cause its Subsidiaries to not take any
action, or fail to take any action, which action or failure would be reasonably
likely to cause such tax treatment not to be obtained.
Section 5.11 AFFILIATE LETTERS.
As promptly as practicable, the Company shall deliver to Parent a letter
identifying all Persons who are at the time this Agreement is submitted for
adoption by the stockholders of the Company, "affiliates" of the Company for
purposes of Rule 145 under the Securities Act. The Company shall use all
reasonable efforts to deliver or cause to be delivered to Parent, prior to the
expiration of the Offer, an Affiliate Letter in the form attached hereto as
Exhibit A from each such person.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1 CONDITIONS TO THE OBLIGATIONS OF THE PARTIES.
The respective obligations of the parties to consummate the Merger are
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) if required by applicable law, this Agreement shall have been duly
approved by the holders of two-thirds of the outstanding Shares, in
accordance with applicable law and the Articles of Incorporation and By-Laws
of the Company.
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
United States court or United States governmental authority which prohibits,
restrains or enjoins the consummation of the Merger; and
(c) Acquisition shall have accepted for payment and paid for Shares
pursuant to the Offer, provided that Parent and Acquisition may not assert
this condition if the failure to accept Shares for payment resulted from a
breach of this Agreement by Parent or Acquisition.
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ARTICLE VII
TERMINATION AND ABANDONMENT
Section 7.1 TERMINATION AND ABANDONMENT.
This Agreement may be terminated and the Offer and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval by the stockholders of the Company:
(a) by mutual action of the Board of Directors of Parent and the
Company;
(b) by either the Company or Parent if (i) any statute, rule,
regulation, executive order, decree, ruling or injunction existing or
hereinafter enacted of or by any Governmental Entity of competent
jurisdiction which makes the consummation of the Offer or the Merger illegal
or otherwise prevents or prohibits the consummation of the Offer or the
Merger shall be in effect and shall have become final and nonappealable,
(ii) Acquisition shall have terminated the Offer, or the Offer shall have
expired, without the acceptance for payment of Shares thereunder or
(iii) the acceptance for payment of Shares pursuant to the Offer shall not
have occurred on or prior to the Outside Date; unless, in any case, such
event has been caused by or resulted from the breach of this Agreement by
the party seeking such termination;
(c) by the Company if, prior to acceptance for payment of Shares
pursuant to the Offer, the Company shall enter into a definitive written
agreement with respect to a Superior Proposal, as provided in
Section 5.5(i), provided that the Company shall have complied in all
material respects with Section 5.5(a) hereof and that the fee payable under
Section 5.5(b) hereof shall have been paid;
(d) by Parent, if, prior to the purchase of Shares in the Offer, the
Board of Directors of the Company shall have publicly withdrawn, modified or
amended in a manner adverse to Acquisition its approval or recommendation of
the Merger;
(e) by the Company if, (i) Acquisition shall have failed to commence
the Offer within ten business days of the date of this Agreement or
(ii) prior to the purchase of Shares in the Offer, (A) Parent shall have
failed to perform in all material respects its covenants and obligations
contained in this Agreement, which failure to perform has not been cured
within ten business days after the giving of notice to Parent or (B) the
representations and warranties set forth in Section 4.8 hereof shall not be
true in all material respects.
(f) by Parent if (i) Acquisition shall have failed to commence the
Offer within ten business days of the date hereof due to the failure to be
satisfied of any condition set forth in Annex I hereto and (ii) such
condition could not reasonably be expected to be satisfied.
Any party desiring to terminate this Agreement pursuant to this Section 7.1
shall give notice to the other party in accordance with Section 8.5.
Section 7.2 EFFECT OF TERMINATION. Except as provided in Sections 5.5 and
8.2, in the event of the termination of this Agreement and the abandonment of
the Merger pursuant to Section 7.1, this Agreement shall thereafter become void
and have no effect, and no party hereto shall have any liability to any other
party hereto or its stockholders or directors or officers in respect thereof,
except that nothing herein shall relieve any party from liability for any fraud
or willful breach prior to the date of such termination; PROVIDED, HOWEVER, that
the Confidentiality Agreement shall survive any termination of this Agreement.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant hereto shall survive the Effective Time, provided
that this Section 8.1 shall not limit any covenant or agreement of the parties,
which covenants and agreements shall survive in accordance with their terms.
Section 8.2 EXPENSES, ETC. Except as provided in Section 5.5, in the event
that the transactions contemplated by this Agreement are not consummated,
neither the Company, on the one hand, nor Acquisition, on the other hand, shall
have any obligation to pay any of the fees and expenses of the other incident to
the negotiation, preparation and execution of this Agreement, including the fees
and expenses of counsel, accountants, investment bankers and other experts.
(b) In the event that the transactions contemplated by this Agreement
are consummated, the Company shall pay all of the fees and expenses of
Acquisition incident to the negotiation, preparation and execution of this
Agreement, including the fees and expenses of counsel, accountants,
investment bankers and other advisors.
Section 8.3 PUBLICITY.
The Company and Parent shall consult with each other before issuing any
press release or making any other public announcement concerning this Agreement
or the transactions contemplated hereby and shall not issue any such press
release or make any such statement without the prior consent of the other party,
except that either party may make such public disclosure that it believes in
good faith to be required by law (in which event such party required to make the
release or announcement shall use its best efforts to allow the other party
reasonable time to comment on such release or announcement in advance of such
issuance).
Section 8.4 EXECUTION IN COUNTERPARTS.
For the convenience of the parties, this Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 8.5 NOTICES. All notices that are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered by hand or national
overnight courier service, transmitted by telecopy or mailed by registered or
certified mail, postage prepaid, as follows (each such notice to be effective
upon receipt):
If to Parent or Acquisition to:
GE Transportation Systems
2901 East Lake Road
Erie, PA 16531
Telecopy: 814-875-2724
Attention: Chief Financial Officer
with copies to:
General Electric Company
3135 Easton Turnpike, W3
Fairfield, CT 06431
Telecopy: 203-373-3008
Attention: Cynthia Shereda
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and a copy to:
Sherman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy: 212-848-7179
Attention: John A. Marzulli Jr.
If to the Company, to:
Harmon Industries, Inc.
1600 N.E. Coronado
Blue Springs, MO 64014
Attention: Bjorn E. Olsson
with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Telecopy: 212-259-6333
Attention: Morton A. Pierce
Richard D. Pritz
and a copy to:
Morrison & Hecker L.L.P.
2600 Grand Avenue
Kansas City, Missouri 64108
Telecopy: 816-474-4208
Attention: James O. Selzer
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
Section 8.6 WAIVERS.
The Company, on the one hand, and Parent, on the other hand, may, by written
notice to the other, (i) extend the time for the performance of any of the
obligations or other actions of the other under this Agreement; (ii) waive any
inaccuracies in the representations or warranties of the other contained in this
Agreement or in any document delivered pursuant to this Agreement; (iii) waive
compliance with any of the conditions of the other contained in this Agreement;
or (iv) waive performance of any of the obligations of the other under this
Agreement. Except as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach.
Section 8.7 ENTIRE AGREEMENT.
This Agreement, its Exhibits and Schedules and the other documents executed
at the time of execution hereof or the Effective Time in connection herewith
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings,
oral and written, between the parties hereto with respect to the subject matter
hereof. No representation, warranty, promise, inducement or statement of
intention has been made by any party that is not embodied in this Agreement or
such other documents, and none of the parties shall be
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bound by, or be liable for, any alleged representation, warranty, promise,
inducement or statement of intention not embodied herein or therein.
Section 8.8 APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to principles of conflict of laws,
except to the extent the corporate law of the State of Missouri is applicable
hereto.
The parties hereto agree that any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of, this Agreement
may be brought in the United States District Court for the District of Delaware
or any other Delaware State court (and in the appropriate appellate courts), and
each of the parties hereby (i) consents to the jurisdiction of such courts in
any such suit, action or proceeding, (ii) irrevocably waives 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 or that any such suit, action or proceeding
which is brought in any such court has been brought in an inconvenient forum and
(iii) agrees not to bring any action related to this agreement or the
transactions contemplated hereby in any other court (except to enforce the
judgment of such courts). 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 foregoing, each party
agrees that service of process on such party in the manner provided for notices
in Section 8.5 shall be deemed effective service of process on such party. Each
of Parent, Acquisition and the Company hereby irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this Agreement or the
actions of Parent, Acquisition or the Company in the negotiation,
administration, performance and enforcement hereof.
Section 8.9 BINDING EFFECT, BENEFITS.
Except as otherwise stated herein, this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective permitted
successors and assigns. Except as otherwise stated herein, nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective permitted successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement; provided, however, that the provisions of Section 5.7 hereof shall
accrue to the benefit of, and shall be enforceable by, each of the current and
former directors and officers of the Company.
Section 8.10 ASSIGNABILITY.
Neither this Agreement nor any of the parties' rights hereunder shall be
assignable by any party hereto without the prior written consent of the other
party hereto.
Section 8.11 AMENDMENTS.
This Agreement may be varied, amended or supplemented at any time before or
after the approval and adoption of this Agreement by the stockholders of the
Company by action of the respective boards of directors of the Company and
Acquisition, without action by the stockholders thereof; provided that, after
approval and adoption of this Agreement by the Company's stockholders, no such
variance, amendment or supplement shall, without consent of such stockholders,
reduce the amount or alter the form of the consideration that the holders of the
capital stock of the Company shall be entitled to receive upon the Effective
Time pursuant to Article II hereof. Without limiting the generality of the
foregoing, this Agreement may only be amended, varied or supplemented by an
instrument in writing, signed by the parties hereto.
Section 8.12 INTERPRETATION.
As used herein, "best efforts" or similar formulations shall mean "all
commercially reasonable efforts." References to the "knowledge" of the Company,
or similar formulations, shall mean to the actual knowledge after due inquiry of
the executive officers of the Company. As used herein, "including" or similar
formulations shall mean "including without limitation."
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
and Plan of Merger as of the day and year first above written.
<TABLE>
<S> <C> <C>
HARMON INDUSTRIES, INC.
By: /s/ ROBERT E. HARMON
-----------------------------------------
Name: Robert E. Harmon
Title: Chairman of the Board of Directors
FOUR POINTS ACQUISITION, INC.
By: /s/ JOHN KRENICKI, JR.
-----------------------------------------
Name: John Krenicki, Jr.
Title: President
GENERAL ELECTRIC COMPANY
By: /s/ JOHN KRENICKI, JR.
-----------------------------------------
Name: John Krenicki, Jr.
Title: President & CEO--GE Transportation
Systems
</TABLE>
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ANNEX I
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, but subject to the terms
of the Merger Agreement and any applicable rules and regulations of the SEC
(including Rule 14e-1(c) relating to Acquisition's obligation to pay for or
return tendered shares after termination of the Offer), Acquisition shall not be
required to accept for payment or pay for any Shares tendered pursuant to the
Offer and may extend, terminate or amend the Offer if (i) the Minimum Condition
has not been satisfied, (ii) any applicable waiting period under the HSR Act or
similar statutes or regulations of foreign jurisdictions has not expired or
terminated, (iii) the Form S-4 shall not have become effective under the
Securities Act or shall be the subject of any stop order or proceedings seeking
a stop order or (iv) the Parent Shares to be issued in the Offer and the Merger
shall not have been approved for listing on the NYSE, subject to official notice
of issuance, or (v) at any time after the date of this Agreement, and prior to
the expiration date of the Offer, any of the following events shall occur and be
continuing:
(a) there shall be instituted or pending any action, proceeding or
litigation by any Governmental Entity which directly or indirectly seeks to
(i) prevent, prohibit, or make illegal, the acceptance for payment, payment
for or purchase of Shares by Parent, Acquisition or any other affiliate of
Parent or the consummation of the Offer, the Merger or the other
transactions contemplated by the Merger Agreement, (ii) render Acquisition
unable to accept for payment, pay for or purchase some or all of the Shares,
(iii) impose material limitations on the ability of Parent effectively to
exercise full rights of ownership of the Shares, including the right to vote
the Shares purchased by it on all matters properly presented to the
Company's stockholders or (iv) impose material damages in connection with
the transactions contemplated by the Merger Agreement;
(b) there shall have been any statute, rule, regulation, legislation or
interpretation enacted, promulgated, amended, issued or deemed applicable to
(i) Parent, the Company or any of their respective Subsidiaries or an
Affiliate of either Parent or the Company or (ii) any transaction
contemplated by the Merger Agreement, by any United States or non-United
States legislative body or Governmental Entity with appropriate jurisdiction
(other than the routine application of the waiting period provisions of the
HSR Act or similar statutes or regulations of foreign jurisdictions
applicable to the Offer or the Merger) that is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (iv) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the NYSE (other than a shortening
of trading hours or any coordinated trading halt triggered solely as a
result of a specified increase or decrease in a market index), (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, or (iii) any limitation (whether or not
mandatory) by any government or Governmental Entity on the extension of
credit by banks or other lending institutions;
(d) (i) the representations and warranties of the Company contained in
this Agreement shall not be true and correct (except to the extent that the
aggregate of all breaches thereof would not have a Material Adverse Effect
on the Company) at the date hereof and as of the consummation of the Offer
with the same effect as if made at and as of the consummation of the Offer
(except to the extent such representations specifically relate to an earlier
date, in which case such representations shall be true and correct as of
such earlier date, and in any event, subject to the foregoing Material
Adverse Effect qualification), (ii) the Company shall have failed to perform
in all material respects its covenants and obligations contained in this
Agreement, which failure to perform has not been cured within ten business
days after the giving of written notice to the Company or (iii) except as
disclosed in the Company SEC Filings or Schedule 3.8, there shall have
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occurred since March 31, 2000 any events or changes which constitute a
Material Adverse Effect on the Company;
(e) the Company Board shall have withdrawn, or modified or changed in a
manner adverse to Parent and Acquisition (including by amendment of the
Schedule 14D-9), its recommendation of the Offer, this Agreement or the
Merger or the Company Board shall have resolved to do any of the foregoing;
or
(f) this Agreement shall have terminated in accordance with its terms,
which in the reasonable judgment of Parent, in any such case, and regardless
of the circumstances (including any action or inaction by Parent) giving
rise to such condition makes it inadvisable to proceed with the Offer or the
acceptance for payment of or payment for the Shares.
The foregoing conditions are for the sole benefit of Parent and Acquisition
and may be waived by Parent and Acquisition, in whole or in part at any time and
from time to time, in the sole discretion of Parent and Acquisition. The failure
by Parent and Acquisition at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
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ANNEX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 16, 2000, between GENERAL ELECTRIC
COMPANY, a New York corporation ("Parent"), and HARMON INDUSTRIES, INC., a
Missouri corporation (the "Company").
WHEREAS, Parent and the Company have entered into an Agreement and Plan of
Merger, dated as of the date hereof (as the same may be amended from time to
time, the "Merger Agreement"), providing for the merger of a wholly owned
subsidiary of Parent with the Company; and
WHEREAS, in order to induce Parent to execute and deliver the Merger
Agreement, Parent has required that the Company agree, and the Company has
agreed, to grant to Parent the option set forth herein to purchase authorized
but unissued shares of common stock, par value $0.25 per share (the "Shares"),
of the Company.
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
1. DEFINITIONS. Capitalized terms used but not defined herein shall have
the same meanings as in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth herein,
the Company hereby grants to Parent an unconditional, irrevocable option (the
"Option") to purchase up to that number of Shares which equals 19.9% of the
issued and outstanding Shares (the "Option Shares") immediately prior to the
first exercise of this Option at a price per share (the "Option Price") equal to
$30, payable in cash as provided in Section 4 hereof. The number of Option
Shares and the Option Price are subject to adjustment as set forth herein.
3. EXERCISE AND TERMINATION OF OPTION. (a) Subject to the conditions set
forth in Section 3(a) and to any additional requirements of any applicable
foreign, federal, state or local laws, statutes, ordinances, regulations, rules,
codes, judgments, orders, decrees or other requirement or rule, Parent may
exercise the Option, in whole or in part, at any time or from time to time,
after the occurrence of a Payment Event (as defined in the Merger Agreement)
provided that, except as provided in the last sentence of this Section 3(a), the
Option shall terminate and be of no further force and effect upon the earliest
to occur of (i) the Effective Time (as such term is defined in the Merger
Agreement), (ii) twelve months after the occurrence of a Payment Event (unless
prior thereto the Option shall have been exercised) and (iii) the termination of
the Merger Agreement prior to the occurrence of a Payment Event unless, in the
case of clause (iii), Parent has the right to receive a termination fee
following such termination upon the occurrence of certain events, in which case
the Option will not terminate until the later of (x) six months following the
time such termination fee becomes payable and (y) the expiration of the period
in which an event may occur which would result in Parent having the right to
receive a termination fee pursuant to Section 5.5(e)(z) of the Merger Agreement.
Notwithstanding the termination of the Option, Parent shall be entitled to
purchase those Option Shares with respect to which it has exercised the Stock
Option in accordance with the terms hereof prior to the termination of the
Option. The termination of the Option shall not affect any rights hereunder
which by their terms extend beyond the date of such termination.
(b) If Parent is entitled to and wishes to exercise the Option, it
shall deliver to the Company a written notice (the date of receipt of which
is referred to as the "Notice Date") specifying (i) the total number of
shares it intends to purchase pursuant to such exercise and (ii) a place and
date not earlier than five business days nor later than 15 calendar days
from the Notice Date for the closing of such purchase (the "Closing Date");
PROVIDED that if the closing of a purchase and sale pursuant to the Option
(the "Closing") cannot be consummated by reason of any applicable
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judgment, decree, order, law or regulation, the period of time that
otherwise would run pursuant to this sentence shall run instead from the
date on which such restriction on consummation has expired or been
terminated; and, PROVIDED FURTHER that, without limiting the foregoing, if
prior notification to or approval of any regulatory authority is required in
connection with such purchase, Parent and, if applicable, the Company shall
promptly file the required notice or application for approval and shall
expeditiously process the same (and the Company shall cooperate with Parent
in the filing of any such notice or application and the obtaining of any
such approval), and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which, as the case may be,
(i) any required notification period has expired or been terminated or
(ii) such approval has been obtained, and in either event, any requisite
waiting period has passed.
(c) It shall be a condition to the exercise of this Option that (i) no
preliminary or permanent injunction or other order, decree or ruling against
the sale or delivery of the Option Shares issued by any federal or state
court of competent jurisdiction in the United States is in effect at such
time, (ii) any applicable waiting period under the HSR Act shall have
expired or been terminated at or prior to such time, and (iii) any approval
required to be obtained prior to the delivery of the Option Shares under the
laws of any jurisdiction shall have been obtained and shall be in full force
and effect.
(d) If at any time the Option is then exercisable pursuant to the terms
of Section 3(a) hereof, Parent may elect, in lieu of exercising the Option
to purchase Option Shares as provided in Section 3(a) hereof, to send a
written notice to the Company (a "Cash Exercise Notice") specifying a date
not later than ten Business Days and not earlier than the fifth Business Day
after delivery of such notice, on which date the Company shall pay to parent
an amount in cash equal to the Spread (as defined below) multiplied by such
number of Option Shares as Parent shall specify in the Cash Exercise Notice.
As used in this Agreement, "Spread" shall mean the excess, if any, over the
Option price of the higher of (x) if applicable, the highest price per Share
paid or to be paid by any person in an Alternative Transaction (the "Competing
Purchase Price") and (y) the closing price of the Shares on Nasdaq on the last
trading day immediately prior to the date of the Cash Exercise Notice or the
Repurchase Notice, as the case may be (the "Closing Price"). If the Competing
Purchase Price includes any property other than cash, the Competing Purchase
Price shall be the sum of (i) the fixed cash amount, if any, included in the
Competing Purchase Price plus (ii) the fair market value of such other property.
If such other property consists of securities with an existing public trading
market, the average of the closing prices (or the average of the closing bid and
asked prices if closing prices are unavailable) for such securities in their
principal public trading market on the five trading days ending five days prior
to the date of the Cash Exercise Notice or the Repurchase Notice, as the case
may be, shall be deemed to equal the fair market value of such property. If such
other property consists of something other than cash or securities with an
existing public trading market and, as of the payment date for the Spread,
agreement on the value of such other property has not been reached, the
Competing Purchase Price shall be deemed to be the amount of any cash included
in the Competing Purchase Price plus the fair market value of such other
property (as determined by a nationally recognized investment banking firm
jointly selected by Parent and the Company). For this purpose, the parties shall
use their reasonable commercial efforts to cause any determination of the fair
market value of such other property to be made within three Business Days after
the date of delivery of the Cash Exercise Notice or the Repurchase Notice, as
the case may be.
Upon exercise by Parent of its right to receive the Spread multiplied by
such number of Option Shares as Parent shall specify in the Cash Exercise Notice
pursuant to this Section 3, the obligations of the Company to deliver Option
Shares pursuant to Section 3(c) shall be terminated with respect to such number
of Option Shares subject to the Cash Exercise Notice.
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4. PAYMENT AND DELIVERY OF CERTIFICATES. (a) At the Closing referred to in
Section 3 hereof, Parent shall pay to the Company on the Closing Date the
aggregate Option price for the Option Shares purchased pursuant to the exercise
of the Option in immediately available funds by wire transfer to a bank account
designated not later than one business day prior to such Closing Date by the
Company; PROVIDED that failure or refusal of the Company to designate such a
bank account shall not preclude Parent from exercising the Option.
(b) At such Closing, simultaneously with the delivery of cash as
provided in Section 4(a), the Company shall deliver to Parent a certificate
or certificates representing the number of Option Shares purchased by
Parent, registered in the name of Parent or a wholly owned subsidiary of
Parent designated in writing by Parent, which shares shall be fully paid and
non-assessable and free and clear of all Liens, claims, charges and
encumbrances of any kind whatsoever. Any certificates so issued shall bear a
legend reflecting any resale restrictions applicable to the shares
represented thereby. Any such legend will be removed by delivery of
substitute certificates without such reference if the sale of such Option
Shares has been registered pursuant to the Securities Act, the Option Shares
have been sold in reliance on and in accordance with Rule 144 or Parent has
delivered to the Company a copy of a letter from the staff of the SEC, or an
opinion of counsel in customary form, to the effect that such legend is not
required for purposes of the Securities Act.
(c) At the time any Option Shares are issued pursuant to any exercise
of the Option, if the Company shall have issued any share purchase rights or
similar securities generally to holders of Shares prior thereto (including
pursuant to the Rights Agreement), then each Option Share issued pursuant to
an exercise of the Option shall also represent rights with terms
substantially the same as and at least as favorable to Parent as those
issued to other holders of Shares.
(d) When Parent provides the written notice of exercise of the Option
provided for in Section 3(b) and the tender of the applicable purchase price
in immediately available funds, Parent shall be deemed to be the holder of
record of the Option Shares issuable upon such exercise, notwithstanding
that the stock transfer books of the Company shall then be closed or that
certificates representing such Option Shares shall not then be actually
delivered to Parent.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Parent as follows:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Missouri. The execution,
delivery and performance of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby (i) are within
the Company's corporate powers, (ii) have been duly authorized by the
Company's Board of Directors and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement and the
transactions contemplated hereby, (iii) require no consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity, except for compliance by the Company with the HSR Act
and similar statutes or regulations of foreign jurisdictions (iv) do not
conflict with any provision of the Articles of Incorporation or By-Laws of
the Company, (v) assuming compliance with clause (iii) above, contravene or
conflict with or constitute a violation of any provision of any law,
regulation or judgment, injunction, order or decree binding upon the Company
or any of its Subsidiaries and (vi) will not require any consent, approval
or notice under and will not conflict with, or result (with the giving of
notice or the lapse of time or both) in any violation of or default or loss
of a benefit under, or permit the acceleration or termination of any
obligation under, any mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the
Company or any Subsidiary or their respective properties, or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any asset of the Company or any Subsidiary; other
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than, in the case of each of (iii), (v) or (vi), such as would not,
individually or in the aggregate, have a Company Material Adverse Effect on
the Company or prevent or materially impair the ability of the Company to
consummate the transactions contemplated by this transaction. This Agreement
has been duly executed and delivered by the Company and constitutes the
legal, valid and binding obligation of the Company, enforceable in
accordance with its terms.
(b) Except for any filings required to be made under the HSR Act, the
Company has taken all necessary corporate and other action to authorize and
reserve and to permit it to issue, and at all times from the date hereof
until such time as the obligation to deliver Option Shares upon the exercise
of the Option terminates, will have reserved for issuance, upon any exercise
of the Option, the number of Shares subject to the Option (less the number
of Shares previously issued upon any partial exercise of the Option). All of
the Shares to be issued pursuant to the Option are duly authorized and, upon
issuance and delivery thereof pursuant to this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable, and free and clear
of all claims, liens, charges, encumbrances and security interests, and not
subject to any preemptive rights.
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Parent hereby
represents and warrants to the Company as follows:
(a) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York. The execution,
delivery and performance of this Agreement by Parent and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
necessary corporate and stockholder action on the part of Parent, require no
consent, approval, order or authorization of, or registration, declaration
or filing with, any Governmental Entity, except for compliance by Parent
with the HSR Act and similar statutes or regulations of foreign
jurisdictions, and do not conflict with any provision of the Articles of
Incorporation or By-Laws of Parent or result (with the giving of notice or
the lapse of time or both) in any violation of or default or loss of a
benefit under, or permit the acceleration of any obligation under any
mortgage, indenture, lease, agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to Parent, its subsidiaries or
their respective properties that individually or in the aggregate, have a
material adverse effect on Parent or materially impair the ability of Parent
to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and constitutes the legal, valid and
binding obligation of Parent, enforceable against Parent in accordance with
its terms.
(b) Parent is acquiring the Option and will acquire the Option Shares
for investment purposes only and not with a view to any resale or
distribution thereof, and will not sell any Option Shares purchased pursuant
to the Option except in compliance with the Securities Act.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event of any change
in the Shares by reason of stock dividends, stock splits, split-ups, spin-offs,
recapitalizations, recombinations, mergers, extraordinary dividends or the like,
the type and number of Option Shares, and the Option Price, as the case may be,
shall be adjusted appropriately in such manner that Parent would have received
in respect of Shares if Parent had exercised the Option immediately prior to
such event on the record date therefore, as applicable, and had elected (to the
fullest extent it would have been permitted to elect) to receive such
securities, cash or other property, and proper provision shall be made in any
agreement governing any such transaction to provide for such adjustment and the
full satisfaction of the Company's obligations hereunder.
8. REPURCHASE.
(a) At any time when the Option is exercisable pursuant to
Section 3(a) hereof, at the request of Parent, the Company shall repurchase
all Shares purchased by Parent pursuant hereto
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which parent then beneficially owns at a price per share equal to the sum of
(x) the aggregate Option Price paid by Parent for all Shares acquired
pursuant to the Stock Option with respect to which parent then has
beneficial ownership; and (v) the Spread multiplied by the number of shares
with respect to which the Option has been exercised and with respect to
which Parent then has beneficial ownership.
(b) In the event Parent exercises its rights under this Section 8, the
Company shall, within 10 business days thereafter, pay the required amount
to Parent by wire transfer of immediately available funds to an account
designated by Parent and Parent shall surrender any certificates evidencing
the Shares purchased thereunder.
(c) In the event Parent exercises its rights under this Section 8, the
Company shall, within 10 business days thereafter, pay the required amount
to Parent by wire transfer of immediately available funds to an account
designated by Parent and Parent shall surrender to the Company the
certificates evidencing the Shares purchased under this Section 8.
(d) The period for exercise of the rights provided under this
Section 8 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, for the expiration of
all statutory waiting periods, and to the extent the Company is unable to
perform any of its obligations in this Section 8 under applicable law; and
(ii) to the extent necessary to avoid liability under Section 16(b) of the
Exchange Act by reason of such exercise.
(e) If within 12 months after the date the Merger Agreement was
terminated pursuant to the terms thereof, neither Parent nor any other
person has acquired more than fifty percent of the issued and outstanding
Shares, the Company will then have the right to purchase (the "Repurchase
Right") all, but not less than all, of the Option Shares acquired upon
exercise of this Option of which Parent is the beneficial owner on the date
the Company gives written notice of its intention to exercise the Repurchase
Right, at a price per share equal to the greater of (i) the Option Price or
(ii) the average of the closing price per Share on Nasdaq for the five
consecutive trading days ending on and including the trading date
immediately prior to the consummation of such repurchase of Option Shares.
9. REGISTRATION RIGHTS. At any time within 2 years after a Closing, if
requested by Parent or any affiliate of Parent who is a beneficial owner of
Option Shares (each a "Shareholder"), the Company shall, as expeditiously as
possible file a registration statement on a form for general use under the
Securities Act if necessary in order to permit the sale or other disposition of
the Option Shares that have been acquired upon exercise of the Option in
accordance with the intended method of sale or other disposition requested by
any such Shareholder. Each such Shareholder shall provide all information
reasonably requested by the Company for inclusion in any registration statement
to be filed hereunder. The Company shall use its reasonable best efforts to
cause such registration statement first to become effective and then to remain
effective for such period not in excess of 90 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sales or other dispositions. The registration effected under this
Section 9 shall be at the Company's expense except for underwriting commissions
and the fees and disbursements of such Shareholder's counsel attributable to the
registration of such Option Shares. In no event shall the Company be required to
effect more than three registrations hereunder. The filing of any registration
statement required hereunder may be delayed for such period of time (not to
exceed 60 days) in the reasonable judgment of the Board of Directors of the
Company, require premature disclosure of any material corporate development or
otherwise interfere with or adversely affect any pending or proposed offering of
securities of the Company or any other material transaction involving the
Company. If requested by any such Shareholder in connection with such
registration, the Company shall become a party to any underwriting agreement
relating to the sale of such shares on terms and including obligations and
indemnities that are customary for parties similarly situated. Upon receiving
any request for registration
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under this Section 9 from any Shareholder, the Company agrees to send a copy
thereof to any other person known to the Company to be entitled to registration
rights under this Section 9, in each case, by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies.
10. LISTING. If Option Shares or any other securities to be acquired upon
exercise of the Option are then-listed on the NYSE or any other national
securities exchange, upon the request of Parent, the Company will promptly file
an application to list the Option Shares or other securities to be acquired upon
exercise of the Option on the NYSE or such other exchange and will use its best
efforts to obtain approval of such listings as soon as practicable.
11. LIMITATION ON PROFITS. (a) Notwithstanding any other provision
contained herein or in the Merger Agreement to the contrary, in no event shall
Parent's Total Profit (as defined below), including the amount of $10.5 million
contemplated by Section 5.5(e) of the Merger Agreement (the "Termination Fee"),
exceed $16,000,000 (the "Fee Cap") and if it otherwise would exceed such amount,
Parent shall repay the excess amounts to the Company in cash so that the Total
Profit shall not exceed such amount.
(b) Notwithstanding anything to the contrary contained herein, the
Option may not be exercised for a number of Shares as would, as of the date
of exercise, result in a Notional Total Profit (as defined below) of more
than the amount of the Fee and if it otherwise would exceed such amount, the
number of shares which may then be issued upon exercise of the options will
be decreased so that the Notional Total Profit shall not exceed the amount
of the Fee;
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount of the Fee received
by Parent pursuant to Section 5.5(e) of the Merger Agreement, (ii) the
amount received by Parent pursuant to Sections 3(d) and 8 hereof, (iii)
(x) the net cash amounts received by Parent pursuant to the sale of Option
Shares (or any other securities into which such Option Shares shall be
converted or exchanged) to any unaffiliated party, LESS (y) Parent's Option
price for such Option Shares.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of shares as to which Parent may propose to exercise the Option
shall be the Total Profit determined as of the date of such proposed
exercise assuming that the Option were exercised on such date for such
number of shares and assuming that each such share, together with each other
Option Share, held by Parent and its affiliates as of such date, were sold
for cash at the closing market price on Nasdaq for one Share as of the close
of business on the preceding trading day (LESS customary brokerage
commissions).
12. TRANSFERABILITY OF THE OPTION. Neither of the parties hereto may
assign any of its rights or obligations under this Option Agreement or the
Option created hereunder to any other person, without the express written
consent of the other party, except Parent may assign, in whole or in part, its
rights and obligations hereunder to any wholly owned subsidiary of Parent,
provided that no such assignment will relieve Parent of its obligations
hereunder. Any purported assignment in violation hereof shall be null and void.
13. MISCELLANEOUS.
(a) EXPENSES. Except as provided in Section 9, each of the parties hereto
shall pay all costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants and counsel.
(b) ENTIRE AGREEMENT. This Option Agreement, the Confidentiality Agreement
and the Merger Agreement (including the exhibits and schedules thereto)
constitute the entire agreement between the
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parties with respect to the subject matter hereto and supersede all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof and thereof.
(c) SUCCESSORS; NO THIRD-PARTY BENEFICIARIES. The terms and conditions of
this Option Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted transferees and
assigns. Nothing in this Option Agreement is intended to confer upon any Person,
other than the parties hereto, and their respective successors and permitted
assigns, any rights or remedies hereunder.
(d) SEVERABILITY. Any term, provision, covenant or restriction contained
in this Option Agreement held by any court of competent jurisdiction to be
invalid, void or unenforceable, shall be ineffective to the extent of such
invalidity, voidness or unenforceability, but neither the remaining terms,
provisions, covenants or restrictions contained in this Option Agreement nor the
validity or enforceability thereof in any other jurisdiction shall be affected
or impaired thereby. Any term, provision, covenant or restriction contained in
this Option Agreement that is so found to be so broad as to be unenforceable
shall be interpreted to be as broad as is enforceable.
(e) NOTICES. All notices or other communications that are required or
permitted hereunder shall be in writing and sufficient if delivered in
accordance with Section 8.5 of the Merger Agreement (which is incorporated
herein by reference).
(f) COUNTERPARTS. This Option Agreement may be executed in counterparts,
and each such counterpart shall be deemed to be an original instrument, but both
such counterparts together shall constitute but one agreement.
(g) FURTHER ASSURANCES. In the event of any exercise of the Option by
Parent, the Company and Parent shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.
(h) SPECIFIC PERFORMANCE. The parties hereto agree that if for any reason
Parent or the Company shall have failed to perform its obligations under this
Option Agreement, then either party hereto seeking to enforce this Option
Agreement against such non-performing party shall be entitled to specific
performance and injunctive and other equitable relief, and the parties hereto
further agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such injunctive or other equitable
relief. This provision is without prejudice to any other rights that either
party hereto may have against the other party hereto for any failure to perform
its obligations under this Option Agreement.
(i) GOVERNING LAW. This Option Agreement shall be construed in accordance
with and governed by the internal laws of the State of Delaware without
reference to its principles of conflicts of laws.
(j) CONSENT TO JURISDICTION; VENUE. Section 8.8 of the Merger Agreement is
hereby incorporated herein by reference.
(k) SECTION 16(B). Periods of time that otherwise would run pursuant to
Section 3 or 8 hereof shall also be extended to the extent necessary for any
Parent to avoid liability under Section 16(b) of the Exchange Act.
(l) WAIVER AND AMENDMENT. Any provision of this Option Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Option Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the date first written above.
<TABLE>
<S> <C> <C>
GENERAL ELECTRIC COMPANY
By: /s/ JOHN KRENICKI, JR.
-----------------------------------------
Name: John Krenicki, Jr.
Title: President & CEO--GE Transportation
Systems
HARMON INDUSTRIES, INC.
By: /s/ ROBERT E. HARMON
-----------------------------------------
Name: Robert E. Harmon
Title: Chairman of the Board of Directors
</TABLE>
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ANNEX C
SUPPORT AGREEMENT, dated as of July 16, 2000 among General Electric Company,
a New York corporation ("Parent"), and each other person set forth on the
signature pages hereof (the "Stockholders"). Capitalized terms used but not
separately defined herein shall have the meanings assigned to such terms in the
Merger Agreement (as defined below).
WHEREAS, the Boards of Directors of each of Acquisition and the Company have
approved an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"), providing for the merger of a wholly owned subsidiary of
Parent with the Company; and
WHEREAS, in order to induce Parent to execute and deliver the Merger
Agreement, Parent has required that the Stockholders, and each Stockholder has
agreed, to enter into this Agreement with respect to shares of common stock, par
value $0.25 per share, of the Company (the "Common Stock") that each Stockholder
beneficially owns and shares of Common Stock that each Stockholder may hereafter
acquire (collectively, the "Shares").
NOW, THEREFORE, in consideration of the premises herein contained, the
parties agree as follows:
Section 1. TENDER. Each Stockholder shall validly tender all of its
outstanding Shares into the Offer promptly after the commencement of the Offer
(and tender against such Shares from time to time in the event it withdraws such
Shares).
Section 2. VOTING AGREEMENT. (a) Each Stockholder hereby irrevocably and
unconditionally agrees to vote all Shares that each Stockholder is entitled to
vote, at the time of any vote to approve and adopt the Merger Agreement, the
Merger and all agreements related to the Merger and any actions related thereto
at any meeting of the stockholders of the Company, and at any adjournment
thereof, at which such Merger Agreement and other related agreements (or any
amended version thereof), or such other actions, are submitted for the
consideration and vote of the stockholders of the Company, in favor of the
approval and adoption of the Merger Agreement, the Merger and the transactions
contemplated by the Merger Agreement.
(b) Each Stockholder hereby agrees that it will not vote any Shares in
favor of the approval of any (i) Alternative Transaction, (ii)
reorganization, recapitalization, liquidation or winding up of the Company
or any other extraordinary transaction involving the Company, other than as
contemplated by the Merger Agreement, (iii) corporate action the
consummation of which would frustrate the purposes, or prevent or delay the
consummation, of the transactions contemplated by the Merger Agreement or
(iv) other matter relating to, or in connection with, any of the foregoing
matters.
(c) Each Stockholder hereby revokes any and all previous proxies
granted with respect to the Shares. By entering into this Agreement, each
Stockholder hereby grants a proxy appointing Parent and each of its
designees as the Stockholder's attorney-in-fact and proxy, with full power
of substitution, for and in the Stockholder's name, to vote, express,
consent or dissent, or otherwise to utilize such voting power in the manner
contemplated by Section 2(a)-(b) above as Parent or its proxy or substitute
shall, in Parent's sole discretion, deem proper with respect to the Shares.
The proxy granted by each Stockholder pursuant to this Section 2 is
irrevocable and is granted in consideration of Parent entering into this
Agreement and the Merger Agreement and incurring certain related fees and
expenses. The proxy granted by each Stockholder shall be revoked upon
termination of this Agreement in accordance with its terms.
C-1
<PAGE>
Section 3. STOCKHOLDER REPRESENTATIONS AND WARRANTIES. Each Stockholder
represents and warrants to Parent that:
(a) The execution, delivery and performance of this Agreement by
Stockholder and the consummation by it of the transactions contemplated
hereby are within the power and authority of Stockholder. This Agreement
constitutes the legal, valid and binding obligation of Stockholder,
enforceable against the Stockholder in accordance with its terms. If the
Stockholder is married and the Shares set forth on the signature page hereto
opposite such Stockholder's name constitute community property under
applicable laws, this Agreement has been duly authorized, executed and
delivered by, and constitutes the valid and binding agreement of, such
Stockholder's spouse.
(b) The execution and delivery of this Agreement by Stockholder do not
and the consummation by Stockholder of the transactions contemplated hereby
will not, (i) result (with the giving of notice or the lapse of time or
both) in any violation of judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Stockholder, (ii) require any consent or
other action by any person under, constitute a default under, or give rise
to any right of termination, cancellation or acceleration or to a loss of
any benefit to which Stockholder is entitled under any provision of any
agreement or other instrument binding on Stockholder or (iii) result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any asset of Stockholder, other than, in respect of each of
clauses (i), (ii) and (iii), any such items as would not, individually or in
the aggregate, prevent or materially impair the ability of Stockholder to
consummate the transactions contemplated by this Agreement.
(c) Stockholder is the beneficial owner of the Shares, free and clear
of any Lien and any other limitation or restriction (including any
restriction on the right to vote or otherwise dispose of the Shares). None
of the Shares is subject to any voting trust or other agreement or
arrangement with respect to the voting of such Shares.
(d) Except for the Shares, Stockholder does not beneficially own any
(i) shares of capital stock or voting securities of the Company,
(ii) securities of the Company convertible into or exchangeable for shares
of capital stock or voting securities of the Company or (iii) options or
other rights to acquire from the Company any capital stock, voting
securities or securities convertible into or exchangeable for capital stock
or voting securities of the Company.
(e) No person is entitled to any brokerage or finder's, financial
advisor's or other similar fee or commission from Parent or the Company in
connection with the transactions contemplated by this Agreement and as a
result of any action taken by or on behalf of Stockholder.
Section 4. PARENT REPRESENTATIONS AND WARRANTIES. Parent represents and
warrants to each Stockholder:
(a) The execution, delivery and performance of this Agreement by Parent
and the consummation by it of the transactions contemplated hereby are
within the requisite corporate power and authority of Parent and have been
duly authorized by all necessary corporate and stockholder action on the
part of Parent. This Agreement has been duly executed by Parent and
constitutes the legal, valid and binding obligation of Parent, enforceable
against each of Parent in accordance with its terms.
Section 5. STOCKHOLDER COVENANTS. Each Stockholder hereby covenants and
agrees that:
(a) Except pursuant to the terms of this Agreement, Stockholder shall
not, without the prior written consent of Parent, directly or indirectly,
(i) grant any proxies or enter into any voting trust or other agreement or
arrangement with respect to the voting of any Shares or (ii) sell, assign,
transfer, encumber or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the direct or
indirect sale, assignment, transfer,
C-2
<PAGE>
encumbrance or other disposition of, any shares of Common Stock during the
term of this Agreement; PROVIDED, however, that Stockholder may sell such
number of Shares as may be necessary to satisfy tax liabilities of such
Stockholder. Stockholder shall not seek or solicit any such acquisition or
sale, assignment, transfer, encumbrance or other disposition or any such
contract, option or other arrangement or understanding and agrees to notify
Parent promptly, and to provide all details requested by Parent, if
Stockholder shall be approached or solicited, directly or indirectly, by any
person with respect to any of the foregoing.
(b) From the date hereof until the termination hereof, Stockholder, in
its capacity as a Stockholder, will not, and will authorize or knowingly
permit any investment bankers, attorneys, accountants, consultants and other
agents or advisors ("Representatives") of Stockholder not to, directly or
indirectly, (i) take any action to solicit, initiate or facilitate or
encourage the submission of any Acquisition Proposal, or (ii) engage in any
negotiations regarding, or furnish to any person any nonpublic information
with respect to, or take any other action knowingly to facilitate any
inquiries or the making of any proposal that constitutes, or may be
reasonably expected to lead to, any Acquisition Proposal; PROVIDED, that
notwithstanding any other provision of this Agreement, Stockholder may take
any action in its capacity as an officer or director of the Company that
would be permitted to be taken in accordance with the terms and conditions
of the Merger Agreement.
(c) Stockholder will notify Parent promptly (but in no event later than
24 hours) if any person shall make a proposal or inquiry, or contact the
Stockholder, relating to the acquisition of beneficial ownership of such
Stockholder's Shares. The notice shall state the identity of the person and
the material terms and conditions of such proposal, inquiry or contact.
Stockholder shall keep Parent reasonably apprised of any material
development with respect to such proposal. Stockholder shall, and shall
cause its Representatives to, cease immediately and cause to be terminated
all existing discussions or negotiations, if any, with any persons conducted
heretofore with respect to, or that could reasonably expected to lead to,
any Acquisition Proposal.
Section 6. MISCELLANEOUS.
(a) FURTHER ASSURANCES. Parent and each Stockholder will execute and
deliver, or cause to be executed and delivered, all further documents and
instruments and use their 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 and make
effective the transactions contemplated by this Agreement.
(b) AMENDMENTS; TERMINATION. Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed, in the case of an amendment, by each party to this Agreement or in the
case of a waiver, by the party against whom the waiver is to be effective. This
Agreement shall terminate upon the termination of the Merger Agreement in
accordance with its terms.
(c) EXPENSES. All costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or expense.
(d) SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of 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
consent of the other parties hereto, except that Parent may transfer or assign
its rights and obligations to any Affiliate of Parent.
(e) GOVERNING LAW. This Agreement shall construed in accordance with and
governed by the laws of the State of Delaware. Section 8.8 of the Merger
Agreement is hereby incorporated herein by reference.
C-3
<PAGE>
(f) 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.
(g) SEVERABILITY. If any term, provision or covenant of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions and covenants of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
(h) SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage
would occur in the event any provision of this Agreement is not performed in
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof in addition to any other remedy to
which they are entitled at law or in equity.
C-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
<TABLE>
<C> <S> <C>
GENERAL ELECTRIC COMPANY
By: /s/ JOHN KRENICKI, JR.
-----------------------------------------
Name: John Krenicki, Jr.
Title: President & CEO--GE Transportation
Systems
</TABLE>
<TABLE>
<CAPTION>
STOCKHOLDER NO. OF SHARES NO. OF OPTIONS
----------- ------------- --------------
<S> <C> <C>
/s/ ROBERT E. HARMON 426,628 10,500
-------------------------------------------------
Name: Robert E. Harmon
/s/ BRUCE M. FLOHR 11,540 4,500
-------------------------------------------------
Name: Bruce M. Flohr
/s/ EMANUEL CLEAVER, II -0- 1,500
-------------------------------------------------
Name: Emanuel Cleaver, II
/s/ RODNEY L. GRAY 21,040 7,500
-------------------------------------------------
Name: Rodney L. Gray
/s/ HERBERT M. KOHN 33,190 7,500
-------------------------------------------------
Name: Herbert M. Kohn
/s/ GERALD E. MYERS 44,216 7,500
-------------------------------------------------
Name: Gerald E. Myers
/s/ DOUGLASS WM. LIST 2,840 7,500
-------------------------------------------------
Name: Douglass Wm. List
/s/ JOHN A. SPRAGUE 540 4,500
-------------------------------------------------
Name: John A. Sprague
/s/ JUDITH C. WHITTAKER 3,540 7,500
-------------------------------------------------
Name: Judith C. Whittaker
/s/ BJORN E. OLSSON 77,454 26,250
-------------------------------------------------
Name: Bjorn E. Olsson
/s/ RAYMOND A. ROSEWALL 30,000 21,000
-------------------------------------------------
Name: Raymond A. Rosewall
/s/ LLOYD T. KAISER 30,322 26,250
-------------------------------------------------
Name: Lloyd T. Kaiser
/s/ WILLIAM P. MARBERG 728 40,500
-------------------------------------------------
Name: William P. Marberg
</TABLE>
C-5
<PAGE>
<TABLE>
<CAPTION>
STOCKHOLDER NO. OF SHARES NO. OF OPTIONS
----------- ------------- --------------
<S> <C> <C>
/s/ STEPHEN L. SCHMITZ 17,400 26,250
-------------------------------------------------
Name: Stephen L. Schmitz
/s/ ROBERT F. ANDERSON 400 6,750
-------------------------------------------------
Name: Robert F. Anderson
/s/ RONALD G. BRESHEARS 10,387 26,250
-------------------------------------------------
Name: Ronald G. Breshears
/s/ ROBERT L. DANLEY 1,900 9,750
-------------------------------------------------
Name: Robert L. Danley
/s/ ROBERT E. HEGGESTAD 26,685 26,250
-------------------------------------------------
Name: Robert E. Heggestad
/s/ J. RANDALL JOHN 10,995 26,250
-------------------------------------------------
Name: J. Randall John
/s/ JOHN W. JOHNSON 10,050 26,250
-------------------------------------------------
Name: John W. Johnson
/s/ GERALD S. MCKENNA -0- 9,750
-------------------------------------------------
Name: Gerald S. McKenna
/s/ WILLIAM J. SCHEERER 9,500 48,750
-------------------------------------------------
Name: William J. Scheerer
/s/ RUSSELL E. TAYLOR -0- 9,750
-------------------------------------------------
Name: Russell E. Taylor
/s/ JEFFREY J. UTTERBACK -0- 26,250
-------------------------------------------------
Name: Jeffrey J. Utterback
/s/ SILVANO BRANDI -0- 11,500
-------------------------------------------------
Name: Silvano Brandi
/s/ DENNIS P. CROWLEY 172,096 -0-
-------------------------------------------------
Name: Dennis P. Crowley
/s/ JOSEPH P. NOFFSINGER -0- 21,500
-------------------------------------------------
Name: Joseph P. Noffsinger
/s/ KAREN A. ARNOLD -0- 7,500
-------------------------------------------------
Name: Karen A. Arnold
/s/ ALICE DIANE MCCLURE 275,099 -0-
-------------------------------------------------
Name: Alice Diane McClure
/s/ ROBERT C. HARMON 117,075 -0-
-------------------------------------------------
Name: Robert C. Harmon
</TABLE>
C-6
<PAGE>
Facsimile copies of letters of transmittal, properly completed and duly
executed, will be accepted. The appropriate letter of transmittal, certificates
for Harmon shares and any other required documents should be sent or delivered
by each Harmon stockholder or his broker, dealer, commercial bank, trust company
or other nominee to the exchange agent at one of its addresses set forth below.
THE EXCHANGE AGENT FOR THE OFFER IS:
THE BANK OF NEW YORK
<TABLE>
<CAPTION>
BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
<S> <C> <C>
(For Eligible Institutions Tender & Exchange Department
Tender & Exchange Department Only)
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York FOR CONFIRMATION TELEPHONE: New York, New York 10286
10286-1248 (212) 815-6156
</TABLE>
------------------------
Any questions or requests for assistance or additional copies of the
prospectus, the letter of transmittal and the notice of guaranteed delivery and
related exchange offer materials may be directed to the information agent at the
telephone number and location listed below. You may also contact your local
broker, commercial bank, trust company or nominee for assistance concerning the
offer.
THE INFORMATION AGENT FOR THE OFFER AND THE MERGER IS:
[LOGO]
445 Park Avenue
5th Floor
New York, New York 10022
Call Collect: (212) 754-8000
Banks and Brokerage Firms Call: (800) 662-5200
SHAREHOLDERS PLEASE CALL: (800) 566-9061
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Indemnification. Section 721 of the New York Business Corporation Law
("NYBCL") provides that, in addition to indemnification provided in Article 7 of
the NYBCL, a corporation may indemnify a director or officer by a provision
contained in the certificate of incorporation or by-laws or by a duly authorized
resolution of its shareholders or directors or by agreement, provided that no
indemnification may be made to or on behalf of any director or officer if a
judgment or other final adjudication adverse to the director or officer
establishes that his acts were committed in bad faith or were the result of
active and deliberate dishonesty and material to the cause of action, or that
such director or officer personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
Section 722(a) of the NYBCL provides that a corporation may indemnify a
director or officer made, or threatened to be made, a party to any action other
than a derivative action, whether civil or criminal, against judgments, fines,
amounts paid in settlement and reasonable expenses actually and necessarily
incurred as a result of such action, if such director or officer acted in good
faith, for a purpose which he reasonably believed to be in, or not opposed to,
the best interests of the corporation and, in criminal actions or proceedings,
in addition, has no reasonable cause to believe that his conduct was unlawful.
Section 722(c) of the NYBCL provides that a corporation may indemnify a
director or officer, made or threatened to be made a party in a derivative
action, against amounts paid in settlement and reasonable expenses actually and
necessarily incurred by him in connection with the defense or settlement of such
action or in connection with an appeal therein if such director or officer acted
in good faith, for a purpose which he reasonably believed to be in, or not
opposed to, the best interests of the corporation, except that no
indemnification will be available under Section 722(c) of the NYBCL in respect
of a threatened or pending action which is settled or otherwise disposed of or
any claim as to which such director or officer shall have been adjudged liable
to the corporation, unless and only to the extent that the court in which the
action was brought, or, if no action was brought, any court of competent
jurisdiction, determines, upon application, that, in view of all the
circumstances of the case, the director or officer is fairly and reasonably
entitled to indemnity for such portion of the settlement amount and expenses as
the court deems proper.
Section 723 of the NYBCL specifies the manner in which payment of
indemnification under Section 722 of the NYBCL or indemnification permitted
under Section 721 of the NYBCL may be authorized by the corporation. It provides
that indemnification may be authorized by the corporation. It provides that
indemnification by a corporation is mandatory in any case in which the director
or officer has been successful, whether on the merits or otherwise, in defending
an action. In the event that the director or officer has not been successful or
the action is settled, indemnification must be authorized by the appropriate
corporate action as set forth in Section 723.
Section 724 of the NYBCL provides that, upon application by a director or
officer, indemnification may be awarded by a court to the extent authorized.
Section 722 and Section 723 of the NYBCL contains certain other miscellaneous
provisions affecting the indemnification of directors and officers.
Section 726 of the NYBCL authorizes the purchase and maintenance of
insurance to indemnify (1) a corporation for any obligation which it incurs as a
result of the indemnification of directors and officers under the above section,
(2) directors and officers in instances in which they may be indemnified by a
corporation under such section, and (3) directors and officers in instances in
which they may not otherwise be indemnified by a corporation under such section,
provided the contract of
II-1
<PAGE>
insurance covering such directors and officers provides, in a manner acceptable
to the New York State Superintendent of Insurance, for a retention amount and
for co-insurance.
Section 6 of the restated certificate of incorporation, as amended, of GE
provides in part as follows:
A Person who is or was a director of the corporation shall have no personal
liability to the corporation or its stockholders for damages for any breach of
duty in such capacity except that the foregoing shall not eliminate or limit
liability where such liability is imposed under the Business Corporation Law of
the State of New York.
Article XI of the bylaws, as amended, of GE provides, in part, as follows:
The corporation shall, to the fullest extent permitted by applicable law as
the same exists or may hereafter be in effect, indemnify any person who is or
was or has agreed to become a director or officer of the Company and who is or
was made or threatened to be made a party to or is involved in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, including an action by or in the right of the
corporation to procure a judgment in its favor and an action by or in the right
of any other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
which such person is serving, has served or has agreed to serve in any capacity
at the request of the corporation, by reason of the fact that he or she is or
was or has agreed to become a director or officer of the corporation, or is or
was serving or has agreed to serve such other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any capacity,
against judgments, fines, amounts paid or to be paid in settlement, taxes or
penalties, and costs, charges and expenses, including attorney's fees, incurred
in connection with such action or proceeding or any appeal therein, PROVIDED,
HOWEVER, that no indemnification shall be provided to any such person if a
judgment or other final adjudication adverse to the director or officer
establishes that (i) his or her acts were committed in bad faith or were the
result of active and deliberate dishonesty and, in either case, were material to
the cause of action so adjudicated, or (ii) he or she personally gained in fact
a financial profit or other advantage to which he or she was not legally
entitled. The benefits of this Paragraph shall extend to the heirs and legal
representatives of any person entitled to indemnification under this paragraph.
GE has purchased liability insurance for its officers and directors as
permitted by Section 727 of the NYBCL.
The merger agreement also provides that after the effective time of the
merger, the surviving corporation shall indemnify and hold harmless, to the
fullest extent permitted under applicable law, each present and former director
or officer of Harmon and each Harmon subsidiary against all liabilities and
expenses, including reasonable attorneys' fees, arising out of or pertaining to
any action or omission in their capacity as an officer or director, in each case
occurring before the effective time of the merger (including the transactions
contemplated by the merger agreement).
For six years from the effective time of the merger, the surviving
corporation shall provide to Harmon's current directors and officers liability
insurance protection of the same kind and scope as that provided by Harmon's
directors' and officers' liability insurance policies as of the date hereof;
provided, however, that in no event shall GE be required to expend in any one
year an amount in excess of 200% of the annual premiums currently paid by Harmon
for such insurance; and PROVIDED FURTHER that if the annual premiums of such
insurance coverage exceed such amount, the surviving corporation shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount.
II-2
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------- -----------------------
<C> <S>
2 Agreement and Plan of Merger dated as of July 16, 2000 among
General Electric Company, Harmon Industries, Inc. and Four
Points Acquisition, Inc. (included as Annex A to the
Prospectus).
3.1 The Certificate of Incorporation, as amended, and Bylaws, as
amended, of General Electric Company are incorporated by
reference to Exhibit (3) of General Electric Company's
Current Report on Form 8-K dated April 27, 2000.
5 Opinion of Robert E. Healing, Corporate Counsel for General
Electric as to the legality of the securities being
registered.
8.1 Opinion of Cahill Gordon & Reindel as to the United States
federal income tax consequences of the offer and the merger.
23.1 Consent of KPMG LLP, independent auditors (for GE).
23.2 Consent of KPMG LLP, independent auditors (for Harmon).
23.3 Consent of Robert E. Healing (included in the opinion filed
as Exhibit 5 to this Registration Statement).
23.4 Consent of Cahill Gordon & Reindel (included in the opinion
filed as Exhibit 8.2 to this Registration Statement).
24 Power of Attorney (included on the signature page of this
Registration Statement).
99.1 Stock Option Agreement dated as of July 16, 2000 between GE
and Harmon (included as Annex B to the Prospectus).
99.2 Support Agreement dated as of July 16, 2000 among GE and
certain stockholders of Harmon (included as Annex C to the
Prospectus).
99.3 Form of Letter of Transmittal.
99.4 Form of Notice of Guaranteed Delivery.
99.5 Form of Letter from Acquiror to Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
99.6 Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees to Clients.
99.7 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
99.8 Summary Advertisement as published in THE WALL STREET
JOURNAL on July 25, 2000.
99.9 Press Release issued by Parent on July 17, 2000
(incorporated by reference to the filing by Parent on
Form 425 on July 17, 2000).
</TABLE>
------------------------
(a) List of Exhibits.
(b) Not applicable.
(c) Not applicable.
II-3
<PAGE>
ITEM 22. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being make, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fairfield, State of
Connecticut, on July 25, 2000.
Date: July 25, 2000
<TABLE>
<S> <C> <C>
GENERAL ELECTRIC COMPANY
(Registrant)
By: /s/ ROBERT E. HEALING
-----------------------------------------
Name: Robert E. Healing
Title: Corporate Counsel
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Philip D. Ameen, Benjamin W. Heineman and Robert E. Healing as his or her true
and lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments)and supplements to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, and hereby grants to such attorneys-in-fact
and agents, full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully to all intents and purposes
as he or she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his or her
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN F. WELCH, JR. Chairman of the Board, Chief
------------------------------------------- Executive Officer (and July 25, 2000
John F. Welch, Jr. Principal Executive Officer)
/s/ JAMES I. CASH, JR.
------------------------------------------- Director July 25, 2000
James I. Cash, Jr.
/s/ SILAS S. CATHCART
------------------------------------------- Director July 25, 2000
Silas S. Cathcart
/s/ DENNIS D. DAMMERMAN
------------------------------------------- Director July 25, 2000
Dennis D. Dammerman
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ ANN M. FUDGE
------------------------------------------- Director July 25, 2000
Ann M. Fudge
/s/ ANDREA JUNG
------------------------------------------- Director July 25, 2000
Andrea Jung
/s/ KENNETH G. LANGONE
------------------------------------------- Director July 25, 2000
Kenneth G. Langone
/s/ SCOTT G. MCNEALY
------------------------------------------- Director July 25, 2000
Scott G. McNealy
/s/ FRANK H.T. RHODES
------------------------------------------- Director July 25, 2000
Frank H.T. Rhodes
/s/ DOUGLAS A. WARNER, III
------------------------------------------- Director July 25, 2000
Douglas A. Warner, III
/s/ PAOLO FRESCO
------------------------------------------- Director July 25, 2000
Paolo Fresco
/s/ GERTRUDE G. MICHELSON
------------------------------------------- Director July 25, 2000
Gertrude G. Michelson
/s/ SAM NUNN
------------------------------------------- Director July 25, 2000
Sam Nunn
/s/ ROGER S. PENSKE
------------------------------------------- Director July 25, 2000
Roger S. Penske
/s/ KEITH S. SHERIN
------------------------------------------- Senior Vice President--Finance July 25, 2000
Keith S. Sherin and Chief Financial Officer
/s/ PHILIP D. AMEEN
------------------------------------------- Vice President, Comptroller and July 25, 2000
Philip D. Ameen Chief Accounting Officer
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2 Agreement and Plan of Merger dated as of July 16, 2000 among
General Electric Company, Harmon Industries, Inc. and Four
Points Acquisition, Inc. (included as Annex A to the
Prospectus).
3.1 The Certificate of Incorporation, as amended, and Bylaws, as
amended, of General Electric Company are incorporated by
reference to Exhibit (3) of General Electric Company's
Current Report on Form 8-K dated April 27, 2000.
5 Opinion of Robert E. Healing, Corporate Counsel for General
Electric as to the legality of the securities being
registered.
8.1 Opinion of Cahill Gordon & Reindel as to the United States
federal income tax consequences of the offer and the merger.
23.1 Consent of KPMG LLP, independent auditors (for GE).
23.2 Consent of KPMG LLP, independent auditors (for Harmon).
23.3 Consent of Robert E. Healing (included in the opinion filed
as Exhibit 5 to this Registration Statement).
23.4 Consent of Cahill Gordon & Reindel (included in the opinion
filed as Exhibit 8.2 to this Registration Statement).
24 Power of Attorney (included on the signature page of this
Registration Statement).
99.1 Stock Option Agreement dated as of July 16, 2000 between GE
and Harmon (included as Annex B to the Prospectus).
99.2 Support Agreement dated as of July 16, 2000 among GE and
certain stockholders of Harmon (included as Annex C to the
Prospectus).
99.3 Form of Letter of Transmittal.
99.4 Form of Notice of Guaranteed Delivery.
99.5 Form of Letter from Acquiror to Brokers, Dealers, Commerical
Banks, Trust Companies and Other Nominees.
99.6 Form of Letter from Brokers, Dealers, Commerical Banks, and
Nominees to Clients.
99.7 Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
99.8 Summary Advertisement as published in THE WALL STREET
JOURNAL on July 25, 2000.
99.9 Press Release issued by Parent on July 17, 2000
(incorporated by reference to the filing by Parent on
Form 425 on July 17, 2000).
</TABLE>
II-7
