<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
GRUMMAN CORPORATION
(Name of Subject Company)
MMC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
MARTIN MARIETTA CORPORATION
(Bidders)
<TABLE>
<S> <C>
COMMON STOCK, $1.00 PAR VALUE PER SHARE
(Including the associated Rights) 40018110
- --------------------------------------------- ---------------------------------------------
(Title of Class of Securities) (CUSIP Number of Class of Securities)
</TABLE>
FRANK H. MENAKER, JR., ESQ.
MARTIN MARIETTA CORPORATION
6801 ROCKLEDGE DRIVE
BETHESDA, MARYLAND 20817
(301) 867-6125
- ----------------------------------------------------------------------------
(Names, Addresses and Telephone Numbers of Persons Authorized
to Receive Notices and Communications on Behalf of Bidder)
With copies to:
<TABLE>
<S> <C>
LEONARD P. LARRABEE, JR., ESQ. EILEEN NUGENT SIMON, ESQ.
DEWEY BALLANTINE SKADDEN, ARPS, SLATE,
1301 AVENUE OF THE AMERICAS MEAGHER & FLOM
NEW YORK, NEW YORK 10019 919 THIRD AVENUE
(212) 259-6800 NEW YORK, NEW YORK 10022
(212) 735-3176
</TABLE>
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
TRANSACTION VALUATION AMOUNT OF FILING FEE
- ---------------------------------------------------------------------------------------------
$1,928,694,900 $385,738.98
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
/ / Check box if any part of the fee is offset by Rule O-11(a)(2) and identify
the filing with which the offsetting fee was previously paid. Identify the
previous filing by registration statement number, or the Form or Schedule
and the date of its filing.
Amount Previously Paid: _____________________________
Form or Registration No.: ___________________________
Filing Party: _______________________________________
Date Filed: _________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
OMB APPROVED
OMB 3235-0102
EXPIRES
<TABLE>
<CAPTION>
CUSIP NO. 40018110 14D-1 PAGE OF PAGES
<S> <C>
1 NAME OF REPORTING PERSON: MMC ACQUISITION CORP.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: Applied for
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCES OF FUNDS
BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or
2(f)
/ /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES / /
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
N/A
10 TYPE OF REPORTING PERSON
CO
</TABLE>
<PAGE> 3
OMB APPROVED
OMB 3235-0102
EXPIRES
<TABLE>
<CAPTION>
CUSIP NO. 40018110 14D-1 PAGE OF PAGES
<S> <C>
1 NAME OF REPORTING PERSON: MARTIN MARIETTA CORPORATION
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 52-1801551
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCES OF FUNDS
BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or
2(f)
/ /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES / /
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
N/A
10 TYPE OF REPORTING PERSON
CO
</TABLE>
<PAGE> 4
This Statement relates to a tender offer by MMC Acquisition Corp., a New
York corporation (the "Purchaser") and a wholly owned subsidiary of Martin
Marietta Corporation, a Maryland corporation ("Parent"), to purchase all
outstanding shares of common stock, par value $1.00 per share and the associated
Rights (as defined in the Offer to Purchase) (collectively, the "Shares") of
Grumman Corporation, a New York corporation (the "Company"), at a purchase price
of $55.00 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated March 8,
1994 (the "Offer to Purchase"), and the related Letter of Transmittal (which
collectively constitute the "Offer"), copies of which are filed as Exhibits
(a)(1) and (a)(2) hereto, respectively, and which are incorporated herein by
reference.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Grumman Corporation. The address of
the principal executive offices of the Company is set forth in Section 7
("Certain Information Concerning the Company") of the Offer to Purchase.
(b) The exact title of the class of equity securities being sought in the
Offer is the common stock, par value $1.00 per share, of the Company and the
associated preferred stock purchase rights issued pursuant to the Rights
Agreement, dated as of February 18, 1988, between the Company and the Bank of
New York, as Rights Agent. The information set forth in the Introduction of the
Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) through (d), (g) The information set forth in Section 8 ("Certain
Information Concerning the Purchaser and Parent") of the Offer to Purchase, and
in Schedule I thereto, is incorporated herein by reference.
(e) and (f) None of the Purchaser or Parent, nor, to the best of their
knowledge, any of the persons listed in Schedule I of the Offer to 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 a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities subject
to, federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction and Section 10
("Background of the Offer; the Merger Agreement; the Rights Agreement") and
Section 8 ("Certain Information Concerning the Purchaser and Parent") of the
Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF BIDDER.
(a) through (e) The information set forth in the Introduction and Section
11 ("Purpose of the Offer, Plans for the Company") of the Offer to Purchase is
incorporated herein by reference.
1
<PAGE> 5
(f) and (g) The information set forth in Section 12 ("Effect of the Offer
on the Market for the Shares; Stock Exchange Listing; Registration Under the
Exchange Act") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Section 8 ("Certain
Information Concerning the Purchaser and Parent") and Schedule I of the Offer to
Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Purchaser and Parent") and Section 10 ("Background of
the Offer; The Merger Agreement; the Rights Agreement") of the Offer to Purchase
is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and in Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
The incorporation by reference herein of the above-mentioned financial
information does not constitute an admission that such information is material
to a decision by a security holder of the Company whether to sell, tender or
hold securities being sought in the Offer.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b) and (c) The information set forth in Section 16 ("Certain Legal
Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein
by reference.
(d) The information set forth in Section 12 ("Effect of the Offer on the
Market for Shares; Stock Exchange Listing; Registration under the Exchange Act")
and Section 16 ("Certain Legal Matters; Regulatory Approvals") of the Offer to
Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) -- Offer to Purchase, dated March 8, 1994.
(a)(2) -- Form of Letter of Transmittal.
(a)(3) -- Form of Letter from Bear, Stearns & Co. Inc., as Dealer Manager,
to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(4) -- Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients.
(a)(5) -- Notice of Guaranteed Delivery.
(a)(6) -- Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(7) -- Form of tombstone advertisement, dated March 8, 1994.
2
<PAGE> 6
(a)(8) -- Form of press release issued by Parent and the Company on March
7, 1994.
(a)(9) -- Letter to Parent from Bank of America National Trust and Savings
Association; Letter to Parent from Morgan Guaranty Trust Company
of New York.
(a)(10) -- The Agreement and Plan of Merger, dated as of March 6, 1994,
among Parent, the Purchaser and the Company (incorporated herein
by reference from Exhibit A to the Offer to Purchase filed as
Exhibit (a)(i) hereto).
3
<PAGE> 7
SIGNATURE
After due inquiry and to the best of its knowledge and belief, each of the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
MARTIN MARIETTA CORPORATION
By: /s/ FRANK H. MENAKER, JR.
Name: Frank H. Menaker, Jr.
Title: Vice President
MMC ACQUISITION CORP.
By: /s/ FRANK H. MENAKER, JR.
Name: Frank H. Menaker, Jr.
Title: Vice President
Dated: March 8, 1994
4
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- --------------------------------------------------------------------------------- -----------
<S> <C> <C>
(a)(1) -- Offer to Purchase, dated March 8, 1994.............................
(a)(2) -- Form of Letter of Transmittal......................................
(a)(3) -- Form of Letter from Bear, Stearns & Co. Inc., as Dealer Manager, to
Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees...........................................................
(a)(4) -- Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees to Clients............................
(a)(5) -- Notice of Guaranteed Delivery......................................
(a)(6) -- Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9................................................
(a)(7) -- Form of tombstone advertisement, dated March 8, 1994...............
(a)(8) -- Form of press release issued by Parent on March 7, 1994............
(a)(9) -- Letter to Parent from Bank of America National Trust and Savings
Association; Letter to Parent from Morgan Guaranty Trust Company of
New York...........................................................
(a)(10) -- Agreement and Plan of Merger, dated as of March 6, 1994, among
Parent, Purchaser and the Company (incorporated herein by reference
from Exhibit A to the Offer to Purchase filed as Exhibit (a)(i)
hereto)
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
GRUMMAN CORPORATION
BY
MMC Acquisition Corp.
A WHOLLY OWNED SUBSIDIARY
OF
MARTIN MARIETTA CORPORATION
AT
$55.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, APRIL 4, 1994, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE A NUMBER OF SHARES OF
COMMON STOCK, PAR VALUE $1.00 PER SHARE (INCLUDING THE ASSOCIATED RIGHTS)
(COLLECTIVELY, THE "SHARES") OF GRUMMAN CORPORATION (THE "COMPANY") REPRESENTING
AT LEAST TWO-THIRDS OF THE TOTAL NUMBER OF SHARES OUTSTANDING ON A FULLY DILUTED
BASIS.
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE
OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE OFFER AND THE MERGER AND
RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
TO THE OFFER.
------------------------
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
March 8, 1994
<PAGE> 2
IMPORTANT
Any shareholder desiring to tender Shares should either (1) complete and
sign the Letter of Transmittal (or facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and deliver it to the Depositary with
the certificate(s) representing tendered Shares and all other required documents
or tender such Shares pursuant to the procedures for book-entry transfer set
forth in Section 3 or (2) request his or her broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for him or her. A
shareholder having Shares registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact such person if he or she
desires to tender such Shares.
Any shareholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such Shares
pursuant to the guaranteed delivery procedure set forth in Section 3.
Questions and requests for assistance or additional copies of this Offer to
Purchase and the Letter of Transmittal may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent, the Dealer Manager or
from brokers, dealers, commercial banks or trust companies.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<C> <S> <C>
Introduction.............................................................................
1. Terms of the Offer; Expiration Date............................................
2. Acceptance for Payment and Payment.............................................
3. Procedure for Tendering Shares.................................................
4. Withdrawal Rights..............................................................
5. Certain Tax Considerations.....................................................
6. Price Range of Shares; Dividends...............................................
7. Certain Information Concerning the Company.....................................
8. Certain Information Concerning the Purchaser and Parent........................
9. Source and Amounts of Funds....................................................
10. Background of the Offer; the Merger Agreement; the Rights Agreement............
11. Purpose of the Offer; Plans for the Company....................................
12. Effect of the Offer on the Market for the Shares; Stock Exchange Listing;
Registration under the Exchange Act............................................
13. Dividends and Distributions....................................................
14. Extension of Tender Period; Amendment; Termination.............................
15. Certain Conditions to the Offer................................................
16. Certain Legal Matters; Regulatory Approvals....................................
17. Fees and Expenses..............................................................
18. Miscellaneous..................................................................
</TABLE>
Schedule I -- Directors and Executive Officers of Parent and the Purchaser
Schedule II -- Certain Information About Parent Required by New York Law
Exhibit A -- Agreement and Plan of Merger
i
<PAGE> 4
To the Holders of Common Stock of
GRUMMAN CORPORATION:
INTRODUCTION
MMC Acquisition Corp., a New York corporation (the "Purchaser") and a
wholly owned subsidiary of Martin Marietta Corporation, a Maryland corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock
(the "Common Stock"), par value $1.00 per share, of Grumman Corporation, a New
York corporation (the "Company"), and the associated preferred stock purchase
rights (the "Rights"; and together with the Common Stock, the "Shares") issued
pursuant to the Rights Agreement, dated as of February 18, 1988, as amended as
of March 6, 1994, between the Company and The Bank of New York, as Rights Agent
(the "Rights Agreement") (until the Distribution Date (as such term is defined
in the Rights Agreement) the Rights will be evidenced by and trade with
certificates evidencing the Common Stock), at $55.00 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"). See Section 10 for a brief description of the Rights
Agreement and its application to the Offer and the Merger (as hereinafter
defined). Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all charges and expenses of Bear,
Stearns & Co. Inc. ("Bear Stearns"), which is acting as Dealer Manager for the
Offer (in such capacity, the "Dealer Manager"), First Chicago Trust Company of
New York (the "Depositary") and Morrow & Co., Inc. (the "Information Agent")
incurred in connection with the Offer. See Section 17.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) A
NUMBER OF SHARES REPRESENTING AT LEAST TWO-THIRDS OF THE TOTAL NUMBER OF SHARES
OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). SEE SECTION 15.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS" OR THE
"BOARD") UNANIMOUSLY HAS DETERMINED THAT THE OFFER AND THE MERGER DESCRIBED
HEREIN ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS, HAS APPROVED THE OFFER AND THE MERGER AND RECOMMENDS THAT THE
COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of March 6, 1994 (the "Merger Agreement"), among Parent, the Purchaser and
the Company. The Merger Agreement provides, among other things, that upon the
terms and subject to the conditions therein, as soon as practicable after the
consummation of the Offer and the approval and adoption of the Merger Agreement
by the shareholders of the Company, the Purchaser will be merged with and into
the Company (the "Merger"), with the Company being the corporation surviving the
Merger (the "Surviving Corporation"). Each outstanding Share (other than
Dissenting Shares (as hereinafter defined)) not owned by Parent, the Purchaser,
the Company or any of their subsidiaries will be converted into and represent
the right to receive $55.00 in cash or any higher price that may be paid per
Share in the Offer, without interest. See Section 10.
Goldman, Sachs & Co. ("Goldman"), financial advisor to the Company, has
delivered to the Board of Directors of the Company its written opinion to the
effect that, as of the date of the Merger Agreement, the $55.00 in cash to be
received by the holders of Shares in the Offer and the Merger is fair to such
holders. A copy of such opinion is included with the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed
to shareholders concurrently herewith, and shareholders are urged to read the
opinion in its entirety for a description of the assumptions made, factors
considered and procedures followed by Goldman.
<PAGE> 5
According to the Company, as of February 28, 1994, there were 33,935,448
Shares outstanding and not more than 1,131,732 Shares subject to issuance
pursuant to stock options under the Company's stock option and long term
incentive plans, and as deferred awards payable in Shares between the date
hereof and June 30, 1994 under the Company's management incentive plan. As a
result, the Purchaser believes that the Minimum Condition would be satisfied if
at least 23,378,120 Shares are validly tendered and not withdrawn prior to the
Expiration Date.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer, the Purchaser will accept for payment and pay for all
Shares that have been validly tendered prior to the Expiration Date and not
withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00
Midnight, New York City time, on Monday, April 4, 1994, unless the Purchaser
shall have extended, in its sole discretion, the period of time for which the
Offer is open, in which event the term "Expiration Date" means the latest time
and date at which the Offer, as so extended by the Purchaser, shall expire.
The Offer is subject to certain conditions set forth in Section 15,
including satisfaction of the Minimum Condition and the expiration or
termination of the waiting period applicable to the Purchaser's acquisition of
Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"). If any such condition is not satisfied,
the Purchaser may (i) terminate the Offer and return all tendered Shares to
tendering shareholders, (ii) extend the Offer and, subject to withdrawal rights
as set forth in Section 4, retain all such Shares until the expiration of the
Offer as so extended, (iii) waive such condition and, subject to any requirement
to extend the period of time during which the Offer is open, purchase all Shares
validly tendered by the Expiration Date and not withdrawn or (iv) delay
acceptance for payment of or payment for Shares, subject to applicable law,
until satisfaction or waiver of the conditions to the Offer; provided, however,
that, unless previously approved by the Company in writing, no change may be
made which decreases the price per Share payable in the Offer, which changes the
form of consideration to be paid in the Offer, which reduces the maximum number
of Shares to be purchased in the Offer, which imposes conditions to the Offer in
addition to those set forth in Section 15 hereto or which broadens the scope of
such conditions. In the Merger Agreement, the Purchaser has agreed, subject to
the conditions in Section 15 and its rights under the Offer, to accept for
payment Shares as soon as practicable after the latest of (i) the date on which
the waiting period under the HSR Act has expired or been terminated, (ii) the
date on which the conditions in Section 15 are fulfilled and there is no right
to terminate the Offer under Section 15 (subject to the Purchaser's rights to
extend the Offer) and (iii) the earliest date on which the Offer can expire
under Federal law. For a description of the Purchaser's right to extend the
period of time during which the Offer is open, and to amend, delay or terminate
the Offer, see Section 14.
The Company has provided or will provide the Purchaser with the Company's
shareholder list and security position listings for the purpose of disseminating
the Offer to holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished to
brokers, banks and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
The Company has advised Parent that as of January 31, 1994, 11,229,061
Shares were held by the Grumman Corporation Employees' Investment Plan ("EIP").
The Offer is being made to the trustees of the EIP for such Shares at the same
price and in accordance with the same terms as for Shares held by other
shareholders. The EIP provides that the trustees of the EIP will exercise their
fiduciary obligations and determine whether to tender such shares. The trustees
may consider a variety of factors set forth in the EIP in making such decision
and may determine what procedures to follow in obtaining instructions from EIP
participants with respect to the Shares held in their accounts (obtaining such
instructions is permitted but not required). Any further information concerning
the procedures that will be followed with respect to the EIP will be provided to
EIP participants by the EIP trustees or other EIP fiduciaries.
2
<PAGE> 6
2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the
conditions of the Offer, the Purchaser will accept for payment and pay for all
Shares validly tendered by the Expiration Date and not properly withdrawn as
soon as practicable after the later of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions set forth in Section 15. For a
description of the Purchaser's right to terminate the Offer and not accept for
payment or pay for Shares or to delay acceptance for payment or payment for
Shares, see Section 14.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment tendered Shares when, as and if the Purchaser gives oral or written
notice to the Depositary of its acceptance of the tenders of such Shares.
Payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price with the Depositary, which will act as agent for
the tendering shareholders for the purpose of receiving payments from the
Purchaser and transmitting such payments to tendering shareholders. In all
cases, payment for Shares accepted for payment pursuant to the Offer will be
made only after timely receipt by the Depositary of certificates for such Shares
(or of a confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities (as defined in
Section 3)), a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other required documents. For a description of the
procedure for tendering Shares pursuant to the Offer, see Section 3. Accordingly
payment may be made to tendering shareholders at different times if delivery of
the Shares and other required documents occur at different times. Under no
circumstances will interest be paid by the Purchaser on the consideration paid
for Shares pursuant to the Offer, regardless of any delay in making such
payment.
If the Purchaser increases the consideration to be paid for Shares pursuant
to the Offer, the Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment will
not relieve the Purchaser of its obligations under the Offer or prejudice the
rights of tendering shareholders to receive payment for Shares validly tendered
and accepted for payment.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted for more Shares than are tendered,
certificates for such unpurchased or untendered Shares will be returned (or, in
the case of Shares tendered by book-entry transfer, such Shares will be credited
to an account maintained at one of the Book-Entry Transfer Facilities), without
expense to the tendering shareholder, as promptly as practicable following the
expiration or termination of the Offer.
3. PROCEDURE FOR TENDERING SHARES. To tender Shares pursuant to the Offer,
either (a) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of Transmittal
must be received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase and either (i) certificates for the Shares to be
tendered must be received by the Depositary, at one of such addresses or (ii)
such Shares must be delivered pursuant to the procedures for book-entry transfer
described below (and a confirmation of such delivery received by the Depositary
including an Agent's Message (as defined below) if the tendering shareholder has
not delivered a Letter of Transmittal), in each case prior to the Expiration
Date, or (b) the guaranteed delivery procedure described below must be complied
with. The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
book-entry confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgement from the participant in such Book-Entry
Transfer Facility tendering the Shares which are the subject of such book-entry
confirmation that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Company may enforce such
agreement against such participant.
The Depositary will establish an account with respect to the Shares at each
of The Depository Trust Company, Midwest Securities Trust Company and
Philadelphia Depository Trust Company (collectively referred to as the
"Book-Entry Transfer Facilities") for purposes of the Offer within two business
days after the date of this Offer to Purchase, and any financial institution
that is a participant in the system of any Book-Entry Transfer Facility may make
delivery of Shares by causing such Book-Entry Transfer Facility to transfer such
Shares into the Depositary's account in accordance with the procedures of such
Book-Entry Transfer
3
<PAGE> 7
Facility. However, although delivery of Shares may be effected through
book-entry transfer, the Letter of Transmittal (or facsimile thereof) properly
completed and duly executed together with any required signature guarantees or
an Agent's Message and any other required documents must, in any case, be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase prior to the Expiration Date, or the guaranteed
delivery procedure described below must be complied with. Delivery of the Letter
of Transmittal and any other required documents to a Book-Entry Transfer
Facility does not constitute delivery to the Depositary.
Except as otherwise provided below, all signatures on a Letter of
Transmittal must be guaranteed by a firm which is a member of a registered
national securities exchange or the National Association of Securities Dealers,
Inc., or by a commercial bank or trust company having an office or correspondent
in the United States (each, an "Eligible Institution"). Signatures on a Letter
of Transmittal need not be guaranteed (a) if the Letter of Transmittal is signed
by the registered holder of the Shares tendered therewith and such holder has
not completed the box entitled "Special Payment Instructions" on the Letter of
Transmittal or (b) if such Shares are tendered for the account of an Eligible
Institution. See Instructions 1 and 5 of the Letter of Transmittal.
If a shareholder desires to tender Shares pursuant to the Offer and such
shareholder's certificates evidencing such Shares are not immediately available
or such shareholder cannot deliver such Shares and all other required documents
to the Depositary by the Expiration Date, or such shareholder cannot complete
the procedure for delivery by book-entry transfer on a timely basis, such Shares
may nevertheless be tendered if all of the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser is received by
the Depositary (as provided below) by the Expiration Date; and
(iii) the certificates for such Shares (or a confirmation of a
book-entry transfer of such Shares into the Depositary's account at one of
the Book-Entry Transfer Facilities), together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) with any
required signature guarantee or an Agent's Message and any other documents
required by the Letter of Transmittal, are received by the Depositary
within five New York Stock Exchange trading days after the date of
execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING THROUGH BOOK-ENTRY TRANSFER FACILITIES, IS AT THE OPTION
AND RISK OF THE TENDERING SHAREHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR SHARES ARE SENT BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.
Under the federal income tax laws, the Depositary will be required to
withhold 31% of the amount of any payments made to certain shareholders pursuant
to the Offer. In order to avoid such backup withholding, each tendering
shareholder must provide the Depositary with such shareholder's correct taxpayer
identification number and certify that such shareholder is not subject to such
backup withholding by completing the Substitute Form W-9 included in the Letter
of Transmittal. (See paragraph 8 of the Terms and Conditions of the Offer set
forth in the Letter of Transmittal or by filing a Form W-9 with the Depositary
prior to any such payments). If the shareholder is a nonresident alien or
foreign entity not subject to back-up withholding, the shareholder must give the
Depositary a completed Form W-8 Certificate of Foreign Status prior to receipt
of any payments.
4
<PAGE> 8
By executing a Letter of Transmittal, a tendering shareholder irrevocably
appoints designees of the Purchaser as such shareholder's proxies in the manner
set forth in the Letter of Transmittal to the full extent of such shareholder's
rights with respect to the Shares tendered by such shareholder and accepted for
payment by the Purchaser (and any and all other Shares or other securities
issued or issuable in respect of such Shares on or after March 6, 1994). All
such proxies shall be irrevocable and coupled with an interest in the tendered
Shares. Such appointment is effective only upon the acceptance for payment of
such Shares by the Purchaser. Upon such acceptance for payment, all prior
proxies and consents granted by such shareholder with respect to such Shares and
other securities will, without further action, be revoked, and no subsequent
proxies may be given nor subsequent written consents executed by such
shareholder (and, if given or executed, will be deemed ineffective). Such
designees of the Purchaser will be empowered to exercise all voting and other
rights of such shareholder as they, in their sole discretion, may deem proper at
any annual, special or adjourned meeting of the Company's shareholders, by
written consent or otherwise. The Purchaser reserves the right to require that,
in order for Shares to be validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares, the Purchaser is able to exercise full
voting rights with respect to such Shares and other securities (including voting
at any meeting of shareholders then scheduled or acting by written consent
without a meeting).
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering shareholder's acceptance of the terms and
conditions of the Offer, as well as the tendering shareholder's representation
and warranty that (a) such shareholder owns the Shares being tendered within the
meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (b) the tender of such Shares complies with Rule
14e-4, and (c) such shareholder has the full power and authority to tender and
assign the Shares tendered, as specified in the Letter of Transmittal. The
Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the tendering shareholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Purchaser, in its sole discretion, which determination
shall be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders of Shares determined by it not to be in proper form or the
acceptance for payment of or payment for which may, in the opinion of the
Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right
to waive any defect or irregularity in any tender of Shares. No tender of Shares
will be deemed to have been properly made until all defects and irregularities
relating thereto have been cured or waived. The Purchaser's interpretation of
the terms and conditions of the Offer in this regard will be final and binding.
None of the Purchaser, the Dealer Manager, the Depositary, the Information Agent
or any other person will be under any duty to give notification of any defect or
irregularity in tenders or incur any liability for failure to give any such
notification.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are
irrevocable, except that they may be withdrawn after May 6, 1994 unless
theretofore accepted for payment as provided in this Offer to Purchase.
To be effective, a written, telegraphic, telex or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and must specify
the name of the person who tendered the Shares to be withdrawn and the number of
Shares to be withdrawn and the name of the registered holder of the Shares, if
different from that of the person who tendered such Shares. If the Shares to be
withdrawn have been delivered to the Depositary, a signed notice of withdrawal
with (except in the case of Shares tendered by an Eligible Institution)
signatures guaranteed by an Eligible Institution must be submitted prior to the
release of such Shares. In addition, such notice must specify, in the case of
Shares tendered by delivery of certificates, the name of the registered holder
(if different from that of the tendering shareholder) and the serial numbers
shown on the particular certificates evidencing the Shares to be withdrawn or,
in the case of Shares tendered by book-entry transfer, the name and number of
the account at one of the Book-Entry Transfer Facilities to be credited with the
withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn will
thereafter be deemed not validly tendered for
5
<PAGE> 9
purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 3 at any time prior to the
Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding. None of the
Purchaser, the Dealer Manager, the Depositary, the Information Agent or any
other person will be under any duty to give notification of any defect or
irregularity in any notice of withdrawal or incur any liability for failure to
give any such notification.
5. CERTAIN TAX CONSIDERATIONS. Sales of Shares by shareholders of the
Company pursuant to the Offer will be taxable transactions for federal income
tax purposes and may also be taxable transactions under applicable state and
local and other tax laws.
In general, a shareholder will recognize gain or loss equal to the
difference between the tax basis of his Shares and the amount of cash received
in exchange therefor. Such gain or loss will be a capital gain or loss if the
Shares are capital assets in the hands of the shareholder and will be long-term
gain or loss if the holding period for the Shares is more than one year as of
the date of the sale of such Shares.
The foregoing discussion may not apply to shareholders who acquired their
Shares pursuant to the exercise of stock options or other compensation
arrangements with the Company or who are not citizens or residents of the United
States or who are otherwise subject to special tax treatment under the Internal
Revenue Code of 1986, as amended.
New York State imposes a 10% tax upon gains realized by a transferor upon
the transfer of an interest in real property (including leases) located within
New York State, including certain transfers of stock in corporations that own
appreciated interests in such real property (the "Gains Tax"), and an additional
tax on the gross value of such real estate or stock in such corporations equal
to approximately 0.4% (the "State Transfer Tax"). The acquisition by the
Purchaser of the Shares pursuant to the Offer and the Merger will constitute a
taxable transfer of an interest in any real property owned or leased by the
Company and located in New York State and may result in a Gains Tax, State
Transfer Tax, or any combination of the foregoing being imposed upon the selling
shareholders. The Purchaser will file all necessary returns on behalf of the
Company's shareholders in connection with such Gains Tax and/or State Transfer
Tax and will pay any taxes due thereon. The amount of such taxes paid by the
Purchaser may result in the deemed receipt of additional consideration by each
shareholder in proportion to the number of Shares sold by such shareholder.
However, the Purchaser believes that in such a case, under Section 164(a) of the
Internal Revenue Code of 1986, as amended, a shareholder would reduce his amount
realized on the sale by the amount of the tax treated as additional
consideration to such shareholder.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY
AND IS BASED UPON PRESENT LAW. SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS
WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER TO THEM, INCLUDING
THE APPLICATION AND EFFECT OR THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND
FOREIGN TAX LAWS.
6
<PAGE> 10
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and traded on
The New York Stock Exchange, Inc. (the "NYSE") under the Symbol "GQ". The
following table sets forth, for the periods indicated, the reported high and low
sales prices and dividends paid per share for the Shares on the NYSE as
published in financial sources.
<TABLE>
<CAPTION>
HIGH LOW DIVIDEND
---- ---- --------
<S> <C> <C> <C>
Year Ended December 31, 1992:
First Quarter........................................ $20 1/4 $17 3/8 $.25
Second Quarter....................................... $22 7/8 $17 3/8 $.25
Third Quarter........................................ $23 3/8 $20 3/4 $.25
Fourth Quarter....................................... $25 $19 5/8 $.25
Year Ended December 31, 1993:
First Quarter........................................ $35 7/8 $24 1/8 $.25
Second Quarter....................................... $41 3/4 $34 $.30
Third Quarter........................................ $41 7/8 $33 $.30
Fourth Quarter....................................... $41 3/8 $34 1/2 $.30
</TABLE>
- ---------------
The Merger Agreement prohibits the Company from declaring or paying any
dividend or distribution on the Shares.
The closing sales price of the Shares as reported by the NYSE was $39 7/8
per share on March 4, 1994, the last full day of trading prior to the first
public announcement of the Offer.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a New York
corporation organized in 1929 under the name Grumman Aircraft Engineering
Corporation. The Company's principal executive offices are located at 1111
Stewart Avenue, Bethpage, New York. The activities of the Company and its
subsidiaries are described in the following four industry segments:
Aerospace -- Includes the design and production of military aircraft, space
systems and commercial aircraft components and subassemblies, as well as the
modernization or conversion of previously completed aircraft.
Electronics Systems -- Includes the design, manufacture and integration of
sophisticated electronics for aircraft, computerized test equipment and other
defense related products, such as airborne surveillance systems.
Information and Other Services -- Includes electronic data processing
services for affiliates and other customers as well as real estate and leasing
services. It also includes technical services that help ready the space shuttle
for flight, provide space station program support, service and maintain flight
simulators and trainers and support Grumman aircraft.
Special Purpose Vehicles -- Includes fabrication of Long Life Vehicles for
the U.S. Postal Service and aluminum truck bodies.
7
<PAGE> 11
Set forth below is certain summary consolidated financial information with
respect to the Company and its consolidated subsidiaries excerpted or derived
from the Company's audited consolidated financial statements for the fiscal year
ended December 31, 1993 (the "1993 Financial Statements") provided to Parent and
the Purchaser by the Company. More comprehensive financial information is
included in the 1993 Financial Statements as well as documents filed by the
Company with the Securities and Exchange Commission (the "Commission"). The
following summary is qualified in its entirety by reference to the 1993
Financial Statements, a copy of which is an exhibit to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Copies of the 1993
Financial Statements may be examined at or obtained from the Commission in the
manner set forth below.
CONSOLIDATED STATEMENT OF INCOME
GRUMMAN CORPORATION AND SUBSIDIARIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Revenues
Sales................................................ $3,224,535 $3,492,075 $3,963,492
Other income......................................... 24,589 11,875 10,359
---------- ---------- ----------
Total sales and other income................. 3,249,124 3,503,950 3,973,851
---------- ---------- ----------
Costs and expenses
Cost of sales........................................ 2,929,987 3,189,035 3,620,895
Restructuring charge................................. 85,000 -- --
Loss on Tracor Aviation Inc. settlement.............. -- -- 46,500
Selling, administrative and other.................... 115,928 113,289 124,049
---------- ---------- ----------
Interest............................................. 31,702 55,065 85,236
---------- ---------- ----------
Total costs and expenses..................... 3,162,617 3,357,389 3,876,680
---------- ---------- ----------
Income before income taxes............................. 86,507 146,561 97,171
Provision for federal income taxes..................... 21,000 26,700 2,000
---------- ---------- ----------
Income from continuing operations.................... 65,507 119,861 95,171
Income (loss) from discontinued operations............. (6,700) (45,035) 4,166
Cumulative effect of change to accrual method of
accounting for postretirement benefits............... -- (198,000) --
---------- ---------- ----------
Net income (loss)............................ $ 58,807 $ (123,174) $ 99,337
---------- ---------- ----------
---------- ---------- ----------
Primary earnings per common share:
Income from continuing operations.................... $ 1.90 $ 3.49 $ 2.75
Income (loss) from discontinued operations........... (.19) (1.34) .13
Cumulative effect of accounting change............... -- (5.88) --
---------- ---------- ----------
Net income (loss)............................ $ 1.71 $ (3.73) $ 2.88
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
8
<PAGE> 12
CONSOLIDATED BALANCE SHEET
GRUMMAN CORPORATION AND SUBSIDIARIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1993 1992
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents......................................... $ 346,090 $ 299,077
Marketable securities (at cost, approximating market)............. 18,034 --
Accounts receivable............................................... 518,731 534,260
Inventories, less progress payments............................... 499,436 612,424
Prepaid expenses.................................................. 40,992 41,280
----------- -----------
Total current assets...................................... 1,423,283 1,487,041
----------- -----------
Property, plant and equipment, less accumulated depreciation........ 372,723 399,421
----------- -----------
Non-current assets
Deferred income taxes............................................. 120,028 94,856
Long-term receivables............................................. 6,009 9,079
Investments....................................................... 52,505 28,678
Other............................................................. 49,901 69,941
----------- -----------
228,443 202,554
----------- -----------
Total..................................................... $ 2,024,449 $ 2,089,016
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term debt................................................... $ 6,571 $ 83,399
Accounts payable.................................................. 147,576 128,610
Wages and benefits payable........................................ 90,229 95,519
Income taxes...................................................... 88,932 145,353
Advances and deposits............................................. 95,340 30,251
Other current liabilities......................................... 89,699 127,902
----------- -----------
Total current liabilities................................. 518,347 611,034
----------- -----------
Long-term debt...................................................... 243,106 355,244
----------- -----------
Accrued retirement benefits......................................... 304,752 306,500
----------- -----------
Restructuring reserve............................................... 85,000 --
----------- -----------
Other liabilities................................................... 37,191 23,348
----------- -----------
Common stock -- $1.00 par value, authorized 80,000 shares;
outstanding 34,049 and 33,519 shares (net of treasury stock)...... 344,589 321,038
Retained earnings................................................... 491,464 471,852
----------- -----------
Total..................................................... $ 2,024,449 $ 2,089,016
----------- -----------
----------- -----------
</TABLE>
The Company is subject to the information requirements of the Exchange Act
and is required to file reports and other information with the Commission
relating to its business, financial condition and other matters. Information, as
of particular dates, concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interest of such persons in transactions with the
Company is required to be described in proxy statements distributed to the
Company's shareholders and filed with the Commission. These reports, proxy
statements and other information, including the 1993 Financial Statements
included as an exhibit to the Company's Solicita-
9
<PAGE> 13
tion/Recommendation Statement on Schedule 14D-9, should be available for
inspection and copying at the Commission's office at 450 Fifth Street, N.W.,
Washington D.C. 20549, and at the regional offices of the Commission located at
75 Park Place, New York, New York 10007 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material may
also be obtained by mail, upon payment of the Commission's customary fees, from
the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549.
The above information concerning the Company has been taken from or based
upon the 1993 Financial Statements and other publicly available documents on
file with the Commission and other publicly available information. Although
neither the Purchaser nor Parent has any knowledge that would indicate that such
information contained herein based upon such documents is untrue, neither the
Purchaser nor Parent takes any responsibility for, or makes any representation
with respect to, the accuracy or completeness of the information contained in
such documents or for any failure by the Company to disclose events that may
have occurred any may affect the significance or accuracy of any such
information but which are unknown to the Purchaser or Parent.
In the course of the discussions between representatives of Parent and the
Company (see Section 10) certain projections of future operating performance
were furnished to Parent's representatives. These projections were not prepared
with a view to public disclosure or compliance with published guidelines of the
Commission or the guidelines established by the American Institute of Certified
Public Accountants regarding projections, and are included in this Offer to
Purchase only because they were provided to Parent. Neither Parent, the
Purchaser nor the Company, nor either of their financial advisors nor the Dealer
Manager assumes any responsibility for the accuracy of these projections. While
presented with numerical specificity, these projections are based upon a variety
of assumptions relating to the businesses of the Company which may not be
realized and are subject to significant uncertainties and contingencies, many of
which are beyond the control of the Company. There can be no assurance that the
projections will be realized, and actual results may vary materially from those
shown.
Set forth below is a summary of the projections. The projections should be
read together with the financial statements of the Company referred to herein.
GRUMMAN CORPORATION
PROJECTED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Sales.................................. $3,149.0 $3,270.8 $3,471.0 $3,505.8 $3,657.0
Earnings before interest and taxes..... 210.3 220.0 244.4 245.7 256.1
Net Income............................. 123.5 139.1 158.1 162.4 172.6
Earnings Per Share..................... 3.61 4.08 4.64 4.76 5.06
</TABLE>
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT. The Purchaser
is a newly incorporated New York corporation and a wholly owned subsidiary of
Parent. To date, Purchaser has not conducted any business other than in
connection with the Offer. Until immediately prior to the time the Purchaser
purchases Shares pursuant to the Offer, it is not anticipated that the Purchaser
will have any significant assets or liabilities or engage in activities other
than those incident to its formation and capitalization and the transactions
contemplated by the Offer. Because the Purchaser is a newly formed corporation
and has minimal assets and capitalization, no meaningful financial information
regarding the Purchaser is available.
Parent is a diversified enterprise principally engaged in the conception,
design, manufacture and integration of advanced technology products and services
for the United States Government and private industry. Parent manages
significant facilities for the Department of Energy and also produces
construction aggregates and specialty chemical products.
10
<PAGE> 14
In April 1993, Parent consummated a transaction in which its businesses and
the Aerospace businesses of the General Electric Company were combined (the
"Combination"). As a result of the Combination, which was approved by Parent's
stockholders on March 25, 1993, the then existing Parent, which was formed in
1961 by the consolidation of the Glenn L. Martin Company (founded in 1909) and
the American-Marietta Company (founded in 1913), was renamed Martin Marietta
Technologies, Inc. ("Technologies"). In the Combination, Technologies became a
wholly-owned subsidiary of a new corporation which assumed the Martin Marietta
Corporation name.
The name, citizenship, business address, principal occupation or employment
and five year employment history of each of the directors and executive officers
of the Purchaser and Parent are set forth in Schedule I hereto. The principal
executive offices of Parent and the Purchaser are located at 6801 Rockledge
Drive, Bethesda, Maryland 20817. Schedule II hereto contains certain additional
information about Parent required by New York State law.
Set forth below is a summary of certain consolidated financial information
with respect to Parent and its consolidated subsidiaries excerpted or derived
from the information contained in or incorporated by reference into Parent's
Annual Report on Form 10-K for the year ended December 31, 1993 (the "Parent
10-K"). More comprehensive financial information is included in or incorporated
by reference into the Parent 10-K and other documents filed by Parent with the
Commission, and the financial information summary set forth below is qualified
in its entirety by reference to the Parent 10-K and such other documents and all
the financial information and related notes contained therein.
11
<PAGE> 15
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE) 1993 1992 1991
- -------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
OPERATING RESULTS
Net sales............................................... $9,435,689 $5,954,292 $6,075,415
Cost of sales, other costs and expenses................. 8,647,224 5,405,123 5,537,926
--------- --------- ---------
Earnings from Operations................................ 788,465 549,169 537,489
Other income and expenses, net.......................... 46,997 21,144 (58,980)
--------- --------- ---------
835,462 570,313 478,509
Interest expense on debt................................ 110,173 57,890 57,660
--------- --------- ---------
Earnings before taxes on income and cumulative effect of
accounting changes.................................... 725,289 512,423 420,849
Taxes on income......................................... 275,000 167,000 107,700
--------- --------- ---------
Earnings before Cumulative Effect of Accounting
Changes............................................... 450,289 345,423 313,149
Cumulative effect of changes in accounting for
post-retirement benefits other than pensions and for
post-employment
benefits.............................................. (429,432) -- --
--------- --------- ---------
Net Earnings............................................ $ 20,857 $ 345,423 $ 313,149
--------- --------- ---------
--------- --------- ---------
PER COMMON SHARE
Net earnings (loss)
Assuming no dilution:
Before cumulative effect of accounting changes........ $ 4.25 $ 3.60 $ 3.15
Cumulative effect of accounting changes............... (4.51) -- --
--------- --------- ---------
$ (.26) $ 3.60 $ 3.15
--------- --------- ---------
--------- --------- ---------
Assuming full dilution:
Before cumulative effect of accounting changes........ $ 3.80 $ 3.60 $ 3.15
Cumulative effect of accounting changes............... * -- --
--------- --------- ---------
* $ 3.60 $ 3.15
--------- --------- ---------
--------- --------- ---------
Cash Dividends.......................................... $ .87 $ .795 $ .75
--------- --------- ---------
--------- --------- ---------
* Anti-dilutive
CONDENSED BALANCE SHEET DATA
Current assets.......................................... $2,448,240 $1,434,341
Other noncurrent assets................................. 707,772 800,445
Noncurrent deferred income taxes........................ 206,119 --
Property, plant and equipment, net...................... 1,692,753 1,257,139
Cost in excess of net assets acquired................... 1,914,894 26,224
Other intangibles....................................... 775,113 81,456
--------- ---------
Total......................................... $7,744,891 $3,599,605
--------- ---------
--------- ---------
Current liabilities -- other............................ $1,491,591 $ 582,422
Current maturities of long-term debt.................... 318,525 3,814
Long-term debt.......................................... 1,479,571 474,726
Post-retirement benefits................................ 740,630 101,978
Other noncurrent liabilities............................ 838,222 194,195
Noncurrent deferred income taxes........................ -- 297,254
Series A preferred stock.............................. 1,000,000 --
Common stock.......................................... 95,697 47,229
Additional paid in capital............................ 123,999 85,992
Retained earnings..................................... 1,656,656 1,811,995
Shareowners' equity..................................... 2,876,352 1,945,216
--------- ---------
Total......................................... $7,744,891 $3,599,605
--------- ---------
--------- ---------
</TABLE>
Parent is subject to the informational filing requirements of the Exchange
Act and is required to file reports and other information with the Commission
relating to its business, financial condition and other
12
<PAGE> 16
matters. Information, as of particular dates, concerning Parent's directors and
officers, their remuneration, the principal holder of Parent's securities and
any material interest of such persons in transactions with Parent is required to
be described in periodic statements filed with the Commission. Such reports and
other information, including the Parent 10-K, may be inspected and copies may be
obtained from the offices of the Commission in the same manner as set forth in
Section 7.
Except as set forth in this Offer to Purchase, none of Parent, the
Purchaser or any of their affiliates (collectively the "Purchaser Entities"),
or, to the best knowledge of any of the Purchaser Entities, any of the persons
listed on Schedule I, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any securities of the
Company, joint ventures, loan or option arrangements, puts or calls, guarantees
of loans, guarantees against loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of the Purchaser Entities,
or, to the best knowledge of any of the Purchaser Entities, any of the persons
listed on Schedule I, has had, since January 1, 1991, any business relationships
or transactions with the Company or any of its executive officers, directors or
affiliates that would require reporting under the rules of the Commission.
Except as set forth in this Offer to Purchase, since January 1, 1991, there have
been no contacts, negotiations or transactions between the Purchaser Entities,
or their respective subsidiaries or, to the best knowledge of any of the
Purchaser Entities, any of the persons listed on Schedule I, and the Company or
its affiliates, concerning a merger, consolidation or acquisition, tender offer
or other acquisition of securities, election of directors or a sale or other
transfer of a material amount of assets. None of the Purchaser Entities or, to
the best knowledge of any of the Purchaser Entities, any of the persons listed
on Schedule I, beneficially owns any Shares or has effected any transactions in
the Shares in the past 60 days.
9. SOURCE AND AMOUNTS OF FUNDS. The total amount of funds required by the
Purchaser to acquire all outstanding Shares pursuant to the Offer and the
Merger, to consummate the transactions contemplated by the Merger Agreement, and
to pay fees and expenses related to the Offer and the Merger is estimated to be
approximately $2 billion. These funds are expected to be provided to the
Purchaser in the form of equity or debt by Parent. Parent intends to obtain the
funds from loans to be provided initially by Bank of America National Trust and
Savings Association ("Bank of America") and Morgan Guaranty Trust Company of New
York ("Morgan Guaranty"; together with Bank of America, the "Co-Agents"). Bank
of America and Morgan Guaranty have committed to provide additional financing of
up to approximately $400 million for general corporate purposes. All of the
foregoing loans will be fully and unconditionally guaranteed by Technologies and
Purchaser. The loans to be provided by Bank of America, Morgan Guaranty, and the
Banks are collectively referred to as the "Bank Financing." It is anticipated
that subsequent to the initial funding of these loans, affiliates of Bank of
America and Morgan Guaranty (collectively, the "Co-Arrangers") will syndicate
the
loans to a group of commercial banks (collectively with Bank of America and
Morgan Guaranty, the "Banks").
The existing revolving credit facilities of Parent and Technologies will be
terminated in connection with the closing of the Offer.
Set forth below is a summary description of the Bank Financing.
Consummation of the Bank Financing is subject to, among other things, the
negotiation and execution of definitive financing agreements on terms
satisfactory to Parent, Technologies, the Purchaser, and the Co-Agents. The
summary description does not purport to be complete, and there can be no
assurance that the terms set forth below will be contained in such agreements or
that such agreements will not contain additional provisions.
Parent has received commitments from Bank of America and Morgan Guaranty
pursuant to which each has agreed to provide up to $1.2 billion of the Bank
Financing. The Co-Agents also have agreed to act as agents for an anticipated
commercial bank syndicate (including the Co-Agents). It is not anticipated that
the syndication of the Bank Financing will be consummated prior to the closing
of the Offer.
Parent has agreed to pay arrangement, underwriting, and syndication fees to
the Co-Agents and the Co-Arrangers, and has agreed to pay Bank of America, as
Administrative Agent under the Credit Facilities, an annual administrative fee.
Parent also has agreed to pay certain of the expenses of the Co-Agents and the
Co-Arrangers incurred in connection with the Bank Financing and to provide the
Co-Agents, the
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Co-Arrangers and the Banks and their respective directors, officers, employees,
and affiliates with customary indemnification.
The Bank Financing will consist of two facilities which will be entered
into prior to or concurrently with the consummation of the Offer. The credit
facilities will consist of a 364-day unsecured revolving credit facility in the
amount of $1.2 billion (the "Short-Term Facility") and a five-year unsecured
revolving credit facility in the amount of $1.2 billion (the "Five-Year
Facility"). The Short-Term Facility and the Five-Year Facility are collectively
referred to as the "Credit Facilities." The Short-Term Facility will have a
final maturity 364 days after the date of execution of the definitive financing
agreement for the Short-Term Facility. There will be no required prepayments or
scheduled reductions of availability of loans under the Credit Facilities.
Revolving loans under the Credit Facilities will bear interest, at the
option of Parent, at (i) a base equal to the higher of the rate announced from
time to time by Bank of America as its reference rate or the daily Federal Funds
rate plus 0.5%; (ii) the London interbank offered rate ("LIBOR") for one-, two-,
three-, six-(or subject to the Banks' unanimous written consent) twelve-month
periods plus an interest rate margin based on the rating for senior, unsecured
long-term debt of Technologies guaranteed by Parent (or for Parent if its
senior, unsecured long-term debt is rated) announced from time to time by
Standard & Poor's Corporation ("S&P"), Moody's Investor Services, Inc.
("Moody's"), and Duff & Phelps Inc. ("D&P"); (iii) a reserve-and FDIC
insurance-adjusted rate for 30-, 60-, 90-, or 180-day certificates of deposit
(the "CD Rate") plus an interest rate margin based on the rating for senior,
unsecured long-term debt of Technologies guaranteed by Parent (or for Parent if
its senior, unsecured long-term debt is rated) announced from time to time by
S&P, Moody's, and D&P; or (iv) a money market bid rate based on competitive bids
solicited of the Banks and accepted by Parent pursuant to an auction mechanism
under the Credit Facilities. The interest rate margins over LIBOR range from
.475% to .25% for the Short-Term Facility and from .425% to .25% for the
Five-Year Facility depending on the level of such ratings. The interest rate
margins over the CD Rate range from .60% to .375% for the Short-Term Facility
and from .55% to .375% for the Five-Year Facility depending on the level of such
ratings. Interest will be payable quarterly in arrears based on a 365/366-day
year for base rate loans and will be payable quarterly in arrears or at the end
of the relevant interest period, whichever is sooner, based on a 360-day year
and the actual number of days elapsed for LIBOR and CD Rate loans. Money market
bid rate loans will bear interest at rates established on the basis of a bidding
procedure and interest will be payable at such times as are determined by such
procedures.
Commitment fees under the Credit Facilities will be payable to each Bank on
the amount of its available but unused commitment based on the rating for
senior, unsecured long-term debt of Technologies guaranteed by Parent (or for
Parent if its senior, unsecured long-term debt is rated) announced from time to
time by S&P, Moody's, and D&P. The commitment fees for the Short-Term Facility
will range from .025% to 0%, and the commitment fee for the Five-Year Facility
will range from .05% to 0%, depending on the level of such ratings. Parent also
will pay facility fees under the Credit Facilities on the amount of each Bank's
commitment, whether used or unused, based on the rating for senior, unsecured
long-term debt of Technologies guaranteed by Parent (or for Parent if its
senior, unsecured long-term debt is rated) announced from time to time by S&P,
Moody's, and D&P. The facility fees for the Short-Term Facility will range from
.15% to .08% and the facility fees for the Five-Year Facility will range from
.20% to .125%, depending on the level of such ratings.
Each Bank's obligation to make loans under the Credit Facilities will be
subject to, among other things, the negotiation, execution, and delivery of
definitive financing agreements (collectively, the "Bank Financing Agreements"),
and the compliance by Parent, Technologies, and the Purchaser with conditions
and covenants contained therein. The covenants in the Bank Financing Agreements
will include but not be limited to covenants limiting the ability of Parent and
certain of its subsidiaries to encumber certain of their assets or to enter into
certain sale-leaseback transactions, a covenant not to exceed a maximum leverage
ratio, and a covenant to maintain a minimum fixed charge coverage ratio under
certain circumstances. It is anticipated that the Bank Financing Agreements will
include terms, conditions, representations, warranties, covenants, indemnities,
events of default, and other provisions customary in such agreements.
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Following closing of the Offer, it is anticipated that Parent or
Technologies may replace borrowings under the Credit Facilities with funds
raised in the public or private debt and equity markets. The method or methods
by which Parent or Technologies might access these markets have not yet been
determined, but these may include public offerings of shares of Common Stock of
Parent, public offerings of debt securities, and the issuance of commercial
paper.
10. BACKGROUND OF THE OFFER; THE MERGER AGREEMENT; THE RIGHTS AGREEMENT.
BACKGROUND OF THE OFFER
On February 1, 1994, Goldman, acting at the direction of the Company,
contacted Parent concerning Parent's interest in a strategic combination with
the Company. Goldman indicated to Parent that the Company was not for sale but
was interested in exploring strategic alternatives. Parent indicated to Goldman
that Parent had not considered a combination with the Company but that Parent
would talk with the Company regarding a transaction. Parent told Goldman that
Parent had no interest in becoming involved in an auction process and would only
negotiate with the Company on an exclusive basis.
On February 3, 1994, at a meeting in New York attended by Norman R.
Augustine, Chairman and Chief Executive Officer of Parent, A. Thomas Young,
President and Chief Operating Officer of Parent, and R.W. Tieken, Vice President
of Parent, R.L. Caporali, Chairman of the Board and Chief Executive Officer of
the Company, and J.R. Anderson, Vice Chairman and Chief Financial Officer of the
Company and a representative of Goldman, Parent and the Company agreed to
explore the possibility of a combination between the two companies. Parent
agreed to sign a confidentiality agreement, after which operations and financial
personnel of the two companies would meet.
On February 8 and 9, 1994, operations and financial personnel of the two
companies met in New York to review a five year plan for the Company and
Parent's five year plan. After this meeting, Parent decided to further explore a
strategic combination with the Company and to retain a financial advisor in
connection with a possible transaction with the Company. On February 10, 1994,
Parent retained Bear Stearns.
Mr. Young and Dr. Caporali met again on February 14, 1994 to review the
status of Parent's investigation of the Company and to discuss Parent's level of
interest in pursuing a transaction. Dr. Caporali told Mr. Young that if Parent's
interest was sufficient, the Board of Directors would be told of Parent's
interest and would discuss the merits of a strategic combination with Parent.
Operations and financial personnel of the two companies held a follow up
meeting in New York on February 15, 1994. At this meeting operations issues were
discussed.
On February 16, 1994, Parent and the Company and their financial advisors
met to discuss structuring alternatives, including whether a transaction would
involve stock or cash, and to review financial and valuation issues. Goldman
told Parent that the Board would consider at a meeting the next day whether the
Company should consider a combination with Parent. Goldman reiterated that the
Company was not for sale but encouraged Parent to consider an offer with respect
to a strategic combination. Parent expressed its view that an auction process
was not in the best interests of the Company or its employees and that Parent
did not want to participate in such a process due to the damage Parent felt it
would cause to the Company. Parent then reiterated its view that it would only
proceed on an exclusive basis. At the close of the meeting, Goldman asked Parent
to make its highest offer. Parent provided the Company with copies of Parent's
recent filings with the Commission for the Board to review at its meeting.
On February 18, 1994, the day after the Company's Board meeting, Mr.
Augustine, Mr. Young, Marcus C. Bennett, Vice President and Chief Financial
Officer of Parent, and Frank H. Menaker, Jr., Vice President and General Counsel
of Parent, met in New York with senior management of the Company along with the
respective financial advisors for Parent and the Company. At this meeting, the
Company informed Parent that the Board was receptive to a transaction with
Parent, would consider an indication of interest from Parent and would agree to
provide Parent with an exclusive negotiating period but that time was of the
essence. Parent indicated a willingness to consider a stock offer or a cash
offer but stated that a cash offer would provide a
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higher value. In response, the Company indicated to Parent that the Board would
be interested in the higher value offer.
On February 21, 1994, Parent sent a letter to the Company containing a
proposal for Parent to acquire all of the outstanding Shares at a price per
share of $55.00 and requesting a response before Parent's scheduled board of
directors meeting on February 24, 1994. If the Company's response was favorable,
Parent's board of directors would consider the transaction at that meeting.
After Parent's proposal was considered by the Board on February 23, 1994, the
Company agreed to proceed with a transaction on the terms outlined in Parent's
proposal letter, including dealing with Parent on an exclusive basis.
On February 24, 1994, Parent's Board of directors met and gave management
authority to proceed with a due diligence investigation of the Company and to
negotiate the terms and conditions of a definitive agreement. On February 26,
1994, Parent provided the Company with a preliminary draft of the Merger
Agreement. During the period that followed, Parent and its financial and legal
advisors conducted a due diligence investigation of the Company and its
subsidiaries. In addition, senior management of Parent and its advisors met with
senior management of the Company and its advisors to discuss the Company and to
negotiate the terms and conditions of the Merger Agreement. On March 6, 1994,
the Board and Parent's board of directors each held a meeting and approved the
Merger Agreement. Immediately following those meetings, the parties executed and
delivered the Merger Agreement.
THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement, a
copy of which is attached hereto as Exhibit A and is incorporated herein by
reference. Such summary is qualified in its entirety by reference to the Merger
Agreement.
The Offer. The Merger Agreement provides for the making of the Offer by the
Purchaser. The obligation of Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer is subject to the satisfaction of the Minimum
Condition and certain other conditions that are described in Section 15. The
Purchaser has agreed that, without the written consent of the Company, no change
in the Offer may be made which changes the form of consideration to be paid or
decreases the price per Share or the number of Shares sought in the Offer or
which imposes conditions to the Offer in addition to the Minimum Condition and
those conditions described in Section 15.
The Merger. The Merger Agreement provides that, following the purchase of
Shares pursuant to the Offer, the approval of the Merger Agreement by the
shareholders of the Company and the satisfaction or waiver of the other
conditions to the Merger, the Purchaser will be merged with and into the
Company. The Merger shall become effective at such time, after May 18, 1994, as
a certificate of merger is filed by the Department of State of the State of New
York, or at such later time as is specified in such certificate of merger (the
"Effective Time"). As a result of the Merger, all of the properties, rights,
privileges and franchises of the Company and the Purchaser shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
the Purchaser shall become the debts, liabilities and duties of the Surviving
Corporation.
At the Effective Time, (i) each issued and outstanding Share held in the
treasury of the Company, by any of the Company's subsidiaries or by Parent, the
Purchaser or any other subsidiary of Parent shall be cancelled, and no payment
shall be made with respect thereto; (ii) each share of common stock of the
Purchaser then outstanding shall be converted into and become one share of
common stock of the Surviving Corporation; and (iii) each Share outstanding
immediately prior to the Effective Time shall, except as otherwise provided in
(i) above and except for Shares held by any holder who has not voted in favor of
the Merger or consented thereto in writing and who has demanded appraisal for
such Shares in accordance with Section 623 of the New York Business Corporation
Law (the "NYBCL") ("Dissenting Shares"), be converted into the right to receive
$55.00 in cash or any higher price per Share that may be paid pursuant to the
Offer, without interest.
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The Merger Agreement provides that the certificate of incorporation and
by-laws of the Company at the Effective Time will be the certificate of
incorporation of the Surviving Corporation. The Merger Agreement also provides
that the directors of the Purchaser at the Effective Time will be the directors
of the Surviving Corporation and the officers of the Company at the Effective
Time will be the officers of the Surviving Corporation.
Recommendation. The Merger Agreement states that the Board of Directors has
(i) determined that the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, are fair to and in the best
interests of the Company and its shareholders, (ii) approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger and (iii) resolved to recommend acceptance of the Offer and approval and
adoption of the Merger Agreement and the Merger by the Company's shareholders.
This recommendation of the Board of Directors may be withdrawn, modified or
amended if the Board by a majority vote determines in its good faith judgment,
based as to legal matters on the written opinion of legal counsel, that such
withdrawal, amendment or modification is required by the Board in the exercise
of its fiduciary duties. Any such withdrawal, modification or amendment will not
constitute a breach of the Merger Agreement but may give rise to certain
termination rights on the part of Parent and the Purchaser, as described below.
Interim Agreements of Parent, Purchaser and the Company. Pursuant to the
Merger Agreement, the Company has covenanted and agreed that, during the period
from the date of the Merger Agreement to the date the Board of Directors of the
Company is reorganized as provided in the Merger Agreement (the "Board
Reorganization"), the Company and its subsidiaries will each conduct its
operations according to its ordinary and usual course of business consistent
with past practice. Pursuant to the Merger Agreement, without limiting the
generality of the foregoing, and except as otherwise expressly provided in the
Merger Agreement, prior to the Board Reorganization, neither the Company nor any
of its subsidiaries will, without the prior written consent of Parent or
Purchaser: (a) amend or propose to amend its charter or by-laws; (b) authorize
for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or any
other securities or equity equivalents (including, without limitation, any stock
options or stock appreciation rights), except as required by agreements with the
Company's employees under the Company's stock plans as in effect as of the date
hereof or pursuant to the Rights Agreement, and except deliveries of
certificates for Shares issued prior to the date hereof pursuant to the
Company's Restricted Stock Award Plan, or amend any of the terms of any such
securities or agreements outstanding as of the date hereof, except as
specifically contemplated by the Merger Agreement; (c) split, combine or
reclassify any shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, or redeem or otherwise
acquire any of its securities or any securities of its subsidiaries; (d) (1)
incur or assume any long-term debt or, except in the ordinary course of business
under existing lines of credit and in amounts not material to the Company and
its subsidiaries taken as a whole, incur or assume any short-term debt, except
in the ordinary course of business; (2) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person except in the ordinary course of business
and consistent with past practices and in amounts not material to the Company
and its subsidiaries, taken as a whole and except for obligations of wholly
owned subsidiaries of the Company; or (3) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned subsidiaries of the Company or customary loans or advances to employees in
the ordinary course of business consistent with past practice and in amounts not
material to the maker of such loan or advance); (4) pledge or otherwise encumber
shares of capital stock of the Company or any of its subsidiaries; or (5)
mortgage or pledge any of its material assets, tangible or intangible, or create
or suffer to exist any material Lien thereupon, subject to certain exceptions;
(e) except as may be required by law or as contemplated by the Merger Agreement,
enter into, adopt or amend or terminate any bonus, profit sharing, compensation,
severance, termination, stock option, stock appreciation right, restricted
stock, performance unit, stock equivalent, stock purchase agreement, pension,
retirement, deferred compensation, employment, severance or other employee
benefit agreement, trust, plan, fund or other arrangement for the benefit or
welfare of any director, officer or employee in any manner, or (except for
normal increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not
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result in a material increase in benefits or compensation expense to the
Company, and as required under existing agreements or in the ordinary course of
business generally consistent with past practice) increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any plan and arrangement as in effect as of the date
hereof (including, without limitation, the granting of stock appreciation rights
or performance units); (f) subject to certain exceptions, acquire, sell, lease
or dispose of any assets outside the ordinary course of business or any assets
which in the aggregate are material to the Company and its subsidiaries taken as
a whole, or enter into any commitment or transaction outside the ordinary course
of business consistent with past practice which would be material to the Company
and its subsidiaries taken as a whole; (g) except as may be required as a result
of a change in law or in generally accepted accounting principles, change any of
the accounting principles or practices used by it; (h) revalue in any material
respect any of its assets, including, without limitation, writing down the value
of inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (i) (1) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or other business
organization or division thereof or any equity interest therein; (2) enter into
any contract or agreement other than in the ordinary course of business
consistent with past practice which would be material to the Company and its
subsidiaries taken as a whole; (3) authorize any new capital expenditure or
expenditures which, individually, is in excess of $2,500,000 or, in the
aggregate, are in excess of $25,000,000; provided, that none of the foregoing
shall limit any capital expenditure already included in the Company's 1994
capital expenditure budget previously provided to Parent or Purchaser; or (4)
enter into or amend any contract, agreement, commitment or arrangement to take
any action that would be prohibited under the Merger Agreement; (j) make any tax
election or settle or compromise any income tax liability material to the
Company and its subsidiaries taken as a whole; (k) pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business of liabilities reflected or reserved against in,
or contemplated by, the consolidated financial statements (or the notes thereto)
of the Company and its subsidiaries or incurred in the ordinary course of
business consistent with past practice; (l) settle or compromise any pending or
threatened suit, action or claim relating to the transactions contemplated by
the Merger Agreement; or (m) take, or agree in writing or otherwise to take, any
of the actions described in this paragraph or any action which would make any of
the representations or warranties of the Company contained in the Merger
Agreement untrue or incorrect as of the date when made or would result in any of
the conditions set forth in Section 15 not being satisfied.
Other Agreements of Parent, the Purchaser and the Company. Pursuant to the
Merger Agreement, Parent and Purchaser will each hold and will each cause its
consultants and advisors to hold in confidence, unless compelled to disclose by
judicial or administrative process or, in the written opinion of its legal
counsel, by other requirements of law, all documents and information concerning
the Company and its subsidiaries furnished to Parent or Purchaser in connection
with the transactions contemplated by the Merger Agreement (except to the extent
that such information can be shown to have been (i) previously known by Parent
or Purchaser from sources other than the Company, or its directors, officers,
representatives or affiliates, (ii) in the public domain through no fault of
Parent or Purchaser or (iii) later lawfully acquired by Parent or Purchaser from
other sources who are not known by Parent or Purchaser to be bound by a
confidentiality agreement or otherwise prohibited from transmitting the
information to Parent or Purchaser by a contractual, legal or fiduciary
obligation) and will not release or disclose such information to any other
person, except its auditors, attorneys, financial advisors and other consultants
and advisors in connection with the Merger Agreement and the transactions
contemplated thereby. Parent and Purchaser will each be deemed to have satisfied
its obligation to hold such information confidential if it exercises the same
care as it takes to preserve confidentiality for its own similar information.
In the Merger Agreement the Company, its affiliates and their respective
officers, directors, employees, representatives and agents have agreed that they
shall immediately cease any existing discussions or negotiations, if any, with
any parties conducted heretofore with respect to any acquisition of all or any
material portion of the assets of, or any equity interest in, the Company or any
of its subsidiaries or any business combination with the Company or any of its
subsidiaries, subject to certain exceptions. The Company may, directly or
indirectly, furnish information and access, in each case only in response to
unsolicited requests
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therefor, to any corporation, partnership, person or other entity or group
pursuant to confidentiality agreements, and may participate in discussions and
negotiate with such entity or group concerning any merger, sale of assets, sale
of shares of capital stock or similar transaction involving the Company or any
subsidiary or division of the Company, if such entity or group has submitted a
written proposal to the Board relating to any such transaction and the Board by
a majority vote determines in its good faith judgment, based as to legal matters
on the written opinion of legal counsel, that failing to take such action would
constitute a breach of the Board's fiduciary duty. The Board shall provide a
copy of any such written proposal to Parent or Purchaser immediately after
receipt thereof and thereafter keep Parent and Purchaser promptly advised of any
development with respect thereto. Except as set forth above, neither the Company
nor any of its affiliates, nor any of its or their respective officers,
directors, employees, representatives or agents, shall, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with,
or provide any information to, any corporation, partnership, person or other
entity or group (other than Parent and Purchaser, any affiliate or associate of
Parent and Purchaser or any designees of Parent and Purchaser) concerning any
merger, sale of assets, sale of shares of capital stock or similar transaction
involving the Company or any subsidiary or division of the Company; provided,
however, that nothing in the Merger Agreement shall prevent the Board from
taking, and disclosing to the Company's shareholders, a position contemplated by
Rules 14d-9 and 14e-2 promulgated under the Exchange Act with regard to any
tender offer; provided, further, that the Board shall not recommend that the
shareholders of the Company tender their Shares in connection with any such
tender offer unless the Board by a majority vote determines in its good faith
judgment, based as to legal matters on the written opinion of legal counsel,
that failing to take such action would constitute a breach of the Board's
fiduciary duty.
Between the date hereof and the Effective Time, the Company will give
Parent and Purchaser and their authorized representatives reasonable access to
all employees, plants, offices, warehouses and other facilities and to all books
and records of the Company and its subsidiaries, will permit Parent and
Purchaser to make such inspections as Parent and Purchaser may reasonably
require and will cause the Company's officers and those of its subsidiaries to
furnish Parent and Purchaser with such financial and operating data and other
information with respect to the business and properties of the Company and any
of its subsidiaries as Parent or Purchaser may from time to time reasonably
request.
The Merger Agreement provides that effective upon purchase and payment for
any Shares by Purchaser, the Purchaser 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
Board of Directors (giving effect to the election of any additional directors
pursuant to this paragraph) and (ii) the percentage that the number of Shares
owned by the Purchaser (including Shares accepted for payment) bears to the
total number of Shares outstanding on a fully-diluted basis, and the Company
shall take all action necessary to cause the Purchaser's designees to be elected
or appointed to the Board of Directors, including, without limitation,
increasing the number of directors, and seeking and accepting resignations of
its incumbent directors. Notwithstanding the foregoing, the Company has agreed
to use its best efforts to ensure that three of the current members of the Board
remain members of the Board until the Effective Time.
Pursuant to the Merger Agreement, the Company shall cause a meeting of its
shareholders (the "Company Shareholder Meeting") to be duly called and held
after May 18, 1994 for the purposes of voting on the approval and adoption of
the Merger Agreement and the Merger.
The Merger Agreement provides that the Company will promptly prepare and
file with the Commission under the Exchange Act a proxy statement relating to
the Company Shareholder Meeting (the "Proxy Statement"). The Company has agreed,
subject to the fiduciary duties of its Board of Directors, based as to legal
matters on the written opinion of legal counsel, to use all reasonable efforts
to obtain the necessary approvals by its shareholders of the Merger Agreement
and the transactions contemplated thereby. Parent has agreed to vote and to
cause its affiliates (including, without limitation, the Purchaser) to vote all
Shares owned by them in favor of adoption of the Merger Agreement.
Parent, Purchaser and the Company have each agreed that all rights to
indemnification or exculpation now existing in favor of the directors, officers,
employees and agents of the Company and its subsidiaries as
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provided in their respective charters or by-laws or otherwise in effect as of
the date of the Merger Agreement with respect to matters occurring prior to the
Effective Time shall survive the Merger and shall continue in full force and
effect. To the maximum extent permitted by the NYBCL, such indemnification shall
be mandatory rather than permissive and the Surviving Corporation shall advance
expenses in connection with such indemnification. In addition, Parent has agreed
that for three years after the Effective Time, Parent will provide, pursuant to
a policy maintained by it, or will cause the Surviving Corporation to use its
best efforts to provide, officers' and directors' liability insurance and
fiduciary insurance in respect of acts or omissions occurring prior to the
Effective Time covering each such Person currently covered by the Company's
officers' and directors' liability insurance policy on terms with respect to
coverage and amount no less favorable than those of such policy in effect on the
date of the Merger Agreement, except that the Surviving Corporation shall not be
required to pay annually more than two times the current annual premium.
Parent has agreed to guarantee the performance by Purchaser of its
obligations under the Merger Agreement and the indemnification obligations of
the Surviving Corporation pursuant to the preceding paragraph.
The Merger Agreement provides that the Company, the Purchaser and Parent
will each use all reasonable efforts to consummate the transactions contemplated
by the Merger Agreement.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations by the Company as to undisclosed
liabilities, certain changes or events concerning its businesses, compliance
with applicable law, employee benefit plans, litigation and environmental
liabilities. In addition, the Company represented to Parent and the Purchaser
that the Board, at a meeting duly called and held, has (i) determined that the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, are fair to, and in the best interests of, the shareholders of
the Company, (ii) approved the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, in all respects and
that such approval constitutes approval of the Offer, the Merger Agreement and
the Merger for purposes of (A) Sections 902 and 912 of the New York Business
Corporation Law and similar statutes of other states that might be deemed
applicable, (B) paragraph 1(a) of Article SEVENTH of the Company's certificate
of incorporation and (C) Section 11(a)(ii)(B) of the Rights Agreement. The
Company has also represented to the Parent and the Purchaser that it has taken
all necessary action so that none of the execution of the Merger Agreement, the
making of the Offer, the acquisition of Shares pursuant to the Offer or the
consummation of the Merger will (i) cause the Rights to become exercisable, (ii)
cause any person to become an Acquiring Person (as defined below) or (iii) give
rise to a Distribution Date or a Triggering Event (as each such term is defined
below).
Conditions to the Merger. The obligations of each of Parent, the Purchaser
and the Company to effect the Merger are subject to the satisfaction of certain
conditions, including: (a) the Merger Agreement shall have been adopted by the
affirmative vote of the shareholders of the Company by the requisite vote in
accordance with applicable law; (b) no statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or enforced by any U.S. court or U.S. governmental authority which
prohibits, restrains, enjoins or restricts the consummation of the Merger; (c)
any waiting period applicable to the Merger under the HSR Act shall have
terminated or expired; and (d) Purchaser shall have purchased Shares pursuant to
the Offer.
Termination. The Merger Agreement may be terminated: (a) by mutual written
consent of Parent, Purchaser and the Company; (b) by Parent and Purchaser or the
Company if any court of competent jurisdiction in the United States or other
United States governmental body shall have issued a final order, decree or
ruling or taken any other final action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall have
become final and nonappealable; (c) by Parent and Purchaser if due to an
occurrence or circumstance which would result in a failure to satisfy any of the
conditions set forth in Section 15 hereto, Purchaser shall have (i) failed to
commence the Offer within five days following the initial public announcement of
the Offer, (ii) terminated the Offer or (iii) failed to pay for Shares pursuant
to the Offer within 75 days following the commencement of the Offer; (d) by the
Company if (i) there shall not have been a material breach of any
representation, warranty, covenant or agreement on the
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<PAGE> 24
part of the Company and the Purchaser shall have (A) failed to commence the
Offer within five days following the initial public announcement of the Offer,
(B) terminated the Offer or (C) failed to pay for Shares pursuant to the Offer
within 75 days following the commencement of the Offer or (ii) prior to the
purchase of Shares pursuant to the Offer, a corporation, partnership, person or
other entity or group shall have made a bona fide offer that the Board by a
majority vote determines in its good faith judgment and in the exercise of its
fiduciary duties, based as to legal matters on the written opinion of legal
counsel, is more favorable to the Company's shareholders than the Offer and the
Merger, provided that such termination under this clause (ii) shall not be
effective until payment of the Third Party Acquisition Fee (as defined below);
(e) by Parent and Purchaser prior to the purchase of Shares pursuant to the
Offer if (i) there shall have been a breach of any representation or warranty on
the part of the Company having a Material Adverse Effect (as defined below) on
the Company or materially adversely affecting (or materially delaying) the
consummation of the Offer, (ii) there shall have been a breach of any covenant
or agreement on the part of the Company resulting in a Material Adverse Effect
on the Company or materially adversely affecting (or materially delaying) the
consummation of the Offer which shall not have been cured prior to the earlier
of (A) 10 days following notice of such breach and (B) two business days prior
to the date on which the Offer expires, (iii) the Company shall engage in
negotiations with any entity or group (other than Parent or Purchaser) that has
proposed a Third Party Acquisition (as defined below), (iv) the Board shall have
withdrawn or modified (including by amendment of the Schedule 14D-9) in a manner
adverse to Purchaser its approval or recommendation of the Offer, the Merger
Agreement or the Merger or shall have recommended another offer, or shall have
adopted any resolution to effect any of the foregoing or (v) the Minimum
Condition shall not have been satisfied by the expiration date of the Offer and
on such date an entity or group (other than Parent or Purchaser) shall have made
and not withdrawn a proposal with respect to a Third Party Acquisition; or (f)
by the Company if (i) there shall have been a breach of any representation or
warranty on the part of Parent or Purchaser which materially adversely affects
(or materially delays) the consummation of the Offer or (ii) there shall have
been a material breach of any covenant or agreement on the part of Parent or
Purchaser and which materially adversely affects (or materially delays) the
consummation of the Offer which shall not have been cured prior to the earliest
of (A) 10 days following notice of such breach and (B) two business days prior
to the date on which the Offer expires.
Termination Fee. Pursuant to the Merger Agreement, in the event Parent and
Purchaser terminate the Merger Agreement pursuant to clause (e)(i) or (e)(ii) of
the preceding paragraph, the Company shall pay to Parent the amount of $20
million as liquidated damages immediately upon such a termination. If, (i)
Parent and Purchaser terminate the Merger Agreement pursuant to clause (e)(ii),
(e)(iii), (e)(iv) or (e)(v) of the preceding paragraph and, within 12 months
thereafter the Company enters into an agreement with respect to a Third Party
Acquisition, or a Third Party Acquisition occurs, involving any party (or any
affiliate thereof) (x) with whom the Company (or its agents) had negotiations
with a view to a Third Party Acquisition, (y) to whom the Company (or its
agents) furnished information with a view to a Third Party Acquisition or (z)
who had submitted a proposal or expressed an interest in a Third Party
Acquisition, in the case of each of clauses (x), (y) and (z) after the date
hereof and prior to such termination; or (ii) Parent and Purchaser terminate the
Merger Agreement pursuant to clause (e)(iii), (e)(iv) or (e)(v) of the preceding
paragraph, and within 12 months thereafter a Third Party Acquisition shall occur
involving a consideration for Shares (including the value of any stub equity) in
excess of the price per share paid pursuant to the Offer; or (iii) the Company
terminates the Merger Agreement pursuant to clause (d)(ii) of the preceding
paragraph, then the Company shall pay to Parent and Purchaser, within one
business day following the execution and delivery of such agreement or such
occurrence, as the case may be, or simultaneously with such termination pursuant
to clause (d)(ii) of the preceding paragraph, a fee, in cash, of $50,000,000;
provided, however, that the Company in no event shall be obligated to pay more
than one such $50,000,000 fee with respect to all such agreements and
occurrences and such termination. In case liquidated damages shall have been
paid pursuant to the first sentence of this paragraph in connection with such a
termination, the amount so paid, minus certain fees and expenses paid shall be
credited against the amount payable pursuant to this paragraph.
"Third Party Acquisition" means the occurrence of any of the following
events (i) the acquisition of the Company by merger or otherwise by any person
(which includes a "person" as such term is defined in Section 13(d)(3) of the
Exchange Act) or entity other than Parent, Purchaser any affiliate thereof (a
"Third
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<PAGE> 25
Party"); (ii) the acquisition by Third Party of 30% or more of the total assets
of the Company and its subsidiaries, taken as a whole; (iii) the acquisition by
Third Party of 30% or more of the outstanding Shares; (iv) the adoption by the
Company of a plan of liquidation or the declaration or payment of an
extraordinary dividend; or (v) the repurchase by the Company or any of its
subsidiaries of more than 20% of the outstanding Shares, other than a repurchase
which was not approved by the Company or publicly announced prior to the
termination of the Merger Agreement and which is not part of a series of
transactions resulting in a change of control.
Upon the termination of the Merger Agreement for any reason prior to the
purchase of Shares by Purchaser pursuant to the Offer (other than (i)
termination by the Company upon a breach by Parent or the Purchaser and (ii)
termination in circumstances requiring the Company to pay liquidated damages)
the Company shall reimburse Parent, Purchaser and their affiliates (not later
than one business day after submission of statements therefor) for all actual
documented out-of-pocket fees and expenses, not to exceed $8,800,000, actually
and reasonably incurred by any of them or on their behalf in connection with the
Offer and the Merger and the consummation of all transactions contemplated by
the Merger Agreement (including, without limitation, fees payable to financing
sources, investment bankers, counsel to any of the foregoing, and accountants).
Pursuant to the Merger Agreement, in the event of the termination and
abandonment of the Merger Agreement, the Merger Agreement will become void and
have no effect, without any liability on the part of any party or its directors,
officers or shareholders, other than certain provisions of the Merger Agreement
relating to the termination fee, expenses of the parties and confidentiality of
information, provided, that a party will not be relieved from liability for any
breach of the Merger Agreement.
Costs and Expenses. Except as discussed above, the Merger Agreement
provides that all costs and expenses incurred in connection with the
transactions contemplated by the Merger Agreement shall be paid by the party
incurring such costs and expenses.
THE RIGHTS AGREEMENT
Pursuant to the Rights Agreement, on February 18, 1988 the Board of
Directors of the Company declared a dividend distribution of one Right for each
Share outstanding on March 25, 1988. Each Right issued pursuant to the Rights
Agreement entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock at a
price of $80.00, subject to adjustment.
Until the earlier to occur of (i) ten days following the date (the "Shares
Acquisition Date") of public announcement that a person or group of affiliated
or associated persons acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of the Common Stock (an
"Acquiring Person") or (ii) ten days following the commencement or first public
announcement of the intent of any person to commence a tender offer or exchange
offer if, upon consummation thereof, such person would be an Acquiring Person
(the earlier of such dates being called the "Distribution Date"), the Rights are
evidenced by the certificates evidencing the Common Stock. Until the
Distribution Date, the Rights will be transferred with and only with the Shares.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of Shares as of the close of business on the Distribution Date and such separate
Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire at the close of business on January 31, 1998 unless earlier redeemed by
the Company as described below.
In the event that (i) the Company is the surviving corporation in a merger
with an Acquiring Person and its Common Stock is not changed or exchanged, (ii)
a person (other than certain specified persons) becomes the beneficial owner of
more than 30% of the then outstanding Shares (except pursuant to an offer for
all outstanding Shares of which the Independent Directors (as defined below)
determined to be fair to and otherwise in the best interests of the Company and
its shareholders), (iii) an Acquiring Person engages in one or more
"self-dealing" transactions or transfers assets as set forth in the Rights
Agreement, or (iv) during
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<PAGE> 26
such time as there is an Acquiring Person, the Company fails to pay certain
dividends or an event occurs which results in such Acquiring Person's ownership
interest being increased by more than 1% (e.g., a reverse stock split), at any
time following the Distribution Date, each holder of a Right will thereafter
have the right to receive, upon exercise, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) having a value
equal to two times the exercise price of the Right. Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void.
In the event that, at any time following the Shares Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction
(other than a merger described in the immediately preceding paragraph or a
merger which follows an offer described in the immediately preceding paragraph),
or (ii) more than 50% of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the exercise price of the Right. The events set forth in this paragraph
and in the preceding paragraph are referred to as the "Triggering Events."
At any time prior to the earlier of (i) 5:00 P.M. New York City time on the
tenth day following the Shares Acquisition Date and (ii) January 31, 1998, the
Company may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"). Under certain circumstances set forth in the
Rights Agreement, the decision to redeem shall require the concurrence of a
majority of the Independent Directors. Thereafter, the Company's right of
redemption may be reinstated if an Acquiring Person reduces his beneficial
ownership to 10% or less of the outstanding shares of common stock of the
Company in a transaction or series of transactions not involving the Company or
any of its subsidiaries and there is no other Acquiring Person. Immediately upon
the action of the Board of Directors of the Company electing to redeem the
Rights with, if required, the concurrence of the Independent Directors, the
Company shall make announcement thereof, and upon such action, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date or the Shares Acquisition Date, the provisions of the Rights
Agreement may be amended by the Board (in certain circumstances, with the
concurrence of the Independent Directors) in order to cure any ambiguity, defect
or inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or, with
certain limitations, to shorten or lengthen any time period under the Rights
Agreement.
The term "Independent Director" means any member of the Board of Directors
of the Company who was a member of the Board prior to the date of the Rights
Agreement, and any person who is subsequently elected to the Board if such
person is recommended or approved by a majority of the Independent Directors,
but shall not include an Acquiring Person, or an affiliate or associate of an
Acquiring Person, or any representative of the foregoing entities.
Whereas (i) the Offer is an offer to purchase all of the outstanding Shares
and the Board has unanimously determined that the Offer described herein is fair
to and in the best interests of the Company and its shareholders and (ii) on
March 6, 1993, the Company amended the Rights Agreement to provide that neither
Parent nor any direct or indirect subsidiary thereof shall be an Acquiring
Person and to exclude Parent and any direct or indirect subsidiary thereof from
certain provisions of the Rights Agreement, the acquisition of Shares pursuant
to the Offer or the consummation of the Merger will not (a) cause any person to
become an Acquiring Person, (b) cause the Distribution Date to occur or (c) give
rise to a Triggering Event.
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<PAGE> 27
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
Purpose of the Offer. The purpose of the Offer is for the Purchaser to
acquire control of, and an equity interest in, the Company. The purpose of the
Merger is to acquire all outstanding Shares not tendered and purchased pursuant
to the Offer. The acquisition of the entire equity interest in the Company has
been structured as a cash tender offer followed by a cash merger in order to
provide a prompt and orderly transfer of ownership of the Company from the
public shareholders to Parent and to provide shareholders with cash for all
their Shares. The purchase of Shares pursuant to the Offer will increase the
likelihood that the Merger will be effected.
Except as noted in this Offer to Purchase, neither Parent nor the Purchaser
has any present plans or proposals that would result in an extraordinary
corporate transaction, such as a merger, reorganization, liquidation, relocation
of operations, or sale or transfer of assets, involving the Company or any of
its subsidiaries, or any material changes in the Company's corporate structure
or business or the composition of its management or personnel.
12. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE
LISTING; REGISTRATION UNDER THE EXCHANGE ACT. The purchase of Shares pursuant to
the Offer will reduce the number of Shares that might otherwise trade publicly
and may reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by shareholders other
than the Purchaser. The Purchaser cannot predict whether the reduction in the
number of Shares that might otherwise trade publicly would have an adverse or
beneficial effect on the market price for or marketability of the Shares or
whether it would cause future market prices to be greater or less than the Offer
price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing and
may, therefore, be delisted from such exchange. According to the NYSE's
published guidelines, the NYSE could consider delisting the Shares if, among
other things, the number of publicly-held Shares (excluding Shares held by
officers, directors, their immediate families and other concentrated holdings of
10% or more) were less than 600,000, there were less than 1,200 holders of at
least 100 shares or the aggregate market value of the publicly-held Shares were
less than $5 million. If, as a result of the purchase of Shares pursuant to the
Offer, the Shares no longer meet the requirements of the NYSE for continued
listing and the listing of Shares is discontinued, the market for the Shares
could be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
trade on another securities exchange or in the over-the-counter market and that
price quotations for the Shares would be reported by such exchange or through
NASDAQ or other sources. The extent of the public market for the Shares and
availability of such quotations would, however, depend upon such factors as the
number of holders and/or the aggregate market value of the publicly-held Shares
at such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares. Depending upon factors similar to those
described above regarding listing and market quotations, the Shares might no
longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for loans made by brokers.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated if the Shares are not listed on a national
securities exchange and there are less than 300 holders of record. Termination
of the registration of the Shares under the Exchange Act would substantially
reduce the information required to be furnished by the Company to holders of
Shares and to the Commission and would make certain of the provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy or information statement in
connection with shareholder action and the related requirement of an annual
report to shareholders and the requirements of Rule 13e-3
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<PAGE> 28
under the Exchange Act with respect to "going private" transactions, no longer
applicable to the Shares. Furthermore, "affiliates" of the Company and persons
holding "restricted securities" of the Company may be deprived of the ability to
dispose of such securities pursuant to Rule 144 promulgated under the Securities
Act of 1933, as amended (the "Securities Act"). If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be "margin
securities" or eligible for listing on a securities exchange or NASDAQ
reporting. It is the current intention of Parent to deregister the Shares after
consummation of the Offer if the requirements for termination of registration
are met.
13. DIVIDENDS AND DISTRIBUTIONS. If, on or after the date of the Merger
Agreement, the Company should (i) split, combine or otherwise change the Shares
or its capitalization, (ii) issue or sell any additional securities of the
Company or otherwise cause an increase in the number of outstanding securities
of the Company (except for Shares issuable upon the exercise of employee stock
options outstanding on the date of the Merger Agreement) or (iii) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares, then, without prejudice to the Purchaser's rights under
Sections 1 and 15, the Purchaser, in its sole discretion, subject to the terms
of the Merger Agreement, may make such adjustments as it deems appropriate in
the purchase price and other terms of the Offer.
If, on or after the date of the Merger Agreement, the Company should
declare or pay any dividend on the Shares or make any distribution (including,
without limitation, cash dividends, the issuance of additional Shares pursuant
to a stock dividend or stock split, the issuance of other securities or the
issuance of rights for the purchase of any securities) with respect to the
Shares that is payable or distributable to shareholders of record on a date
prior to the transfer to the name of the Purchaser or its nominee or transferee
on the Company's stock transfer records of the Shares purchased pursuant to the
Offer, then, without prejudice to the Purchaser's rights under Sections 1 and
15, any such dividend, distribution or right to be received by the tendering
shareholders will be received and held by the tendering shareholders for the
account of the Purchaser and will be required to be promptly remitted and
transferred by each tendering shareholder to the Depositary for the account of
the Purchaser, accompanied by appropriate documentation of transfer. Pending
such remittance and subject to applicable law, the Purchaser will be entitled to
all rights and privileges as owner of any such dividend, distribution or right
and may withhold the entire purchase price or deduct from the purchase price the
amount or value thereof, as determined by the Purchaser in its sole discretion.
14. EXTENSION OF TENDER PERIOD; AMENDMENT; TERMINATION. The Purchaser
expressly reserves the right, in its sole discretion, at any time or from time
to time, regardless of whether or not any of the events set forth in Section 15
shall have occurred or shall have been determined by the Purchaser to have
occurred, subject to the terms of the Merger Agreement and applicable rules of
the Commission, (i) to extend the period of time during which the Offer is open
and thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or notice of such extension to the Depositary and (ii) to amend the
Offer in any respect by giving oral or written notice of such amendment to the
Depositary. The rights reserved by the Purchaser in this paragraph are in
addition to the Purchaser's rights to terminate the Offer pursuant to Section
15. Any extension, amendment or termination will be followed as promptly as
practicable by public announcement thereof, the announcement in the case of an
extension to be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
the public announcement requirements of Rule 14d-4(c) under the Exchange Act.
Any reduction in the purchase price pursuant to the Merger Agreement will be
considered an amendment to the Offer, and will be followed by the appropriate
announcement. Without limiting the obligation of the Purchaser under such Rule
or the manner in which the Purchaser may choose to make any public announcement,
the Purchaser currently intends to make announcements by issuing a release to
the Dow Jones News Service or the Reuters News Service.
The Purchaser also reserves the right, in its sole discretion, in the event
any of the conditions specified in Section 15 shall not have been satisfied and
so long as Shares have not theretofore been accepted for payment, to delay
(except as otherwise required by applicable law) acceptance for payment of or
payment for Shares or to terminate the Offer and not accept for payment or pay
for Shares.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant
25
<PAGE> 29
to the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to withdrawal rights as described in Section 4.
However, the ability of the Purchaser to delay the payment for Shares which the
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of such bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including the Minimum Condition), the Purchaser will disseminate additional
tender offer materials and extend the Offer to the extent required by Rules 14d-
4(c) and 14d-6(d) under the Exchange Act. The minimum period during which the
Offer must remain open following material changes in the terms of the Offer or
information concerning the Offer, other than a change in price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the relative materiality of the terms or information. With respect to
a change in price or a change in percentage of securities sought, a minimum ten
business day period is generally required to allow for adequate dissemination to
shareholders and investor response. If prior to the Expiration Date, the
Purchaser should decide to increase the price per Share being offered in the
Offer, such increase will be applicable to all shareholders whose Shares are
accepted for payment pursuant to the Offer. As used in this Offer to Purchase,
"business day" means any day other than Saturday, Sunday or a federal holiday
and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York
City time as computed in accordance with Rule 14d-1 under the Exchange Act.
15. CERTAIN CONDITIONS TO THE OFFER. Notwithstanding any other provisions
of the Offer, Purchaser shall not be required to accept for payment or pay for,
and may delay the acceptance for payment of, or the payment for, any Shares, and
may terminate the Offer and not accept for payment or pay for any Shares, if (i)
immediately prior to the expiration of the Offer (as it may be extended in
accordance with the Offer), the Minimum Condition shall not have been satisfied,
(ii) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer or (iii) at any time on or
after March 7, 1994 and prior to the acceptance for payment of Shares, Purchaser
makes a determination (which shall be made in good faith) that any of the
following conditions exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction proposed, sought, promulgated,
enacted, entered, enforced or deemed applicable to the Offer, or any other
action shall have been taken, proposed or threatened, by any state or
federal government or governmental authority or by any U.S. court, other
than the routine application to the Offer, the Merger or other subsequent
business combination of waiting periods under the HSR Act, that presents a
substantial likelihood of (1) making the acceptance for payment of, or the
payment for, some or all of the Shares illegal or otherwise prohibiting,
restricting or significantly delaying consummation of the Offer, (2)
imposing material limitations on the ability of Purchaser to acquire or
hold or to exercise effectively all rights of ownership of the Shares,
including, without limitation, the right to vote any Shares purchased by
Purchaser on all matters properly presented to the shareholders of the
Company, or effectively to control in any material respect the business,
assets or operations of the Company, its subsidiaries, Purchaser or any of
their respective affiliates, or (3) otherwise having a Material Adverse
Effect on the Company, Parent or Purchaser; or
(b) any material adverse change shall have occurred or be threatened,
or Parent or Purchaser shall have become aware of any fact or circumstance,
that has had or is reasonably likely to have a Material Adverse Effect on
the Company; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
(ii) the declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States (whether or not mandatory), (iii)
the commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States, and
having a Material Adverse Effect on the Company or
26
<PAGE> 30
materially adversely affecting (or materially delaying) the consummation of
the Offer, (iv) any limitation (whether or not mandatory), by any U.S.
governmental authority or agency on, or any other event that, in the
judgment of Purchaser, is reasonably likely to materially adversely affect,
the extension of credit by banks or other financial institutions, (v) from
the date of the Merger Agreement through the date of termination or
expiration of the Offer, a decline of at least 25% in the Standard & Poor's
500 Index or (vi) in the case of any of the situations described in clauses
(i) through (v) inclusive, existing at the date of the commencement of the
Offer, a material acceleration or worsening thereof; or
(d) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Purchaser, any of its
affiliates, or any group of which any of them is a member shall have
acquired beneficial ownership of more than 30% of the outstanding Shares or
shall have entered into a definitive agreement or an agreement in principle
with the Company with respect to a tender offer or exchange offer for any
Shares or a merger, consolidation or other business combination with or
involving the Company or any of its subsidiaries; or
(e) the Merger Agreement shall have been terminated in accordance with
its terms; or
(f) prior to the purchase of Shares pursuant to the Offer, the Board
shall have withdrawn or modified (including by amendment of the Schedule
14D-9) in a manner adverse to Purchaser its approval or recommendation of
the Offer, the Merger Agreement or the Merger or shall have recommended
another offer, or shall have adopted any resolution to effect any of the
foregoing
which, in the sole judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or omission by Purchaser) giving rise to any
such condition, makes it inadvisable to proceed with such acceptance for
payment. When used in connection with a corporation, the term "Material Adverse
Effect" means any change or effect (other than, with respect to the Company,
changes or effects, described in the letter delivered by the Company to Parent
dated the date of the Merger Agreement) that is or is reasonably likely to be
materially adverse to the business, results of operations or condition
(financial or otherwise) of such corporation and its subsidiaries, taken as a
whole, other than, with respect to the Company, any change or effect arising out
of general economic conditions unrelated to any business in which the Company is
engaged.
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. Except as described in
this Section 16, based on a review of publicly available filings by the Company
with the Commission and other publicly available information concerning the
Company, neither Parent nor the Purchaser is aware of any license or regulatory
permit that appears to be material to the business of the Company and its
subsidiaries, taken as a whole, that might be adversely affected by the
acquisition of Shares by the Purchaser pursuant to the Offer, the Merger or
otherwise or of any approval or other action by any governmental, administrative
or regulatory agency or authority, domestic or foreign, that would be required
prior to the acquisition of Shares by the Purchaser pursuant to the Offer, the
Merger or otherwise. Should any such approval or other action be required,
Parent and the Purchaser currently contemplate that it will be sought. While the
Purchaser does not currently intend to delay the acceptance for payment of
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company or the
Purchaser Entities or that certain parts of the business of the Company or the
Purchaser Entities might not have to be disposed of in the event that such
approvals were not obtained or any other actions were not taken. The Purchaser's
obligation under the Offer to accept for payment and pay for Shares is subject
to certain conditions, including conditions relating to the legal matters
discussed in this Section 16. See Section 15.
State Takeover Statutes. The Company is incorporated under the laws of the
State of New York. Section 912 of the NYBCL prohibits certain "business
combinations" (defined to include mergers and consolidations) involving a New
York corporation and an "interested shareholder" (defined generally as a person
who is the beneficial owner of 20% or more of the outstanding voting stock of
such New York corporation) for a period of five years following the date on
which such interested shareholder became such (such date, a "stock acquisition
date") unless such business combination or the purchase of stock made by
27
<PAGE> 31
such interested shareholder is approved by the board of direction of such New
York corporation prior to such interested shareholder's stock acquisition date
or certain other statutory conditions have been met. At a meeting on March 6,
1994, the Board of Directors approved the Merger Agreement, the Merger, the
Offer and the Purchaser's purchase of Shares pursuant to the Offer. Accordingly,
the provisions of Section 912 of the NYBCL have been satisfied with respect to
the Offer and the Merger and such provisions will not delay the consummation of
the Merger. Article 16 of the NYBCL also requires a bidder for shares of a New
York corporation to file a registration statement with the attorney general and
satisfy certain disclosure requirements. Parent and the Purchaser have filed
such a registration statement and this Offer to Purchase sets forth the
information required to be disclosed pursuant to Article 16.
A number of other states adopted "takeover" statutes that purport to apply
to attempts to acquire corporations that are incorporated in such states, or
whose business operations have substantial economic effects in such states, or
which have substantial assets, security holders, employees, principal executive
offices or places of business in such states.
In Edgar v. MITE Corporation, the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Act, which,
as a matter of state securities law, made takeovers of corporations meeting
certain requirements more difficult. However, in CTS Corp. v. Dynamics Corp. of
America, the Supreme Court held that a state may, as a matter of corporate law
and, in particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining shareholders, provided that
such laws were applicable under certain conditions, in particular, that the
corporation has a substantial number of shareholders in the state and is
incorporated there.
The Company, directly or though subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted "takeover"
statutes. The Purchaser does not know whether any of these statutes will, by
their terms, apply to the Offer, and has not complied with any such statutes
other than those adopted by the State of New York. To the extent that certain
provisions of these statutes purport to apply to the Offer, the Purchaser
believes that there are reasonable bases for contesting such statutes. If any
person should seek to apply any state takeover statute, the Purchaser would take
such action as then appears desirable, which action may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
If it is asserted that one or more takeover statues apply to the Offer, and it
is not determined by an appropriate court that such statute or statutes do not
apply or are invalid as applied to the Offer, the Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities, and the Purchaser might be unable to purchase or pay for Shares
tendered pursuant to the Offer, or be delayed in continuing or consummating the
Offer. In such case, the Purchaser may not be obligated to accept for payment or
pay for Shares tendered. At the meeting held on March 6, 1994, the Board amended
the by-laws of the Company to provide that, to the extent the Company is
permitted to do so, the takeover statutes of any state, other than the State of
New York, shall not apply to the Company. See Section 15.
Antitrust. Under the HSR Act, certain acquisitions may not be consummated
unless information has been furnished to the Federal Trade Commission and the
Antitrust Division of the Department of Justice and certain waiting period
requirements have been satisfied. The Offer and the acquisition of Shares
pursuant to the Merger Agreement are subject to the HSR Act, which provides that
certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the Federal Trade Commission ("FTC") and
certain waiting period requirements have been satisfied. Parent expects to file
on or before March 9, 1994 a Notification and Report Form with respect to the
Offer.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares under the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent. Accordingly, if
such filing is made on March 9, 1994, the waiting period with respect to the
Offer will expire at 11:59 p.m., New York City time, on March 24, 1994, unless
Parent receives a request for additional information or documentary material, or
the Antitrust Division and the FTC terminate the waiting period
28
<PAGE> 32
prior thereto. If, within such 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or material from Parent
concerning the Offer, the waiting period will be extended and would expire at
11:59 p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent with such request. Only one extension of the
waiting period pursuant to a request for additional information is authorized by
the HSR Act. Thereafter, such waiting period may be extended only by court order
or with the consent of Parent. The Purchaser will not accept for payment Shares
tendered pursuant to the Offer unless and until the waiting period requirements
imposed by the HSR Act with respect to the Offer have been satisfied. See
Section 15.
No separate HSR Act waiting period requirements with respect to the Merger
Agreement will apply, so long as the 15-day waiting period expires or is
terminated. Thus, all Shares may be acquired pursuant to the Offer at the close
of the 15-day waiting period or on the tenth calendar day after the date of
substantial compliance with a request for additional information.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger Agreement. At any time before or after the
Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares pursuant
to the Offer or otherwise or seeking divestiture of Shares acquired by the
Purchaser or divestiture of substantial assets of Parent or its subsidiaries.
Private parties and state attorneys general may also bring legal action under
the antitrust laws under certain circumstances. Based upon an examination of
publicly available information relating to the businesses in which Parent and
the Company are engaged, Parent and the Purchaser believe that the acquisition
of Shares by the Purchaser will not violate the antitrust laws. Nevertheless,
there can be no assurance that a challenge to the Offer or other acquisition of
Shares by the Purchaser on antitrust grounds will not be made or, if such a
challenge is made, of the result. See Section 15 for certain conditions to the
Offer, including conditions with respect to litigation and certain governmental
actions.
Margin Rules. The Purchaser and Parent believe that the requirements of the
margin regulations promulgated by the Federal Reserve Board are not applicable
to the financing of the Offer and the Merger.
Short-Form Merger. Section 905 of the NYBCL would permit the Merger to
occur without a vote of the Company's shareholders (a "short-form merger") if
the Purchaser were to acquire at least 90% of the outstanding Shares in the
Offer. However, because Article SEVENTH of the Company's certificate of
incorporation imposes certain conditions on short-form mergers that will not be
satisfied, the Merger will require the approval of the Company's shareholders
even if the Purchaser acquires at least 90% of the outstanding Shares in the
Offer. Therefore, consummation of the Merger may occur at a date later than the
date on which the Merger could have occurred if effected as a short-form merger.
In any event, pursuant to the Merger Agreement, the Merger will not occur on or
prior to May 18, 1994.
17. FEES AND EXPENSES. Parent and the Purchaser have engaged Bear Stearns
as the Dealer Manager in connection with the Offer and as financial advisor in
connection with the Offer and the Merger. Parent has agreed to pay Bear Stearns
$2 million as compensation for its services to date as financial advisor to
Parent and a fee of $8 million that will be payable to Bear Stearns upon
consummation of the Offer. The Purchaser also has agreed to reimburse Bear
Stearns for its expenses, including reasonable counsel fees, and to indemnify it
against certain liabilities and expenses, including certain liabilities under
the federal securities laws.
The Purchaser has retained Morrow & Co., Inc. to act as the Information
Agent and First Chicago Trust Company of New York to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, facsimile, telegraph and personal interview and may
request brokers, dealers, commercial banks, trust companies and other nominees
to forward the Offer material to beneficial owners. The Information Agent and
Depositary each will receive reasonable and customary compensation for their
services, will be reimbursed for certain reasonable out-of-pocket expenses and
will be indemnified against certain liabilities and expenses in connection
therewith, including certain liabilities under the federal securities laws.
Neither the Information Agent nor the Depositary has been retained to make
solicitations or recommendations in connection with the Offer.
29
<PAGE> 33
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other persons for soliciting tenders of Shares pursuant to
the Offer (other than the fees of the Dealer Manager and the Information Agent).
Brokers, dealers, commercial banks and trust companies will be reimbursed by the
Purchaser for reasonable expenses incurred by them in forwarding material to
their customers.
18. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction in which
the making of the Offer is not in compliance with applicable law. If the
Purchaser becomes aware of any jurisdiction in which the making of the Offer
would not be in compliance with applicable law, the Purchaser will make a good
faith effort to comply with any such law. If, after good faith effort, the
Purchaser cannot comply with any such law, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) the holders of Shares residing in
such jurisdiction. In those jurisdictions where securities or blue sky laws
require the Offer to be made by a licensed broker or dealer, the Offer is being
made on behalf of the Purchaser by the Dealer Manager or one or more registered
brokers or dealers which are licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to
Rule 14d-3 under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. The Schedule 14D-1
and any amendments thereto, including exhibits, may be inspected and copies may
be obtained at the same places and in the same manner as set forth in Section 7
(except they will not be available at the regional offices of the Commission).
MMC ACQUISITION CORP.
March 8, 1994
30
<PAGE> 34
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF
PARENT
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of Parent
and certain other information are set forth below. Unless otherwise indicated
below, the address of each director and officer is c/o Martin Marietta
Corporation, 6801 Rockledge Drive, Bethesda, Maryland 20817. No information is
provided in the right-hand column where the individual has occupied the position
indicated in the middle column for the past five years. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with Parent. All directors and officers listed below are citizens of
the United States. Directors are identified by a single asterisk.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES PRINCIPAL OCCUPATION AND
NAME HELD WITH PARENT** BUSINESS EXPERIENCE**
(AGE AT 3/30/94) (YEAR ELECTED) (PAST FIVE YEARS)
- ------------------------- ------------------------- ---------------------------------------
<S> <C> <C>
Norman R. Augustine* (58) Chairman of the Board
(1988), Chief Executive
Officer (1987) and
Director (1986)
A. Thomas Young* (55) President and Chief Executive Vice President, 1989
Operating Officer (1990)
and Director (1989)
Richard G. Adamson (61) Corporate Vice President, Corporate Vice President, Business
Strategic Development Development, 1988-1993
(1993)
Joseph D. Antinucci (53) Corporate Vice President President, Martin Marietta Aero & Naval
(1993) and President, Systems, 1984-1993
Electronics and Missiles
(1993)
Marcus C. Bennett* (58) Corporate Vice President
(1984), Chief Financial
Officer (1988), and
Director (1993)
Peter A. Bracken (52) Corporate Vice President President, Martin Marietta Electronics,
(1992) and President, Information & Missiles, 1992-1993; Vice
Information Group (1993) President, Technical Operations for
Information Systems, 1986-1992
Michael F. Camardo (52) Corporate Vice President President, GE Government Services,
(1993) and President, Inc.,+ 1990-1993; President, GE
Services Group (1993) Government Services,+ 1988-1990
Thomas A. Corcoran (49) Corporate Vice President Vice President and General Manager,
(1993) and President, General Electric Company,++ 1990-1993;
Electronics Group (1993) General Manager, GE Government
Communications,+ 1988-1990
Clyde C. Hopkins (64) Corporate Vice President President, Martin Marietta Energy
(1991) and President, Systems, Inc., 1988-1993
Energy Group (1993)
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
POSITIONS AND OFFICES PRINCIPAL OCCUPATION AND
NAME HELD WITH PARENT** BUSINESS EXPERIENCE**
(AGE AT 3/30/94) (YEAR ELECTED) (PAST FIVE YEARS)
- ------------------------- ------------------------- ---------------------------------------
<S> <C> <C>
Alexander L. Horvath (52) Corporate Vice President Vice President and General Manager, GE
(1993); President, Martin Ocean, Radar & Sensor Systems,++ 1992-
Marietta Ocean, Radar & 1993; General Manager, GE,++ 1989-1992
Sensor Systems (1993)
Bobby F. Leonard (61) Corporate Vice President,
Human Resources (1981)
James W. McAnally (57) President, Martin President, Martin Marietta Defense
Marietta Astronautics Systems & Communications, 1987-1993
(1993)
Janet L. McGregor (40) Treasurer (1992) Deputy Treasurer, 1991-1992; Assistant
Treasurer, 1984-1991
Frank H. Menaker, Jr. Corporate Vice President
(53) (1982) and General
Counsel (1981)
Dan A. Peterson (63) Corporate Vice President President, Information Systems,
(1986), and Vice 1986-1989
President, Washington
Operations (1989)
Robert J. Polutchko (56) Corporate Vice President Vice President, Technical Operations,
(1991) and Vice 1991-1993; President, Information
President, Space Group Systems Group, 1989-1991; President,
Technical Operations Martin Marietta Communications Systems,
(1993) 1988-1989
Michael A. Smith (50) Corporate Vice President Vice President and General Manager of
(1993); President, Martin General Electric Company,++ 1989-1993
Marietta Astro Space
(1993)
Peter B. Teets (52) Corporate Vice President
(1985) and President,
Space Group (1993)
Stephen P. Zelnak, Jr. Corporate Vice President
(49) (1989) and President,
Materials Group (1993)***
A. James Clark* (66) Director (since 1981), Mr. Clark has served since 1987 as
member of the Chairman of the Board of Clark
Compensation, Executive, Enterprises, Inc., a holding company
and Finance Committees engaged in the construction business.
He has also served as its President
since 1972. Mr. Clark serves on the
Boards of Directors of GEICO
Corporation and Potomac Electric Power
Company. In addition, Mr. Clark is a
member of the Board of Trustees of The
Johns Hopkins University.
</TABLE>
I-2
<PAGE> 36
<TABLE>
<CAPTION>
POSITIONS AND OFFICES PRINCIPAL OCCUPATION AND
NAME HELD WITH PARENT** BUSINESS EXPERIENCE**
(AGE AT 3/30/94) (YEAR ELECTED) (PAST FIVE YEARS)
- ------------------------- ------------------------- ---------------------------------------
<S> <C> <C>
Edwin I. Colodny* (67) Director (since 1987), Mr. Colodny is Of Counsel to Paul,
member of the Executive, Hastings, Janofsky & Walker. He served
Finance, and Nominating as Chief Executive Officer of USAir,
Committees Inc. from 1975 until retiring in June
1991 and as Chairman of the Board of
USAir, Inc. from 1978 until July 1992.
He also served as Chairman of the Board
of USAir Group, Inc. from 1983 until
retiring from that position in July
1992. Mr. Colodny serves on the Board
of Directors of USAir Group, Inc.,
USAir Inc., COMSAT Corporation,
Esterline Technologies Corp., and the
United States Chamber of Commerce. In
addition, Mr. Colodny is a member of
the Board of Trustees of the University
of Rochester.
James L. Everett, III* Director (since 1976), Mr. Everett was elected Chief Executive
(67) Chairman of the Officer of Philadelphia Electric
Nominating Committee, Company in 1978 and Chairman of its
member of the Audit and Board of Directors in 1982. He
Ethics and Compensation continued to serve in those capacities
Committees until his retirement in 1988. He serves
on the Boards of Directors of Phillips
& Jacobs, Inc. and Tasty Baking
Company.
Allen E. Murray* (65) Director (since 1991), Mr. Murray was Chairman of the Board
Chairman of the and Chief Executive Officer of Mobil
Compensation Committee, Corporation from 1986 until his
member of the Audit and retirement on March 1, 1994. He serves
Ethics Committee on the Boards of Directors of
Metropolitan Life Insurance Company,
Minnesota Mining and Manufacturing
Company, and Morgan Stanley Group Inc.
Mr. Murray is also a member of the
Board of Trustees of New York
University, a member of the Chase
International Advisory Committee, and
serves as a Director of the American
Petroleum Institute. In addition, Mr.
Murray is a member of The Business
Council, The Business Roundtable, The
Council on Foreign Relations, and The
Trilateral Commission.
</TABLE>
I-3
<PAGE> 37
<TABLE>
<CAPTION>
POSITIONS AND OFFICES PRINCIPAL OCCUPATION AND
NAME HELD WITH PARENT** BUSINESS EXPERIENCE**
(AGE AT 3/30/94) (YEAR ELECTED) (PAST FIVE YEARS)
- ------------------------- ------------------------- ---------------------------------------
<S> <C> <C>
Caleb H. Hurtt* (62) Director (since 1987), Mr. Hurtt was President and Chief
member of the Operating Officer of the Corporation
Compensation, Executive, from 1987 until his retirement in
and Finance Committees January 1990. He was its Executive Vice
President in 1987 and a Senior Vice
President from 1983 to 1987. Mr. Hurtt
is Vice Chairman of the Board of
Trustees of Stevens Institute of
Technology. He was Chairman of the
Board of Governors of the Aerospace
Industries Association in 1989 and is a
past Chairman of the NASA Advisory
Council.
Melvin R. Laird* (71) Director (since 1981), Mr. Laird has served as a Director of
member of the Audit and The Reader's Digest Association, Inc.
Ethics, Executive, and since 1990 and as its Senior Counsellor
Nominating Committees for National and International Affairs
since 1974. He served as a United
States Congressman for nine terms, as
U.S. Secretary of Defense, and as a
Presidential Counsellor. Mr. Laird is
Chairman of the Board of Directors of
COMSAT Corporation. He serves on the
Boards of Directors of IDS Mutual Fund
Group, Metropolitan Life Insurance
Company, Science Applications
International Corporation, and The
Wallace-Reader's Digest Funds. Mr.
Laird is a Director Emeritus of
Northwest Airlines, Inc. and is a
member of the Public Oversight Board of
the American Institute of Certified
Public Accountants.
Gordon S. Macklin* (65) Director (since 1992), Mr. Macklin is Chairman of White River
Chairman of the Audit and Corporation, a financial services
Ethics Committee, member company. He served as Chairman of the
of the Executive and Board of Hambrecht & Quist, Inc., a
Finance Committees venture capital and investment banking
company, from 1987 until his retirement
in April 1992 and was President of the
National Association of Securities
Dealers, Inc. from 1970 until 1987. He
is also a former director of H&Q
Healthcare Investors. Mr. Macklin
serves on the Boards of Directors of
Fund American Enterprises Holdings,
Inc. and MCI Communications
Corporation. In addition, he serves as
Director of certain of the investment
companies in the Templeton Group of
Funds and as Director, Trustee or
Managing General Partner, as the case
may be, of most of the investment
companies in the Franklin Group of
Funds.
</TABLE>
I-4
<PAGE> 38
<TABLE>
<CAPTION>
POSITIONS AND OFFICES PRINCIPAL OCCUPATION AND
NAME HELD WITH PARENT** BUSINESS EXPERIENCE**
(AGE AT 3/30/94) (YEAR ELECTED) (PAST FIVE YEARS)
- ------------------------- ------------------------- ---------------------------------------
<S> <C> <C>
Eugene F. Murphy* (58) Director (since 1993), Mr. Murphy is President and Chief
member of the Executive Officer of GE Aircraft
Compensation and Finance Engines. Until the Aerospace businesses
Committees of General Electric ("GE Aerospace")
were combined with the businesses of
the Corporation in April 1993, he was
President and Chief Executive Officer
of GE Aerospace. Prior to 1992, he was
Senior Vice President of GE
Communications & Services. Mr. Murphy
became a Senior Vice President of GE
upon its merger with RCA Corporation in
1986. He was a member of President
Reagan's National Security
Telecommunications Advisory Committee
and is a former Chairman and permanent
member of the Board of Directors of the
Armed Forces Communications and
Electronics Association. In addition,
Mr. Murphy is a member of the Aerospace
Industries Association Board of
Governors.
John W. Vessey, Jr.* (71) Director (since 1985), General Vessey was Chairman of the
member of the Audit and Joint Chiefs of Staff from 1982 until
Ethics, Executive, and his retirement from active military
Nominating Committees duty in October 1985 after 44 years in
the armed services. He serves on the
Boards of Directors of National
Computer Systems, Inc., Youth Service
USA Inc., and The National Flag Day
Foundation. He also serves on the Board
of Advisors of GA Technologies, Inc.
Lamar Alexander* (53) Director (since 1993), Mr. Alexander is counsel to Baker,
member of the Audit and Worthington, Crossley, Stansberry &
Ethics and Compensation Woolf of Nashville, Tennessee. He
Committees served as U.S. Secretary of Education
from March 1991 until January 1993. He
was President of The University of
Tennessee from July 1988 until March
1991, and he served as the Governor of
the State of Tennessee from 1979 to
1987. Mr. Alexander served on the
Corporation's Board of Directors from
1989 until his confirmation as U.S.
Secretary of Education.
</TABLE>
I-5
<PAGE> 39
<TABLE>
<CAPTION>
POSITIONS AND OFFICES PRINCIPAL OCCUPATION AND
NAME HELD WITH PARENT** BUSINESS EXPERIENCE**
(AGE AT 3/30/94) (YEAR ELECTED) (PAST FIVE YEARS)
- ------------------------- ------------------------- ---------------------------------------
<S> <C> <C>
John J. Byrne* (61) Director (since 1978), Mr. Byrne has been Chairman of the
Chairman of the Finance Board and Chief Executive Officer of
Committee, member of the Fund American Enterprises Holdings,
Nominating Committee Inc. (formerly Fireman's Fund
Corporation) since 1985. In addition to
the Boards of Fund American and its
subsidiary, Source One Mortgage
Company, he serves on the Boards of
Directors of New Dartmouth Bank, LTD,
Zurich Reinsurance Centre, Inc.,
Special Olympics International,
American Academy of Actuaries, and is
an Advisory Director of Potomac
Electric Power Company. Mr. Byrne is an
Overseer of the Amos Tuck School of
Business Administration of Dartmouth
College and, the Rutgers University
Foundation.
Edward L. Hennessy, Jr.* Director (since 1983), Mr. Hennessy served as Chairman of the
(65) member of the Board and Chief Executive Officer of
Compensation and AlliedSignal Inc. from May 1979 through
Nominating Committees June 1991. He served as Chairman of
AlliedSignal Inc. from July 1991
through December 1991. Mr. Hennessy
serves on the Boards of Directors of
The Bank of New York, Titan
Pharmaceuticals, Inc., Dycom
Industries, Inc., The Wackenhut
Corporation, and Walden Residential
Properties, Inc. He is a Trustee and
Chairman of the Board of Fairleigh
Dickinson University.
Edward E. Hood, Jr.* (63) Director (since 1993), Mr. Hood joined GE in 1957 after
member of the Audit and service in the U.S. Air Force. He was
Ethics, Executive, and elected a Vice President of GE in 1968
Finance Committees and was Vice Chairman and Executive
Officer of GE in 1979. He was a
Director of GE from 1980 until his
retirement in 1993. Mr. Hood is a
Director of FlightSafety International,
Inc. and the Lincoln Electric Company.
He also serves as Chairman of the Board
of Trustees of Rensselaer Polytechnic
Institute.
</TABLE>
I-6
<PAGE> 40
<TABLE>
<CAPTION>
POSITIONS AND OFFICES PRINCIPAL OCCUPATION AND
NAME HELD WITH PARENT** BUSINESS EXPERIENCE**
(AGE AT 3/30/94) (YEAR ELECTED) (PAST FIVE YEARS)
- ------------------------- ------------------------- ---------------------------------------
<S> <C> <C>
Gwendolyn S. King* (53) Director (since 1992), Mrs. King has been Senior Vice
member of the Audit and President of Corporate and Public
Ethics and Finance Affairs for Philadelphia Electric
Committees Company since October 1992. She served
as Commissioner of the Social Security
Administration from August 1989 through
September 1992. From March 1988 to July
1989, Mrs. King was Executive Vice
President of Gogol & Associates in
Washington, D.C. Mrs. King serves on
the Board of Directors of Monsanto
Company.
</TABLE>
- ---------------
** In April 1993, as a result of the Combination, all of the Executive Officers
of Technologies (then known as Martin Marietta Corporation) assumed the same
offices with Parent and all of the directors of Technologies (then known as
Martin Marietta Corporation) assumed the same positions with Parent. The
above listing does not distinguish between their service with the two
corporations. Mr. Hood and Mr. Murphy assumed their offices in 1993 in
connection with the Combination.
*** In November 1993, Parent's aggregates business and the Common Stock of
Martin Marietta Magnesia Specialties Inc. were transferred to a subsidiary,
Martin Marietta Materials, Inc. On February 24, 1994, approximately 19% of
the common stock of Martin Marietta Materials, Inc. was sold to the public.
Mr. Zelnak is the President, Chief Executive Officer and a Director of
Martin Marietta Materials, Inc. Effective upon the completion of the
offering, Mr. Zelnak resigned his position as a corporate officer of Parent.
+ Route 38, Cherry Hill, New Jersey 08358
++ 3135 Eastern Turnpike, Fairfield, Connecticut 06431
I-7
<PAGE> 41
DIRECTORS AND EXECUTIVE OFFICERS OF
THE PURCHASER
The name, business address, present principal occupation or employment and
five-year employment history of each director and executive officer of Purchaser
and certain other information are set forth below. Unless otherwise indicated
below, the address of each director and officer is c/o Martin Marietta
Corporation, 6801 Rockledge Drive, Bethesda, Maryland 20817. Unless otherwise
indicated, each occupation set forth opposite an individual's name refers to
employment with Parent. All directors and officers listed below are citizens of
the United States. Directors are identified by a single asterisk.
<TABLE>
<CAPTION>
PRINCIPAL
POSITIONS AND OCCUPATION
OFFICES HELD AND BUSINESS
NAME WITH THE PURCHASER EXPERIENCE
(AGE AT 3/30/94) (YEAR ELECTED) (PAST FIVE YEARS)
- ---------------------------- ---------------------- -------------------------
<S> <C> <C>
John E. Montague* (40) President (1994) Vice President Corporate
Development and Investor
Relations (1991-1994);
Director of Corporate
Development (1988-1991)
Frank H. Menaker, Jr.* (53) Vice President (1994) Corporate Vice President
(1982) and General
Counsel (1981)
Janet L. McGregor (40) Treasurer (1994) Treasurer (1992); Deputy
Treasurer, 1991-1992;
Assistant Treasurer,
1984-1991
Lillian M. Trippett (40) Secretary (1994) Corporate Secretary and
Assistant General
Counsel, 1993 to present;
Director, Washington
Operation, 1989-1993;
Counsel, Subcommittee on
Science, Space and
Technology, U.S. House of
Representatives,
1986-1989
Marcus C. Bennett* (58) Corporate Vice President
(1984), Chief Financial
Officer (1988), and
Director (1993)
</TABLE>
I-8
<PAGE> 42
SCHEDULE II
CERTAIN INFORMATION ABOUT PARENT REQUIRED BY NEW YORK LAW
EDUCATIONAL OPPORTUNITIES
Parent provides assistance to eligible employees participating in study
programs leading to an undergraduate or an advanced degree. Such study programs
must be consistent with Parent's business goals and objectives and applicable to
the employee's field of work. Parent will reimburse the academic costs of
tuition for up to two courses per term.
RELOCATION ADJUSTMENTS
Parent may reimburse job applicants for reasonable and actual interview
expenses, and may reimburse new and existing employees for reasonable and actual
travel and relocation expenses in accordance with the provisions of corporate
policy.
CHARITABLE CONTRIBUTIONS
Parent supports a broad spectrum of public interest activities through a
gifts and grants program, with emphasis on recognized agencies in such fields as
health, education, civic affairs, and cultural activities.
POST-EMPLOYMENT BENEFIT PLANS
Parent sponsors a number of retirement plans that cover substantially all
employees. Defined benefit plans for salaried and certain hourly employees
provide benefits based on employees' years of service and compensation, either
on a final or career average basis. Defined benefit plans for other hourly
employees generally provide benefits of stated amounts for specified periods of
service. Certain health care and life insurance benefits are provided to
eligible retirees by Parent. For recently retired participants, the health
benefits generally provide for cost sharing through participant contributions
and copayments. For salaried employees who retired after 1992, there is an
annual limit on the Corporation's contribution per participant.
STOCK OPTION AND AWARD PLANS
Under Parent's Amended Omnibus Securities Award Plan (the "Plan"),
employees of Parent may be granted stock-based incentive awards, including
options to purchase common stock, stock appreciation rights, restricted stock or
other stock-based incentive awards. These awards may be granted singly or in
combination with other awards. To date, Parent has awarded stock options and
restricted stock under the Plan. The options to purchase its common stock are
granted at a price equal to the market value at the date of grant. These options
become exercisable in three approximately equal annual increments in multiples
of 100 on the first, second and third anniversary dates of such grants and
expire 10 years from such date. The Plan allows Parent to provide financing or
purchases, subject to certain conditions, by interest-bearing notes payable to
Parent. Parent also maintains other non-stock based award plans for its
employees, including the Amended and Restated Martin Marietta Corporation Long
Term Performance Incentive Compensation Plan pursuant to which units payable in
cash are granted to employees.
I-9
<PAGE> 43
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each shareholder
of the Company or his broker, dealer, commercial bank or other nominee to the
Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
P.O. Box 2564 (201) 222-4720 14 Wall Street, 8th Floor
Tenders & Exchanges or Suite 4660
Suite 4660 (201) 222-4721 New York, New York 10005
Jersey City, New Jersey
07303-2564
</TABLE>
Confirm Facsimile By Telephone:
(201) 222-4707
(Call Collect)
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. You may also contact your broker,
dealer, commercial bank or trust company or nominee for assistance concerning
the Offer.
The Information Agent for the Offer is:
[LOGO] MORROW & CO., INC.
909 Third Avenue
New York, New York 10022
(212) 754-8000 (collect)
OR
CALL TOLL FREE (800) 662-5200
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-7921
(Call Collect)
I-10
<PAGE> 44
EXHIBIT A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER,
DATED AS OF MARCH 6, 1994,
AMONG
MARTIN MARIETTA CORPORATION,
MMC ACQUISITION CORP.
AND
GRUMMAN CORPORATION.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 45
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 THE OFFER.................................................................... 1
SECTION 1.1. The Offer.............................................................. 1
SECTION 1.2. Company Action......................................................... 2
SECTION 1.3. Boards of Directors and Committees; Section 14(f)...................... 3
ARTICLE 2 THE MERGER................................................................... 4
SECTION 2.1. The Merger............................................................. 4
SECTION 2.2. Effective Time......................................................... 4
SECTION 2.3. Effects of the Merger.................................................. 4
SECTION 2.4. Certificate of Incorporation and By-Laws............................... 4
SECTION 2.5. Directors.............................................................. 4
SECTION 2.6. Officers............................................................... 4
SECTION 2.7. Conversion of Shares................................................... 4
SECTION 2.8. Stock Option Plans; MIP................................................ 5
SECTION 2.9. Shareholders' Meeting.................................................. 5
ARTICLE 3 DISSENTING SHARES; EXCHANGE OF SHARES........................................ 5
SECTION 3.1. Dissenting Shares...................................................... 5
SECTION 3.2. Payment for Shares..................................................... 6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................ 7
SECTION 4.1. Organization and Qualification; Subsidiaries........................... 7
SECTION 4.2. Capitalization of the Company and its Subsidiaries..................... 7
SECTION 4.3. Authority Relative to this Agreement; Consents and Approvals........... 8
SECTION 4.4. SEC Reports; Financial Statements...................................... 8
SECTION 4.5. Proxy Statement; Offer Documents....................................... 9
SECTION 4.6. Consents and Approvals; No Violations.................................. 9
SECTION 4.7. No Default............................................................. 10
SECTION 4.8. No Undisclosed Liabilities; Absence of Changes......................... 10
SECTION 4.9. Litigation............................................................. 10
SECTION 4.10. Compliance with Applicable Law......................................... 10
SECTION 4.11. Employee Plans......................................................... 10
SECTION 4.12. Environmental Laws and Regulations..................................... 11
SECTION 4.13. Rights Agreement....................................................... 11
SECTION 4.14. Brokers................................................................ 11
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION..................... 11
SECTION 5.1. Organization........................................................... 11
SECTION 5.2. Authority Relative to this Agreement................................... 11
SECTION 5.3. Consents and Approvals; No Violations.................................. 12
SECTION 5.4. Proxy Statement; Schedule 14D-9........................................ 12
SECTION 5.5. Financing.............................................................. 12
SECTION 5.6. No Prior Activities.................................................... 12
SECTION 5.7. Brokers................................................................ 12
</TABLE>
i
<PAGE> 46
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 6 COVENANTS.................................................................... 12
SECTION 6.1. Conduct of Business of the Company..................................... 12
SECTION 6.2. Other Potential Bidders................................................ 14
SECTION 6.3. Access to Information.................................................. 15
SECTION 6.4. Additional Agreements; Reasonable Efforts.............................. 15
SECTION 6.5. Consents............................................................... 15
SECTION 6.6. Public Announcements................................................... 16
SECTION 6.7. Indemnification; Directors' and Officers' Insurance.................... 16
SECTION 6.8. Notification of Certain Matters........................................ 16
SECTION 6.9. Guarantee of Performance............................................... 16
SECTION 6.10. Redemption of Rights................................................... 16
ARTICLE 7 CONDITIONS TO CONSUMMATION OF THE MERGER..................................... 17
SECTION 7.1. Conditions to Each Party's Obligations to Effect the Merger............ 17
ARTICLE 8 TERMINATION; AMENDMENT; WAIVER............................................... 17
SECTION 8.1. Termination............................................................ 17
SECTION 8.2. Effect of Termination.................................................. 18
SECTION 8.3. Fees and Expenses...................................................... 18
SECTION 8.4. Amendment.............................................................. 19
SECTION 8.5. Extension; Waiver...................................................... 19
ARTICLE 9 MISCELLANEOUS................................................................ 19
SECTION 9.1. Nonsurvival of Representations and Warranties.......................... 19
SECTION 9.2. Entire Agreement; Assignment........................................... 19
SECTION 9.3. Validity............................................................... 20
SECTION 9.4. Notices................................................................ 20
SECTION 9.5. Governing Law.......................................................... 20
SECTION 9.6. Descriptive Headings................................................... 20
SECTION 9.7. Parties in Interest.................................................... 20
SECTION 9.8. Counterparts........................................................... 20
</TABLE>
ii
<PAGE> 47
TABLE OF DEFINED TERMS
<TABLE>
<CAPTION>
CROSS REFERENCE
TERMS IN AGREEMENT
- ----------------------------------------------------------------------------- ---------------
<S> <C>
Acquisition.................................................................. Preamble
Balance Sheet................................................................ Section 4.4(a)
Board........................................................................ Recitals
Certificates................................................................. Section 3.2(b)
Code......................................................................... Section 4.11
Common Stock................................................................. Section 4.2(a)
Company...................................................................... Preamble
Company Permits.............................................................. Section 4.10
Company Securities........................................................... Section 4.2(a)
Dissenting Shares............................................................ Section 3.1
Effective Time............................................................... Section 2.2
Environmental Claim.......................................................... Section 4.12
Environmental Laws........................................................... Section 4.12
ERISA........................................................................ Section 4.11
Exchange Act................................................................. Section 1.3(b)
Exchange Agent............................................................... Section 3.2(a)
Exchange Fund................................................................ Section 3.2(a)
Financial Adviser............................................................ Section 1.2(a)
Governmental Entity.......................................................... Section 4.6
HSR Act...................................................................... Section 4.6
Lien......................................................................... Section 4.2(b)
Material Adverse Effect...................................................... Sections 4.1(a)
and 5.1
Merger....................................................................... Section 2.1
Merger Consideration......................................................... Section 2.7(a)
Minimum Condition............................................................ Section 1.1(a)
1993 Financial Statement..................................................... Section 4.4
NYBCL........................................................................ Section 1.2(a)
Offer........................................................................ Recitals
Offer Documents.............................................................. Section 1.1(b)
Option....................................................................... Section 2.8(a)
Parent....................................................................... Preamble
Per Share Amount............................................................. Recitals
Premium Amount............................................................... Section 6.7(b)
Proxy Statement.............................................................. Section 4.5
Rights....................................................................... Section 4.2(a)
Rights Agreement............................................................. Section 4.2(a)
Schedule 14D-9............................................................... Section 1.2(b)
Securities Act............................................................... Section 4.4
SEC.......................................................................... Section 1.1(b)
SEC Reports.................................................................. Section 4.4(a)
Shares....................................................................... Recitals
Shareholders' Meeting........................................................ Section 2.9(a)
Stock Plans.................................................................. Section 2.8(a)
Subsidiary................................................................... Section 4.1(a)
Surviving Corporation........................................................ Section 2.1
Third Party.................................................................. Section 8.3(a)
Third Party Acquisition...................................................... Section 8.3(a)
1993 Financial Statements.................................................... Section 4.4
</TABLE>
iii
<PAGE> 48
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 6, 1994, is among
MARTIN MARIETTA CORPORATION, a Maryland corporation ("Parent"), MMC ACQUISITION
CORP., a New York corporation and a wholly owned subsidiary of Parent
("Acquisition"), and GRUMMAN CORPORATION, a New York corporation ("Company").
WHEREAS, the Board of Directors of the Company (the "Board") has, in light
of and subject to the terms and conditions set forth herein, (i) determined that
each of the Offer and the Merger (each as defined below) is fair to the
shareholders of the Company and in the best interests of such shareholders and
(ii) approved and adopted this Agreement and the transactions contemplated
hereby and resolved to recommend acceptance of the Offer and approval and
adoption by the shareholders of the Company of this Agreement; and
WHEREAS, in furtherance thereof, it is proposed that Acquisition shall make
a tender offer (the "Offer") to acquire all of the outstanding shares of common
stock, par value $1.00 per share, of the Company (the "Shares"), together with
the associated Rights (as hereafter defined), at a price of $55.00 per Share
(such amount, or any greater amount per share paid pursuant to the Offer, being
hereinafter referred to as the "Per Share Amount"), net to the seller in cash,
in accordance with the terms and subject to the conditions provided herein.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, and intending to be
legally bound hereby, Parent, Acquisition and the Company hereby agree as
follows:
ARTICLE 1
THE OFFER
SECTION 1.1. The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.1 and none of the events or
conditions set forth in Annex A shall have occurred and be existing, Acquisition
shall commence the Offer not later than the fifth business day from and
including the date of initial public announcement of this Agreement and the
Offer. Acquisition shall accept for payment Shares which have been validly
tendered and not withdrawn pursuant to the Offer at the earliest time following
expiration of the Offer that all conditions to the Offer shall have been
satisfied or waived by Acquisition. The obligation of Acquisition to commence
the Offer shall be subject only to the conditions set forth in Annex A hereto
and the obligation of Acquisition to accept for payment, purchase and pay for
Shares tendered pursuant to the Offer shall be subject only to such conditions
and to the further condition that a number of Shares representing not less than
two-thirds of the Shares then outstanding on a fully diluted basis shall have
been validly tendered and not withdrawn prior to the expiration date of the
Offer (the "Minimum Condition"). Acquisition expressly reserves the right to
increase the price per Share payable in the Offer or to make any other changes
in the terms and conditions of the Offer (provided that, unless previously
approved by the Company in writing, no change may be made which decreases the
price per Share payable in the Offer, which changes the form of consideration to
be paid in the Offer, which reduces the maximum number of Shares to be purchased
in the Offer, which imposes conditions to the Offer in addition to those set
forth in Annex A hereto or which broadens the scope of such conditions). It is
agreed that the conditions set forth in Annex A are for the sole benefit of
Acquisition and may be asserted by Acquisition regardless of the circumstances
giving rise to any such condition (including any action or inaction by
Acquisition) or may be waived by Acquisition, in whole or in part at any time
and from time to time, in its sole discretion. The failure by 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. Any determination (which shall be
made in good faith) by Acquisition with respect to any of the foregoing
conditions (including, without limitation, the satisfaction of such conditions)
shall be final and binding on the parties. The Per Share Amount shall be paid
net to the seller in cash, less any required
1
<PAGE> 49
withholding of taxes, upon the terms and subject to such conditions of the
Offer. The Company agrees that no Shares held by the Company or any of its
subsidiaries will be tendered in the Offer.
(b) As soon as practicable on the date of commencement of the Offer,
Acquisition shall file with the Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer which will
contain the offer to purchase and form of the related letter of transmittal
(together with any supplements or amendments thereto, collectively the "Offer
Documents"). The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and the securities laws of the
State of New York. The information provided and to be provided by the Company,
Parent and Acquisition for use in the Offer Documents shall not, on the date
filed with the SEC and on the date first published or sent or given to the
Company's shareholders, 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 were made, not misleading. Parent, Acquisition
and the Company each agrees promptly to correct any information provided by it
for use in the Offer Documents if and to the extent that it shall have become
false or misleading in any material respect and Acquisition further agrees to
take all steps necessary to cause the Offer Documents 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 and the
securities laws of the State of New York.
SECTION 1.2. Company Action. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Board, at a meeting
duly called and held, has, subject to the terms and conditions set forth herein,
(i) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to, and in the best interests of,
the shareholders of the Company, (ii) approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, in all
respects and that such approval constitutes approval of the Offer, this
Agreement and the Merger for purposes of (A) Sections 902 and 912 of the New
York Business Corporation Law (the "NYBCL") and similar provisions of any other
similar state statutes that might be deemed applicable to the transactions
contemplated hereby, (B) paragraph 1(a) of Article SEVENTH of the Company's
certificate of incorporation and (C) Section 11(a)(ii)(B) of the Rights
Agreement, and (iii) resolved to recommend that the shareholders of the Company
accept the Offer, tender their Shares thereunder to Acquisition and approve and
adopt this Agreement and the Merger; provided, however, that such recommendation
may be withdrawn, modified or amended to the extent that the Board by a majority
vote determines in its good faith judgment, based as to legal matters on the
written opinion of legal counsel, that the Board is required to do so in the
exercise of its fiduciary duties. The Company consents to the inclusion of such
recommendation and approval in the Offer Documents. The Company further
represents that Goldman, Sachs & Co. (the "Financial Adviser") has delivered to
the Board its written opinion that the cash consideration to be received by the
shareholders of the Company pursuant to the Offer and the Merger is fair to such
shareholders. The Company has been authorized by the Financial Adviser to
permit, subject to the prior review and consent by the Financial Adviser (such
consent not to be unreasonably withheld), the inclusion of the fairness opinion
(or a reference thereto) in the Offer Documents, the Schedule 14D-9 and the
Proxy Statement.
(b) The Company hereby agrees to file with the SEC as soon as practicable
on the date of commencement of the Offer a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with any amendments or supplements thereto, the
"Schedule 14D-9") containing the recommendation described in Section 1.2(a) and
to mail the Schedule 14D-9 to the shareholders of the Company promptly after the
commencement of the Offer. The Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on the
date filed with the SEC and on the date first published, sent or given to the
Company's shareholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information supplied by Parent or
Acquisition in writing for inclusion in the Schedule 14D-9. The Company, Parent
and Acquisition each agrees 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 and the Company further agrees to
take all steps necessary to cause the Sched-
2
<PAGE> 50
ule 14D-9 as so corrected to be filed with the SEC and disseminated to the
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Notwithstanding anything to the contrary in this
Agreement, if the Board by majority vote determines in its good faith judgment,
based as to legal matters on the written opinion of legal counsel, that the
Board is required in the exercise of its fiduciary duties to withdraw, modify or
amend the recommendation of the Board, such withdrawal, modification or
amendment shall not constitute a breach of this Agreement.
(c) In connection with the Offer, the Company will promptly furnish Parent
and Acquisition with mailing labels, security position listings and any
available listing or computer files containing the names and addresses of the
record holders of the Shares as of a recent date and shall furnish Acquisition
with such additional information and assistance (including, without limitation,
updated lists of shareholders, mailing labels and lists of securities positions)
as Acquisition or its agents may reasonably request in communicating the Offer
to the record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Merger,
Parent, Acquisition and their affiliates, associates, agents and advisors shall
use the information contained in any such labels, listings and files only in
connection with the Offer and the Merger, and, if this Agreement shall be
terminated, will deliver to the Company all copies of such information then in
their possession.
SECTION 1.3. Boards of Directors and Committees; Section 14(f). (a)
Promptly upon the purchase by Acquisition of Shares pursuant to the Offer and
from time to time thereafter, and subject to the last sentence of this Section
1.3(a), Acquisition shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as will give
Acquisition representation on the Board equal to the product of the number of
directors on the Board (giving effect to any increase in the number of directors
pursuant to this Section 1.3) and the percentage that such number of Shares so
purchased bears to the total number of outstanding Shares on a fully-diluted
basis, and the Company shall use its best efforts to, upon request by
Acquisition, promptly, at the Company's election, either increase the size of
the Board (subject to the provisions of Article EIGHTH of the Company's
certificate of incorporation) or secure the resignation of such number of
directors as is necessary to enable Acquisition's designees to be elected to the
Board and to cause Acquisition's designees to be so elected. At such times, and
subject to the last sentence of this Section 1.3(a), the Company will use its
best efforts to cause persons designated by Acquisition to constitute the same
percentage as is on the Board of (i) each committee of the Board (other than any
committee of the Board established to take action under this Agreement), (ii)
each board of directors of each subsidiary of the Company and (iii) each
committee of each such board. Notwithstanding the foregoing, the Company shall
use its best efforts to ensure that three of the members of the Board as of the
date hereof shall remain members of the Board until the Effective Time (as
defined in Section 2.2 hereof).
(b) The Company's obligation to appoint designees to the Board shall be
subject to Section 14(f) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all action required pursuant to such Section and Rule in order to
fulfill its obligations under this Section 1.3 and shall include in the Schedule
14D-9 such information with respect to the Company and its officers and
directors as is required under such Section and Rule in order to fulfill its
obligations under this Section 1.3. Acquisition will 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 such Section and
Rule.
(c) Following the election or appointment of Acquisition's designees
pursuant to this Section 1.3 and prior to the Effective Time, if there shall be
any directors of the Company who were directors as of the date hereof, any
amendment of this Agreement, any termination of this Agreement by the Company,
any extension by the Company of the time for the performance of any of the
obligations or other acts of Acquisition or Parent or waiver of any of the
Company's rights hereunder, will require the concurrence of a majority of such
directors.
3
<PAGE> 51
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and in accordance with the NYBCL,
Acquisition shall be merged with and into the Company (the "Merger"). Following
the Merger, the Company shall continue as the surviving corporation (the
"Surviving Corporation") and the separate corporate existence of Acquisition
shall cease.
SECTION 2.2. Effective Time. As soon as practicable after the satisfaction
or waiver of the conditions set forth in Article 7, the parties hereto will
deliver a certificate of merger to the department of state of the State of New
York for filing and make all other filings or recordings required by the NYBCL
in connection with the Merger. Prior to the filing referred to in this Section
2.2, a closing will be held at the offices of Dewey Ballantine, 1301 Avenue of
the Americas, New York, New York 10019 (or such other place as the parties may
agree) for the purpose of confirming all of the foregoing. The Merger shall
become effective at such time as such certificate of merger is duly filed by the
Department of State of the State of New York, or at such later time as is
specified in such certificate of merger (the time the Merger becomes effective
being referred to herein as the "Effective Time").
SECTION 2.3. Effects of the Merger. The Merger shall have the effects set
forth in the NYBCL (including, without limitation, Section 906 thereof). Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, all the properties, rights, privileges, powers and franchises of the
Company and Acquisition shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Acquisition shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 2.4. Certificate of Incorporation and By-Laws. (a) The certificate
of incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law.
(b) The by-laws of the Company in effect at the Effective Time shall be the
by-laws of the Surviving Corporation until amended in accordance with applicable
law.
SECTION 2.5. Directors. The directors of Acquisition at the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation until such director's successor is duly elected or appointed and
qualified.
SECTION 2.6. Officers. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and By-Laws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
SECTION 2.7. Conversion of Shares. (a) Each Share issued and outstanding
immediately prior to the Effective Time (other than (i) Shares held in the
Company's treasury or by any of the Company's subsidiaries, (ii) Shares held by
Parent, Acquisition or any other subsidiary of Parent and (iii) Dissenting
Shares (as defined in Section 3.1 hereof)) together with the associated Rights,
shall, by virtue of the Merger and without any action on the part of
Acquisition, the Company or the holder thereof, be cancelled and extinguished
and be converted into the right to receive, pursuant to Section 3.2, the Per
Share Amount in cash (the "Merger Consideration"), payable to the holder
thereof, without interest thereon, upon the surrender of the certificate
formerly representing such Share, less any required withholding of taxes. Parent
and Acquisition shall take such action as may be necessary to cause Acquisition
to have outstanding, immediately prior to the Effective Time, the same number of
shares of common stock as the number of Shares then outstanding. At the
Effective Time, each outstanding share of the common stock, par value $.01 per
share, of Acquisition shall be converted into a share of common stock, par value
$1.00 per share, of the Surviving Corporation.
(b) Each Share held in the treasury of the Company and each Share held by
Parent, Acquisition or any subsidiary of Parent, Acquisition or the Company
immediately prior to the Effective Time shall, by virtue of
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the Merger and without any action on the part of Acquisition, the Company or the
holder thereof, be cancelled, retired and cease to exist and no payment shall be
made with respect thereto.
SECTION 2.8. Stock Option Plans; MIP. (a) The Company shall use all
reasonable efforts to cause all holders of options ("Options") to purchase
Shares granted under the 1981 Stock Option Plan of the Company, the 1990 Stock
Option Plan of the Company, the 1992 Long Term Incentive Plan of the Company or
any predecessor stock option or stock plan of the Company (collectively, the
"Stock Plans") which are outstanding immediately prior to the Effective Time to
exercise such Options prior to the Effective Time. The Company shall take such
action as is necessary under the Stock Plans to cause any Options that remain
outstanding after the Merger to thereafter be exercisable for a short-term debt
instrument of the Surviving Corporation in a face amount (and with an interest
rate and other terms designed to provide a fair value) equal to an amount
determined by multiplying the Merger Consideration by the number of Shares for
which such Option was theretofore exercisable.
(b) Prior to the Effective Time, the Company shall use all reasonable
efforts to (i) obtain any consents from individuals who are entitled to awards
under the Company's Management Incentive Plan ("MIP") and (ii) make any
amendments to the terms of such plan that are necessary to provide for future
distributions thereunder to be paid in the form of cash (and not in the form of
Shares).
SECTION 2.9. Shareholders' Meeting. The Company, acting through the Board,
shall in accordance with applicable law:
(i) duly call, give notice of, convene and hold an annual or special
meeting of its shareholders (the "Shareholders' Meeting"), to be held as
soon as practicable after May 18, 1994 (provided that Acquisition shall
have purchased Shares pursuant to the Offer) for the purpose of considering
and taking action upon this Agreement;
(ii) subject to its fiduciary duties as determined in good faith by a
majority of the Board, based as to legal matters on the written opinion of
legal counsel, include in the Proxy Statement the recommendation of the
Board that shareholders of the Company vote in favor of the approval and
adoption of this Agreement and the written opinion of the Financial Advisor
that the cash consideration to be received by the shareholders of the
Company pursuant to the Merger is fair to such shareholders; and
(iii) use all reasonable efforts (A) to obtain and furnish the
information required to be included by it in the Proxy Statement and, after
consultation with Parent and Acquisition, respond promptly to any comments
made by the SEC with respect to the Proxy Statement and any preliminary
version thereof and cause the Proxy Statement to be mailed to its
shareholders at the earliest practicable time following the expiration or
termination of the Offer and (B) subject to its fiduciary duties as
determined in good faith by a majority of the Board, based as to legal
matters on the written opinion of legal counsel, to obtain the necessary
approvals by its shareholders of this Agreement and the transactions
contemplated hereby.
At such meeting, Parent, Acquisition and their affiliates will vote all
Shares owned by them in favor of approval and adoption of this Agreement and the
transactions contemplated hereby.
ARTICLE 3
DISSENTING SHARES; EXCHANGE OF SHARES
SECTION 3.1. Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Shares outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing and who has demanded appraisal for such Shares in accordance with
Section 623 of the NYBCL ("Dissenting Shares") shall not be converted into a
right to receive the Merger Consideration, unless such holder fails to perfect
or withdraws or otherwise loses his right to appraisal. If, after the Effective
Time, such holder fails to perfect or withdraws or loses his right to appraisal,
such Shares shall be treated as if they had been converted as of the Effective
Time into a right to receive the Merger Consideration,
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without interest thereon. The Company shall give Parent and Acquisition prompt
notice of any demands received by the Company for appraisal of Shares, and,
prior to the Effective Time, Parent and Acquisition shall have the right to
direct all negotiations and proceedings with respect to such demands. Prior to
the Effective Time, the Company shall not, except with the prior written consent
of Parent or Acquisition, make any payment with respect to, or settle or offer
to settle, any such demands.
SECTION 3.2. Payment for Shares. (a) Prior to the Effective Time, Parent
and Acquisition shall designate a bank or trust company reasonably acceptable to
the Company to act as Exchange Agent in connection with the Merger (the
"Exchange Agent") pursuant to an exchange agency agreement providing for the
matters set forth in this Section 3.2 and otherwise reasonably satisfactory to
the Company. At or prior to the Effective Time, Parent or Acquisition will
provide the Exchange Agent with the funds necessary to make the payments
contemplated by Section 2.7(a) hereof (the "Exchange Fund").
(b) Promptly after the Effective Time, the Exchange Agent shall mail to
each record holder, as of the Effective Time, of an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "Certificates") a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent) and
instructions for use in effecting the surrender of the Certificates for payment
therefor. Upon surrender to the Exchange Agent of a Certificate, together with a
duly executed letter of transmittal and any other required documents, the holder
of such Certificate shall receive in exchange therefor (as promptly as
practicable) the consideration set forth in Section 2.7(a) hereof, without any
interest thereon, less any required withholding of taxes, and such Certificate
shall forthwith be cancelled. If payment is to be made to a person other than
the person in whose name a Certificate so surrendered is registered, it shall be
a condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer, that the signatures on the
Certificate or any related stock power shall be properly guaranteed and that the
person requesting such payment shall either pay any transfer or other taxes
required by reason of the payment to a person other than the registered holder
of the Certificate so surrendered or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.2(b), each
Certificate (other than Certificates representing Shares held in the Company's
treasury or by Acquisition, or by any subsidiary of the Company or Acquisition,
and other than Certificates representing Dissenting Shares) shall represent for
all purposes only the right to receive for each Share represented thereby the
consideration provided for under this Agreement.
(c) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation 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 cancelled
and exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article 3.
(d) From and after the Effective Time, the holders of Certificates
evidencing ownership of Shares outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares except as
otherwise provided herein or by applicable law. Such holders shall have no
rights, after the Effective Time, with respect to such Shares except to
surrender such Certificates in exchange for cash pursuant to this Agreement or
to perfect any rights of appraisal as a holder of Dissenting Shares that such
holders may have pursuant to Section 623 of the NYBCL.
(e) Any portion of the Exchange Fund (including the proceeds of any
investment thereof) that remains unclaimed by the shareholders of the Company
for six months after the Effective Time shall be repaid to the Surviving
Corporation. Any shareholders of the Company who have not theretofore complied
with this Article 3 shall thereafter look only to the Surviving Corporation for
payment of their claims for the consideration set forth in Section 2.7(a) hereof
for each Share such shareholder holds, without any interest thereon.
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(f) Notwithstanding anything to the contrary in this Section 3.2, none of
the Exchange Agent, Parent or the Surviving Corporation shall be liable to a
holder of a Certificate formerly representing Shares for any amount properly
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If Certificates are not surrendered prior to two years
after the Effective Time, unclaimed funds payable with respect to such
Certificates shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent and
Acquisition that, except as disclosed in the letter, dated the date hereof, from
the Company to Parent (the "Letter"):
SECTION 4.1. Organization and Qualification; Subsidiaries. (a) Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its businesses as now being conducted, except where
the failure to be so organized, existing and in good standing or to have such
power and authority would not, individually or in the aggregate, have a Material
Adverse Effect (as defined below) on the Company. The Company has heretofore
delivered to Acquisition or Parent accurate and complete copies of the
certificate of incorporation and by-laws, as currently in effect, of the Company
and promptly will deliver to Acquisition and Parent accurate and complete copies
of the certificate or articles of incorporation and by-laws, as currently in
effect, of each of its significant subsidiaries (as that term is defined in
Regulation S-X of the General Rules and Regulations under the Securities Act of
1933, as amended). When used in connection with the Company or any of its
subsidiaries, the term "Material Adverse Effect" means any change or effect
(other than changes or effects described in the Letter) that is or is reasonably
likely to be materially adverse to the business, results of operations or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
whole, other than any change or effect arising out of general economic
conditions unrelated to any businesses in which the Company is engaged.
(b) Each of the Company and its subsidiaries is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not, individually or in aggregate, have a Material Adverse Effect on the
Company.
SECTION 4.2. Capitalization of the Company and its Subsidiaries. (a) The
authorized capital stock of the Company consists of: 80,000,000 shares of common
stock, par value $1.00 per share (the "Common Stock"), of which, as of February
28, 1994, 33,935,448 Shares were issued and outstanding and 10,000,000 shares of
preferred stock, par value $1.00 per share, no shares of which are outstanding.
All of the Shares have been validly issued, and are fully paid, nonassessable
and free of preemptive rights. As of February 28, 1994, approximately 1,129,226
shares of Common Stock were reserved for issuance and issuable upon or otherwise
deliverable in connection with the exercise of outstanding Options. As of
February 28, 1994, performance share awards were outstanding with respect to a
maximum of 428,650 shares of Common Stock under the Company's Long Term
Incentive Plan with no more than an additional 30,000 shares of Common Stock
payable as dividend equivalents with respect to such share awards, and the
number of all such shares (including shares under the performance share awards
and the dividend equivalent shares thereon) will be doubled under such plan as a
result of any change of control as defined therein. As of February 28, 1994,
107,975.451 shares of Common Stock were deliverable in settlement of deferred
compensation under the MIP. Since February 28, 1994, no shares of the Company's
capital stock have been issued other than pursuant to stock options already in
existence on such date, and since February 28, 1994, no stock options have been
granted. Except as set forth above and except for the rights (the "Rights") to,
among other things, purchase Series A Junior Participating Preferred Stock
issued pursuant to the Rights Agreement, dated as of February 18, 1988 (the
"Rights Agreement"), between the Company and The Bank of New York, as Rights
Agent, there are outstanding (i) no shares of capital stock or other voting
securities of the Company, (ii) no
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securities of the Company or any of its subsidiaries convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
(iii) no options or other rights to acquire from the Company or any of its
subsidiaries, and no obligations of the Company or any of its subsidiaries to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company, and (iv) no
equity equivalents, interests in the ownership or earnings of the Company or any
of its subsidiaries or other similar rights (collectively, "Company
Securities"). There are no outstanding obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any Company Securities.
(b) Except for directors qualifying shares, if any, all of the outstanding
capital stock of, or other ownership interests in, each subsidiary of the
Company, is owned by the Company, directly or indirectly, free and clear of any
Lien (as hereinafter defined) or any other limitation or restriction (including
any restriction on the right to vote or sell the same, except as may be provided
as a matter of law). There are no securities of the Company or any of its
subsidiaries convertible into or exchangeable for, no options or other rights to
acquire from the Company or any of its subsidiaries, and no other contract,
understanding, arrangement or obligation (whether or not contingent) providing
for the issuance or sale, directly or indirectly, of any capital stock or other
ownership interests in, or any other securities of, any subsidiary of the
Company. There are no outstanding contractual obligations of the Company or any
of its subsidiaries to repurchase, redeem or otherwise acquire any outstanding
shares of capital stock or other ownership interests in any subsidiary of the
Company. For purposes of this Agreement, "Lien" means, with respect to any asset
(including, without limitation, any security) any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
(c) The Shares and the Rights constitute the only class of equity
securities of the Company or any of its subsidiaries registered or required to
be registered under the Exchange Act.
SECTION 4.3. Authority Relative to this Agreement; Consents and Approvals.
(a) The Company has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby (other than, with respect to the Merger, the approval and
adoption of this Agreement by the holders, including Acquisition, of two-thirds
of the then outstanding Shares). This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid, legal and binding
agreement of the Company, enforceable against the Company in accordance with its
terms.
(b) The Board has duly and validly approved, and taken all corporate
actions required to be taken by the Board for the consummation of, the
transactions, including the Offer and the acquisition of the Shares pursuant
thereto and the Merger, contemplated hereby, including but not limited to all
actions required to render the provisions of Section 912 of the NYBCL
restricting business combinations with "interested shareholders" inapplicable to
such transactions.
SECTION 4.4. SEC Reports; Financial Statements. (a) The Company has filed
all required forms, reports and documents with the SEC since January 1, 1990
(collectively, the "SEC Reports"), each of which has complied in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act each as in effect on the
dates so filed. The Company has heretofore delivered or promptly will deliver to
Acquisition or Parent, in the form filed with the SEC (including any amendments
thereto), (i) its Annual Reports on Form 10-K for each of the three fiscal years
ended December 31, 1990, 1991 and 1992 and Quarterly Reports on Form 10-Q for
the quarterly periods ended March 31, June 30, and September 30, 1993, (ii) all
definitive proxy statements relating to the Company's meetings of shareholders
(whether annual or special) held since January 1, 1990 and (iii) all other
reports (other than Quarterly Reports on Form 10-Q not listed above) or
registration statements filed by the Company with the SEC since January 1, 1990.
None of such forms, reports or documents, including, without limitation, any
financial statements or schedules included or incorporated by reference therein,
contained, when filed, any untrue statement of a material fact or omitted to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in light of the
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circumstances under which they were made, not misleading. The Company has also
delivered to Parent or Acquisition a true and complete copy of the audited
consolidated financial statements of the Company, including the notes thereto,
for the fiscal year ended December 31, 1993 (the "1993 Financial Statements").
The 1993 Financial Statements and the audited consolidated financial statements
and unaudited consolidated interim financial statements of the Company included
in its Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q
referred to in the first sentence of this Section 4.4(a) fairly present, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto), the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and their consolidated results of operations and changes in
financial position for the periods then ended (subject in the case of any
unaudited interim financial statements to normal recurring year-end audit
adjustments).
(b) The Company has heretofore made available or promptly will make
available to Acquisition or Parent a complete and correct copy of any amendments
or modifications, which have not yet been filed with the SEC, to agreements,
documents or other instruments which previously had been filed by the Company
with the SEC pursuant to the Exchange Act.
SECTION 4.5. Proxy Statement; Offer Documents. Any proxy or similar
materials distributed to the Company's shareholders in connection with the
Merger, including any amendments or supplements thereto (the "Proxy Statement"),
will comply in all material respects with applicable federal securities laws,
except that no representation is made by the Company with respect to information
supplied by Acquisition or Parent for inclusion in the Proxy Statement. None of
the information supplied by the Company in writing for inclusion in the Offer
Documents or provided by the Company in the Schedule 14D-9 will, at the
respective times that the Offer Documents and the Schedule 14D-9 or any
amendments or supplements thereto are filed with the SEC and are first published
or sent or given to holders of Shares, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
SECTION 4.6. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the filing and recordation of a
certificate of merger as required by the NYBCL, no filing with or notice to, and
no permit, authorization, consent or approval of, any court or tribunal or
administrative, governmental or regulatory body, agency or authority (a
"Governmental Entity") is necessary for the execution and delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on the Company. Neither the
execution, delivery and performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
certificate of incorporation or by-laws (or similar governing documents) of the
Company or of any its subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound, other than
breaches or defaults under loan agreements resulting from the existence of
indebtedness on the part of Acquisition, or (iii) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company
or any of its subsidiaries or any of their respective properties or assets,
except in the case of(ii)or (iii) for violations, breaches or defaults which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
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SECTION 4.7. No Default. None of the Company or any of its subsidiaries is
in default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a default or violation) of any term,
condition or provision of (i) its certificate of incorporation or by-laws (or
similar governing documents), (ii) any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which the
Company or any of its subsidiaries is now a party or by which any of them or any
of their respective properties or assets may be bound or (iii) any order, writ,
injunction, decree, law, statute, rule or regulation applicable to the Company,
any of its subsidiaries or any of their respective properties or assets, except
in the case of (ii) or (iii) for violations, breaches or defaults that would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company.
SECTION 4.8. No Undisclosed Liabilities; Absence of Changes. Except as and
to the extent publicly disclosed by the Company, as of December 31, 1993,
neither the Company nor any of its subsidiaries had any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, that
would be required by generally accepted accounting principles to be reflected on
a consolidated balance sheet of the Company and its subsidiaries (including the
notes thereto) or, which would have, individually or in the aggregate, a
Material Adverse Effect on the Company. Except as publicly disclosed by the
Company, since December 31, 1993, neither the Company nor any of its
subsidiaries has incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, which would have, and there have been no events,
changes or effects with respect to the Company and its subsidiaries having,
individually or in the aggregate, a Material Adverse Effect on the Company.
SECTION 4.9. Litigation. Except as publicly disclosed by the Company, there
is no suit, claim, action, proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries or any of their respective properties or assets before any
Governmental Entity which, individually or in the aggregate, would have a
Material Adverse Effect on the Company or would prevent or delay the
consummation of the transactions contemplated by this Agreement. Except as
publicly disclosed by the Company, neither the Company nor any of its
subsidiaries is subject to any outstanding order, writ, injunction or decree
which, insofar as can be reasonably foreseen, individually or in the aggregate,
in the future would have a Material Adverse Effect on the Company or would
prevent or delay the consummation of the transactions contemplated hereby.
SECTION 4.10. Compliance with Applicable Law. Except as publicly disclosed
by the Company, the Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the "Company
Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company. Except as publicly
disclosed by the Company, the Company and its subsidiaries are in compliance
with the terms of the Company Permits, except where the failure so to comply
would not have a Material Adverse Effect on the Company. Except as publicly
disclosed by the Company, the businesses of the Company and its subsidiaries are
not being conducted in violation of any law, ordinance or regulation of any
Governmental Entity except that no representation or warranty is made in this
Section 4.10 with respect to Environmental Laws (as defined in Section 4.12
below) and except for violations or possible violations which individually or in
the aggregate do not, and, insofar as reasonably can be foreseen, in the future
will not, have a Material Adverse Effect on the Company. Except as publicly
disclosed by the Company, no investigation or review by any Governmental Entity
with respect to the Company or any of its subsidiaries is pending or, to the
best knowledge of the Company, threatened, nor, to the best knowledge of the
Company, has any Governmental Entity indicated an intention to conduct the same,
other than, in each case, those which the Company reasonably believes will not
have a Material Adverse Effect on the Company.
SECTION 4.11. Employee Plans. All "employee benefit plans" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), maintained or contributed to by the Company and its subsidiaries are
in compliance with the applicable provisions of ERISA and the Internal Revenue
Code of 1986, as amended (the "Code"), except for instances of non-compliance
that individually or in the aggregate would not have a Material Adverse Effect
on the Company.
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SECTION 4.12. Environmental Laws and Regulations. (a) Except as publicly
disclosed by the Company, (i) the Company and each of its subsidiaries is in
material compliance with all applicable federal, state and local laws and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata) (collectively, "Environmental Laws"),
except for non-compliance that individually or in the aggregate would not have a
Material Adverse Effect on the Company, which compliance includes, but is not
limited to, the possession by the Company and its subsidiaries of all material
permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof; (ii)
neither the Company nor any of its subsidiaries has received written notice of,
or, to the best knowledge of the Company, is the subject of, any action, cause
of action, claim, investigation, demand or notice by any person or entity
alleging liability under or non-compliance with any Environmental Law (an
"Environmental Claim") that individually or in the aggregate would have a
Material Adverse Effect on the Company; and (iii) to the best knowledge of the
Company, there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
(b) Except as publicly disclosed by the Company, there are no Environmental
Claims which individually or in the aggregate would have a Material Adverse
Effect on the Company that are pending or, to the best knowledge of the Company,
threatened against the Company or any of its subsidiaries or, to the best
knowledge of the Company, against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has or may have
retained or assumed either contractually or by operation of law.
SECTION 4.13. Rights Agreement. The Company has taken all necessary action
so that none of the execution of this Agreement, the making of the Offer, the
acquisition of Shares pursuant to the Offer or the consummation of the Merger
will (i) cause the Rights issued pursuant to the Rights Agreement to become
exercisable, (ii) cause any person to become an Acquiring Person (as such term
is defined in the Rights Agreement) or (iii) give rise to a Distribution Date or
a Triggering Event (as each such term is defined in the Rights Agreement).
SECTION 4.14. Brokers. No broker, finder or investment banker (other than
the Financial Adviser, a true and correct copy of whose engagement agreement has
been provided to Acquisition or Parent) is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by and on behalf of the Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the Company as
follows:
SECTION 5.1. Organization. Each of Parent and Acquisition is a corporation
duly organized, validly existing and in good standing under the laws of the
States of Maryland and New York, respectively, and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority would not in
the aggregate have a Material Adverse Effect (as defined below) on Parent or
Acquisition. When used in connection with Parent or Acquisition, the term
"Material Adverse Effect" means any change or effect that is materially adverse
to the business, results of operations or condition (financial or otherwise) of
Parent and its subsidiaries, taken as a whole, other than any change or effect
arising out of general economic conditions unrelated to any businesses in which
Parent and its subsidiaries are engaged.
SECTION 5.2. Authority Relative to this Agreement. Each of Parent and
Acquisition has all necessary corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
boards of directors of Parent and Acquisition and by Parent as the sole
shareholder of Acquisition, and no other corporate proceedings on the
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part of Parent or Acquisition are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Acquisition and
constitutes a valid, legal and binding agreement of each of Parent and
Acquisition, enforceable against each of Parent and Acquisition in accordance
with its terms.
SECTION 5.3. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, state
securities or blue sky laws, the HSR Act, and the filing and recordation of a
certificate of merger as required by the NYBCL, no filing with or notice to, and
no permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery by Parent or Acquisition of this
Agreement or the consummation by Parent or Acquisition of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a material adverse effect on the ability of Parent or
Acquisition to consummate the Offer or the Merger. Neither the execution,
delivery and performance of this Agreement by Parent or Acquisition nor the
consummation by Parent or Acquisition of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of the
respective certificate of incorporation or by-laws (or similar governing
documents) of Parent or Acquisition or any of Parent's subsidiaries, (ii) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Parent or Acquisition or any of Parent's
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound or (iii) violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to Parent or Acquisition or
any of Parent's subsidiaries or any of their respective properties or assets,
except in the case of (ii) or (iii) for violations, breaches or defaults which
would not, individually or in the aggregate, have a material adverse effect on
the ability of Parent or Acquisition to consummate the Offer or the Merger.
SECTION 5.4. Proxy Statement; Schedule 14D-9. None of the information
supplied by Parent or Acquisition in writing for inclusion in the Proxy
Statement or the Schedule 14D-9 will, at the respective times that the Proxy
Statement and the Schedule 14D-9 or any amendments or supplements thereto are
filed with the SEC and are first published or sent or given to holders of
Shares, and in the case of the Proxy Statement, at the time that it or any
amendment or supplement thereto is mailed to the Company's shareholders, at the
time of the Shareholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
SECTION 5.5. Financing. Either Parent or Acquisition has or will have
sufficient funds available to purchase all of the Shares outstanding on a fully
diluted basis and to pay all related fees and expenses.
SECTION 5.6. No Prior Activities. Except for obligations incurred in
connection with its incorporation or organization or the negotiation and
consummation of this Agreement and the transactions contemplated hereby,
Acquisition has neither incurred any obligation or liability nor engaged in any
business or activity of any type or kind whatsoever or entered into any
agreement or arrangement with any person or entity.
SECTION 5.7. Brokers. Except for Bear, Stearns & Co. Inc. (a true and
correct copy of whose engagement agreement has been provided to the Company), no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of Parent or
Acquisition.
ARTICLE 6
COVENANTS
SECTION 6.1. Conduct of Business of the Company. Except as contemplated by
this Agreement, during the period from the date hereof to the time persons
designated or elected by Acquisition or any of its affiliates shall constitute a
majority of the Board, the Board will not permit the Company or any of its
subsidiaries to
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conduct its operations otherwise than in the ordinary course of business
consistent with past practice. Without limiting the generality of the foregoing,
and except as otherwise expressly provided in this Agreement, prior to the time
persons designated or elected by Acquisition or any of its affiliates shall
constitute a majority of the Board, the Board will not, without the prior
written consent of Parent or Acquisition, permit the Company or any of its
subsidiaries to:
(a) amend or propose to amend its certificate or articles of
incorporation or by-laws;
(b) authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities or equity
equivalents (including, without limitation, any stock options or stock
appreciation rights), except as required by agreements with the Company's
employees under the Stock Plans as in effect as of the date hereof or
pursuant to the Rights Agreement, and except deliveries of certificates for
Shares issued prior to the date hereof pursuant to the Company's Restricted
Stock Award Plan, or amend any of the terms of any such securities or
agreements outstanding as of the date hereof, except as specifically
contemplated by this Agreement;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, or redeem or otherwise acquire any of its securities or any
securities of its subsidiaries;
(d) (i) incur or assume any long-term or short-term debt or issue any
debt securities except for borrowings under existing lines of credit in the
ordinary course of business and in amounts not material to the Company and
its subsidiaries taken as a whole; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person except in the ordinary
course of business consistent with past practice and in amounts not
material to the Company and its subsidiaries, taken as a whole, and except
for obligations of wholly owned subsidiaries of the Company; (iii) make any
loans, advances or capital contributions to, or investments in, any other
person (other than to wholly owned subsidiaries of the Company or customary
loans or advances to employees in the ordinary course of business
consistent with past practice and in amounts not material to the maker of
such loan or advance); (iv) pledge or otherwise encumber shares of capital
stock of the Company or any of its subsidiaries; or (v) mortgage or pledge
any of its material assets, tangible or intangible, or create or suffer to
exist any material Lien thereupon, except as disclosed in the Letter;
(e) except as may be required by law or as contemplated by this
Agreement, enter into, adopt or amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, stock equivalent,
stock purchase agreement, pension, retirement, deferred compensation,
employment, severance or other employee benefit agreement, trust, plan,
fund or other arrangement for the benefit or welfare of any director,
officer or employee in any manner, or (except for normal increases in the
ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company, and as required under existing agreements or in the
ordinary course of business generally consistent with past practice)
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any plan and
arrangement as in effect as of the date hereof (including, without
limitation, the granting of stock appreciation rights or performance
units);
(f) except as disclosed in the Letter, acquire, sell, lease or dispose
of any assets outside the ordinary course of business or any assets which
in the aggregate are material to the Company and its subsidiaries taken as
a whole, or enter into any commitment or transaction outside the ordinary
course of business consistent with past practice which would be material to
the Company and its subsidiaries taken as a whole;
(g) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
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(h) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off
notes or accounts receivable other than in the ordinary course of business;
(i) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) enter into any
contract or agreement other than in the ordinary course of business
consistent with past practice which would be material to the Company and
its subsidiaries taken as a whole; (iii) authorize any new capital
expenditure or expenditures which, individually, is in excess of $2,500,000
or, in the aggregate, are in excess of $25,000,000; provided, that none of
the foregoing shall limit any capital expenditure already included in the
Company's 1994 capital expenditure budget previously provided to Parent or
Acquisition; or (iv) enter into or amend any contract, agreement,
commitment or arrangement providing for the taking of any action that would
be prohibited hereunder;
(j) make any tax election or settle or compromise any income tax
liability material to the Company and its subsidiaries taken as a whole;
(k) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in, or contemplated
by, the consolidated financial statements (or the notes thereto) of the
Company and its subsidiaries or incurred in the ordinary course of business
consistent with past practice;
(l) settle or compromise any pending or threatened suit, action or
claim relating to the transactions contemplated hereby; or
(m) take, or agree in writing or otherwise to take, any of the actions
described in Sections 6.1(a) through 6.1(l) or any action which would make
any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect as of the date when made or would result in
any of the conditions set forth in Annex A not being satisfied.
SECTION 6.2. Other Potential Bidders. The Company, its affiliates and their
respective officers, directors, employees, representatives and agents shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any acquisition of all or any
material portion of the assets of, or any equity interest in, the Company or any
of its subsidiaries or any business combination with the Company or any of its
subsidiaries, other than as described in the Letter. The Company may, directly
or indirectly, furnish information and access, in each case only in response to
unsolicited requests therefor, to any corporation, partnership, person or other
entity or group pursuant to confidentiality agreements, and may participate in
discussions and negotiate with such entity or group concerning any merger, sale
of assets, sale of shares of capital stock or similar transaction involving the
Company or any subsidiary or division of the Company, if such entity or group
has submitted a written proposal to the Board relating to any such transaction
and the Board by a majority vote determines in its good faith judgment, based as
to legal matters on the written opinion of legal counsel, that failing to take
such action would constitute a breach of the Board's fiduciary duty. The Board
shall provide a copy of any such written proposal to Parent or Acquisition
immediately after receipt thereof and thereafter keep Parent and Acquisition
promptly advised of any development with respect thereto. Except as set forth
above, neither the Company or any of its affiliates, nor any of its or their
respective officers, directors, employees, representatives or agents, shall,
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent and
Acquisition, any affiliate or associate of Parent and Acquisition or any
designees of Parent and Acquisition) concerning any merger, sale of assets, sale
of shares of capital stock or similar transaction involving the Company or any
subsidiary or division of the Company; provided, however, that nothing herein
shall prevent the Board from taking, and disclosing to the Company's
shareholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to any tender offer; provided, further, that the
Board shall not recommend that the shareholders of the Company tender their
Shares in connection with any
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such tender offer unless the Board by a majority vote determines in its good
faith judgment, based as to legal matters on the written opinion of legal
counsel, that failing to take such action would constitute a breach of the
Board's fiduciary duty.
SECTION 6.3. Access to Information. (a) Between the date hereof and the
Effective Time, the Company will give Parent and Acquisition and their
authorized representatives reasonable access to all employees, plants, offices,
warehouses and other facilities and to all books and records of the Company and
its subsidiaries, will permit Parent and Acquisition to make such inspections as
Parent and Acquisition may reasonably require and will cause the Company's
officers and those of its subsidiaries to furnish Parent and Acquisition with
such financial and operating data and other information with respect to the
business and properties of the Company and any of its subsidiaries as Parent or
Acquisition may from time to time reasonably request.
(b) Each of Parent and Acquisition will hold and will cause its consultants
and advisors to hold in confidence, unless compelled to disclose by judicial or
administrative process or, in the written opinion of its legal counsel, by other
requirements of law, all documents and information concerning the Company and
its subsidiaries furnished to Parent or Acquisition in connection with the
transactions contemplated by this Agreement (except to the extent that such
information can be shown to have been (i) previously known by Parent or
Acquisition from sources other than the Company, or its directors, officers,
representatives or affiliates, (ii) in the public domain through no fault of
Parent or Acquisition or (iii) later lawfully acquired by Parent or Acquisition
on a non-confidential basis from other sources who are not known by Parent or
Acquisition to be bound by a confidentiality agreement or otherwise prohibited
from transmitting the information to Parent or Acquisition by a contractual,
legal or fiduciary obligation) and will not release or disclose such information
to any other person, except its auditors, attorneys, financial advisors and
other consultants and advisors in connection with this Agreement who need to
know such information. If the transactions contemplated by this Agreement are
not consummated, such confidence shall be maintained and, if requested by or on
behalf of the Company, Parent and Acquisition will, and will use all reasonable
efforts to cause their auditors, attorneys, financial advisors and other
consultants, agents and representatives to, return to the Company or destroy all
copies of written information furnished by the Company to Parent and Acquisition
or their agents, representatives or advisors. It is understood that Parent and
Acquisition shall be deemed to have satisfied their obligation to hold such
information confidential if they exercise the same care as they take to preserve
confidentiality for their own similar information.
SECTION 6.4. Additional Agreements; Reasonable Efforts. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
all reasonable efforts to take, or cause to be taken, all action, 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, including, without limitation, (i)
cooperation in the preparation and filing of the Offer Documents, the Schedule
14D-9, the Proxy Statement, any filings that may be required under the HSR Act,
and any amendments to any thereof; (ii) the taking of all action reasonably
necessary, proper or advisable to secure any necessary consents under existing
debt obligations of the Company and its subsidiaries or amend the notes,
indentures or agreements relating thereto to the extent required by such notes,
indentures or agreements or redeem or repurchase such debt obligations; (iii)
contesting any pending legal proceeding relating to the Offer or the Merger and
(iv) the execution of any additional instruments necessary to consummate the
transactions contemplated hereby. Subject to the terms and conditions of this
Agreement, Parent and Acquisition agree to use all reasonable efforts to cause
the Effective Time to occur as soon as practicable after the shareholder vote
with respect to the Merger. In case at any time after the Effective Time any
further action is necessary to carry out the purposes of this Agreement, the
proper officers and directors of each party hereto shall take all such necessary
action.
SECTION 6.5. Consents. Parent, Acquisition and the Company each will use
all reasonable efforts to obtain consents of all third parties and governmental
authorities necessary, proper or advisable for the consummation of the
transactions contemplated by this Agreement.
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SECTION 6.6. Public Announcements. Parent, Acquisition and the Company, as
the case may be, will consult with one another before issuing any press release
or otherwise making any public statements with respect to the transactions
contemplated by this Agreement, including, without limitation, the Offer and the
Merger, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law or by obligations pursuant to any listing agreement with any national
securities exchange or the Nasdaq Stock Market, as determined by Parent,
Acquisition or the Company, as the case may be.
SECTION 6.7. Indemnification; Directors' and Officers' Insurance. (a)
Parent and Acquisition agree that all rights to indemnification or exculpation
now existing in favor of the directors, officers, employees and agents of the
Company and its subsidiaries as provided in their respective charters or by-laws
or otherwise in effect as of the date hereof with respect to matters occurring
prior to the Effective Time shall survive the Merger and shall continue in full
force and effect. To the maximum extent permitted by the NYBCL, such
indemnification shall be mandatory rather than permissive and the Surviving
Corporation shall advance expenses in connection with such indemnification.
(b) Parent shall cause the Surviving Corporation to maintain in effect for
not less than three years from the Effective Time the policies of the directors'
and officers' liability and fiduciary insurance most recently maintained by the
Company (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous to the beneficiaries thereof so long as such substitution
does not result in gaps or lapses in coverage) with respect to matters occurring
prior to the Effective Time to the extent available provided that in no event
shall the Surviving Corporation be required to expend more than an amount per
year equal to 200% of the current annual premiums paid by the Company (the
"Premium Amount") to maintain or procure insurance coverage pursuant hereto and
further provided that if the Surviving Corporation is unable to obtain the
insurance called for by this Section 6.7(b), the Surviving Corporation will
obtain as much comparable insurance as is available for the Premium Amount per
year.
SECTION 6.8. Notification of Certain Matters. The Company shall give prompt
notice to Parent and Acquisition, and Parent and Acquisition shall give prompt
notice to the Company, of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at or prior to the Effective Time and (ii) any material failure
of the Company, Parent or Acquisition, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 6.8 shall not cure such breach or non-compliance or limit or
otherwise affect the remedies available hereunder to the party receiving such
notice. Notwithstanding anything to the contrary herein, no provision of this
Agreement shall limit or restrict the right of the Board to amend, rescind or
take or omit to take any action pursuant to or under any provision of the Rights
Agreement; provided, however, that no such amendment, action or omission will
cause the acquisition of Shares pursuant to the Offer or the consummation of the
Merger to give rise to a Triggering Event.
SECTION 6.9. Guarantee of Performance. Parent hereby guarantees the
performance by Acquisition of its obligations under this Agreement and the
indemnification obligations of the Surviving Corporation pursuant to Section
6.7(a) hereof.
SECTION 6.10. Redemption of Rights. At Parent's request, the Company will
take such action as Parent may request to effectuate the redemption, at any time
after the purchase by Acquisition pursuant to the Offer of at least a majority
of the outstanding Shares, of the Rights.
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ARTICLE 7
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.1. Conditions to Each Party's Obligations to Effect the Merger.
The respective obligations of each party hereto to effect the Merger is subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) this Agreement shall have been adopted by the affirmative vote of
the shareholders of the Company by the requisite vote;
(b) no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
U.S. court or U.S. governmental authority which prohibits, restrains,
enjoins or restricts the consummation of the Merger;
(c) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired; and
(d) Acquisition shall have purchased Shares pursuant to the Offer.
ARTICLE 8
TERMINATION; AMENDMENT; WAIVER
SECTION 8.1. Termination. This Agreement may be terminated and the Offer
and the Merger may be abandoned at any time, but prior to the Effective Time:
(a) by mutual written consent of Parent, Acquisition and the Company;
(b) by Parent and Acquisition or the Company if any court of competent
jurisdiction in the United States or other United States governmental body
shall have issued a final order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action is or shall have become
nonappealable;
(c) by Parent and Acquisition if due to an occurrence or circumstance
which would result in a failure to satisfy any of the conditions set forth
in Annex A hereto, Acquisition shall have (A) failed to commence the Offer
within five days following the date of the initial public announcement of
the Offer, (B) terminated the Offer or (C) failed to pay for Shares
pursuant to the Offer within 75 days following the commencement of the
Offer;
(d) by the Company if (i) there shall not have been a material breach
of any representation, warranty, covenant or agreement on the part of the
Company and Acquisition shall have (A) failed to commence the Offer within
five days following the date of the initial public announcement of the
Offer, (B) terminated the Offer or (C) failed to pay for Shares pursuant to
the Offer within 75 days following the commencement of the Offer or (ii)
prior to the purchase of Shares pursuant to the Offer, a corporation,
partnership, person or other entity or group shall have made a bona fide
offer that the Board by a majority vote determines in its good faith
judgment and in the exercise of its fiduciary duties, based as to legal
matters on the written opinion of legal counsel, is more favorable to the
Company's shareholders than the Offer and the Merger, provided that such
termination under this clause (ii) shall not be effective until payment of
the fee required by Section 8.3(b) hereof;
(e) by Parent and Acquisition prior to the purchase of Shares pursuant
to the Offer, if (i) there shall have been a breach of any representation
or warranty on the part of the Company having a Material Adverse Effect on
the Company or materially adversely affecting (or materially delaying) the
consummation of the Offer, (ii) there shall have been a breach of any
covenant or agreement on the part of the Company resulting in a Material
Adverse Effect on the Company or materially adversely affecting (or
materially delaying) the consummation of the Offer, which shall not have
been cured prior to the earlier of (A) 10 days following notice of such
breach and (B) two business days prior to the date in which the Offer
expires, (iii) the Company shall engage in negotiations with any entity or
group (other than Parent
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or Acquisition) that has proposed a Third Party Acquisition (as defined
below), (iv) the Board shall have withdrawn or modified (including by
amendment of the Schedule 14D-9) in a manner adverse to Acquisition its
approval or recommendation of the Offer, this Agreement or the Merger or
shall have recommended another offer, or shall have adopted any resolution
to effect any of the foregoing or (v) the Minimum Condition shall not have
been satisfied by the expiration date of the Offer and on or prior to such
date an entity or group (other than Parent or Acquisition) shall have made
and not withdrawn a proposal with respect to a Third Party Acquisition; or
(f) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of Parent or Acquisition which
materially adversely affects (or materially delays) the consummation of the
Offer or (ii) there shall have been a material breach of any covenant or
agreement on the part of Parent or Acquisition and which materially
adversely affects (or materially delays) the consummation of the Offer
which shall not have been cured prior to the earliest of (A) 10 days
following notice of such breach and (B) two business days prior to the date
on which the Offer expires.
SECTION 8.2. Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its affiliates, directors, officers or shareholders, other
than the provision of this Section 8.2 and Sections 6.3(b) and 8.3 hereof.
Nothing contained in this Section 8.2 shall relieve any party from liability for
any breach of this Agreement.
SECTION 8.3. Fees and Expenses. (a) In the event Parent and Acquisition
terminate this Agreement pursuant to Section 8.1(e)(i) or 8.1(e)(ii) hereof,
Parent and Acquisition would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate Parent and
Acquisition for such damages, the Company shall pay to Parent the amount of $20
million as liquidated damages immediately upon such a termination. It is
specifically agreed that the amount to be paid pursuant to this Section 8.3(a)
represents liquidated damages and not a penalty.
(b) If
(i) Parent and Acquisition terminate this Agreement pursuant to
Section 8.1(e)(ii), (iii), (iv) or (v) hereof and, within 12 months
thereafter the Company enters into an agreement with respect to a Third
Party Acquisition, or a Third Party Acquisition occurs, involving any party
(or any affiliate thereof) (x) with whom the Company (or its agents) had
negotiations with a view to a Third Party Acquisition, (y) to whom the
Company (or its agents) furnished information with a view to a Third Party
Acquisition or (z) who had submitted a proposal or expressed an interest in
a Third Party Acquisition, in the case of each of clauses (x), (y) and (z)
after the date hereof and prior to such termination; or
(ii) Parent and Acquisition terminate this Agreement pursuant to
Section 8.1(e)(iii), (iv) or (v), and within 12 months thereafter a Third
Party Acquisition shall occur involving a consideration for Shares
(including the value of any stub equity) in excess of the Per Share Amount;
or
(iii) the Company terminates this Agreement pursuant to 8.1(d)(ii)
hereof,
the Company shall pay to Parent and Acquisition, within one business day
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with such termination pursuant to Section
8.1(d)(ii), a fee, in cash, of $50,000,000, provided however that the Company in
no event shall be obligated to pay more than one such $50,000,000 fee with
respect to all such agreements and occurrences and such termination. In case
liquidated damages shall have been paid pursuant to Section 8.3(a) in connection
with such a termination, the amount so paid, minus an amount equal to the fees
and expenses that would have been collectible by Parent and Acquisition pursuant
to Section 8.3(c) but for the operation of clause (ii) of the parenthetical of
the first sentence thereof, shall be credited against the amount payable
pursuant to this Section 8.3(b).
"Third Party Acquisition" means the occurrence of any of the following
events (i) the acquisition of the Company by merger or otherwise by any person
(which includes a "person" as such term is defined in Section 13(d)(3) of the
Exchange Act) or entity other than Parent, Acquisition or any affiliate thereof
(a
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"Third Party"); (ii) the acquisition by a Third Party of more than 30% of the
total assets of the Company and its subsidiaries, taken as a whole; (iii) the
acquisition by a Third Party of 30% or more of the outstanding Shares; (iv) the
adoption by the Company of a plan of liquidation or the declaration or payment
of an extraordinary dividend; or (v) the repurchase by the Company or any of its
subsidiaries of more than 20% of the outstanding Shares, other than a repurchase
which was not approved by the Company or publicly announced prior to the
termination of this Agreement and which is not part of a series of transactions
resulting in a change of control.
(c) Upon the termination of this Agreement for any reason prior to the
purchase of Shares by Acquisition pursuant to the Offer (other than (i)
termination by the Company pursuant to Section 8.1(f) hereof and (ii)
termination in circumstances requiring the Company to pay liquidated damages as
contemplated by Section 8.3(a) hereof) the Company shall reimburse Parent,
Acquisition and their affiliates (not later than one business day after
submission of statements therefore) for all actual documented out-of-pocket fees
and expenses, not to exceed $8,800,000, actually and reasonably incurred by any
of them or on their behalf in connection with the Offer and the Merger and the
consummation of all transactions contemplated by this Agreement (including,
without limitation, fees payable to financing sources, investment bankers,
counsel to any of the foregoing, and accountants). Parent and Acquisition have
provided the Company with an estimate of the amount of such fees and expenses
and, if Parent or Acquisition shall have submitted a request for reimbursement
hereunder, will provide the Company in due course with invoices or other
reasonable evidence of such expenses upon request. The Company shall in any
event pay the amount requested (not to exceed $8,800,000) within one business
day of such request, subject to the Company's right to demand a return of any
portion as to which invoices are not received in due course.
(d) Except as specifically provided in this Section 8.3 each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby.
SECTION 8.4. Amendment. Subject to Section 1.3(c), this Agreement may be
amended by action taken by the Company, Parent and Acquisition at any time
before or after approval of the Merger by the shareholders of the Company (if
required by applicable law) but, after any such approval, no amendment shall be
made which requires the approval of such shareholders under applicable law
without such approval. This Agreement may not be amended except by an instrument
in writing signed on behalf of the parties hereto.
SECTION 8.5. Extension; Waiver. Subject to Section 1.3(c), at any time
prior to the Effective Time, each party hereto may (i) extend the time for the
performance of any of the obligations or other acts of the other party, (ii)
waive any inaccuracies in the representations and warranties of the other party
contained herein or in any document, certificate or writing delivered pursuant
hereto or (iii) waive compliance by the other party with any of the agreements
or conditions contained herein. Any agreement on the part of either party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of either
party hereto to assert any of its rights hereunder shall not constitute a waiver
of such rights.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1. Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
SECTION 9.2. Entire Agreement; Assignment.This Agreement (a) constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof
and (b) shall not be assigned by operation of law or otherwise; provided,
however, that Acquisition may assign any or all of its rights and obligations
under this Agreement to any subsidiary of Parent, but no such assignment shall
relieve Acquisition of its obligations hereunder if such assignee does not
perform such obligations.
19
<PAGE> 67
SECTION 9.3. Validity. If any provision of this Agreement, or the
application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
SECTION 9.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as follows:
if to Parent or Acquisition:
Martin Marietta Corporation
6801 Rockledge Drive
Bethesda, Maryland 26817
Attention: General Counsel
if to the Company to:
Grumman Corporation
1111 Stewart Avenue
Bethpage, New York 11714-3580
Attention: General Counsel
Fax No. 516-575-2921
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 9.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to the principles of conflicts of law thereof.
SECTION 9.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.7. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and its successors and
permitted assigns, and except as provided in Sections 6.7 and 9.2, nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
SECTION 9.8. Counterparts.This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
20
<PAGE> 68
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed on its behalf as of the day and year first above written.
MARTIN MARIETTA CORPORATION
By:
Title:
MMC ACQUISITION CORP.
By:
Title:
GRUMMAN CORPORATION
By:
Title:
21
<PAGE> 69
ANNEX A
THE CAPITALIZED TERMS USED HEREIN HAVE THE
MEANINGS SET FORTH IN THE AGREEMENT AND
PLAN OF MERGER TO WHICH THIS
ANNEX A IS ATTACHED
Notwithstanding any other provisions of the Offer, Acquisition shall not be
required to accept for payment or pay for, and may delay the acceptance for
payment of, or the payment for, any Shares, and may terminate the Offer and not
accept for payment or pay for any Shares, if (i) immediately prior to the
expiration of the Offer (as it may be extended in accordance with the Offer),
the Minimum Condition shall not have been satisfied, (ii) any applicable waiting
period under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer or (iii) at any time on or after March 7, 1994 and prior
to the acceptance for payment of Shares, Acquisition makes a determination
(which shall be made in good faith) that any of the following conditions exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction proposed, sought, promulgated,
enacted, entered, enforced or deemed applicable to the Offer, or any other
action shall have been taken, proposed or threatened, by any state or
federal government or governmental authority or by any U.S. court, other
than the routine application to the Offer, the Merger or other subsequent
business combination of waiting periods under the HSR Act, that presents a
substantial likelihood of (1) making the acceptance for payment of, or the
payment for, some or all of the Shares illegal or otherwise prohibiting,
restricting or significantly delaying consummation of the Offer, (2)
imposing material limitations on the ability of Acquisition to acquire or
hold or to exercise effectively all rights of ownership of the Shares,
including, without limitation, the right to vote any Shares purchased by
Acquisition on all matters properly presented to the shareholders of the
Company, or effectively to control in any material respect the business,
assets or operations of the Company, its subsidiaries, Acquisition or any
of their respective affiliates, or (3) otherwise having a Material Adverse
Effect on the Company, Parent or Acquisition; or
(b) any material adverse change shall have occurred or be threatened,
or Parent or Acquisition shall have become aware of any fact or
circumstance, that has had or is reasonably likely to have a Material
Adverse Effect on the Company; or
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
(ii) the declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States (whether or not mandatory), (iii)
the commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States and
having a Material Adverse Effect on the Company or materially adversely
affecting (or materially delaying) the consummation of the Offer, (iv) any
limitation (whether or not mandatory), by any U.S. governmental authority
or agency on, or any other event that, in the judgment of Acquisition, is
reasonably likely to materially adversely affect, the extension of credit
by banks or other financial institutions, (v) from the date of the Merger
Agreement through the date of termination or expiration of the Offer, a
decline of at least 25% in the Standard & Poor's 500 Index or (vi) in the
case of any of the situations described in clauses (i) through (v)
inclusive, existing at the date of the commencement of the Offer, a
material acceleration or worsening thereof; or
(d) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Acquisition, any of its
affiliates, or any group of which any of them is a member shall have
acquired beneficial ownership of more than 30% of the outstanding Shares or
shall have entered into a definitive agreement or an agreement in principle
with the Company with respect to a tender offer or exchange offer for any
Shares or a merger, consolidation or other business combination with or
involving the Company or any of its subsidiaries; or
(e) the Merger Agreement shall have been terminated in accordance with
its terms; or
22
<PAGE> 70
(f) prior to the purchase of Shares pursuant to the Offer, the Board
shall have withdrawn or modified (including by amendment of the Schedule
14D-9) in a manner adverse to Acquisition its approval or recommendation of
the Offer, this Agreement or the Merger or shall have recommended another
offer, or shall have adopted any resolution to effect any of the foregoing
which, in the sole judgment of Acquisition in any such case, and regardless
of the circumstances (including any action or omission by Acquisition)
giving rise to any such condition, makes it inadvisable to proceed with
such acceptance for payment.
23
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
GRUMMAN CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED MARCH 8, 1994
OF
MMC ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
MARTIN MARIETTA CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, APRIL 4, 1994, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Facsimile
By Mail: Transmission: By Hand or Overnight Courier:
<S> <C> <C>
P.O. Box 2564 (201) 222-4720 14 Wall Street, 8th Floor
Suite 4660 or Suite 4660
Jersey City, New Jersey 07303 - 2564 (201) 222-4721 New York, New York 10005
Confirm Fax Only:
(201) 222-4707
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used if certificates are to be forwarded
herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is
utilized, if delivery of Shares (as defined below) is to be made by book-entry
transfer to the Depositary's account at The Depository Trust Company, Midwest
Securities Trust Company or Philadelphia Depository Trust Company (hereinafter
collectively referred to as the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth in Section 3 of the Offer to Purchase.
Shareholders who cannot deliver their Shares and all other documents
required hereby to the Depositary by the Expiration Date (as defined in the
Offer to Purchase) or who cannot complete the procedure for delivery by
book-entry transfer on a timely basis and who wish to tender their Shares must
do so pursuant to the guaranteed delivery procedure set forth in Section 3 of
the Offer to Purchase. See Instruction 2.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution_____________________________________________
Account No. ______________________________________________________________
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Transaction Code No. _____________________________________________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Shareholder(s) _____________________________________
Date of Execution of Notice of Guaranteed Delivery _______________________
Name of Institution which Guaranteed Delivery ____________________________
IF DELIVERY IS BY BOOK-ENTRY TRANSFER, PLEASE PROVIDE THE FOLLOWING:
Name of Tendering Institution ____________________________________________
Account No. ______________________________________________________________
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Transaction Code No. _____________________________________________________
<PAGE> 2
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES)
OF REGISTERED HOLDER(S) CERTIFICATE(S) TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED SHARES
BY
NUMBER(S)* CERTIFICATE(S)* TENDERED**
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
TOTAL NUMBER
OF SHARES
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares
represented by any certificates delivered to the Depositary are being
tendered. See Instruction 4.
- --------------------------------------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to MMC Acquisition Corp., a New York
corporation (the "Purchaser") and a wholly owned subsidiary of Martin Marietta
Corporation, the above-described shares of common stock, par value $1.00 per
share (including the associated Rights (as defined in the Offer to Purchase))
(collectively, the "Shares"), of Grumman Corporation, a New York corporation
(the "Company"), pursuant to the Purchaser's offer to purchase all outstanding
Shares at a price of $55.00 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated March 8, 1994, receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which together constitute the "Offer"). The
Purchaser reserves the right to transfer or assign in whole or from time to time
in part, to one or more of its affiliates the right to purchase Shares tendered
pursuant to the Offer.
Subject to, and effective upon, acceptance for payment for the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns, and transfers to, or upon the order of, the Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all other Shares or other securities issued or issuable in
respect thereof on or after March 8, 1994) and appoints the Depositary the true
and lawful agent and attorney-in-fact of the undersigned with respect to such
Shares (and all such other Shares or securities), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to (a) deliver certificates for such Shares (and all
such other Shares or securities), or transfer ownership of such Shares (and all
such other Shares or securities) on the account books maintained by any of the
Book-Entry Transfer Facilities, together, in any such case, with all
accompanying evidence of transfer and authenticity, to or upon the order of the
Purchaser, (b) present such Shares (and all such other Shares or securities) for
transfer on the books of the Company and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares (and all such other
Shares or securities), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Marcus C. Bennett and Frank H.
Menaker, Jr., and each of them, the attorneys and proxies of the undersigned,
each with full power of substitution, to exercise all voting and other rights of
the undersigned in such manner as each such attorney and proxy or his substitute
shall in his sole discretion deem proper, with respect to all of the Shares
tendered hereby which have been accepted for payment by the Purchaser prior to
the time of any vote or other action (and any and all other Shares or other
securities issued or issuable in respect thereof on or after
<PAGE> 4
March 8, 1994), at any meeting of shareholders of the Company (whether annual or
special and whether or not an adjourned meeting), by written consent or
otherwise. This proxy is irrevocable and coupled with an interest in the
tendered Shares and is granted in consideration of, and is effective upon, the
acceptance for payment of such Shares or securities, and no subsequent proxies
will be given or written consents will be executed by the undersigned (and if
given or executed, will not be deemed to be effective).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all other Shares or other securities issued or
issuable in respect thereof on or after March 8, 1994) and that when the same
are accepted for payment by the Purchaser, the Purchaser will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claims. The undersigned will,
upon request, execute and deliver any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby (and all such other Shares
or securities).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
The undersigned understands that a tender of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase will constitute
the tendering shareholder's acceptance of the terms and conditions of the Offer,
as well as the tendering shareholder's representation and warranty that such
shareholder has the full power and authority to tender and assign the Shares
tendered, as specified in this Letter of Transmittal. The Purchaser's acceptance
for payment of Shares tendered pursuant to the Offer will constitute a binding
agreement between the tendering shareholder and the Purchaser upon the terms and
subject to the conditions of the Offer.
Unless otherwise indicated under "Special Payment Instructions", please
issue the check for the purchase price of any Shares purchased, and return any
Shares not tendered or not purchased, in the name(s) of the undersigned (and, in
the case of Shares tendered by book-entry transfer, by credit to the account at
the Book-Entry Transfer Facility designated above). Similarly, unless otherwise
indicated under "Special Delivery Instructions", please mail the check for the
purchase price of any Shares purchased and any certificates for Shares not
tendered or not purchased (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). In the
event that both "Special Payment Instructions" and "Special Delivery
Instructions" are completed, please issue the check for the purchase price of
any Shares purchased and return any Shares not tendered or not purchased in the
name(s) of, and mail said check and any certificates to, the person(s) so
indicated. The undersigned recognizes that the Purchaser has no obligation,
pursuant to the "Special Payment Instructions", to transfer any Shares from the
name of the registered holder(s) thereof if the Purchaser does not accept for
payment any of the Shares so tendered.
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if check for the purchase price of Shares purchased or
certificates for Shares not tendered or not purchased are to be issued in the
name of someone other than the undersigned, or if Shares tendered by book-entry
transfer that are not purchased are to be returned by credit to an account at
one of the Book-Entry Transfer Facilities other than that designated above.
Issue / /check
/ /certificate(s) to:
Name ______________________________________________________________________
(Please Print)
Address ______________________________________________________________________
______________________________________________________________________
(Zip Code)
______________________________________________________________________
(Taxpayer Identification Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or certificates for Shares not tendered or not purchased are to be
mailed to someone other than the undersigned or to the undersigned at an address
other than that shown under "Description of Shares Tendered".
Mail / /check
/ /certificate(s) to:
Name ______________________________________________________________________
(Please Print)
Address ______________________________________________________________________
______________________________________________________________________
(Zip Code)
/ /Credit unpurchased Shares tendered by book-entry transfer to the account set
forth below:
Name of Account Party ______________________________________________________
Account No. _____________________________________________________________at
/ /The Depository Trust Company
/ /Midwest Securities Trust Company
/ /Philadelphia Depository Trust Company
<PAGE> 6
IMPORTANT
SHAREHOLDERS: SIGN HERE
(Please complete Substitute Form W-9 on Reverse)
..........................................................................
..........................................................................
SIGNATURE(S) OF HOLDER(S)
DATED: ........................................, 199
(MUST BE SIGNED BY REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON SHARE
CERTIFICATES OR ON A SECURITY POSITION LISTING OR BY PERSON(S) AUTHORIZED TO
BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND DOCUMENTS TRANSMITTED HEREWITH.
IF SIGNATURE IS BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN,
ATTORNEY-IN-FACT, OFFICER OF A CORPORATION OR OTHER PERSON ACTING IN A FIDUCIARY
OR REPRESENTATIVE CAPACITY, PLEASE PROVIDE THE FOLLOWING INFORMATION AND SEE
INSTRUCTION 5.)
NAME(S):........................................................................
..........................................................................
(PLEASE PRINT)
CAPACITY (FULL TITLE):
ADDRESS:........................................................................
..........................................................................
(INCLUDE ZIP CODE)
AREA CODE AND TELEPHONE NO.:
TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NO.:..........................................................
(SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(See Instructions 1 and 5)
Authorized Signature:...........................................................
Name:...........................................................................
(PLEASE TYPE OR PRINT)
Title:..........................................................................
Name of Firm:...................................................................
Address:........................................................................
..........................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone No.:....................................................
Dated: ........................................, 199
<PAGE> 7
PAYER'S NAME:
- --------------------------------------------------------------------------------
<TABLE>
<C> <S> <C>
PART I -- Taxpayer Identification Number -- For All
Accounts Enter your taxpayer identification number in the Social Security
SUBSTITUTE appropriate box. For most individuals and sole Number
proprietors, this is your Social Security Number. For
FORM W-9 other entities, it is your Employer Identification Number. OR_____________
If you do not have a number, see "How to Obtain a TIN" in
the enclosed Guidelines.
DEPARTMENT OF THE Note: if the account is in more than one name, see the Employer
TREASURY chart on page 2 of the enclosed Guidelines to determine Identification
INTERNAL REVENUE what number to enter. Number
SERVICE -----------------------------------------------------------
PART II -- For Payees Exempt From Backup Withholding (see
enclosed Guidelines and complete as instructed therein).
[ ] Awaiting TIN
- ---------------------------------------------------------------------------------------------------------
CERTIFICATION. -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number,
or I am waiting for a number to be issued to me and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social Security Administration
Office or (b) I intend to mail or deliver an application in the near future.
I understand that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all reportable payments made to me thereafter will be
PAYER'S REQUEST FOR withheld until I provide a number;
TAXPAYER
IDENTIFICATION (2) I am not subject to backup withholding either because (a) I am exempt from
NUMBER backup withholding, or (b) I have not been notified by the Internal Revenue
Service ("IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding; and
(3) Any other information provided on this form is true, correct and complete.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2).
---------------------------------------------------------------------------------
SIGNATURE __________________________________________________ DATE________, 199_
- ---------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR INSTRUCTIONS
<PAGE> 8
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm which is a
member of a registered national securities exchange or the National Association
of Securities Dealers, Inc., or by a commercial bank or trust company having an
office or correspondent in the United States (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed (a) if this
Letter of Transmittal is signed by the registered holder(s) of the Shares (which
term, for purposes of this document, shall include any participant in one of the
Book-Entry Transfer Facilities whose name appears on a security position listing
as the owner of Shares) tendered herewith and such holder(s) have not completed
the instruction entitled "Special Payment Instructions" on this Letter of
Transmittal or (b) if such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates. This Letter of
Transmittal is to be used either if certificates are to be forwarded herewith or
if delivery of Shares is to be made by book-entry transfer pursuant to the
procedures set forth in Section 3 of the Offer to Purchase. Certificates for all
physically delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at one of the Book-Entry Transfer Facilities of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), unless an Agent's Message is
utilized, and any other documents required by this Letter of Transmittal, must
be received by the Depositary at one of its addresses set forth on the front
page of this Letter of Transmittal by the Expiration Date. Shareholders who
cannot deliver their Shares and all other required documents to the Depositary
by the Expiration Date must tender their Shares pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to
such procedure: (a) such tender must be made by or through an Eligible
Institution, (b) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser must be received by
the Depositary by the Expiration Date and (c) the certificates for all
physically delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at one of the Book-Entry Transfer Facilities of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), unless an Agent's Message is
utilized, and any other documents required by this Letter of Transmittal, must
be received by the Depositary within five New York Stock Exchange, Inc. trading
days after the date of execution of such Notice of Guaranteed Delivery, all as
provided in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING THROUGH BOOK-ENTRY TRANSFER FACILITIES, IS AT THE OPTION
AND RISK OF THE TENDERING SHAREHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR SHARES ARE SENT BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal (or
facsimile thereof), the tendering shareholder waives any right to receive any
notice of the acceptance for payment of Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (not applicable to shareholders who tender by book-entry
transfers). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
which are to be tendered in the box entitled "Number of Shares Tendered". In
such case, a new certificate for the remainder of the Shares represented by the
old certificate will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the appropriate box on this Letter of
Transmittal, as promptly a practicable following the expiration or termination
of the Offer. All Shares represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the purchase price is to be made, or Shares not
tendered or not purchased are to be returned, in the name of any person other
than the registered holder(s). Signatures on any such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s)
<PAGE> 9
of the registered holder(s) appear(s) on the certificates for such Shares.
Signature(s) on any such certificates or stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Purchaser of the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. The Purchaser will pay any stock transfer taxes
with respect to the sale and transfer of any Shares to it or its order pursuant
to the Offer. If, however, payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be returned in the name of, any
person other than the registered holder(s), or if a transfer tax is imposed for
any reason other than the sale or transfer of Shares to the Purchaser pursuant
to the Offer, then the amount of any stock transfer taxes (whether imposed on
the registered holder(s), such other person or otherwise) will be deducted from
the purchase price unless satisfactory evidence of the payment of such taxes, or
exemption therefrom, is submitted herewith.
7. Special Payment and Delivery Instructions. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or not
purchased are to be returned, in the name of a person other than the person(s)
signing this Letter of Transmittal or if the check or any certificates for
Shares not tendered or not purchased are to be mailed to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal at an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. Shareholders tendering
Shares by book-entry transfer may request that Shares not purchased be credited
to such account at any of the Book-Entry Transfer Facilities as such shareholder
may designate under "Special Payment Instructions". If no such instructions are
given, any such Share not purchased will be returned by crediting the account at
the Book-Entry Transfer Facilities designated above.
8. Substitute Form W-9. Under the federal income tax laws, the Depositary
will be required to withhold 31% of the amount of any payments made to certain
shareholders pursuant to the Offer. In order to avoid such backup withholding,
each tendering shareholder, and, if applicable, each other payee, must provide
the Depositary with such shareholder's or payee's correct taxpayer
identification number and certify that such shareholder or payee is not subject
to such backup withholding by completing the Substitute Form W-9 set forth above
or by filing a properly completed Form W-9. In general, if a shareholder or
payee is an individual, the taxpayer identification number is the Social
Security number of such individual. If the Depositary is not provided with the
correct taxpayer identification number, the shareholder or payee may be subject
to a $50 penalty imposed by the Internal Revenue Service. Certain shareholders
or payees (including, among others, all corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements. In order to satisfy the Depositary that a foreign individual
qualifies as an exempt recipient, such shareholder or payee must submit a
statement, signed under penalties of perjury, attesting to that individual's
exempt status. Such statements can be obtained from the Depositary. For further
information concerning backup withholding and instructions for completing the
Substitute Form W-9 (including how to obtain a taxpayer's identification number
if you do not have one and how to complete the Substitute Form W-9 if Shares are
held in more than one name), consult the enclosed Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 (or to file a Form W-9) will
not, by itself, cause Shares to be deemed invalidly tendered, but may require
the Depositary to withhold 31% of the amount of any payments made pursuant to
the Offer. Backup withholding is not an additional federal income tax. Rather,
the federal income tax liability of a person subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained provided that the required
information is furnished to the Internal Revenue Service.
NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE> 10
9. Requests for Assistance or Additional Copies. Requests for assistance or
additional copies of the Offer to Purchase and this Letter of Transmittal may be
obtained from the Information Agent or Dealer Manager at their respective
addresses or telephone numbers set forth below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
(DO NOT WRITE IN SPACES BELOW)
- --------------------------------------------------------------------------------
Date Received__________ Accepted By _____________ Checked By_____________
- --------------------------------------------------------------------------------
SHARES SHARES SHARES CHECK AMOUNT SHARES CERTIFICATE BLOCK
SURRENDERED TENDERED ACCEPTED NO. OF CHECK RETURNED NO. NO.
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Or
Net
- --------------------------------------------------------------------------------------------------------
Delivery Prepared By _______________ Checked By ______________ Date ______________________
- --------------------------------------------------------------------------------------------------------
</TABLE>
The Information Agent is:
[LOGO] MORROW & CO., INC.
909 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 754-8000 (COLLECT)
OR
CALL TOLL FREE (800) 662-5200
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-7921
(Call Collect)
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
GRUMMAN CORPORATION
BY
MMC Acquisition Corp.,
a wholly owned subsidiary
of
MARTIN MARIETTA CORPORATION
AT
$55.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, APRIL 4, 1994, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks, March 8, 1994
Trust Companies and Other Nominees:
We have been appointed by MMC Acquisition Corp., a New York corporation
(the "Purchaser") and a wholly owned subsidiary of Martin Marietta Corporation,
a Maryland corporation, to act as Dealer Manager in connection with its offer to
purchase all outstanding shares of common stock, par value $1.00 per share
(including the associated Rights (as defined in the Offer to Purchase referred
to below) (collectively, the "Shares"), of Grumman Corporation, a New York
corporation (the "Company"), at $55.00 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase, dated March 8, 1994, and the related Letter of
Transmittal (which together constitute the "Offer").
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. Offer to Purchase, dated March 8, 1994;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (as defined in the Offer to Purchase);
4. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard
to the Offer;
5. Solicitation/Recommendation Statement on Schedule 14D-9 issued by the
Company; and
6. Return envelope addressed to First Chicago Trust Company of New York,
the Depositary.
<PAGE> 2
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will be deemed to have accepted for payment, and
will pay for, all Shares validly tendered and not properly withdrawn prior to
the Expiration Date (as defined in the Offer to Purchase) when, as and if the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares for payment pursuant to the Offer. Payment for Shares
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such Shares (or confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-Entry
Transfer Facilities (as defined in the Offer to Purchase)), a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) (unless, in the
case of a book-entry transfer, an Agent's Message is utilized) and any other
documents required by the Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal, with any required signature guarantees and any
other required documents, should be sent to the Depositary, and certificates
representing the tendered Shares should be delivered, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates on or prior to the Expiration Date or to
comply with the book-entry transfer procedures on a timely basis, a tender may
be effected by following the guaranteed delivery procedures specified in Section
3 of the Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Dealer Manager, the Information Agent or the
Depositary as described in the Offer to Purchase) for soliciting tenders of
Shares pursuant to the Offer. The Purchaser will, however, upon request,
reimburse brokers, dealers, commercial banks and trust companies for reasonable
and necessary costs and expenses incurred by them in forwarding materials to
their customers. The Purchaser will pay all stock transfer taxes applicable to
its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, APRIL 4, 1994, UNLESS THE OFFER IS
EXTENDED.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers set
forth on the back cover of the Offer to Purchase.
Very truly yours,
Bear, Stearns & Co. Inc.
as Dealer Manager
245 Park Avenue
New York, New York 10167
(212) 272-7921
(Call Collect)
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF THE PURCHASER, THE COMPANY, ANY AFFILIATE OF THE
COMPANY, MARTIN MARIETTA CORPORATION, THE DEALER MANAGER, THE INFORMATION AGENT
OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR
MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER
THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
GRUMMAN CORPORATION
BY
MMC Acquisition Corp.,
a wholly owned subsidiary
of
MARTIN MARIETTA CORPORATION
AT
$55.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, APRIL 4, 1994 UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated March 8,
1994 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") and other materials relating to the offer by
MMC Acquisition Corp., a New York corporation (the "Purchaser") and a wholly
owned subsidiary of Martin Marietta Corporation, a Maryland corporation, to
purchase all outstanding shares of common stock, par value $1.00 per share
(including the associated Rights (as defined in the Offer to Purchase))
(collectively, the "Shares"), of Grumman Corporation, a New York corporation
(the "Company"), at $55.00 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions set forth in the Offer.
This material is being sent to you as the beneficial owner of Shares held by us
for your account but not registered in your name. A TENDER OF SUCH SHARES CAN BE
MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE
LETTER OF TRANSMITTAL ACCOMPANYING THIS LETTER IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to have us tender any or all
of the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $55.00 per Share, net to the seller in cash.
2. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Monday, April 4, 1994, unless the Offer is extended.
3. The Board of Directors of the Company unanimously has determined that
the Offer and the Merger (as defined in the Offer to Purchase) are fair
to, and in the best interests of, the Company and its shareholders, has
approved the Offer and the Merger and recommends that shareholders
accept the Offer and tender their Shares pursuant to the Offer.
<PAGE> 2
4. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in
the Offer) a number of Shares representing at least two-thirds of the
total number of Shares outstanding on a fully diluted basis.
5. Any stock transfer taxes applicable to the sale of Shares to the
Purchaser pursuant to the Offer will be paid by the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
The Offer is being made to all holders of Shares. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares in
any jurisdiction in which the making of the Offer or acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by Bear, Stearns & Co., Inc. or one or more registered brokers or
dealers licensed under the laws of such jurisdictions.
2
<PAGE> 3
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing and returning to us the
instruction form set forth below. Please forward your instructions to us in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer. If you authorize the tender of your Shares, all such
Shares will be tendered unless otherwise specified on the instruction form set
forth below.
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
GRUMMAN CORPORATION
BY
MMC ACQUISITION CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated March 8, 1994, and the related Letter of Transmittal,
in connection with the offer by MMC Acquisition Corp., a New York corporation
and a wholly owned subsidiary of Martin Marietta Corporation, a Maryland
corporation, to purchase for cash all outstanding shares of common stock, par
value $1.00 per share (including the associated Rights (as defined in the Offer
to Purchase))(collectively, the "Shares"), of Grumman Corporation, a New York
corporation.
This will instruct you to tender the number of Shares indicated below (or
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Dated: , 1994
NUMBER OF SHARES TO BE TENDERED:
_______SHARES*
__________________________________
__________________________________
SIGNATURE(S)
__________________________________
PLEASE PRINT NAME(S)
__________________________________
__________________________________
PLEASE PRINT ADDRESS(ES)
__________________________________
AREA CODE AND TELEPHONE NUMBER(S)
__________________________________
TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER(S)
- ---------------
* I (we) understand that if I (we) sign this instruction form without indicating
a lesser number of Shares in the space above, all Shares held by you for my
(our) account will be tendered.
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
GRUMMAN CORPORATION
This form, or a form substantially equivalent to this form, must be used to
accept the Offer (as defined below) if the certificates representing shares of
common stock, par value $1.00 per share, of Grumman Corporation and the
associated preferred share purchase rights (collectively, the "Shares") are not
immediately available or if the procedure for book-entry transfer cannot be
completed on a timely basis or if time will not permit all required documents to
reach the Depositary at or prior to the expiration of the Offer. Such form may
be delivered by hand or facsimile transmission, telex or mail to the Depositary.
See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Facsimile By Hand
By Mail Transmission or Overnight Carrier:
P.O. Box 2564 (201) 222-4720 14 Wall Street, 8th Floor
Suite 4660 or Suite 4660
Jersey City, New Jersey (201) 222-4721 New York, New York 10005
07303-2564
Confirm by Telephone
(201) 222-4707
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS LISTED ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to MMC Acquisition Corp. (the "Purchaser"),
a New York corporation and a wholly owned subsidiary of Martin Marietta
Corporation, a Maryland corporation, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated March 8, 1994 (the "Offer
to Purchase"), and the related Letter of Transmittal (which together constitute
the "Offer"), receipt of which is hereby acknowledged, Shares pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Share Certificate Nos. (if available): Name(s) of Record Holder(s):
______________________________________ _____________________________________________
______________________________________ _____________________________________________
PLEASE TYPE OR PRINT
Address(es) ________________________________
If Shares will be delivered by book-entry _____________________________________________
transfer, check one box: ZIP CODE
/ / The Depositary Trust Company Area Code and Telephone Number:
/ / Midwest Securities Trust Company _____________________________________________
/ / Philadelphia Depositary Trust Company _____________________________________________
Account Number________________________ _____________________________________________
Dated: , 1994 _____________________________________________
SIGNATURE(S)
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States (each, an "Eligible Institution"), hereby guarantees that either the
certificates representing the Shares tendered hereby in proper form for
transfer, or timely confirmation of a book-entry transfer of such Shares into
the Depositary's account at The Depository Trust Company, the Midwest Securities
Trust Company or the Philadelphia Depository Trust Company (pursuant to
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) with any required signature guarantee and any
other required documents, will be received by the Depositary at one of its
addresses set forth above within five (5) New York Stock Exchange, Inc. trading
days after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<PAGE> 3
<TABLE>
<S> <C>
Name of Firm: ______________________________ _____________________________________
AUTHORIZED SIGNATURE
Address: ___________________________________ Name: ______________________________
PLEASE TYPE OR PRINT
___________________________________ Title: _____________________________
ZIP CODE
Area Code and
Tel. No.: ________________________________ Dated: _____________________________ , 1994
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM. CERTIFICATES ARE TO
BE DELIVERED WITH THE LETTER OF TRANSMITTAL.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
Purpose of Form.-- A person who is required to file an information return
with the IRS must obtain your correct TIN to report income paid to you, real
estate transactions, mortgage interest you paid, the acquisition or abandonment
of secured property, or contributions you made to an IRA. Use Form W-9 to
furnish your correct TIN to the requester (the person asking you to furnish your
TIN) and, when applicable, (1) to certify that the TIN you are furnishing is
correct (or that you are waiting for a number to be issued), (2) to certify that
you are not subject to backup withholding, and (3) to claim exemption from
backup withholding if you are an exempt payee. Furnishing your correct TIN and
making the appropriate certifications will prevent certain payments from being
subject to backup withholding.
Note: If a requester gives you a form other than a W-9 to request your TIN,
you must use the requester's form.
How To Obtain a TIN.-- If you do not have a TIN, apply for one immediately.
To apply, get Form SS-5, Application for a Social Security Card (for
individuals), from your local office of the Social Security Administration, or
Form SS-4, Application for Employer Identification Number (for businesses and
all other entities), from your local IRS office.
To complete Form W-9 if you do not have a TIN, write "Applied for" in the
space for the TIN in Part I, sign and date the form, and give it to the
requester. Generally, you will then have 60 days to obtain a TIN and furnish it
to the requester. If the requester does not receive your TIN within 60 days,
backup withholding, if applicable, will begin and continue until you furnish
your TIN to the requester. For reportable interest or dividend payments, the
payer must exercise one of the following options concerning backup withholding
during this 60-day period. Under option (1), a payer must backup withhold on any
withdrawals you make from your account after 7 business days after the requester
receives this form back from you. Under option (2), the payer must backup
withhold on any reportable interest or dividend payments made to your account,
regardless of whether you make any withdrawals. The backup withholding under
option (2) must begin no later than 7 business days after the requester receives
this form back. Under option (2), the payer is required to refund the amounts
withheld if your certified TIN is received within the 60-day period and you were
not subject to backup withholding during that period.
Note: Writing "Applied for" on the form means that you have already applied
for a TIN OR that you intend to apply for one in the near future.
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date the form, and give it to the requester.
What Is Backup Withholding?-- persons making certain payments to you after
1992 are required to withhold and pay to the IRS 31% of such payments under
certain conditions. This is called "backup withholding". Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, nonemployee compensation, and certain
payments from fishing boat operators, but do not include real estate
transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS notifies the requester that you furnished an incorrect TIN,
or
3. You are notified by the IRS that you are subject to backup
withholding because you failed to report all your interest and dividends on
your tax return (for reportable interest and dividends only), or
<PAGE> 2
4. You do not certify to the requester that you are not subject to
backup withholding under 3 above (for reportable interest and dividend
accounts opened after 1983 only), or
5. You do not certify your TIN. This applies only to reportable
interest, dividend, broker, or barter exchange accounts opened after 1983,
or broker accounts considered inactive in 1983.
Except as explained in 5 above, other reportable payments are subject to
backup withholding only if 1 or 2 above applies. Certain payees and payments are
exempt from backup withholding and information reporting. See Payees and
Payments Exempt From Backup Withholding, below, and Example Payees and Payments
under Specific Instructions, below, if you are an exempt payee.
Payees and Payments Exempt From Backup Withholding. -- The following is a
list of payees exempt from backup withholding and for which no information
reporting is required. For interest and dividends, all listed payees are exempt
except item (9). For broker transactions, payees listed in (1) through (13) and
a person registered under the Investment Advisers Act of 1940 who regularly acts
as a broker are exempt. Payments subject to reporting under sections 6041 and
6041A are generally exempt from backup withholding only if made to payees
described in items (1) through (7), except a corporation that provides medical
and health care services or bills and collects payments for such services is not
exempt from backup withholding or information reporting. Only payees described
in items (2) through (6) are exempt from backup withholding for barter exchange
transactions, patronage dividends, and payments by certain fishing boat
operators.
(1) A corporation. (2) An organization exempt from tax under section
501(a), or an IRA, or a custodial account under section 403(b)(7). (3) The
United States or any of its agencies or instrumentalities. (4) A state, the
District of Columbia, a possession of the United States, or any of their
political subdivisions or instrumentalities. (5) A foreign government or any of
its political subdivisions, agencies, or instrumentalities. (6) An international
organization or any of its agencies or instrumentalities. (7) A foreign central
bank of issue. (8) A dealer in securities or commodities required to register in
the United States or a possession of the United States. (9) A futures commission
merchant registered with the Commodity Futures Trading Commission. (10) A real
estate investment trust. (11) An entity registered at all times during the tax
year under the Investment Company Act of 1940. (12) A common trust fund operated
by a bank under section 584(a). (13) A financial institution. (14) A middleman
known in the investment community as a nominee or listed in the most recent
publication of the American Society of Corporate Secretaries, Inc., Nominee
List. (15) A trust exempt from tax under section 664 or described in section
4947.
Payments of dividend and patronage dividends generally not subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include
the following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have not
provided your correct TIN to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
<PAGE> 3
- Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041 A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and their regulations.
PENALTIES
Failure To Furnish TIN. -- If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to Withholding. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
Criminal Penalty for Falsifying Information. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
Misuse of TINs. -- If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
Name. -- If you are an individual, you must generally provide the name
shown on your social security card. However, if you have changed your last name,
for instance, due to marriage, without informing the Social Security
Administration of the name change, please enter your first name, the last name
shown on your social security card, and your new last name.
If you are a sole proprietor, you must furnish your individual name and
either your SSN or EIN. You may also enter your business name or "doing business
as" name on the business name line. Enter your name(s) as shown on your social
security card and/or as it was used to apply for your EIN on Form SS-4.
SIGNING THE CERTIFICATION.
1. Interest, Dividend, and Barter Exchange Accounts Opened Before 1984 and
Broker Accounts Considered Active During 1983. You are required to furnish your
correct TIN, but you are not required to sign the certification.
2. Interest, Dividend, Broker, and Barter Exchange Accounts Opened After
1983 and Broker Accounts Considered Inactive During 1983. You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item 2 in the certification before signing the form.
3. Real Estate Transactions. You must sign the certification. You may
cross out item 2 of the certification.
4. Other Payments. You are required to furnish your correct TIN, but you
are not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
5. Mortgage Interest Paid by You, Acquisition or Abandonment of Secured
Property, or IRA Contributions. You are required to furnish your correct TIN,
but you are not required to sign the certification.
6. Exempt Payees and Payments. If you are exempt from backup withholding,
you should complete this form to avoid possible erroneous backup withholding.
Enter your correct TIN in Part I, write "EXEMPT" in the block in Part II, and
sign and date the form. If you are a nonresident alien or foreign entity not
subject to backup withholding, give the requester a complete Form W-8,
Certificate of Foreign Status.
7. TIN "Applied for." Follow the instructions under How To Obtain a TIN,
on page 1, and sign and date this form.
<PAGE> 4
Signature. -- For a joint account, only the person whose TIN is shown in
Part I should sign.
Privacy Act Notice. -- Section 6109 requires you to furnish your correct
TIN to persons who must file information returns with the IRS to report
interest, dividends, and certain other income paid to you, mortgage interest you
paid, the acquisition or abandonment of secured property, or contributions you
made to an IRA. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. You must provide your TIN whether or not
you are required to file a tax return. Payers must generally withhold 31% of
taxable interest, dividend, and certain other payments to a payee who does not
furnish a TIN to a payer. Certain penalties may also apply.
<PAGE> 5
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<C> <S> <C>
For this type of account: Give name and SSN of:
1. Individual The individual
2. Two or more individuals (joint account) The actual owner of the account or, if
combined funds, the first individual on
the account(1)
3. Custodian account of a minor (Uniform Gift The minor(2)
to Minors Act)
4. a. The usual revocable savings trust the grantor-trustee(1)
(grantor is also trustee)
b. So-called trust account that is not a The actual owner(1)
legal or valid trust under state law
5. Sole proprietorship The owner(3)
For this type of account: Give name and EIN of:
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or pension trust Legal entity(4)
8. Corporate The corporation
9. Association, club, religious, charitable, The organization
educational, or other tax-exempt
organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of Agriculture The public entity
in the name of a public entity (such as a
state or local government, school district
or prison) that receives agriculture
program payments
</TABLE>
- ---------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) Show your individual name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
Note: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
March 8, 1994 and the related Letter of Transmittal and is not being made to,
nor will tenders be accepted from or on behalf of, holders of Shares in any
jurisdiction in which the making of the Offer or acceptance thereof would not
be in compliance with the laws of such jurisdiction. In those jurisdictions
where 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
the Purchaser by Bear, Stearns & Co. Inc. or one or more registered brokers or
dealers licensed under the laws of such jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS)
OF
GRUMMAN CORPORATION
BY
MMC Acquisition Corp.
A WHOLLY OWNED SUBSIDIARY
OF
MARTIN MARIETTA CORPORATION
AT
$55.00 NET PER SHARE
MMC Acquisition Corp., a New York corporation (the "Purchaser") and a wholly
owned subsidiary of Martin Marietta Corporation, a Maryland corporation
("Parent"), is offering to purchase all outstanding shares of common stock, par
value $1.00 per share (including the associated Rights (as defined in the Offer
to Purchase)) (collectively, the "Shares"), of Grumman Corporation, a New York
corporation (the "Company"), at $55.00 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated March 8, 1994 (the "Offer to Purchase") and in the
related Letter of Transmittal (which together constitute the "Offer").
<PAGE> 2
- ------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MONDAY, APRIL 4, 1994, UNLESS THE OFFER IS EXTENDED.
- ------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE OFFER AND THE MERGER AND
RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN BY THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE) THAT NUMBER OF SHARES REPRESENTING AT LEAST TWO-THIRDS OF THE
TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION").
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of March 6, 1994 (the "Merger Agreement"), among Parent, the
Purchaser and the Company. The Merger Agreement provides that, among other
things, the Purchaser will make the Offer and that following the purchase
of Shares pursuant to the Offer and the satisfaction of the other
conditions set forth in the Merger Agreement and in accordance with
relevant provisions of the New York Business Corporation Law, the Purchaser
will be, on or after May 18, 1994, merged with and into the Company (the
"Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation and will be a wholly owned subsidiary of
Parent. At the effective time of the Merger (the "Effective Time"), each
Share issued and outstanding immediately prior to the Effective Time (other
than Shares held by the Company as treasury stock or by any subsidiary of
the Company or by Parent, the Purchaser or any other subsidiary of Parent
and other than Shares held by a holder who has not voted in favor of the
Merger or consented thereto in writing and who has demanded appraisal for
such Shares in accordance with Section 623 of the New York Business
Corporation Law) will be converted into the right to receive cash without
interest in an amount equal to the price per share paid pursuant to the
Offer.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. If any such condition is not satisfied, the Purchaser may (i)
terminate the Offer and return all tendered Shares to tendering
shareholders, (ii) extend the Offer and, subject to withdrawal rights as
set forth below, retain all such Shares until the expiration of the Offer
as so extended, (iii) waive such condition and, subject to any requirement
to extend the time during which the Offer is open, purchase all Shares
validly tendered prior to the Expiration Date and not withdrawn or (iv)
delay acceptance for payment of or payment for Shares, subject to
applicable law, until satisfaction or waiver of the conditions to the
Offer.
The Purchaser reserves the right, at any time or from time to time,
to extend the period of time during which the Offer is open by giving oral
or written notice of such extension to the Depositary. Any such extension
will be followed as promptly as practicable by public announcement thereof
no later than 9:00 a.m., New York City time, on the next business day after
the previously scheduled Expiration Date.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment (and thereby purchased) tendered Shares when, as and
if the Purchaser gives oral or written notice to First Chicago Trust
Company of New York (the "Depositary") of its acceptance of the tenders of
such Shares. Payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates
for such Shares (or a confirmation of a book-entry transfer of such Shares
into the Depositary's account at one of the Book-Entry Transfer Facilities
(as defined in the Offer to Purchase)), a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other
documents required by the Letter of Transmittal.
<PAGE> 3
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn at any time after May 6, 1994 unless theretofore
accepted for payment as provided in the Offer to Purchase. To be effective, a
written, telegraphic, telex or facsimile transmission notice of withdrawal must
be timely received by the Depositary at one of its addresses set forth in the
Offer to Purchase and must specify the name of the person who tendered the
Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares
to be withdrawn have been delivered to the Depositary, a signed notice of
withdrawal with (except in the case of Shares tendered by an Eligible
Institution (as defined in the Offer to Purchase)) signatures guaranteed by an
Eligible Institution must be submitted prior to the release of such Shares. In
addition, such notice must specify, in the case of Shares tendered by delivery
of certificates, the name of the registered holder (if different from that of
the tendering shareholder) and the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at one of
the Book-Entry Transfer Facilities (as defined in the Offer to Purchase) to be
credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has agreed to provide the Purchaser with the Company's
shareholder list and security position listings for the purpose of disseminating
the Offer to holders of Shares. The Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares and will be furnished to
brokers, banks and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent or the Dealer Manager as set forth below, and copies will be furnished
promptly at the Purchaser's expense. The Purchaser will not pay any fees or
commissions to any broker or dealer or any other person (other than the Dealer
Manager and the Information Agent) for soliciting tenders of Shares pursuant to
the Offer.
The Information Agent for the Offer is:
[LOGO] MORROW & CO., INC.
909 Third Avenue
New York, New York 10022
(212) 754-8000 (collect)
OR
CALL TOLL FREE (800) 662-5200
The Dealer Manager for the Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
(212) 272-7921
(Call Collect)
March 8, 1994
<PAGE> 1
FOR IMMEDIATE RELEASE
BOARDS OF DIRECTORS
UNANIMOUSLY APPROVE
MARTIN MARIETTA CASH TENDER
OFFER FOR GRUMMAN CORPORATION
BETHESDA, Maryland/BETHPAGE, New York, March 7 -- The boards of directors
of Martin Marietta Corporation and Grumman Corporation said today they have
entered into a definitive agreement to combine the two companies and have
unanimously approved a $55-per-share cash offer by Martin Marietta for Grumman's
outstanding shares.
The transaction, valued at approximately $1.9 billion, will be effected
through a cash tender offer expected to commence tomorrow, March 8. The offer
will be for all but not less than two-thirds of Grumman's fully diluted shares.
The transaction is subject to Hart-Scott-Rodino antitrust review.
Martin Marietta said it has commitments from Bank of America National Trust
and Savings Association and Morgan Guaranty Trust Company of New York to provide
$2.4 billion in the aggregate in unsecured financing to support the tender
offer.
Norman R. Augustine, Martin Marietta chairman and chief executive officer,
said that "the joining of Grumman with Martin Marietta strategically positions
the combined entity on the leading edge of the industry consolidation that is so
essential to preserving our nation's defense capabilities and the jobs that go
with them."
Renso L. Caporali, chairman and chief executive officer of Grumman, said,
"The overwhelmingly positive recommendation of our board represents our belief
that a combination with Martin Marietta will provide our people, programs and
products with the support necessary to grow in a shrinking defense market.
"Grumman concluded over one year ago that we could not thrive in the
current business climate without making a significant strategic move," said
Caporali. "We looked at a number of different approaches and combinations, and
this is far superior to any of our other options."
Augustine said, "This combination will create a company with over $13
billion in sales that will have the critical mass, breadth of programs and depth
of technology to be solidly positioned in the aerospace/electronics industry.
"There is a complementary fit between our companies in defense electronics,
aerospace systems, aerostructures, services and information systems. It is these
diversified products and technologies and a common heritage that make this
combination extraordinarily beneficial to our customers, shareholders and
employees. It will allow us to enter new and adjacent markets. The companies
also share a 'geographical synergy' with significant operations in Florida,
Georgia, Louisiana, New York and Pennsylvania," said Augustine.
Augustine said that Martin Marietta was "immensely proud" of the
opportunity to be associated with Grumman, noting the comment by a Navy admiral
during World War II that "the name Grumman on a product is like the name
Sterling on silver."
Grumman, headquartered in Bethpage, New York, has 18,000 employees and had
1993 sales exceeding $3 billion, with a year-end backlog of $6 billion. Major
product areas are airborne surveillance systems, including the Air Force and
Army Joint STARS, and the Navy E-2C Hawkeye; defense electronics; commercial
aircraft structures; and computer information systems and software.
Martin Marietta, headquartered in Bethesda, Maryland, had 1993 sales of
$9.44 billion, with a total backlog of $16.7 billion. The Corporation has nearly
93,000 employees in seven operating groups, including Electronics, Space,
Information, Services, Materials, Energy and the Sandia National Laboratories,
and has facilities in 39 states and 17 foreign countries.
<PAGE> 2
Bear, Stearns & Co. Inc. is financial advisor to Martin Marietta and dealer
manager for the tender offer. Goldman, Sachs & Co. is financial advisor to
Grumman. The tender offer will be made only pursuant to definitive offering
documents to be filed with the Securities and Exchange Commission.
<PAGE> 1
Bank of America United States Division
March 6, 1994
Ms. Janet McGregor
Treasurer
Martin Marietta Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Dear Janet:
You have advised us that Martin Marietta Corporation ("Martin Marietta" or the
"Company") proposes to raise approximately $1.9 billion in new senior bank
financing for the purchase of the common stock of "Bits." It is also our
understanding that the Company's current revolving credit facilities will be
canceled and replaced with approximately $500 million in bank financing, in
addition to the $1.9 billion referred to above. In connection with this
transaction, Bank of America National Trust and Savings Association ("Bank of
America") is pleased to propose (i) a $1.2 billion 364-day revolving credit
facility and (ii) a $1.2 billion 5-year revolving credit facility (collectively
the "Credit Facilities") under the terms and conditions described in the
attached Summary of Terms and Conditions (the "Term Sheet") for the Credit
Facilities, and hereby commits to provide 50% of the Credit Facilities.
Bank of America's aggregate commitment of $1.2 billion is subject to (i)
acceptance by you as set forth in the last paragraph of this letter by 5:00
p.m. (E.S.T.), March 10, 1994, (ii) acceptance by you of a commitment for 50%
of the Credit Facilities from Morgan Guaranty Trust Company of New York
("Morgan") on the same terms and conditions and (iii) the negotiation,
execution and delivery of mutually acceptable definitive loan documentation (to
be prepared by Morgan's counsel, Davis Polk & Wardwell) on or before May 31,
1994, or June 30, 1994 if Bank of America's commitment is extended pursuant to
the next sentence. In addition, Bank of America's commitment will expire if
your tender offer for the common stock of "Bits" does not close on or before
May 31, 1994, unless such failure is due solely to the failure to have obtained
any clearance which may be necessary under the Hart-Scott-Rodino Act, in which
case such expiration date shall be extended to June 30, 1994.
It is BA Securities, Inc.'s ("BASI") intention to syndicate the Credit
Facilities with J.P. Morgan Securities, Inc. ("JPMSI") to a group of lenders
acceptable to Bank of America, Morgan and Martin Marietta (Bank of America and
such other lenders herein being called the "Banks"). Martin Marietta agrees to
provide such assistance in the syndication effort as may be reasonably
requested, including making members of management of the Company and its
subsidiaries available to meet with prospective syndicate members, and
assisting BASI and JPMSI in the preparation of a financing memorandum. It is
our further expectation that no fewer than 30 banks will be invited to
participate in the general syndication of these facilities and that the general
syndication will be launched in approximately two weeks from the date of your
acceptance.
<PAGE> 2
By signing below Martin Marietta acknowledges its obligation to pay Bank of
America and BASI the fees as set forth in the Fee Letter dated March 6, 1994
among Martin Marietta, Bank of America and BASI and the Agency Fee Letter dated
March 6, 1994 among Martin Marietta and Bank of America.
In addition, by signing below, Martin Marietta agrees to indemnify and defend
Bank of America and BASI and each other Bank and their respective directors,
officers, agents, employees and affiliates from, and hold each of them harmless
against, any and all losses, liabilities, claims, damages or reasonable
expenses incurred by any of them arising out of or by reason of any
investigation, litigation or other proceeding brought or threatened relating to
any loan made or proposed to be made to Martin Marietta or any of its
affiliates in connection with the matters herein referred to (including, but
without limitation, any use made or proposed to be made by Martin Marietta or
any of its affiliates of the proceeds of such loans, but excluding any such
losses, liabilities, claims, damages or expenses relating to the relationships
of, between or among each of, or any of, the Banks, the Co-Arrangers and any
assignees or participants thereof after the loan agreements have been executed
by all parties thereto and excluding any such losses, liabilities, claims,
damages or expenses incurred by reason of the gross negligence or willful
misconduct of the indemnitee), including, without limitation, amounts paid in
settlement (approved in writing by Martin Marietta), court costs, and
reasonable fees and disbursements of counsel incurred in connection with any
such pending or threatened investigation, litigation or other proceeding.
If you accept and agree to this proposal, please so indicate by signing in the
space provided below and returning a copy of this letter to us. This offer
will expire at 5:00 p.m. (E.S.T.) on March 10, 1994 if this letter and the Fee
Letters have not been accepted by you by that time.
Very truly yours,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
<TABLE>
<S> <C>
By:____________________________ ACCEPTED AND AGREED TO
Name: Lori Y. Kannegieter this 6th day of March, 1994:
Title: Vice President
BA SECURITIES, INC. MARTIN MARIETTA CORPORATION
By:____________________________ By:____________________________
Name: Keith Barnish Name:
Title: Managing Director Title:
</TABLE>
2
<PAGE> 3
SUMMARY OF TERMS AND CONDITIONS
FOR PROJECT BITS
BORROWER: Martin Marietta Corporation.
GUARANTORS: Martin Marietta Technologies, Inc. and target
acquisition company.
AGGREGATE AMOUNT: $2,400,000,000.
PURPOSE: 1. To finance acquisition of "Bits" by the
Borrower.
2. General corporate purposes, including,
without limitation, working capital for
the Borrower and its subsidiaries.
CO-ARRANGERS: BA Securities, Inc. ("BASI") and J P. Morgan
Securities, Inc. ("Morgan").
DOCUMENTATION AGENT: Morgan.
ADMINISTRATIVE AGENT: Bank of America National Trust & Savings
Association ("Bank of America" or "BofA").
LENDERS: Syndicate of lenders acceptable to the
Borrower and the Co-Arrangers (the "Banks").
FACILITIES DESCRIPTION: Facility A: $1,200,000,000 364-day revolving
credit facility.
Facility B: $1,200,000,000 5-year revolving
credit facility.
BORROWING OPTIONS: LIBOR, Adjusted CD, Base Rate and Money
Market.
CD will be automatically adjusted for
reserves and other regulatory requirements.
LIBOR adjustments for Regulation D will be
charged by Banks individually.
Base rate means the higher of Bank of
America's reference rate (calculated on a
365/366 day basis) or the federal funds rate
+ 0.50%.
MONEY MARKET OPTION DESCRIPTION: The Borrower may request the Administrative
Agent to solicit competitive bids from the
Banks at a margin over LIBOR or at an
absolute rate. Each Bank will bid at its own
discretion for amounts up to the total amount
of commitments and the Borrower will be under
no obligation to accept any of the bids. Any
Money Market advances made by a Bank shall be
deemed usage of the facility for the purpose
of fees and availability. However, each
Bank's advance shall not reduce such Bank's
obligation to lend its pro rata share of the
remaining undrawn commitment.
3
<PAGE> 4
Bid Selection Mechanism: The Borrower will
determine the aggregate amount of bids,if
any, it will accept. Bids will be accepted
in order of the lowest to the highest rates
("Bid Rates"). If two or more Banks bid at
the same Bid Rate and the amount of such bids
accepted is less than the aggregate amount of
such bids, then the amount to be borrowed at
such Bid Rate will be allocated among such
Banks in proportion to the amount for which
each Bank bid at such Bid Rate. (The
Borrower may cancel the auction in its sole
discretion.)
PRICING: Pricing on the commitments and loans will be
at the following rates per annum, expressed
in basis points per annum, and will vary
according to the pricing level commensurate
with credit quality.
Basis for Pricing Levels: See attached Pricing Grids.
Facility Fees: See attached Pricing Grids.
Commitment Fees: See attached Pricing Grids.
REFERENCE LENDERS: Three Banks representative of the lender
group.
INTEREST PAYMENTS: At the end of each applicable Interest Period
or quarterly, if earlier.
INTEREST PERIODS: Syndicated Borrowings:
LIBOR Loans - 1, 2, 3, 6 or 12 (subject to
Banks' unanimous consent) months. Adjusted
CD Loans - 30, 60, 90 or 180 days.
Non-Syndicated Borrowings:
Money Market LIBOR Loans - minimum 1 month.
Money Market Absolute Rate Loans - minimum
7 days.
DRAWDOWNS: Minimum amounts of $10 million with
additional increments of $1 million.
Drawdowns are at the Borrower's option with
same day notice for Base Rate Loans, one
business day's notice for Money Market
Absolute Rate Loans, two business days'
notice for Adjusted CD Loans, three business
days' notice for LIBOR Loans (except for
LIBOR Loans with 12-month Interest Periods,
for which six business days' notice is
required), and five business days' notice for
Money Market LIBOR Loans.
PREPAYMENTS: Base Rate Loans, LIBOR Loans and Adjusted CD
Loans may be prepaid at any time on one
business day's notice for Base Rate Loans,
three business days' notice for LIBOR Loans
and one business day's notice for Adjusted CD
Loans, subject to breakage costs, if any, in
the case of LIBOR Loans and Adjusted CD
Loans. Money Market loans may not be prepaid
before the end of an Interest Period.
4
<PAGE> 5
TERMINATION OR REDUCTION
OF COMMITMENTS: The Borrower may terminate the commitments in
amounts of at least $10 million at any time
on three business days' notice.
REPRESENTATIONS AND
WARRANTIES: Customary for credit agreements of this
nature, with respect to the Borrower and its
subsidiaries (with exceptions for
non-significant subsidiaries) on the same
basis as set forth in the Short- Term
Revolving Credit Agreement and the Revolving
Credit Agreement, each dated as of March 31,
1993 as amended (collectively, the "Current
Credit Agreements"), including but not
limited to:
1. Corporate existence.
2. Corporate and governmental
authorization; no contravention;
binding effect.
3. Financial information.
4. No material adverse change.
5. Environmental matters.
6. Compliance with laws, including
ERISA.
7. No material litigation.
8. Existence, incorporation, etc. of
subsidiaries.
9. Payment of taxes.
10. Full disclosure.
CONDITIONS TO BORROWING: Customary in credit agreements of this
nature, including but not limited to:
1. Absence of default.
2. Accuracy of representations and
warranties (on the same basis as set
forth in the Current Credit
Agreements).
3. Negotiation and execution of
satisfactory closing documentation
(on the same basis as set forth in
the Current Credit Agreements) and
cancellation of the Current Credit
Agreements.
4. Deal-specific requirements;
regulatory approvals, licenses, if
any (on the same basis as set forth
in the Current Credit Agreements).
COVENANTS: Customary in credit agreements of this
nature, with respect to the Borrower and its
subsidiaries, including but not limited to:
1. Information.
2. Maintenance of property; insurance
coverage.
3. Conduct of business; maintenance of
existence.
4. Compliance with laws, including
ERISA and environmental regulations.
5
<PAGE> 6
5. Negative pledge.
6. Consolidations, mergers and sale of
assets.
7. Use of proceeds.
8. Funded debt/net worth plus funded
debt not to exceed:
<TABLE>
<CAPTION>
Ratio Applicability
----- -------------
<S> <C>
0.75 Closing through 12/31/94
0.60 Thereafter
</TABLE>
9. Minimum fixed charge coverage ratio
(defined as EBIT plus depreciation
and amortization divided by interest
expense plus preferred dividends,
measured on a rolling four quarter
basis) of 3.0, stepping up to 3.5 on
December 31, 1994; provided that
this covenant shall be in effect
only when the Borrower is rated
BBB+, Baa1 or BBB+ or lower by 2 of
the 3 rating agencies.
10. Other deal specific covenants.
Covenants will be conformed where
possible to the Current Credit
Agreements, except as noted in
Covenant #9 above.
Exempt Subsidiaries (as defined in
the Current Credit Agreements) will
be reviewed for exclusion from the
covenants.
EVENTS OF DEFAULT: Customary in credit agreements of this
nature, including but not limited to the
following:
1. Failure to pay any principal when
due, or any interest or fees payable
under the Credit Agreement within 5
days of when due.
2. Failure to meet covenants (with
grace periods, where appropriate).
3. Representations or warranties false
in any material respect when made.
4. Cross default to other Material Debt
of the Borrower and its subsidiaries
in an aggregate amount of $100
million (other than debt of "Bits"
which comes due solely as a result
of the Borrower's purchase of the
common stock of "Bits", the
subsequent merger involving "Bits"
or credit downgrades following the
purchase of the common stock of
"Bits" pursuant to terms of existing
debt of "Bits", which debt is not
expected to exceed approximately
$240,000,000) which is triggered by
an event which permits the holder to
accelerate its debt.
5. Change of ownership or control.
6. Other usual defaults with respect to
the Borrower and subsidiaries,
including but not limited to,
insolvency, bankruptcy, ERISA and
judgment defaults.
INCREASED COSTS/CHANGE
OF CIRCUMSTANCES: The Credit Agreement will contain
customary provisions protecting the
Banks in the event of unavailability
of funding, illegality, increased
costs and funding losses.
6
<PAGE> 7
INDEMNIFICATION: The Borrower will indemnify the Banks on the
same basis and with the same additional
exceptions and conditions contained in the
Current Credit Agreements against all losses,
liabilities, claims, damages, or expenses
relating to their loans, the Borrower's use
of loan proceeds or the commitments,
including but not limited to, reasonable
attorneys' fees and settlement costs (except
such as result from the Indemnitee's gross
negligence or willful misconduct).
PARTICIPATIONS AND
ASSIGNMENTS: Banks will have the right to sell
participations in their loans and commitments
with the transferability of voting rights
limited to changes in principal, rate, fees
and term. Assignments, which must be in
amounts of at least $10 million per Credit
Facility, will be allowed with the consent of
the Borrower. Assignments and participations
will be subject to the same conditions as
provided for in the Current Credit
Agreements.
EXPENSES: Borrower will pay all reasonable legal and
other out-of-pocket expenses of Morgan and
the Administrative Agent related to this
transaction and any subsequent amendments or
waivers, including the reasonable fees and
expenses of Davis Polk & Wardwell, special
counsel to Morgan.
GOVERNING LAW: State of New York.
7
<PAGE> 8
MARTIN MARIETTA CORPORATION
$1.2 BILLION
364-DAY FACILITY
(BASIS POINTS PER ANNUM)
<TABLE>
<CAPTION>
If no two of the If no two of the If no two of the If no two of the If no other basis
Borrower's Ratings Borrower's Ratings Borrower's Ratings Borrower's Ratings for pricing
Basis for Pricing are lower than A, A2 are lower than A-, are lower than BBB+, are lower than BBB, applies
----------------- or A A3 or A- Baa1 or BBB+ Baa2 or BBB
-------------------- ------------------ -------------------- -------------------- -----------------
<S> <C> <C> <C> <C> <C>
Facility Fee 8.00 10.00 12.50 12.50 15.00
Commitment Fee 0 0 0 2.50 2.50
"Unused" 8.00 10.00 12.50 15.00 17.50
LIBOR + 25.00 27.50 32.50 40.00 47.50
CD + 37.50 40.00 45.00 52.50 60.00
Base Rate + 0 0 0 0 0
"Used" L + 33.00 L + 37.50 L + 45.00 L + 52.50 L + 62.50
LIBOR Margin +
Facility Fee
</TABLE>
Borrower's Ratings refer to ratings on senior unsecured long-term debt of
Martin Marietta Technologies, Inc. guaranteed by Borrower as stated by
Standard & Poor's, Moody's and Duff & Phelps; provided that if Borrower's
senior unsecured long-term debt is rated by S&P, Moody's and D&P, Borrower's
own ratings will apply.
8
<PAGE> 9
MARTIN MARIETTA CORPORATION
$1.2 BILLION
5 YEAR FACILITY
(BASIS POINTS PER ANNUM)
<TABLE>
<CAPTION>
If no two of the If no two of the If no two of the If no two of the If no other basis
Borrower's Ratings Borrower's Ratings Borrower's Ratings Borrower's Ratings for pricing
Basis for Pricing are lower than A, A2 are lower than A-, are lower than BBB+, are lower than BBB, applies
----------------- or A A3 or A- Baa1 or BBB+ Baa2 or BBB
-------------------- ------------------ -------------------- ------------------- -----------------
<S> <C> <C> <C> <C> <C>
Facility Fee 12.50 12.50 12.50 15.00 20.00
Commitment Fee 0 0 5.00 5.00 5.00
"Unused" 12.50 12.50 17.50 20.00 25.00
LIBOR + 25.00 25.00 32.50 37.50 42.50
CD + 37.50 37.50 45.00 50.00 55.00
Base Rate + 0 0 0 0 0
"Used" L + 37.50 L + 37.50 L + 45.00 L + 52.50 L + 62.50
LIBOR Margin +
Facility Fee
</TABLE>
Borrower's Ratings refer to ratings on senior unsecured long-term debt of
Martin Marietta Technologies, Inc. guaranteed by Borrower as stated by
Standard & Poor's, Moody's and Duff & Phelps; provided that if Borrower's
senior unsecured long-term debt is rated by S&P, Moody's and D&P, Borrower's
own ratings will apply.
9
<PAGE> 10
JP Morgan
March 6, 1994
Ms. Janet McGregor
Treasurer
Martin Marietta Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Dear Janet:
You have advised us that Martin Marietta Corporation ("Martin Marietta" or the
"Company") proposes to raise approximately $1.9 billion in new senior bank
financing for the purchase of the common stock of "Bits." It is also our
understanding that the Company's current revolving credit facilities will be
canceled and replaced with approximately $500 million in bank financing, in
addition to the $1.9 billion referred to above. In connection with this
transaction, Morgan Guaranty Trust Company of New York ("Morgan") is pleased to
propose (i) a $1.2 billion 364-day revolving credit facility and (ii) a $1.2
billion 5-year revolving credit facility (collectively, the "Credit
Facilities") under the terms and conditions described in the attached Summary
of Terms and Conditions (the "Term Sheet") for the Credit Facilities, and
hereby commits to provide 50% of the Credit Facilities.
Morgan's aggregate commitment of $1.2 billion is subject to (i) acceptance by
you as set forth in the last paragraph of this letter by 5:00 p.m. (EST), March
10, 1994, (ii) acceptance by you of a commitment for 50% of the Credit
Facilities from Bank of America National Trust and Savings Association ("Bank
of America") on the same terms and conditions and (iii) the negotiation,
execution and delivery of mutually acceptable definitive loan documentation (to
be prepared by Morgan's counsel, Davis Polk & Wardwell) on or before May 31,
1994, or June 30, 1994 if Morgan's commitment is extended pursuant to the next
sentence. In addition, Morgan's commitment will expire if your tender offer
for the common stock of "Bits" does not close on or before May 31, 1994, unless
such failure is due solely to the failure to have obtained any clearance which
may be necessary under the Hart-Scott-Rodino Act, in which case such expiration
date shall be extended to June 30, 1994.
It is J.P.Morgan Securities Inc.'s ("JPMSI") intention to syndicate the Credit
Facilities with BA Securities,Inc. ("BASI") to a group of lenders acceptable to
Morgan, Bank of America and Martin Marietta (Morgan and such other lenders
herein being called the "Banks"). Martin Marietta agrees to provide such
assistance in the syndication effort as may be reasonably requested, including
making members of management of the Company and its subsidiaries available to
meet with prospective syndicate members, and assisting JPMSI and BASI in the
preparation of a financing memorandum. It is our further expectation that no
fewer than 30 banks will be invited to participate in the general syndication
of these facilities and that the general syndication will be launched in
approximately 2 weeks from the date of your acceptance.
By signing below, Martin Marietta acknowledges its obligation to pay Morgan and
JPMSI the fees set forth in the Fee Letter, dated March 6, 1994 (the "Fee
Letter") among Martin Marietta, Morgan and JPMSI.
10
<PAGE> 11
In addition, by signing below, Martin Marietta agrees to indemnify and defend
Morgan and JPMSI and each other Bank and their respective directors, officers,
agents, employees and affiliates from, and hold each of them harmless against,
any and all losses, liabilities, claims, damages or reasonable expenses
incurred by any of them arising out of or by reason of any investigation,
litigation or other proceeding brought or threatened relating to any loan made
or proposed to be made to Martin Marietta or any of its affiliates in
connection with the matters herein referred to (including, but without
limitation, any use made or proposed to be made by Martin Marietta or any of
its affiliates of the proceeds of such loans, but excluding any such losses,
liabilities, claims, damages or expenses relating to the relationships of,
between or among each of, or any of, the Banks, the Co-Arrangers (as defined in
the Term Sheet) and any assignees or participants thereof after the loan
agreements have been executed by all parties thereto and excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the
gross negligence or willful misconduct of the indemnitee), including, without
limitation, amounts paid in settlement (approved in writing by Martin
Marietta), court costs, and reasonable fees and disbursements of counsel
incurred in connection with any such pending or threatened investigation,
litigation or other proceeding.
If you accept and agree to this proposal, please so indicate by signing in the
space provided below and returning a copy of this letter to us. This offer
will expire at 5:00 p.m. (EST) on March 10, 1994, if this letter and the Fee
Letter have not been accepted by you by that time.
Very truly yours,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By:_________________________
Name:
Title:
J.P. MORGAN SECURITIES INC.
By:_________________________
Name:
Title:
ACCEPTED AND AGREED TO
this _____ day of __________, 1994:
MARTIN MARIETTA CORPORATION
By:_________________________
Name:
Title:
11
<PAGE> 12
SUMMARY OF TERMS AND CONDITIONS
FOR PROJECT BITS
BORROWER Martin Marietta Corporation.
GUARANTORS Martin Marietta Technologies, Inc. and
target acquisition company.
AMOUNT $2,400,000,000.
PURPOSE 1. To finance acquisition of "Bits" by
the Borrower.
2. General corporate purposes, including,
without limitation, working capital
for the Borrower and its subsidiaries.
CO-ARRANGERS J.P. Morgan Securities Inc. ("Morgan") and
BA Securities, Inc. ("BASI").
DOCUMENTATION AGENT Morgan.
ADMINISTRATIVE AGENT Bank of America National Trust and Savings
Association (Bank of America" or "BofA").
LENDERS Syndicate of lenders acceptable to the
Borrower and the Co- Arrangers (the
"Banks").
FACILITIES DESCRIPTION Facility A: $1,200,000,000 364-day
revolving credit facility. Facility B:
$1,200,000,000 5-year revolving credit
facility.
BORROWING OPTIONS LIBOR, Adjusted CD, Base Rate, and Money
Market.
CD will be automatically adjusted for
reserves and other regulatory requirements.
LIBOR adjustments for Regulation D will be
charged by Banks individually.
Base Rate means the higher of Bank of
America's reference rate (calculated on a
365/366 day basis) or the federal funds rate
+ 0.50%.
MONEY MARKET OPTION The Borrower may request the Administrative
DESCRIPTION Agent to solicit competitive bids from the
Banks at a margin over LIBOR or at an
absolute rate. Each Bank will bid at its
own discretion for amounts up to the total
amount of commitments and the Borrower will
be under no obligation to accept any of the
bids. Any Money Market advances made by a
Bank shall be deemed usage of the facility
for the purpose of fees and availability.
However, each Bank's advance shall not
reduce such Bank's obligation to lend its
pro rata share of the remaining undrawn
commitment.
12
<PAGE> 13
Bid Selection Mechanism: The Borrower will
determine the aggregate amount of bids, if
any, it will accept. Bids will be accepted
in order of the lowest to the highest rates
("Bid Rates"). If two or more Banks bid at
the same Bid Rate and the amount of such
bids accepted is less than the aggregate
amount of such bids, then the amount to be
borrowed at such Bid Rate will be allocated
among such Banks in proportion to the amount
for which each Bank bid at such Bid Rate.
(The Borrower may cancel the auction in its
sole discretion.)
PRICING Pricing on the commitments and loans will be
at the following rates per annum, expressed
in basis points per annum, and will vary
according to the pricing level commensurate
with credit quality.
Basis for Pricing Levels: See attached Pricing Grids.
Facility Fees: See attached Pricing Grids.
Commitment Fees: See attached Pricing Grids.
REFERENCE LENDERS Three Banks representative of the lender
group.
INTEREST PAYMENTS At the end of each applicable Interest
Period or quarterly, if earlier.
INTEREST PERIODS Syndicated Borrowings:
LIBOR Loans - 1, 2, 3, 6 or 12 (subject to
Banks' unanimous consent) months. Adjusted
CD Loans - 30, 60, 90 or 180 days.
Non-Syndicated Borrowings:
Money Market LIBOR Loans - minimum 1 month.
Money Market Absolute Rate Loans - minimum 7
days.
DRAWDOWNS Minimum amounts of $10 million with
additional increments of $1 million.
Drawdowns are at the Borrower's option with
same day notice for Base Rate Loans, one
business day's notice for Money Market
Absolute Rate Loans, two business days'
notice for Adjusted CD Loans, three business
days' notice for LIBOR Loans (except for
LIBOR Loans with 12-month Interest Periods,
for which six business days' notice is
required), and five business days' notice
for Money Market LIBOR Loans.
PREPAYMENTS Base Rate Loans, LIBOR Loans and Adjusted CD
Loans may be prepaid at any time on one
business day's notice for Base Rate Loans,
three business days' notice for LIBOR Loans
and one business day's notice for Adjusted
CD Loans, subject to breakage costs, if any,
in the case of LIBOR Loans and Adjusted CD
Loans. Money Market Loans may not be
prepaid before the end of an Interest
Period.
TERMINATION OR REDUCTION OF The Borrower may terminate the commitments
COMMITMENTS in amounts of at least $10 million at any
time on three business days' notice.
<PAGE> 14
REPRESENTATIONS AND WARRANTIES Customary for credit agreements of this
nature, with respect to the Borrower and its
subsidiaries (with exceptions for non-
significant subsidiaries) on the same basis
as set forth in the Short-Term Revolving
Credit Agreement and the Revolving Credit
Agreement, each dated as of March 31, 1993
as amended (collectively, the "Current
Credit Agreements"), including, but not
limited to:
1. Corporate existence.
2. Corporate and governmental
authorization; no contravention;
binding effect.
3. Financial information.
4. No material adverse change.
5. Environmental matters.
6. Compliance with laws, including ERISA.
7. No material litigation.
8. Existence, incorporation, etc. of
subsidiaries.
9. Payment of taxes.
10. Full disclosure.
CONDITIONS TO BORROWING Customary in credit agreements of this
nature, including but not limited to:
1. Absence of default.
2. Accuracy of representations and
warranties (on the same basis as set
forth in the Current Credit
Agreements).
3. Negotiation and execution of
satisfactory closing documentation (on
the same basis as set forth in the
Current Credit Agreements) and
cancellation of the Current Credit
Agreements.
4. Deal-specific requirements; regulatory
approvals, licenses, if any (on the
same basis as set forth in the Current
Credit Agreements).
14
<PAGE> 15
COVENANTS Customary in credit agreements of this
nature, with respect to the Borrower and its
subsidiaries, including but not limited to:
1. Information.
2. Maintenance of property; insurance
coverage.
3. Conduct of business; maintenance of
existence.
4. Compliance with laws, including ERISA
and environmental regulations.
5. Negative pledge.
6. Consolidations, mergers and sale of
assets.
7. Use of proceeds.
8. Funded debt/net worth plus funded debt
not to exceed:
<TABLE>
<CAPTION>
Ratio Applicability
----- -------------
<S> <C>
.75 Closing through 12/31/94
.60 Thereafter
</TABLE>
9. Minimum fixed charge coverage ratio
(defined as EBIT plus depreciation and
amortization divided by interest
expense plus preferred dividends,
measured on a rolling four quarter
basis) of 3.0, stepping up to 3.5 on
December 31, 1995; provided that this
covenant shall be in effect only when
the Borrower is rated BBB+, Baa1, or
BBB+ or lower by 2 of the 3 rating
agencies.
10. Other deal specific covenants.
Covenants will be conformed where possible
to the Current Credit Agreements, except as
noted in Covenant #9 above.
Exempt Subsidiaries (as defined in the
Current Credit Agreements) will be reviewed
for exclusion from the covenants.
EVENTS OF DEFAULT Customary in credit agreements of this
nature, including but not limited to, the
following:
15
<PAGE> 16
1. Failure to pay any principal when due,
or any interest or fees payable under
the Credit Agreement within 5 days of
when due.
2. Failure to meet covenants (with grace
periods, where appropriate).
3. Representations or warranties false in
any material respect when made.
4. Cross default to other Material Debt
of the Borrower and its subsidiaries
in an aggregate amount of $100 million
(other than debt of "Bits" which comes
due solely as a result of the
Borrower's purchase of the common
stock of "Bits", the subsequent merger
involving "Bits" or credit downgrades
following the purchase of the common
stock of "Bits" pursuant to terms of
existing debt of "Bits", which debt is
not expected to exceed approximately
$240,000,000) which is triggered by an
event which permits the holder to
accelerate its debt.
5. Change of ownership or control.
6. Other usual defaults with respect to
the Borrower and Subsidiaries,
including but not limited to,
insolvency, bankruptcy, ERISA and
judgment defaults.
INCREASED COSTS/CHANGE OF The Credit Agreement will contain customary
CIRCUMSTANCES provisions protecting the banks in the event
of unavailability of funding, illegality,
increased costs and funding losses.
INDEMNIFICATION The Borrower will indemnify the Banks on the
same basis and with the same additional
exceptions and conditions contained in the
Current Credit Agreements against all
losses, liabilities, claims, damages, or
expenses relating to their loans, the
Borrower's use of loan proceeds or the
commitments, including but not limited to,
reasonable attorneys' fees and settlement
costs (except such as result from the
indemnitee's gross negligence or willful
misconduct).
PARTICIPATIONS AND ASSIGNMENTS Banks will have the right to sell
participations in their loans and
commitments with the transferability of
voting rights limited to changes in
principal, rate, fees and term.
Assignments, which must be in amounts of at
least $10 million per Credit Facility, will
be allowed with the consent of the Borrower.
Assignments and participations will be
subject to the same conditions as provided
for in the Current Credit Agreements.
EXPENSES Borrower will pay all reasonable legal and
other out-of-pocket expenses of Morgan and
the Administrative Agent related to this
transaction and any subsequent amendments or
waivers, including the reasonable fees and
expenses of Davis Polk & Wardwell, special
counsel to Morgan.
GOVERNING LAW State of New York.
16
<PAGE> 17
MARTIN MARIETTA CORPORATION
$1.2 BILLION
364-DAY FACILITY
(BASIS POINTS PER ANNUM)
<TABLE>
<CAPTION>
If no two of the If no two of the If no two of the If no two of the
Borrower's Ratings Borrower's Ratings Borrower's Ratings Borrower's Ratings If no other basis
are lower than A, A2 are lower than A-, are lower than BBB+, are lower than BBB, for pricing
Basis for Pricing or A A3 or A- Baa1 or BBB+ Baa2 or BBB applies
----------------- -------------------- ------------------ -------------------- ------------------- -----------------
<S> <C> <C> <C> <C> <C>
Facility Fee 8.00 10.00 12.50 12.50 15.00
Commitment Fee 0 0 0 2.50 2.50
"Unused" 8.00 10.00 12.50 15.00 17.50
LIBOR + 25.00 27.50 32.50 40.00 47.50
CD + 37.50 40.00 45.00 52.50 60.00
Base Rate + 0 0 0 0 0
"Used" L + 33.00 L + 37.50 L + 45.00 L + 52.50 L + 62.50
LIBOR Margin +
Facility Fee
</TABLE>
Borrower's Ratings refers to ratings on senior unsecured long-term debt of
Martin Marietta Technologies, Inc. guaranteed by Borrower as stated by
Standard & Poors, Moody's and Duff & Phelps; provided that if Borrower's
senior unsecured long-term debt is rated by S&P, Moody's and D&P, Borrower's
own ratings will apply.
17
<PAGE> 18
MARTIN MARIETTA CORPORATION
$1.2 BILLION
5-YEAR FACILITY
(BASIS POINTS PER ANNUM)
<TABLE>
<CAPTION>
If no two of the If no two of the If no two of the If no two of the
Borrower's Ratings Borrower's Ratings Borrower's Ratings Borrower's Ratings If no other basis
are lower than A, A2 are lower than A-, are lower than BBB+, are lower than BBB, for pricing
Basis for Pricing or A A3 or A- Baa1 or BBB+ Baa2 or BBB applies
----------------- -------------------- ------------------ -------------------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
Facility Fee 12.50 12.50 12.50 15.00 20.00
Commitment Fee 0 0 5.00 5.00 5.00
"Unused" 12.50 12.50 17.50 20.00 25.00
LIBOR + 25.00 25.00 32.50 37.50 42.50
CD + 37.50 37.50 45.00 50.00 55.00
Base Rate + 0 0 0 0 0
"Used" L + 37.50 L + 37.50 L + 45.00 L + 52.50 L + 62.50
LIBOR Margin +
Facility Fee
</TABLE>
Borrower's Ratings refers to ratings on senior unsecured long-term debt of
Martin Marietta Technologies, Inc. guaranteed by Borrower as stated by
Standard & Poors, Moody's and Duff & Phelps; provided that if Borrower's
senior unsecured long-term debt is rated by S&P, Moody's and D&P, Borrower's
own ratings will apply.
18
