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EXHIBIT 99.(a)(1)(i)
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(together with associated rights)
of
LITTON INDUSTRIES, INC.
at
$80.00 NET PER SHARE
and
All Outstanding Shares of Series B $2 Cumulative Preferred Stock
of
LITTON INDUSTRIES, INC.
at
$35.00 NET PER SHARE
by
LII ACQUISITION CORP.
a wholly owned subsidiary of
NORTHROP GRUMMAN CORPORATION
THE OFFER (AS DEFINED HEREIN) AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, FEBRUARY 2, 2001 UNLESS THE OFFER
IS EXTENDED.
This Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of December 21, 2000 (the "Merger Agreement"), among Northrop Grumman
Corporation ("Parent"), LII Acquisition Corp. ("Purchaser") and Litton
Industries, Inc. (the "Company"). The Board of Directors of the Company (the
"Company Board") has unanimously approved the Merger Agreement, the Offer and
the Merger (each as defined herein), and unanimously recommends that holders
of Common Shares (as defined herein) accept the Offer and tender their Common
Shares pursuant to the Offer. The Company Board makes no recommendation with
respect to the tender of Preferred Shares (as defined herein).
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer a total of at
least 25,562,006 Common Shares and Preferred Shares, which represents a
majority of the total outstanding Common Shares and Preferred Shares on a
fully-diluted basis (the "Minimum Tender Condition") and (ii) the expiration
or termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and, to the
extent required, the approval of the Merger by the Commission of the European
Union under Council Regulation (EEC) No. 4064/89 of the Council of the
European Union.
IMPORTANT
Any stockholder wishing to tender all or any portion of its shares of common
stock, par value $1.00 per share (together with the associated rights to
purchase preferred stock of the Company pursuant to the Rights Agreement dated
as of August 17, 1994 between the Company and The Bank of New York, the
"Common Shares") or its shares of Series B $2 Cumulative Preferred Stock, par
value $5.00 per share (the "Preferred Shares") in the Offer should either: (i)
complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and mail or
deliver the Letter of Transmittal and all other required documents to the
Depositary (as defined herein) together with certificates representing the
Common Shares and Preferred Shares tendered; (ii) follow the procedure for
book-entry transfer set forth in Section 3 of this Offer to Purchase entitled
"Procedures for Accepting the Offer and Tendering Common Shares and Preferred
Shares;" or (iii) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for the stockholder.
A stockholder having Common Shares or Preferred Shares registered in the name
of a broker, dealer, commercial bank, trust company, or other nominee must
contact such person if they desire to tender such Common Shares or Preferred
Shares.
Any stockholder who wishes to tender Common Shares or Preferred Shares and
cannot deliver certificates representing such Common Shares or Preferred
Shares and all other required documents to the Depositary on or prior to the
date on which the Offer expires or who cannot comply with the procedures for
book-entry transfer on a timely basis may tender such Common Shares or
Preferred Shares pursuant to the guaranteed delivery procedure set forth in
Section 3 of this Offer to Purchase entitled "Procedures for Accepting the
Offer and Tendering Common Shares and Preferred Shares." Questions and
requests for assistance may be directed to the Information Agent or the Dealer
Manager at their respective addresses and telephone numbers set forth below.
Additional copies of this Offer to Purchase, the Letter of Transmittal, the
Notice of Guaranteed Delivery and other related materials may be obtained from
the Information Agent or the Dealer Manager. Stockholders may also contact
their broker, dealer, commercial bank, trust company or other nominee.
The Dealer Manager for the Offer is:
[LOGO FOR SALOMON SMITH BARNEY]
The date of this Offer to Purchase is January 5, 2001.
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TABLE OF CONTENTS
<TABLE>
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Page
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<C> <S> <C>
SUMMARY ................................................................ 3
INTRODUCTION............................................................ 7
THE TENDER OFFER........................................................ 9
1. Terms of the Offer................................................. 9
Acceptance of Payment and Payment for Common Shares and Preferred
2. Shares............................................................. 10
Procedures for Accepting the Offer and Tendering Common Shares and
3. Preferred Shares................................................... 12
4. Withdrawal Rights.................................................. 14
5. Material U.S. Federal Income Tax Considerations.................... 15
6. Price Range of Common Shares and Preferred Shares.................. 16
7. Certain Information Concerning the Company......................... 17
8. Selected Financial Information and Certain Projections............. 18
9. Certain Information Concerning Parent and Purchaser................ 20
10. Source and Amount of Funds......................................... 21
Background of the Offer; Past Contacts or Negotiations with the
11. Company............................................................ 22
12. The Merger Agreement; Other Arrangements........................... 23
13. Purpose of the Offer; Plans for the Company........................ 31
14. Certain Effects of the Offer....................................... 32
15. Dividends and Distributions........................................ 33
16. Certain Conditions of the Offer.................................... 34
17. Certain Legal Matters; Regulatory Approvals........................ 35
18. Appraisal Rights................................................... 37
19. Fees and Expenses.................................................. 39
20. Miscellaneous...................................................... 40
SCHEDULE I: DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER.... 41
1. Directors and Executive Officers of Parent......................... 41
2. Directors and Executive Officers of Purchaser...................... 45
SCHEDULE II: SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW........ 46
</TABLE>
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SUMMARY
The following is a summary of some of the key terms of this offer to
purchase all of the outstanding Common Shares and Preferred Shares. We urge
you to read carefully the remainder of this offer to purchase and the
accompanying letter of transmittal because the information in this Summary is
not complete. Additional important information is contained in the remainder
of this offer to purchase and the letter of transmittal.
. The Purchaser.
The Purchaser referred to in this offer is LII Acquisition Corp., a Delaware
corporation formed for the purpose of making this tender offer and the merger
described herein. We are a wholly owned subsidiary of Northrop Grumman
Corporation, a Delaware corporation. See Section 9 of this offer to purchase--
"Certain Information Concerning Parent and Purchaser."
. Classes and Amounts of Shares Sought.
We are seeking to purchase all of the outstanding Common Shares and all of
the outstanding Preferred Shares. See "Introduction" and Section 1 of this
offer to purchase--"Terms of the Offer."
. Offer Prices; Fees and Commissions.
We are offering to pay $80.00 per Common Share and $35.00 per Preferred
Share, net to you in cash, less any required withholding of taxes and without
the payment of interest. If you are the record owner of your shares and you
tender your shares to us in the offer, you will not have to pay brokerage fees
or similar expenses. If you own your shares through a broker or other nominee,
and your broker tenders your shares on your behalf, your broker or nominee may
charge you a fee for doing so. You should consult your broker or nominee to
determine whether any charges will apply. We will not be obligated to pay for
or reimburse you for such broker or nominee charges. See the "Introduction"
Section to this offer to purchase. In addition, if you do not complete and
sign the Substitute Form W-9 included in the letter of transmittal, you may be
subject to required backup federal income tax withholding. See Instruction 9
to the letter of transmittal.
. Source of Funds.
LII Acquisition Corp. will be provided with approximately $4.0 billion by
its parent company, Northrop Grumman Corporation for the purchase of Common
Shares and Preferred Shares in the offer. Northrop Grumman Corporation will
borrow the majority of such funds pursuant to a commitment letter which it has
received from Credit Suisse First Boston and The Chase Manhattan Bank. The
loan commitments are subject to normal and customary conditions. However, the
offer is not conditioned upon any financing arrangements. See Section 10 of
this offer to purchase--"Source and Amount of Funds." Northrop Grumman
Corporation is one of the world leaders in the aerospace and defense industry.
As of December 31, 1999, Northrop Grumman Corporation's fiscal year-end,
Northrop Grumman Corporation had total assets of $7.616 billion and net income
of $467 million. See Section 9 of this offer to purchase--"Certain Information
Concerning Parent and Purchaser."
. Time For Acceptance.
You will have at least until 12:00 midnight, New York City time, on Friday,
February 2, 2001, to decide whether to tender your shares in the offer. If you
cannot deliver everything that is required in order to make a valid tender by
that time, you may be able to use a guaranteed delivery procedure, which is
described later in this offer to purchase. See Sections 1 and 3 of this offer
to purchase--"Terms of the Offer" and "Procedures for Accepting the Offer and
Tendering Common Shares and Preferred Shares."
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. Extension of the Offer.
We may extend the offer as follows:
. for additional 5 business day periods if at the time the offer is
scheduled to expire (including at the end of any extension) any of the
conditions to the offer are not satisfied or waived by us;
. for any period during which we are required to extend the offer by the
rules of the Securities and Exchange Commission; and
. for a subsequent offering period of up to 20 business days in order to
acquire over 90% of the outstanding Common Shares or Preferred Shares. A
subsequent offering period, if one is provided, will be an additional
opportunity for stockholders to tender their Common Shares and Preferred
Shares and receive the offer consideration for such shares promptly after
they are tendered.
See Section 1 of this offer to purchase--"Terms of the Offer."
. Notification of Extensions.
We will make a public announcement if we extend the offer, and we will
inform EquiServe Trust Company, the depositary for the offer, of the extension
by not later than 9:00 a.m., New York City time, on the next business day
after the day on which the offer was scheduled to expire. See Section 1 of
this offer to purchase--"Terms of the Offer."
. Significant Conditions to the Offer.
We are not obligated to purchase any tendered shares if the total number of
Common Shares and Preferred Shares validly tendered is less than 25,562,006,
which represents a majority of the total outstanding number of Common Shares
and Preferred Shares on a fully-diluted basis. The offer is also subject to a
number of other conditions including the expiration or termination of any
applicable waiting period under the Hart-Scott-Rodino Act or a similar
regulation of the European Union. See Sections 1 and 16 of this offer to
purchase--"Terms of the Offer," and "Certain Conditions of the Offer."
. Method of Tender.
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal, to EquiServe Trust
Company, the depositary for the offer, not later than the time the tender
offer expires. If your shares are held in street name, the shares can be
tendered by your nominee through the depositary. If you cannot deliver
something that is required by the depositary by the expiration of the offer,
you may get a little extra time to do so by having a broker, a bank or other
fiduciary which is a member of the Securities Transfer Agents Medallion
Program or other eligible institution, guarantee that the missing items will
be received by the depositary within three New York Stock Exchange trading
days. However, the depositary must receive the missing items within that three
trading day period. See Section 3 of this offer to purchase--"Procedures for
Accepting the Offer and Tendering Common Shares and Preferred Shares."
. Time of Payment.
If all of the conditions of the offer are satisfied or waived and your
shares of Litton Industries, Inc. are accepted for payment, we will pay you
promptly after the expiration of the offer. See Section 2 of this offer to
purchase--"Acceptance of Payment and Payment for Common Shares and Preferred
Shares."
. Withdrawal of Tendered Shares.
You can withdraw previously tendered shares at any time until the offer has
expired and, if we have not agreed to accept your shares for payment by
Tuesday, March 6, 2001, you can withdraw them at any time after such time
until we accept the shares for payment. See Section 4 of this offer to
purchase--"Withdrawal Rights."
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To withdraw previously tendered shares, you must deliver a written notice of
withdrawal, or a facsimile of one, with the required information to the
depositary while you still have the right to withdraw the shares. If you
tendered by giving instructions to a broker or bank, you must instruct the
broker or bank to arrange for the withdrawal of your shares. See Sections 1
and 4 of this offer to purchase--"Terms of the Offer" and "Withdrawal Rights."
. Board of Directors Recommendation.
We are making the offer pursuant to an agreement and plan of merger dated
December 21, 2000 among Litton Industries, Inc., Northrop Grumman Corporation
and us. The Board of Directors of each of Litton Industries, Inc. and Northrop
Grumman Corporation has unanimously approved the merger agreement, the offer
and the proposed merger with LII Acquisition Corp. The Board of Directors of
Litton Industries, Inc. unanimously recommends that holders of Common Shares
accept the offer and tender their Common Shares. The Board of Directors of
Litton Industries, Inc. is not taking a position with respect to whether
holders of Preferred Shares should accept the offer and tender their Preferred
Shares. See Section 11 of this offer to purchase--"Background of the Offer;
Past Contacts or Negotiations with the Company."
. Merger After Tender Offer.
If we purchase in the offer a total of at least 25,562,006 Common Shares and
Preferred Shares on a fully-diluted basis, and all other applicable conditions
are met, LII Acquisition Corp. will be merged with Litton Industries, Inc. and
all remaining stockholders holding Common Shares (other than stockholders who
have properly perfected appraisal rights under Delaware state law) will
receive the same price per Common Share paid in the offer, that is $80.00 per
share in cash (or any greater amount per Common Share we pay in the offer).
See "Introduction" and Section 13 of this offer to purchase--"Purpose of the
Offer; Plans for the Company."
Any Preferred Shares that are not tendered in the offer or not accepted for
purchase by LII Acquisition Corp. will remain outstanding after our merger
with Litton Industries, Inc. The rights, preferences and privileges of such
untendered or unpurchased Preferred Shares will remain the same after the
offer and the merger, as before the offer. If, however, we acquire two-thirds
or more of the Preferred Shares we will have sufficient voting power to amend
the terms of the Preferred Shares under Litton Industries, Inc.'s Restated
Certificate of Incorporation. See Section 12 of this offer to purchase--"The
Merger Agreement, Other Arrangements--Preferred Shares" and Section 13--
"Purpose of the Offer; Plans for the Company--Preferred Shares."
. Appraisal Rights.
No appraisal rights are available in connection with the offer. After the
offer, appraisal rights will be available to holders of Common Shares who do
not vote in favor of the merger (if a stockholder vote is required), subject
to and in accordance with Delaware state law. Holders of Preferred Shares will
not have appraisal rights in connection with the merger if the Preferred
Shares are either listed on a national securities exchange or quoted on the
Nasdaq National Market System on the record date fixed to determine those
stockholders entitled to vote on the merger (if a stockholder vote is
required). A holder of Common Shares or Preferred Shares must properly perfect
its right to seek an appraisal under Delaware state law in connection with the
merger to have appraisal rights as provided under Delaware state law. See
Section 18 of this offer to purchase--"Appraisal Rights."
. Market for Common Shares and Preferred Shares After the Offer.
If we purchase all of the tendered shares and the merger takes place, there
will no longer be a trading market for the Common Shares. There may remain a
limited trading market for the Preferred Shares. Even if the merger does not
take place, if we purchase all of the tendered Common Shares and Preferred
Shares:
. there may be so few remaining stockholders and publicly held shares that
the Common Shares and Preferred Shares no longer will be eligible to be
traded through the New York Stock Exchange, the Pacific Exchange or
another exchange or the National Association of Securities Dealers
Automated Quotation System;
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. there may not be a public trading market for the Common Shares and
Preferred Shares; and
. Litton Industries, Inc. may cease making filings with the Securities and
Exchange Commission or otherwise cease being required to comply with the
Securities and Exchange Commission's rules relating to publicly held
companies. See Section 14 of this offer to purchase--"Certain Effects of
the Offer."
. Return of Tendered Shares.
If any Common Shares or Preferred Shares that you tender are not accepted
for any reason, certificates representing such shares will be returned to you
or to the person you specify in your tendering documents. See Section 2 of
this offer to purchase--"Acceptance of Payment and Payment for Common Shares
and Preferred Shares."
. Recent Market Prices.
On December 21, 2000, the last trading day before Northrop Grumman
Corporation and Litton Industries, Inc. announced that they had signed the
merger agreement, (a) the last sale price of the Common Shares reported on the
New York Stock Exchange was $62.6250 per share and (b) the last sale price of
the Preferred Shares reported on the New York Stock Exchange was $24.0000 per
share. On January 4, 2001, the last trading day before LII Acquisition Corp.
commenced the offer, (i) the last sale price of the Common Shares reported on
the New York Stock Exchange was $78.9375 per share and (ii) the last sale
price of the Preferred Shares reported on the New York Stock Exchange was
$34.2500. We advise you to obtain a recent quotation for shares of Litton
Industries, Inc. in deciding whether to tender your shares. See Section 6 of
this offer to purchase--"Price Range of Common Shares and Preferred Shares.
. Effect of the Offer on Preferred Shares.
If you own Preferred Shares and decide not to tender them for purchase in
the offer, your untendered and unpurchased Preferred Shares will remain
outstanding and unchanged as the result of the merger. If two-thirds or more
of the Preferred Shares are acquired by LII Acquisition Corp. in the offer or
otherwise, LII Acquisition Corp. will have sufficient voting power to approve
amendments to the terms of the Preferred Shares under the Company's Restated
Certificate of Incorporation. Also, if there are less than 300 record holders
of Preferred Shares remaining, LII Acquisition Corp. currently anticipates
that it will deregister and delist the Preferred Shares from the New York
Stock Exchange. See Section 13 of this offer to purchase--"Purpose of the
Offer; Plans for the Company--Preferred Shares" and Section 18--"Appraisal
Rights."
. Questions and Information.
You can call Georgeson Shareholder Communications Inc., at (800) 223-2064
(toll free) or Salomon Smith Barney Inc. at (877) 319-4978 (toll free).
Georgeson Shareholder Communications Inc. is acting as the information agent
and Salomon Smith Barney Inc. is acting as the dealer manager for our tender
offer. See the back cover page of this offer to purchase.
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To the Holders of Common Stock
(including the associated rights) and
Series B $2 Cumulative Preferred Stock
of Litton Industries, Inc.:
INTRODUCTION
LII Acquisition Corp., a Delaware corporation ("Purchaser") and a wholly
owned subsidiary of Northrop Grumman Corporation, a Delaware corporation
("Parent"), hereby offers to purchase (a) all of the outstanding shares of
common stock, par value $1.00 per share (together with the associated rights
to purchase preferred stock pursuant to the Rights Agreement dated as of
August 17, 1994 between Litton Industries, Inc. and The Bank of New York, the
"Common Shares") of Litton Industries, Inc., a Delaware corporation (the
"Company"), at a purchase price of $80.00 per Common Share (the "Common Offer
Price") and (b) all of the outstanding shares of Series B $2 Cumulative
Preferred Stock, par value $5.00 per share (the "Preferred Shares") of the
Company, at a purchase price of $35.00 per Preferred Share (the "Preferred
Offer Price"), in each case, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in this Offer
to Purchase (as amended or supplemented from time to time, the "Offer to
Purchase") and Letter of Transmittal (the "Letter of Transmittal," which,
together with the Offer to Purchase, as each may be amended or supplemented
from time to time, collectively constitute the "Offer").
Tendering stockholders who are record owners of the Common Shares and
Preferred Shares and tender directly to the Depositary (as defined below) will
not be obligated to pay brokerage fees or commissions or, except as otherwise
provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes
with respect to the purchase of Common Shares or Preferred Shares by Purchaser
pursuant to the Offer. Stockholders who hold their Common Shares or Preferred
Shares through a broker or bank should consult such institution as to whether
it charges any service fees. Parent or Purchaser will pay all charges and
expenses of Salomon Smith Barney Inc. as dealer manager (the "Dealer
Manager"), EquiServe Trust Company, as depositary (the "Depositary"), and
Georgeson Shareholder Communications Inc., as information agent (the
"Information Agent"), incurred in connection with the Offer. See Section 19 of
this Offer to Purchase--"Fees and Expenses."
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
total of at least 25,562,006 Common Shares and Preferred Shares, which
represents a majority of the total outstanding number of Common Shares and
Preferred Shares on a fully-diluted basis (the "Minimum Tender Condition") and
(ii) the expiration or termination of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and, to the extent required, the approval of the Merger (as defined
below) by the Commission of the European Union under Council Regulation (EEC)
No. 4064/89 of the Council of the European Union. The Offer also is subject to
certain other terms and conditions. See Sections 1, 16 and 17 of this Offer to
Purchase.
The Offer will expire at 12:00 midnight, New York City time, on Friday,
February 2, 2001 (the "Expiration Date") unless the Offer is extended, in
which case the Expiration Date will be the latest time and date the Offer, as
extended, expires.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of December 21, 2000, among the Company, Parent and Purchaser (the "Merger
Agreement") pursuant to which, after completion of the Offer and satisfaction
or waiver of certain conditions, Purchaser will be merged with and into the
Company and the Company will be the surviving corporation (the "Merger"). On
the effective date of the Merger (the "Effective Time"), each outstanding
Common Share (other than Common Shares owned by Purchaser or any subsidiary or
affiliate of Purchaser or the Company or held in the treasury of the Company
or by stockholders who have properly perfected appraisal rights under Delaware
state law) will by virtue of the Merger, and without any action by the holder
thereof, be cancelled and converted into the right to receive $80.00 per
Common Share in cash, or any higher price per Common Share paid pursuant to
the Offer, without interest thereon (the "Merger Consideration"). Each
Preferred Share that remains outstanding at the Effective Time shall, without
any change, remain outstanding as a Preferred Share of the surviving
corporation. The Merger Agreement is more fully
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described in Section 12 of this Offer to Purchase entitled "The Merger
Agreement; Other Arrangements." Certain United States federal income tax
consequences of the sale of Common Shares and Preferred Shares pursuant to the
Offer and the Merger, as the case may be, are discussed in Section 5 of this
Offer to Purchase entitled "Material U.S. Federal Income Tax Considerations."
The Company Board (i) has unanimously approved the Merger Agreement, the
Offer and the Merger, (ii) has unanimously determined that the Offer and the
Merger are fair to, and in the best interests of, the holders of Common Shares,
and (iii) unanimously recommends that holders of Common Shares accept the Offer
and tender their Common Shares pursuant to the Offer. The Company Board makes
no recommendation with respect to the tender of Preferred Shares.
Merrill Lynch & Co., the Company's financial advisor (the "Advisor"), has
delivered to the Company Board a written opinion dated December 21, 2000, to
the effect that, as of that date and based on and subject to the matters
described in the opinion, the $80.00 per Common Share cash consideration to be
received by the holders of Common Shares in the Offer and the Merger is fair to
such holders from a financial point of view. A copy of the Advisor's written
opinion, which describes the assumptions made, procedures followed, matters
considered and limitations on the review undertaken, is contained in the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") filed with the Securities and Exchange Commission (the "SEC")
on January 5, 2001 in connection with the Offer, a copy of which (without
certain exhibits) is being furnished to stockholders of the Company
concurrently herewith. Stockholders are urged to read the full text of such
opinion carefully in its entirety.
If the Minimum Tender Condition and the other conditions to the Offer are
satisfied and the Offer is consummated, Purchaser will own a sufficient number
of Common Shares and Preferred Shares to ensure that the Merger will be
approved. Under the Delaware General Corporation Law ("DGCL") if, after
consummation of the Offer, Purchaser owns at least 90% of the Common Shares and
at least 90% of the Preferred Shares then outstanding, Purchaser will be able
to cause the Merger to occur without a vote of the Company's stockholders.
However, if Purchaser owns less than 90% of the Common Shares or less than 90%
of the Preferred Shares then outstanding after consummation of the Offer, a
vote of the Company's stockholders will be required under the DGCL to approve
the Merger. See Sections 12 and 18 of this Offer to Purchase--"The Merger
Agreement; Other Arrangements" and "Appraisal Rights."
The Company has informed Purchaser that, as of December 31, 2000, there were
45,577,834 Common Shares issued and outstanding (excluding 2,743,083 Common
Shares held in the Company's treasury), there were 5,194,720 Common Shares
reserved for issuance pursuant to outstanding options under the Company's stock
option plans and there were 410,643 Preferred Shares issued and outstanding. As
of the date of this Offer to Purchase, Parent beneficially owns no Common
Shares or Preferred Shares and no rights to acquire Common Shares or Preferred
Shares of the Company. See Section 13 of this Offer to Purchase--"Purpose of
the Offer; Plans for the Company."
The Merger is subject to the satisfaction or waiver of certain conditions,
including, among other things, the approval and adoption of the Merger
Agreement by the requisite vote of the stockholders of the Company, if
required. If the Minimum Tender Condition is satisfied, Purchaser would have
sufficient voting power to approve the Merger without the affirmative vote of
any other stockholder of the Company and has agreed to vote its shares in favor
of the Merger. The Company has agreed, if required, to duly call, give notice
of, convene and hold a meeting of its stockholders, to be held as promptly as
practicable after the expiration of the Offer for the purpose of obtaining
stockholder approval of the Merger Agreement. See Section 12 of this Offer to
Purchase--"The Merger Agreement; Other Arrangements."
No appraisal rights are available in connection with the Offer. Stockholders
may have appraisal rights in connection with the Merger if they comply with
applicable Delaware state law and do not vote such Common Shares or Preferred
Shares in favor of the Merger or, if no such vote is required, if they comply
with the requirements of Delaware state law regarding the perfection of
available appraisal rights. See Section 18 of this Offer to Purchase--
"Appraisal Rights."
This Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully and in their entirety
before any decision is made with respect to the Offer.
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THE TENDER OFFER
1. Terms of the Offer.
Upon the terms and subject to the conditions of the Offer (including the
terms and conditions of any extension or amendment, if the Offer is extended
or amended), Purchaser will accept for payment and pay the Common Offer Price
for all Common Shares and the Preferred Offer Price for all Preferred Shares
validly tendered and not properly withdrawn prior to the Expiration Date as
permitted under Section 4 of this Offer to Purchase entitled "Withdrawal
Rights."
The Offer is conditioned upon, among other things, the Minimum Tender
Condition. The "Minimum Tender Condition" refers to the requirement that there
have been validly tendered and not properly withdrawn a total of at least
25,562,006 Common Shares and Preferred Shares, which represents a majority of
the total outstanding Common Shares and Preferred Shares on a fully-diluted
basis. The Offer also is conditioned upon expiration or termination of any
applicable waiting period under the HSR Act, the approval, to the extent
required, of the Commission of the European Union under Council Regulation
(EEC) No. 4064/89 of the Council of the European Union, and the other
conditions described in Section 16 of this Offer to Purchase entitled "Certain
Conditions of the Offer."
Extension of the Offer. Subject to the limitations set forth in this Offer,
the Merger Agreement and the applicable rules and regulations of the SEC
described below, Purchaser reserves the right, at any time and from time to
time in its sole discretion, to extend the period during which the Offer is
open by giving oral or written notice of such extension to the Depositary.
During any such extension, all Common Shares and Preferred Shares previously
tendered and not properly withdrawn will remain subject to the Offer, subject
to the right, if any, of a tendering stockholder to withdraw such
stockholder's Common Shares and Preferred Shares. See Section 4 of this Offer
to Purchase--"Withdrawal Rights." There can be no assurance that Purchaser
will exercise its right to extend the Offer.
Purchaser has agreed that it will not, without the prior written consent of
the Company (a) decrease the Common Offer Price or the Preferred Offer Price,
(b) change the form of consideration payable in the Offer, (c) decrease the
number of Common Shares or Preferred Shares sought to be purchased in the
Offer, (d) impose additional conditions to the Offer other than those set
forth in the Merger Agreement, (e) amend any other term of the Offer in any
manner adverse to the holders of Common Shares or Preferred Shares, (f) reduce
the time period during which the Offer shall remain open or (g) waive the
Minimum Tender Condition.
Pursuant to the Merger Agreement, Parent may, without the consent of the
Company, cause Purchaser to (i) extend the Offer from time to time in its sole
discretion, if at the then-scheduled expiration date of the Offer, any of the
conditions to the Offer have not been satisfied or waived, for such amount of
time as is reasonably necessary to cause the Offer conditions to be satisfied,
but not to exceed five business days for each such extension, (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the SEC or the staff of the SEC applicable to the Offer, or
(iii) extend the Offer for a subsequent offering period (as provided in Rule
14d-11 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of up to twenty business days beyond the latest expiration date that
would otherwise be permitted under clause (ii) of this sentence in order to
acquire over 90% of the outstanding Common Shares and over 90% of the
outstanding Preferred Shares. Parent has agreed to cause Purchaser to extend
the Offer as permitted by the Merger Agreement for the shortest time periods
which it reasonably believes are necessary to consummate the Offer if the
conditions to the Offer have not been satisfied or waived so long as the
Merger Agreement has not been terminated pursuant to its terms.
The rights reserved in the foregoing paragraphs are in addition to any
additional rights described in Section 16 of this Offer to Purchase entitled
"Certain Conditions of the Offer."
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement. An announcement, in the case
of an extension, will be made no later than 9:00 a.m.,
9
<PAGE>
New York City time, on the next business day after the previously scheduled
expiration of the Offer, in accordance with the public announcement
requirements of Rule 14e-1(d). Subject to applicable law (including Rules 14d-
4(d), and 14d-6(c) under the Exchange Act, which require that material changes
be promptly disseminated to stockholders in a manner reasonably designed to
inform them of such changes) and without limiting the manner in which Purchaser
may choose to make any public announcement, Purchaser shall have no obligation
to publish, advertise or otherwise communicate any such public announcement
other than by issuing a press release to the Dow Jones News Service.
Subject to the Merger Agreement, if Purchaser makes a material change in the
terms of the Offer or the information concerning the Offer or waives any
material condition of the Offer, Purchaser will disseminate additional tender
offer materials (including by public announcement as set forth below) and
extend the Offer to the extent required by Rules 14d-4(d) and 14e-1 under the
Exchange Act. These rules generally provide that the minimum period during
which a tender 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 the percentage of securities sought, will depend upon the facts
and circumstances then existing, including the relative materiality of the
changed terms or information. In the SEC's view, an offer should remain open
for a minimum of five business days from the date the material change is first
published, sent or given to stockholders, and, if material changes are made
with respect to information that approaches the significance of price and the
percentage of securities sought, a minimum of ten business days may be required
to allow for adequate dissemination and investor response. With respect to a
change in price, a minimum ten business day period from the date of the change
is generally required to allow for adequate dissemination to stockholders.
Accordingly, if, prior to the Expiration Date, Purchaser increases or decreases
the consideration offered pursuant to the Offer, and if the Offer is scheduled
to expire at any time earlier than the tenth business day from the date that
notice of the increase or decrease is first published, sent or given to holders
of Common Shares and Preferred Shares, Purchaser will extend the Offer at least
until the expiration of such tenth business day. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight, New
York City time.
Pursuant to, but subject to certain conditions in, the Merger Agreement,
Purchaser has agreed to (i) accept for payment all Common Shares and Preferred
Shares validly tendered and not withdrawn pursuant to the Offer as soon as
permitted under applicable law, and (ii) pay for such Common Shares and
Preferred Shares promptly thereafter.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to
holders of Common Shares and Preferred Shares. This Offer to Purchase and the
related Letter of Transmittal will be mailed to record holders of Common Shares
and Preferred Shares whose names appear on the Company's stockholder list and
will be furnished, for subsequent transmittal to beneficial owners of Common
Shares and Preferred Shares, to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. Acceptance of Payment and Payment for Common Shares and Preferred Shares.
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), Purchaser will accept for payment, purchase and pay for all Common
Shares and Preferred Shares which have been validly tendered and not properly
withdrawn pursuant to the Offer at the earliest time following expiration of
the Offer when all conditions to the Offer described in Section 16 of this
Offer to Purchase entitled "Certain Conditions of the Offer" have been
satisfied or waived by Purchaser. Subject to the Merger Agreement and any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Common Shares or Preferred Shares promptly after termination or withdrawal of
the Offer), Purchaser expressly reserves the right to delay the acceptance for
payment of or the payment for any tendered Common Shares or Preferred Shares in
order to comply in whole or in part with any applicable laws, including,
without limitation,
10
<PAGE>
the HSR Act and similar foreign statutes and regulations. See Section 17 of
this Offer to Purchase--"Certain Legal Matters; Regulatory Approvals."
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Common Shares and Preferred Shares validly
tendered and not properly withdrawn as, if and when Purchaser gives oral or
written notice to the Depositary of Purchaser's acceptance for payment of such
Common Shares or Preferred Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Common Shares and Preferred
Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price for the Common Shares and Preferred Shares with the
Depositary, which will act as agent for tendering stockholders for the purposes
of receiving payments from Purchaser and transmitting payments to tendering
stockholders. Under no circumstances will Purchaser pay interest on the
purchase price for any Common Shares or Preferred Shares accepted for payment,
regardless of any extension of the Offer or any delay in making payment.
The reservation by Purchaser of the right to delay the acceptance, purchase
of or payment for Common Shares or Preferred Shares is subject to the terms of
the Merger Agreement and the provisions of Rule 14e-1(c) under the Exchange
Act, which requires Purchaser to pay the consideration offered or return the
Common Shares and Preferred Shares deposited by or on behalf of tendering
stockholders promptly after the termination or withdrawal of the Offer.
In all cases, Purchaser will pay for Common Shares and Preferred Shares
purchased in the Offer only after timely receipt by the Depositary of (i) the
certificates representing the Common Shares or Preferred Shares, as the case
may be (the "Share Certificates") or confirmation (a "Book-Entry Confirmation")
of a book-entry transfer of such Common Shares or Preferred Shares into the
Depositary's account at The Depositary Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 3 of this Offer to
Purchase entitled "Procedures for Accepting the Offer and Tendering Common
Shares and Preferred Shares;" (ii) the appropriate Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message (as defined below) in lieu of the Letter of Transmittal; and (iii) any
other documents required under the Letter of Transmittal.
"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 message states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Common Shares or Preferred Shares which are the
subject of the Book-Entry Confirmation that the participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce the Letter of Transmittal against the participant.
If Purchaser does not purchase any tendered Common Shares or Preferred Shares
pursuant to the Offer for any reason, or if a holder of Common Shares or
Preferred Shares submits Share Certificates representing more Common Shares or
Preferred Shares than are tendered, Share Certificates representing unpurchased
or untendered Common Shares and Preferred Shares will be returned, without
expense to the tendering stockholder (or, in the case of Common Shares or
Preferred Shares tendered by book-entry transfer into the Depositary's account
at the Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 3 of this Offer to Purchase entitled "Procedures for Accepting the
Offer and Tendering Common Shares and Preferred Shares," such Common Shares or
Preferred Shares will be credited to an account maintained at the Book-Entry
Transfer Facility), as promptly as practicable following the expiration or
termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the Common Offer Price
or the Preferred Offer Price, Purchaser will pay the increased Common Offer
Price to all holders of Common Shares and the increased Preferred Offer Price
to all holders of Preferred Shares that are purchased in the Offer, whether or
not the Common Shares or Preferred Shares were tendered before the increase in
the Common Offer Price or Preferred Offer Price, as the case may be.
11
<PAGE>
Purchaser reserves the right to transfer or assign, in whole or in part,
from time to time, to one or more direct or indirect subsidiaries of Parent,
the right to purchase all or any portion of the Common Shares or Preferred
Shares tendered pursuant to the Offer, but any such transfer or assignment
will not relieve Purchaser of its obligations under the Offer and will in no
way prejudice the rights of tendering stockholders to receive payment for
Common Shares or Preferred Shares validly tendered and accepted for payment
pursuant to the Offer.
3. Procedures for Accepting the Offer and Tendering Common Shares and
Preferred Shares.
Valid Tenders. To tender Common Shares or Preferred Shares pursuant to the
Offer, a stockholder must comply with one of the following: (a) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions of the Letter of Transmittal, with any
required signature guarantees, certificates for the Common Shares or Preferred
Shares to be tendered 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 prior to the Expiration
Date, (b) such Common Shares or Preferred Shares must be properly delivered
pursuant to the procedures for book-entry transfer, as described below, and a
confirmation of such delivery received by the Depositary, which confirmation
must include an Agent's Message if the tendering stockholder has not delivered
a Letter of Transmittal, prior to the Expiration Date, or (c) the tendering
stockholder must comply with the guaranteed delivery procedures set forth
below.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Common Shares and Preferred Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of the
Book-Entry Transfer Facility may make a book-entry delivery of Common Shares
or Preferred Shares by causing the Book-Entry Transfer Facility to transfer
such Common Shares or Preferred Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Common
Shares and Preferred Shares may be effected through book-entry transfer at the
Book-Entry Transfer Facility, either the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message in lieu of the Letter of
Transmittal, 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 on or prior to the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedure set forth
below.
Delivery of documents to the Book-Entry Transfer Facility in accordance with
the Book-Entry Transfer Facility's procedures does not constitute delivery to
the Depositary. The method of delivery of Share Certificates, the Letter of
Transmittal and all other required documents, including delivery through the
Book-Entry Transfer Facility, is at the option and risk of the tendering
stockholder, and the delivery will be deemed made only when actually received
by the Depositary (including, in the case of a book-entry transfer, a Book-
Entry Confirmation). If delivery is by mail, registered mail with return
receipt requested and properly insured is recommended. In all cases,
sufficient time should be allowed to ensure timely delivery.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal where Common Shares or Preferred Shares are tendered (i) by a
registered holder of Common Shares or Preferred Shares who has not completed
either the box labeled "Special Delivery Instructions" or the box labeled
"Special Payment Instructions" on the Letter of Transmittal or (ii) for the
account of a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of a recognized Medallion Program
approved by the Securities Transfer Association Inc., including the Securities
Transfer Agents Medallion Program ("STAMP"), the Stock Exchange Medallion
Program ("SEMP") and the New York Stock Exchange Medallion Signature Program
("MSP"), or any other "eligible guarantor institution" as defined in Rule
17Ad-15 under the Exchange Act (each of the foregoing, an "Eligible
Institution"). In all other cases, all signatures on a Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 1 of the Letter
of Transmittal.
If a Share Certificate is registered in the name of a person or persons
other than the signer of the Letter of Transmittal, or if payment is to be
made or delivered to a person other than the registered holder, or if a
12
<PAGE>
Share Certificate for unpurchased Common Shares or Preferred Shares is to be
issued or returned to a person other than the registered holder, then the
Share Certificate must be endorsed or accompanied by a duly executed stock
power, in either case signed exactly as the name of the registered holder
appears on the Share Certificate, with the signature on such Share Certificate
or stock power guaranteed by an Eligible Institution as provided in the Letter
of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Common Shares or
Preferred Shares pursuant to the Offer and the Share Certificates evidencing
such stockholder's Common Shares or Preferred Shares are not immediately
available or such stockholder cannot deliver the Share Certificates and all
other required documents to the Depositary prior to the Expiration Date, or
such stockholder cannot complete the procedure for delivery by book-entry
transfer on a timely basis, the stockholder's Common Shares and Preferred
Shares may nevertheless be tendered, provided that all of the following
conditions are satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) the Depositary receives, as described below, a properly completed and
duly executed Notice of Guaranteed Delivery (the "Notice of
Guaranteed Delivery"), substantially in the form made available by
Purchaser, on or prior to the Expiration Date; and
(iii) the Depositary receives the Share Certificates (or a Book-Entry
Confirmation) evidencing all tendered Common Shares and Preferred
Shares, in proper form for transfer, in each case together with the
Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message), and any other
documents required by the Letter of Transmittal, within three New
York Stock Exchange trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the
form of Notice of Guaranteed Delivery made available by Purchaser.
Notwithstanding any other provision of the Offer, Purchaser will pay for
Common Shares and Preferred Shares only after timely receipt by the Depositary
of: (i) Share Certificates representing, or Book-Entry Confirmation with
respect to, the Common Shares and/or Preferred Shares, (ii) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
together with any required signature guarantees (or, in the case of a book-
entry transfer, an Agent's Message), and (iii) any other documents required by
the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Common Shares or Preferred Shares will be determined by Purchaser in
its sole discretion, which determination will be final and binding on all
parties. Purchaser reserves the absolute right to reject any and all tenders
determined by it not to be in proper form or the acceptance for payment of
which may, in the opinion of its counsel, be unlawful. Subject to the terms of
the Merger Agreement, Purchaser also reserves the absolute right to waive any
condition of the Offer or any defect or irregularity in the tender of any
Common Shares or Preferred Shares of any particular stockholder of the
Company, whether or not similar defects or irregularities are waived in the
case of other stockholders of the Company.
Subject to the Merger Agreement, Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Common Shares or
Preferred Shares will be deemed to have been validly made until all defects
and irregularities have been cured or waived. None of Parent, Purchaser, or
any of their respective affiliates or assigns, the Dealer Manager, the
Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of Purchaser as such stockholder's
agents, attorneys-in-fact and proxies, with full power of
13
<PAGE>
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Common Shares and/or
Preferred Shares tendered by such stockholder and accepted for payment by
Purchaser and with respect to any and all other Common Shares or Preferred
Shares or other securities or rights issued or issuable in respect of those
Common Shares or Preferred Shares on or after the date of this Offer to
Purchase. All such powers of attorney and proxies will be considered
irrevocable and coupled with an interest in the tendered Common Shares or
Preferred Shares, as the case may be. This appointment will be effective when,
and only to the extent that, Purchaser accepts such Common Shares or Preferred
Shares for payment. Upon such acceptance for payment, all other powers of
attorney and proxies given by such stockholder with respect to such Common
Shares or Preferred Shares and such other securities or rights prior to such
payment will be revoked without further action, and no subsequent powers of
attorney or proxies may be given, nor may any subsequent written consent be
executed by such stockholder (and, if given or executed, will not be deemed to
be effective) with respect thereto. With respect to the Common Shares or
Preferred Shares for which the appointment is effective, the designees of
Purchaser will be empowered to exercise all voting and other rights of such
stockholder as the designees, in their sole discretion, may deem proper at any
annual or special meeting of the Company's stockholders or any adjournment or
postponement thereof, or by written consent in lieu of any such meeting or
otherwise. In order for Common Shares or Preferred Shares to be deemed validly
tendered, immediately upon the acceptance for payment of such Common Shares or
Preferred Shares, Purchaser or its designee must be able to exercise full
voting rights to the extent permitted under applicable law with respect to such
Common Shares or Preferred Shares.
Tender Constitutes Binding Agreement. Purchaser's acceptance for payment of
Common Shares and Preferred Shares tendered pursuant to any of the procedures
described above will constitute a binding agreement between Purchaser and the
tendering stockholder upon the terms and subject to the conditions of the
Offer.
4. Withdrawal Rights.
Tenders of Common Shares and Preferred Shares made pursuant to the Offer are
irrevocable, except that such Common Shares and Preferred Shares may be
withdrawn (i) at any time prior to the Expiration Date and (ii) at any time
after Tuesday, March 6, 2001 (or such later date as may apply if the Offer is
extended), unless accepted for payment by Purchaser pursuant to the Offer prior
to that date. See Section 1 of this Offer to Purchase--"Terms of the Offer."
If Purchaser extends the Offer, is delayed in its acceptance for payment of
Common Shares or Preferred Shares, or is unable to accept Common Shares or
Preferred Shares for payment pursuant to the Offer for any reason, then,
without prejudice to Purchaser's rights under the Offer, the Depositary may
nevertheless retain tendered Common Shares or Preferred Shares on behalf of
Purchaser, and such Common Shares and Preferred Shares may not be withdrawn,
except to the extent that tendering stockholders are entitled to and duly
exercise their withdrawal rights as described in this Section 4. Any such delay
will be by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover page of this Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Common Shares
or Preferred Shares to be withdrawn, the number of Common Shares and Preferred
Shares to be withdrawn and (if Share Certificates have been tendered) the name
of the registered holder of such Common Shares or Preferred Shares, if
different from that of the person who tendered such Common Shares and Preferred
Shares. If Share Certificates representing Common Shares or Preferred Shares to
be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such Share Certificates, the serial
numbers shown on such Share Certificates must be submitted to the Depositary
and the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution, except in the case of Common Shares or Preferred Shares tendered
for the account of an Eligible Institution. If Common Shares or Preferred
Shares have been tendered pursuant to the procedure for book-entry transfer as
set forth in Section 3 of this Offer to Purchase entitled "Procedures for
Accepting the Offer and Tendering Common Shares and Preferred Shares," the
notice of withdrawal must specify
14
<PAGE>
the name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Common Shares or Preferred Shares, in which case a
notice of withdrawal will be effective if delivered to the Depositary by any
method of delivery described in the first sentence of this paragraph.
Withdrawals of Common Shares and Preferred Shares may not be rescinded. Any
Common Shares or Preferred Shares properly withdrawn will be considered not
validly tendered for purposes of the Offer. However, withdrawn Common Shares
and Preferred Shares may be tendered again at any time prior to the Expiration
Date by following one of the procedures described in Section 3 of this Offer to
Purchase entitled "Procedures for Accepting the Offer and Tendering Common
Shares and Preferred Shares."
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser in its sole discretion,
whose determination will be final and binding. None of Parent, Purchaser, or
their respective affiliates or assigns, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
5. Material U.S. Federal Income Tax Considerations.
The following is a summary of the material United States federal income tax
consequences that are generally applicable to holders of Preferred Shares and
Common Shares who exchange such shares for cash pursuant to the Offer and to
holders of Common Shares who exchange such shares for cash pursuant to the
Merger. This discussion is based on currently existing federal income tax laws,
all of which are subject to change. Any such change, which may or may not be
retroactive, could alter the tax consequences of the Offer and the Merger that
are described below. Stockholders should be aware that this discussion does not
deal with all federal income tax considerations that may be relevant to
particular stockholders in light of their individual circumstances. For
example, this discussion does not address the tax consequences of the Offer and
the Merger to stockholders who are dealers in securities, are foreign persons,
or do not hold their Common Shares or Preferred Shares as capital assets. Nor
does it address the tax consequences of the Offer or the Merger to stockholders
who acquired such shares through the exercise of employee stock options or
otherwise as compensation or stockholders who are otherwise subject to special
tax treatment under the Internal Revenue Code of 1986, as amended (the "Code")
(such as insurance companies, tax-exempt entities and regulated investment
companies). In addition, the following discussion does not address the tax
consequences of the Offer or the Merger to the stockholders under foreign,
state, or local tax laws. Accordingly, all stockholders are urged to consult
their own tax advisors to determine the particular tax consequences to them of
the Offer and the Merger, including the applicable federal, state, local and
foreign tax consequences.
In general, the receipt of cash by the holders of the Common Shares and the
Preferred Shares pursuant to the Offer and/or the Merger will constitute a
taxable transaction for United States federal income tax purposes. For United
States federal income tax purposes, a tendering stockholder would generally
recognize gain or loss in an amount equal to the difference between the amount
of cash received by the stockholder pursuant to the Offer and/or the Merger and
the stockholder's tax basis for the Common Shares or Preferred Shares that are
tendered and purchased pursuant to the Offer and/or the Merger. Generally, gain
or loss must be calculated separately for each identifiable block of shares of
Company stock (i.e., shares acquired at the same cost in a single transaction).
If tendered Common Shares or Preferred Shares are held by a tendering
stockholder as capital assets, that gain or loss will be a capital gain or
loss. Any such capital gain or loss will be long term if, as of the date of the
disposition of its Common Shares or Preferred Shares, the stockholder held such
Common Shares or Preferred Shares for more than one year, or will be short term
if, as of such date, the stockholder held such Common Shares or Preferred
Shares for one year or less. In the case of Company stockholders who are
individuals, long term capital gain is currently subject to tax at a favorable
tax rate. There are limitations on the deductibility of capital losses.
Backup U.S. Federal Income Tax Withholding. Under the United States federal
income tax laws, the payments made by the Depositary to stockholders of the
Company, pursuant to the Offer and/or the Merger may, under certain
circumstances, be subject to backup withholding at a rate of 31%. To avoid
backup withholding
15
<PAGE>
with respect to payments made pursuant to the Offer and/or the Merger, each
stockholder must provide the Depositary with proof of an applicable exemption
or a correct taxpayer identification number, and must otherwise comply with the
applicable requirements of the backup withholding rules. The Letter of
Transmittal provides instructions on how to provide the Depositary with
information to prevent backup withholding with respect to cash received
pursuant to the Offer and/or the Merger. See Instruction 9 of the Letter of
Transmittal. Any amount withheld under the backup withholding rules is not an
additional tax. Rather, the tax liability of the persons subject to backup
withholding will be reduced by the amount of tax withheld.
The foregoing is intended as a general summary only. Because the tax
consequences to a particular stockholder may differ based on that stockholder's
particular circumstances, each stockholder should consult his or her own tax
advisor regarding the tax consequences of the Offer and the Merger.
6. Price Range of Common Shares and Preferred Shares.
The Common Shares trade on the New York Stock Exchange under the symbol
"LIT," and the Preferred Shares trade on the New York Stock Exchange under the
symbol "LIT pb." The following tables set forth, for the calendar quarters
shown, the high and low closing sale prices for the Common Shares and the
Preferred Shares, respectively, on the New York Stock Exchange based on
published financial sources.
Litton Industries, Inc. Common Stock
<TABLE>
<CAPTION>
High Low
------- -------
<S> <C> <C>
Calendar 1998
First Quarter................................................. 63.1875 55.0625
Second Quarter................................................ 63.4375 55.5000
Third Quarter................................................. 62.0625 47.4375
Fourth Quarter................................................ 68.0000 55.6250
Calendar 1999
First Quarter................................................. 65.2500 50.6250
Second Quarter................................................ 74.6250 54.4375
Third Quarter................................................. 73.3750 54.0625
Fourth Quarter................................................ 55.7500 42.4375
Calendar 2000
First Quarter................................................. 53.3750 26.8125
Second Quarter................................................ 46.8750 38.0000
Third Quarter................................................. 59.8125 40.7500
Fourth Quarter................................................ 80.6250 43.7500
</TABLE>
16
<PAGE>
Litton Industries, Inc. Series B $2 Cumulative Preferred Stock
<TABLE>
<CAPTION>
High Low
------- -------
<S> <C> <C>
Calendar 1998
First Quarter................................................. 37.0000 31.0000
Second Quarter................................................ 35.0000 28.7500
Third Quarter................................................. 35.0000 28.0000
Fourth Quarter................................................ 34.6250 29.0000
Calendar 1999
First Quarter................................................. 34.1250 29.8750
Second Quarter................................................ 33.6250 28.6250
Third Quarter................................................. 31.6250 26.9375
Fourth Quarter................................................ 30.5625 26.9375
Calendar 2000
First Quarter................................................. 28.0000 24.0000
Second Quarter................................................ 27.7500 21.0000
Third Quarter................................................. 27.0000 22.5000
Fourth Quarter................................................ 35.0000 23.0000
</TABLE>
In the Merger Agreement, the Company has represented to each of Parent and
Purchaser that as of November 30, 2000, there were 45,418,647 Common Shares
(excluding 2,734,083 Common Shares held in the Company's treasury) and 410,643
Preferred Shares issued and outstanding. On December 21, 2000, the last full
day of trading before the public announcement of the execution of the Merger
Agreement, the closing price of the Common Shares on the New York Stock
Exchange was $62.6250 per Common Share and the closing price of the Preferred
Shares on the New York Stock Exchange was $24.0000 per Preferred Share. On
January 4, 2001, the last full day of trading before the commencement of the
Offer, the closing price of the Common Shares on the New York Stock Exchange
was $78.9375 per Common Share and the closing price of the Preferred Shares on
the New York Stock Exchange was $34.2500 per Preferred Share.
Stockholders are urged to obtain a current market quotation for the Common
Shares and the Preferred Shares.
The Company does not pay any dividends on its Common Shares, and the Merger
Agreement prohibits the Company from declaring or paying any dividends, except
for the payment of dividends on the Preferred Shares and except for the
payment of dividends or distributions by a wholly owned subsidiary of the
Company to the Company or another wholly owned subsidiary of the Company paid
in the ordinary course of business, from the date of the Merger Agreement
until the Effective Time.
7. Certain Information Concerning the Company.
The Company is a Delaware corporation with its principal offices located at
21240 Burbank Boulevard, Woodland Hills, California 91367-6675. The telephone
number of the Company is (818) 598-5000.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended July 31, 2000 (the "Company's 10-K"), the Company designs, builds, and
overhauls surface ships for government and commercial customers worldwide and
is a provider of defense and commercial electronics technology, components and
materials for customers worldwide. In addition, the Company is a prime
contractor to the United States government for information technology and
provides specialized IT services to commercial customers in local and foreign
jurisdictions.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the SEC relating to its
business, financial condition and other matters. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
17
<PAGE>
Room 1024, Washington, D.C. 20549, and at the SEC's regional offices located
at Seven World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Information regarding the public reference facilities may be obtained from the
SEC by telephoning 1-800-SEC-0330. The Company's filings are also available to
the public on the SEC's Internet site (http://www.sec.gov). Copies of such
materials may also be obtained by mail from the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
You may also read and copy reports and other information at the office of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005 or
the office of the Pacific Exchange, 301 Pine Street, San Francisco, California
94104.
8. Selected Financial Information and Certain Projections.
Certain Selected Financial Information
Set forth below is certain selected historical consolidated financial
information with respect to the Company, excerpted from the Company's 10-K for
the fiscal year ended June 31, 2000 and from the Company's unaudited interim
consolidated financial statements in the Company's quarterly report on Form
10-Q for the fiscal quarter ended October 31, 2000 (the "Company's 10-Q"),
each as filed with the SEC pursuant to the Exchange Act. More comprehensive
financial information is included in such reports (including management's
discussion and analysis of financial condition and results of operation) and
other documents filed by the Company with the SEC, and the following summary
is qualified in its entirety by reference to such reports and other documents
along with all of the financial information and notes contained therein.
Copies of such reports and other documents may be examined at or obtained from
the SEC in the manner set forth above.
LITTON INDUSTRIES, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per share data)
<TABLE>
<CAPTION>
3 Months Ended
October 31 Year Ended July 31
------------------ ----------------------------------------------
2000 1999 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales and Service
Revenues............... $1,083.1 $1,000.0 $5,588.2 $4,827.5 $4,399.9 $4,175.5 $3,611.5
Total Segment Operating
Profit................. (1) (1) 562.1 339.3 410.0 369.6 320.1
Earnings before
Cumulative Effect of a
Change in Accounting
Principle.............. 44.9 52.8 221.2 120.6 181.4 162.0 150.9
Earnings Per Share
Basic................. 0.98 1.09 4.79 2.63 3.91 3.48 3.24
Diluted............... 0.97 1.07 4.74 2.58 3.82 3.40 3.15
Total Assets............ $4,279.5 (1) $4,835.9 $4,260.1 (2) (2) (2)
Total Current
Liabilities............ 1,108.4 (1) 1,531.4 1,709.3 (2) (2) (2)
Total Stockholders'
Investment............. 1,544.6 (1) 1,495.9 1,300.2 (2) (2) (2)
</TABLE>
--------
(1) Not provided in the Company's 10-Q for the quarter ended October 31, 2000.
(2) Not provided in the Company's 10-K for the fiscal year ended July 31,
2000.
Although each of Parent and Purchaser has no knowledge that would indicate
that any statements contained above taken from or based on such documents and
records of the Company are untrue, neither Parent nor Purchaser can take
responsibility for the accuracy or completeness of the information contained
in such documents and records, of the Company or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Parent or Purchaser.
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<PAGE>
Certain Projections
Prior to entering into the Merger Agreement, the Company provided to Parent
certain information which was not publicly available, including a variety of
projected financial data based on various differing assumptions for future
fiscal years. The Company has advised that it does not publicly disclose
projections, and the projections furnished to Parent were not prepared with a
view to public disclosure. Parent analyzed the information in the projections,
certain publicly available information and additional information obtained in
Parent's due diligence review of the Company, along with Parent's own
estimates of potential cost savings and benefits in evaluating the Offer and
the Merger.
The projections provided to Parent by the Company included, among other
things, the following forecasts of the Company's revenues, net income
(excluding pension income) and earnings per share (excluding pension income),
respectively (in millions, except per share data): $5,850.0, $151.9 and $3.31
in 2001; $6,473.0, $186.4 and $4.06 in 2002; $6,827.0, $220.8 and $4.81 in
2003; $7,183.0, $248.4 and $5.41 in 2004; and $7,436.0, $278.7, and $6.07 in
2005. Including pension income, the projected net income and earnings per
share were, respectively (in millions, except per share data): $220.5 and
$4.80 in 2001; $254.9 and $5.55 in 2002; $289.4 and $6.30 in 2003; $317.0 and
$6.90 in 2004; and $347.3 and $7.56 in 2005.
Other projections provided to Parent by the Company indicated the potential
for increased profitability based upon more aggressive assumptions. Based upon
the more aggressive assumptions, these projections indicated revenues and net
income (including pension income), respectively (in millions), of: $6,019.0
and $228.0 in 2001; $6,740.0 and $300.0 in 2002; $7,329.0 and $414.0 in 2003;
$7,920.0 and $490.0 in 2004; and $8,426.0 and $548.0 in 2005. The Company has
advised Parent that these projections do not give effect to customary
processes of adjustment by senior management of projections provided by
operating/divisional management.
The projections were prepared by the Company independently and provided to
Parent prior to entering the Merger Agreement. The projections were not
prepared by the Company with a view to public disclosure or compliance with
published guidelines of the SEC, the guidelines established by the American
Institute of Certified Public Accountants for Prospective Financial
Information or generally accepted accounting principles. The Company's
certified public accountants have not examined or compiled any of the
projections. The projections were not prepared with the approval of the
Company Board. The projections are included herein to give the Company's
stockholders access to information that was not publicly available and that
the Company provided to Parent.
The projections are forward-looking statements that are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those statements and should be read with caution. The projections are
subjective in many respects and thus susceptible to interpretations and
periodic revisions based on actual experience and recent developments. While
presented with numerical specificity, the projections were not prepared by the
Company in the ordinary course and are based upon a variety of estimates and
hypothetical assumptions made by management of the Company with respect to,
among other things, industry performance, general economic, market, interest
rate and financial conditions, sales, cost of goods sold, operating and other
revenues and expenses, capital expenditures and working capital of the
Company, and other matters which may not be realized and are inherently
subject to significant business, economic and competitive uncertainties and
contingencies, all of which are difficult to predict and many of which are
beyond the Company's control. The Company's operations are subject to various
additional risks and uncertainties resulting from its position as a supplier,
either directly or as subcontractor or team member, to the United States
government and its agencies as well as to foreign governments and agencies;
actual outcomes are dependent upon factors, including, without limitation, the
Company's successful performance of internal plans; government customers'
budgetary restraints; customer changes in short-range and long-range plans;
domestic and international competition in both the defense and commercial
areas; product performance; continued development and acceptance of new
products; performance issues with key suppliers and subcontractors; government
import and export policies; acquisition or termination of government
contracts; the outcome of political and legal processes; legal, financial, and
governmental risks related to international transactions and global needs for
military aircraft, military and civilian
19
<PAGE>
electronic systems and support and information technology. Accordingly, there
can be no assurance that the assumptions made in preparing the projections
will prove accurate, and actual results may be materially greater or less than
those contained in the projections. In addition, the projections do not take
into account any of the transactions contemplated by the Merger Agreement,
including the Offer and the Merger. These events may cause actual results to
differ materially from the projections.
For these reasons, as well as the bases and assumptions on which the
projections were compiled by the Company, the inclusion of such projections
herein should not be regarded as an indication that the Company, Parent,
Purchaser or any of their respective affiliates or representatives considers
such information to be an accurate prediction of future events, and the
projections should not be relied on as such. None of such persons assumes any
responsibility for the reasonableness, completeness, accuracy or reliability
of such projections. No party nor any of their respective affiliates or
representatives has made, or makes, any representation to any person regarding
the information contained in the projections and none of them intends to
update or otherwise revise the projections to reflect circumstances existing
after the date when made or to reflect the occurrences of future events even
in the event that any or all of the assumptions are shown to be in error.
9. Certain Information Concerning Parent and Purchaser.
Purchaser is a Delaware corporation and, to date, has engaged in no
activities other than those incident to its formation and the Offer and the
Merger. Purchaser is currently a wholly owned subsidiary of Parent. The
principal executive offices of Purchaser are located at 1840 Century Park
East, Los Angeles, California 90067 and Purchaser's telephone number is (310)
553-6262.
Parent is a Delaware corporation with its principal executive offices
located at 1840 Century Park East, Los Angeles, California 90067. The
telephone number of Parent is (310) 553-6262. Parent is an advanced technology
company operating in the Integrated Systems Sector ("ISS"), Electronic Systems
and Sensors Sector ("ES/3/") and Information Technology ("Logicon") segments
of the broadly defined aerospace and defense industry. The ISS segment
includes the design, development and manufacturing of aircraft and aircraft
subassemblies. The ES/3/ segment includes the design, development,
manufacturing and integration of electronic systems and components for
military and commercial use. Logicon, Parent's information technology segment,
includes the design, development, operation and support of computer systems
for scientific and management information.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of Parent and Purchaser and certain other information are set forth
in Schedule I to this Offer to Purchase.
Except as described elsewhere in this Offer to Purchase, (i) none of Parent,
Purchaser nor, to the best knowledge of Parent and Purchaser, any of the
persons listed in Schedule I to this Offer to Purchase or any associate or
majority-owned subsidiary of Parent or Purchaser or any of the persons so
listed beneficially owns or has any right to acquire, directly or indirectly,
any Common Shares or Preferred Shares; and (ii) none of Parent, Purchaser nor,
to the best knowledge of Parent and Purchaser, any of the persons or entities
referred to above nor any director, executive officer or subsidiary of any of
the foregoing has effected any transaction in the Common Shares or Preferred
Shares during the past 60 days.
Except as provided in the Merger Agreement or as otherwise described in this
Offer to Purchase, none of Parent, Purchaser nor, to the best knowledge of
Parent and Purchaser, any of the persons listed in Schedule I to this Offer to
Purchase, 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 voting of such securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss, guarantees of profits, division of profits or loss or
the giving or withholding of proxies.
20
<PAGE>
Except as set forth in this Offer to Purchase, (i) none of Parent, Purchaser
nor, to the best knowledge of Parent and Purchaser, any of the persons listed
on Schedule I hereto, has had any business relationship or transaction with
the Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the SEC applicable
to the Offer, and (ii) there have been no contracts, negotiations or
transactions between Parent or any of its subsidiaries or, to the best
knowledge of Parent, any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, a tender offer or
other acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets.
None of the persons listed in Schedule I to this Offer to Purchase has,
during the past five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). None of the persons listed in
Schedule I has, during the past five years, been a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to federal or state securities laws, or a finding of any violation of
federal or state securities laws.
In the normal course of their business, Parent and the Company are parties
to transactions and agreements. During the two years ended October 31, 2000,
no such transaction had an aggregate value in excess of one percent of the
Company's consolidated revenues.
10. Source and Amount of Funds.
The Offer is not conditioned upon any financing arrangements.
Parent and Purchaser estimate that the total amount of funds required to
purchase all of the outstanding Common Shares and Preferred Shares that Parent
or its affiliates do not own pursuant to the Offer and the Merger and to pay
related fees and expenses will be approximately $4.0 billion. Purchaser
expects to obtain the funds necessary to consummate the Offer and the Merger
from Parent. Parent has received a commitment letter from Credit Suisse First
Boston ("CSFB") and The Chase Manhattan Bank ("Chase") providing for the
structure, arrangement and syndication of senior unsecured loans (the "Loans")
of up to $6.0 billion, the initial proceeds of which will be used solely to
acquire Common Shares and Preferred Shares in the Offer and the Merger, to
retire and refinance certain outstanding debt of the Company and to pay any
related expenses. The proceeds of subsequent borrowings under the Loans will
be used for general corporate purposes of Parent and the Company. The Loans
will be in the form of a 364-day Revolving Credit Facility and a separate
Five-Year Revolving Credit Facility, each in an aggregate maximum principal
amount of $3.0 billion. Each of the facilities will be an unsecured senior
credit facility and will contain usual and customary affirmative and negative
covenants, customary financial covenants (including (a) maximum ratios of
Funded Debt to Total Capitalization, (b) maximum ratios of Funded Debt to Cash
Flow and (c) minimum ratios of Cash Flow minus Capital Expenditures to Fixed
Charges). Events of Default will include (i) failure to pay principal,
interest or other amounts, (ii) breach of representations and warranties,
(iii) breach of covenants, (iv) certain bankruptcy events, (v) cross default
and cross acceleration, (vi) certain ERISA matters, (vii) certain judgments
and (viii) change in control events, which will be defined in the final
documents for the Loans. Interest rates for the Loans will be Adjusted LIBOR
(which will at all times include statutory reserves) or the Adjusted Base Rate
(defined as the higher of Chase's Prime Rate and the Federal Funds Effective
Rate plus 0.5%), at the election of Parent, in each case plus spreads
depending upon a schedule of certain specified Standard & Poor's and Moody's
Investor Services ratings of Parent. Parent may elect periods of one, two,
three or six months for Adjusted LIBOR borrowings under the Loans.
It is expected that the Loan documents will be negotiated while the Offer is
outstanding and signed on or before the Expiration Date. No alternate
financing plans exist.
21
<PAGE>
11. Background of the Offer; Past Contacts or Negotiations with the Company.
In May 2000, Kent Kresa, Chairman and Chief Executive Officer of Parent, and
Michael Brown, Chairman and Chief Executive Officer of the Company, agreed
that a small group of directors, officers and senior employees from the two
companies would have discussions looking into the possibility of a strategic
transaction. A confidentiality letter agreement was signed, dated June 23,
2000 (the "Confidentiality Agreement"), by which each company agreed to
maintain the confidentiality of non-public information which might be received
from the other and also agreed that no disclosure would be made concerning the
discussions between the parties. From that time to the present a number of
meetings and conversations have taken place between representatives of the two
companies.
In mid-September 2000, Mr. Kresa contacted Mr. Brown to advise him that
Parent would have an interest in acquiring the Company in a transaction in
which the holders of Common Shares would receive a combination of cash and
stock having a value equivalent, on a per share basis, to 0.70 of a share of
Parent common stock. Subsequent to the conversation, a representative of
Parent was advised that the Company did not wish to pursue the proposal.
On October 20, 2000, the Company publicly announced its intention to explore
the sale of its advanced electronics group. Later the same day, Mr. Kresa
spoke with Mr. Brown and wrote to him reiterating Parent's interest in an
acquisition of the Company in a transaction involving cash and stock valued at
0.70 of a share of Parent common stock, for each Common Share. Mr. Kresa
pointed out that the sale of the advanced electronics group would be
inconsistent with Parent's plans for the combined company and would diminish
Parent's interest in the combination. In response, Mr. Brown advised Mr. Kresa
that the transaction value proposed by Parent was not sufficient for the
Company Board to support such a transaction.
On November 2, 2000, Mr. Kresa again wrote to Mr. Brown increasing the value
of Parent's proposal so that holders of Common Shares would receive a
combination of cash and Parent common stock having a value, per share,
equivalent to 0.75 of a share of Parent common stock and offering the
potential for some additional value to be delivered to the holders of Common
Shares through a contingent value mechanism.
Following a meeting of the Company Board on November 3, 2000, Mr. Brown
again advised Mr. Kresa that the value proposed by Parent was considered
insufficient by the Company Board. On November 29, 2000, Mr. Kresa wrote to
Mr. Brown to specifically propose two alternatives for a potential
transaction. The first proposed alternative would provide the Company's
stockholders with a combination of cash and stock valued at 0.75 of a share of
Parent common stock plus a contingent value instrument which would provide the
Parent's stockholders with 75% of the net after-tax recovery in Parent's
pending litigation with Honeywell, Inc. as well as certain other litigation,
and between 40% and 60% of the net after-tax value of the Electronic
Components and Materials business segment achieved within the five-year period
following closing. The second alternative proposed was for an acquisition for
cash at $72.00 per Common Share.
Following further discussions and negotiations and the exchange of
additional non-public information between the parties, the board of directors
of Parent met on December 20, 2000 and unanimously approved the Merger
Agreement. The Company Board met on December 21, 2000 and also approved the
Merger Agreement and determined unanimously that the transactions contemplated
thereby, including the Offer and the Merger, were fair to, and in the best
interests of, the holders of Common Shares of the Company.
On December 21, 2000, the Merger Agreement was executed by Parent, Purchaser
and the Company, and Parent and the Company issued a joint press release
announcing the transaction.
On January 5, 2001, Parent commenced the Offer.
22
<PAGE>
12. The Merger Agreement; Other Arrangements.
The Merger Agreement
The following is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as an exhibit to the Tender Offer
Statement on Schedule TO (the "Schedule TO") filed by Parent and Purchaser on
January 5, 2001 with the SEC in connection with the Offer. The following
summary may not contain all of the information important to you, and is
qualified in its entirety by reference to the Merger Agreement, which is
deemed incorporated by reference in this Offer to Purchase. Accordingly, we
encourage you to read the entire Merger Agreement. The Merger Agreement may be
examined and copies may be obtained from the SEC in the same manner as set
forth in Section 7 of this Offer to Purchase entitled "Certain Information
Concerning the Company." Capitalized terms used in the following summary and
not otherwise defined in this Offer to Purchase shall have the respective
meanings set forth in the Merger Agreement.
The Offer. The Merger Agreement provides that Purchaser will commence the
Offer and that, upon the terms and subject to prior satisfaction or waiver of
the Minimum Tender Condition and the other conditions of the Offer, as set
forth in Section 16 of this Offer to Purchase entitled "Certain Conditions of
the Offer," Purchaser will purchase all Common Shares and Preferred Shares
validly tendered and not properly withdrawn pursuant to the Offer. The Merger
Agreement further provides that, without the prior written consent of the
Company, Purchaser will not: (i) decrease the Common Offer Price or the
Preferred Offer Price, (ii) change the form of consideration payable in the
Offer, (iii) decrease the number of Common Shares or Preferred Shares sought
to be purchased in the Offer, (iv) impose additional conditions to the Offer
other than those set forth in the Merger Agreement, (v) amend any other term
of the Offer in any manner adverse to the holders of Common Shares or
Preferred Shares, (vi) reduce the time period during which the Offer shall
remain open or (vii) waive the Minimum Tender Condition.
Pursuant to the Merger Agreement, Parent may, without the consent of the
Company, cause Purchaser to: (i) extend the Offer from time to time in its
sole discretion, if at the then-scheduled expiration of the Offer, any of the
conditions to the Offer have not been satisfied or waived, for such amount of
time as is reasonably necessary to cause such Offer conditions to be
satisfied, but not to exceed five business days for each such extension, (ii)
extend the Offer for any period required by any rule, regulation,
interpretation or position of the SEC or the staff of the SEC applicable to
the Offer, or (iii) extend the Offer for a subsequent offering period (as
provided in Rule 14d-11 under the Exchange Act) of up to twenty business days
beyond the latest expiration date that would otherwise be permitted under
clause (ii) of this sentence in order to acquire over 90% of the outstanding
Common Shares or over 90% of the outstanding Preferred Shares. Parent has
agreed to cause Purchaser to extend the Offer as permitted by the Merger
Agreement for the shortest time periods which it reasonably believes are
necessary until the consummation of the Offer if the conditions to the Offer
have not been satisfied or waived so long as the Merger Agreement has not been
terminated pursuant to its terms.
Directors. The Merger Agreement provides that promptly upon the acceptance
for payment of any Common Shares pursuant to the Offer, Purchaser shall be
entitled to designate that number of directors on the Company Board (rounded
to the next whole number that constitutes at least a majority of the members
of the Company Board) that equals the product of (i) the total number of
directors on the Company Board (giving effect to the election of any
additional directors pursuant to the Merger Agreement), and (ii) the
percentage that the number of Common Shares so purchased bears to the total
number of Common Shares outstanding. The Company has agreed to use all
reasonable efforts, upon Purchaser's request, promptly to cause Purchaser's
designees to be elected or appointed to the Company Board, including, at the
Company's election, increasing the number of directors or securing
resignations of incumbent directors. At such time, to the extent requested by
Purchaser, the Company will use its best efforts to cause Purchaser's
designees to constitute at least a majority on each committee of the Company
Board, other than any committee of the Company Board established to take
action under the Merger Agreement. Notwithstanding the foregoing, the Company
will use all reasonable efforts to ensure that, prior to the Effective Time,
the Company will retain at least three directors who were directors of the
Company on the date of the Merger Agreement (the "Continuing Directors");
provided, however, that if there are fewer than three Continuing Directors for
any reason, the Continuing Directors or, if there is only one Continuing
Director, that
23
<PAGE>
director, shall be entitled to designate a person or persons to fill such
vacancy or vacancies. The Company's obligation to appoint designees to the
Company Board is subject to certain provisions of the Exchange Act. From and
after the time that Purchaser's designees are elected or appointed to the
Company Board until the Effective Time, the approval of a majority of the
Continuing Directors shall be required to authorize: (i) any termination of
the Merger Agreement by the Company, (ii) any amendment of the Merger
Agreement, (iii) any extension by the Company of time for performance of any
of the obligations or actions of Parent or Purchaser under the Merger
Agreement, (iv) any waiver of any of the Company's rights under the Merger
Agreement and (v) any other action which adversely affects the holders of the
Common Shares or the Preferred Shares (other than Parent or Purchaser).
The Merger. The Merger Agreement provides that, subject to the terms and
conditions of the Merger Agreement, at the Effective Time, Purchaser will be
merged with and into the Company in accordance with the applicable provisions
of the DGCL. Following the Merger, the separate existence of Purchaser will
cease and the Company will continue as the surviving corporation (the
"Surviving Corporation"). The Company, as the Surviving Corporation, will
succeed to and assume all of the rights and obligations of both the Company
and Purchaser. Also, the Bylaws of the Company in effect upon the consummation
of the Merger will be the Bylaws of the Surviving Corporation and the Restated
Certificate of Incorporation of the Company will be the Certificate of
Incorporation of the Surviving Corporation; provided, however, that Article
Fourth, Section 1 of the Restated Certificate of Incorporation of the Company
shall be amended in its entirety to read as follows: "The Corporation shall be
authorized to issue 3,000,000 shares of Common Stock, par value $1.00 per
share, 600,000 shares of Preferred Stock, par value $5.00 per share and 1,000
shares of Preference Stock, par value $2.50 per share." In addition, following
the Merger, the directors of Purchaser will become the initial directors of
the Surviving Corporation and the officers of the Company will become the
initial officers of the Surviving Corporation. The Merger Agreement provides
that the closing of the Merger will take place as promptly as practicable but
in no event later than the second business day after the satisfaction or
waiver of the conditions to the Merger. At the closing, the Company, Parent
and Purchaser will file the necessary documents with Delaware public officials
to make the Merger effective.
Conversion of Common Shares. At the Effective Time, each Common Share issued
and outstanding immediately prior to the Effective Time (excluding (i) Common
Shares held in the Company's treasury or by any of the Company's subsidiaries,
(ii) Common Shares held by Parent, Purchaser or any other subsidiary of Parent
and (iii) Common Shares held by dissenting shareholders who have perfected
their appraisal rights) will, by virtue of the Merger and without any action
on the part of Purchaser, the Company or the holder, be converted into and
become the right to receive an amount of cash, without interest, equal to the
Merger Consideration. At the Effective Time, each Common Share held in the
treasury of the Company and each Common Share held by Parent, Purchaser or any
subsidiary of Parent, Purchaser or any subsidiary of the Company immediately
prior to the Effective Time will, without any action on the part of Purchaser,
the Company or the holder, be canceled and retired and will cease to exist,
and no payment shall be made with respect thereto. Moreover, at the Effective
Time, each share of common stock of Purchaser, par value $0.01 per share,
issued and outstanding immediately prior to the Effective Time will be
converted into and become 3,000 shares of common stock, par value $1.00 per
share, of the Surviving Corporation.
Preferred Shares. At the Effective Time, each issued and outstanding
Preferred Share shall remain outstanding, without any change, as a share of
the Series B $2 Cumulative Preferred Stock, par value $5.00 per share, of the
Surviving Corporation.
Company Stock Options. As of the Effective Time, each outstanding option to
purchase Common Shares (a "Company Stock Option" or collectively, "Company
Stock Options") that has been granted pursuant to any Company stock option
plan (the "Company Plans"), that is then vested (each, an "A Option") will be
canceled and each A Option will become the right to receive an amount, without
interest, in cash (less any applicable tax withholding) equal to the number of
Common Shares subject to such Company Stock Option immediately prior to the
Effective Time, multiplied by the excess, if any, of the Merger Consideration
over the exercise price per Common Share of such Company Stock Option. The
Company shall provide holders of A Options the opportunity to elect, before
the Effective Time, to have some or all of their A Options to be converted
into
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options to acquire Parent Common Shares as if they were B Options, as
described below. As of the Effective Time, each outstanding Company Stock
Option that is not an A Option (each, a "B Option") shall be converted into an
option to purchase shares of common stock of Parent, on the same terms and
conditions as were applicable under such B Option, in an amount equal to the
number of Common Shares subject to such B Option times a fraction, the
numerator of which is the Merger Consideration and the denominator of which is
the average of the high and low trading prices of the shares of common stock
of Parent on the New York Stock Exchange during normal business hours on the
day on which the Effective Time occurs; provided, however, that in the case of
any B Option to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code, the option price, the number of
shares purchasable pursuant to such option and the terms and conditions of
exercise of such option shall be determined in order to comply with Section
424(a) of the Code. Pursuant to the Merger Agreement, the parties have agreed
to cooperate to take all reasonable steps necessary to effect the foregoing.
Representations and Warranties. The Merger Agreement contains customary
representations and warranties of the parties. These include representations
and warranties of the Company with respect to, among other things,
organization and qualification, capitalization, subsidiaries, authority, SEC
filings, financial statements, governmental approvals, compliance with laws,
litigation, intellectual property and trade secrets, employment matters,
environmental laws and regulations and tax matters. The Merger Agreement also
contains customary representations and warranties of Parent and Purchaser,
including among other things, organization and qualification, authority and
financing. The representations and warranties contained in the Merger
Agreement expire at the Effective Time of the Merger.
Conduct of Business. From the date of the Merger Agreement until the
Effective Time, unless Parent consents in writing, which consent may not be
unreasonably withheld, and except for as contemplated by the Merger Agreement
or in a schedule attached thereto, the Company has agreed not to, and to cause
each of its subsidiaries not to: (i) amend its Restated Certificate of
Incorporation or Bylaws or similar organizational documents, (ii) authorize
for issuance, issue, sell, deliver or agree or commit to issue, sell or
deliver any shares of any class of capital stock or any other securities
(other than bank loans) or equity equivalents, with limited exceptions, (iii)
split, combine or reclassify any shares of its capital stock, declare, set
aside or pay any dividend or other distribution in respect of its capital
stock or otherwise make any payments to its stockholders in their capacity as
stockholders or redeem or acquire any of its securities or any securities of
any of its subsidiaries, except for the payment of dividends in respect of the
Preferred Shares and the payment of dividends or distributions by a wholly-
owned subsidiary of the Company to the Company or another wholly-owned
subsidiary of the Company, (iv) adopt a plan of complete or partial
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its
subsidiaries (other than the Merger), (v) alter through merger, liquidation,
reorganization, restructuring or any other fashion the corporate structure of
ownership of any subsidiary (other than as permitted by the Merger Agreement),
(vi) incur or become liable or responsible for indebtedness for borrowed money
or issue debt securities or make any loans or advances to or investments in
any other person or mortgage, pledge or otherwise encumber shares of capital
stock of the Company or its subsidiaries or any of the Company's material
assets, except as permitted under the Merger Agreement, (vii) enter into,
adopt, 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, except as permitted
under the Merger Agreement, (viii) acquire, sell, lease, or dispose of any
assets in any transaction or series of related transactions having a fair
market value in excess of $10,000,000 in the aggregate, other than in the
ordinary course of business or as permitted under the Merger Agreement, (ix)
materially change any of its accounting principles or practices, except as
required by a change of law or generally accepted accounting principles, (x)
revalue in any material respect any of its assets other than in the ordinary
course of business or as required by generally accepted accounting principles,
(xi) acquire any corporation, partnership or other business organization or
division thereof or equity interest therein or enter into any contract or
agreement other than in the ordinary course of business consistent with past
practice that would be material to the Company and its subsidiaries, taken as
a whole or
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authorize any capital expenditures in excess of $10,000,000 individually or
$210,000,000 in the aggregate, (xii) make any material tax election or settle
or compromise any income tax liability material to the Company and its
subsidiaries taken as a whole, except in the ordinary course of business
consistent with past practice, (xiii) settle or compromise any pending or
threatened suit, action or claim which relates to the transactions
contemplated by the Merger Agreement or the settlement or compromise of which
would have a Company Material Adverse Effect (as defined in the Merger
Agreement), (xiv) commence or terminate any material research and/or
development project, except as permitted under the Merger Agreement, (xv)
amend the Company Rights Agreement in any way that would permit any person
other than Parent or its affiliates to acquire more than 15% of the Common
Shares or redeem the rights issuable under the Rights Plan established
thereunder, or (xvi) take or agree in writing to take any of the foregoing
actions.
Stockholder Approval. If Company stockholder approval of the Merger is
required by law, the Company has agreed to, as promptly as practicable
following the expiration of the Offer, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Stockholders Meeting") for the
purpose of obtaining such approval. If a Stockholders Meeting is required, the
Company will use all reasonable efforts to prepare and file a Proxy Statement
(the "Proxy Statement") with the SEC and shall use all reasonable efforts to
obtain and furnish the information required to be included in the Proxy
Statement and, after consultation with Parent and Purchaser, respond promptly
to any comments of the SEC or its staff with respect to the Proxy Statement or
any preliminary version of the Proxy Statement and to cause the Proxy
Statement to be mailed to the Company's stockholders as promptly as
practicable after the expiration or termination of the Offer. Subject to its
fiduciary duties under applicable law and after consultation with counsel, the
Company shall, through the Company Board, recommend that the stockholders of
the Company vote in favor of the approval and adoption of the Merger Agreement
and the Merger. At the Stockholders Meeting, Parent, Purchaser and their
subsidiaries will vote all Common Shares and all Preferred Shares owned by
them in favor of approval and adoption of the Merger Agreement and in favor of
the Merger.
Access to Information. The Merger Agreement provides that from the date of
the Merger Agreement until the Effective Time, the Company will, and will
cause each of its subsidiaries to, give Parent and its representatives
reasonable access, during normal business hours, to the employees, plants,
offices, warehouses and other facilities, books and records of the Company and
its subsidiaries, and will furnish to Parent and its representatives financial
and operating data and other information concerning the business of the
Company and its subsidiaries as Parent may reasonably request. All information
obtained by the Parent and its representatives will be kept confidential in
accordance with the confidentiality provisions of the Confidentiality
Agreement between Parent and the Company. Between the date of the Merger
Agreement and the Effective Time, the Company has agreed to furnish to Parent
with certain quarterly statements of financial information.
Further Actions. Pursuant to the Merger Agreement, each of Parent, Purchaser
and the Company has agreed to use all reasonable efforts to take, or cause to
be taken, all reasonable actions necessary, proper or advisable, and to
reasonably cooperate with each other in order to consummate and make effective
the transactions contemplated by the Merger Agreement, including using all
reasonable efforts: (i) to obtain all necessary waivers, consents and
approvals from other parties to material loan agreements, leases and other
contracts, (ii) to obtain all consents, approvals and authorizations that are
required to be obtained under any federal, state, local or foreign law or
regulation, (iii) to lift or rescind any injunction or restraining order or
other order adversely affecting the ability of the parties to the Merger
Agreement to consummate the transactions contemplated thereby, (iv) to effect
all necessary registrations and filings including, but not limited to, filings
and submissions of information requested or required by any domestic or
foreign government or governmental or multinational authority, including,
without limitation, the Antitrust Division of the United States Department of
Justice (the "Antitrust Division"), the Federal Trade Commission (the "FTC"),
any State Attorney General, or the European Commission, and (v) to fulfill all
conditions to the Merger Agreement. Parent, Purchaser and the Company have
further covenanted and agreed, with respect to a threatened or pending
preliminary or permanent injunction or other order, decree or ruling or
statute, rule, regulation or executive order that would adversely affect the
ability of the parties to the Merger Agreement to consummate the transactions
contemplated thereby, to use efforts to prevent the entry, enactment or
promulgation thereof, as the case may be. In furtherance
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and not in limitation of the foregoing, the Company, Parent and Purchaser
shall use their respective best efforts to resolve such objections, if any, as
may be asserted with respect to the transactions contemplated by the Merger
Agreement under any antitrust, competition or trade regulatory laws of any
domestic or foreign government or governmental authority or any multinational
authority, or any regulations issued thereunder. Without limiting the
foregoing, if requested by any governmental authority, Parent and the Company
shall agree to divest, sell, dispose, or otherwise take or commit to take any
action that limits its freedom of action with respect to any of the
businesses, product lines or assets of Parent or its affiliates, the Company
or its affiliates, provided that any such action would not have a material
adverse effect on the business, assets, long-term earning capacity or
financial condition of Parent and the Company (and their subsidiaries), taken
as a whole.
Inquiries and Negotiations. The Merger Agreement provides that the Company
and its subsidiaries will, and will cause their respective officers,
directors, employees, representatives or agents to, refrain from directly or
indirectly, encouraging, soliciting, participating in, initiating discussions
or negotiations with, and to immediately cease any discussions or negotiations
with, or providing any information or data to anyone (other than Parent,
Purchaser or any designees of either entity) concerning any Third Party
Acquisition. The term "Third Party Acquisition" means: (i) the acquisition of
the Company by merger or otherwise by any person (including a "person" as such
term is defined under Section 13(d)(3) of the Exchange Act) other than Parent,
Purchaser, or any affiliate of Parent or Purchaser (each, a "Third Party"),
(ii) the acquisition by a Third Party of all or a major part of any of the
Company's business segments, as identified in the Company's SEC Reports or
more than 20% of the total assets of the Company and its subsidiaries taken as
a whole, (iii) the acquisition by a Third Party of 20% or more of the
outstanding Common Shares, (iv) the adoption by the Company of a plan of
liquidation or the declaration or payment of an extraordinary dividend, (v)
the repurchase by the Company or any of its subsidiaries of more than 20% of
the outstanding Common Shares, or (vi) the acquisition by the Company or any
subsidiary by merger, purchase of stock or assets, joint venture or otherwise
of a direct or indirect ownership interest or investment in any business whose
annual revenues, net income or assets is equal to or greater than 20% of the
annual revenues, net income or assets of the Company.
Notwithstanding the above, (i) nothing in the Merger Agreement prevents the
Company Board from taking and disclosing to the Company's stockholders a
position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange
Act with regard to any tender offer, (ii) if the Company receives an
unsolicited written proposal for a Third Party Acquisition from a Third Party,
nothing in the Merger Agreement prevents the Company or its representatives
from making such inquiries or conducting such discussions as the Company
Board, after consultation with and based upon the advice of, legal counsel,
may deem necessary to inform itself for the purpose of exercising its
fiduciary duties, and (iii) if the Company receives an unsolicited written
proposal for a Third Party Acquisition from a Third Party that the Company
Board by a majority vote determines in its good faith judgment (after
receiving the advice of a financial advisor of nationally recognized
reputation) is reasonably likely to constitute a Superior Proposal (as defined
hereafter), the Company and its representatives may conduct such additional
discussions or provide such information as the Company Board shall determine,
but only if, prior to such provision of information or additional discussion
(A) such Third Party shall have entered into a confidentiality and standstill
agreement substantially in the form of the Confidentiality Agreement between
Parent and the Company and (B) the Company Board by a majority vote determines
in its good faith judgment, after consultation with and based upon the advice
of, legal counsel that it is required to do so in order to comply with its
fiduciary duties. The Company shall promptly notify the Parent in the event it
receives any proposal or inquiry concerning a Third Party Acquisition
including the terms and conditions thereof and the identity of the party
submitting such proposal; and the Company shall advise the Parent from time to
time of the status and any material developments concerning the same. The term
"Superior Proposal" means any bona fide proposal to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more than
50% of the Common Shares then outstanding or all or substantially all of the
assets of the Company and otherwise on terms which the Company Board by a
majority vote determines in its good faith judgment (after receiving the
advice of a financial advisor of nationally recognized reputation) to be more
favorable to the Company's stockholders, from a financial point of view, than
the Merger.
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The Company Board may not withdraw, change or modify its recommendation of
the transactions contemplated by the Merger Agreement or approve or recommend,
or cause the Company to enter into any agreement with respect to, any Third
Party Acquisition unless, by a majority vote, it determines in its good faith
judgment, after consultation with and based upon the advice of, legal counsel
that it is required to do so in order to comply with its fiduciary duties, but
in each case only (i) after providing written notice to Parent (a "Notice of
Superior Proposal") advising Parent that the Company Board has received a
Superior Proposal, specifying the material terms and conditions of such
Superior Proposal and identifying the person making such Superior Proposal,
(ii) if Parent does not, within five business days of Parent's receipt of the
Notice of Superior Proposal, make an offer which the Company Board by a
majority vote determines in its good faith judgment (after receiving the
advice of a financial advisor of nationally recognized reputation) to be as
favorable to the Company's stockholders as such Superior Proposal and (iii) in
connection with entering into an agreement with respect to a Superior
Proposal, after the Merger Agreement is terminated in accordance with its
terms and the Company has paid all amounts due to Purchaser pursuant to the
Merger Agreement.
If the Merger Agreement is terminated for any one of the following reasons:
(i) by the Parent and Purchaser because the Company Board enters into, or
recommends to the Company's stockholders, a Superior Proposal, (ii) by the
Parent and Purchaser because the Company Board withdraws, modifies, or changes
its approval or recommendation of the Merger Agreement or the Offer or the
Merger or adopts any resolution to effect any of the foregoing, (iii) by the
Parent and Purchaser because a Third Party Acquisition occurs after December
21, 2000, provided that, for purposes of termination only, a Third Party
Acquisition as defined in clause (iii) of the definition of such term shall be
deemed to occur only upon acquisition by a Third Party of 50% or more of the
outstanding Common Shares, (iv) by the Company because the Company receives a
Superior Proposal and resolves to accept such Superior Proposal, but only if
the Company has acted in accordance with, and has complied with the terms of
the Merger Agreement, including the notice provisions therein, and the Company
has paid all amounts due to Purchaser pursuant to the Merger Agreement, (v) by
the Parent and Purchaser because the Company breaches a covenant or agreement
under the Merger Agreement that would have a Company Material Adverse Effect,
or that would have a material adverse effect on, or materially delay, the
consummation of the Offer, or the Merger and such breach is not cured within
twenty days after notice from Parent and Purchaser (and neither Parent nor
Purchaser has breached any of its obligations under the Merger Agreement) and
within twelve 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 an affiliate thereof) (A) with whom the Company (or
its agents) had negotiations with a view to a Third Party Acquisition, (B) to
whom the Company (or its agents) furnished information with a view to a Third
Party Acquisition, or (C) who had submitted a proposal for a Third Party
Acquisition, in the case of (A), (B) and (C), after December 21, 2000 and
prior to such termination, or (vi) by Parent and Purchaser or the Company
because the purchase of Common Shares pursuant to the Offer has not been
consummated by September 15, 2001 (provided that no party may terminate the
Merger Agreement if that party's failure to fulfill any of its obligations
under the Merger Agreement is the reason that the purchase of Common Shares
has not occurred before that date) at a time when the Minimum Tender Condition
is not satisfied, there is outstanding a publicly announced offer by a Third
Party to consummate a Third Party Acquisition, and no other condition to the
Offer is unsatisfied, and within twelve months thereafter the Company enters
into an agreement with respect to a Third Party Acquisition or a Third Party
Acquisition occurs, in either case involving the Third Party referred to
above; then, the Company shall pay to Parent or its designated beneficiary
within three business days following the occurrence of one of the foregoing,
or upon the entering into of the agreement for a Third Party Acquisition or
the occurrence of the Third Party Acquisition, as the case may be, a fee of
$110 million in cash. Any fee paid as a result of the foregoing represents
liquidated damages and not a penalty.
Indemnification. For six years after the Effective Time, the Surviving
Corporation shall provide each person who is, or prior to the date of the
Merger Agreement was, or prior to the Effective Time becomes, a director or
officer of the Company (the "Indemnified Persons"), directors' and officers'
liability insurance that provides coverage for events occurring prior to the
Effective Time that is no less favorable than the Company's existing policy;
provided, however, that the Surviving Corporation shall not be required to pay
an annual
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premium for the coverage in excess of 300% of the last annual premium paid by
the Company prior to the date of the Merger Agreement. After the Effective
Time, Parent and the Surviving Corporation shall indemnify and hold harmless
each Indemnified Person against all losses, claims, damages, costs, expenses
(including without limitation counsel fees and expenses), settlement payments
or liabilities arising out of or in connection with the fact that such person
is or was an officer or director of the Company or any of its subsidiaries, or
pertaining to the Merger Agreement or the transactions contemplated by the
Merger Agreement, in each case to the fullest extent required or permitted
under applicable law or under the Surviving Corporation's Certificate of
Incorporation or Bylaws.
Employee Benefit Matters. The Merger Agreement provides that from and after
the Effective Time, Parent will assume and honor, and cause the Company to
honor all material Employee Plans (as defined in the Merger Agreement) and
Employment Agreements (as defined in the Merger Agreement), in accordance with
their terms as in effect immediately before the Effective Time. For a period
of not less than two years from and after the Effective Time, Parent shall
cause the current and former employees of the Company and its subsidiaries
("Company Employees") to be provided with compensation and employee benefits
that are, in the aggregate, not less favorable than those provided to Company
Employees immediately before the Effective Time. For all purposes under the
employee benefit plans of Parent and its subsidiaries which provide benefits
to any Company Employee after the Effective Time, each Company Employee will
be credited with all years of service for which such Company Employee was
credited under comparable Company Employee Plans, except to the extent that
such service credits would result in a duplication of benefits. In addition,
from and after the Effective Time, Parent shall assume and honor, and shall
cause the Surviving Corporation to honor, the obligations of the Company to
provide lifetime benefits under the Company's Supplemental Medical Insurance
Plan to certain individuals specified in the Merger Agreement and Parent also
agrees not to demand, and to cause the Surviving Corporation not to demand,
repayment of the loans currently outstanding under the Company's Incentive
Loan Program before December 31, 2001. Further, Parent will continue, or cause
the Surviving Corporation to continue, certain executive life insurance
policies specified in the Merger Agreement in effect for the remaining
lifetime of the retired executive officers covered by such insurance policies.
Conditions to the Merger. The respective obligations of the Company, Parent
and Purchaser to complete the Merger are subject to the fulfillment of the
following conditions: (i) the Merger Agreement having been duly approved and
adopted, if required, by the requisite vote of the stockholders of the
Company, (ii) no statute, rule, regulation, executive order, decree, ruling or
injunction having been enacted, entered, promulgated or enforced by any United
States court or United States or European Union governmental authority which
prohibits, restrains or enjoins the consummation of the Merger, (iii) any
waiting period applicable to the Merger under the HSR Act having terminated or
expired and to the extent required, the Commission of the European Union
having approved the Merger under Council Regulation (EEC) No. 4064/89 of the
Council of the European Union, or such approval having been deemed to have
been granted, and (iv) Purchaser having accepted for payment and paid for
Common Shares pursuant to the Offer.
Termination and Abandonment. The Merger Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time as follows: (i) by
mutual written consent of the Company, Parent and Purchaser, (ii) by either
the Company or Parent and Purchaser, if any court of competent jurisdiction in
the United States or other United States or European Union governmental
authority has issued a final order, decree or ruling or taken any other final
action restraining, enjoining or otherwise prohibiting the Offer or the Merger
and such order, decree, ruling or other action is or has become final and
nonappealable or the purchase of Common Shares pursuant to the Offer has not
been consummated by September 15, 2001 (provided that no party may terminate
the Merger Agreement if that party's failure to fulfill any of its obligations
under the Merger Agreement is the reason that the purchase of Common Shares
has not occurred before that date), (iii) by the Company if a representation
or warranty of Parent or Purchaser in the Merger Agreement is breached or
becomes untrue or if Parent or Purchaser breaches a covenant or agreement
under the Merger Agreement that would have a Parent Material Adverse Effect
(as defined in the Merger Agreement) or which would materially adversely
affect or delay, the consummation of the Offer or the Merger and such breach
is not cured within twenty business days
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after notice from the Company (and the Company has not breached any of its
obligations under the Merger Agreement), (iv) by Parent and Purchaser if: (A)
a representation or warranty of the Company in the Merger Agreement is
breached or becomes untrue, in either such case such that the conditions set
forth in paragraph (e) of Annex A to the Merger Agreement are incapable of
being satisfied by September 15, 2001, (B) the Company breaches a covenant or
agreement under the Merger Agreement that would have a Company Material
Adverse Effect, or that would materially adversely affect or delay, the
consummation of the Offer, or the Merger and such breach is not cured within
twenty business days after notice from Parent and Purchaser (and neither
Parent nor Purchaser has breached any of its obligations under the Merger
Agreement), (C) the Company Board enters into, or recommends to the Company's
stockholders, a Superior Proposal, (D) the Company Board withdraws, modifies,
or changes its approval or recommendation of the Merger Agreement or the Offer
or the Merger or adopts any resolution to effect any of the foregoing, or (E)
a Third Party Acquisition occurs after December 21, 2000, provided that, for
purposes of termination only, a Third Party Acquisition as defined in clause
(iii) of the definition of such term will be deemed to occur only upon
acquisition by a Third Party of 50% or more of the outstanding Common Shares,
(v) by the Company if the Company receives a Superior Proposal and resolves to
accept such Superior Proposal, but only if the Company has acted in accordance
with, and has complied with, the terms of the Merger Agreement, including the
notice provisions therein, and the Company has paid all amounts due to
Purchaser pursuant to the Merger Agreement. In the event of the termination of
the Merger Agreement, except for the amounts described under the heading
entitled "Inquiries and Negotiations," and any liability arising out of a
breach of its covenants, agreements or obligations, no party shall have any
liability to any other party or its stockholders or directors or officers, and
the Merger Agreement shall become void and have no effect.
Publicity. The Company, Parent and Purchaser agree that they will not issue
any press release or make any other public announcement concerning the Merger
Agreement or the transactions contemplated thereby without consulting with the
other party, except as may be required by law or obligations pursuant to any
listing agreement with the New York Stock Exchange.
Amendment. The Merger Agreement may be amended by action taken the Company,
Parent and Purchaser at any time before or after approval, if necessary, of
the Merger by the stockholders of the Company but, after any such approval, no
amendment shall be made that requires the approval of such stockholders under
applicable law without such approval.
Waiver. Each of the Company, Parent and Purchaser 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 or
any document provided by the other party, or (iii) waive compliance by the
other party with any of the agreements or conditions contained in the Merger
Agreement.
Going Private Transactions.
The Merger would have to comply with any applicable federal law operative at
the time of its consummation including Rule 13e-3 under the Exchange Act which
applies to certain "going private" transactions. If applicable, Rule 13e-3
requires, among other things, that certain financial information concerning
the fairness of the Merger and the consideration offered to minority
stockholders in the Merger be filed with the SEC and disclosed to stockholders
prior to the consummation of the Merger. Purchaser does not believe that Rule
13e-3 will be applicable to the Merger unless the Merger is consummated more
than one year after the termination of the Offer
Confidentiality Agreement.
The following is a summary of certain provisions of the Confidentiality
Agreement. This summary does not purport to be complete and is qualified in
its entirety by reference to the complete text of the Confidentiality
Agreement, a copy of which is filed with the SEC as Exhibit (d)(2) to the
Schedule TO and incorporated herein by reference. Capitalized terms not
otherwise defined below shall have the meanings set forth in the
Confidentiality Agreement. The Confidentiality Agreement may be examined and
copies may be obtained at the
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places and in the manner set forth in Section 7 of this Offer to Purchase
entitled "Certain Information Concerning the Company."
The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, Parent and the Company have mutually agreed,
subject to certain exceptions, to keep confidential all non-public,
confidential or proprietary information exchanged between each other,
including analyses, compilations, forecasts, studies, notes, summaries,
reports, analyses or other materials derived from the information exchanged
(the "Confidential Information"), and to use the Confidential Information
solely for the purpose of evaluating a possible transaction (the
"Transaction") involving Parent and the Company, together with any of their
subsidiaries or affiliates. Parent and the Company each agreed not to solicit
certain members of the other's directors, officers or employees with whom they
have had dealings for employment for a period of two years from June 23, 2000.
Parent and the Company also agreed for the same period not to (i) acquire more
than one percent of any securities of the other party or any of its
subsidiaries, (ii) solicit proxies or consents with respect to the other party
or any of its subsidiaries, (iii) seek to advise, control or influence the
management, board of directors or policies of the other party or any of its
subsidiaries, (iv) make any proposal or any public announcement relating to a
tender or exchange offer for securities of the other party or any of its
subsidiaries, (v) enter into any discussions or understandings with any third
party with respect to any of the foregoing, or (vi) advise, assist or
encourage any other person in connection with any of the foregoing.
Employment Agreement with Dr. Ronald D. Sugar
In connection with the Merger Agreement on December 21, 2000, Parent entered
into an agreement with Ronald D. Sugar, President and Chief Operating Officer
of the Company, by which Parent agreed to assume Dr. Sugar's existing
employment agreement and change in control employment agreement with the
Company (the "Sugar Employment Agreement"). In addition, Parent agreed that
Dr. Sugar will become an elected Corporate Vice President of Parent and
President of the Company after the Merger. The Sugar Employment Agreement
provides that Dr. Sugar will defer until the later of (i) six months after the
Merger, or (ii) December 31, 2001, certain rights he would otherwise have to
terminate his employment and receive payments under his existing agreements
with the Company.
13. Purpose of the Offer; Plans for the Company.
Purpose of the Offer. The purpose of the Offer is to acquire control of, and
the entire common stock equity interest in, the Company. The purpose of the
Merger is to acquire all outstanding Common Shares not tendered and purchased
pursuant to the Offer. If the Offer is successful, Purchaser intends to
consummate the Merger as soon as practicable following the satisfaction or
waiver of each of the conditions to the Merger set forth in the Merger
Agreement.
Preferred Shares. If two-thirds or more of the Preferred Shares are tendered
for purchase in the Offer and Purchaser acquires such percentage of the
Preferred Shares, Purchaser will have sufficient voting power to amend the
terms of the Preferred Shares in accordance with the provisions set forth in
the Company's Restated Certificate of Incorporation. If, after the Offer,
there are less than 300 registered holders of Preferred Shares remaining,
Purchaser currently anticipates that it will deregister and delist the
Preferred Shares from the New York Stock Exchange. Parent and Purchaser do not
intend to redeem any Preferred Shares that are not tendered and accepted by
Purchaser for purchase in the Offer. However, following the Merger, Purchaser
may seek to acquire the Preferred Shares that remain outstanding for cash at a
price or prices not exceeding $35.00 per share through open market
transactions, an amendment to the Certificate of Incorporation of the Company,
a subsequent merger, or otherwise.
Plans for the Company. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business
operations of the Company will be continued by the Surviving Corporation
substantially as they are currently being conducted. The directors of
Purchaser will be the initial directors of the Surviving Corporation, and the
officers of the Company will be the initial officers of the Surviving
Corporation. Upon completion of the Offer and the Merger, Parent intends to
conduct a detailed review of the Company and its
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assets, corporate structure, capitalization, operations, policies, management
and personnel. After such review, Parent will determine what actions or
changes, if any, would be desirable in light of the circumstances which then
exist.
Except as described in this Offer to Purchase, neither Parent nor Purchaser
has any present plans or proposals that would relate to or result in: (i) any
extraordinary corporate transaction, such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries, (ii) a purchase,
sale or transfer of a material amount of assets of the Company or any of its
subsidiaries, (iii) any change in the Company Board or management, including,
but not limited to, any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the Company Board or to change
any material term of the employment contract of any executive officer, (iv)
any material change in the Company's capitalization, indebtedness or dividend
policy, (v) any other material change in the Company's corporate structure or
business, (vi) a class of securities being delisted from a national securities
exchange or ceasing to be authorized to be quoted in an inter-dealer quotation
system of a registered national securities association, or (vii) a class of
equity securities of the Company becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Exchange Act. Certain members
of the Company's current management are not expected to continue with the
Surviving Corporation following the Merger. See Sections 12 and 14 of this
Offer to Purchase--"The Merger Agreement; Other Arrangements" and "Certain
Effects of the Offer," respectively.
14. Certain Effects of the Offer.
Market for the Common Shares and Preferred Shares. The purchase of Common
Shares and Preferred Shares pursuant to the Offer will reduce the number of
holders of Common Shares and Preferred Shares and the number of Common Shares
and Preferred Shares that might otherwise trade publicly and could adversely
affect the liquidity and market value of the remaining Common Shares and
Preferred Shares held by stockholders other than Purchaser. Purchaser cannot
predict whether the reduction in the number of Common Shares or Preferred
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for, or marketability of, the Common Shares or
Preferred Shares or whether such reduction would cause future market prices to
be greater or less than the Common Offer Price or the Preferred Offer Price,
as the case may be.
Stock Quotation. Listing the Common Shares and Preferred Shares on the New
York Stock Exchange is voluntary, so the Company may terminate such listing at
any time. Neither Parent nor Purchaser has any intention to cause the Company
to terminate the inclusion of the Common Shares or Preferred Shares on the New
York Stock Exchange prior to the Merger. However, depending upon the number of
Common Shares and Preferred Shares purchased pursuant to the Offer, the Common
Shares and/or Preferred Shares may no longer meet the standards for continued
inclusion on the New York Stock Exchange. According to its published
guidelines, the New York Stock Exchange would give consideration to delisting
the Common Shares or Preferred Shares if, among other things, the number of
publicly held Common Shares or Preferred Shares, as the case may be, falls
below 600,000, the number of holders of round lots of Common Shares or
Preferred Shares falls below 400 (or below 1,200 if the average monthly
trading volume is below 100,000 for the last twelve months). Common Shares and
Preferred Shares held by officers or directors of the Company or their
immediate families, or by any beneficial owner of more than 10% or more of the
Common Shares or Preferred Shares, ordinarily will not be considered as being
publicly held for this purpose. In the event the Common Shares or Preferred
Shares are no longer eligible for listing on the New York Stock Exchange,
quotations might still be available from other sources. The extent of the
public market for the Common Shares and the Preferred Shares and the
availability of such quotations would, however, depend upon the number of
holders of such shares at such time, the interest in maintaining a market in
such shares on the part of securities firms, the possible termination of
registration of such shares under the Exchange Act as described below and
other factors. If, as a result of the purchase of Common Shares and/or
Preferred Shares pursuant to the Offer, the Common Shares or Preferred Shares
no longer meet the criteria for continued inclusion in the New York Stock
Exchange, the market for the Common Shares or Preferred Shares, as the case
may be, could be adversely affected.
If the New York Stock Exchange were to delist the Common Shares or Preferred
Shares, it is possible that such shares would continue to trade on another
securities exchange or in the over-the-counter market and that
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price or other quotations would be reported by such exchange, or through the
National Association of Securities Dealers Automated Quotation System, or
other sources. The extent of the public market for such delisted shares and
the availability of such quotations would depend upon such factors as the
number of stockholders and/or the aggregate market value of the publicly
traded shares remaining at such time, the interest in maintaining a market in
the shares on the part of securities firms, the possible termination of
registration under the Exchange Act (as described below) and other factors. We
cannot predict whether the reduction in the number of Common Shares or
Preferred Shares that might otherwise trade publicly would have an adverse or
beneficial effect on the market price for or marketability of such shares or
whether it would cause future market prices to be greater or less than the
Common Offer Price or the Preferred Offer Price, as the case may be.
Exchange Act Registration. The Common Shares and Preferred Shares are
currently registered under the Exchange Act. The purchase of the Common Shares
and Preferred Shares pursuant to the Offer may result in the Common Shares and
Preferred Shares becoming eligible for deregistration under the Exchange Act.
Such registration of the Common Shares and Preferred Shares may be terminated
upon application of the Company to the SEC if the Common Shares and Preferred
Shares are not listed on a national securities exchange and there are fewer
than 300 holders of record of the Common Shares and Preferred Shares.
Termination of registration of the Common Shares and Preferred Shares under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the SEC and would make
certain provisions of the Exchange Act no longer applicable to the Company,
such as the short-swing profit recovery provisions of Section 16(b) of the
Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with stockholders' meetings
and the related requirement of furnishing an annual report to stockholders,
and the requirements of Rule 13e-3 under the Exchange Act with respect to
"going private" transactions. Furthermore, the ability of "affiliates" of the
Company and persons holding "restricted securities" of the Company to dispose
of such securities pursuant to Rule 144 promulgated under the Securities Act
of 1933 may be impaired or eliminated. If registration of the Common Shares
and Preferred Shares under the Exchange Act were terminated, the Common Shares
and Preferred Shares would no longer be "margin securities" or be eligible for
inclusion on the New York Stock Exchange.
Purchaser believes that the purchase of the Common Shares and Preferred
Shares pursuant to the Offer may result in the Common Shares and Preferred
Shares becoming eligible for deregistration under the Exchange Act and it
would be the intention of Purchaser to cause the Company to make an
application for termination of registration of the Common Shares and Preferred
Shares as soon as possible after successful completion of the Merger, if the
Common Shares and Preferred Shares are then eligible for such termination.
Margin Regulations. The Common Shares and Preferred 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
the Common Shares and Preferred Shares. Depending upon factors similar to
those described above regarding the market for the Common Shares and Preferred
Shares and stock quotations, it is possible that, following the Offer, the
Common Shares and Preferred Shares would no longer constitute "margin
securities" for the purposes of the margin regulations of the Federal Reserve
Board and therefore could no longer be used as collateral for loans made by
brokers.
15. Dividends and Distributions.
The Merger Agreement provides that from the date of the Merger Agreement
until the Effective Time, unless Parent has consented in writing, the Company
may not declare, set aside or pay any dividend, make any other actual,
constructive or deemed distribution or otherwise make any payments to its
stockholders in their capacity as such, or redeem or otherwise acquire any of
its securities or any securities of any of its subsidiaries, other than the
dividends payable with respect to the Preferred Shares in the ordinary course.
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16. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer (subject to the terms and
conditions of the Merger Agreement), and subject to any applicable rules and
regulations of the SEC including Rule 14e-l(c) under the Exchange Act relating
to Purchaser's obligation to pay for or return any tendered Common Shares or
Preferred Shares after termination of the Offer, Purchaser shall not be
required to accept for payment or pay for Common Shares or Preferred Shares
tendered pursuant to the Offer and may delay the acceptance for payment of any
Common Shares or Preferred Shares if (i) less than 25,562,006 Common Shares
and Preferred Shares, which represent a majority of the total outstanding
Common Shares and Preferred Shares on a fully-diluted basis, have been
tendered pursuant to the Offer by the expiration of the Offer and not
withdrawn, (ii) any applicable waiting period under the HSR Act or similar
statutes or regulations of a foreign jurisdiction has not expired or
terminated prior to the expiration of the Offer, or if to the extent required,
the Merger has not been approved by the Commission of the European Union under
Council Regulation (EEC) No. 4064/89 of the Council of the European Union, or
(iii) at any time after the date of the Merger Agreement and before the
Expiration Date, any of the following conditions shall have occurred and
continued to exist:
(a) there shall have been any statute, rule, regulation, judgment, order or
injunction enacted or entered and which shall remain in effect by any state or
United States government or governmental authority or by any state, United
States or European Union court or any agency or authority of the European
Union, other than the routine application to the Offer, the Merger or other
subsequent business combination of waiting periods under the HSR Act or
Council Regulation (EEC) No. 4064/89 of the Council of the European Union,
that has the effect of (i) making the acceptance for payment of, or the
payment for, some or all of the Common Shares illegal or otherwise prohibiting
consummation of the Offer, (ii) imposing limitations on the ability of
Purchaser or Parent to acquire or hold or to exercise effectively all rights
of ownership of the Common Shares or effectively to control the business,
assets or operations of Parent, the Company and their subsidiaries, of such
magnitude as would have a material adverse effect on the business, assets,
long-term earning capacity or financial condition of Parent, the Company and
their subsidiaries, taken as a whole; or
(b) a Company Material Adverse Effect shall have occurred and continued to
exist; or
(c) there shall have occurred and continued to exist (i) any general
suspension of trading in, or limitation on prices for, securities on the New
York Stock Exchange (excluding any coordinated trading halt triggered solely
as a result of a specified decrease in a market index and suspensions or
limitations resulting from physical damage to or interference with such
exchange not related to market conditions), (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 Company Material Adverse Effect, (iv)
any material limitation (whether or not mandatory) by any United States
governmental authority or agency on 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 27.5% 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) the Merger Agreement shall have been terminated in accordance with its
terms; or
(e) (i) the representations of the Company contained in the Merger Agreement
are not true and correct at and as of consummation of the Offer with the same
effect as if made at and as of such date or if such representations speak as
of an earlier date, as of such earlier date, except, in either such case to
the extent that the breach thereof would not have a Company Material Adverse
Effect, or (ii) the Company shall have failed to comply with its covenants and
agreements contained in the Merger Agreement in all material respects; or
(f) prior to the purchase of Common Shares pursuant to the Offer, the
Company 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, this Agreement or the Merger or shall have
recommended another offer, or shall have adopted any resolution to effect any
of the foregoing.
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17. Certain Legal Matters; Regulatory Approvals.
General. Purchaser is not aware of any material pending legal proceeding
relating to the Offer. Based on its examination of publicly available
information filed by the Company with the SEC and other publicly available
information concerning the Company, Purchaser is not aware of any governmental
license or regulatory permit that appears to be material to the Company's
business that might be adversely affected by Purchaser's purchase of the
Common Shares and Preferred Shares as contemplated herein or, except as set
forth below, of any approval or other action by any government or governmental
administrative or regulatory authority or agency, domestic or foreign, that
would be required for the purchase or ownership of Common Shares and Preferred
Shares by Purchaser or Parent as contemplated herein. Should any such approval
or other action be required, Purchaser currently contemplates that, except as
described below under "State Takeover Statutes," such approval or other action
will be sought. 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 if such approval were not obtained or such other action
were not taken, adverse consequences might not result to the Company's
business, or certain parts of the Company's business might not have to be
disposed of, any of which could cause Purchaser to elect to terminate the
Offer without the purchase of Common Shares and Preferred Shares under certain
conditions. See Section 16 of this Offer to Purchase--"Certain Conditions of
the Offer."
State Takeover Statutes. A number of states (including Delaware, where the
Company is incorporated), have adopted laws which purport, to varying degrees,
to apply to attempts to acquire corporations that are incorporated in, or
which have substantial assets, stockholders, principal executive offices or
principal places of business or whose business operations otherwise have
substantial economic effects in, such states. Except as described herein,
Purchaser does not know whether any of these laws will, by their terms, apply
to the Offer or the Merger or any other business combination between Purchaser
or any of its affiliates and the Company. To the extent that certain
provisions of these laws purport to apply to the Offer or the Merger or other
business combination, Purchaser believes that there are reasonable bases for
contesting such laws. In 1982, in Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State
of Indiana could, as a matter of corporate law, constitutionally disqualify a
potential acquiror from voting shares of a target corporation without the
prior approval of the remaining stockholders where, among other things, the
corporation is incorporated in, and has a substantial number of stockholders
in, the state. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a
Federal District Court in Oklahoma ruled that the Oklahoma statutes were
unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma in that they would subject such corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a Federal District
Court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the Sixth
Circuit.
Section 203 of the DGCL ("Section 203"), in general, prevents an "interested
stockholder" (including a person who owns or has the right to acquire 15% or
more of the corporation's outstanding voting stock) from engaging in a
"business combination" (defined to include mergers and certain other actions)
with a Delaware corporation for a period of three years following the date
such person became an interested stockholder. The Company Board has taken all
appropriate action so that neither Parent nor Purchaser is or will be
considered an "interested stockholder" pursuant to Section 203.
Neither Parent nor Purchaser has determined whether any other state takeover
laws or regulations will by their terms apply to the Offer or the Merger, and
except as set forth above, neither Purchaser nor Parent have attempted to
comply with any state takeover statutes in connection with the Offer or the
Merger. Purchaser and Parent reserve the right to challenge the validity or
applicability of any state law allegedly applicable to the Offer or the
Merger, and nothing in this Offer to Purchase nor any action taken by Parent
or Purchaser in connection with the Offer is intended as a waiver of that
right. In the event it is asserted that one or more state takeover statutes is
applicable to the Offer or the Merger and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer or the
Merger, Purchaser might be required to file certain information with, or
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to receive approvals from, the relevant state authorities or holders of Common
Shares and/or Preferred Shares, and Purchaser might be unable to accept for
payment or pay for Common Shares and/or Preferred Shares tendered pursuant to
the Offer, or be delayed in continuing or consummating the Offer or the
Merger. In such case, Purchaser may not be obligated to accept for payment or
pay for any tendered Common Shares and/or Preferred Shares. See Section 16 of
this Offer to Purchase--"Certain Conditions of the Offer."
Antitrust in the United States. Under the HSR Act and the rules that have
been promulgated thereunder by the FTC, certain acquisition transactions may
not be consummated unless certain information has been furnished to the
Antitrust Division and the FTC and certain waiting period requirements have
been satisfied. The purchase of Common Shares and Preferred Shares pursuant to
the Offer is subject to such requirements.
Pursuant to the requirements of the HSR Act, Purchaser expects to file a
Notification and Report Form with respect to the Offer and Merger with the
Antitrust Division and the FTC on or about January 5, 2001. The waiting period
applicable to the purchase of Common Shares and Preferred Shares pursuant to
the Offer is scheduled to expire at 11:59 p.m., New York City time, fifteen
days after such filing. However, prior to such time, the Antitrust Division or
the FTC may extend the waiting period by requesting additional information or
documentary material relevant to the Offer from Purchaser. If such a request
is made, the waiting period will be extended until 11:59 p.m., New York City
time, on the tenth day after substantial compliance by Purchaser with such
request. Thereafter, such waiting period can be extended only by court order.
Any extension of the waiting period will not give rise to any withdrawal
rights not otherwise provided for by applicable law. See Section 4 of this
Offer to Purchase--"Withdrawal Rights." If Purchaser's purchase of Common
Shares or Preferred Shares is delayed pursuant to a request by the Antitrust
Division or the FTC for additional information or documentary material
pursuant to the HSR Act, the Offer will be extended in certain circumstances.
See Section 16 of this Offer to Purchase--"Certain Conditions of the Offer."
The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the purchase of Common Shares and
Preferred Shares by Purchaser pursuant to the Offer. At any time before or
after the consummation of any such transactions, the Antitrust Division or the
FTC could take such action under the antitrust laws of the United States as it
deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of Common Shares and/or Preferred Shares pursuant to the
Offer or seeking divestiture of the Common Shares and/or Preferred Shares so
acquired or divestiture of substantial assets of Parent or the Company.
Private parties (including individual states) may also bring legal actions
under the antitrust laws of the United States. Purchaser does not believe that
the consummation of the Offer will result in a violation of any applicable
antitrust laws. However, there can be no assurance that a challenge to the
Offer on antitrust grounds will not be made, or if such a challenge is made,
what the result will be. See Section 16 of this Offer to Purchase--"Certain
Conditions of the Offer," including conditions with respect to litigation and
certain governmental actions and Section 12 of this Offer to Purchase--"The
Merger Agreement; Other Arrangements" for certain termination rights.
Foreign Regulatory Matters.
Completion of the transaction also may require certain approvals by foreign
regulatory authorities. The parties conduct business in a number of foreign
countries. Under the laws of certain foreign nations and multinational
authorities, such as the European Commission (under Council Regulation (EEC)
4064/89, or "ECMR"), the transaction may not be completed unless certain
filings are made with these nations' antitrust regulatory authorities or
multinational antitrust authorities and these antitrust authorities approve or
clear closing of the transaction. Other foreign nations and multinational
authorities have voluntary and/or post-merger notification systems. The
parties intend to file shortly all non-United States pre-merger notifications
that they believe are required, including that required under the ECMR. Should
any other approval or action be required, the parties currently contemplate
that such approval or action would be sought.
Although the parties believe that they will obtain all material required
regulatory approvals in a timely manner, it is not certain that all such
approvals will be received in a timely manner or at all or that foreign or
multinational antitrust authorities will not impose unfavorable conditions for
granting the required approvals.
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18. Appraisal Rights.
No appraisal rights are available in connection with the Offer.
If Purchaser acquires at least 90% of the Common Shares and at least 90% of
the Preferred Shares pursuant to the Offer, the Merger may be consummated
without a stockholders' meeting and without the approval of the Company's
stockholders.
If less than 90% of the Preferred Shares are acquired pursuant to the Offer
and a stockholder vote is required to approve the Merger, holders of Preferred
Shares may have appraisal rights in connection with the Merger under certain
circumstances. If the Preferred Shares are not listed on a national securities
exchange or quoted on the Nasdaq National Market System on the record date
fixed to determine the stockholders entitled to receive notice of and to vote
on the Merger, the holders of Preferred Shares will have appraisal rights
pursuant to Section 262 of the DGCL ("Section 262").
In addition, holders of Common Shares at the Effective Time who do not wish
to accept the Merger Consideration pursuant to the Merger will have the right
to seek an appraisal and to be paid the "fair value" of their Common Shares at
the Effective Time (exclusive of any element of value arising from the
accomplishment or expectation of the Merger) judicially determined and paid to
it in cash provided that such holder complies with the provisions of such
Section 262.
The following is a brief summary of the statutory procedures to be followed
in order to dissent from the Merger and perfect appraisal rights under
Delaware law. This summary is not intended to be complete and is qualified in
its entirety by reference to Section 262, the text of which is set forth in
Schedule II hereto. Any stockholder considering demanding appraisal is advised
to consult legal counsel. Dissenters' rights, if any, will not be available
unless and until the Merger (or a similar business combination) is
consummated.
Stockholders of record who desire to exercise their appraisal rights must
fully satisfy all of the following conditions. A written demand for appraisal
of Common Shares or Preferred Shares must be delivered to the Secretary of the
Company (x) before the taking of the vote on the approval and adoption of the
Merger Agreement if the Merger is not being effected without a vote of
stockholders pursuant to Section 253 of the DGCL (a "short-form merger"), but
rather is being consummated following approval thereof at a meeting of the
Company's stockholders (a "long-form merger") or (y) within twenty days after
the date that the Surviving Corporation mails to the stockholders a notice
(the "Notice of Merger") to the effect that the Merger is effective and that
appraisal rights are available (and includes in such notice a copy of Section
262 and any other information required thereby) if the Merger is being
effected as a short-form merger without a vote or meeting of the Company's
stockholders. If the Merger is effected as a long-form merger, this written
demand for appraisal must be in addition to and separate from any proxy or
vote abstaining from or against the approval and adoption of the Merger
Agreement, and neither voting against, abstaining from voting, nor failing to
vote on the Merger Agreement will constitute a demand for appraisal within the
meaning of Section 262. In the case of a long-form merger, any stockholder
seeking appraisal rights must hold the Common Shares or Preferred Shares for
which appraisal is sought on the date the demand is made and, continuously
hold such Common Shares or Preferred Shares through the Effective Time, and
otherwise comply with the provisions of Section 262.
In the case of both a short-form merger and a long-form merger, a demand for
appraisal must be executed by or for the stockholder of record, fully and
correctly, as such stockholder's name appears on the stock certificates. If
Common Shares or Preferred Shares are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, such demand must be executed by
the fiduciary. If Common Shares or Preferred Shares are owned of record by
more than one person, as in a joint tenancy or tenancy in common, such demand
must be executed by all joint owners. An authorized agent, including an agent
for two or more joint owners, may execute the demand for appraisal for a
stockholder of record; however, the agent must identify the record owner and
expressly disclose the fact that, in exercising the demand, he is acting as
agent for the record owner.
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A record owner, such as a broker, who holds Common Shares or Preferred
Shares as a nominee for others, may exercise appraisal rights with respect to
the Common Shares or Preferred Shares held for all or less than all beneficial
owners of Common Shares or Preferred Shares as to which the holder is the
record owner. In such case the written demand must set forth the number of
Common Shares or Preferred Shares covered by such demand. Where the number of
Common Shares or Preferred Shares is not expressly stated, the demand will be
presumed to cover all Common Shares or Preferred Shares outstanding in the
name of such record owner. Beneficial owners who are not record owners and who
intend to exercise appraisal rights should instruct the record owner to comply
strictly with the statutory requirements with respect to the exercise of
appraisal rights before the date of any meeting of stockholders of the Company
called to approve the Merger in the case of a long-form merger and within
twenty days following the mailing of the Notice of Merger in the case of a
short-form merger.
Stockholders who elect to exercise appraisal rights must mail or deliver
their written demands to: Secretary, Litton Industries, Inc., 21240 Burbank
Boulevard, Woodland Hills, California 91367. The written demand for appraisal
should specify the stockholder's name and mailing address, the number of
Common Shares or Preferred Shares covered by the demand and that the
stockholder is thereby demanding appraisal of such shares. In the case of a
long-form merger, the Company must, within ten days after the Effective Time,
provide notice of the Effective Time to all stockholders who have complied
with Section 262 and have not voted for approval and adoption of the Merger
Agreement.
In the case of a long-form merger, stockholders electing to exercise their
appraisal rights under Section 262 must not vote for the approval and adoption
of the Merger Agreement or consent thereto in writing. Voting in favor of the
approval and adoption of the Merger Agreement, or delivering a proxy in
connection with the stockholders meeting called to approve the Merger
Agreement (unless the proxy votes against, or expressly abstains from the vote
on, the approval and adoption of the Merger Agreement), will constitute a
waiver of the stockholder's right of appraisal and will nullify any written
demand for appraisal submitted by the stockholder.
Regardless of whether the Merger is effected as a long-form merger or a
short-form merger, within 120 days after the Effective Time, either the
Company or any stockholder who has complied with the required conditions of
Section 262 and who is otherwise entitled to appraisal rights may file a
petition in the Delaware Court of Chancery demanding a determination of the
fair value of the shares of the dissenting stockholders. If a petition for an
appraisal is timely filed, after a hearing on such petition, the Delaware
Court of Chancery will determine which stockholders are entitled to appraisal
rights and thereafter will appraise the Common Shares and/or Preferred Shares
owned by such stockholders, determining the fair value of such Common Shares
and/or Preferred Shares exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest to be paid, if any, upon the amount determined to be the fair value.
In determining fair value, the Delaware Court of Chancery is to take into
account all relevant factors. In Weinberger v. UOP, Inc., et al., the Delaware
Supreme Court discussed the factors that could be considered in determining
fair value in an appraisal proceeding, stating that "proof of value by any
techniques or methods which are generally considered acceptable in the
financial community and otherwise admissible in court" should be considered
and that "[f]air price obviously requires consideration of all relevant
factors involving the value of a company." The Delaware Supreme Court stated
that in making this determination of fair value the court must consider
"market value, asset value, dividends, earnings prospects, the nature of the
enterprise and any other facts which were known or which could be ascertained
as of the date of merger which throw any light on future prospects of the
merged corporation . . . ." The Delaware Supreme Court has construed Section
262 to mean that "elements of future value, including the nature of the
enterprise, which are known or susceptible of proof as of the date of the
merger and not the product of speculation, may be considered." However, the
court noted that Section 262 provides that fair value is to be determined
"exclusive of any element of value arising from the accomplishment or
expectation of the merger."
Stockholders who in the future consider seeking appraisal should have in
mind that the fair value of their Common Shares or Preferred Shares determined
under Section 262 could be more than, the same as, or less than the Merger
Consideration (or, in the case of the Preferred Shares, the highest amount
paid per Preferred Share in the Offer) if they do seek appraisal of their
Common Shares or Preferred Shares, and that opinions of investment banking
firms as to fairness from a financial point of view are not necessarily
opinions as to fair value under Section 262. Moreover, Parent intends to cause
the Surviving Corporation to argue in any appraisal proceeding
38
<PAGE>
that, for purposes thereof, the "fair value" of the Common Shares or Preferred
Shares, as the case may be, is less than that paid in the Offer. The cost of
the appraisal proceeding may be determined by the Delaware Court of Chancery
and taxed upon the parties as the Delaware Court of Chancery deems equitable
in the circumstances. Upon application of a dissenting stockholder, the
Delaware Court of Chancery may order that all or a portion of the expenses
incurred by any dissenting stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts, be charged pro rata against the value of all
Common Shares and/or Preferred Shares entitled to appraisal. In the absence of
such a determination or assessment, each party bears its own expenses.
Any stockholder who has duly demanded appraisal in compliance with Section
262 will not, after the Effective Time, be entitled to vote for any purpose
the Common Shares and/or Preferred Shares subject to such demand or to receive
payment of dividends or other distributions on such Common Shares and/or
Preferred Shares, except for dividends or other distributions payable to
stockholders of record at a date prior to the Effective Time.
At any time within 60 days after the Effective Time, any former holder of
Common Shares or Preferred Shares shall have the right to withdraw his or her
demand for appraisal and to accept the Merger Consideration (or, in the case
of Preferred Shares, the highest amount paid per Preferred Share in the
Offer). After this period, such holder may withdraw his or her demand for
appraisal only with the consent of the Company as the Surviving Corporation.
If no petition for appraisal is filed with the Delaware Court of Chancery
within 120 days after the Effective Time, stockholders' rights to appraisal
shall cease and all stockholders shall be entitled to receive the Merger
Consideration (or, in the case of the Preferred Shares, the highest amount
paid per Preferred Share in the Offer). Inasmuch as the Company has no
obligation to file such a petition, and Parent has no present intention to
cause or permit the Surviving Corporation to do so, any stockholder who
desires such a petition to be filed is advised to file it on a timely basis.
However, no petition timely filed in the Delaware Court of Chancery demanding
appraisal shall be dismissed as to any stockholder without the approval of the
Delaware Court of Chancery, and such approval may be conditioned upon such
terms as the Delaware Court of Chancery deems just.
Failure to take any required step in connection with the exercise of
appraisal rights may result in the termination or waiver of such rights.
APPRAISAL RIGHTS CANNOT BE EXERCISED AT THIS TIME. THE INFORMATION SET FORTH
ABOVE IS FOR INFORMATIONAL PURPOSES ONLY WITH RESPECT TO ALTERNATIVES
AVAILABLE TO STOCKHOLDERS IF THE MERGER IS CONSUMMATED. STOCKHOLDERS WHO WILL
BE ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE MERGER WILL RECEIVE
ADDITIONAL INFORMATION CONCERNING APPRAISAL RIGHTS AND THE PROCEDURES TO BE
FOLLOWED IN CONNECTION THEREWITH BEFORE SUCH STOCKHOLDERS HAVE TO TAKE ANY
ACTION RELATING THERETO.
STOCKHOLDERS WHO SELL COMMON SHARES OR PREFERRED SHARES IN THE OFFER WILL
NOT BE ENTITLED TO EXERCISE APPRAISAL RIGHTS WITH RESPECT THERETO BUT, RATHER,
WILL RECEIVE THE PRICE PAID IN THE OFFER THEREFOR.
The foregoing summary of the rights of objecting stockholders under the DGCL
does not purport to be a complete statement of the procedures to be followed
by stockholders of the Company desiring to exercise any available dissenters'
rights. The foregoing summary is qualified in its entirety by reference to
Section 262. The preservation and exercise of dissenters' rights require
strict adherence to the applicable provisions of the DGCL.
19. Fees and Expenses.
Salomon Smith Barney Inc. is acting as the Dealer Manager in connection with
the Offer and as financial advisor to Parent in connection with our offer and
the Merger, for which services Salomon Smith Barney Inc. will receive
reasonable and customary compensation. Parent has agreed to reimburse Salomon
Smith Barney Inc.
39
<PAGE>
for reasonable fees and expenses incurred by Salomon Smith Barney Inc. in
performing its services, including reasonable fees and expenses of its legal
counsel, and to indemnify Salomon Smith Barney Inc. and certain related
parties against certain liabilities, including liabilities under the federal
securities laws, arising out of its engagement. In the ordinary course of
business, Salomon Smith Barney Inc. and its affiliates may actively trade or
hold the securities of Parent, the Company and their respective affiliates for
Salomon Smith Barney Inc.'s and its affiliates' own account or for the account
of customers and, accordingly, may at any time hold a long or short position
in such securities.
Parent and Purchaser have retained Georgeson Shareholder Communications Inc.
to be the Information Agent and EquiServe Trust Company, to be the Depositary
in connection with the Offer. The Information Agent may contact holders of
Common Shares or Preferred Shares by mail, telephone, telecopy, telegraph and
personal interview and may request banks, brokers, dealers and other nominees
to forward materials relating to the Offer to beneficial owners of Common
Shares or Preferred Shares. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their respective services in
connection with the Offer, will be reimbursed for reasonable out-of-pocket
expenses, and will be indemnified against certain liabilities and expenses in
connection therewith, including certain liabilities under federal securities
laws. Parent also retained Salomon Smith Barney Inc. to render financial
advisory services to Parent concerning its acquisition of the Company and to
act as the Dealer Manager in connection with the Offer, pursuant to which
Salomon Smith Barney Inc. will be paid customary compensation. Neither Parent
nor Purchaser will pay any fees or commissions to any broker or dealer or to
any other person (other than to the Dealer Manager, the Depositary and the
Information Agent) in connection with the solicitation of tenders of Common
Shares and Preferred Shares pursuant to the Offer. Brokers, dealers,
commercial banks and trust companies will, upon request, be reimbursed by
Purchaser for customary mailing and handling expenses incurred by them in
forwarding Offering materials to their customers.
20. Miscellaneous.
Neither Purchaser nor Parent is aware of any jurisdiction where the making
of the Offer is prohibited by any administrative or judicial action pursuant
to any valid state statute. If either Purchaser or Parent becomes aware of any
valid state statute prohibiting the making of the Offer or the acceptance of
the Common Shares and Preferred Shares, Parent and Purchaser will make a good
faith effort to comply with that state statute. If, after a good faith effort,
Purchaser and Parent cannot comply with the state statute, the Offer will not
be made to, nor will tenders be accepted from or on behalf of, the holders of
Common Shares and Preferred Shares in that state.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED HEREIN IN THE
OFFER DOCUMENTS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser has filed with the SEC a Tender Offer Statement on Schedule TO
pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange
Act, together with exhibits furnishing certain additional information with
respect to the Offer, and may file amendments thereto. In addition, the
Company has filed with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9, together with exhibits, pursuant to Rule 14d-9 under the
Exchange Act, setting forth the recommendations of the Company Board with
respect to the Offer and the reasons for such recommendations and furnishing
certain additional related information. A copy of such documents, and any
amendments thereto, may be examined at, and copies may be obtained from, the
SEC (but not the regional offices of the SEC) in the manner set forth in
Section 7 of this Offer to Purchase entitled "Certain Information Concerning
the Company."
LII Acquisition Corp.
January 5, 2001
40
<PAGE>
SCHEDULE I:
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. Directors and Executive Officers of Parent.
The following table sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for
the past five years of each director and executive officer of Parent. Unless
otherwise indicated below, each occupation set forth opposite each person
refers to employment with Parent. Unless otherwise indicated, the business
address of each such person is c/o Northrop Grumman Corporation at 1840
Century Park East, Los Angeles, California 90067 and each such person is a
citizen of the United States.
<TABLE>
<CAPTION>
Directors and
Executive Officers Present Principal and Five-Year Employment History
------------------ --------------------------------------------------
<C> <S>
Kent Kresa*............. Chairman, President and Chief Executive Officer.
Before joining the Company, Kent Kresa was associated
with the Lincoln Laboratory of M.I.T. and the Defense
Advanced Research Projects Agency of the Department
of Defense. In 1975, he joined the Company as Vice
President and Manager of the Company's Research and
Technology Center. He became General Manager of the
Ventura Division in 1976, Group Vice President of the
Aircraft Group in 1982 and Senior Vice President for
Technology and Development in 1986. Mr. Kresa was
elected President and Chief Operating Officer of the
Company in 1987. He was named Chief Executive Officer
in 1989 and Chairman of the Board in 1990. Mr. Kresa
is a member of the National Academy of Engineering
and is past Chairman of the Board of Governors of the
Aerospace Industries Association. He is also an
Honorary Fellow of the American Institute of
Aeronautics and Astronautics. He serves on the Board
of Directors of the W.M. Keck Foundation and on the
Board of Trustees of the California Institute of
Technology, and serves as a director of Avery
Dennison Corporation, the Los Angeles World Affairs
Council, the John Tracy Clinic and Eclipse Aviation.
He is also a Member of the Corporation, Draper
Laboratories, Inc. and serves on the Board of
Governors of the Performing Arts Center of Los
Angeles.
Jack R. Borsting*....... E. Morgan Stanley Professor of Business
Administration and Director of the Center for
Telecommunications Management, University of Southern
California. Dr. Jack R. Borsting was at the Naval
Postgraduate School in Monterey, California from 1959
to 1980. During his tenure at Monterey, he was
professor of Operations Research, Chairman of the
Department of Operations Research and Administration
Science, and Provost and Academic Dean. Dr. Borsting
was Assistant Secretary of Defense (Comptroller) from
1980 to 1983 and Dean of the School of Business at
the University of Miami from 1983 to 1988. From 1988
to 1994, he was the Robert R. Dockson professor and
Dean of the School of Business Administration at the
University of Southern California, Los Angeles. He is
past president of both the Operations Research
Society of America and the Military Operations
Research Society. He is currently Chairman of the
Board of Trustees of the Orthopedic Hospital of
Los Angeles and serves as a director of Whitman
Education Group and TRO Learning, Inc. He is also a
trustee of the Rose Hills Foundation.
John T. Chain, Jr.*..... General, United States Air Force (Ret.) and Chairman
of the Board, Thomas Group, a management consulting
company. During his military career, General John T.
Chain held a number of Air Force commands. In 1978,
he became military assistant to the Secretary of the
Air Force. In 1984, he became the Director of
Politico-Military Affairs, Department of State.
General Chain has
</TABLE>
41
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<TABLE>
<C> <S>
been Chief of Staff of Supreme Headquarters Allied
Powers Europe, and Commander in Chief, Strategic Air
Command, the position from which he retired in
February 1991. In March 1991, he became Executive
Vice President for Burlington Northern Railroad,
serving in that capacity until February 1996. In
December 1996, he assumed the position of President
of Quarterdeck Equity Partners, Inc. and in May 1998,
he became Chairman of the Board of Thomas Group, Inc.
He is also a director of Nabisco Holding Group, Inc.,
R.J. Reynolds, Inc. and Kemper Insurance Company.
Vic Fazio*.............. Senior Partner, Clark & Weinstock, a consulting firm.
Vic Fazio served as a Member of Congress for twenty
years representing California's third congressional
district. During that time he served as a member of
the Armed Services, Budget and Ethics Committees and
was a member of the House Appropriations Committee
where he served as Subcommittee Chair or ranking
member for eighteen years. Mr. Fazio was a member of
the elected Democratic Leadership in the House from
1991-1998 including four years as Chair of the
Democratic Caucus, the third ranking position in the
party. From 1975 to 1978 Mr. Fazio served in the
California Assembly and was a member of the staff of
the California Assembly Speaker from 1971 to 1975.
Upon leaving Congress in early 1999, he became a
Senior Partner at Clark & Weinstock, a strategic
communications consulting firm. He is a member of
numerous boards including The California Institute,
Coro National Board of Governors, the U.S. Capitol
Historical Society and the Board of Visitors, The
University of California at Davis.
Phillip Frost*.......... Chairman of the Board and Chief Executive Officer,
IVAX Corporation, a pharmaceutical company. Dr.
Phillip Frost has served as Chairman of the Board of
Directors and Chief Executive Officer of IVAX
Corporation since 1987. He was Chairman of the
Department of Dermatology at Mt. Sinai Medical Center
of Greater Miami, Miami Beach, Florida from 1972 to
1990. Dr. Frost was Chairman of the Board of
Directors of Key Pharmaceuticals, Inc. from 1972 to
1986. He is Chairman of Whitman Education Group, and
Vice Chairman of the Board of Directors of North
American Vaccine, Inc., and Continucare Corporation.
He is also a Trustee of the Board of the University
of Miami and a member of the Board of Governors of
the American Stock Exchange.
Charles R. Larson*...... Admiral, United States Navy (Ret.). Charles R. Larson
was superintendent of the U.S. Naval Academy from
1983 to 1986. In 1991, he became senior military
commander in the Pacific. He returned to the U.S.
Naval Academy in 1994, where he served as
superintendent until 1998. Currently, he is Chairman
of the Board of the U.S. Naval Academy Foundation,
Vice Chairman of the Board of Regents of the
University System of Maryland and serves on the board
of directors of such organizations as Constellation
Energy Group, Inc., the White House Fellows
Foundation, Edge Technologies, Inc., Fluor Global
Services, the Atlantic Council, Military.com and the
National Academy of Sciences' Committee on
International Security and Arms Control. In addition,
he is a member of the Council on Foreign Relations
and is a senior fellow of The CNA Corporation. His
decorations include the Defense Distinguished Service
Medal, seven Navy Distinguished Service Medals, three
Legions of Merit, Bronze Star Medal, Navy
Commendation and the Navy Achievement Medal.
Robert A. Lutz*......... Chairman and Chief Executive Officer, Exide
Corporation, a battery manufacturing company. Robert
A. Lutz has served as Chairman and Chief Executive
Officer of Exide Corporation since December 1998.
Previously he had
</TABLE>
42
<PAGE>
<TABLE>
<C> <S>
joined Chrysler Corporation in 1986 as Executive Vice
President of Chrysler Motors Corporation and was
elected a director of Chrysler Corporation that same
year. He was elected President in 1991 and Vice
Chairman in 1996. He retired from Chrysler
Corporation in July 1998. Prior to joining Chrysler
Corporation, Mr. Lutz held senior positions with Ford
Motor Company, General Motors Corporation Europe and
Bavarian Motor Werke. He is an executive director of
the National Association of Manufacturers and a
member of the National Advisory Council of the
University of Michigan School of Engineering, the
Board of Trustees of the U.S. Marine Corps University
Foundation and the Advisory Board of the University
of California-Berkeley, Haas School of Business. Mr.
Lutz is also a director of ASCOM Holdings, A.G. and
Silicon Graphics, Inc.
Aulana L. Peters*....... Partner, Gibson, Dunn & Crutcher. Aulana L. Peters
joined the law firm of Gibson, Dunn & Crutcher in
1973. In 1980, she was named a partner in the firm
and continued in the practice of law until 1984 when
she accepted an appointment as Commissioner of the
SEC. In 1988, after serving four years as a
Commissioner, she returned to Gibson, Dunn &
Crutcher. Ms. Peters is a director of Callaway Golf
Company, Minnesota Mining and Manufacturing Company,
and Merrill Lynch & Co., Inc. She is also a member of
the Board of Directors of Community Television for
Southern California ("KCET") and of the Legal
Advisory Board of the National Association of
Securities Dealers. Ms. Peters is a member of the
Financial Accounting Standards Board Steering
Committee for its Financial Reporting Project and is
a member of the Public Oversight Board's Panel on
Audit Effectiveness.
John E. Robson*......... Senior Advisor, Robertson Stephens, a Fleet Boston
Financial Company, investment bankers. From 1989 to
1993, John E. Robson served as Deputy Secretary of
the United States Treasury. He was Dean and Professor
of Management at the Emory University School of
Business Administration from 1986 to 1989 and
President and Chief Executive Officer and Executive
Vice President and Chief Operating Officer of G.D.
Searle & Co., a pharmaceutical company, from 1977 to
1986. Previously, he held government posts as
Chairman of the U.S. Civil Aeronautics Board,
regulator of the airline industry and Under Secretary
of the U.S. Department of Transportation, and engaged
in the private practice of law as a partner of Sidley
and Austin. Mr. Robson is a director of Exide
Corporation, Monsanto Company and ProLogis Trust. He
is also a Distinguished Visiting Fellow of the Hoover
Institution at Stanford University, a Visiting Fellow
at the Heritage Foundation and a director of the
University of California San Francisco Foundation.
Richard M. Rosenberg*... Chairman of the Board and Chief Executive Officer
(Ret.), BankAmerica Corporation and Bank of America
NT&SA. Richard M. Rosenberg was the Chairman of the
Board and Chief Executive Officer of BankAmerica
Corporation ("BAC") and Bank of America ("BofA") from
1990 to 1996. He had served as President since
February 1990 and as Vice Chairman of the Board and a
director of BAC and the BofA since 1987. Before
joining BAC, Mr. Rosenberg served as President and
Chief Operating Officer of Seafirst Corporation and
Seattle-First National Bank, which he joined in 1986.
Mr. Rosenberg is a retired Commander in the U.S. Navy
Reserve, a director of
Airborne Express Corporation, SBC Communications,
Chronicle Publishing, Pacific Life Insurance Company,
and Bank of America Corporation and a member of the
Board of Trustees of the California Institute of
Technology.
</TABLE>
43
<PAGE>
<TABLE>
<C> <S>
John Brooks Slaughter*.. President and CEO of the National Action Council for
Minorities in Engineering, Inc. Dr. John Brooks
Slaughter held electronics engineering positions with
General Dynamics Convair and the U.S. Navy
Electronics Laboratory. In 1975, he became Director
of the Applied Physics Laboratory of the University
of Washington. In 1977, he was appointed Assistant
Director for Astronomics, Atmospherics, Earth and
Ocean Sciences at the National Science Foundation.
From 1979 to 1980, he served as Academic Vice
President and Provost of Washington State University.
In 1980, he returned to the National Science
Foundation as Director and served in that capacity
until 1982 when he became Chancellor of the
University of Maryland, College Park. From 1988 to
July 1999, Dr. Slaughter was President of Occidental
College in Los Angeles and in August 1999, he assumed
the position of Melbo Professor of Leadership in
Education at the University of Southern California.
In June 2000, Dr. Slaughter was named President and
CEO of the National Action Counsel for Minorities in
Engineering, Inc. He is a member of the National
Academy of Engineering, a fellow of the American
Academy of Arts and Sciences and serves as a director
of Avery Dennison Corporation, Solutia, Inc. and
International Business Machines Corporation.
Richard J. Stegemeier*.. Chairman Emeritus of the Board of Directors, Unocal
Corporation, an integrated petroleum company. Richard
J. Stegemeier joined Union Oil Company of California,
principal operating subsidiary of Unocal Corporation
("Unocal"), in 1951. He became President and Chief
Operating Officer in 1985, and President and Chief
Executive Officer in 1988. In 1989 he was elected
Chairman of the Board, the position from which he
retired in 1995. Mr. Stegemeier is a member of the
National Academy of Engineering and a director of
Foundation Health Systems, Inc., Halliburton Company,
Sempra Energy and Montgomery Watson, Inc.
Herbert W. Anderson..... Corporate Vice President, President and Chief
Executive Officer, Logicon, Inc. since 1998. Prior to
this, Mr. Anderson was Corporate Vice President and
General Manager, Data Systems and Services Division.
Ralph D. Crosby, Jr..... Corporate Vice President and President, Integrated
Systems and Aerostructures Sector since 1998. Prior
to this, Mr. Crosby was Corporate Vice President and
General Manager, Commercial Aircraft Division. Prior
to September 1996, he was Corporate Vice President
and Deputy General Manager, Commercial Aircraft
Division. Prior to March 1996, he was Corporate Vice
President and Deputy General Manager, Military
Aircraft Systems Division. Prior to January 1996, he
was Corporate Vice President and General Manager, B-2
Division.
J. Michael Hateley...... Corporate Vice President and Chief Human Resources
and Administrative Officer since 2000. Prior to
January 1999, Mr. Hateley was Vice President, Human
Resources, Security and Administration Military
Aircraft Systems Division. Prior to 1996, he was Vice
President, Human Resources, Security and
Administration, B-2 Division.
Robert W. Helm.......... Corporate Vice President, Government Relations since
1994.
John H. Mullan.......... Corporate Vice President and Secretary since 1999.
Prior to this, Mr. Mullan was Acting Secretary. Prior
to May 1998, he was Senior Corporate Counsel.
Albert F. Myers......... Corporate Vice President and Treasurer since 1994.
Rosanne P. O'Brien...... Corporate Vice President, Communications since
August, 2000. Prior to this, Ms. O'Brien was Vice
President, Communications since January, 1999.
Ms. O'Brien was Senior Consultant to Alleghany
Teledyne, Inc. from 1996 to 1999, and Vice President,
Corporate Relations for Teledyne, Inc. from 1993
through 1995.
</TABLE>
44
<PAGE>
<TABLE>
<C> <S>
James G. Roche.......... Corporate Vice President and President, Electronic
Sensors and Systems Sector since 1998. Prior to this,
Mr. Roche was Corporate Vice President and General
Manager, Electronic Sensors and Systems Division.
Prior to 1996, he was Corporate Vice President and
Chief Advanced Development, Planning, and Public
Affairs Officer.
W. Burks Terry.......... Corporate Vice President and General Counsel since
August, 2000. Prior to this, Mr. Terry became Vice
President, Deputy General Counsel and Sector Counsel
in October, 1998 and prior to October, 1998 he was
Vice President and Assistant General Counsel.
Robert B. Spiker........ Corporate Vice President and Controller since
December, 2000. Prior to this, Mr. Spiker was Vice
President, Finance and Controller, Electronic Sensors
and Systems Sector. Prior to 1999, he was Business
Manager for C3&I Naval Systems.
Richard B. Waugh, Jr.... Corporate Vice President and Chief Financial Officer
since 1993.
</TABLE>
--------
* Member of Parent's Board of Directors.
2. Directors and Executive Officers of Purchaser.
The following table sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for
the past five years of each director and executive officer of Purchaser.
Unless otherwise indicated below, each occupation set forth opposite each
person refers to employment with Purchaser. Unless otherwise indicated, the
business address of each such person is c/o Parent at 1840 Century Park East,
Los Angeles, California 90067 and each such person is a citizen of the United
States.
<TABLE>
<CAPTION>
Directors and
Executive Officers Present Principal and Five-Year Employment History
------------------ --------------------------------------------------
<C> <S>
Albert F. Myers** President. Mr. Myers has held the position of
Corporate Vice President and Treasurer of Parent
since 1994.
W. Burks Terry** Chief Financial Officer, Vice President and General
Counsel. In addition, Mr. Terry has held the position
of Corporate Vice President and General Counsel of
Parent since August 2000. From October 1998 to August
2000, Mr. Terry was Vice President, Deputy General
Counsel, and Sector Counsel of Parent. From 1989 to
October 1998, Mr. Terry was Vice President and
Assistant General Counsel of Parent.
John H. Mullan** Secretary. In addition, Mr. Mullan has held the
positions of Corporate Vice President and Secretary
of Parent since 1999. Prior to this, Mr. Mullan was
Acting Secretary of Parent, and prior to May 1998,
Mr. Mullan was Senior Corporate Counsel of Parent.
</TABLE>
--------
** Member of Purchaser's Board of Directors.
45
<PAGE>
SCHEDULE II:
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
DELAWARE CODE ANNOTATED
TITLE 8. CORPORATIONS
CHAPTER 1. GENERAL CORPORATION LAW
SUBCHAPTER IX. MERGER, CONSOLIDATION OR CONVERSION
8 Del. C. (S) 262 (2000)
Section 262. Appraisal rights
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has otherwise
complied with subsection (d) of this section and who has neither voted in
favor of the merger or consolidation nor consented thereto in writing pursuant
to (S) 228 of this title shall be entitled to an appraisal by the Court of
Chancery of the fair value of the stockholder's shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to
be effected pursuant to (S) 251 (other than a merger effected pursuant to (S)
251(g) of this title), (S) 252, (S) 254, (S) 257, (S) 258, (S) 263 or (S) 264
of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights shall be
available for any shares of stock of the constituent corporation surviving a
merger if the merger did not require for its approval the vote of the
stockholders of the surviving corporation as provided in subsection (f) of (S)
251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to (S)(S) 251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts
in respect thereof) or depository receipts at the effective date
of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market
system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
46
<PAGE>
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs paragraphs a.
and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs paragraphs a.,
b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S) 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for such
meeting with respect to shares for which appraisal rights are available
pursuant to subsection (b) or (c) hereof that appraisal rights are available
for any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder electing to
demand the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal
of such stockholder's shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each
constituent corporation who has complied with this subsection section and has
not voted in favor of or consented to the merger or consolidation of the date
that the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to (S) 228 or (S)
253 of this title, each constituent corporation, either before the effective
date of the merger or consolidation or within ten days thereafter, shall
notify each of the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval of the merger
or consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation, such
notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal
of such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the effective date
of the merger or consolidation notifying each of the holders of any class or
series of stock of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided, however,
that if such second notice is sent more than 20 days following the sending of
the first notice, such
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second notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or assistant
secretary or of the transfer agent of the corporation that is required to give
either notice that such notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be not
more than 10 days prior to the date the notice is given, provided, that if the
notice is given on or after the effective date of the merger or consolidation,
the record date shall be such effective date. If no record date is fixed and
the notice is given prior to the effective date, the record date shall be the
close of business on the day next preceding the day on which the notice is
given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied
with subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the
merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholder's written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal
under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates
to submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court
may, in its discretion, permit discovery or other pretrial
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proceedings and may proceed to trial upon the appraisal prior to the final
determination of the stockholder entitled to an appraisal. Any stockholder
whose name appears on the list filed by the surviving or resulting corporation
pursuant to subsection (f) of this section and who has submitted such
stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under
this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced
as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed within
the time provided in subsection (e) of this section, or if such stockholder
shall deliver to the surviving or resulting corporation a written withdrawal
of such stockholder's demand for an appraisal and an acceptance of the merger
or consolidation, either within 60 days after the effective date of the merger
or consolidation as provided in subsection (e) of this section or thereafter
with the written approval of the corporation, then the right of such
stockholder to an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be dismissed as to any
stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
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Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, Share Certificates and
any other required documents should be sent by each stockholder or such
stockholder's broker, dealer, commercial bank, trust company or other nominee
to the Depositary at one of the addresses set forth below:
The Depositary for the Offer is:
EQUISERVE TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight Delivery:
EQUISERVE TRUST COMPANY EQUISERVE TRUST COMPANY EQUISERVE TRUST COMPANY
P.O. Box 842010 c/o Securities Transfer and 40 Campanelli Drive
Boston, Massachusetts Reporting Services Inc. Braintree, Massachusetts 02184
02284-2010 100 William Street--Galleria
New York, New York 10038
</TABLE>
<TABLE>
<S> <C>
By Facsimile Transmission: Confirmation Receipt of Facsimile
(For Eligible Institutions Only) by Telephone Only:
(781) 575-4826 (781) 575-4816
or
(781) 575-4827
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone
numbers as set forth below. Additional copies of this Offer to Purchase, the
Letter of Transmittal, or other related tender offer materials may be obtained
from the Information Agent or from brokers, dealers, commercial banks or trust
companies.
The Information Agent for the Offer is:
[LOGO OF GEORGESON SHAREHOLDER COMMUNICATIONS INC.]
17 State Street, 10th Floor
New York, New York 10004
Bankers and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
The Dealer Manager for the Offer is:
Salomon Smith Barney
[LOGO FOR SALOMON SMITH BARNEY]
388 Greenwich Street
New York, New York 10013
Call Toll Free: (877) 319-4978
