<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
STATEMENT ON
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
--------------
MICRODYNE CORPORATION
(NAME OF SUBJECT COMPANY)
L-M ACQUISITION CORPORATION
L-3 COMMUNICATIONS CORPORATION
L-3 COMMUNICATIONS HOLDINGS, INC.
(BIDDER)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
(TITLE OF CLASS OF SECURITIES)
595067109
(CUSIP NUMBER OF CLASS OF SECURITIES)
--------------
CHRISTOPHER C. CAMBRIA, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
L-3 COMMUNICATIONS CORPORATION
600 THIRD AVENUE
NEW YORK, NY 10016
TELEPHONE: (212) 697-1111
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
Copy to:
WILLIAM E. CURBOW, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 455-2000
--------------
CALCULATION OF FILING FEE
===============================================================================
Transaction Valuation* $73,412,515Amount of Filing Fee** $14,682.50
===============================================================================
* Based on the offer to purchase all of the outstanding shares of Common Stock
of the Subject Company at $5.00 cash per Share, 13,111,201 Shares
outstanding and 1,571,302 outstanding options as of November 30, 1998.
** 1/50 of 1% of Transaction Valuation.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Filing Party:
Form or Registration No.: Date Filed:
===============================================================================
<PAGE>
CUSIP NO. 595067109
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
L-M ACQUISITION CORPORATION
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
MARYLAND
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF -----------------------------------------------------------
SHARES 8 SHARED VOTING POWER*
BENEFICIALLY 5,754,575
OWNED BY -----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON -----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON*
5,754,575
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.9% (BASED ON 13,111,201 OUTSTANDING)
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
* Beneficial ownership is based solely on the provisions of the Tender
Agreement, pursuant to which among other things, certain stockholders of
Microdyne Corporation have agreed with the reporting person to vote the
shares shown as beneficially owned in favor of the Merger and against any
action or agreement (other than the Merger Agreement or the transactions
contemplated thereby) that would impede, interfere with, delay, postpone
or attempt to discourage the Merger or the Offer, all as more fully
described herein. Capitalized terms have the meanings assigned thereto
herein.
2
<PAGE>
CUSIP NO. 595067109
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
L-3 COMMUNICATIONS CORPORATION
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC AND BK
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ---------------------------------------------------------
SHARES 8 SHARED VOTING POWER*
BENEFICIALLY 5,754,575
OWNED BY ---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ---------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON*
5,754,575
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.9% (BASED ON 13,111,201 OUTSTANDING)
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
* Beneficial ownership is based solely on the provisions of the Tender
Agreement, pursuant to which among other things, certain stockholders of
Microdyne Corporation have agreed with the reporting person to vote the
shares shown as beneficially owned in favor of the Merger and against any
action or agreement (other than the Merger Agreement or the transactions
contemplated thereby) that would impede, interfere with, delay, postpone
or attempt to discourage the Merger or the Offer, all as more fully
described herein. Capitalized terms have the meanings assigned thereto
herein.
3
<PAGE>
CUSIP NO. 595067109
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
L-3 COMMUNICATIONS HOLDINGS, INC.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ------------------------------------------------------------
SHARES 8 SHARED VOTING POWER*
BENEFICIALLY 5,754,575
OWNED BY ------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON*
5,754,575
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
43.9% (BASED ON 13,111,201 OUTSTANDING)
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
* Beneficial ownership is based solely on the provisions of the Tender
Agreement, pursuant to which among other things, certain stockholders of
Microdyne Corporation have agreed with the reporting person to vote the
shares shown as beneficially owned in favor of the Merger and against any
action or agreement (other than the Merger Agreement or the transactions
contemplated thereby) that would impede, interfere with, delay, postpone
or attempt to discourage the Merger or the Offer, all as more fully
described herein. Capitalized terms have the meanings assigned thereto
herein.
4
<PAGE>
This Tender Offer Statement on Schedule 14D-1 and Statement on Schedule
13D (the "Schedule 14D-1/13D") relates to the offer by L-M Acquisition
Corporation, a Maryland corporation ("Purchaser") and a wholly owned subsidiary
of L-3 Communications Corporation, a Delaware corporation ("Parent") and a
wholly owned subsidiary of L-3 Communications Holdings, Inc., a Delaware
corporation, to purchase for cash all of the outstanding shares of Common
Stock, par value $0.10 per share (the "Shares"), of Microdyne Corporation, a
Maryland corporation (the "Company"), at a purchase price of $5.00 per Share,
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase, dated as of December 9,
1998 (the "Offer to Purchase"), a copy of which is attached hereto as Exhibit
(a)(1), and in the related Letter of Transmittal (which, together with the
Offer to Purchase, as amended from time to time, constitute the "Offer"), a
copy of which is attached hereto as Exhibit (a)(2).
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Microdyne Corporation. The
information set forth in Section 7 ("Certain Information Concerning the
Company") of the Offer to Purchase is incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is Common Stock, par value $0.10 per share, of the Company. The
information set forth in the Introduction (the "Introduction") of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by Purchaser and Parent. The
information set forth in Section 8 ("Certain Information Concerning Purchaser
and Parent") of the Offer to Purchase and in Schedule I thereto is incorporated
herein by reference.
(e) and (f) During the last five years, neither Purchaser nor Parent nor,
to the best knowledge of Purchaser or Parent, any of the persons listed in
Schedule I to the Offer to Purchase (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 8 ("Certain Information
Concerning Purchaser and Parent"), Section 10 ("Background of the Offer;
Contacts with the Company") and Section 11 ("The Merger Agreement; The Tender
Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company"), Section 11 ("The Merger
Agreement; The Tender Agreement"), Section 12 ("Purpose of the Offer; The
Merger; Plans for the Company") and Section 14 ("Effect of the Offer on the
Market for the Shares; Nasdaq Listing; Exchange Act Registration") of the Offer
to Purchase is incorporated herein by reference.
5
<PAGE>
(f)-(g) The information set forth in Section 14 ("Effect of the Offer on
the Market for the Shares; Nasdaq Listing; Exchange Act Registration") of the
Offer to Purchase is incorporated herein by reference.
Except as contemplated by the Merger Agreement and the Tender Agreement,
neither Parent nor Purchaser has any plans or proposals which relate to or
would result in (x) the acquisition by any person of additional securities of
the Company or the disposition of securities of the Company, or (y) changes to
the Company's charter, bylaws or instruments corresponding thereto or other
action which may impede the acquisition of control of the Company by any
person.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction and Section 8
("Certain Information Concerning Purchaser and Parent") of and Schedule I to
the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent"), Section 10 ("Background of the
Offer; Contacts with the Company"), Section 11 ("The Merger Agreement; The
Tender Agreement") and Section 12 ("Purpose of the Offer; the Merger; Plans for
the Company") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 ("The Merger Agreement; The
Tender Agreement") is incorporated herein by reference.
(b) and (c) The information set forth in Section 16 ("Certain Legal
Matters and Regulatory Approvals") of the Offer to Purchase is incorporated
herein by reference.
(d) The information set forth in Section 14 ("Effect of the Offer on the
Market for the Shares; Nasdaq Listing; Exchange Act Registration") and Section
16 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase
is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated as of December 9, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
6
<PAGE>
(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published on December 9, 1998.
(a)(8) Press Release issued by Parent on December 3, 1998.
(b)(1) Amended and Restated Credit Agreement, dated as of August 13, 1998,
among L-3 Communications Corporation, Lehman Commercial Paper Inc.,
Bank of America NT & SA and the several Lenders from time to time
parties thereto.
(b)(2) 364 Day Credit Agreement, dated as of August 13, 1998, among L-3
Communications Corporation, Lehman Commercial Paper Inc., Bank of
America NT & SA and the several Lenders from time to time parties
thereto.
(c)(1) Agreement and Plan of Merger, dated as of December 3, 1998, by and
among L-3 Communications Corporation, L-M Acquisition Corporation and
Microdyne Corporation.
(c)(2) Tender Agreement, dated as of December 3, 1998, among L-3
Communications Corporation and each of the Stockholders of Microdyne
Corporation named on the signature pages thereto.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
7
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
L-3 COMMUNICATIONS HOLDINGS, INC.
By: /S/ CHRISTOPHER C. CAMBRIA
------------------------------------
Name: Christopher C. Cambria
Title: Vice President and General
Counsel
L-3 COMMUNICATIONS CORPORATION
By: /S/ CHRISTOPHER C. CAMBRIA
------------------------------------
Name: Christopher C. Cambria
Title: Vice President, General
Counsel and Secretary
L-M ACQUISITION CORPORATION
By: /S/ CHRISTOPHER C. CAMBRIA
------------------------------------
Name: Christopher C. Cambria
Title: President and Secretary
Date: December 9, 1998
8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NO.
--- ----------- ---
<S> <C> <C>
(a)(1) Offer to Purchase dated as of December 9, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(7) Summary Advertisement as published on December 9, 1998.
(a)(8) Press Release issued by Parent on December 3, 1998.
*(b)(1) Amended and Restated Credit Agreement, dated as of August 13, 1998,
among L-3 Communications Corporation, Lehman Commercial Paper Inc.,
Bank of America NT & SA and the several Lenders from time to time parties
thereto.
**(b)(2) 364 Day Credit Agreement, dated as of August 13, 1998, among L-3
Communications Corporation, Lehman Commercial Paper Inc., Bank of
America NT & SA and the several Lenders from time to time parties thereto.
(c)(1) Agreement and Plan of Merger, dated as of December 3, 1998, by and among
L-3 Communications Corporation, L-M Acquisition Corporation and
Microdyne Corporation.
(c)(2) Tender Agreement, dated as of December 3, 1998, among L-3 Communications
Corporation and each of the Stockholders of Microdyne Corporation named
on the signature pages thereto.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
- ----------
* Incorporated by reference from Exhibit 99.1 of L-3 Communications
Corporation's Form 10-Q filed on November 16, 1998.
** Incorporated by reference from Exhibit 99.2 of L-3 Communications
Corporation's Form 10-Q filed on November 16, 1998.
9
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MICRODYNE CORPORATION
AT
$5.00 NET PER SHARE
BY
L-M ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS HOLDINGS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JANUARY 7, 1999, UNLESS THE OFFER IS EXTENDED.
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
NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.10 PER SHARE (THE "SHARES"), OF
MICRODYNE CORPORATION (THE "COMPANY") WHICH, TOGETHER WITH ANY SHARES OWNED BY
L-3 COMMUNICATIONS HOLDINGS, INC., L-3 COMMUNICATIONS CORPORATION ("PARENT") OR
L-M ACQUISITION CORPORATION ("PURCHASER"), OR ANY CONTROLLED AFFILIATE THEREOF,
CONSTITUTES AT LEAST A MAJORITY OF THE VOTING POWER (DETERMINED ON A
FULLY-DILUTED BASIS), ON THE DATE OF PURCHASE, OF ALL THE SECURITIES OF THE
COMPANY ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS OR IN A MERGER
AND (II) THE EXPIRATION OR TERMINATION OF ANY WAITING PERIODS UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. THE OFFER IS
ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION AND SECTIONS 1
AND 15.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF
THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE HOLDERS
OF SHARES AND RECOMMENDS THAT HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER
THEIR SHARES TO PURCHASER.
--------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such
stockholder's Shares should either (1) complete and sign the enclosed Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, mail or deliver the Letter of Transmittal (or such
facsimile) and any other required documents to American Stock Transfer & Trust
Company (the "Depositary"), and either deliver the certificates evidencing the
tendered Shares and any other required documents to the Depositary or tender
such Shares pursuant to the procedure for book-entry transfer set forth in
Section 3 or (2) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such stockholder.
Stockholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if they desire to
tender Shares so registered.
A STOCKHOLDER WHO DESIRES TO TENDER SHARES AND WHOSE CERTIFICATES
REPRESENTING SUCH SHARES ARE NOT IMMEDIATELY AVAILABLE, OR WHO CANNOT COMPLY
WITH THE PROCEDURE FOR BOOK-ENTRY TRANSFER ON A TIMELY BASIS, MAY TENDER SUCH
SHARES BY FOLLOWING THE PROCEDURES FOR GUARANTEED DELIVERY SET FORTH IN
SECTION 3.
Questions and requests for assistance may be directed to Lehman Brothers
Inc. ("Lehman Brothers" or the "Dealer Manager") or to D.F. King & Co., Inc.
(the "Information Agent") at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent or from brokers,
dealers, commercial banks or trust companies.
--------------
THE DEALER MANAGER FOR THE OFFER IS:
LEHMAN BROTHERS
December 9, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION .......................................................................... 1
THE TENDER OFFER ...................................................................... 3
1. Terms of the Offer; Expiration Date ............................................ 3
2. Acceptance for Payment and Payment for Shares .................................. 4
3. Procedure for Tendering Shares ................................................. 5
4. Withdrawal Rights .............................................................. 8
5. Certain Federal Income Tax Consequences ........................................ 8
6. Price Range of Shares; Dividends ............................................... 9
7. Certain Information Concerning the Company ..................................... 9
8. Certain Information Concerning Purchaser and Parent ............................ 11
9. Source and Amount of Funds ..................................................... 12
10. Background of the Offer; Contacts with the Company ............................. 14
11. The Merger Agreement; The Tender Agreement ..................................... 15
12. Purpose of the Offer; The Merger; Plans for the Company ........................ 27
13. Dividends and Distributions .................................................... 29
14. Effect of the Offer on the Market for the Shares; Nasdaq Listing; Exchange Act
Registration ................................................................... 30
15. Certain Conditions of the Offer ................................................ 31
16. Certain Legal Matters and Regulatory Approvals ................................. 33
17. Fees and Expenses .............................................................. 34
18. Miscellaneous .................................................................. 34
SCHEDULE I
CERTAIN INFORMATION REGARDING THE DIRECTORS AND EXECUTIVE
OFFICERS OF PURCHASER, PARENT AND HOLDINGS ........................................... I-1
</TABLE>
i
<PAGE>
To the Stockholders of Microdyne Corporation:
INTRODUCTION
L-M Acquisition Corporation, a Maryland corporation ("Purchaser") and a
wholly owned subsidiary of L-3 Communications Corporation, a Delaware
corporation ("Parent") and a wholly owned subsidiary of L-3 Communications
Holdings, Inc., a Delaware corporation ("Holdings"), hereby offers to purchase
all of the outstanding shares of Common Stock, par value $0.10 per share (the
"Shares"), of Microdyne Corporation, a Maryland corporation (the "Company"), at
a purchase price of $5.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the transfer and sale of Shares pursuant to the Offer.
Purchaser will pay all fees and expenses of Lehman Brothers Inc., which is
acting as Dealer Manager for the Offer ("Lehman" or the "Dealer Manager"),
American Stock Transfer & Trust Company, which is acting as the Depositary (the
"Depositary"), and D.F. King & Co., Inc. , which is acting as the Information
Agent (the "Information Agent"), incurred in connection with the Offer. See
Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS"), AT A
MEETING DULY CALLED AND HELD ON DECEMBER 2, 1998, HAS UNANIMOUSLY (A)
DETERMINED THAT THE MERGER AGREEMENT (AS DEFINED BELOW) AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING EACH OF THE OFFER AND THE MERGER (AS DEFINED
BELOW), ARE FAIR TO AND IN THE BEST INTERESTS OF THE HOLDERS OF THE SHARES, (B)
EXEMPTED THE OFFER, THE MERGER, THE MERGER AGREEMENT AND THE TENDER AGREEMENT
(AS DEFINED BELOW) AND THE TRANSACTIONS CONTEMPLATED THEREBY SO AS TO RENDER
SECTION 3-602 OF THE MARYLAND GENERAL CORPORATION LAW (THE "MGCL") INAPPLICABLE
THERETO AND TO ANY OTHER TRANSACTIONS ENTERED INTO AFTER THE DATE OF THE MERGER
AGREEMENT BETWEEN THE COMPANY AND PARENT OR ANY OF ITS SUBSIDIARIES OR BETWEEN
PARENT OR ANY OF ITS SUBSIDIARIES AND CERTAIN STOCKHOLDERS WITH THE APPROVAL OF
THE BOARD OF DIRECTORS OF THE COMPANY (A "CONSENSUAL TRANSACTION"), (C) AMENDED
THE BY-LAWS OF THE COMPANY SO AS TO RENDER INAPPLICABLE SECTION 3-702(A)(I) OF
THE MGCL TO THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND THE
TENDER AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE OFFER, AND TO ANY
CONSENSUAL TRANSACTION, (D) DECLARED THE MERGER TO BE ADVISABLE AND DIRECTED
THAT THE MERGER BE SUBMITTED FOR CONSIDERATION AT A SPECIAL MEETING OF THE
STOCKHOLDERS OF THE COMPANY AND (E) RESOLVED TO RECOMMEND THAT THE STOCKHOLDERS
OF THE COMPANY ACCEPT THE OFFER, TENDER THEIR SHARES TO PURCHASER THEREUNDER
AND APPROVE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
The Board of Directors and a committee (the "Special Committee")
consisting of certain independent directors of the Board of Directors have
received the written opinion of Robinson-Humphrey Company, LLC
("Robinson-Humphrey"), financial advisor to the Company, that the consideration
to be received by the holders of Shares pursuant to each of the Offer and the
Merger is fair to such stockholders from a financial point of view. A copy of
the opinion of Robinson-Humphrey is attached to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which is being distributed to the stockholders of the Company. The
Robinson-Humphrey opinion should be read in its entirety for the assumptions
made, the procedures followed, the matters considered and the limits of the
review made by Robinson-Humphrey in connection with such opinion. The
Robinson-Humphrey opinion was prepared for the Board of Directors and the
Special Committee and does not constitute a recommendation to any stockholder
as to whether to tender in the Offer. Robinson-Humphrey was not retained as an
advisor or agent to the Company's stockholders.
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
NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES OWNED BY HOLDINGS, PARENT OR
PURCHASER OR ANY CONTROLLED AFFILIATE THEREOF, CONSTITUTES AT LEAST A MAJORITY
OF THE VOTING POWER (DETERMINED ON A FULLY-DILUTED BASIS), ON THE DATE OF
PURCHASE, OF ALL THE SECURITIES OF THE COMPANY ENTITLED TO VOTE GENERALLY IN
THE ELECTION OF DIRECTORS OR IN A MERGER (THE "MINIMUM CONDITION")
<PAGE>
AND (II) THE EXPIRATION OR TERMINATION OF ANY WAITING PERIODS UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT"). SEE SECTIONS 1 AND 15. IF PURCHASER PURCHASES AT LEAST THAT NUMBER OF
SHARES NEEDED TO SATISFY THE MINIMUM CONDITION, IT WILL BE ABLE TO EFFECT THE
MERGER WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER OF THE COMPANY.
SEE SECTION 12.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 3, 1998 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, for the making
of the Offer by Purchaser, and further provides that, following the completion
of the Offer, upon the terms and subject to the conditions of the Merger
Agreement and in accordance with the MGCL, Purchaser will be merged with and
into the Company (the "Merger"). Following the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and become
a wholly owned subsidiary of the Parent, and the separate corporate existence
of Purchaser will cease.
Certain stockholders of the Company representing, as of the date hereof,
approximately 43.9% of the issued and outstanding Shares of the Company (the
"Stockholders") have contractually agreed with Parent, among other things, to
tender their Shares in the Offer and otherwise support the transaction. See
Section 11 for a discussion of the Tender Agreement, dated as of December 3,
1998, among the Parent and the Stockholders (the "Tender Agreement").
In accordance with the Merger Agreement, the Company agrees, if and to the
extent permitted by law, to duly convene a meeting of its stockholders as soon
as practicable following consummation of the Offer for the purpose of
considering and taking action on the Merger Agreement and the transactions
contemplated thereby and to include in the proxy statement for such meeting the
unanimous recommendation of the Board of Directors that the stockholders of the
Company vote in favor of the Merger Agreement and the transactions contemplated
thereby and to otherwise use its reasonable good faith efforts to obtain the
necessary approval of the Merger Agreement and the transactions contemplated
thereby. See Section 11.
At the effective time of the Merger (the "Effective Time"), each then
outstanding Share (other than each Share owned by Parent or Purchaser and if
Appraisal Rights are available because the Shares are no longer listed on
Nasdaq on the Appraisal Date (each as defined below), Shares held by
stockholders who have not voted in favor of or consented to the Merger and who
have properly demanded appraisal of their Shares in accordance with Section
3-203 of the MGCL (the "Dissenting Shares")) will be cancelled, extinguished
and converted into the right to receive $5.00 in cash, or any higher price that
may be paid pursuant to the Offer (the "Merger Consideration"), without
interest, less any withholding taxes required under applicable law.
The Company has represented to Purchaser and Parent that as of November
30, 1998, there were 13,111,201 Shares issued and outstanding, and 1,571,302
Shares reserved for issuance upon the exercise of outstanding stock options and
other stock rights. Based upon the foregoing, Purchaser and Parent believe that
7,341,252 Shares would constitute a majority of the voting power (determined on
a fully-diluted basis), on the date of purchase, of all the securities of the
Company entitled to vote generally in the election of directors or in a merger
and would therefore equal the Minimum Condition.
The Company has advised Purchaser and Parent that, to the knowledge of the
Company, all the directors and officers of the Company intend to tender their
Shares pursuant to the Offer.
The Merger Agreement is more fully described in Section 11. Certain
federal income tax consequences of the sale of the Shares pursuant to the Offer
and the exchange of Shares for the Merger Consideration pursuant to the Merger
are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
2
<PAGE>
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including if the Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser will accept for
payment, purchase and pay for all Shares validly tendered on or prior to the
Expiration Date and not properly withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 Midnight, New York City time, on Thursday,
January 7, 1999, unless and until Purchaser, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), shall have
extended the period during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by Purchaser, shall expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM CONDITION AND THE EXPIRATION OR TERMINATION OF ANY WAITING PERIODS
UNDER THE HSR ACT. SEE SECTION 15, WHICH SETS FORTH IN FULL THE CONDITIONS TO
THE OFFER (THE "OFFER CONDITIONS"). SUBJECT TO THE PROVISIONS OF THE MERGER
AGREEMENT AND THE APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION"), PURCHASER RESERVES THE RIGHT, IN ITS
SOLE DISCRETION, TO WAIVE ANY OR ALL CONDITIONS TO THE OFFER (OTHER THAN THE
MINIMUM CONDITION) AND TO MAKE ANY OTHER CHANGES IN THE TERMS AND CONDITIONS OF
THE OFFER. SUBJECT TO THE PROVISIONS OF THE MERGER AGREEMENT AND THE APPLICABLE
RULES AND REGULATIONS OF THE COMMISSION, IF BY THE EXPIRATION DATE ANY OR ALL
OF SUCH OFFER CONDITIONS HAVE NOT BEEN SATISFIED, PURCHASER RESERVES THE RIGHT
(BUT SHALL NOT BE OBLIGATED) TO (I) TERMINATE THE OFFER AND RETURN ALL TENDERED
SHARES TO TENDERING STOCKHOLDERS, (II) WAIVE SUCH UNSATISFIED CONDITIONS (OTHER
THAN THE MINIMUM CONDITION) AND PURCHASE ALL SHARES VALIDLY TENDERED OR (III)
EXTEND THE OFFER AND, SUBJECT TO THE TERMS OF THE OFFER (INCLUDING THE RIGHTS
OF STOCKHOLDERS TO WITHDRAW THEIR SHARES), RETAIN THE SHARES WHICH HAVE BEEN
TENDERED, UNTIL THE OFFER, AS SO EXTENDED BY PURCHASER, SHALL EXPIRE.
Subject to the provisions of the Merger Agreement and the applicable rules
and regulations of the Commission, Purchaser expressly reserves the right, in
its sole discretion, at any time and from time to time, and regardless of
whether or not any of the Offer Conditions set forth in Section 15 shall have
occurred or shall have been determined by Purchaser to have occurred, to (i)
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary and (ii) amend the Offer in
any respect by giving oral or written notice of such amendment to the
Depositary. Under the terms of the Merger Agreement, however, without the
written consent of the Company, Purchaser may not amend or waive the Minimum
Condition, decrease the price per Share payable in the Offer, change the form
of consideration payable in the Offer (other than by adding consideration),
reduce the maximum number of Shares to be purchased in the Offer, or impose
conditions to the Offer in addition to those set forth in the Merger Agreement
which are materially adverse to the holders of Shares. Purchaser shall have no
obligation to pay interest on the purchase price of tendered Shares, including
in the event Purchaser exercises its right to extend the period of time during
which the Offer is open. The rights reserved by Purchaser in this paragraph are
in addition to Purchaser's rights to terminate the Offer upon the failure of
the Offer Conditions in Section 15 to be satisfied on the Expiration Date.
Notwithstanding the foregoing, (x) at each scheduled expiration date of the
Offer prior to the date 90 days from the date of the Merger Agreement, if any
of the Offer Conditions shall have not been satisfied or waived, Purchaser
shall extend the Offer until the date on which such conditions are then
reasonably expected by Purchaser to be satisfied, (y) Purchaser shall extend
the Offer for any period required by any rule, regulation, interpretation or
position of the Commission or the staff thereof applicable to the Offer and (z)
Purchaser may extend the Offer up to the tenth business day beyond the latest
expiration date that would otherwise be permitted under clauses (x) and (y) of
this sentence. Subject to the terms and conditions of the Offer, Purchaser will
accept for payment, purchase and pay for all Shares validly tendered and not
withdrawn as soon as it is permitted to do so in accordance with the provisions
of the Merger Agreement and under applicable law.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, and such announcement
in the case of an extension will be made in accordance with Rule 14e-1(d) under
the Securities Exchange Act of 1934, as amended (the "Exchange
3
<PAGE>
Act"), no later than 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date. Without limiting the manner in
which Purchaser may choose to make any public announcement, except as provided
by applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange
Act, which require that material changes be promptly disseminated to holders of
Shares), Purchaser shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to the
Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, Purchaser will disseminate additional
tender offer materials and extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following material changes in the terms of the
offer, other than a change in price or a change in the percentage of securities
sought, will depend upon the facts and circumstances, including the
materiality, of the changes. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought, a minimum
10 business day period from the day of such change is generally required to
allow for adequate dissemination to stockholders. 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.
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 Shares. This Offer to Purchase and the related Letter of Transmittal
and other relevant materials will be mailed by Purchaser to record holders of
Shares and furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. The obligation of
Purchaser to accept for payment Shares tendered shall be subject to the
satisfaction of the Offer Conditions. Purchaser covenants and agrees that,
subject to the terms and conditions of the Merger Agreement, including the
Offer Conditions, it will accept for payment and pay for Shares validly
tendered and not withdrawn pursuant to the Offer as promptly as reasonably
practicable. In addition, subject to the applicable rules of the Commission,
Purchaser expressly reserves the right to delay acceptance for payment of or
payment for Shares pending receipt of any other regulatory approvals specified
in Section 16. Any such delays will be effected in compliance with Rule
14e-1(c) under the Exchange Act.
For information with respect to approvals required to be obtained prior to
the consummation of the Offer, including the HSR Act, see Section 16.
In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates representing such Shares ("Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at the Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message (as defined below) in connection with a book-entry transfer and (iii)
any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
4
<PAGE>
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to stockholders whose Shares have been accepted for
payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES
BE PAID OR ACCRUED FOR THE BENEFIT OF HOLDERS OF SHARE CERTIFICATES ON THE
PRICE PER SHARE PAYABLE UPON THE SURRENDER OF THE SHARE CERTIFICATES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. If for any reason acceptance for payment of or payment for any Shares
tendered pursuant to the Offer is delayed or Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then without
prejudice to Purchaser's rights set forth herein, the Depositary may
nevertheless, on behalf of Purchaser and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Shares and such Shares may not be withdrawn
except to the extent that the tendering stockholder is entitled to and duly
exercises withdrawal rights as described in Section 4.
If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted for more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned
without expense to the tendering stockholder (or, in the case of Shares
tendered by book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility pursuant to the procedures set forth in Section 3, such
Shares will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable following the expiration, termination or
withdrawal of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
3. PROCEDURE FOR TENDERING SHARES. Valid Tenders. Except as set forth
below, in order for Shares to be validly tendered pursuant to the Offer, the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's
Message in connection with a book-entry delivery of Shares, and any other
documents required by the Letter of Transmittal, must be received by the
Depositary at its addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date and either (i) Share Certificates
evidencing tendered Shares must be received by the Depositary at such address
or such Shares must be tendered pursuant to the procedure for book-entry
transfer described below and a Book-Entry Confirmation must be received by the
Depositary, in each case on or prior to the Expiration Date or (ii) the
guaranteed delivery procedures described below must be complied with. If Share
Certificates are forwarded separately to the Depositary, a properly completed
and duly executed Letter of Transmittal (or a facsimile thereof) must accompany
each such delivery.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of the
Book-Entry Transfer Facility may make book-entry delivery of Shares by causing
the Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer at the Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or an Agent's Message in connection with a book-entry transfer, and any other
documents required by the Letter of Transmittal, 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 guaranteed
delivery procedures described below must be complied with.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
5
<PAGE>
THE METHOD OF DELIVERY OF SHARE CERTIFICATES 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 BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Signature Guarantees. Except as otherwise provided below, all signatures
on a Letter of Transmittal must be guaranteed by a financial institution
(including most banks, savings and loan associations and brokerage houses)
which is a member 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, Inc. Medallion Signature Program (MSP) (any such financial
institution an "Eligible Institution"). Signatures on a Letter of Transmittal
need not be guaranteed (a) if the Letter of Transmittal is signed by the
registered holder of the Shares tendered and such holder has not completed the
box entitled "Special Payment Instructions" or "Special Delivery Instructions"
on the Letter of Transmittal or (b) if such Shares are tendered for the account
of an Eligible Institution. See Instructions 1 and 5 of the Letter of
Transmittal.
If the Share Certificates are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made, or
Share Certificates not accepted for payment or not tendered are to be returned,
to a person other than the registered holder, the Share Certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name of the registered holder appears on such certificates, with
the signatures on such certificates or stock powers guaranteed as aforesaid.
See Instructions 1 and 5 of the Letter of Transmittal.
If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) and any other documents required by the Letter of Transmittal must
accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available, or such stockholder cannot deliver the Share Certificates and all
other required documents to the Depositary on or prior to the Expiration Date,
or such stockholder cannot complete the procedure for delivery by book-entry
transfer on a timely basis, such Shares may nevertheless be tendered, provided
that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form made available by Purchaser is received by the
Depositary as provided below on or prior to the Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation), representing
all tendered Shares in proper form for transfer, together with 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 are received by the Depositary within three
NASDAQ National Market trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution and a representation that the
stockholder owns the Shares tendered within the meaning of, and that the tender
of the Shares effected thereby complies with, Rule 14e-4 under the Exchange
Act, each in the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted
for payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the
6
<PAGE>
case of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal. Accordingly, payment might not be made
to all tendering stockholders at the same time and will depend upon when Share
Certificates or Book-Entry Confirmations of such Shares are received into the
Depositary's account at the Book-Entry Transfer Facility.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of Purchaser and each of them as
such stockholder's attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by Purchaser (and with respect to any and
all other Shares, other securities or rights issued or issuable in respect of
such Shares on or after the date hereof). All such powers of attorney and
proxies shall be considered irrevocable and coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the
extent that, Purchaser accepts such Shares for payment. Upon such acceptance
for payment, all prior powers of attorney and proxies given by such stockholder
with respect to such Shares will be revoked without further action, and no
subsequent powers of attorney and proxies may be given nor any subsequent
written consents executed (and, if given or executed, will not be deemed
effective). The designees of Purchaser will, with respect to the Shares for
which such appointment is effective, be empowered to exercise all voting and
other rights of such stockholder as they in their sole discretion may deem
proper at any annual or special meeting of the Company's stockholders or any
adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. Purchaser reserves the right to require that, in order
for Shares to be deemed validly tendered, immediately upon Purchaser's payment
for such Shares, Purchaser must be able to exercise full voting rights with
respect to such Shares and other securities, including voting at any meeting of
stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by Purchaser in its sole discretion, which
determination shall 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. Purchaser also reserves the absolute right to waive any
defect or irregularity in any tender of Shares of any particular stockholder
whether or not similar defects or irregularities are waived in the case of
other stockholders. No tender of Shares will be deemed to have been validly
made until all defects and irregularities have been cured or waived. None of
Purchaser, the Parent, any of their 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. 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.
Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
"backup withholding" provisions of federal income tax law, the Depositary may
be required to withhold 31% of the amount of any payments of cash pursuant to
the Offer. In order to avoid backup withholding, each stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the payor of
such cash with such stockholder's correct taxpayer identification number
("TIN") on a substitute Form W-9 and certify, under penalties of perjury, that
such TIN is correct and that such stockholder is not subject to backup
withholding. If a stockholder does not provide its correct TIN or fails to
provide the certifications described above, the Internal Revenue Service
("IRS") may impose a penalty on such stockholder and payment of cash to such
stockholder pursuant to the Offer may be subject to backup withholding of 31%.
All stockholders surrendering Shares pursuant to the Offer should complete and
sign the substitute Form W-9 included in the Letter of Transmittal to provide
the information and certification necessary to avoid backup withholding (unless
an applicable exemption exists and is proved in a manner satisfactory to the
Depositary). Certain stockholders (including among others all corporations and
certain foreign individuals and entities) are not subject to backup
withholding. Noncorporate foreign stockholders should complete and sign a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 of the
Letter of Transmittal.
7
<PAGE>
Other Requirements. Purchaser's acceptance for payment of Shares tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering stockholder and Purchaser upon the terms and
subject to the conditions of the Offer, including the tendering stockholder's
representation and warranty that the stockholder is the holder of the Shares
within the meaning of, and that the tender of the Shares complies with, Rule
14e-4(a)(4) under the Exchange Act.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date. Thereafter, such tenders
are irrevocable except that they may be withdrawn after February 6, 1999 unless
theretofore accepted for payment as provided in this Offer to Purchase. If
Purchaser extends the Offer, is delayed in its acceptance for payment of Shares
or is unable to purchase Shares validly tendered pursuant to the Offer for any
reason, then, without prejudice to Purchaser's rights under the Offer, the
Depositary may, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except as otherwise described in this Section 4.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at its address set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If the Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then prior to the physical release of
the certificates, the name of the registered holder (if different from the
tendering stockholder) and the serial numbers shown on such certificates must
be submitted to the Depositary, together with a signed notice of withdrawal,
the signatures on which must be guaranteed by an Eligible Institution unless
such Shares have been tendered for the account of any Eligible Institution. If
Shares have been tendered pursuant to the procedure for book-entry transfer as
set forth in Section 3, any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares.
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. Purchaser reserves
the absolute right to reject any and all withdrawals determined by it not to be
in proper form. Purchaser also reserves the absolute right to waive any defect
or irregularity in any withdrawal of Shares of any particular stockholder
whether or not similar defects or irregularities are waived in the case of
other stockholders. No withdrawal of Shares will be deemed to have been validly
made until all defects and irregularities have been cured or waived. None of
Purchaser, the Parent, any of their 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.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The summary of tax
consequences set forth below is for general information only and is based on
the law as currently in effect. The tax treatment of each stockholder will
depend in part upon such stockholder's particular situation. Special tax
consequences not described herein may be applicable to particular classes of
taxpayers, such as financial institutions, broker-dealers, insurance companies,
foreign corporations, foreign partnerships, foreign trusts, foreign estates,
persons who are not citizens or residents of the United States, tax-exempt
entities, stockholders who acquired their Shares through the exercise of an
employee stock option or otherwise as compensation, and persons who received
payments in respect of options to acquire Shares. ALL STOCKHOLDERS SHOULD
CONSULT WITH THEIR TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE
ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME OR OTHER TAX
LAWS AND CHANGES IN SUCH TAX LAWS.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and may also
8
<PAGE>
be a taxable transaction under applicable state, local, foreign income or other
tax laws. Generally, for federal income tax purposes, a stockholder will
recognize gain or loss in an amount equal to the difference between the cash
received by the stockholder pursuant to the Offer or the Merger and the
stockholder's adjusted tax basis in the Shares purchased pursuant to the Offer
or converted to cash in the Merger. Gain or loss will be calculated separately
for each block of Shares tendered and purchased pursuant to the Offer or
converted in the Merger, as the case may be. For federal income tax purposes,
such gain or loss will be a capital gain or loss if the Shares are a capital
asset in the hands of the stockholder, and a long-term capital gain or loss if
the stockholder's holding period is more than one year as of the date Purchaser
accepts such Shares for payment pursuant to the Offer or the effective date of
the Merger, as the case may be. In the case of a non-corporate stockholder,
capital gain is currently eligible for a maximum federal income tax rate of 20%
(10% for non-corporate stockholders in the 15% tax bracket) if the Shares were
held for more than one year. There are limitations on the deductibility of
capital losses.
6. PRICE RANGE OF SHARES; DIVIDENDS. According to the Company's 1997
Annual Report on Form 10-K for the fiscal year ended September 28, 1997 (the
"1997 Annual Report"), the Shares are listed and traded on the Nasdaq National
Market ("Nasdaq") under the symbol "MCDY". The following table sets forth, for
the quarters indicated, the high and low sales prices per Share on Nasdaq with
respect to periods occurring in 1997 and 1998 as reported by the Dow Jones News
Service. According to the 1997 Annual Report, the Company has not paid any
dividends on its common stock since its initial public offering.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
YEAR ENDED SEPTEMBER 28, 1997:
First Quarter ........................ $ 10.250 $ 4.500
Second Quarter ....................... 6.750 4.375
Third Quarter ........................ 6.000 3.688
Fourth Quarter ....................... 6.750 4.000
YEAR ENDING SEPTEMBER 30, 1998:
First Quarter ........................ $ 8.625 $ 5.250
Second Quarter ....................... 7.250 5.563
Third Quarter ........................ 6.875 3.625
Fourth Quarter ....................... 5.000 2.250
</TABLE>
On December 2, 1998, the last full trading day prior to announcement of
the Offer, the closing sale price per Share reported on Nasdaq was $4.312. On
December 8, 1998, the last full trading day before commencement of the Offer,
the closing sale price per Share reported on Nasdaq was $4.719. STOCKHOLDERS
ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including financial
information, has been taken from or based upon publicly available documents and
records on file with the Commission and other public sources. The summary
information concerning the Company in this Section 7 and elsewhere in this
Offer to Purchase is derived from the Company's 1997 Annual Report, the
Company's Quarterly Reports on Form 10-Q for the quarters ended June 30, 1998
and June 29, 1997 (together, the "Company's 10-Q's") and other publicly
available information. The summary information set forth below is qualified in
its entirety by reference to such reports (which may be obtained and inspected
as described below) and should be considered in conjunction with the more
comprehensive financial and other information in such reports and other
publicly available reports and documents filed by the Company with the
Commission and other publicly available information. Although Purchaser and
Parent do not have any knowledge that would indicate that any statements
contained herein based upon such reports are untrue, neither Purchaser nor
Parent assumes any responsibility for the accuracy or completeness of the
information contained therein, or for any failure by the Company to disclose
events that may have occurred and may affect the significance or accuracy of
any such information but which are unknown to Purchaser and Parent.
General. The Company was incorporated in Maryland in January 1968. In
March 1991, the Company merged with Federal Technology Corporation. The
Company's principal executive offices are located at 3601 Eisenhower Avenue,
Alexandria, Virginia 22304. The telephone number of the Company at such offices
is (703) 329-3700.
9
<PAGE>
The Company's continuing business is comprised of two wholly owned
subsidiaries. Its Microdyne Communications Technologies Inc. subsidiary, which
includes MCTI Acquisition Corporation, manufactures and sells aerospace
telemetry receivers and ancillary devices, and provides systems integration
services. Its Microdyne Outsourcing Inc. subsidiary provides outsourced
services including telephone technical support and warranty and product repair.
On August 11, 1998 the Company, through its wholly owned subsidiary MCTI
Acquisition Corpora-tion, acquired all of the outstanding stock of Apcom, Inc.
and Celerity Systems Inc. as well as certain assets and liabilities of two
other affiliated companies, Acceleration Systems, Inc. and Digital Telcom, for
aggregate consideration of $16 million plus a contingent earnout payment of $1
million. The Company refers to the acquired companies as the Advanced
Technology Group ("ATG"). ATG provides hardware development, design, and
manufacturing, including wideband digital receiving and processing equipment,
signal generators, and recording devices for the intelligence and surveillance
communities.
Approximately 33.4% of the currently outstanding Shares are owned directly
by Philip T. Cunning-ham, the Chairman of the Board of Directors. In addition,
affiliates or associates of Mr. Cunningham own approximately 6.7% of the
currently outstanding Shares. All such Shares, together with additional Shares
representing approximately 3.8% of the currently outstanding Shares, are
subject to the Tender Agreement.
Financial Information. Set forth below are certain selected consolidated
financial data for the Company which was derived from the 1997 Annual Report
and the Company's 10-Q's. More comprehensive financial information (including
management's discussion and analysis of financial condition and results of
operations) is included in the reports and other documents filed by the Company
with the Commission, and the following financial data is qualified in its
entirety by reference to such reports and other documents, including the
financial statements and related notes contained therein. Such reports and
other documents may be examined and copies thereof may be obtained from the
offices of the Commission and Nasdaq in the manner set forth below.
MICRODYNE CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE
NINE MONTHS ENDED FOR THE FISCAL YEAR ENDED
------------------- ---------------------------------
JUNE 30, SEPTEMBER 28, SEPTEMBER 29,
1998 1997 1996
------------------- ---------------- --------------
<S> <C> <C> <C>
EARNINGS STATEMENT DATA
Revenue .................................................. $ 39,458 $ 43,621 $ 31,459
Total Cost of Products Sold and Service Provided ......... $ 23,431 $ 25,473 $ 17,701
Earnings from Continuing Operations before Income
taxes ................................................... $ 5,755 $ 7,034 $ 3,272
Net Earnings from Continuing Operations .................. $ 5,755 $ 5,158 $ 2,029
Net (loss) earnings ...................................... $ 5,755 $ (28,445) $ (2,944)
Basic (loss) earnings per share .......................... $ 0.44 $ (2.21) $ (0.23)
BALANCE SHEET DATA (AT PERIOD END)
Total Assets ............................................. $ 30,672 $ 34,541 $ 79,994
Total Stockholders' Equity ............................... $ 14,728 $ 8,402 $ 36,524
Total Liabilities and Stockholders' Equity ............... $ 30,672 $ 34,541 $ 79,994
</TABLE>
The Shares are registered under the Exchange Act. Accordingly, the Company
is subject to the informational filing requirements of the Exchange Act and in
accordance therewith is obligated to file periodic reports, proxy statements
and other information with the Commission relating to its business, financial
condition and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company. Such reports, proxy statements
and other
10
<PAGE>
information should be available for inspection at the public reference
facilities of the Commission located at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and should also be available for inspection and
copying at prescribed rates at the regional offices of the Commission located
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661, and Seven World Trade Center, Suite 1300, New York, New York 10048. Such
reports, proxy statements and other information may also be obtained at the Web
site that the Commission maintains at http://www.sec.gov. Copies of this
material may also be obtained by mail, upon payment of the Commission's
customary fees, from the Commission's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. Such material should also be available for
inspection at the library of Nasdaq, 1735 K Street, N.W., Washington, D.C.
20006. Except as otherwise noted in this Offer to Purchase, all of the
information with respect to the Company set forth in this Offer to Purchase has
been derived from publicly available information.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT. Purchaser, a
Maryland corporation and a wholly owned subsidiary of Parent, was organized for
the sole purposes of entering into the Merger Agreement and consummating the
transactions contemplated thereby, including making the Offer, and has not
carried on any activities to date other than those incident to its formation,
entering into such agreement and the commencement of the Offer.
Both Parent and Purchaser have their principal executive offices at 600
Third Avenue, New York, New York 10016. The telephone number for both the
Parent and Purchaser is (212) 697-1111.
Parent was originally incorporated in Delaware in 1997 by Mr. Frank C.
Lanza, the former President and Chief Operating Officer of Loral Corporation
("Loral"), Mr. Robert V. LaPenta, the former Senior Vice President and
Controller of Loral, Lehman Brothers Capital Partners III, L.P. and its
affiliates (the "Lehman Partnership") and Lockheed Martin Corporation
("Lockheed Martin") to acquire substantially all of the assets and certain
liabilities of (i) nine business units previously purchased by Lockheed Martin
as part of its acquisition of Loral in April 1996 and (ii) one business unit,
Communication Systems -- East, purchased by Lockheed Martin as part of its
acquisition of the aerospace business of GE in April 1993. As of September 30,
1998, Messrs. Lanza and LaPenta and certain other members of management
collectively owned approximately 15.5%, the Lehman Partnership owned
approximately 36.6%, Lockheed Martin owned approximately 24.9% and the public
owned approximately 23.0% of the outstanding shares of Holdings' common stock.
Parent is a leading merchant supplier of sophisticated secure
communication systems and specialized communication products. Parent produces
secure, high data rate communication systems, microwave components, avionics
and ocean systems and telemetry, instrumentation and space products. These
systems and products are critical elements of virtually all major
communication, command and control, intelligence gathering and space systems.
Parent's systems and specialized products are used to connect a variety of
airborne, space, ground- and sea-based communication systems and are used in
the transmission, processing, recording, monitoring and dissemination functions
of these communication systems. Parent's customers include the U.S. department
of defense, certain U.S. government intelligence agencies, major aerospace and
defense contractors, foreign governments and commercial customers. Parent is a
wholly owned subsidiary of Holdings.
The name, citizenship, business address, principal occupation or
employment and five-year employment history of each of the directors and
executive officers of Purchaser and Parent and certain other information are
set forth in Schedule I hereto.
Parent's shares are registered under the Exchange Act. Accordingly, Parent
is subject to the informational filing requirements of the Exchange Act and in
accordance therewith is obligated to file periodic reports, proxy statements
and other information with the Commission relating to its business, financial
condition and other matters. Parent is required to disclose in such proxy
statements certain information, as of particular dates, concerning the Parent's
directors and officers, their remuneration, options granted to them, the
principal holders of the Parent's securities and any material interest of such
persons in transactions with Parent. Such reports, proxy statements and other
information should be available for inspection at the public reference
facilities of the Commission located at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and should also be available for inspection and
copying at
11
<PAGE>
prescribed rates at the regional offices of the Commission located at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven
World Trade Center, Suite 1300, New York, New York 10048. Such reports, proxy
statements and other information may also be obtained at the Web site that the
Commission maintains at http://www.sec.gov. Copies of this material may also be
obtained by mail, upon payment of the Commission's customary fees, from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. Such material should also be available for inspection at the offices of
the NYSE, 20 Broad Street, New York, New York 10005.
Except to the extent Shares owned by the Stockholders may be deemed to be
beneficially owned by Parent or Purchaser pursuant to Rule 13d-3 under the
Exchange Act as a result of the execution of the Tender Agreement, none of
Purchaser, Parent nor, to the knowledge of Purchaser and Parent, any of the
persons listed on Schedule I hereto nor any associate or majority-owned
subsidiary of Purchaser, Parent or any of the persons so listed, beneficially
owns or has a right to acquire directly or indirectly any Shares, and none of
Purchaser, Parent nor, to the best knowledge of Purchaser and Parent, any of
the persons or entities referred to above, nor any of their respective
executive officers, directors or subsidiaries, has effected any transactions in
the Shares during the past 60 days. In the ordinary course of Lehman Brothers'
business, Lehman Brothers may actively trade in the Shares for Lehman Brothers'
own account and for the accounts of Lehman Brothers' customers and,
accordingly, may at any time hold a long or short position in the Shares.
Except as set forth in this Offer to Purchase, there have been no (i)
transactions or series of similar transactions between any of Parent, Purchaser
or, to the best knowledge of Purchaser and Parent, any of the persons listed in
Schedule I hereto, on the one hand, and (x) the Company or any of its
affiliates which are corporations, on the other hand, or (y) executive
officers, directors or affiliates of the Company which are not corporations, on
the other hand, involving an aggregate amount exceeding $40,000 or (ii)
contacts, negotiations or transactions between any of Parent, Purchaser or, to
the best knowledge of Purchaser and Parent, any of the persons listed in
Schedule I hereto, 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.
Except for the Merger Agreement and the Tender Agreement, to the best
knowledge of Parent and Purchaser, (a) there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
Schedule I hereto and between such persons and any person with respect to any
securities of the Company, including but not limited to, transfer or voting of
any of the securities of the Company, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees of profits, division of profits
or loss, or the giving or withholding of proxies and (b) none of the Shares are
pledged or otherwise subject to a contingency, the occurrence of which would
give another person voting power or investment power over the Shares.
9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by
Purchaser to purchase all of the outstanding Shares pursuant to the Offer and
to pay fees and expenses related to the Offer and the proposed Merger is
estimated to be approximately $69 million. Purchaser plans to obtain all funds
needed for the Offer and the proposed Merger through capital contributions or
advances made by Parent. Parent plans to use funds it has available in its cash
accounts or to borrow the funds available under its existing bank credit
facilities for purposes of such contributions or advances. Any debt incurred to
fund the purchase of the Shares in the Offer is expected to be repaid from
funds internally generated by Parent and its subsidiaries from the normal
operations of their businesses. The Offer is not conditioned on obtaining
financing. Receiving a consent of the Required Lenders is required under the
Senior Credit Facilities (each as defined below) to the transactions
contemplated by the Merger Agreement under the Senior Credit Facilities and
Parent has received such consent.
On August 13, 1998, Parent amended its credit facilities (the "Senior
Credit Facilities") with a syndicate of banks and financial institutions (with
Bank of America National Trust and Savings Association as Administrative
Agent). The Senior Credit Facilities provide for (A) $200 million in revolving
credit loans which must be repaid by March 31, 2003 (the "Revolving Credit
Facility") and (B) $185 million in revolving credit loans which must be repaid
by August 12, 1999 (the "Revolving 364
12
<PAGE>
Day Facility"); provided that all or a portion of the Revolving 364 Day
Facility may be extended for a period of 364 days following August 12, 1999
with the consent of lenders holding not less than 50% of the commitments to
make 364-day loans (August 12, 1999 or the date 364 days thereafter, the "364
Day Termination Date"); and provided further that Parent may convert the
outstanding principal amount of any or all of the loans outstanding under the
Revolving 364 Day Facility to term loans on the 364 Day Termination Date. The
Revolving Credit Facility includes borrowing capacity available for letters of
credit and for borrowing on same-day notice (the "Swingline Loans").
All borrowings under the Senior Credit Facilities bear interest, at
Parent's option, at either: (A) a "base rate" equal to, for any day, the higher
of: (a) 0.50% per annum above the latest Federal Funds Rate; and (b) the rate
of interest in effect for such day as publicly announced from time to time by
Bank of America National Trust & Savings Association in San Francisco,
California, as its "reference rate" plus a spread ranging from 0.875% to 0.0%
per annum depending on Parent's ratio of debt to EBITDA (as defined in the
Senior Credit Facilities ("Bank EBITDA")) at the time of determination or (B) a
"LIBOR rate" equal to, for any Interest Period (as defined in the Senior Credit
Facilities), the London interbank offered rate of interest per annum for such
Interest Period as determined by the Administrative Agent, plus a spread
ranging from 1.875% to 0.625% per annum depending on Parent's ratio of debt to
Bank EBITDA; provided that Swingline Loans can only bear interest at a "base
rate" plus the applicable spread.
Parent will pay commitment fees calculated at a rate (A) ranging from
0.50% to 0.25% per annum on the daily amount of the available unused commitment
under the Revolving Credit Facility, and (B) ranging from 0.30% to 0.125% per
annum on the daily amount of the available unused commitment under the
Revolving 364 Day Facility, in each case depending on Parent's ratio of debt to
Bank EBITDA in effect on each day. Such commitment fees will be payable
quarterly in arrears and upon termination of the Senior Credit Facilities.
Parent will pay a letter of credit fee calculated at a rate ranging from
(A) 0.9375% to 0.3125% per annum in the case of performance letters of credit
and (B) 1.875% to 0.625% in the case of all other letters of credit, in each
case depending on Parent's ratio of debt to Bank EBITDA at the time of
determination. Parent will also pay a fronting fee equal to 0.1250% per annum
on the aggregate face amount of all outstanding letters of credit. Such fees
will be payable quarterly in arrears and upon the termination of the Senior
Credit Facilities. In addition, Parent will pay customary transaction charges
in connection with any letters of credit. The Senior Credit Facilities provide
for the issuance of letters of credit in currencies other than United States
Dollars.
The foregoing debt to Bank EBITDA-dependent rates range from the highest
rate specified if the ratio of debt to Bank EBITDA is greater than 4.75 to 1.0
and the lowest rate specified if such ratio is less than 2.75 to 1.0.
13
<PAGE>
In the event that the 364-day loans are converted into term loans, such
term loans shall be repaid by the Borrower in nine (9) consecutive quarterly
installment commencing on March 31, 2001, by funding on each amortization
payment date set forth below an amount necessary to cause the aggregate
principal amount of term loans outstanding on such date to not exceed an amount
equal to the product of (x) the "Applicable Percentage" set forth opposite such
amortization payment date multiplied by (y) the aggregate amount of commitments
of lenders to make loans under the Revolving 364 Day Facility on the 364 Day
Termination Date (the "Applicable Converted Commitment"):
<TABLE>
<CAPTION>
APPLICABLE PERCENTAGE OF THE
AMORTIZATION PAYMENT DATE APPLICABLE CONVERTED COMMITMENT
------------------------- -------------------------------
<S> <C>
3/31/01 90.0%
6/30/01 80.0%
9/30/01 70.0%
12/31/01 60.0%
3/31/02 50.0%
6/30/02 40.0%
9/30/02 30.0%
12/31/02 20.0%
3/31/03 0.0%
</TABLE>
Borrowings under the Senior Credit Facilities are subject to mandatory
prepayment (i) with the net proceeds of any incurrence of indebtedness and (ii)
with the proceeds of asset sales in both cases subject to certain exceptions.
Parent's obligations under the Senior Credit Facilities are secured by (i)
a pledge by Holdings of the stock of Parent and (ii) a pledge by Parent and its
material direct and indirect subsidiaries of all of the stock of their
respective material domestic subsidiaries and 65% of the stock of Parent's
material first-tier foreign subsidiaries. In addition, indebtedness under the
Senior Credit Facilities is guaranteed by Holdings and by all of Parent's
direct and indirect material domestic subsidiaries.
The Senior Credit Facilities contain customary covenants and restrictions
on Parent's ability to engage in certain activities. In addition, the Senior
Credit Facilities provide that Parent must meet or exceed an interest coverage
ratio and must not exceed a leverage ratio. The Senior Credit Facilities also
include customary events of default.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. Parent considers
and executes strategic acquisitions and alliances on an ongoing basis and may
be evaluating acquisitions or engaged in acquisition negotiations at any given
time. Consistent with this practice, in February, 1998, representatives of
Parent contacted representatives of the Company to discuss on an informal basis
potential relationships and alliances.
In mid-October 1998, Michael E. Jalbert, the President and Chief Executive
Officer of the Company, called Robert V. LaPenta, the President and Chief
Financial Officer of Parent, to discuss the prospects of a transaction between
Parent and the Company. Mr. Jalbert and Mr. LaPenta met on October 24, 1998 and
reiterated a mutual interest in exploring a potential business combination
involving Parent and the Company.
On November 5, 1998, after further contact between Messrs. Jalbert and
LaPenta, including a meeting with Messrs. Cunningham, Jalbert, LaPenta and
Lanza to discuss further the potential for a transaction, Mr. Lanza sent the
Company a letter indicating that Parent would be willing to pay $4.75 per Share
to acquire all the Shares, subject to the satisfactory completion of due
diligence, approval of Parent's Board of Directors, the negotiation of
satisfactory acquisition agreements and a requirement that the Company
negotiate exclusively with Parent for a period of time regarding a potential
transaction. Later that day, representatives of the Company advised Parent that
the price offered by Parent was unacceptable and that the Company was not
prepared to enter into exclusive negotiations. Parent indicated a willingness
to consider increasing the proposed price per Share to $5.00, subject to its
due diligence, director approval and documentation requirements.
14
<PAGE>
On November 8, 1998, Parent and the Company agreed upon the terms and
conditions of a confidentiality agreement pursuant to which Parent received
from the Company certain preliminary financial and operational information
concerning the Company, and on the next day, officers of Parent and Parent's
legal and financial advisors commenced a due diligence review of the Company.
On November 10, 1998, at a regular meeting, Parent's Board of Directors
analyzed and reviewed various strategic and financial considerations concerning
the possible acquisition and the status of discussions and authorized
management of Parent to continue to pursue the transaction at a price per share
of $5.00, subject to satisfactory completion of due diligence and negotiation
of acquisition agreements and a further final approval of a special committee
consisting of two of Parent's directors, David J. Brand and Frank H. Menaker.
On November 11, 1998, Parent's legal advisors forwarded a copy of a draft
merger agreement to counsel for the Company and a copy of a draft tender
agreement to counsel for the Company and the Stockholders. On November 13,
1998, representatives of Parent and the Company had discussions regarding the
proposed offer price and the major issues presented by the drafts. Parent
indicated a willingness to consider the objections to the drafts but stated it
would not consider a price in excess of $5.00 per Share. Thereafter, until
December 2, 1998, negotiations of the terms and conditions of the Merger
Agreement and the Tender Agreement were conducted by the legal and financial
advisors to Parent, the Company and the Stockholders. During this period,
Parent's due diligence review of the Company continued.
On November 30, 1998, at a special meeting, Parent's special committee
discussed the results of the due diligence investigation and the contract
negotiations and, after considering reports from management and Parent's legal
and financial advisors, approved the acquisition by Parent of the Company for a
purchase price of $5.00 in cash per Share and the Merger Agreement and the
Tender Agreement and the transactions contemplated thereby.
On December 2, 1998, the Special Committee and the Board of Directors
received an oral opinion of Robinson-Humphrey (subsequently confirmed by
delivery of a written opinion dated December 3, 1998) to the effect that the
$5.00 per Share cash consideration is fair, from a financial point of view, to
the holders of the Shares and approved the Merger Agreement and the
transactions contemplated thereby and resolved to recommend that the Company's
stockholders accept the Offer and tender their Shares into the Offer and
approve and adopt the Merger Agreement and the transactions contemplated
thereby.
On December 3, 1998, the Merger Agreement and the Tender Agreement were
executed by the parties, and the transaction was publicly announced.
On December 9, 1998, Purchaser commenced the Offer.
Together with the filing of the Statement on Schedule 14D-1, Holdings,
Parent and Purchaser are filing with the Commission on the date of this Offer
to Purchase a Schedule 13D reporting Shares that may be deemed to be
beneficially owned by Parent and its affiliates as a result of the Tender
Agreement. See Section 11.
11. THE MERGER AGREEMENT; THE TENDER AGREEMENT. The following is a summary
of the Merger Agreement, which summary is qualified in its entirety by
reference to the Merger Agreement, which is filed as an exhibit to Parent's
Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") and
incorporated herein by reference.
The Offer. The Merger Agreement provides for the commencement of the Offer
as soon as practicable after the date of the Merger Agreement, but in no event
later than five business days from the date of the execution of the Merger
Agreement. The obligations of Purchaser to accept for payment, purchase and pay
for any and all Shares validly tendered on or prior to the expiration of the
Offer and not withdrawn are subject to the satisfaction or waiver of the Offer
Conditions. Purchaser expressly reserves the right, in its sole discretion, to
waive any such condition and make any other changes in the terms and conditions
of the Offer; provided, however, under the terms of the Merger Agreement,
without the written consent of the Company, Purchaser will not amend or waive
the Minimum Condition, decrease
15
<PAGE>
the price per Share payable in the Offer, change the form of consideration
payable in the Offer (other than by adding consideration), reduce the maximum
number of Shares to be purchased in the Offer, or impose conditions to the
Offer in addition to those set forth in the Merger Agreement which are
materially adverse to the holders of Shares. Purchaser shall have no obligation
to pay interest on the purchase price of tendered Shares, including in the
event Purchaser exercises its right to extend the period of time during which
the Offer is open. The rights reserved by Purchaser in this paragraph are in
addition to Purchaser's rights to terminate the Offer upon the failure of the
Offer Conditions in Section 15 to be satisfied on the Expiration Date.
Purchaser covenants and agrees that, subject to the terms and conditions of the
Merger Agreement, including the Offer Conditions, it will accept for payment
and pay for Shares validly tendered and not withdrawn pursuant to the Offer as
promptly as reasonably practicable. Notwithstanding the foregoing, (x) at each
scheduled expiration date of the Offer prior to the date 90 days from the date
of the Merger Agreement, if any of the Offer Conditions shall have not been
satisfied or waived, Purchaser shall extend the Offer until the date on which
such conditions are then reasonably expected by Purchaser to be satisfied, (y)
Purchaser shall extend the Offer for any period required by any rule,
regulation, interpretation or position of the Commission or the staff thereof
applicable to the Offer and (z) Purchaser may extend the Offer up to the tenth
business day beyond the latest expiration date that would otherwise be
permitted under clauses (x) and (y) of this sentence. The initial expiration
date of the Offer shall be 20 business days from the commencement of the Offer
in accordance with applicable law. Subject to the terms of the Offer, including
the Offer Conditions, Purchaser will accept for payment, purchase and pay for
all Shares validly tendered and not withdrawn as soon as it is permitted to do
so under applicable law.
The Minimum Condition requires that at least that number of Shares which,
together with any Shares owned by Holdings, Parent or Purchaser, or any
controlled entity thereof, constitutes at least a majority of the voting power
(determined on a fully-diluted basis) on the date of purchase, of all the
securities of the Company entitled to vote generally in the election of
directors or in a merger shall have been validly tendered and not withdrawn
prior to the expiration of the Offer.
The Merger. The Merger Agreement provides that, at the Effective Time and
subject to the conditions set forth therein (including the Offer Conditions
described in Section 15 hereof) and in accordance with the provisions of the
MGCL, Purchaser shall be merged with and into the Company and the separate
corporate existence of Purchaser shall cease, and the Company shall continue as
the surviving corporation of the Merger (the "Surviving Corporation"). At
Parent's election (provided, that such election shall not adversely affect the
ability of the Company to consummate the transactions contemplated by the
Merger Agreement, and provided, further, that the Company shall not be deemed
to have breached any of its representations or warranties therein if and to the
extent such breach results from such election), the Merger may alternatively be
structured so that (i) the Company and/or its subsidiaries are merged with and
into Parent, Purchaser or any other direct or indirect subsidiary of Parent or
(ii) any direct or indirect subsidiary of Parent other than Purchaser is merged
with and into the Company.
Articles, By-laws, Directors and Officers. The Merger Agreement provides
that at the Effective Time and without any further action on the part of the
Company and Purchaser, the Articles of Amendment and Restatement of the
Company, as amended (the "Articles"), as in effect immediately prior to the
Effective Time, shall be the charter of the Surviving Corporation until
thereafter and further amended as provided therein and under the MGCL. At the
Effective Time and without any further action on the part of the Company and
Purchaser, the By-Laws of the Purchaser shall be the By-Laws of the Surviving
Corporation and thereafter may be amended or repealed in accordance with their
terms or the Articles of the Surviving Corporation and as provided by law. The
Merger Agreement further provides that the directors of Purchaser immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Articles and By-Laws of
the Surviving Corporation, and the officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation,
in each case until their respective successors are duly elected or appointed
(as the case may be) and qualified.
16
<PAGE>
Conversion of Securities. Pursuant to the Merger Agreement, at the
Effective Time, each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares owned by Parent or Purchaser and any
Dissenting Shares) shall be cancelled, extinguished and converted into the
right to receive the Merger Consideration, without interest, upon surrender of
the certificate formerly representing such Share in the manner described in the
Merger Agreement, less any withholding taxes required under applicable law.
Each share of common stock of Purchaser issued and outstanding immediately
prior to the Effective Time shall be converted into and become one validly
issued, fully paid and nonassessable share of identical common stock of the
Surviving Corporation.
Conversion of Employee Options. Immediately prior to the Effective Time,
each outstanding employee stock option and any related stock appreciation right
(together, an "Employee Option"), whether or not then exercisable, shall be
cancelled by the Company (provided that with respect to the 3,300 Shares (the
"1988 Options") subject to stock options issued pursuant to the Incentive Stock
Option Plan of 1988, such 1988 Options, to the extent permitted, shall be
cancelled by the Company and otherwise the Company shall use its reasonable
good faith efforts to cancel the 1988 Options), and the holder thereof shall be
entitled to receive at the Effective Time or as soon as practicable thereafter
from the Surviving Corporation in consideration for such cancellation an amount
in cash equal to the product of (a) the number of Shares previously subject to
such Employee Option and (b) the excess, if any, of the Merger Consideration
over the exercise price per Share previously subject to such Employee Option.
Appraisal Rights. The Merger Agreement provides that so long as the Shares
are listed on Nasdaq on the record date for the determination of stockholders
entitled to vote on the Merger with respect to mergers other than mergers
pursuant to Section 3-106 of the MGCL or a merger of a 90 percent owned
subsidiary with or into its parent or the date notice is given or waived under
Section 3-106 of the MGCL in connection with a merger of a 90 percent owned
subsidiary with or into its parent as the case may be (as applicable, the
"Appraisal Date"), no stockholder of the Company shall have any rights under
Title 3, Subtitle 2 of the MGCL as a result of the transactions contemplated by
the Merger Agreement or the Tender Agreement.
However, the Merger Agreement also provides that if the Shares are not
listed on Nasdaq on the Appraisal Date, Dissenting Shares shall not be
converted into the right to receive the Merger Consideration, but shall be
entitled to receive the consideration as shall be determined pursuant to Title
III, Subtitle 2 of the MGCL; provided, however, that if such holder shall have
failed to perfect or shall have effectively withdrawn or lost his, her or its
right to appraisal and payment under the MGCL, such holder's Shares shall
thereupon be deemed to have been converted, at the Effective Time, into the
right to receive the Merger Consideration, without any interest thereon.
Conduct of Business Pending the Merger. The Company has agreed that,
during the period from the date of the Merger Agreement until the time persons
nominated by Parent or Purchaser constitute a majority of the Board of
Directors, except pursuant to the terms of the Merger Agreement or as disclosed
in the Company's forms, reports, statements and documents filed with the
Commission prior to the date of the Merger Agreement, or unless Purchaser shall
otherwise agree in writing, the businesses of the Company and its subsidiaries
will be conducted only in, and the Company and its subsidiaries shall not take
any action except in, the ordinary course of business and in a manner
consistent with past practice and in compliance in all material respects with
applicable laws. The Company has also agreed that the Company and its
subsidiaries shall use their reasonable good faith efforts during such period
to preserve substantially intact the business organization and assets of the
Company and its subsidiaries, to keep available the services of the present
officers, employees and consultants of the Company and its subsidiaries, and to
preserve their present relationships of the Company and its subsidiaries with
customers, suppliers and other persons with which the Company or any of its
subsidiaries has significant business relations.
By way of amplification and not limitation of the foregoing paragraph, the
Company also has agreed that the Company and its subsidiaries shall refrain
from directly or indirectly taking various actions without the Parent's consent
until the time persons nominated by Parent or Purchaser constitute a
17
<PAGE>
majority of the Company's Board of Directors. These prohibitions cover, among
other things, limitations on making changes to their organizational documents,
selling their capital stock or their property or assets, declaring or paying
any dividend or other distribution, making changes in their capital stock,
engaging in any material corporate transaction, including acquisitions and
dispositions, incurring debt beyond specified limits, amending contracts and
making capital expenditures beyond specified limits, increasing the
compensation payable to its directors, officers and employees (except to the
extent required under existing plans or agreements), increasing or granting any
severance or termination pay (except to the extent required, subject to certain
limits, under existing policies or agreements), changing accounting or tax
policies, settling any litigation beyond specified limits or any litigation
which relates to the transactions contemplated by the Merger Agreement,
changing the key management structure of the Company or any of its
subsidiaries, transferring or granting any rights to intellectual property,
adopting a plan of complete or partial dissolution or liquidation, paying or
discharging any claims, liabilities or obligations, failing to maintain the
existing insurance policies covering the Company and its subsidiaries and
taking any actions that would make any of the representations and warranties of
the Company contained in the Merger Agreement untrue and incorrect or result in
any of the Offer Conditions not being satisfied.
Stockholders Meeting. Pursuant to the Merger Agreement, the Company,
acting through its Board of Directors, shall, if required in accordance with
applicable law and the Company's Articles and By-Laws, (i) duly call, give
notice of, convene and hold a meeting of its stockholders as soon as
practicable following consummation of the Offer for the purpose of considering
and taking action on the Merger Agreement and the transactions contemplated
thereby (the "Stockholders Meeting") and (ii) subject to its fiduciary duties
under applicable law as determined in good faith by a majority of the
Disinterested Directors (as defined below) of the Company based on the advice
of independent outside legal counsel to the Disinterested Directors, (A)
include in the Proxy Statement (as defined below) the unanimous recommendation
of the Board of Directors that the stockholders of the Company vote in favor of
the approval of the Merger Agreement and the transactions contemplated thereby
and, subject to the approval of Robinson-Humphrey, the written opinion of
Robinson-Humphrey that the consideration to be received by the stockholders of
the Company pursuant to the Offer and the Merger is fair to such stockholders
and (B) use its reasonable good faith efforts to obtain the necessary approval
of the Merger Agreement and the transactions contemplated thereby by its
stockholders. At the Stockholders Meeting, Parent and Purchaser shall cause all
Shares then beneficially owned by them and their subsidiaries to be voted in
favor of approval of the Merger Agreement and the transactions contemplated
thereby.
The Merger Agreement provides that, notwithstanding the foregoing, in the
event that Purchaser acquires at least 90% of the outstanding Shares, the
Company and Parent agree, subject to the provisions of the Merger Agreement, to
take all necessary and appropriate action to cause the Merger to become
effective as soon as reasonably practicable after such acquisition, without a
meeting of the Company's stockholders, in accordance with Section 3-106 of the
MGCL.
The Merger Agreement also provides that notwithstanding anything to the
contrary contained in the Merger Agreement, the Company shall not be required
to hold the Stockholders Meeting if the Minimum Condition is not satisfied.
Proxy Statement. The Merger Agreement provides that, if required by
applicable law, as soon as practicable following Parent's request, the Company
shall file with the Commission under the Exchange Act and the rules and
regulations promulgated thereunder, and shall use its reasonable good faith
efforts to have cleared by the Commission, the Proxy Statement with respect to
the Stockholders Meeting (the "Proxy Statement"). Parent, Purchaser and the
Company will cooperate with each other in the preparation of the Proxy
Statement. Without limiting the generality of the foregoing, each of Parent and
Purchaser will furnish to the Company the information relating to it required
by the Exchange Act and the rules and regulations promulgated thereunder to be
set forth in the Proxy Statement. The Company agrees to use its reasonable good
faith efforts, after consultation with the other parties hereto, to respond
promptly to any comments made by the Commission with respect to the Proxy
Statement and any preliminary version thereof filed by it and cause such Proxy
Statement to be mailed to the Company's stockholders at the earliest
practicable time.
18
<PAGE>
Company Board Representation. The Merger Agreement provides that, promptly
upon the purchase by Purchaser of Shares pursuant to the Offer, and from time
to time thereafter, Purchaser shall be entitled to designate up to such number
of directors, rounded up to the next whole number, on the Board of Directors of
the Company as shall give Purchaser representation on the Board of Directors
equal to the product of the total number of directors on such Board (giving
effect to the directors elected pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares beneficially owned by Purchaser
or any affiliate of Purchaser bears to the total number of Shares then
outstanding, and the Company shall, at such time, promptly take all action
necessary to cause Purchaser's designees to be so elected, including either
increasing the size of the Company's Board of Directors or securing the
resignations of incumbent directors or both. Notwithstanding the foregoing, the
Merger Agreement provides that none of Parent, Purchaser or the Company shall
take any action to remove or replace any member of the Special Committee after
consummation of the Offer and prior to the Effective Time. If at any time prior
to the Effective Time there are less than two members of the Special Committee,
as constituted on the date of the Merger Agreement (other than upon the
resignation of both Disinterested Directors), on the Company's Board of
Directors, Parent, Purchaser and the Company shall use all reasonable efforts
to ensure that two members of the Company's Board of Directors are
Disinterested Directors. In the event that both Disinterested Directors resign
from the Special Committee, Parent, Purchaser and the Company shall either (i)
use their reasonable efforts to appoint successors as aforesaid or (ii) permit
the resigning Disinterested Directors to appoint their successors in their
reasonable discretion. The Company will use its best efforts to cause persons
designated by Purchaser to constitute the same percentage as is on the Board of
(i) each committee of the Board, (ii) each board of directors of each domestic
subsidiary of the Company and (iii) each committee of each such board, in each
case only to the extent permitted by law. Until Purchaser acquires a majority
of the outstanding Shares on a fully diluted basis, the Company shall use its
best efforts to ensure that all the members of the Board and such boards and
committees as of the date hereof who are not employees of the Company shall
remain members of the Board and such boards and committees. The Company's
obligations to appoint designees to its Board of Directors shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder.
Following the election or appointment of Purchaser's designees pursuant to
the Merger Agreement and prior to the Effective Time, any amendment of the
Merger Agreement or the Articles or By-Laws of the Company, any termination of
the Merger Agreement by the Company, any extension by the Company of the time
for the performance of any of the obligations or other acts of Parent or
Purchaser or waiver of any of the Company's rights thereunder, will require the
concurrence of a majority of the directors of the Company then in office who
are (a) either members of the Special Committee (as constituted on the date of
the Merger Agreement) or (b) are neither designated by Purchaser nor are
employees of the Company or any of its subsidiaries (the "Disinterested
Directors").
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
from the date thereof to the Effective Time, the Company shall, and shall cause
its subsidiaries, officers, directors, employees, auditors and other agents, to
afford the officers, employees, auditors and other agents of Parent, and
financing sources who shall agree to be bound by the provisions of the Merger
Agreement as though a party thereto, complete access at all reasonable times to
its officers, employees, agents, properties, offices, plants and other
facilities and to all books and records, and shall furnish Parent and such
financing sources with all financial, operating and other data and information
as Parent, through its officers, employees or agents, or such financing
sources, may from time to time reasonably request.
The Merger Agreement further provides that each of Parent and Purchaser
will hold and treat and will cause its officers, employees, auditors and other
agents to hold and treat in confidence all documents and information concerning
the Company and its subsidiaries furnished to Parent or Purchaser in connection
with the transactions contemplated in the Merger Agreement in accordance with
the Confidentiality Agreement, dated November 8, 1998, between the Company and
Parent, which Confidentiality Agreement shall remain in full force and effect
in accordance with its terms.
No Solicitation of Transactions. The Merger Agreement provides that the
Company, its affiliates and their respective officers, directors, employees,
representatives and agents shall immediately cease any
19
<PAGE>
existing discussions or negotiations, if any, with any parties conducted prior
to the date thereof with respect to any acquisition or exchange of all or any
material portion of the assets of, or any equity interest in, the Company or
any of its subsidiaries or any business combination with the Company or any of
its subsidiaries. The Company may, directly or indirectly, furnish information
and access, in each case only in response to a request for such information or
access to any person made after the date of the Merger Agreement which was not
encouraged, solicited or initiated by the Company or any of its affiliates or
any of its or their respective officers, directors, employees, representatives
or agents after the date of the Merger Agreement, pursuant to appropriate
confidentiality agreements, and may participate in discussions and negotiate
with such entity or group concerning any merger, sale of assets, sale of shares
of capital stock or similar transaction (including an exchange of stock or
assets) involving the Company or any subsidiary or division of the Company, if
such entity or group has submitted a written proposal to the Board relating to
any such transaction and the members of the Special Committee, as a result of
such proposal, by a majority vote determine, in their good faith judgment, that
based on the advice of independent outside legal counsel to the members of the
Special Committee, failing to take such action would constitute a breach of the
Board of Directors' fiduciary duty under applicable law. The Board of Directors
of the Company shall provide a copy of any such written proposal to Parent
immediately after receipt thereof, shall notify Parent immediately if any such
proposal is made and shall keep Parent promptly advised of all developments
which could reasonably be expected to culminate in the Board of Directors
withdrawing, modifying or amending its recommendation of the Offer, the Merger
and the other transactions contemplated by the Merger Agreement. Except as set
forth above, neither the Company or any of its affiliates, nor any of its or
their respective officers, directors, employees, representatives or agents,
shall, directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent
and Purchaser, any affiliate or associate of Parent and Purchaser or any
designees of Parent or Purchaser) concerning any merger, sale of all or any
material portion of the assets, the sale of more than 10% of the outstanding
shares of capital stock of the Company or any of its subsidiaries or similar
transactions (including an exchange of stock or assets) involving the Company
or any subsidiary or division of the Company; provided, however, that nothing
in the Merger Agreement shall prevent the Board of Directors of the Company
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; provided, further, that the Board of Directors of
the Company shall not recommend that the stockholders of the Company tender
their Shares in connection with any such tender offer unless the Board of
Directors by a majority vote determines in its good faith judgment, based on
the advice of independent outside legal counsel to the Company, that failing to
take such action would constitute a breach of the Board of Director's fiduciary
duty under applicable law. The Company has agreed not to release any third
party from, or waive any provisions of, (i) any standstill agreement to which
the Company is a party (other than for the limited purpose of discussions and
negotiations permitted above) and (ii) any confidentiality agreement to which
the Company is a party.
Employee Benefits Matters. The Merger Agreement provides that the Company
shall or Parent shall cause the Company and the Surviving Corporation to
promptly pay or provide when due all compensation and benefits earned through
or prior to the Effective Time as provided pursuant to the terms of any
compensation arrangements, employment agreements and employee or director
benefit plans, programs and policies in existence as of the date of the Merger
Agreement for all employees (and former employees) and directors (and former
directors) of the Company. Parent and the Company agree that the Company and
the Surviving Corporation shall pay promptly or provide when due all
compensation and benefits required to be paid pursuant to the terms of any
individual agreement with any employee, former employee, director or former
director in effect and disclosed to Parent as of the date of the Merger
Agreement. Nothing in the Merger Agreement shall require the continued
employment of any person or prevent the Company and/or the Surviving
Corporation from taking any action or refraining from taking any action which
the Company could take or refrain from taking prior to the Effective Time.
Pursuant to the Merger Agreement, Parent shall cause the Surviving
Corporation, for the period ending on December 31, 1999, to provide employee
benefits under plans, programs and arrangements
20
<PAGE>
which, in the aggregate, will provide benefits to the employees of the
Surviving Corporation (other than employees covered by a collective bargaining
agreement) which are no less favorable than those provided pursuant to the
plans, programs and arrangements of the Company in effect on the date of the
Merger Agreement (other than stock-based plans) and employees covered by
collective bargaining agreements shall be provided with such benefits as shall
be required under the terms of any applicable collective bargaining agreement;
provided, however, that nothing in the Merger Agreement shall prevent the
amendment or termination of any such plan, program or arrangement, require that
the Surviving Corporation provide or permit investment in the securities of
Parent, the Company or the Surviving Corporation or interfere with the
Surviving Corporation's right or obligation to make such changes as are
necessary to conform with applicable law. On and after January 1, 2000, Parent
shall provide employees of the Surviving Corporation (other than those covered
by collective bargaining agreements) with benefits, in the aggregate, that are
no less favorable than those provided to similarly situated employees of
subsidiaries of Parent.
Directors' and Officers' Indemnification and Insurance. The Merger
Agreement provides that from the Effective Time through the sixth anniversary
of the date on which the Effective Time occurs, Parent shall, or shall cause
the Surviving Corporation to, indemnify and hold harmless each present and
former officer, director or employee of the Company (the "Indemnified
Parties"), against all claims, losses, liabilities, damages, judgments, fines,
reasonable fees, reasonable costs or reasonable expenses, including, without
limitation, reasonable attorneys' fees and disbursements (collectively,
"Costs"), incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of the fact that the Indemnified Party is or was a director,
officer or employee of the Company and pertaining to matters existing or
occurring at or prior to the Effective Time (including, without limitation, the
Merger Agreement and the transactions and actions contemplated thereby),
whether asserted or claimed prior to, at or after the Effective Time, to the
fullest extent permitted under applicable law; provided, that no Indemnified
Party may settle any such claim without the prior approval of Parent or the
Surviving Corporation (such consent not to be unreasonably withheld). Each
Indemnified Party will be entitled to advancement of expenses incurred in the
defense of any claim, action, suit, proceeding or investigation; provided, that
any person to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such person is not entitled to
indemnification. Without limiting the foregoing, in the event that any claim,
action, suit, proceeding or investigation is brought against an Indemnified
Party (whether arising before or after the Effective Time), the Indemnified
Parties as a group may retain one counsel (plus appropriate local counsel)
satisfactory to Parent or the Surviving Corporation.
The Merger Agreement also provides that the By-Laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in Article VIII of the By-laws of the
Company, which provisions shall not be amended, repealed or otherwise modified
for a period of three years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at the Effective Time
were directors, officers or employees of the Company.
The Merger Agreement provides that Parent shall, or shall cause the
Surviving Corporation to maintain, at no expense to the beneficiaries, in
effect for six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by the Company
(provided, that Parent or the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which
are not materially less advantageous) with respect to matters occurring at or
prior to the Effective Time to the extent available; provided, however, that in
no event shall Parent or the Surviving Corporation be required to expend more
than an amount per year in excess of 150% of current annual premiums paid by
the Company (which the Company represents and warrants to be not more than
$140,000) to maintain or procure insurance coverage pursuant to the Merger
Agreement; and provided, further, that if the annual premiums of such insurance
coverage would exceed 150% of current annual premiums, Parent or the Surviving
Corporation shall obtain a policy with the greatest coverage available for a
cost not exceeding 150% of current annual premiums. In the event any claim is
made against present or former directors, officers or employees of the Company
(the
21
<PAGE>
"Indemnitees") that is covered or potentially covered by insurance, none of the
Surviving Corporation, Parent or any Indemnitee shall do anything that would
forfeit, jeopardize, restrict or limit the insurance coverage available for
that claim until the final disposition thereof.
The Merger Agreement further provides that (i) Parent and Purchaser
acknowledge that the Company is party to indemnification agreements (the
"Indemnification Agreements") with each of its current directors, (ii) Parent
and Purchaser agree that all rights in favor of such persons under the
Indemnification Agreements shall survive the Merger and shall continue in full
force and effect and without modification (except for such modifications which
would enlarge the rights) after the Effective Time in accordance with the
provisions of such Indemnification Agreements, (iii) Parent will cause the
Surviving Corporation to comply fully with its obligations under the Merger
Agreement and the Indemnification Agreements and (iv) the Company, Parent and
Purchaser acknowledge that nothing in Section 6.7 of the Merger Agreement shall
limit any rights in favor of such persons under the Indemnification Agreements.
Notification of Certain Matters. Pursuant to the Merger Agreement, the
Company shall give reasonably prompt notice to Parent, and Parent shall give
reasonably prompt notice to the Company, in each case, after it becomes aware,
of (i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or warranty
contained in the Merger Agreement to be untrue or inaccurate in any material
respects at or prior to the Effective Time and (ii) any material failure of the
Company, Parent or Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
the Merger Agreement; provided, however, that the delivery of any notice
pursuant to the foregoing shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Further Action; Reasonable Good Faith Efforts. The Merger Agreement
provides that, upon the terms and subject to the conditions thereof, each of
the parties thereto shall use its reasonable good faith efforts to take, or
cause to be taken, all appropriate action, and to do or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by the Merger
Agreement as promptly as practicable, including but not limited to (i)
cooperation in the preparation and filing of the Offer Documents, the Schedule
14D-9, the Proxy Statement, any required filings under the HSR Act and any
amendments to any thereof and (ii) using its reasonable good faith efforts to
make all required regulatory filings and applications and to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts with the Company
and its subsidiaries as are necessary for the consummation of the transactions
contemplated by the Merger Agreement and the Tender Agreement and to fulfill
the conditions to the Offer and the Merger. Notwithstanding the foregoing,
Purchaser and its affiliates shall not be required to divest, or agree to any
restrictions with respect to, any of its businesses or assets or the businesses
or assets to be acquired in connection with the transactions contemplated by
the Merger Agreement. The Company will use reasonable good faith efforts to
cooperate with Parent and Purchaser as may be reasonably necessary with respect
to consummating the financing for the Offer and the Merger. Parent and
Purchaser will use reasonable good faith efforts to obtain the consents as
promptly as practicable of the required lenders under Parent's Credit Agreement
and 364 day Credit Agreement (each as defined in the Merger Agreement). In case
at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of the Merger Agreement, the proper
officers and directors of each party to the Merger Agreement shall use their
reasonable good faith efforts to take all such necessary action.
Public Announcements. Parent and the Company shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to the transactions contemplated by the Merger Agreement, including the
Offer or the Merger and the Tender Agreement, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law or any listing agreement with its securities
exchange.
Disposition of Litigation. Pursuant to the Merger Agreement, the Company
agrees that it will not settle any litigation currently pending, or commenced
after the date of the Merger Agreement, against the
22
<PAGE>
Company or any of its directors by any stockholder of the Company relating to
the Offer or the Merger Agreement, without the prior written consent of Parent.
Except as permitted by the Merger Agreement, the Company will not voluntarily
cooperate with any third party which has sought or may seek after the date of
the Merger Agreement to restrain or prohibit or otherwise oppose the Offer or
the Merger and will cooperate with Parent and Purchaser to resist any such
effort to restrain or prohibit or otherwise oppose the Offer or the Merger.
State Takeover Statutes. The Merger Agreement provides that during the
term thereof the Board of Directors of the Company shall not (i) repeal or
otherwise alter the resolutions of the Board of Directors that render Section
3-602 of the MGCL (or any similar provision) inapplicable to the Offer, the
Merger, the Merger Agreement, the Tender Agreement, the other transactions
contemplated thereby and any Consensual Transaction and (ii) amend the By-Laws
of the Company so as to render Section 3-702(a)(i) of the MGCL (or any similar
provision) applicable to the transactions contemplated by the Merger Agreement
and the Tender Agreement, including, without limitation, the Offer, or to any
Consensual Transaction.
Stop Transfer Order. The Merger Agreement provides that the Company will
instruct the Company's transfer agent that, except as provided in the Tender
Agreement, there is a stop transfer order with respect to all of the
Stockholders' Shares and that the Tender Agreement places limits on the
transfer of such Shares.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto.
Representations and warranties of the Company include, without limitation,
certain matters concerning the Company's capitalization, the Company's
authority to execute, deliver and perform under, and the Board of Directors'
approval of, the Offer, the Merger, the Merger Agreement, the Tender Agreement
and the transactions contemplated thereby (including approvals and amendments
so as to render inapplicable limitations on certain business combinations
contained in the MGCL), absence of any conflicts with charter documents and
contracts, required filings and consents, compliance with law, Commission
filings and financial statements, absence of certain changes or events, absence
of litigation, employee benefit plans, tax matters, environmental matters,
brokers and Year 2000 issues. Some of the representations are qualified by a
"Material Adverse Effect" clause. "Material Adverse Effect" means any change or
effect that would be materially adverse to the business, operations, assets,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole.
Representations and warranties of Parent and Purchaser include, without
limitation, certain matters relating to their organization and qualification to
do business, their authority to enter into the Merger Agreement and to
consummate the transactions contemplated thereby, their filings with the
Commission in connection with the Offer, consents and approvals required for
the execution and delivery of the Merger Agreement and the consummation of the
transactions contemplated thereby and, subject to obtaining consents from the
Required Lenders (as defined in the Merger Agreement), the availability of
funds sufficient to consummate the Offer and the Merger on the terms
contemplated thereby.
Conditions of the Merger. Under the Merger Agreement, the respective
obligations of the Parent and Purchaser, on the one hand, and the Company, on
the other hand, to consummate the Merger are subject at the Effective Time to
the satisfaction of the following conditions: (a) if required by the MGCL, the
Merger Agreement shall have been approved by the affirmative vote of the
stockholders of the Company by the requisite vote in accordance with the
Company's Articles and the MGCL; (b) no statute, rule, regulation, executive
order, decree, ruling, injunction or other order (whether temporary,
preliminary or permanent) shall have been enacted, entered, promulgated or
enforced by any United States or state court or governmental authority which
prohibits, restrains, enjoins or restricts the consummation of the Merger; (c)
any waiting period applicable to the Merger under the HSR Act shall have
terminated or expired; and (d) Purchaser shall have purchased Shares pursuant
to the Offer.
Termination Events. The Merger Agreement may be terminated and the Merger
contemplated thereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company as follows:
23
<PAGE>
(a) By mutual written consent of Parent, Purchaser and the Company,
subject in the case of the Company to Section 6.3(c) of the Merger
Agreement;
(b) By Parent or the Company if any court of competent jurisdiction or
other governmental body located or having jurisdiction within the United
States or any country or economic region in which either the Company or
Parent, directly or indirectly, has material assets or operations, shall
have 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 shall have become final
and nonappealable and, with respect to any court or governmental body
located outside the United States, such order, decree, ruling or other
action would have a Material Adverse Effect or a material adverse effect on
the business, operations, assets, financial condition or results of
operations of Parent and its subsidiaries taken as a whole;
(c) By Parent if due to an occurrence or circumstance which would result
in a failure to satisfy any of the Offer Conditions, Purchaser shall have
(i) terminated the Offer or (ii) failed to pay for Shares pursuant to the
Offer within 120 days following the date of the Merger Agreement unless
such failure to pay for Shares is a result of the failure of Parent or
Purchaser to perform any of its covenants and agreements contained in the
Merger Agreement;
(d) By the Company if (i) (A) Purchaser fails to commence the Offer as
provided in the Merger Agreement, (B) Purchaser fails to pay for Shares
pursuant to the Offer within 120 days following the date of the Merger
Agreement, unless such failure to pay for Shares is the result of the
failure of the Company to perform any of its covenants and agreements
contained in the Merger Agreement or (C) Purchaser shall have terminated
the Offer or (ii) prior to the purchase of Shares pursuant to the Offer,
any person shall have made a bona fide offer to acquire the Company as a
result of which a majority of the members of the Special Committee conclude
in good faith on the advice of independent outside legal counsel to the
members of the Special Committee that termination of the Merger Agreement
is necessary in order for the Board of Directors to comply with its
fiduciary obligations under applicable law (provided that such termination
under this clause (d) shall not be effective until the Company has made
payment of the fee, if any, required simultaneous with such termination
pursuant to the Merger Agreement); or
(e) By Parent prior to the purchase of Shares pursuant to the Offer, if
(i) following any negotiations by the Company with any person (other than
Parent or Purchaser) that has proposed a Third Party Acquisition (as
defined below), there shall have been a breach of any covenant or agreement
on the part of the Company contained in the Merger Agreement such that the
conditions set forth in clause (f) of the Offer Conditions and/or the
conditions of the parties to consummate the Merger contained in the Merger
Agreement would not be satisfied which shall not have been cured prior to
the earlier of (A) 10 days following notice of such breach and (B) two
business days prior to the date on which the Offer expires, (ii) the Board
of Directors shall have withdrawn or modified (including by amendment of
the Schedule 14D-9) in a manner adverse to Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger or shall
have recommended another offer or transaction, or shall have resolved to
effect any of the foregoing or (iii) the Minimum Condition shall not have
been satisfied by the expiration date of the Offer and on or prior to such
date (A) any person (other than Parent or Purchaser) shall have made and
not withdrawn a bona fide proposal or public announcement or communication
to the Company with respect to a Third Party Acquisition or (B) any person
(including the Company or any of its affiliates or subsidiaries), other
than Parent or any of its affiliates shall have become the beneficial owner
of more than 25% of the Shares.
In the event of the termination of the Merger Agreement as described
above, the Merger Agreement shall forthwith become void and there shall be no
liability on the part of any party thereto except as set forth below; provided,
however, that nothing therein will relieve any party from liability for any
breach of the Merger Agreement.
Termination Fee and Expenses. (a) If (A) the Company terminates the Merger
Agreement pursuant to clause (d)(ii) above, (B) the Company terminates the
Merger Agreement pursuant to clause (d)(i)(B)
24
<PAGE>
at a time when Parent had a right to terminate the Merger Agreement pursuant to
clause (e) above or (C) Parent terminates the Merger Agreement pursuant to
clause (e) above (each, a "Fee Termination Event"), then (x) in the event of a
termination pursuant to clause (e)(i) or pursuant to clause (d)(i)(B) at a time
when Parent had a right to terminate the Merger Agreement pursuant to clause
(e)(i), if the Company or any of its subsidiaries enters into an agreement with
respect to a Third Party Acquisition (an "Acquisition Agreement") within 12
months of termination, the Company shall pay Parent $1.25 million
simultaneously with the signing of the Acquisition Agreement and an additional
$1.25 million on the consummation of a Third Party Acquisition pursuant to such
Acquisition Agreement or if a Third Party Acquisition occurs within 12 months
of termination without the execution of an Acquisition Agreement, the Company
shall pay Parent $2.5 million on the consummation of the Third Party
Acquisition and (y) in the event of any other Fee Termination Event, the
Company shall pay to Parent a fee, in cash (as a condition and prior to such
Fee Termination Event if such event is a termination by the Company and within
one business day of such termination if such event is a termination by Parent),
of $1.25 million and, if a Third Party Acquisition occurs within 12 months, an
additional $1.25 million on the consummation of such transaction. Parent shall
not be entitled to a fee under this clause if Parent is in material breach of
the Merger Agreement and such breach has not been cured within 10 days
following notice of such breach. Notwithstanding the foregoing provisions, the
Company in no event shall be obligated to pay to Parent more than $2.5 million
pursuant to this clause (a).
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger, tender offer or otherwise
by any person or group of persons acting in concert other than Parent,
Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by a
Third Party of 35% or more of the assets of the Company and its subsidiaries,
taken as a whole, in one transaction or a related series of transactions; (iii)
the acquisition by a Third Party of more than 35% of the outstanding Shares, in
one transaction or a related series of transactions; (iv) the adoption by the
Company of a plan of liquidation or the declaration or payment of an
extraordinary dividend; or (v) the repurchase by the Company or any of its
subsidiaries of 15.0% or more of the outstanding Shares.
(b) If the Merger Agreement is terminated due to the failure to satisfy
the Offer Condition set forth in clause (ii) of the first paragraph of the
Offer Conditions, then Parent shall pay to the Company a fee, in cash, of
$1.25 million within one business day of such termination; provided that
the Company shall not be entitled to a fee under this clause (b) if the
Company is in material breach of the Merger Agreement and such breach has
not been cured within 10 days following notice of such breach.
(c) Except as otherwise specifically provided herein, each party shall
bear its own expenses in connection with the Merger Agreement and the
transactions contemplated thereby.
Tender Agreement. Concurrently with the execution and delivery of the
Merger Agreement, Parent and the Stockholders entered into the Tender
Agreement. The following is a summary of the Tender Agreement, which summary is
qualified in its entirety by reference to the Tender Agreement, which is filed
as an exhibit to the Schedule 14D-1 and incorporated herein by reference.
The Tender Agreement provides that during the term of the Tender Agreement
each Stockholder will validly tender his, her or its Shares in the Offer and
will not withdraw any Shares so tendered; provided that the Merger Agreement
has not been terminated; and provided further that the Stockholders are
entitled to receive the same consideration to be received by the other
stockholders of the Company in the Offer. Each Stockholder also agrees, so long
as such Stockholder is required to tender his, her or its Shares pursuant to
the preceding sentence, to (a) vote the Shares in favor of the approval of the
Merger Agreement, (b) vote the Shares against any action or agreement that
would result in a breach in any material respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement, and (c) vote the Shares against any action or
agreement (other than the Merger Agreement or the transactions contemplated
thereby) that would impede, interfere with, delay, postpone or attempt to
discourage the Merger or the Offer. After the date of the Tender Agreement,
each Stockholder shall not, so long as such Stockholder is required to tender
his, her or its Shares, purport to vote (or execute a consent with respect to)
such Shares (other than in accordance with
25
<PAGE>
the requirements of the Tender Agreement) or grant any other proxy or power of
attorney with respect to any Shares, deposit any Shares into a voting trust or
enter into any agreement (other than the Tender Agreement), arrangement or
understanding with any person, directly or indirectly, to vote, grant any proxy
or give instructions with respect to the voting of such Shares. The Tender
Agreement also provides that no Stockholder or any employee, representative or
agent thereof, shall, directly or indirectly, encourage, solicit, participate
in or initiate discussions or negotiations with, or provide any information to,
any corporation, partnership, person or other entity or group (other than
Parent and its subsidiaries, any affiliate or associate of Parent and its
subsidiaries or any designees of Parent or its subsidiaries) concerning any
merger, sale of all or any material portion of the assets, sale of shares of
capital stock or similar transactions (including an exchange of stock or
assets) involving the Company or any subsidiary or division of the Company;
provided, however, that nothing in the nonsolicitation provision of the Tender
Agreement shall prevent Mr. Cunningham from taking any action required to be
taken by him in his capacity as a director consistent with the requirements of
the Merger Agreement. If any Stockholder, or any employee, representative or
agent of any Stockholder, receives an inquiry or proposal with respect to the
sale of Shares, then such Stockholder shall promptly inform Parent of the terms
and conditions, if any, of such inquiry or proposal and the identity of the
person making it. Each Stockholder shall, and shall cause his, her or its
employees, representatives and agents to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
The Tender Agreement also provides for the payment by the Stockholders to
Parent of a Topping Fee (as defined below) as follows:
(a) In the event that any Topping Fee Event (as defined below) shall
occur, each Stockholder shall pay to Parent any Topping Fee due to Parent
with respect to his, her or its Shares in connection with such Topping Fee
Event. Payment of Topping Fees to Parent shall be due immediately following
the consummation of the related Topping Fee Event and shall be payable in
immediately available funds by wire transfer to the account designated in
writing by Parent; provided, that if the Selling Price is payable in a form
other than cash ("Non-Cash Consideration") and the Stockholders are legally
prohibited from selling the Non-Cash Consideration into the market, the
Stockholders, at their option, may pay a pro rata portion of the Topping
Fee in the same form of consideration as the Non-Cash Consideration so long
as Parent is granted registration rights with respect to the Non-Cash
Consideration on terms no less favorable than the registration rights, if
any, granted to any of the Stockholders. For the avoidance of doubt, the
Tender Agreement provides that Topping Fees shall be payable, from time to
time, upon the occurrence of each Topping Fee Event.
(b) For purposes of the Topping Fee provisions of the Tender Agreement,
the following terms shall have the following meanings:
"Initial Amount" shall equal $0.50, as adjusted from time to time in
accordance with the Tender Agreement.
"Selling Price" shall mean the consideration per share (whether cash
or non-cash) to be received by any Stockholder in connection with a
Topping Fee Event; provided that if the consideration received by such
Stockholder in connection with a Topping Fee Event shall be other than
cash, (i) in the case of securities listed on a national securities
exchange or traded on Nasdaq, the per share value of such consideration
shall be equal to the closing price per share listed on such national
securities exchange or Nasdaq on the date the Topping Fee Event is
consummated and (ii) in the case of consideration in a form other than
such securities, the per share value shall be determined in good faith
as of the date the Topping Fee Event is consummated by Parent and the
Stockholders, or, if Parent and the Stockholders cannot reach agreement,
by a nationally recognized investment banking firm reasonably acceptable
to the parties, which determination shall be conclusive for all purposes
of the Tender Agreement.
"Set Amount" shall equal $5.50, as adjusted from time to time in
accordance with the Tender Agreement.
26
<PAGE>
"Topping Fee" shall mean a fee payable by a Stockholder to Parent
equal to the product of (i) the number of Shares directly or indirectly
sold or disposed by such Stockholder or otherwise in respect of which
such Stockholder is entitled to receive consideration and (ii) (A) if
the Selling Price is less than or equal to the Set Amount, the Selling
Price less $5.00 or (B) if the Selling Price is greater than the Set
Amount, the sum of (1) the Initial Amount plus (2) 50% of the excess of
the Selling Price less the Set Amount.
"Topping Fee Event" shall mean (a) direct or indirect sale or other
disposition by any Stockholder of his or its Shares, (b) a merger or
consolidation of Company or any of its subsidiaries (or similar
transaction) with or into another person, (c) a sale or other
disposition of all or substantially all of the assets of Company and/or
its subsidiaries (whether in one or more transactions) or (d) any other
extraordinary transaction involving Company or any of its subsidiaries
or any of their respective assets, in each case, in which any
Stockholder is entitled to receive, cash or non-cash consideration with
respect to any of his or its Shares, provided that such sale, other
disposition, merger, consolidation or other extraordinary transaction is
consummated (or a definitive written agreement with respect thereto is
entered into) within twelve (12) months after any Fee Termination
pursuant to the Merger Agreement, provided further that any of the
transactions described in clauses (a)-(d) above that involve Parent or
any of its subsidiaries shall not be deemed to constitute a Topping
Event.
12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY. Purpose. The
purpose of the Offer is to acquire control of, and the entire equity interest
in, the Company. The Offer is being made pursuant to the Merger Agreement. As
promptly as practicable following consummation of the Offer and after
satisfaction or waiver of all conditions to the Merger set forth in the Merger
Agreement, Purchaser intends to acquire the remaining equity interest in the
Company not acquired in the Offer by consummating the Merger.
Vote Required to Approve the Merger; Stockholder Approval. The Board of
Directors of the Company has approved the Merger Agreement in accordance with
the MGCL. If required for approval of the Merger, the Company has agreed,
subject to the satisfaction of the conditions to the Merger set forth in the
Merger Agreement, in accordance with and subject to the MGCL, to duly convene a
meeting of its stockholders as soon as practicable following consummation of
the Offer for the purpose of considering and taking action on the Merger
Agreement and the transactions contemplated thereby. If stockholder approval is
required, the Merger Agreement must be approved by the vote of the holders of a
majority of the outstanding Shares. If the Minimum Condition is satisfied,
Purchaser will have the power, which it intends to exercise, to approve the
Merger Agreement without the affirmative vote of any other stockholder. In such
case, Parent and Purchaser have agreed to cause all Shares then owned by them
and their subsidiaries to be voted in favor of the approval of the Merger
Agreement and the Merger. If Purchaser acquires Shares entitled to cast at
least 90% of all votes that would otherwise be entitled to vote in the Merger,
the Company and Parent agree to take all necessary and appropriate action to
cause the Merger to become effective as soon as reasonably practicable after
such acquisition, without a meeting of the Company's stockholders, in
accordance with the MGCL. In such event, (i) the Purchaser would give the
Company's minority stockholders notice of the Merger at least 30 days prior to
filing articles of merger with the State Department of Assessments and Taxation
of the State of Maryland (the "MD-SDAT") and (ii) the Merger would be
accomplished without a meeting. Notwithstanding the foregoing, the Company will
not be required to hold the Stockholders Meeting if the Minimum Condition is
not satisfied.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY
SPECIAL MEETING OF THE COMPANY'S STOCKHOLDERS OR ANY ACTION IN LIEU THEREOF.
ANY SUCH SOLICITATION, IF REQUIRED, WHICH PURCHASER MAY MAKE WILL BE MADE ONLY
PURSUANT TO SEPARATE PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF
SECTION 14(A) OF THE EXCHANGE ACT.
THE OFFER IS CONDITIONED UPON THE MINIMUM CONDITION BEING SATISFIED.
Appraisal Rights. The Merger Agreement provides that so long as the Shares
are listed on Nasdaq on the record date for the determination of stockholders
entitled to vote on the Merger with respect to mergers other than mergers
pursuant to Section 3-106 of the MGCL or a merger of a 90 percent owned
27
<PAGE>
subsidiary with or into its parent or the date notice is given or waived under
Section 3-106 of the MGCL in connection with a merger of a 90 percent owned
subsidiary with or into its parent as the case may be (collectively, the
"Appraisal Date"), no stockholder of the Company shall have any rights under
Title III, Subtitle 2 of the MGCL as a result of the transactions contemplated
by the Merger Agreement or the Tender Agreement.
However, the Merger Agreement also provides that if the Shares are not
listed on Nasdaq on the Appraisal Date, Shares that are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders who
have not voted in favor of or consented to the Merger and shall have delivered
a written demand for appraisal of such Shares in the time and manner provided
in Section 3-202 of the MGCL and shall not have failed to perfect or shall not
have effectively withdrawn or lost their rights to appraisal and payment under
the MGCL shall not be converted into the right to receive the Merger
Consideration, but shall be entitled to receive the consideration as shall be
determined pursuant to Title III, Subtitle 2 of the MGCL; provided, however,
that if such holder shall have failed to perfect or shall have effectively
withdrawn or lost his, her or its right to appraisal and payment under the
MGCL, such holder's Shares shall thereupon be deemed to have been converted, at
the Effective Time, into the right to receive the Merger Consideration, without
any interest thereon.
Under the MGCL, any holder of Shares that are not listed on Nasdaq on the
Appraisal Date who (i) files with the Company a written objection to the Merger
prior to the Stockholder's Meeting at which the Merger will be considered or
within 30 days after notice is given or waived in the event the Merger will be
consummated without a meeting of stockholders, (ii) does not vote in favor of
the Merger and (iii) within 20 days after the MD-SDAT accepts the articles of
merger for record, makes a written demand on the Surviving Corporation for
payment for his, her or its shares, stating the number of Shares for which he,
she or it demands payment, is entitled, if the Merger is effected, to receive a
cash payment of the fair value of such Shares ("Appraisal Rights"). A
stockholder who does not follow each of such procedures cannot assert Appraisal
Rights.
Any written notice of intent to demand payment by a holder of Shares that
are not listed on Nasdaq on the Appraisal Date must be filed with the Company
at the meeting at which the Merger is to be considered, if any, or at the
headquarters of the Company at 3601 Eisenhower Avenue, Alexandria, Virginia
22304, Attention: Gareth V. Higgins, prior to the vote on the Merger or within
30 days after notice is given or waived in the event the Merger will be
consummated without a meeting of stockholders. A vote against the Merger
without compliance with the specific notice requirements under Section 3-203 of
the MGCL will not entitle a stockholder to Appraisal Rights under the MGCL.
Under Section 3-207 of the MGCL, the Surviving Corporation will promptly
notify each holder of Shares who is entitled to Appraisal Rights in writing of
the date on which articles of merger are accepted for record by the MD-SDAT.
The Surviving Corporation also may send the objecting stockholder an offer to
pay the objecting stockholder what it considers to be the fair value for his,
her or its Shares. Each such offer would be accompanied by (i) a balance sheet
as of a date not more than six months before the offer, (ii) a profit and loss
statement for the twelve months ended on the date of the balance sheet and
(iii) any other information the Surviving Corporation considers pertinent. The
Surviving Corporation is required to deliver the notice and offer, if any, to
each holder of Shares who is entitled to Appraisal Rights personally or mail
the notice and offer, if any, by registered mail to the address the objecting
stockholder gives the Surviving Corporation in writing, or, if none, at the
address as it appears on the records of the Surviving Corporation.
Under Section 3-208 of the MGCL, within 50 days after the MD-SDAT accepts
the articles of merger for record, the Surviving Corporation or the holder of
Shares who is entitled to Appraisal Rights and who has not received payment for
his, her or its stock may petition a court of equity in the county where the
principal office of the successor is located or, if it does not have a
principal office in Maryland, where the resident agent of the Surviving
Corporation is located, for an appraisal to determine the fair value of his,
her or its Shares.
THE FOREGOING SUMMARY OF THE RIGHTS OF OBJECTING STOCKHOLDERS DOES NOT
PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY
STOCKHOLDERS DESIRING TO EXERCISE ANY AVAILABLE APPRAISAL
28
<PAGE>
RIGHTS. ANY HOLDER OF SHARES CONTEMPLATING SEEKING APPRAISAL RIGHTS IN
CONNECTION WITH THE MERGER SHOULD CAREFULLY REVIEW SECTIONS 3-202 THROUGH 3-213
OF THE MGCL AND SHOULD CONSULT SUCH HOLDER'S LEGAL COUNSEL. THE PRESERVATION
AND EXERCISE OF APPRAISAL RIGHTS REQUIRES STRICT ADHERENCE TO THE APPLICABLE
PROVISIONS OF THE MGCL.
The foregoing description of the MGCL is not necessarily complete and is
qualified in its entirety by reference to the MGCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger following the purchase of
Shares pursuant to the Offer or any alternative transaction (including any
purchase of Shares in the open market following the purchase of Shares pursuant
to the Offer for the purpose of acquiring at least 90% of the outstanding
shares of each class of capital stock of the Company in order to effect the
Merger without a stockholder meeting in accordance with Section 3-106 of the
MGCL) in which Purchaser seeks to acquire any remaining Shares. Rule 13e-3
should not be applicable to the Merger if the Merger is consummated within one
year after the expiration or termination of the Offer and the price paid in the
Merger is not less than the price paid pursuant to the Offer. However, in the
event that Purchaser is deemed to have acquired control of the Company pursuant
to the Offer and if the Merger is consummated more than one year after
completion of the Offer or an alternative acquisition transaction is effected
whereby stockholders of the Company receive consideration less than that paid
pursuant to the Offer, in either case at a time when the Shares are still
registered under the Exchange Act, Purchaser may be required to comply with
Rule 13e-3 under the Exchange Act. If applicable, Rule 13e-3 would require,
among other things, that certain financial information concerning the Company
and certain information relating to the fairness of the Merger or such
alternative transaction and the consideration offered to minority stockholders
in the Merger or such alternative transaction be filed with the Commission and
disclosed to stockholders prior to consummation of the Merger or such
alternative transaction. The purchase of a substantial number of Shares
pursuant to the Offer may result in the Company being able to terminate its
Exchange Act registration. See Section 14. If such registration were
terminated, Rule 13e-3 would be inapplicable to the Merger or any such
alternative transaction.
Plans for the Company. It is currently expected that initially following
the purchase of the Shares and the consummation of the Offer, the business and
operations of the Company will continue as they currently are conducted without
substantial change. The Parent will continue to evaluate all aspects of the
business, operations and management of the Company during the pendency of the
Offer and after the consummation of the Offer and will take such further
actions as it deems appropriate under the circumstances then existing.
Except as described in this Offer to Purchase, none of Purchaser, the
Parent nor, to the best knowledge of Purchaser and the Parent, any of the
persons listed on Schedule I have any present plans or proposals that would
relate to or result in an extraordinary corporate transaction such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries
or a sale or other transfer of a material amount of assets of the Company or
any of its subsidiaries, any material change in the capitalization or dividend
policy of the Company or any other material change in the Company's corporate
structure or business or the composition of its Board of Directors or
management.
13. DIVIDENDS AND DISTRIBUTIONS. If the Company should, on or after the
date of the Merger Agreement, split, combine or otherwise change the Shares or
its capitalization, or disclose that it has taken any such action, then without
prejudice to Purchaser 's rights under Section 15, Purchaser may make such
adjustments to the purchase price and other terms of the Offer as it deems
appropriate to reflect such split, combination or other change.
If on or after the date of the Merger Agreement, the Company should
declare or pay any cash or stock dividend or other distribution on, or issue
any rights with respect to, the Shares that is payable or distributable to
stockholders of record on a date prior to the transfer to the name of Purchaser
or the nominee or transferee of Purchaser on the Company's stock transfer
records of such Shares that are purchased pursuant to the Offer, then without
prejudice to Purchaser's rights under Section 15, (i) the purchase price
payable per Share by Purchaser pursuant to the Offer will be reduced to the
extent any
29
<PAGE>
such dividend or distribution is payable in cash and (ii) any non-cash
dividend, distribution (including additional Shares) or right received and held
by a tendering stockholder shall be required to be promptly remitted and
transferred by the tendering stockholder to the Depositary for the account of
Purchaser, accompanied by appropriate documentation of transfer. Pending such
remittance or appropriate assurance thereof, Purchaser will, subject to
applicable law, be entitled to all rights and privileges as owner of any such
non-cash dividend, distribution or right and may withhold the entire purchase
price or deduct from the purchase price the amount or value thereof, as
determined by Purchaser in its sole discretion.
14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ LISTING;
EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and could
reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
Following completion of the Offer, at least a majority of the outstanding
Shares will be owned by Purchaser.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in Nasdaq, which
require that an issuer have at least 200,000 publicly held shares, held by at
least 400 stockholders or 300 stockholders of round lots, with a market value
of at least $1,000,000 and have net tangible assets of at least $1,000,000,
$2,000,000 or $4,000,000, depending on profitability levels during the issuer's
four most recent fiscal years. If these standards are not met, the Shares might
nevertheless continue to be included in the NASD's Nasdaq Stock Market (the
"Nasdaq Stock Market") with quotations published in Nasdaq "additional list" or
in one of the "local lists," but if the number of holders of the Shares were to
fall below 300, or if the number of publicly held Shares were to fall below
100,000 or there were not at least two registered and active market makers for
the Shares, the NASD's rules provide that the Shares would no longer be
"qualified" for Nasdaq Stock Market reporting and Nasdaq Stock Market would
cease to provide any quotations. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10% of the Shares are not
considered as being publicly held for this purpose. As of November 30, 1998,
there were approximately 864 holders of record or through nominee or street
name accounts with brokers of Shares and there were 13,111,201 Shares
outstanding. If as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements of the NASD for continued
inclusion in Nasdaq or in any other tier of Nasdaq Stock Market and the Shares
are no longer included in Nasdaq or in any other tier of Nasdaq Stock Market,
as the case may be, the market for the Shares could be adversely affected.
If Nasdaq were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchanges
or through other sources. The extent of the public market therefor and the
availability of such quotations would depend, however, upon such factors as the
number of stockholders and/or the aggregate market value of such securities
remaining at such time, the interest in maintaining a market in the Shares on
the part of the securities firms, the possible termination of registration
under the Exchange Act as described below and other factors. Purchaser cannot
predict whether the reduction in the number of Shares that might otherwise
trade publicly would have an adverse or beneficial effect on the market price
for or marketability of the Shares or whether it would cause future market
prices to be greater or less than the Offer price.
The Shares are currently registered under the Exchange Act. The purchase
of Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange and there are fewer than 300
holders of record. The termination of the registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of the Shares and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement in
connection with stockholders' meetings and the requirements of Rule 13e-3 under
the Exchange Act with respect to "going private" transactions, no longer
applicable to the Shares or the holders thereof, as the case may be.
Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of the
securities pursuant to Rule 144 under the Securities Act of 1933, as amended.
30
<PAGE>
The Shares are currently "margin securities" under the rules of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), which
has the effect, among other things, of allowing brokers to extend credit on the
collateral of such Shares for the purpose of buying, carrying or trading in
securities ("purpose loans"). Depending upon factors similar to those described
above with respect to listing and market quotations, it is possible that,
following the Offer, the Shares might no longer constitute "margin securities"
for the purposes of the Federal Reserve Board's margin regulations and
therefore could no longer be used as collateral for purpose loans made by
brokers.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer, Purchaser shall not be required to accept for payment or, subject
to any applicable rules and regulations of the Commission, including Rule
14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay for
or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for any Shares tendered pursuant to the Offer, and may postpone the
acceptance for payment or, subject to the restriction referred to above,
payment for any Shares tendered pursuant to the Offer, and may amend or
terminate the Offer (whether or not any Shares have theretofore been purchased
or paid for) if, prior to the expiration of the Offer, (i) a number of Shares
which, together with any Shares owned by Holdings, Parent or Purchaser, or any
controlled affiliate thereof, constitutes at least a majority of the voting
power (determined on a fully-diluted basis), on the date of purchase, of all
the securities of the Company entitled to vote generally in the election of
directors or in a merger shall not have been validly tendered and not properly
withdrawn prior to the expiration of the Offer, (ii) Purchaser shall have not
received the consent of the Required Lenders to the transactions contemplated
by the Merger Agreement under (x) the Revolving Credit Facility and (y) the
Revolving 364 Day Facility, or (iii) at any time on or after December 3, 1998
and prior to the acceptance for payment of Shares, any of the following
conditions occurs or has occurred or Purchaser makes a good faith determination
that any of the following conditions has occurred:
(a) there shall have been instituted and pending any action or proceeding
brought by any governmental authority before any federal or state court, or
any order or preliminary or permanent injunction entered in any action or
proceeding before any federal or state court or governmental,
administrative or regulatory authority or agency, or any other action
taken, proposed or threatened, or statute, rule, regulation, legislation,
interpretation, judgment or order proposed, sought, enacted, entered,
enforced, promulgated, amended, issued or deemed applicable to Parent,
Purchaser, the Company or any subsidiary or affiliate of Purchaser or the
Company or the Offer or the Merger, by any legislative body, court,
government or governmental, administrative or regulatory authority or
agency which could reasonably be expected to have the effect of: (i) making
illegal, materially delaying or otherwise directly or indirectly
restraining or prohibiting or making materially more costly the making of
the Offer, the acceptance for payment of, or payment for, some of or all
the Shares by Purchaser or any of its affiliates, the consummation of any
of the transactions contemplated by the Merger Agreement or materially
delaying the Merger; (ii) prohibiting or materially limiting the ownership
or operation by the Company or any of its subsidiaries or Parent, Purchaser
or any of Parent's affiliates of all or any material portion of the
business or assets of the Company or any of its subsidiaries or Parent, or
any of its affiliates, or compelling Parent, Purchaser or any of Parent's
affiliates to dispose of or hold separate all or any material portion of
the business or assets of the Company or any of its subsidiaries or Parent,
or any of its affiliates, as a result of the transactions contemplated by
the Offer or the Merger Agreement; (iii) imposing or confirming limitations
on the ability of Parent, Purchaser or any of Parent's affiliates
effectively to acquire or hold or to exercise full rights of ownership of
Shares, including without limitation the right to vote any Shares acquired
or owned by Parent or Purchaser or any of its affiliates on all matters
properly presented to the stockholders of the Company, including without
limitation the adoption and approval of the Merger Agreement and the Merger
or the right to vote any shares of capital stock of any subsidiary directly
or indirectly owned by the Company; or (iv) requiring divestiture by Parent
or Purchaser or any of their affiliates of any Shares;
(b) there shall have occurred any fact that had or could reasonably be
expected to have a Material Adverse Effect;
31
<PAGE>
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States, (ii) a decline of
at least 25% in either the Dow Jones Average of Industrial Stocks or the
Standard & Poor's 500 index from the date hereof, (iii) any material
adverse change or any existing or threatened condition, event or
development involving a prospective material adverse change in United
States or other material international currency exchange rates or a
suspension of, or limitation on, the markets therefor, (iv) a declaration
of a banking moratorium or any suspension of payments in respect of banks
in the United States, (v) any limitation (whether or not mandatory) by any
government or governmental, administrative or regulatory authority or
agency, domestic or foreign, on, or any other event that, in the reasonable
judgment of Purchaser, could reasonably be expected to materially adversely
affect the extension of credit by banks or other lending institutions, (vi)
a commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
(except for any such event involving Iraq) or having a Material Adverse
Effect or materially adversely affecting (or material delaying) the
consummation of the Offer or (vii) in the case of any of the foregoing
existing at the time of commencement of the Offer, a material acceleration
or worsening thereof;
(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or Purchaser
the approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any takeover proposal or any other
acquisition of Shares other than the Offer and the Merger, or (ii) any such
corporation, partnership, person or other entity or group shall have
entered into a definitive agreement or an agreement in principle with the
Company with respect to a tender offer or exchange offer for any Shares or
a merger, consolidation or other business combination with or involving the
Company or any of its subsidiaries;
(e) any of the representations and warranties of the Company set forth in
the Merger Agreement shall not be true and correct, in each case as if such
representations and warranties were made at the time of such determination,
except where the failure of any such representations and warranties to be
true and correct would not have a Material Adverse Effect or would make
materially more costly the making of the Offer or the acceptance for
payment of, or payment for, some or all of the Shares by Purchaser or any
of its affiliates;
(f) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
(g) the Merger Agreement shall have been terminated in accordance with
its terms or the Offer shall have been terminated with the consent of the
Company; or
(h) any waiting periods under the HSR Act applicable to the purchase of
Shares pursuant to the Offer, and any applicable waiting periods under any
material foreign statutes or regulations, shall not have expired or been
terminated, or any material approval, permit, authorization or consent of
any domestic or foreign governmental, administrative or regulatory agency
(federal, state, local, provincial or otherwise) shall not have been
obtained on terms satisfactory to the Parent in its reasonable discretion;
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (including any
action or inaction by Purchaser or any of its affiliates other than a breach of
the Merger Agreement) giving rise to any such condition, makes it inadvisable
to proceed with the Offer or with such acceptance for payment of or payment for
Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition or may be waived by Purchaser in whole or in part at any time and
from time to time in its sole discretion (subject to the terms of the Merger
Agreement). The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be
32
<PAGE>
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. General. Except as set
forth below, based upon its examination of publicly available filings by the
Company with the Commission and other publicly available information concerning
the Company, neither Purchaser nor the Parent is aware of any licenses or other
regulatory permits that appear to be material to the business of the Company
and its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares (and the indirect acquisition of the stock of
the Company's subsidiaries) as contemplated herein, or of any filings,
approvals or other actions by or with any domestic (federal or state), foreign
or supranational governmental authority or administrative or regulatory agency
that would be required prior to the acquisition of Shares (or the indirect
acquisition of the stock of the Company's subsidiaries) by Purchaser pursuant
to the Offer as contemplated herein. Should any such approval or other action
be required, it is Purchaser's present intention to seek such approval or
action. However, Purchaser does not presently intend to delay the purchase of
Shares tendered pursuant to the Offer pending the receipt of any such approval
or the taking of any such action (subject to Purchaser's right to delay or
decline to purchase Shares if any of the Offer Conditions in Section 15 shall
have occurred). There can be no assurance that any such approval or other
action, if needed, would be obtained without the imposition of substantial
conditions that must be complied with or that adverse consequences might not
result to the business of the Company, the Parent or Purchaser as a result of
the imposition of such conditions or in the event that such approval was not
obtained or such other action was not taken, any of which could cause Purchaser
to elect to terminate the Offer without the purchase of the Shares thereunder.
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions, including conditions relating to the legal
matters discussed in Section 15.
State Takeover Laws. Except as described herein with respect to the MGCL,
Purchaser has not attempted to comply with any state takeover statutes in
connection with the Offer. Purchaser reserves the right to challenge the
validity or applicability of any state law allegedly applicable to the Offer
and nothing in this Offer to Purchase nor any action taken in connection
herewith is intended as a waiver of that right. In the event that any state
takeover statute is found applicable to the Offer, Purchaser might be unable to
accept for payment or purchase Shares tendered pursuant to the Offer or be
delayed in continuing or consummating the Offer. In such case, Purchaser may
not be obligated to accept for purchase or pay for, any Shares tendered. See
Section 15.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the FTC and the Antitrust Division of the Department of Justice
(the "Antitrust Division") and certain waiting period requirements have been
satisfied. The acquisition of Shares pursuant to the Offer is subject to such
requirements. See Section 2.
The Parent intends to file with the FTC and the Antitrust Division a
Premerger Notification and Report Form in connection with the purchase of
Shares pursuant to the Offer. Under the provisions of the HSR Act applicable to
the Offer, the purchase of Shares pursuant to the Offer may not be consummated
until the expiration of a 15-calendar day waiting period following such filing,
unless such waiting period is extended by a request from the FTC or the
Antitrust Division for additional information or documentary material prior to
the expiration of the waiting period. If either the FTC or the Antitrust
Division were to request additional information or documentary material from
the Parent, the waiting period would expire at 11:59 p.m., New York City time,
on the tenth calendar day after the date of substantial compliance by the
Parent with such request. Thereafter, the waiting period could be extended only
by court order or by an agreement involving the Parent and the Company. If the
acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer may, but need not, be extended and in any event the
purchase of and payment for Shares will be deferred until ten days after the
request is substantially complied with, unless the waiting period is sooner
terminated by the FTC and the Antitrust
33
<PAGE>
Division. See Section 2. Only one extension of such waiting period pursuant to
a request for additional information is authorized by the HSR Act and the rules
promulgated thereunder, except by court order. Any such extension of the
waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. See Section 4.
The FTC and the Antitrust Division frequently scrutinize the legality
under the antitrust laws of transactions such as the proposed acquisition of
Shares by Purchaser pursuant to the Offer. At any time before or after the
purchase by Purchaser of Shares pursuant to the Offer, either of the FTC or the
Antitrust Division could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
purchase of Shares pursuant to the Offer or seeking the divestiture of Shares
purchased by Purchaser or the divestiture of substantial assets of the Parent,
its subsidiaries or the Company. Private parties and state attorneys general
may also bring legal action under federal or state antitrust laws under certain
circumstances.
Although Purchaser believes that the acquisition of Shares pursuant to the
Offer would not violate the antitrust laws, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such
challenge is made, what the outcome will be. See Section 15 for certain
conditions to the Offer, including conditions with respect to litigation and
certain government actions.
Margin Credit Regulations. Federal Reserve Board Regulations G, T, U and X
(the "Margin Credit Regulations") restrict the extension or maintenance of
credit for the purpose of buying or carrying margin stock, including the
Shares, if the credit is secured directly or indirectly thereby. Such secured
credit may not be extended or maintained in an amount that exceeds the maximum
loan value of the margin stock. Under the Margin Credit Regulations, the Shares
are presently margin stock and the maximum loan value thereof is generally 50%
of their current market value. The definition of "indirectly secured" contained
in the Margin Credit Regulations provides that the term does not include an
arrangement with a customer if the lender in good faith has not relied upon
margin stock as collateral in extending or maintaining the particular credit.
17. FEES AND EXPENSES. Lehman Brothers is acting as Dealer Manager in
connection with the Offer for which Parent and Purchaser will pay Lehman
Brothers a fee of $200,000 upon commencement of the Offer and a fee of $300,000
upon consummation of the Offer. In addition, Parent and Purchaser will
reimburse Lehman Brothers for reasonable out-of-pocket expenses, including
reasonable attorneys' fees, and have also agreed to indemnify Lehman Brothers
against certain liabilities and expenses in connection with the Offer,
including certain liabilities under the federal securities laws.
Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent and American Stock Transfer & Trust Company to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal interview and may request
brokers, dealers and other nominee stockholders to forward the Offer materials
to beneficial owners. The Information Agent and the Depositary will receive
reasonable and customary compensation for services relating to the Offer and
will be reimbursed for certain out-of-pocket expenses. Purchaser and the Parent
have also agreed to indemnify the Information Agent and the Depositary against
certain liabilities and expenses in connection with the Offer, including
certain liabilities under the federal securities laws.
Purchaser will not pay any fees or commissions to any broker or dealer or
any other person for soliciting tenders of Shares pursuant to the Offer (other
than to the Information Agent and the Depositary). Brokers, dealers, commercial
banks and trust companies will, upon request, be reimbursed by Purchaser for
reasonable and customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
18. MISCELLANEOUS. The Offer is being made solely by this Offer to
Purchase and the related Letter of Transmittal and is being made to all holders
of Shares. Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser
will make a good faith effort to comply with any such state statute. If after
such good faith effort, Purchaser cannot comply with such state statute, the
Offer will
34
<PAGE>
not be made to nor will tenders be accepted from or on behalf of the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by the Dealer Manager
or one or more registered brokers or dealers that are licensed under the laws
of such jurisdiction.
Purchaser and Parent have filed with the Commission the Tender Offer
Statement Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 under the
Exchange Act, and Statement on Schedule 13D under the Exchange Act, furnishing
certain additional information with respect to the Offer. Such statement and
any amendments thereto, including exhibits, may be inspected and copies may be
obtained from the offices of the Commission (except that they will not be
available at the regional offices of the Commission) in the manner set forth in
Section 7 of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
L-M ACQUISITION CORPORATION
December 9, 1998
35
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PURCHASER, PARENT AND HOLDINGS
1. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The name and position
with the Purchaser of each director and executive officer of the Purchaser are
set forth below. The other required information with respect to each such
person is set forth under "Directors and Executive Officers of the Parent"
below. All directors and executive officers listed below are citizens of the
United States.
<TABLE>
<CAPTION>
NAME POSITION
- ---- --------
<S> <C>
Christopher C. Cambria .......... President, Secretary and Director.
Lawrence W. O'Brien ............. Vice President and Treasurer.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND HOLDINGS. The name,
business address, present principal occupation or employment and material
occupations, positions, offices or employments during the last five years of
each director and executive officer of Parent and Holdings and certain other
information are set forth below. The business address of each such director and
executive officer is: c/o L-3 Communications Corporation, 600 Third Avenue, New
York, New York 10016. Unless otherwise indicated, each occupation set forth
opposite an individual's name refers to employment with Parent and Holdings.
All directors and executive officers listed below are citizens of the United
States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
DIRECTORS
David J. Brand ............. Director (since 4/97); Managing Director of Lehman
Brothers (since 1996); Senior Vice President of
Lehman Brothers (1994-1996); Vice President of
Lehman Brothers (1991-1994).
Thomas A. Corcoran ......... Director (since 7/97); President and Chief Operating
Officer of the Electronics Systems Sector of
Lockheed Martin (since 3/95); President of
Electronics Group of Martin Marietta Corporation
( 1993-1995).
Alberto M. Finali .......... Director (since 4/97); Managing Director of Lehman
Brothers (since 1997); Senior Vice President of
Lehman Brothers (1993-1997); Vice President of
Lehman Brothers (1989-1993).
Eliot M. Fried ............. Director (since 4/97); Managing Director of Lehman
Brothers (since 1986).
Frank C. Lanza ............. Director; Chairman and Chief Executive Officer
(since 4/97); Executive Vice President of Lockheed
Martin and President and Chief Operating Officer of
Lockheed Martin's C(3)I and Systems Integration
Sector (4/96-4/97); President and Chief Operating
Officer of Loral (since 1981).
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
Robert V. LaPenta .............. Director; President and Chief Financial Officer (since
4/97); Vice President of Lockheed Martin and Vice
President and Chief Financial Officer of Lockheed
Martin's C(3)I and Systems Integration Sector
(4/96-4/97); Senior Vice President and Controller of
Loral (1981-4/96).
Frank H. Menaker, Jr. .......... Director (since 4/97); Senior Vice President and
General Counsel of Lockheed Martin (since 7/96);
Vice President and General Counsel of Lockheed
Martin (3/95-7/96); Vice President of Martin Marietta
Corporation (1982-1995); General Counsel of Martin
Marietta (1981-1995).
Robert B. Millard .............. Director (since 4/97); Managing Director of Lehman
Brothers (since 1983).
John E. Montague ............... Director (since 4/97); Vice President and Chief
Financial Officer of Lockheed Martin Global
Telecommunications, Inc. (since 8/98); Vice President
of Financial Strategies at Lockheed Martin (since
3/95); Vice President of Corporate Development and
Investor Relations at Martin Marietta Corporation
( 1991-1995).
John M. Shalikashvili .......... Director (since 8/98); Senior Officer of the United
States Military and Principal Military Advisor to the
President of the United States, the Secretary of
Defense and National Security Council (1993-1997).
Alan H. Washkowitz ............. Director (since 4/97); Managing Director of Lehman
Brothers (since 1978).
OFFICERS
Jimmie V. Adams ................ Vice President-Washington D.C. Operations (since
4/97); Vice President of Lockheed Martin's
Washington Operations for C(3)I and Systems
Integration Sector (4/96-4/97); Vice President of
Loral's Washington Operations for C(3)I and
System's Integration Sector (since 1993).
Christopher C. Cambria ......... Vice President- General Counsel and Secretary (since
6/97); Associate at Fried, Frank, Harris, Shriver, and
Jacobson (1994-1997); Associate at Cravath, Swaine
and Moore (1986-1993).
Frank C. Lanza ................. Chairman and Chief Executive Officer.
Robert V. LaPenta .............. President and Chief Financial Officer.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- ---- ---------------------------------------------
<S> <C>
Robert F. Mehmel ............. Vice President-Planning and Assistant Secretary
(since 4/97); Director of Financial Planning and
Capital Review for Lockheed Martin's C(3)I and
Systems Integration Sector (4/96-4/97); Held several
accounting and financial analysis positions at Loral
Electronic Systems (1984-1996).
Lawrence W. O'Brien .......... Vice President-Treasurer (since 6/97); Vice President
and Treasurer of Pechiney Corporation (since 1981).
Joseph S. Paresi ............. Vice President-Product Development (since 4/97);
Corporate Director of Technology for Lockheed
Martin's C(3)I and Systems Integration Sector (since
4/96); Corporate Director of Technology for Loral
(since 1993).
Robert Riscassi .............. Vice President-Washington D.C. Operations (since
4/97); Vice President of Land Systems for Lockheed
Martin C(3)I and Systems Integration Sector
(4/96-4/97); Vice President of Land Systems for
Loral's C(3)I and Systems Integration Sector (since
1993).
Lawrence H. Schwartz ......... Vice President-Business Development (since 5/97);
Vice President of Technology for Lockheed Martin's
C(3)I and Systems Integration Sector (4/96-5/97);
Vice President of Technology at Loral (since 1987).
Michael T. Strianese ......... Vice President-Finance and Controller (since 4/97);
Vice President and Controller of Lockheed Martin's
C(3)I and Systems Integration Sector (4/96-4/97);
Director of Special Projects at Loral (1991-4/96).
</TABLE>
3. OWNERSHIP OF SHARES BY DIRECTORS AND EXECUTIVE OFFICERS.
None.
I-3
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each
stockholder of the Company or his, her or its broker, dealer, commercial bank,
trust company or other nominee to the Depositary as follows:
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
40 Wall Street (for Eligible Institutions only) 40 Wall Street
New York, New York 10005 (718) 236-4588 New York, New York 10005
For Information Telephone:
(212) 936-5100
</TABLE>
Any questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective telephone numbers
and addresses listed below. Additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may also be
obtained from the Information Agent. You may also contact your broker, dealer,
commercial bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: (800) 848-2998
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
Three World Financial Center
200 Vesey Street
New York, New York 10285
Call Collect: (212) 526-5044 or (212) 526-2545
<PAGE>
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
MICRODYNE CORPORATION
PURSUANT TO THE OFFER TO PURCHASE DATED DECEMBER 9, 1998
BY
L-M ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS HOLDINGS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 7, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
40 Wall Street (for Eligible Institutions only) 40 Wall Street
New York, New York 10005 (718) 234-5001 New York, New York 10005
Confirm by Telephone:
(212) 936-5100
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders, either if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase (as defined
below)) is utilized, if tenders of Shares are to be made by book-entry transfer
into the account of the American Stock Transfer & Trust Company, as Depositary
(the "Depositary"), at The Depository Trust Company ("DTC" or the "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Stockholders who tender Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders."
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or who
cannot compete the procedure for book-entry transfer on a timely basis, must
tender their Shares according to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL SHARE CERTIFICATE(S) AND SHARES TENDERED (ATTACH
IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) ADDITIONAL SIGNED LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARES OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S) TENDERED**
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
TOTAL SHARES:
- ------------------------------------------------------------------------------------------------------------------------
* NEED NOT BE COMPLETED BY BOOK-ENTRY STOCKHOLDERS.
** UNLESS OTHERWISE INDICATED, ALL SHARES REPRESENTED BY CERTIFICATES DELIVERED TO THE DEPOSITARY WILL BE
DEEMED TO HAVE BEEN TENDERED. SEE INSTRUCTION 4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
- -------------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
----------------------------------------------
Check box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
Account Number Transaction Code Number
------------------- ------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
--------------------------------------------
Window Ticket Number (if any):
---------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
------------------------
Name of Institution that Guaranteed Delivery:
------------------------------
If delivered by Book-Entry Transfer, check box of Book-Entry Transfer
Facility:
[ ] The Depository Trust Company
Account Number Transaction Code Number
------------------- ------------------
- -------------------------------------------------------------------------------
2
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to L-M Acquisition Corporation, a Maryland
corporation ("Purchaser") and a wholly owned subsidiary of L-3 Communications
Corporation, a Delaware corporation ("Parent") and a wholly owned subsidiary of
L-3 Communications Holdings, Inc., a Delaware corporation, the above-described
shares of Common Stock, par value $0.10 per share (the "Shares"), of Microdyne
Corporation, a Maryland corporation (the "Company"), at a purchase price of
$5.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
December 9, 1998 (the "Offer to Purchase") and in this Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, receipt of which is hereby acknowledged.
Subject to, and effective upon, acceptance for payment for the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all of the Shares that are being tendered
hereby and any and all dividends, distributions (including additional Shares)
or rights declared, paid or issued with respect to the tendered Shares on or
after the date hereof and payable or distributable to the undersigned on a date
prior to the transfer to the name of Purchaser or nominee or transferee of
Purchaser on the Company's stock transfer records of the Shares tendered
herewith (collectively, a "Distribution"), and appoints the Depositary the true
and lawful agent and attorney-in-fact of the undersigned with respect to such
Shares (and any Distribution) with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest) to
(a) deliver such Share Certificates (as defined herein) (and any Distribution)
or transfer ownership of such Shares (and any Distribution) on the account
books maintained by the Book-Entry Transfer Facility, together in either case
with appropriate evidences of transfer, to the Depositary for the account of
Purchaser, (b) present such Shares (and any Distribution) for transfer on the
books of the Company and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares (and any Distribution), all in
accordance with the terms and subject to the conditions of the Offer.
The undersigned irrevocably appoints designees of Purchaser as such
stockholder's attorneys-in-fact and proxies, with full power of substitution,
to the full extent of such stockholder's rights with respect to the Shares
tendered by such stockholder and accepted for payment by Purchaser (and with
respect to any and all other Shares or other securities issued or issuable in
respect of such Shares on or after the date hereof). All such powers of
attorney and proxies shall be considered irrevocable and coupled with an
interest in the tendered Shares. Such appointment will be effective when, and
only to the extent that, Purchaser accepts such Shares for payment. Upon such
acceptance for payment, all prior powers of attorney and proxies given by such
stockholder with respect to such Shares (and such other Shares and securities)
will be revoked without further action, and no subsequent powers of attorney
and proxies may be given nor any subsequent written consents executed (and, if
given or executed, will not be deemed effective). The designees of Purchaser
will, with respect to the Shares for which such appointment is effective, be
empowered to exercise all voting and other rights of such stockholder as they
in their sole discretion may deem proper at any annual or special meeting of
the Company's stockholders or any adjournment or postponement thereof, by
written consent in lieu of any such meeting or otherwise. Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's payment for such Shares, Purchaser must be able to
exercise full voting rights with respect to such Shares and other securities,
including voting at any meeting of stockholders.
The undersigned hereby represents and warrants that (a) the undersigned
has full power and authority to tender, sell, assign and transfer the Shares
(and any Distribution) tendered hereby and (b) when the Shares are accepted for
payment by Purchaser, Purchaser will acquire good, marketable and unencumbered
title to the Shares (and any Distribution), free and clear of all liens,
restrictions, charges and encumbrances, and the same will not be subject to any
adverse claim. The undersigned, upon request, will execute and deliver any
additional documents deemed by the Depositary or Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby (and any Distribution). In addition, the undersigned shall promptly
remit and transfer to the Depositary for the account of Purchaser any and all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer; and pending such remittance or
appropriate assurance thereof, Purchaser will be, subject to applicable law,
entitled to all rights and privileges as owner of any such Distribution and may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and
any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable except
that they may be withdrawn after February 6, 1999, unless theretofore accepted
for payment as provided in the Offer to Purchase. See Section 4 of the Offer to
Purchase.
3
<PAGE>
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions set forth in the
Offer, including the undersigned's representation that the undersigned owns the
Shares being tendered.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or issue or return any
certificate(s) for Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated herein under "Special Delivery
Instructions." please mail the check for the purchase price and/or any
certificate(s) for Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or any
certificate(s) for Shares not tendered or accepted for payment in the name of,
and deliver such check and/or such certificates to, the person or persons so
indicated. The undersigned recognizes that Purchaser has no obligation,
pursuant to the Special Payment Instructions, to transfer any Shares from the
name(s) of the registered holder(s) thereof if Purchaser does not accept for
payment any of the Shares so tendered.
4
<PAGE>
- -------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than the
undersigned.
Issue [ ] check [ ] Certificate to:
Name
-------------------------------------------------------------------------
(PLEASE PRINT)
Address
----------------------------------------------------------------------
------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------------------------
(TAX ID. OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned or
to the undersigned at an address other than that shown above.
Mail [ ] check [ ] Certificate to:
Name
-------------------------------------------------------------------------
(PLEASE PRINT)
Address
----------------------------------------------------------------------
------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------------------------
(TAX ID. OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE)
- -------------------------------------------------------------------------------
5
<PAGE>
- -------------------------------------------------------------------------------
SIGN HERE
AND COMPLETE SUBSTITUTE FORM W-9 ON REVERSE
X
-------------------------------------------------------------------------
X
-------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S)
Dated:
-----------------------------------------------------------------------
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s)
-----------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
---------------------------------------------------------
Address
-----------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
------------------------------------------------
Tax Identification or
Social Security No.
-----------------------------------------------------------
COMPLETE SUBSTITUTE FORM W-9 ON REVERSE
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
AUTHORIZED SIGNATURE
----------------------------------------------------------
NAME
--------------------------------------------------------------------------
NAME OF FIRM
------------------------------------------------------------------
(PLEASE PRINT)
ADDRESS
-----------------------------------------------------------------------
(INCLUDE ZIP CODE)
AREA CODE AND TELEPHONE NUMBER
------------------------------------------------
DATED:
------------------------------------------------------------------------
- -------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares tendered herewith, unless such holder(s) has
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" above or (b) if such Shares are
tendered for the account of a firm which is a bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing
of the Securities Transfer Agents Medallion Program (each of the foregoing
being referred to as an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5 of this Letter of Transmittal.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by stockholders either if Share Certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if tenders are to be made pursuant to
the procedure for tender by book-entry transfer set forth in Section 3 of the
Offer to Purchase. Share Certificates evidencing tendered Shares, or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility, as
well as this Letter of Transmittal (or a facsimile hereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message in connection with a book-entry transfer, and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth herein prior to the Expiration Date (as defined
in Section 1 of the Offer to Purchase). Stockholders whose Share Certificates
are not immediately available or who cannot deliver their Share Certificates
and all other required documents to the Depositary prior to the Expiration Date
or who cannot complete the procedure for delivery by book-entry transfer on a
timely basis may tender their Shares by properly completing and duly executing
a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure
set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure:
(i) such tender must be made by or through an Eligible Institution; (ii) a
properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Purchaser, must be received by
the Depositary prior to the Expiration Date; and (iii) the Share Certificates
(or a Book-Entry Confirmation) representing all tendered 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 delivery, an Agent's
Message) and any other documents required by this Letter of Transmittal, must
be received by the Depositary within three Nasdaq National Market trading days
after the date of execution of such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution
of this Letter of Transmittal (or a facsimile hereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the Share
Certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto.
4. PARTIAL TENDERS. (Not Applicable to Book-Entry Stockholders) If fewer
than all the Shares evidenced by any Share Certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, new Share Certificates for
the Shares that were evidenced by your old Share Certificates, but were not
tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
Expiration Date. All Shares represented by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written
on the face of the Share Certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
7
<PAGE>
If any of the tendered Shares are registered in different names on several
Share Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of Share
Certificates.
If this Letter of Transmittal or any Share Certificates or stock powers
are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to Purchaser of their authority so to act must be
submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share Certificates or
separate stock powers are required unless payment is to be made to or Share
Certificates for Shares not tendered or not purchased are to be issued in the
name of a person other than the registered holder(s). Signatures on such Share
Certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Share Certificate(s) listed, the certificate(s)
must be endorsed or accompanied by appropriate stock powers, in either case
signed exactly as the name(s) of the registered holder(s) appear(s) on the
Share Certificate(s). Signatures on such Share Certificates or stock powers
must be guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay any stock transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment
of the purchase price is to be made to, or if certificate(s) for Shares not
tendered or accepted for payment are to be registered in the name of, any
person other than the registered holder(s), or if tendered Share Certificate(s)
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or an exemption therefrom, is submitted.
EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE
NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE CERTIFICATE(S)
LISTED IN THIS LETTER OF TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or if a check and/or such Share Certificates are to be
returned to a person other than the person(s) signing this Letter of
Transmittal or to an address other than that shown in this Letter of
Transmittal, the appropriate boxes on this Letter of Transmittal must be
completed.
8. WAIVER OF CONDITIONS. Subject to the terms and conditions of the Merger
Agreement, the conditions of the Offer (other than the Minimum Condition) may
be waived by Purchaser in whole or in part at any time and from time to time in
its sole discretion.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a stockholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on the Substitute Form W-9 below. If the
Depositary is not provided with the correct TIN, the Internal Revenue Service
may subject the stockholder or other payee to a $50 penalty. In addition,
payments that are made to such stockholder or other payee with respect to
Shares purchased pursuant to the Offer may be subject to 31% backup
withholding.
Certain stockholders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, the stockholder must submit a Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. A Form W-8
can be obtained from the Depositary. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the stockholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to
backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
8
<PAGE>
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests
for assistance may be directed to the Dealer Manager or the Information Agent
at their respective addresses and telephone numbers set forth below. Additional
copies of the Offer to Purchase, this Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Share Certificate
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the Share Certificate. This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK ENTRY TRANSFER OR THE NOTICE OF
GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE.
9
<PAGE>
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
<TABLE>
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
PAYER'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
- ------------------------------------------------------------------------------------------------------
PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX Social Security Number
SUBSTITUTE AT THE RIGHT AND CERTIFY BY SIGNING AND or Employer
DATING BELOW. Identification Number
FORM W-9
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE -------------------------
-------------------------------------------------------------------------
PART 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
PAYER'S REQUEST FOR (1) The number shown on this form is my correct Taxpayer Identification
TAXPAYER IDENTIFICATION Number (or I am waiting for a number to be
NUMBER ("TIN") issued to me) and
(2) I am not subject to backup withholding because: (a) I am exempt from
backup withholding, or (b) I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I
am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you
have been notified by the IRS that
you are currently subject to backup withholding because of
under-reporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to
backup withholding you received another notification
from the IRS that you are no longer subject to backup withholding, do not
cross out such Item (2).
-------------------------------------------------------------------------
SIGNATURE: DATE:
------------------------------- -------------------------
-------------------------------------------------------------------------
SIGN HERE ->
PART 3 -- AWAITING TIN [ ]
- ------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE MERGER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or
delivered an application to receive a taxpayer identification number to the
appropriate Internal Revenue Service Center or Social
Security Administration Office, or (2) I intend to mail or deliver an
application in the near future. I understand that if I do not provide a
taxpayer identification number by the time of payment, 31% of all reportable
payments made to me will be withheld.
Signature: Date:
--------------------------------- -----------------------------
- -------------------------------------------------------------------------------
10
<PAGE>
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: (800) 848-2998
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
Three World Financial Center
200 Vesey Street
New York, New York 10285
Call Collect: (212) 526-5044 or (212) 526-2545
December 9, 1998
<PAGE>
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
TO
TENDER SHARES OF COMMON STOCK
OF
MICRODYNE CORPORATION
As set forth in Section 3 of the Offer to Purchase described below, this
instrument or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if certificates for Shares (as defined below) are not
immediately available or the certificates for Shares and all other required
documents cannot be delivered to the Depositary (as defined below) prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) or if the
procedure for delivery by book-entry transfer cannot be completed on a timely
basis. This instrument may be delivered by hand or transmitted by facsimile
transmission or mail to the Depositary.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
40 Wall Street (for Eligible Institutions Only) 40 Wall Street
New York, New York 10005 (718) 234-5001 New York, New York 10005
</TABLE>
Confirm by Telephone:
(212) 936-5100
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX IN THE LETTER OF TRANSMITTAL.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to L-M Acquisition Corporation, a
Maryland corporation and a wholly owned subsidiary of L-3 Communications
Corporation, a Delaware corporation and a wholly owned subsidiary of L-3
Communications Holdings, Inc., a Delaware corporation, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated December 9,
1998 (the "Offer to Purchase"), and in the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"), receipt
of which is hereby acknowledged, the number of shares of Common Stock, par
value $0.10 per share (the "Shares"), of Microdyne Corporation, a Maryland
corporation, pursuant to the guaranteed delivery procedure set forth in Section
3 of the Offer to Purchase.
Signature(s)
-----------------------------
Name(s) of Record Holders
- ------------------------------------------
Please Type or Print
Number of Shares
-------------------------
Certificate Nos. (If Available)
- ------------------------------------------
- ------------------------------------------
Dated
------------------------------------
Address(es)
-------------------------------
- ------------------------------------------
ZIP CODE
Area Code and Tel. No(s)
-----------------
Check box if Shares will be tendered by book-entry transfer)
[ ] The Depository Trust Company
Account Number
---------------------------
- -----------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, (a) represents that the above
named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b)
represents that such tender of Shares complies with Rule 14e-4, and (c)
guarantees to deliver to the Depositary either the certificates evidencing all
tendered Shares, in proper form for transfer, or to deliver Shares pursuant to
the procedure for book-entry transfer into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility"), in either case
together with the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase) in the case of a
book-entry delivery, and any other required documents, all within three Nasdaq
National Market trading days after the date hereof.
- -----------------------------------------
Name of Firm
- -----------------------------------------
Address
- -----------------------------------------
Zip Code
AREA CODE AND TEL. NO.
-------------------
- -----------------------------------------
AUTHORIZED SIGNATURE
Name
-------------------------------------
PLEASE TYPE OR PRINT
Title
------------------------------------
Dated
-----------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MICRODYNE CORPORATION
AT
$5.00 NET PER SHARE
BY
L-M ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS HOLDINGS, INC.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 7, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
December 9, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by L-M Acquisition Corporation, a Maryland
corporation ("Purchaser") and a wholly owned subsidiary of L-3 Communications
Corporation, a Delaware corporation ("Parent") and a wholly owned subsidiary of
L-3 Communications Holdings, Inc., a Delaware corporation, to act as Dealer
Manager in connection with Purchaser's offer to purchase for cash all the
outstanding shares of Common Stock, par value $0.10 per share (the "Shares"),
of Microdyne Corporation, a Maryland corporation (the "Company") at a purchase
price of $5.00 per Share, net to the seller in cash, without interest thereon,
less applicable withholding taxes upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated December 9, 1998 (the "Offer to
Purchase"), and in the related Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer") enclosed herewith. Holders of
Shares whose certificates for such Shares (the "Share Certificates") are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to the Depositary (as defined below) prior to the
Expiration Date (as defined in the Offer to Purchase), or who cannot complete
the procedures for book-entry transfer on a timely basis, must tender their
Shares according to the guaranteed delivery procedures set forth in Section 3
of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your
nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase;
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal
may be used to tender Shares;
3. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Share Certificates are not immediately available or if such Share
Certificates and all other required documents cannot be delivered to
American Stock Transfer & Trust Company (the "Depositary") by the Expiration
Date or if the procedure for book-entry transfer cannot be completed by the
Expiration Date;
4. The Letter to Stockholders of the Company from the Chairman of the
Board of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
<PAGE>
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Offer;
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
7. A return envelope addressed to the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 7, 1999, UNLESS THE
OFFER IS EXTENDED.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and other required documents should be sent to
the Depositary and (ii) either Share Certificates representing the tendered
Shares should be delivered to the Depositary, or such Shares should be tendered
by book-entry transfer into the Depositary's account maintained at the
Book-Entry Transfer Facility (as described in the Offer to Purchase), all in
accordance with the instructions set forth in the Letter of Transmittal and the
Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedures on a
timely basis, a tender may be effected by following the guaranteed delivery
procedures specified in Section 3 of the Offer to Purchase.
Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and D.F. King &
Co., Inc. (the "Information Agent") (as described in the Offer to Purchase))
for soliciting tenders of Shares pursuant to the Offer. Purchaser will,
however, upon request, reimburse you for customary clerical and mailing
expenses incurred by you in forwarding any of the enclosed materials to your
clients. Purchaser will pay or cause to be paid any stock transfer taxes
payable on the transfer of Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed
to Lehman Brothers Inc., the Dealer Manager, or the Information Agent, at their
respective addresses and telephone numbers set forth on the back cover of the
Offer to Purchase. Additional copies of the enclosed materials may be obtained
from the Information Agent.
Very truly yours,
LEHMAN BROTHERS
- -------------------------------------------------------------------------------
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON, THE AGENT OF THE PURCHASER, THE PARENT, THE DEALER MANAGER,
THE COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY
OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MICRODYNE CORPORATION
AT
$5.00 NET PER SHARE
BY
L-M ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS HOLDINGS, INC.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 7, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated December 9,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer") relating to the
offer by L-M Acquisition Corporation, a Maryland corporation ("Purchaser") and
a wholly owned subsidiary of L-3 Communications Corporation, a Delaware
corporation ("Parent") and a wholly owned subsidiary of L-3 Communications
Holdings, Inc., a Delaware corporation ("Holdings"), to purchase all of the
outstanding shares of Common Stock, par value $0.10 per share (the "Shares"),
of Microdyne Corporation, a Maryland corporation (the "Company"), at a purchase
price of $5.00 per Share, net to the seller in cash, without interest thereon,
less applicable withholding taxes upon the terms and subject to the conditions
set forth in the Offer. WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer to Purchase.
Your attention is directed to the following:
1. The tender price is $5.00 per Share, net to the seller in cash
without interest thereon.
2. The Offer is made for all of the outstanding Shares.
3. The Board of Directors of the Company has unanimously determined that
the Merger Agreement (as defined below) and the transactions contemplated
thereby, including each of the Offer and the Merger (as defined below), are
fair to and in the best interests of the holders of the Shares and resolved
to recommend that the holders of the Shares accept the Offer and tender
their Shares to Purchaser.
4. The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of December 3, 1998 (the "Merger Agreement"), which provides that
subsequent to the consummation of the Offer, Purchaser will merge with and
into the Company (the "Merger"). At the effective time of the Merger (the
"Effective Time"), each then outstanding Share (other than each Share owned
by Parent or Purchaser and, if Appraisal Rights are available because the
Shares are no longer listed on Nasdaq on the Appraisal Date (each as defined
in the Merger Agreement), Shares held by stockholders who have not voted in
favor of or consented to the Merger and who have properly demanded appraisal
of their Shares in accordance with Section 3-203 of the Maryland General
Corporation Law) will be cancelled, extinguished and converted into the
right to receive $5.00 in cash, without interest, less any withholding taxes
required under applicable law.
5. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Thursday, January 7, 1999, unless the Offer is extended.
<PAGE>
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer.
7. 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 number of Shares which, together with any shares owned by Holdings,
Parent or Purchaser, or any controlled affiliate thereof, constitutes at
least a majority of the voting power (determined on a fully-diluted basis),
on the date of purchase, of all the securities of the Company entitled to
vote generally in the election of directors or in a merger and (ii) the
expiration or termination of any waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and any ancillary documents thereto and is being made to
all holders of Shares. Purchaser is not aware of any state where the making of
the Offer is prohibited by administrative or judicial action pursuant to any
valid state statute. If Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer, Purchaser will make a good faith effort to
comply with such statute. If, after such good faith effort, Purchaser cannot
comply with such state statute, the Offer will not be made to nor will tenders
be accepted from or on behalf of the holders of Shares in such state. In any
jurisdiction where the securities, "blue sky" or other laws require the Offer
to be made by a licensed broker or dealer, the Offer shall be deemed to be made
on behalf of Purchaser by Lehman Brothers Inc., as Dealer Manager, or one or
more registered brokers or dealers licensed under the laws of such
jurisdiction.
IF YOU WISH TO HAVE US TENDER ANY OR ALL OF THE SHARES HELD BY US FOR YOUR
ACCOUNT, PLEASE INSTRUCT US BY COMPLETING, EXECUTING AND RETURNING TO US THE
INSTRUCTION FORM CONTAINED IN THIS LETTER. IF YOU AUTHORIZE A TENDER OF YOUR
SHARES, ALL SUCH SHARES WILL BE TENDERED UNLESS OTHERWISE SPECIFIED IN SUCH
INSTRUCTION FORM. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO
PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MICRODYNE CORPORATION
BY
L-M ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS HOLDINGS, INC.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated December 9, 1998 (the "Offer to Purchase"), and the related
Letter of Transmittal pursuant to an offer by L-M Acquisition Corporation, a
Maryland corporation and a wholly owned subsidiary of L-3 Communications
Corporation, a Delaware corporation and a wholly owned subsidiary of L-3
Communications Holdings, Inc., a Delaware Corporation, to purchase all
outstanding shares of Common Stock, par value $0.10 per share (the "Shares"),
of Microdyne Corporation, a Maryland corporation, at a purchase price of $5.00
per Share, net to the seller in cash, without interest thereon, upon the terms
and subject to the conditions set forth in the Offer to Purchase and the
related Letter of Transmittal.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) which are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
DATE:
------------------
NUMBER OF SHARES TO BE TENDERED:*
SHARES
----------
- -------------------------------------------------------------------------------
SIGN HERE
- -------------------------------------------------------------------------------
SIGNATURE(S)
- -------------------------------------------------------------------------------
PLEASE PRINT NAME(S)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ADDRESS(ES)
- -------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NUMBER
- -------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER
- --------------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number for the Payee (You)
to Give the Payer.--Social security numbers have nine digits separated by two
hyphens: i.e., 000-00-0000. Employee identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payer. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
- -------------------------------------------------------------------------------
Give the social security number
For this type of account: of--
- -------------------------------------------------------------------------------
1. Individual The individual
2. Two or more individuals The actual owner of the account
(joint account) or, if combined funds, the first
individual on the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors
Act)
4. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or valid
trust under state law
5. Sole proprietorship The owner(3)
- -------------------------------------------------------------------------------
Give the employer identification
For this type of account: number of--
- -------------------------------------------------------------------------------
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or The legal entity(4)
pension trust
8. Corporate The corporation
9. Association, club, religious, The organization
charitable, educational, or
other tax-exempt
organization account
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the The public entity
Department of Agriculture in
the name of a public entity
(such as a state or local
government, school district,
or prison) that receives
agricultural program
payments
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your social security
number or your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
- --------------------------------------------------------------------------------
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5. Application for a Social Security Card, at the local
Social Administration office, or Form SS-4, Application for Employer
Identification Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from withholding include:
o An organization exempt from tax under Section 501(a), an individual
retirement account (IRA), or a custodial account under Section 403(b)(7),
if the account satisfies the requirements of Section 401(f)(2).
o The United States or a state thereof, the District of Columbia, a
possession of the United States, or a political subdivision or
wholly-owned agency or instrumentality of any one or more of the
foregoing.
o An international organization or any agency or instrumentality thereof.
o A foreign government and any political subdivision, agency or
instrumentality thereof.
Payees that may be exempt from backup withholding include:
o A corporation.
o A financial institution.
o A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
o A real estate investment trust.
o A common trust fund operated by a bank under Section 584(a).
o An entity registered at all times during the tax year under the Investment
Company Act of 1940.
o A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
o A futures commission merchant registered with the Commodity Futures
Trading Commission.
o A foreign central bank of issue.
Payments of dividends and patronage dividends generally exempt from backup
withholding include:
o Payments to nonresident aliens subject to withholding under Section 1441.
o Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
o Payments of patronage dividends not paid in money.
o Payments made by certain foreign organizations.
o Section 404(k) payments made by an ESOP.
Payments of interest generally exempt from backup withholding include:
o Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and you
have not provided your correct taxpayer identification number to the
payer.
o Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
o Payments described in Section 6049(b)(5) to nonresident aliens.
o Payments on tax-free covenant bonds under Section 1451.
o Payments made by certain foreign organizations.
o Mortgage interest paid to you.
Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see the regulations under sections 6041,
6041A, 6042, 6044, 6045, 6049, 6050A and 6050N.
EXEMPT PAYEES DESCRIBED ABOVE MUST FILE FORM W-9 OR A SUBSTITUTE FORM W-9 TO
AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER,
FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART II OF THE
FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS,
OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM.
PRIVACY ACT NOTICE. -- Section 6109 requires you to provide your correct
taxpayer identification number to payers, who must report the payments to tje
IRS. The IRS uses the number for identification purposes and may also provide
this information to various government agencies for tax enforcement or
litigation purposes. Payers must be given the numbers whether or not recipients
are required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish
a taxpayer identification number to payer. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you fail to
furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME:
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT -----------------------
AND CERTIFY BY SIGNING AND DATING BELOW. Social Security Number
SUBSTITUTE
FORM W-9 OR
Department of the Treasury -----------------------
Internal Revenue Service Employer Identification
Number
---------------------------------------------------------------------------------------------
PART 2 PART 3--
Certification--Under the penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer [ ] Awaiting TIN
Payer's Request for Identification Number (or I am waiting for a number to be issued
Taxpayer to me), and
Identification
Number (TIN) (2) I am not subject to backup withholding because (a) I am exempt
from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
---------------------------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS--You must cross out item (2) above if you have been notified by
the IRS that you are currently subject to backup withholding because of under-reporting
interest or dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out such item (2).
---------------------------------------------------------------------------------------------
SIGNATURE
SIGN HERE -> ------------------------------------------------
DATE
-----------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER, PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (2) I intend to
mail or deliver an application in the near future. I understand that if I do
not provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld.
Signature Date
------------------------------ ------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares (as defined below). The Offer (as defined below) is made
solely by the Offer to Purchase dated December 9, 1998 and the related Letter
of Transmittal and is being made to all holders of Shares. Purchaser (as
defined below) is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer, Purchaser will make a good faith effort to comply with
such statute. If, after such good faith effort, Purchaser cannot comply with
such state statute, the Offer will not be made to nor will tenders be accepted
from or on behalf of the holders of Shares in such state. In any jurisdiction
where the securities, "blue sky" or other laws require the Offer to be made by
a licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by Lehman Brothers Inc., the Dealer Manager, or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MICRODYNE CORPORATION
AT
$5.00 NET PER SHARE
BY
L-M ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
L-3 COMMUNICATIONS HOLDINGS, INC.
L-M Acquisition Corporation, a Maryland corporation ("Purchaser") and a
wholly owned subsidiary of L-3 Communications Corporation, a Delaware
corporation ("Parent") and a wholly owned subsidiary of L-3 Communications
Holdings, Inc., a Delaware corporation, hereby offers to purchase for cash all
of the outstanding shares of Common Stock, par value $0.10 per share (the
"Shares"), of Microdyne Corporation, a Maryland corporation (the "Company"), at
a purchase price of $5.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated December 9, 1998 (the "Offer to Purchase") and in the
related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer").
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 7, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
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
NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES OWNED BY L-3 COMMUNICATIONS
HOLDINGS, INC., PARENT OR PURCHASER, OR ANY CONTROLLED AFFILIATE THEREOF,
CONSTITUTES AT LEAST A MAJORITY OF THE VOTING POWER (DETERMINED ON A
FULLY-DILUTED BASIS), ON THE DATE OF PURCHASE, OF ALL THE SECURITIES OF THE
COMPANY ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS OR IN A MERGER
(THE "MINIMUM CONDITION") AND (ii) THE EXPIRATION OR TERMINATION OF ANY WAITING
PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED.
<PAGE>
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. As promptly as practicable following consummation of
the Offer and after satisfaction or waiver of all conditions to the Merger set
forth in the Merger Agreement (as defined below), Purchaser intends to acquire
the remaining equity interest in the Company not acquired by the Offer by
consummating the Merger (as defined below). The Offer is being made pursuant to
an Agreement and Plan of Merger, dated as of December 3, 1998 (the "Merger
Agreement"), among Parent, Purchaser and the Company. The Merger Agreement
provides, among other things, for the making of the Offer by Purchaser, and
further provides that, following the completion of the Offer, upon the terms
and subject to the conditions of the Merger Agreement and in accordance with
the Maryland General Corporation Law ("MGCL"), Purchaser will be merged with
and into the Company (the "Merger"). At the effective time of the Merger (the
"Effective Time") each Share issued and outstanding immediately prior to the
Effective Time (other than each Share owned by Parent or Purchaser and, if
appraisal rights are available because the Shares are no longer listed on
Nasdaq on the Appraisal Date (each as defined in the Merger Agreement), Shares
issued and outstanding immediately prior to the Effective Time and held by
stockholders who have not voted in favor of or consented to the Merger, and who
have properly demanded appraisal of their Shares in accordance with Section
3-203 of the MGCL) will, by virtue of the Merger and without any action on the
part of the holders thereof, be cancelled, extinguished and converted into the
right to receive $5.00 in cash or any higher price that may be paid pursuant to
the Offer, without interest, less any withholding taxes required under
applicable law. The Merger Agreement is more fully described in Section 11 of
the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF
THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE HOLDERS
OF THE SHARES AND RESOLVED TO RECOMMEND THAT THE HOLDERS OF THE SHARES ACCEPT
THE OFFER AND TENDER THEIR SHARES TO PURCHASER.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
American Stock Transfer & Trust Company (the "Depositary") of Purchasers
acceptance for payment of such Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payments from Purchaser and transmitting such payments to
stockholders whose Shares have been accepted for payment. UNDER NO
CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates representing Shares (the "Share Certificates") or timely
confirmation of a book-entry transfer of such Shares into the Depositarys
account at the Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 3 of the Offer to Purchase,
(ii) the Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or an Agents Message (as
defined in Section 2 of the Offer to Purchase) in connection with a book-entry
transfer, and (iii) any other documents required by the Letter of Transmittal.
Subject to the provisions of the Merger Agreement and the applicable rules
and regulations of the Securities and Exchange Commission (the "Commission"),
Purchaser reserves the right, in its sole discretion., to waive any or all
conditions to the Offer (other than the Minimum Condition) and to make any
other changes in the terms and conditions to the Offer. Subject to the
provisions of the Merger Agreement and the applicable rules and regulations of
the Commission, if by the Expiration Date any or all of such Offer Conditions
have not been satisfied, Purchaser reserves the right (but shall not be
obligated) to (i) terminate the Offer and return all tendered Shares to
tendering stockholders, (ii) waive such unsatisfied conditions (other than the
Minimum Condition) and purchase all Shares validly tendered or (iii) extend the
Offer and, subject to the terms of the Offer (including the rights of
stockholders to withdraw their Shares), retain the Shares which have been
tendered, until the termination of the Offer, as extended.
Subject to the provisions of the Merger Agreement and the applicable rules
and regulations of the Commission, Purchaser expressly reserves the right, in
its sole discretion, at any time and from time to time, and regardless of
whether or not any of the Offer Conditions set forth in Section 15 of the Offer
to Purchase shall have occurred or shall have been determined by Purchaser to
have occurred, to (i) extend the period of time during which the Offer is open
and thereby delay acceptance of payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary and (ii)
amend the Offer in any respect by giving oral or written notice of such
amendment to the Depositary.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof to be made no later than
9:00 A.M., New York City time, on the next business day after the previously
scheduled Expiration Date. During any such extension, all Shares previously
tendered and not properly withdrawn will remain subject to the Offer, subject
to the rights of a tendering stockholder to withdraw such stockholder's Shares.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Thursday, January 7, 1999, unless and until the Purchaser, in its sole
discretion (but subject to the terms and conditions of the Merger Agreement),
shall have extended the period during which the Offer is open, in which event
the term "Expiration Date" shall mean the latest time and date at which the
Offer, as so extended by the Purchaser, shall expire.
2
<PAGE>
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable except
that they may be withdrawn after February 6, 1999 unless theretofore accepted
for payment as provided in the Offer to Purchase. For a withdrawal to be
effective, a written, telegraphic, telex or facsimile transmission notice of
withdrawal must be timely received by the Depositary at its addresses set forth
on the back cover of the Offer to Purchase. Any notice of withdrawal must
specify the name of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder, if
different from that of the person who tendered such Shares. If the Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then
prior to the physical release of the certificates, the name of the registered
holder (if different from the tendering stockholder) and the serial numbers
shown on such certificates must be submitted to the Depositary, together with a
signed notice of withdrawal, the signatures on which must be guaranteed by an
Eligible Institution unless such Shares have been tendered for the account of
any Eligible Institution. If Shares have been tendered pursuant to the
procedure for book-entry transfer as set forth in Section 3 of the Offer to
Purchase, any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares. All questions as to the form and validity (including time of receipt)
of any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
Parent, any of their 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 such notification. Withdrawals of
Shares may not be rescinded. Any Shares properly withdrawn will thereafter be
deemed not to have been validly tendered for purposes of the Offer. However,
withdrawn Shares may be re-tendered at any time prior to the Expiration Date by
following one of the procedures described in Section 3 of the Offer to
Purchase.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
and other relevant materials will be mailed by Purchaser to record holders of
Shares and furnished to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer
Manager or the Information Agent as set forth below. Requests for copies of the
Offer to Purchase and the related Letter of Transmittal and all other tender
offer materials may be directed to the Information Agent and copies will be
furnished promptly at Purchaser's expense. Purchaser will not pay any fees or
commissions to any broker or dealer or any other person (other than the Dealer
Manager and the Information Agent) for soliciting tenders of Shares pursuant to
the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL-FREE: (800) 848-2998
The Dealer Manager for the Offer is:
LEHMAN BROTHERS
Three World Financial Center
200 Vesey Street
New York, New York 10285
Call Collect: (212) 526-5044 or (212) 526-2545
December 9, 1998
3
<PAGE>
MCDY) L-3 COMMUNICATIONS AGREES TO ACQUIRE MICRODYNE CORPORATION
- -------------------
Business Editors
NEW YORK--(BUSINESS WIRE)--Dec. 3, 1998--L-3 Communications (NYSE:LLL)
announced today that it has signed a definitive agreement to acquire Microdyne
Corporation (NASDAQ/NM:MCDY).
Under the terms of the agreement, L-3 Communications will purchase all of the
outstanding common stock of Microdyne for $5.00 per share in cash and assume
Microdyne's existing debt. The total value of the transaction is approximately
$90.0 million. The transaction is anticipated to be accretive to earnings in
1999 and is expected to close in early 1999.
For the fiscal year ended September 30, 1998, Microdyne reported actual
revenues of $58.3 million, operating income of $1.3 million and net income of
$0.3 million. On a pro forma basis including acquisitions made during the 1998
fiscal year, Microdyne's revenues were $73.5 million, operating income was $3.6
million and net income was $0.9 million. Microdyne's actual earnings before
interest, taxes, depreciation and amortization (EBITDA) for the recent fiscal
year was $2.9 million. Pro forma EBITDA was $11.1 million, before pro forma
depreciation and amortization expenses of $2.4 million and non-recurring
charges of $5.1 million primarily for the write-off of acquired in-process
research and development costs.
Headquartered in Alexandria, Virginia, Microdyne is a premier global developer
and manufacturer of aerospace telemetry receivers, secure communications and
technical support services, including specialized telemetry high-frequency
radios used in aerospace and satellite communications for data gathering and
analysis. The company also provides products for the government and commercial
segments of the U.S. signal intelligence industry and support and repair
services for electronic products companies. "Microdyne is an excellent
strategic addition to L-3 Communications and meets all our acquisition
objectives," said Frank C. Lanza, chairman and chief executive officer of L-3
Communications. "Its key businesses hold leadership positions in their markets
and its operations expand L-3's existing telemetry and instrumentation and
secure communication operations. Over the past year, the company has reshaped
its portfolio to focus on its core businesses, introduced new products and now
has excellent top-line and bottom-line growth prospects. We also see
significant opportunities to improve Microdyne's operating efficiency and
productivity in administrative areas and through R&D consolidation."
"Specifically, Microdyne's aerospace
<PAGE>
telemetry products enable us to provide total solutions to our space customers
for command, control, telemetry and tracking requirements," said Mr. Lanza.
"Its communications and intelligence processing products complement our
existing secure communication products."
Another significant growth area for Microdyne is its product support
operations. More and more companies are choosing to outsource their technical
support so that they can focus their resources on their core businesses,
control costs and improve the quality of their service to customers.
Microdyne's product support operations offer customer service solutions for
high-technology providers and manufacturers.
Under the acquisition agreement, a cash tender offer will be commenced by a
wholly owned subsidiary of L-3 Communications. The transaction is subject to
the receipt of a majority of Microdyne's shares outstanding in the tender offer
and the approval of L-3 Communications' lenders, regulatory approvals and other
customary closing conditions. Lehman Brothers Inc. has been appointed
dealer/manager for the tender offer.
Philip T. Cunningham, Chairman of the Microdyne Board of Directors and
beneficial owner of approximately 43% of the outstanding Microdyne shares, has
agreed to tender his shares provided that the acquisition agreement has not
been terminated. As of December 1, 1998, Microdyne had approximately 13.1
million shares outstanding.
L-3 Communications is a leading merchant supplier of secure communication
systems and products, microwave components, avionics and ocean systems and
telemetry instrumentation, space and wireless products. Its customers include
the Department of Defense, U.S. government intelligence agencies, aerospace and
defense prime contractors, foreign governments and commercial
telecommunications and cellular customers.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Except for historical information contained herein, the matters set forth
in this news release are forward- looking statements. The forward-looking
statements set forth above involve a number of risks and uncertainties that
could cause actual results to differ materially from any such statement,
including the risks and uncertainties discussed in the company's Safe Harbor
Compliance Statement for Forward-Looking Statements, included in L-3's final
prospectus, dated May 18, 1998, relating to the initial public offering of its
stock, which discussion is incorporated herein by this reference.
<PAGE>
----------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Among
L-3 COMMUNICATIONS CORPORATION,
L-M ACQUISITION CORPORATION
and
MICRODYNE CORPORATION
Dated as of December 3, 1998
----------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE OFFER....................................................................2
SECTION 1.1 The Offer..............................................2
SECTION 1.2 Company Action.........................................3
ARTICLE II
THE MERGER...................................................................5
SECTION 2.1 The Merger.............................................5
SECTION 2.2 Effective Time.........................................5
SECTION 2.3 Effects of the Merger..................................6
SECTION 2.4 Articles of Amendment and Restatement; By-Laws.........6
SECTION 2.5 Directors and Officers.................................6
SECTION 2.6 Conversion of Securities...............................6
SECTION 2.7 Treatment of Employee Options..........................7
SECTION 2.8 Appraisal Rights.......................................7
SECTION 2.9 Surrender of Shares; Stock Transfer Books..............8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................9
SECTION 3.1 Organization and Qualification; Subsidiaries..........10
SECTION 3.2 Articles and By-Laws..................................10
SECTION 3.3 Capitalization........................................10
SECTION 3.4 State Takeover Statutes; Authority Relative to
This Agreement........................................11
SECTION 3.5 No Conflict; Required Filings and Consents............12
SECTION 3.6 Compliance............................................13
SECTION 3.7 SEC Filings; Financial Statements.....................13
SECTION 3.8 Absence of Certain Changes or Events..................14
SECTION 3.9 Absence of Litigation.................................15
SECTION 3.10 Employee Benefit Plans...............................15
SECTION 3.11 Tax Matters..........................................17
SECTION 3.12 Offer Documents; Proxy Statement.....................18
SECTION 3.13 Environmental Matters................................19
SECTION 3.14 Brokers..............................................19
SECTION 3.15 Year 2000............................................19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER........................................................20
SECTION 4.1 Corporate Organization................................20
SECTION 4.2 Authority Relative to This Agreement..................20
SECTION 4.3 No Conflict; Required Filings and Consents............20
-i-
<PAGE>
Page
SECTION 4.4 Offer Documents; Proxy Statement......................21
SECTION 4.5 Brokers...............................................22
SECTION 4.6 Financing.............................................22
SECTION 4.7 Operations of Purchaser...............................22
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER......................................23
SECTION 5.1 Conduct of Business of the Company Pending the
Merger................................................23
ARTICLE VI
ADDITIONAL AGREEMENTS.......................................................26
SECTION 6.1 Stockholders Meeting..................................26
SECTION 6.2 Proxy Statement.......................................27
SECTION 6.3 Company Board Representation; Section 14(f) ..........27
SECTION 6.4 Access to Information; Confidentiality................28
SECTION 6.5 No Solicitation of Transactions.......................29
SECTION 6.6 Employee Benefits Matters.............................30
SECTION 6.7 Directors' and Officers' Indemnification and
Insurance.............................................31
SECTION 6.8 Notification of Certain Matters.......................33
SECTION 6.9 Further Action; Reasonable Good Faith Efforts.........33
SECTION 6.10 Public Announcements.................................34
SECTION 6.11 Disposition of Litigation............................34
SECTION 6.12 State Takeover Statutes..............................34
SECTION 6.13 Stop Transfer Order..................................34
ARTICLE VII
CONDITIONS OF MERGER........................................................35
SECTION 7.1 Conditions to Obligation of Each Party to
Effect the Merger.....................................35
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER...........................................35
SECTION 8.1 Termination...........................................35
SECTION 8.2 Effect of Termination.................................37
SECTION 8.3 Fees..................................................37
SECTION 8.4 Amendment.............................................38
SECTION 8.5 Waiver................................................38
ARTICLE IX
GENERAL PROVISIONS..........................................................38
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements............................................38
SECTION 9.2 Notices...............................................39
-ii-
<PAGE>
SECTION 9.3 Certain Definitions...................................39
SECTION 9.4 Severability..........................................41
SECTION 9.5 Entire Agreement; Assignment..........................41
SECTION 9.6 Parties in Interest...................................41
SECTION 9.7 Governing Law.........................................42
SECTION 9.8 Headings..............................................42
SECTION 9.9 Counterparts..........................................42
Annex A - Offer Conditions
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 3, 1998
(the "Agreement"), among L-3 COMMUNICATIONS CORPORATION, a Delaware corporation
("Parent"), L-M ACQUISITION CORPORATION, a Maryland corporation and a wholly
owned subsidiary of Parent ("Purchaser"), and MICRODYNE CORPORATION, a Maryland
corporation (the "Company").
WHEREAS, as promptly as practicable (but in no event later
than five business days after the public announcement of the execution hereof),
the Purchaser shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) an offer (the
"Offer") to purchase for cash all of the issued and outstanding shares of
Common Stock, par value $0.10 per share (referred to herein as either the
"Shares" or "Company Common Stock"), of the Company at a price of $5.00 per
Share, net to the seller in cash, subject to there being validly tendered and
not withdrawn prior to the expiration of the Offer, that number of Shares of
the Company beneficially owned by Parent or the Purchaser which represent at
least a majority of the Shares outstanding on a fully diluted basis and to the
other conditions set forth in Annex A hereto.
WHEREAS, as a condition to their willingness to enter into
this Agreement and consummate the transactions contemplated hereby, Parent and
Purchaser have required that Philip T. Cunningham and the Successor Trust to
Philip T. Cunningham Grantor Retained Annuity Trust #1, Philip T.
Cunningham-Grantor Retained Annuity Trust #2, Maura Spaeth, Katherine
Cunningham and Neal Sanders as agent for Roman Herzig and Gallerie Nissl
(collectively, the "Stockholders") agree to tender Shares (as hereinafter
defined) owned by them in accordance with the Tender Agreement, dated as of the
date hereof (the "Tender Agreement"), among Parent and the Stockholders; and in
order to induce Parent and Purchaser to enter into this Agreement, the
Stockholders have agreed to execute and deliver the Tender Agreement.
WHEREAS, the Board of Directors of the Company has (i)
determined that the consideration to be paid for each Share in the Offer and in
the Merger (as defined below) is fair to and in the best interests of the
stockholders of the Company, (ii) exempted the transactions contemplated by
this Agreement and the transactions contemplated pursuant to this Agreement and
the Tender Agreement and the transactions contemplated thereby and any other
transactions entered into after the date hereof between the Company and Parent
or any of its subsidiaries or between Parent or any of its subsidiaries and the
Stockholders with the approval of the Board of Directors of the Company (a
"Consensual Transaction") so as to render inapplicable Section 3-602 of the
Maryland General Corporation Law (the "MGCL") to the transactions contemplated
hereby and thereby), (iii) amended the By-laws of the Company so as to render
inapplicable Section 3-702(a)(i) of
<PAGE>
the MGCL to the transactions contemplated by this Agreement and the Tender
Agreement, including, without limitation, the Offer, and to any Consensual
Transaction, and (iv) resolved to recommend acceptance of the Offer and the
Merger and approval of this Agreement by such stockholders; and
WHEREAS, the Board of Directors of the Company and Purchaser
have each approved the merger (the "Merger") of Purchaser with and into the
Company in accordance with the MGCL upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Provided that this Agreement shall
not have been terminated in accordance with Section 8.1 and no event shall have
occurred and no circumstance shall exist which would result in a failure to
satisfy any of the conditions or events set forth in Annex A hereto (the "Offer
Conditions"), Purchaser shall commence the Offer as soon as practicable after
the date hereof, and in any event within five business days from the date
hereof. The obligation of Purchaser to accept for payment Shares tendered shall
be subject to the satisfaction of the Offer Conditions. Purchaser expressly
reserves the right, in its sole discretion, to waive any such condition and
make any other changes in the terms and conditions of the Offer, provided that,
unless previously approved by the Company in writing, (i) Purchaser may not
amend or waive the Minimum Condition, (ii) no change may be made which
decreases the price per Share payable in the Offer, (iii) there shall be no
change to the form of consideration payable in the Offer (other than by adding
consideration), (iv) there shall be no reduction in the maximum number of
Shares to be purchased in the Offer, or (v) there shall be no imposition of any
condition to the Offer in addition to those set forth herein which is
materially adverse to holders of the Shares. Purchaser covenants and agrees
that, subject to the terms and conditions of this Agreement, including the
Offer Conditions, it will accept for payment and pay for Shares validly
tendered and not withdrawn pursuant to the Offer as promptly as reasonably
practicable; provided, that (x) at each scheduled expiration date of the Offer
prior to the date 90 days from the date hereof, if any of the Offer Conditions
shall not be satisfied or waived, Purchaser shall extend the Offer until the
date on which such conditions are then reasonably expected by Purchaser to be
satisfied, (y) Purchaser shall extend the Offer for any period required by any
rule, regulation, interpretation
<PAGE>
or position of the SEC or the staff thereof applicable to the Offer and (z)
Purchaser may extend the Offer up to the tenth business day beyond the latest
expiration date that would otherwise be permitted under clause (x) or (y) of
this sentence. The initial expiration date of the Offer shall be 20 business
days from the commencement of the Offer in accordance with applicable law.
Subject to the foregoing, it is agreed that the Offer Conditions are for the
benefit of Purchaser and may be asserted by Purchaser regardless of the
circumstances giving rise to any such condition (including any action or
inaction by Purchaser or Parent not inconsistent with the terms hereof) or,
except with respect to the Minimum Condition, may be waived by Purchaser, in
whole or in part at any time and from time to time, in its sole discretion.
(b) As soon as reasonably practicable after the date hereof,
and in any event within five business days from the date hereof, Purchaser and
Parent shall file their Tender Offer Statement on Schedule 14D-1 (the "Schedule
14D-1") with respect to the Offer with the Securities and Exchange Commission
(the "SEC"). The Schedule 14D-1 will contain an Offer to Purchase and forms of
the related letter of transmittal (which Schedule 14D-1, Offer to Purchase and
other documents, together with any further supplements or amendments thereto,
are referred to herein collectively as the "Offer Documents"). Parent,
Purchaser and the Company each agrees promptly to correct any information
provided by it for use in the Offer Documents that shall have become false or
misleading in any material respect, and Parent and Purchaser further agree to
take all steps necessary to cause the Schedule 14D-1 as so corrected to be
filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the extent required
by applicable federal securities laws. The Company and its counsel shall be
given a reasonable opportunity to review and comment on the Offer Documents
prior to their filing with the SEC. Parent and Purchaser agree to provide the
Company with any comments that may be received from the SEC or its staff with
respect to the Offer Documents promptly after receipt thereof.
(c) Notwithstanding any other provision contained herein, the
Offer shall terminate upon termination of this Agreement pursuant to Section
8.1.
SECTION 1.2 Company Action. (a) The Company hereby approves
of and consents to the Offer and represents and warrants that: (i) its Board of
Directors, acting upon the unanimous recommendation of the independent
directors (the "Special Committee") of the Board of Directors, at a meeting
duly called and held on December 2, 1998, has unanimously (A) determined that
this Agreement and the transactions contemplated hereby, including each of the
Offer and the Merger, are fair to and in the best interests of the holders of
Shares, (B) exempted the Offer, the Merger, this Agreement and the Tender
Agreement and
<PAGE>
the transactions contemplated hereby and thereby so as to render Section 3-602
of the MGCL inapplicable thereto and to any Consensual Transaction, (C) amended
the By-laws of the Company so as to render inapplicable Section 3-702(a)(i) of
the MGCL to the transactions contemplated by this Agreement and the Tender
Agreement, including, without limitation, the Offer, and to any Consensual
Transaction,(D)declared the Merger to be advisable and directed that the Merger
be submitted for consideration at a special meeting of the stockholders of the
Company and (E) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares to Purchaser thereunder and approve this
Agreement and the transactions contemplated hereby; and (ii) The
Robinson-Humphrey Company, LLC (the "Financial Adviser") has delivered to the
Board of Directors of the Company and the Special Committee its written opinion
(or oral opinion to be confirmed in writing) that the consideration to be
received by holders of Shares pursuant to each of the Offer and the Merger is
fair to such holders from a financial point of view. The Company has been
authorized by the Financial Adviser to permit, subject to prior review and
consent by such Financial Adviser (such consent not to be unreasonably
withheld), the inclusion of such fairness opinion (or a reference thereto) in
the Offer Documents and in the Schedule 14D-9 referred to below and the Proxy
Statement referred to in Section 3.12. The Company hereby consents to the
inclusion in the Offer Documents of the recommendations of the Company's Board
of Directors described in this Section 1.2(a).
(b) The Company shall file with the SEC, contemporaneously
with Schedule 14D-1 pursuant to Section 1.1, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9"), containing the recommendations of the
Company's Board of Directors described in Section 1.2(a)(i) and shall promptly
mail the Schedule 14D-9 to the stockholders of the Company; provided, that in
the event of a proposed Third Party Acquisition (as defined in Section 8.3),
the Company shall not be required to make such filing with such recommendations
or make such mailing if a majority of the Special Committee Members (as defined
below) conclude in good faith based on advice of independent outside legal
counsel to the Special Committee that taking any such action would constitute a
breach of the fiduciary duties of the Board of Directors of the Company under
applicable law. "Special Committee Members" shall mean directors of the Company
who are (a) members of the Special Committee (as constituted on the date
hereof) or (b) nominees of such Special Committee who are not (1) employees of
the Company or any of its subsidiaries, (2) Philip T. Cunningham or (3)
affiliates and associates of Philip T. Cunningham. The Schedule 14D-9 and all
amendments thereto will comply in all material respects with the Exchange Act
and the rules and regulations promulgated thereunder. The Company, Parent and
Purchaser each agrees promptly to correct any information provided by it for
use in the Schedule 14D-9 that
<PAGE>
shall have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to holders of Shares, in
each case as and to the extent required by applicable federal securities laws.
(c) In connection with the Offer, if requested by Purchaser,
the Company shall promptly furnish Purchaser with mailing labels, security
position listings, any non-objecting beneficial owner lists and any available
listings or computer files containing the names and addresses of the record
holders of Shares, each as of a recent date, and shall promptly furnish
Purchaser with such additional information (including but not limited to
updated lists of stockholders, mailing labels, security position listings and
non-objecting beneficial owner lists) and such other assistance as Parent,
Purchaser or their agents may reasonably require in communicating the Offer to
the record and beneficial holders of Shares.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the
conditions of this Agreement and in accordance with the MGCL, at the Effective
Time (as defined in Section 2.2), Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation"). At Parent's election
(provided, that such election shall not adversely affect the ability of the
Company to consummate the transactions contemplated hereby, and provided,
further, that the Company shall not be deemed to have breached any of its
representations or warranties herein if and to the extent such breach results
from such election), the Merger may alternatively be structured so that (i) the
Company and/or its subsidiaries are merged with and into Parent, Purchaser or
any other direct or indirect subsidiary of Parent or (ii) any direct or
indirect subsidiary of Parent other than Purchaser is merged with and into the
Company. In the event of such an election, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect such election.
SECTION 2.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing articles of merger
(the "Articles of Merger") with the State Department of Assessments and
Taxation of the State of Maryland, in such form as required by and executed in
accordance with the relevant provisions of the MGCL (the date and time of the
acceptance of record of the Articles of Merger by
<PAGE>
the State Department of Assessments and Taxation of the State of Maryland (or
such later time as is specified in the Articles of Merger) being the "Effective
Time").
SECTION 2.3 Effects of the Merger. The Merger shall have the
effects set forth in the applicable provisions of the MGCL. Without limiting
the generality of the foregoing and subject thereto, at the Effective Time all
the property, rights, privileges, immunities, powers and franchises of the
Company and Purchaser shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Purchaser shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 2.4 Articles of Amendment and Restatement; By-Laws.
(a) At the Effective Time and without any further action on the part of the
Company and Purchaser, the Articles of Amendment and Restatement of the Company
(as amended, the "Articles") as in effect immediately prior to the Effective
Time shall be the charter of the Surviving Corporation until thereafter and
further amended as provided therein and under the MGCL.
(b) At the Effective Time and without any further action on
the part of the Company and Purchaser, the By-Laws of Purchaser shall be the
By-Laws of the Surviving Corporation and thereafter may be amended or repealed
in accordance with their terms or the Articles of the Surviving Corporation and
as provided by law.
SECTION 2.5 Directors and Officers. The directors of
Purchaser immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Articles and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors
are duly elected or appointed (as the case may be) and qualified.
SECTION 2.6 Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to
the Effective Time (other than any Shares to be cancelled pursuant to Section
2.6(b) and any Dissenting Shares (as defined in Section 2.8(b)) shall be
cancelled, extinguished and converted into the right to receive $5.00 in cash
or any higher price that may be paid pursuant to the Offer (the "Merger
Consideration") payable to the holder thereof, without interest, upon surrender
of the certificate formerly representing such
<PAGE>
Share in the manner provided in Section 2.9, less any required withholding
taxes.
(b) Each share of Company Common Stock owned by Parent or
Purchaser, in each case immediately prior to the Effective Time, shall be
cancelled and retired without any conversion thereof and no payment or
distribution shall be made with respect thereto.
(c) Each share of common stock of Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one validly issued, fully paid and nonassessable share of identical
common stock of the Surviving Corporation.
SECTION 2.7 Treatment of Employee Options. Immediately prior
to the Effective Time, each outstanding employee stock option and any related
stock appreciation right (together, an "Employee Option"), whether or not then
exercisable, shall be cancelled by the Company (provided that with respect to
the 3,300 Shares (the "1988 Options") subject to stock options issued pursuant
to the Incentive Stock Option Plan of 1988, such 1988 Options, to the extent
permitted, shall be cancelled by the Company and otherwise the Company shall
use its reasonable good faith efforts to cancel the 1988 Options), and the
holder thereof shall be entitled to receive at the Effective Time or as soon as
practicable thereafter from the Surviving Corporation in consideration for such
cancellation an amount in cash equal to the product of (a) the number of Shares
previously subject to such Employee Option and (b) the excess, if any, of the
Merger Consideration over the exercise price per Share previously subject to
such Employee Option.
SECTION 2.8 Appraisal Rights. (a) So long as the Company
Common Stock is listed on the National Market System of NASDAQ on the record
date for the determination of stockholders entitled to vote on the Merger with
respect to mergers other than mergers pursuant to Section 3-106 of the MGCL or
a merger of a 90 percent owned subsidiary with or into its parent or the date
notice is given or waived under Section 3-106 of the MGCL in connection with a
merger of a 90 percent owned subsidiary with or into its parent as the case may
be (as applicable, the "Appraisal Date"), no stockholder of the Company shall
have any rights under Title 3, Subtitle 2 of the MGCL as a result of the
transactions contemplated by this Agreement or the Tender Agreement.
(b) If the Company Common Stock is not listed on the National
Market System of NASDAQ on the Appraisal Date, shares of Company Common Stock
that are issued and outstanding immediately prior to the Effective Time and
which are held by stockholders who have not voted in favor of or consented to
the Merger and shall have delivered a written demand for appraisal of such
shares of Company Common Stock in the time and manner provided in
<PAGE>
Section 3-203 of the MGCL and shall not have failed to perfect or shall not
have effectively withdrawn or lost their rights to appraisal and payment under
the MGCL (the "Dissenting Shares") shall not be converted into the right to
receive the Merger Consideration, but shall be entitled to receive the
consideration as shall be determined pursuant to Title III, Subtitle 2 of the
MGCL; provided, however, that if such holder shall have failed to perfect or
shall have effectively withdrawn or lost his, her or its right to appraisal and
payment under the MGCL, such holder's shares of Company Common Stock shall
thereupon be deemed to have been converted, at the Effective Time, into the
right to receive the Merger Consideration set forth in Section 2.6(a) of this
Agreement, without any interest thereon.
(c) The Company shall give Parent (i) prompt notice of any
written objection to the transactions contemplated by this Agreement or any
demands for appraisal pursuant to Section 3-203 of the MGCL received by the
Company, withdrawals of such demands, and any other instruments served pursuant
to the MGCL and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
MGCL. The Company shall not, except with the prior written consent of Parent,
make any payment with respect to any such demands for appraisal or offer to
settle or settle any such demands.
SECTION 2.9 Surrender of Shares; Stock Transfer Books. (a)
Prior to the Effective Time, Purchaser shall designate a bank or trust company
to act as agent for the holders of Shares in connection with the Merger (the
"Paying Agent") to receive the Merger Consideration to which holders of Shares
shall become entitled pursuant to Section 2.6(a). When and as needed, Parent or
Purchaser will make available to the Paying Agent sufficient funds to make all
payments pursuant to Section 2.9(b). Such funds shall be invested by the Paying
Agent as directed by Purchaser or, after the Effective Time, the Surviving
Corporation, provided that such investments shall be in obligations of or
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank
repurchase agreements or banker's acceptances of commercial banks with capital
exceeding $500 million. Any net profit resulting from, or interest or income
produced by, such investments will be payable to the Surviving Corporation or
Parent, as Parent directs.
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each record holder, as of the Effective
Time, of an outstanding certificate or certificates which immediately prior to
the Effective Time represented Shares (the "Certificates"), a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss
<PAGE>
and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent) and instructions for use in effecting the
surrender of the Certificates for payment of the Merger Consideration therefor.
Upon surrender to the Paying Agent of a Certificate, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor the Merger Consideration for each Share formerly
represented by such Certificate, and such Certificate shall then be cancelled.
No interest shall be paid or accrued for the benefit of holders of the
Certificates on the Merger Consideration payable upon the surrender of the
Certificates. If payment of the Merger Consideration is to be made to a person
other than the person in whose name the surrendered Certificate is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that
the person requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such tax
either has been paid or is not applicable.
(c) At any time following twelve months after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying Agent
to deliver to it any funds (including any interest received with respect
thereto) which had been made available to the Paying Agent and which have not
been disbursed to holders of Certificates, and thereafter such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof with respect
to the Merger Consideration payable upon due surrender of their Certificates.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(d) At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration
of transfers of shares of Company Common Stock on the records of the Company.
From and after the Effective Time, the holders of Certificates evidencing
ownership of Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares except as otherwise
provided for herein or by applicable law.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Purchaser that, except as specifically set forth on the corresponding Schedule
of the Disclosure Schedules delivered by the Company to the Parent and
Purchaser prior to the execution of this Agreement (the "Disclosure Schedules")
with respect to such representation and warranty:
SECTION 3.1 Organization and Qualification; Subsidiaries.
Each of the Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted. Each of the Company and each of its subsidiaries
is duly qualified or licensed as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing which would not, individually or in
the aggregate, have a Material Adverse Effect (as defined below). When used in
connection with the Company or any of its subsidiaries, the term "Material
Adverse Effect" means any change or effect that would be materially adverse to
the business, operations, assets, financial condition or results of operations
of the Company and its subsidiaries taken as a whole.
SECTION 3.2 Articles and By-Laws. The Company has heretofore
furnished to Parent a complete and correct copy of the Articles and the By-Laws
of the Company and its subsidiaries as currently in effect. Such Articles and
By-Laws are in full force and effect and no other organizational documents are
applicable to or binding upon the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries is in violation of any provisions of
its Articles or By-Laws or other constitutive documents.
SECTION 3.3 Capitalization. The authorized capital stock of
the Company consists of 50,000,000 shares of Company Common Stock. As of
November 30, 1998, (i) 13,111,201 shares of Company Common Stock were issued
and outstanding, all of which were validly issued, fully paid and nonassessable
and were issued free of preemptive (or similar) rights, and (ii) an aggregate
of 1,571,302 shares of Company Common Stock were reserved for issuance and
issuable upon or otherwise deliverable in connection with the exercise of
outstanding Employee Options issued pursuant to the Company Plans (as defined
in Section 3.10). Since November 30, 1998, no options to purchase shares of
Company
<PAGE>
Common Stock have been granted and no shares of Company Common Stock have been
issued except for shares issued pursuant to the exercise of Employee Options
outstanding as of November 30, 1998. Except (i) as set forth above, and (ii) as
a result of the exercise of Employee Options outstanding as of November 30,
1998, there are outstanding or authorized (a) no shares of capital stock or
other voting securities of the Company, (b) no securities of the Company
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (c) no options or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company and (d) no equity equivalents, interests in
the ownership or earnings of the Company or other similar rights (collectively,
"Company Securities"). There are no outstanding obligations of the Company or
any of its subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities. There are no other options, calls, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or any of its subsidiaries to which
the Company or any of its subsidiaries is a party. All shares of Company Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and nonassessable and free
of preemptive (or similar) rights. There are no outstanding contractual
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or the capital stock of
any subsidiary or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any such subsidiary or any other
entity. Each of the outstanding shares of capital stock of each of the
Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares are owned by the Company or another wholly
owned subsidiary of the Company and are owned free and clear of all security
interests, liens, claims, pledges, agreements, limitations in voting rights,
charges or other encumbrances of any nature whatsoever, except where the
failure to own such shares free and clear would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has delivered to Parent
prior to the date hereof a list of all subsidiaries and other persons in which
the Company, directly or indirectly, owns in excess of 10% of the stock or
other equity interests of such person ("Associated Entity") which evidences,
among other things, the amount of capital stock or other equity interests owned
by the Company, directly or indirectly, in such subsidiaries or Associated
Entities. No entity in which the Company owns, directly or indirectly, less
than a 50% equity interest is, individually or when taken together with all
such other entities, material to the business of the Company and its
subsidiaries taken as a whole.
<PAGE>
SECTION 3.4 State Takeover Statutes; Authority Relative to
This Agreement. The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the transactions so contemplated (other than, with respect to the
Merger, the approval of this Agreement by the holders of at least a majority of
the outstanding shares of Company Common Stock if and to the extent required by
applicable law, and the filing of appropriate merger documents as required by
the MGCL). This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery hereof
by Parent and Purchaser, constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing. The Board of Directors of the Company has (i) approved the Offer,
the Merger, this Agreement, the Tender Agreement and the transactions
contemplated hereby and thereby to render Section 3-602 of the MGCL (or any
similar provision) inapplicable to the Offer, the Merger, this Agreement, the
Tender Agreement, the other transactions contemplated hereby and thereby and
any Consensual Transaction, and (ii) amended the By-laws of the Company so as
to render inapplicable Section 3-702(a)(i) of the MGCL (or any similar
provision) to the transactions contemplated by this Agreement and the Tender
Agreement, including, without limitation, the Offer, and to any Consensual
Transaction. As a result of the foregoing actions, the only vote required to
authorize the Merger is the affirmative vote of a majority of the outstanding
Shares.
SECTION 3.5 No Conflict; Required Filings and Consents. (a)
The execution, delivery and performance of this Agreement by the Company do not
and will not: (i) conflict with or violate the Articles or By-Laws of the
Company or the equivalent organizational documents of any of its subsidiaries;
(ii) assuming that all consents, approvals and authorizations contemplated by
clauses (i), (ii) and (iii) of subsection (b) below have been obtained and all
filings described in such clauses have been made, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its subsidiaries or by which its or any of their respective properties
are bound or affected; or (iii) result in any breach or violation of or
constitute a default (or an event
<PAGE>
which with notice or lapse of time or both could become a default) or result in
the loss of a material benefit under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the properties or assets of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
are bound or affected, except, in the case of clauses (ii) and (iii), for any
such conflicts, violations, breaches, defaults or other occurrences which would
not, individually or in the aggregate, have a Material Adverse Effect or
prevent or materially delay the consummation of the Offer or the Merger or
otherwise prevent the Company from performing its obligations under this
Agreement.
(b) The execution, delivery and performance of this Agreement
by the Company and the consummation of the Merger by the Company do not and
will not require any consent, approval, authorization or permit of, action by,
filing with or notification to, any governmental or regulatory authority,
domestic or foreign, except for (i) applicable requirements, if any, of the
Exchange Act and the rules and regulations promulgated thereunder, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), state securities, takeover and Blue Sky laws, (ii) the filing and
recordation of appropriate merger or other documents as required by the MGCL
and (iii) such consents, approvals, authorizations, permits, actions, filings
or notifications the failure of which to make or obtain would not (x) prevent
or materially delay consummation of the Offer or the Merger, (y) otherwise
prevent or materially delay the Company from performing its obligations under
this Agreement or (z) have a Material Adverse Effect.
SECTION 3.6 Compliance. Neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties are
bound or affected, or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
are bound or affected, except for any such conflicts, defaults or violations
which would not, individually or in the aggregate, have a Material Adverse
Effect. The Company and its subsidiaries have all permits, licenses,
authorizations, exemptions, orders, consents, approvals and franchises from
governmental and regulatory agencies required to conduct their respective
businesses as now being conducted, except for such permits, licenses,
authorizations, exemptions, orders, consents, approvals, and franchises the
absence of which
<PAGE>
would not individually or in the aggregate have a Material Adverse Effect.
SECTION 3.7 SEC Filings; Financial Statements. (a) The
Company and, to the extent applicable, each of its then or current
subsidiaries, has filed all forms, reports, statements and documents required
to be filed with the SEC since September 29, 1996 (collectively, the "SEC
Reports"), each of which has complied as to form in all material respects with
the applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act") and the rules and regulations promulgated thereunder, or the
Exchange Act and the rules and regulations promulgated thereunder, each as in
effect on the date so filed. The Company has heretofore delivered or promptly
will deliver to Parent, in the form filed with the SEC (including any
amendments thereto), the SEC Reports. None of such SEC Reports contained, when
filed, any untrue statement of a material fact or omitted to state a material
fact required to be stated or incorporated by reference therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Except to the extent revised or
superseded by a subsequent filing with the SEC (a copy of which has been
provided to Parent prior to the date hereof), none of the SEC Reports filed by
the Company since September 28, 1997 and prior to the date hereof contains any
untrue statement of a material fact or omits to state a material fact required
to be stated or incorporated by reference therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the audited consolidated financial statements of
the Company (including any related notes thereto) included in its Annual
Reports on Form 10-K for each of the two fiscal years ended September 29, 1996
and September 28, 1997 filed with the Commission, which have previously been
furnished to Parent, complies as to form in all material respects with all
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, has been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto) and fairly
presents in all material respects the consolidated financial position of the
Company and its subsidiaries at the respective date thereof and the
consolidated results of its operations and changes in cash flows for the
periods indicated.
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and its subsidiaries at September 30, 1998,
including the notes thereto, neither the Company nor any of its subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) which would be required to be reflected on a balance
sheet or in the notes thereto prepared in accordance with
<PAGE>
generally accepted accounting principles, except for liabilities or obligations
incurred in the ordinary course of business since September 30, 1998 which
would not, individually or in the aggregate, have a Material Adverse Effect.
(d) The Company has heretofore furnished to Parent a complete
and correct copy of any amendments or modifications which have not yet been
filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the
Securities Act and the rules and regulations promulgated thereunder or the
Exchange Act and the rules and regulations promulgated thereunder.
SECTION 3.8 Absence of Certain Changes or Events. Since
September 30, 1998, except as contemplated by this Agreement, disclosed in the
SEC Reports filed and publicly available prior to the date of this Agreement,
the Company and its subsidiaries have conducted their businesses only in the
ordinary course and in a manner consistent with past practice and, since such
date, there has not been (i) any changes in the financial condition, results of
operations, assets, business or operations of the Company or any of its
subsidiaries that would reasonably likely materially delay or impair the
ability of the Company to effect the closing of the transactions contemplated
hereby, (ii) any condition, event or occurrence, other than such conditions or
events or occurrences which, individually or in the aggregate, have not had and
would not have a Material Adverse Effect, (iii) any damage, destruction or loss
(whether or not covered by insurance) with respect to any assets of the Company
or any of its subsidiaries individually or in the aggregate in excess of $1.0
million, (iv) any labor, dispute or any labor union organizing activity, or any
actual or threatened strike, work stoppage, slowdown or lockout, or any
material change in its relationship with employees, customers, distributors or
suppliers,(v) any revaluation by the Company of any of its material assets,
including but not limited to writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business,
(vi) any entry by the Company or any of its subsidiaries into any commitment or
transactions material to the Company and its subsidiaries taken as a whole
other than in the ordinary course of business,(vii) receipt of any notice of
termination or the occurrence of a default or the breach of any material
contract, lease or other agreement, or (viii) any other action which, if it had
been taken after the date hereof, would have required the consent of Parent
under Section 5.1 hereof.
SECTION 3.9 Absence of Litigation. Except as disclosed with
reasonable specificity in the SEC Reports filed and publicly available prior to
the date of this Agreement, there are no suits, claims, actions, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries, or any properties or rights of the
<PAGE>
Company or any of its subsidiaries, other than such suits, claims, actions,
proceedings or investigations that (i) individually or in the aggregate, have
not had and would not have a Material Adverse Effect or (ii) seek to delay or
prevent the consummation of the transactions contemplated hereby and are not
reasonably likely to succeed. As of the date hereof, neither the Company nor
any of its subsidiaries nor any of their respective properties is or are
subject to any order, writ, judgment, injunction, decree, determination or
award having, or which would have, a Material Adverse Effect or would prevent
or materially delay the consummation of the transactions contemplated hereby.
SECTION 3.10 Employee Benefit Plans. Except as set forth in
the SEC Reports and except as would not, individually or in the aggregate, have
a Material Adverse Effect:
(a) Schedule 3.10 of the Disclosure Schedule contains a true
and complete list of each "employee benefit plan" (within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, multiemployer plans within the
meaning of ERISA section 3(37)), stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in
the future as a result of the transactions contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or
not, under which any employee or former employee of the Company or any of its
subsidiaries has any present or future right to benefits or under which the
Company or any of its subsidiaries has any present or future liability. All
such plans, agreements, programs, policies and arrangements shall be
collectively referred to as the "Company Plans".
(b) With respect to each Company Plan, the Company has
delivered to the Parent a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) thereof and, to the extent
applicable: (i) any related trust agreement or other funding instrument; (ii)
the most recent determination letter, if applicable; (iii) any summary plan
description and other written communications (or a description of any oral
communications) by the Company or any of its subsidiaries to their employees
concerning the extent of the benefits provided under a Company Plan; and (iv)
for the two most recent years (A) the Form 5500 and attached schedules, (B)
audited financial statements, (C) actuarial valuation reports and (D)
attorney's response to an auditor's request for information.
(c) (i) Each Company Plan has been established and
administered in accordance with its terms, and in compliance with
<PAGE>
the applicable provisions of ERISA, the Internal Revenue Code as of 1986, as
amended (the "Code") and other applicable laws, rules and regulations; (ii)
each Company Plan which is intended to be qualified within the meaning of Code
section 401(a) is so qualified and has received a favorable determination
letter as to its qualification, and nothing has occurred, whether by action or
failure to act, that would cause the loss of such qualification; (iii) no event
has occurred and no condition exists that would subject the Company or any of
its subsidiaries, either directly or by reason of their affiliation with any
member of their "Controlled Group" (defined as any organization which is a
member of a controlled group of organizations within the meaning of Code
sections 414(b), (c), (m) or (o)), to any tax, fine, lien or penalty imposed by
ERISA, the Code or other applicable laws, rules and regulations; (iv) for each
Company Plan with respect to which a Form 5500 has been filed, no material
change has occurred with respect to the matters covered by the most recent Form
since the date thereof; and (v) no "reportable event" (as such term is defined
in ERISA section 4043), "prohibited transaction" (as such term is defined in
ERISA section 406 and Code section 4975) that is not exempt or "accumulated
funding deficiency" (as such term is defined in ERISA section 302 and Code
section 412 (whether or not waived)) has occurred with respect to any Company
Plan.
(d) With respect to each of the Company Plans that is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA but is
subject to Title IV of ERISA, as of the Effective Time, the assets of each such
Company Plan are at least equal in value to the present value of the accrued
benefits (vested and unvested) of the participants in such Company Plan on a
termination and projected benefit obligation basis, based on the actuarial
methods and assumptions indicated in the most recent actuarial valuation
reports.
(e) With respect to any multiemployer plan (within the
meaning of ERISA section 4001(a)(3)) to which the Company, any of its
subsidiaries or any member of their Controlled Group has any liability or
contributes (or has at any time contributed or had an obligation to
contribute): (i) none of the Company, any of its subsidiaries or any member of
their Controlled Group has incurred any withdrawal liability under Title IV of
ERISA or would be subject to such liability if, as of the Effective Time, the
Company, any of its subsidiaries or any member of their Controlled Group were
to engage in a complete withdrawal (as defined in ERISA section 4203) or
partial withdrawal (as defined in ERISA section 4205) from any such
multiemployer plan; and (ii) no such multiemployer plan is in reorganization or
insolvent (as those terms are defined in ERISA sections 4241 and 4245,
respectively).
(f) With respect to any Company Plan, (i) no actions, suits
or claims (other than routine claims for benefits in the ordinary course) are
pending or threatened, and (ii) no facts or
<PAGE>
circumstances exist that could give rise to any such actions, suits or claims.
(g) No Company Plan exists that would result in the payment
to any present or former employee of the Company or any of its subsidiaries of
any money or other property or accelerate or provide any other rights or
benefits to any present or former employee of the Company or any of its
subsidiaries as a result of the transaction contemplated by this Agreement,
whether or not such payment would constitute a parachute payment within the
meaning of Code section 280G.
SECTION 3.11 Tax Matters. The Company and each of its
subsidiaries, and any consolidated, combined, unitary or aggregate group for
tax purposes of which the Company or any of its subsidiaries is or has been a
member has timely filed all Tax Returns required to be filed by it in the
manner provided by law, has paid all Taxes shown thereon to be due and has
provided adequate reserves in its financial statements for any Taxes that have
not been paid, whether or not shown as being due on any Tax Returns. All such
Tax Returns were true, correct and complete in all material respects when
filed. No (i) material claim for unpaid Taxes has become a lien or encumbrance
of any kind against the property of the Company or any of its subsidiaries or
is being asserted against the Company or any of its subsidiaries; (ii) audit of
any Tax Return of the Company or any of its subsidiaries is being conducted by
a Tax authority; and (iii) extension of the statute of limitations on the
assessment of any Taxes is currently in effect with respect to the Company or
any of its subsidiaries. For purposes of this Agreement, "Taxes" shall mean any
taxes of any kind, including but not limited to those on or measured by or
referred to as income, gross receipts, capital, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall
profits taxes, customs, duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any governmental authority, domestic or
foreign. For purposes of this Agreement, "Tax Return" shall mean any return,
report or statement required to be filed with any governmental authority with
respect to Taxes, including any schedule or attachment thereto or amendment
thereof.
SECTION 3.12 Offer Documents; Proxy Statement. Neither the
Schedule 14D-9, nor any of the information supplied by the Company for
inclusion in the Offer Documents, shall, at the respective times such Schedule
14D-9, the Offer Documents or any amendments or supplements thereto are filed
with the SEC or are first published, sent or given to stockholders, as the case
may be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light
<PAGE>
of the circumstances under which they were made, not misleading. Neither the
proxy statement to be sent to the stockholders of the Company in connection
with the Stockholders Meeting (as defined in Section 6.1) nor the information
statement to be sent to such stockholders, as appropriate (such proxy statement
or information statement, as amended or supplemented, is herein referred to as
the "Proxy Statement"), shall, at the date the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to stockholders and at
the time of the Stockholders Meeting and at the Effective Time, be false or
misleading with respect to any material fact, or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Stockholders Meeting which
has become false or misleading. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information supplied by
Parent or Purchaser or any of their respective representatives which is
contained in the Schedule 14D-9 or the Proxy Statement. The Schedule 14D-9 and
the Proxy Statement will comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder.
SECTION 3.13 Environmental Matters. Except as set forth in
the SEC Reports, neither the Company nor any of its subsidiaries is in
violation of any applicable law, rule, regulation, decree or order of any
governmental or regulatory authority applicable to the Company or its
subsidiaries, except for violations which would not have a Material Adverse
Effect. Without limiting the foregoing, except for matters which would not have
a Material Adverse Effect and those matters disclosed in the SEC Reports, (a)
businesses of the Company and its subsidiaries are being conducted in
compliance with applicable Environmental Laws (as defined below), (b) the
businesses of the Company and its subsidiaries (past or present) have not made,
caused or contributed to any material release of any hazardous or toxic waste
or substance into the environment at any facility now or formerly owned or
operated by the Company or its past or present subsidiaries and (c) neither the
Company nor any of its subsidiaries is subject to any compliance agreement or
settlement agreement from an alleged violation of Environmental Laws. For
purposes hereof, "Environmental Laws" shall mean all applicable laws relating
to pollution or protection of the environment, including, without limitation,
the Resource Conservation and Recovery Act, the Federal Water Pollution Control
Act, the Toxic Substances Control Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Federal Clean Air Act, the
Federal Toxic Substance Control Act and any state law equivalents thereof.
<PAGE>
SECTION 3.14 Brokers. No broker, finder or investment banker
(other than the Financial Adviser) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by and on behalf of the Company.
The Company has heretofore furnished to Parent a complete and correct copy of
all agreements between the Company and the Financial Adviser pursuant to which
such firm would be entitled to any payment relating to the transactions
contemplated hereby.
SECTION 3.15 Year 2000. All the computer-based systems of the
Company and its subsidiaries, including its information data bases, accounting
systems and data processing systems, will not be materially adversely affected
by, and will continue to operate in the same manner as such systems currently
operate notwithstanding, Year 2000; provided that the Company does not
represent or warrant that the databases and systems of its material suppliers
and customers will not be adversely affected due to the Year 2000. None of the
Intellectual Property or other assets of the Company and its subsidiaries used
in their current products will be materially adversely affected by, and each
thereof will continue to operate in the same manner as it currently operates
notwithstanding, Year 2000. As used herein, the term "Year 2000" means the
occurrence of or calculation involving the Year 2000 A.D., or other calendar
dates occurring through December 31, 2010.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent
and warrant to the Company that:
SECTION 4.1 Corporate Organization. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
the requisite corporate power and authority and any necessary governmental
authority to own, operate or lease its properties and to carry on its business
as it is now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power, authority and governmental
approvals could not, individually or in the aggregate, reasonably be expected
to prevent the consummation of the Offer or the Merger.
SECTION 4.2 Authority Relative to This Agreement. Each of
Parent and Purchaser has all necessary corporate power and authority to enter
into this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
<PAGE>
this Agreement by each of Parent and Purchaser and the consummation by each of
Parent and Purchaser of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and
Purchaser other than filing and recordation of appropriate merger documents as
required by the MGCL. This Agreement has been duly executed and delivered by
Parent and Purchaser and, assuming due authorization, execution and delivery by
the Company, constitutes a legal, valid and binding obligation of each such
corporation enforceable against such corporation in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
SECTION 4.3 No Conflict; Required Filings and Consents. (a)
The execution, delivery and performance of this Agreement by Parent and
Purchaser do not and will not: (i) conflict with or violate the respective
certificates or articles of incorporation or by-laws of Parent or Purchaser;
(ii) assuming that all consents, approvals and authorizations contemplated by
clauses (i), (ii) and (iii) of subsection (b) below have been obtained and all
filings described in such clauses have been made, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Parent or
Purchaser or by which either of them or their respective properties are bound
or affected; or (iii) result in any breach or violation of or constitute a
default (or an event which with notice or lapse of time or both could become a
default) or result in the loss of a material benefit under, or give rise to any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the property or assets of
Parent or Purchaser pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Purchaser is a party or by which Parent or Purchaser or any
of their respective properties are bound or affected, except, in the case of
clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults
or other occurrences which could not, individually or in the aggregate,
reasonably be expected to prevent the consummation of the Offer or the Merger.
(b) The execution, delivery and performance of this Agreement
by Parent and Purchaser do not and will not require any consent, approval,
authorization or permit of, action by, filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Exchange Act and the rules and
regulations promulgated thereunder, the HSR Act, state securities, takeover and
Blue Sky laws, (ii) the filing and recordation of appropriate merger or other
documents as required
<PAGE>
by the MGCL, (iii) the consent of the Required Lenders (having the meaning
assigned to such term under the Credit Agreement and the 364 Day Credit
Agreement referred to below) under (x) the Amended and Restated Credit
Agreement dated as of August 13, 1998 (the "Credit Agreement"), among Parent,
the several lenders from time to time a party thereto, BankAmerica Robertson
Stevens and Lehman Commercial Paper Inc., as Arrangers (the "Arrangers"), Bank
of America National Trust & Savings Association, as Administrative Agent (the
"Administration Agent"), and Lehman Commercial Paper Inc., as Documentation
Agent and Syndication Agent (the "Documentation Agent"), and (y) the 364 Day
Credit Agreement dated as of August 13, 1998 (the "364 Day Credit Agreement"),
among Parent, the several lenders from time to time a party thereto, the
Arrangers, the Administration Agent and the Documentation Agent, and (iv) such
consents, approvals, authorizations, permits, actions, filings or notifications
the failure of which to make or obtain would not, individually or in the
aggregate, reasonably be expected to prevent the consummation of the Offer or
the Merger.
SECTION 4.4 Offer Documents; Proxy Statement. The Offer
Documents, as filed pursuant to Section 1.1, will not, at the time such Offer
Documents are filed with the SEC or are first published, sent or given to
stockholders, as the case may be, contain any untrue statement of a material
fact or omit to state any material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
information supplied by Parent for inclusion in the Proxy Statement shall not,
on the date the Proxy Statement is first mailed to stockholders, at the time of
the Stockholders Meeting (as defined in Section 6.1) or at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to any
material fact, or shall omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Stockholders Meeting which
has become false or misleading. Notwithstanding the foregoing, Parent and
Purchaser make no representation or warranty with respect to any information
supplied by the Company or any of its representatives which is contained in or
incorporated by reference in any of the foregoing documents or the Offer
Documents. The Offer Documents, as amended and supplemented, will comply in all
material respects as to form with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder.
SECTION 4.5 Brokers. No broker, finder or investment banker
is entitled to any brokerage, finder's or other fee or commission from the
Company in connection with the transactions
<PAGE>
contemplated by this Agreement based upon arrangements made by and on behalf of
Parent or Purchaser.
SECTION 4.6 Financing. Subject to the consent of the Required
Lenders under the Credit Agreement and the 365 Day Credit Agreement, Parent and
Purchaser have as of the date hereof and will have available to them, upon
consummation of the Offer and at the Effective Time, immediately available
funds necessary to consummate the transactions contemplated by this Agreement.
Parent and Purchaser reasonably believe that such consents of the Required
Lenders will be obtained.
SECTION 4.7 Operations of Purchaser. Purchaser has been
formed solely for the purpose of engaging in the transactions contemplated
hereby and prior to the Effective Time will have engaged in no other business
activities and will have incurred no liabilities or obligations other than as
contemplated herein.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending the
Merger. The Company covenants and agrees that, during the period from the date
hereof until the time persons nominated by Parent or Purchaser constitute a
majority of the Board of Directors, except pursuant to the terms hereof or as
disclosed in the SEC Reports, or unless Purchaser shall otherwise agree in
writing, the businesses of the Company and its subsidiaries shall be conducted
only in, and the Company and its subsidiaries shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice and in compliance in all material respects with applicable laws; and
the Company and its subsidiaries shall each use its reasonable good faith
efforts to preserve substantially intact the business organization and assets
of the Company and its subsidiaries, to keep available the services of the
present officers, employees and consultants of the Company and its subsidiaries
and to preserve the present relationships of the Company and its subsidiaries
with customers, suppliers and other persons with which the Company or any of
its subsidiaries has significant business relations. By way of amplification
and not limitation, neither the Company nor any of its subsidiaries shall,
between the date of this Agreement and the time persons nominated by Parent or
Purchaser constitute a majority of the Board of Directors, directly or
indirectly do, or propose or commit to do, any of the following, except as
otherwise contemplated by this Agreement, as previously disclosed in the SEC
Reports filed prior to the date of this Agreement or as set forth in Schedule
5.1 of the Disclosure Schedule, without the prior written consent of Parent:
<PAGE>
(a) Amend or otherwise change its Articles or By-Laws
or equivalent organizational documents;
(b) Issue, deliver, sell, pledge, dispose of or encumber, or
authorize or commit to the issuance, sale, pledge, disposition or
encumbrance of, (A) any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind
to acquire any shares of capital stock, or any other ownership
interest (including but not limited to stock appreciation rights or
phantom stock), of the Company or any of its subsidiaries (except for
the issuance of up to 1,571,302 shares of Company Common Stock
issuable in accordance with the terms of Employee Options outstanding
as of November 30, 1998) or (B) any property or assets, whether
tangible or intangible, of the Company or any of its subsidiaries,
except for sales of products in the ordinary course of business and in
a manner consistent with past practice;
(c) Declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(d) Reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock
or any capital stock of any of its subsidiaries;
(e) (i) Acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof or any material assets, (ii) incur
any indebtedness for borrowed money (other than indebtedness incurred
under the Company's existing revolving credit facility in the ordinary
course of business consistent with past practice to fund working
capital requirements) or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, or make any loans,
advances or capital contributions to, or investments in, any other
person, (iii) make or start any bid or proposal, or enter into or
renew or amend in any material respect any contract or agreement other
than in the ordinary course of business consistent with past practice
that would involve aggregate consideration under such bid, proposal,
contract or agreement in excess of $4.0 million or is bid, proposed or
renewed at an amount at which the Company would expect such bid,
proposal or renewal to result in a loss thereunder to the Company,
(iv) except for expenditures relating to the anticipated acquisition
of Oracle Software in accordance with the Edgemark Systems Proposal
for Microdyne dated September 9, 1998, authorize any single capital
expenditure which is in excess of $250,000 or capital expenditures
which are, in the
<PAGE>
aggregate, in excess of $1.0 million for the Company and its
subsidiaries taken as a whole, (v) enter into any transaction,
contract or commitment with any affiliate of the Company, or (vi)
except as contemplated or permitted by clauses (i)-(v) of this Section
5.1(e), enter into or amend any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this
Section 5.1(e);
(f) Except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the
date of this Agreement, increase the compensation or fringe benefits
of any of its directors, officers or employees, except for increases
in salary or wages of employees of the Company or its subsidiaries who
are not officers of the Company in the ordinary course of business in
accordance with past practice, or grant any retention, severance or
termination pay not currently required to be paid under existing
severance plans to or enter into any employment, consulting or
severance agreement or arrangement with any present or former
director, officer or other employee of the Company or any of its
subsidiaries, or establish, adopt, enter into or amend or terminate
any collective bargaining agreement or Company Plan, including, but
not limited to, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust,
fund, policy or arrangement for the benefit of any directors, officers
or employees;
(g) Except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the
accounting methods, practices or principles used by it;
(h) Make or change any Tax election, make or change any
method of accounting with respect to Taxes, file any amended Tax
Return or settle or compromise any material Tax liability;
(i) Settle or compromise any pending or threatened suit,
action or claim for an aggregate amount in excess of $100,000 or which
is material or which relates to the transactions contemplated hereby;
(j) Make any change in the key management structure of the
Company or any of its subsidiaries, including, without limitation, the
hiring of additional officers or the termination of existing officers;
(k) Other than in the ordinary course of business, transfer
or grant any rights under any Intellectual
<PAGE>
Property, or modify any existing rights with respect thereto; provided
that the Company shall not grant an exclusive license with respect to
any Intellectual Property;
(l) Adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its subsidiaries not
constituting an inactive subsidiary (other than the Merger);
(m) Pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business in accordance with the terms of such
obligation or liability and consistent with past practice of
liabilities reflected or reserved against in the financial statements
of the Company or incurred in the ordinary course of business and
consistent with past practice;
(n) Fail to maintain in full force and effect the existing
insurance policies covering the Company and its subsidiaries and their
respective properties, assets and businesses (provided, that the
Company may substitute therefor policies providing for coverages no
less favorable to the Company and its subsidiaries on terms and
conditions no less favorable to the Company and its subsidiaries); or
(o) Take, or offer or propose to take, or agree to take in
writing or otherwise, any of the actions described in Sections 5.1(a)
through 5.1(n) or any action which would make any of the
representations or warranties of the Company contained in this
Agreement untrue and incorrect as of the date when made if such action
had then been taken, or would result in any of the conditions set
forth in Annex A not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholders Meeting. (a) The Company, acting
through its Board of Directors, shall, if required in accordance with
applicable law and the Company's Articles and By-Laws, (i) duly call, give
notice of, convene and hold a meeting of its stockholders as soon as
practicable following consummation of the Offer for the purpose of considering
and taking action on this Agreement and the transactions contemplated hereby
(the "Stockholders Meeting") and (ii) subject to its fiduciary duties under
applicable law as determined in good faith by a majority of the Disinterested
Directors (as defined in Section 6.3(c)) of the Company based on the advice of
independent outside legal counsel to the Disinterested Directors, (A) include
in the Proxy
<PAGE>
Statement the unanimous recommendation of the Board of Directors that the
stockholders of the Company vote in favor of the approval of this Agreement and
the transactions contemplated hereby and, subject to the approval of the
Financial Advisor, the written opinion of the Financial Adviser that the
consideration to be received by the stockholders of the Company pursuant to the
Offer and the Merger is fair to such stockholders and (B) use its reasonable
good faith efforts to obtain the necessary approval of this Agreement and the
transactions contemplated hereby by its stockholders. At the Stockholders
Meeting, Parent and Purchaser shall cause all Shares then beneficially owned by
them and their subsidiaries to be voted in favor of approval of this Agreement
and the transactions contemplated hereby.
(b) Notwithstanding the foregoing, in the event that
Purchaser shall acquire at least 90% of the outstanding Shares, the Company and
Parent agree, subject to Article VII, to take all necessary and appropriate
action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 3-106 of the MGCL.
(c) Notwithstanding anything to the contrary contained in
this Agreement, the Company shall not be required to hold the Stockholders
Meeting if the Minimum Condition is not satisfied.
SECTION 6.2 Proxy Statement. If required by applicable law,
as soon as practicable following Parent's request, the Company shall file with
the SEC under the Exchange Act and the rules and regulations promulgated
thereunder, and shall use its reasonable good faith efforts to have cleared by
the SEC, the Proxy Statement with respect to the Stockholders Meeting. Parent,
Purchaser and the Company will cooperate with each other in the preparation of
the Proxy Statement. Without limiting the generality of the foregoing, each of
Parent and Purchaser will furnish to the Company the information relating to it
required by the Exchange Act and the rules and regulations promulgated
thereunder to be set forth in the Proxy Statement. The Company agrees to use
its reasonable good faith efforts, after consultation with the other parties
hereto, to respond promptly to any comments made by the SEC with respect to the
Proxy Statement and any preliminary version thereof filed by it and cause such
Proxy Statement to be mailed to the Company's stockholders at the earliest
practicable time.
SECTION 6.3 Company Board Representation; Section 14(f). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and
from time to time thereafter, Purchaser shall be entitled to designate up to
such number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as shall give Purchaser representation on the Board of
Directors equal to the product of the total number of directors on such Board
(giving effect to the directors
<PAGE>
elected pursuant to this sentence) multiplied by the percentage that the
aggregate number of Shares beneficially owned by Purchaser or any affiliate of
Purchaser bears to the total number of Shares then outstanding, and the Company
shall, at such time, promptly take all action necessary to cause Purchaser's
designees to be so elected, including either increasing the size of the Board
of Directors or securing the resignations of incumbent directors or both.
Notwithstanding the foregoing, none of Parent, Purchaser or the Company shall
take any action to remove or replace any member of the Special Committee after
consummation of the Offer and prior to the Effective Time. If at any time prior
to the Effective Time there are less than two members of the Special Committee,
as constituted on the date hereof (other than upon the resignation of both
Disinterested Directors), on the Company's Board of Directors, Parent,
Purchaser and the Company shall use all reasonable efforts to ensure that two
members of the Company's Board of Directors are Disinterested Directors. In the
event that both Disinterested Directors resign from the Special Committee,
Parent, Purchaser and the Company shall either (i) use their reasonable efforts
to appoint successors as aforesaid or (ii) permit the resigning Disinterested
Directors to appoint their successors in their reasonable discretion. The
Company will use its best efforts to cause persons designated by Purchaser to
constitute the same percentage as is on the Board of (i) each committee of the
Board, (ii) each board of directors of each domestic subsidiary of the Company
and (iii) each committee of each such board, in each case only to the extent
permitted by law. Until Purchaser acquires a majority of the outstanding Shares
on a fully diluted basis, the Company shall use its best efforts to ensure that
all the members of the Board and such boards and committees as of the date
hereof who are not employees of the Company shall remain members of the Board
and such boards and committees.
(b) The Company's obligations to appoint designees to its
Board of Directors shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. The Company shall promptly (subject to the
prompt provision of information by Parent and Purchaser) take all actions
required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under this Section 6.3 and shall include in the Schedule 14D-9 or a
separate Rule 14f-1 information statement provided to stockholders such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 to fulfill its obligations under
this Section 6.3. Parent or Purchaser will promptly supply to the Company and
be solely responsible for any information with respect to either of them and
their nominees, officers, directors and affiliates required by Section 14(f)
and Rule 14f-1.
(c) Following the election or appointment of Purchaser's
designees pursuant to this Section 6.3 and prior to the Effective Time, any
amendment of this Agreement or the
<PAGE>
Articles or By-Laws of the Company, any termination of this Agreement by the
Company, any extension by the Company of the time for the performance of any of
the obligations or other acts of Parent or Purchaser or waiver of any of the
Company's rights hereunder, will require the concurrence of a majority of the
directors of the Company then in office who are (a) either members of the
Special Committee (as constituted on the date hereof) or (b) are neither
designated by Purchaser nor are employees of the Company or any of its
subsidiaries (the "Disinterested Directors").
SECTION 6.4 Access to Information; Confidentiality. (a) From
the date hereof to the Effective Time, the Company shall, and shall cause its
subsidiaries, officers, directors, employees, auditors and other agents to,
afford the officers, employees, auditors and other agents of Parent, and
financing sources who shall agree to be bound by the provisions of this Section
6.4 as though a party hereto, complete access at all reasonable times to its
officers, employees, agents, properties, offices, plants and other facilities
and to all books and records, and shall furnish Parent and such financing
sources with all financial, operating and other data and information as Parent,
through its officers, employees or agents, or such financing sources may from
time to time reasonably request.
(b) Each of Parent and Purchaser will hold and treat and will
cause its officers, employees, auditors and other agents to hold and treat in
confidence all documents and information concerning the Company and its
subsidiaries furnished to Parent or Purchaser in connection with the
transactions contemplated in this Agreement in accordance with the
Confidentiality Agreement, dated November 8, 1998, between the Company and
Parent, which Confidentiality Agreement shall remain in full force and effect
in accordance with its terms.
(c) No investigation pursuant to this Section 6.4 shall
affect any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereto.
SECTION 6.5 No Solicitation of Transactions. The Company, its
affiliates and their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any acquisition or
exchange of all or any material portion of the assets of, or any equity
interest in, the Company or any of its subsidiaries or any business combination
with the Company or any of its subsidiaries. The Company may, directly or
indirectly, furnish information and access, in each case only in response to a
request for such information or access to any person made after the date hereof
which was not encouraged, solicited or initiated by the Company or any of its
affiliates or any of its or their respective
<PAGE>
officers, directors, employees, representatives or agents after the date
hereof, pursuant to appropriate confidentiality agreements, and may participate
in discussions and negotiate with such entity or group concerning any merger,
sale of assets, sale of shares of capital stock or similar transaction
(including an exchange of stock or assets) involving the Company or any
subsidiary or division of the Company, if such entity or group has submitted a
written proposal to the Board relating to any such transaction and the Special
Committee Members, as a result of such proposal, by a majority vote determine,
in their good faith judgment, that based on the advice of independent outside
legal counsel to the Special Committee Members, failing to take such action
would constitute a breach of the Board's fiduciary duty under applicable law.
The Board shall provide a copy of any such written proposal to Parent
immediately after receipt thereof, shall notify Parent immediately if any such
proposal is made and shall keep Parent promptly advised of all developments
which could reasonably be expected to culminate in the Board of Directors
withdrawing, modifying or amending its recommendation of the Offer, the Merger
and the other transactions contemplated by this Agreement. Except as set forth
in this Section 6.5, neither the Company or any of its affiliates, nor any of
its or their respective officers, directors, employees, representatives or
agents, shall, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent
and Purchaser, any affiliate or associate of Parent and Purchaser or any
designees of Parent or Purchaser) concerning any merger, sale of all or any
material portion of the assets, the sale of more than 10% of the outstanding
shares of capital stock of the Company or any of its subsidiaries or similar
transactions (including an exchange of stock or assets) involving the Company
or any subsidiary or division of the Company; provided, however, that nothing
herein shall prevent the Board from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated
under the Exchange Act with regard to any tender offer; provided, further, that
the Board shall not recommend that the stockholders of the Company tender their
Shares in connection with any such tender offer unless the Board by a majority
vote determines in its good faith judgment, based on the advice of independent
outside legal counsel to the Company, that failing to take such action would
constitute a breach of the Board's fiduciary duty under applicable law. The
Company agrees not to release any third party from, or waive any provisions of,
(i) any standstill agreement to which the Company is a party (other than for
the limited purpose of discussions and negotiations permitted by this Section
6.5) and (ii) any confidentiality agreement to which the Company is a party.
SECTION 6.6 Employee Benefits Matters. (a) The
Company shall or Parent shall cause the Company and the Surviving
Corporation to promptly pay or provide when due all compensation
<PAGE>
and benefits earned through or prior to the Effective Time as provided pursuant
to the terms of any compensation arrangements, employment agreements and
employee or director benefit plans, programs and policies in existence as of
the date hereof for all employees (and former employees) and directors (and
former directors) of the Company. Parent and the Company agree that the Company
and the Surviving Corporation shall pay promptly or provide when due all
compensation and benefits required to be paid pursuant to the terms of any
individual agreement with any employee, former employee, director or former
director in effect and disclosed to Parent as of the date hereof. Nothing
herein shall require the continued employment of any person or prevent the
Company and/or the Surviving Corporation from taking any action or refraining
from taking any action which the Company could take or refrain from taking
prior to the Effective Time.
(b) Except as contemplated herein, Parent shall cause the
Surviving Corporation, for the period ending on December 31, 1999, to provide
employee benefits under plans, programs and arrangements which, in the
aggregate, will provide benefits to the employees of the Surviving Corporation
(other than employees covered by a collective bargaining agreement) which are
no less favorable than those provided pursuant to the plans, programs and
arrangements of the Company in effect on the date hereof (other than
stock-based plans) and employees covered by collective bargaining agreements
shall be provided with such benefits as shall be required under the terms of
any applicable collective bargaining agreement; provided, however, that nothing
herein shall prevent the amendment or termination of any such plan, program or
arrangement, require that the Surviving Corporation provide or permit
investment in the securities of Parent, the Company or the Surviving
Corporation or interfere with the Surviving Corporation's right or obligation
to make such changes as are necessary to conform with applicable law. On and
after January 1, 2000, Parent shall provide employees of the Surviving
Corporation (other than those covered by collective bargaining agreements) with
benefits, in the aggregate, that are no less favorable than those provided to
similarly situated employees of subsidiaries of Parent.
SECTION 6.7 Directors' and Officers' Indemnification and
Insurance. (a) From the Effective Time through the sixth anniversary of the
date on which the Effective Time occurs, Parent shall, or shall cause the
Surviving Corporation to, indemnify and hold harmless each present and former
officer, director or employee of the Company (the "Indemnified Parties"),
against all claims, losses, liabilities, damages, judgments, fines, reasonable
fees, reasonable costs or reasonable expenses, including, without limitation,
reasonable attorneys' fees and disbursements (collectively, "Costs"), incurred
in connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of the
fact that the Indemnified Party is or was a director,
<PAGE>
officer or employee or the Company and pertaining to matters existing or
occurring at or prior to the Effective Time (including, without limitation,
this Agreement and the transactions and actions contemplated hereby), whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent permitted under applicable law; provided, that no Indemnified Party may
settle any such claim without the prior approval of Parent or the Surviving
Corporation (such consent not to be unreasonably withheld). Each Indemnified
Party will be entitled to advancement of expenses incurred in the defense of
any claim, action, suit, proceeding or investigation; provided, that any person
to whom expenses are advanced provides an undertaking to repay such advances if
it is ultimately determined that such person is not entitled to
indemnification. Without limiting the foregoing, in the event that any claim,
action, suit, proceeding or investigation is brought against an Indemnified
Party (whether arising before or after the Effective Time), the Indemnified
Parties as a group may retain one counsel (plus appropriate local counsel)
satisfactory to Parent or the Surviving Corporation.
(b) The By-Laws of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set forth
in Article VIII of the By-laws of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of three years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers or employees
of the Company.
(c) Parent shall, or shall cause the Surviving Corporation to
maintain, at no expense to the beneficiaries, in effect for six years from the
Effective Time the current policies of the directors' and officers' liability
insurance maintained by the Company (provided that Parent or the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are not materially less advantageous)
with respect to matters occurring at or prior to the Effective Time to the
extent available; provided, however, that in no event shall Parent or the
Surviving Corporation be required to expend more than an amount per year in
excess of 150% of current annual premiums paid by the Company (which the
Company represents and warrants to be not more than $140,000) to maintain or
procure insurance coverage pursuant hereto; and provided, further, that if the
annual premiums of such insurance coverage would exceed 150% of current annual
premiums, Parent or the Surviving Corporation shall obtain a policy with the
greatest coverage available for a cost not exceeding 150% of current annual
premiums. In the event any claim is made against present or former directors,
officers or employees of the Company (the "Indemnitees") that is covered or
potentially covered by insurance, none of the Surviving Corporation, Parent or
any Indemnitee shall do anything that would forfeit, jeopardize,
<PAGE>
restrict or limit the insurance coverage available for that claim until the
final disposition thereof.
(d) Notwithstanding anything herein to the contrary, if any
claim, action, suit, proceeding or investigation (whether arising before, at or
after the Effective Time) is made against any Indemnified Party, on or prior to
the sixth anniversary of the Effective Time, the provisions of this Section 6.7
shall continue in effect until the final disposition of such claim, action,
suit, proceeding or investigation.
(e) This covenant is intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified Parties and their respective
heirs and legal representatives. The indemnification provided for herein shall
not be deemed exclusive of any other rights to which an Indemnified Party is
entitled, whether pursuant to law, contract or otherwise.
(f) In the event that the Surviving Corporation or Parent or
any of their respective successor or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in each
such case, to the extent necessary to effectuate the purposes of this Section
6.7, proper provision shall be made so that the successors and assigns of the
Surviving Corporation or Parent shall succeed to the obligations set forth in
this Section 6.7.
(g) Parent and Purchaser acknowledge that the Company is a
party to indemnification agreements (the "Indemnification Agreements") with
each of its current directors as set forth on Schedule 3.8 of the Disclosure
Schedule. Parent and Purchaser agree that all rights in favor of such persons
as set forth in the Indemnification Agreements shall survive the Merger and
shall continue in full force and effect and without modification (except for
such modifications which would enlarge the rights) after the Effective Time in
accordance with the provisions of such Indemnification Agreements, and Parent
shall cause the Surviving Corporation to comply fully with its obligations
hereunder and thereunder. The parties acknowledge that nothing in this Section
6.7 shall limit any rights in favor of Indemnified Parties under the
Indemnification Agreements.
SECTION 6.8 Notification of Certain Matters. The Company
shall give reasonably prompt notice to Parent, and Parent shall give reasonably
prompt notice to the Company, in each case, after it becomes aware, of (i) the
occurrence or non-occurrence of any event the occurrence or non-occurrence of
which would be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respects at or prior to
the Effective Time and (ii) any material failure of
<PAGE>
the Company, Parent or Purchaser, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.8 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 6.9 Further Action; Reasonable Good Faith Efforts.
Upon the terms and subject to the conditions hereof, each of the parties hereto
shall use its reasonable good faith efforts to take, or cause to be taken, all
appropriate action, and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement as promptly as
practicable, including but not limited to (i) cooperation in the preparation
and filing of the Offer Documents, the Schedule 14D-9, the Proxy Statement, any
required filings under the HSR Act and any amendments to any thereof and (ii)
using its reasonable good faith efforts to make all required regulatory filings
and applications and to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company and its subsidiaries as are necessary for
the consummation of the transactions contemplated by this Agreement and the
Tender Agreement and to fulfill the conditions to the Offer and the Merger;
provided that Purchaser and its affiliates shall not be required to divest, or
agree to any restrictions with respect to, any of its businesses or assets or
the businesses or assets to be acquired in connection with the transactions
contemplated hereby. The Company will use reasonable good faith efforts to
cooperate with Parent and Purchaser as may be reasonably necessary with respect
to consummating the financing for the Offer and the Merger. Parent and
Purchaser will use reasonable good faith efforts to obtain the consents as
promptly as practicable of the Required Lenders under the Credit Agreement and
the 364 day Credit Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their reasonable good faith efforts to take all such necessary
action.
SECTION 6.10 Public Announcements. Parent and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated by
this Agreement, including the Offer or the Merger and the Tender Agreement, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by law or any listing agreement
with its securities exchange.
SECTION 6.11 Disposition of Litigation. (a) The Company
agrees that it will not settle any litigation currently
<PAGE>
pending, or commenced after the date hereof, against the Company or any of its
directors by any stockholder of the Company relating to the Offer or this
Agreement, without the prior written consent of Parent.
(b) Except as permitted by Section 6.5 of this Agreement, the
Company will not voluntarily cooperate with any third party which has sought or
may hereafter seek to restrain or prohibit or otherwise oppose the Offer or the
Merger and will cooperate with Parent and Purchaser to resist any such effort
to restrain or prohibit or otherwise oppose the Offer or the Merger.
SECTION 6.12 State Takeover Statutes. During the term of this
Agreement, the Board of Directors of the Company shall not (i) repeal or
otherwise alter the resolutions of the Board of Directors that render Section
3-602 of the MGCL (or any similar provision) inapplicable to the Offer, the
Merger, this Agreement, the Tender Agreement, the other transactions
contemplated hereby and thereby and any Consensual Transaction and (ii) amend
the By-laws of the Company so as to render Section 3-702(a)(i) of the MGCL (or
any similar provision) applicable to the transactions contemplated by this
Agreement and the Tender Agreement, including, without limitation, the Offer,
or to any Consensual Transaction.
SECTION 6.13 Stop Transfer Order. The Company will instruct
the Company's transfer agent that, except as provided in Section 4.3 of the
Tender Agreement, there is a stop transfer order with respect to all of the
Stockholders' Shares and that the Tender Agreement places limits on the
transfer of such Shares.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) If required by the MGCL, this Agreement shall have been
approved by not less than the affirmative vote of the stockholders of the
Company by the requisite vote in accordance with the Company's Articles and the
MGCL.
(b) No statute, rule, regulation, executive order, decree,
ruling, injunction or other order (whether temporary, preliminary or permanent)
shall have been enacted, entered, promulgated or enforced by any United States
or state court or
<PAGE>
governmental authority which prohibits, restrains, enjoins or restricts the
consummation of the Merger.
(c) Any waiting period applicable to the Merger under the HSR
Act shall have terminated or expired.
(d) Purchaser shall have purchased Shares pursuant to the
Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and
the Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
(a) By mutual written consent of Parent, Purchaser and the
Company, subject in the case of the Company to Section 6.3(c);
(b) By Parent or the Company if any court of competent
jurisdiction or other governmental body located or having jurisdiction within
the United States or any country or economic region in which either the Company
or Parent, directly or indirectly, has material assets or operations, shall
have 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 shall have become final and
nonappealable and, with respect to any court or governmental body located
outside the United States, such order, decree, ruling or other action would
have a Material Adverse Effect or a material adverse effect on the business,
operations, assets, financial condition or results of operations of Parent and
its subsidiaries taken as a whole;
(c) By Parent if due to an occurrence or circumstance which
would result in a failure to satisfy any of the Offer Conditions, Purchaser
shall have (i) terminated the Offer or (ii) failed to pay for Shares pursuant
to the Offer within 120 days following the date hereof, unless such failure to
pay for Shares is a result of the failure of Parent or Purchaser to perform any
of its covenants and agreements contained in this Agreement;
(d) By the Company if (i) (A) Purchaser fails to commence the
Offer as provided in Section 1.1, (B) Purchaser fails to pay for Shares
pursuant to the Offer within 120 days following the date hereof, unless such
failure to pay for Shares is the result of the failure of the Company to
perform any of its covenants and agreements contained in this Agreement, or (C)
Purchaser shall have terminated the Offer or (ii) prior to the
<PAGE>
purchase of Shares pursuant to the Offer, any person shall have made a bona
fide offer to acquire the Company as a result of which a majority of the
Special Committee Members conclude in good faith on the advice of independent
outside legal counsel to the Special Committee Members that termination of this
Agreement is necessary in order for the Board of Directors to comply with its
fiduciary obligations under applicable law (provided that such termination
under this clause (d) shall not be effective until the Company has made payment
of the fee, if any, required simultaneous with such termination pursuant to
Section 8.3(a) hereof); or
(e) By Parent prior to the purchase of Shares pursuant to the
Offer, if (i)following any negotiations by the Company with any person (other
than Parent or Purchaser) that has proposed a Third Party Acquisition, there
shall have been a breach of any covenant or agreement on the part of the
Company contained in this Agreement such that the conditions set forth in
clause (f) of Annex A and/or Section 7.1 would not be satisfied which shall not
have been cured prior to the earlier of (A) 10 days following notice of such
breach and (B) two business days prior to the date on which the Offer
expires,(ii) the Board shall have withdrawn or modified (including by amendment
of the Schedule 14D-9) in a manner adverse to Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger or shall have
recommended another offer or transaction, or shall have resolved to effect any
of the foregoing, or (iii) the Minimum Condition shall not have been satisfied
by the expiration date of the Offer and on or prior to such date (A) any person
(other than Parent or Purchaser) shall have made and not withdrawn a bona fide
proposal or public announcement or communication to the Company with respect to
a Third Party Acquisition or (B) any person (including the Company or any of
its affiliates or subsidiaries), other than Parent or any of its affiliates
shall have become the beneficial owner of more than 25% of the Shares.
SECTION 8.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except as set forth in Section 8.3 and Section 9.1; provided, however,
that nothing herein shall relieve any party from liability for any breach
hereof.
SECTION 8.3 Fees. (a) If (A) the Company terminates this
Agreement pursuant to 8.1(d)(ii) hereof, (B) the Company terminates this
Agreement pursuant to Section 8.1(d)(i)(B) hereof at a time when Parent had a
right to terminate this Agreement pursuant to Section 8.1(e) hereof or (C)
Parent terminates this Agreement pursuant to Section 8.1(e) hereof (each, a
"Fee Termination Event"), then (x) in the event of a termination
<PAGE>
pursuant to Section 8(e)(i)or pursuant to Section 8.1(d)(i)(B) at a time when
Parent had a right to terminate this Agreement pursuant to Section 8.1(e)(i),
if the Company or any of its subsidiaries enters into an agreement with respect
to a Third Party Acquisition (an "Acquisition Agreement") within 12 months of
termination, the Company shall pay Parent $1.25 million simultaneously with the
signing of the Acquisition Agreement and an additional $1.25 million on the
consummation of a Third Party Acquisition pursuant to such Acquisition
Agreement or if a Third Party Acquisition occurs within 12 months of
termination without the execution of an Acquisition Agreement, the Company
shall pay Parent $2.5 million on the consummation of the Third Party
Acquisition and (y) in the event of any other Fee Termination Event, the
Company shall pay to Parent a fee, in cash (as a condition and prior to such
Fee Termination Event if such event is a termination by the Company and within
one business day of such termination if such event is a termination by Parent),
of $1.25 million and, if a Third Party Acquisition occurs within 12 months, an
additional $1.25 million on the consummation of such transaction. Parent shall
not be entitled to a fee under this Section 8.3(a) if Parent is in material
breach of this Agreement and such breach has not been cured within 10 days
following notice of such breach. Notwithstanding the foregoing provisions, the
Company in no event shall be obligated to pay to Parent more than $2.5 million
pursuant to this Section 8.3(a).
"Third Party Acquisition" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger, tender offer or
otherwise by any person or group of persons acting in concert other than
Parent, Purchaser or any affiliate thereof (a "Third Party"); (ii) the
acquisition by a Third Party of 35% or more of the assets of the Company and
its subsidiaries, taken as a whole, in one transaction or a related series of
transactions; (iii) the acquisition by a Third Party of more than 35% of the
outstanding Shares, in one transaction or a related series of transactions;
(iv) the adoption by the Company of a plan of liquidation or the declaration or
payment of an extraordinary dividend; or (v) the repurchase by the Company or
any of its subsidiaries of 15.0% or more of the outstanding Shares.
(b) If this Agreement is terminated due to the failure to
satisfy the Offer Condition set forth in clause (ii) of Annex A, then Parent
shall pay to the Company a fee, in cash, of $1.25 million within one business
day of such termination; provided that the Company shall not be entitled to a
fee under this Section 8.3(b) if the Company is in material breach of this
Agreement and such breach has not been cured within 10 days following notice of
such breach.
<PAGE>
(c) Except as otherwise specifically provided herein, each
party shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
SECTION 8.4 Amendment. Subject to Section 6.3, this Agreement
may be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after approval of the Merger by the stockholders of
the Company, no amendment may be made which would reduce the amount or change
the type of consideration into which each Share shall be converted upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.5 Waiver. Subject to Section 6.3, at any time prior
to the Effective Time, any party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II, Section 6.6, Section 6.7, Section 6.10 and Article IX
shall survive the Effective Time and those set forth in Section 6.4(b), Section
8.3 and Article IX shall survive termination of this Agreement.
SECTION 9.2 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telecopy, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
<PAGE>
if to Parent or Purchaser:
L-3 Communications Corporation
600 Third Avenue
New York, New York 10016
Attention: Christopher C. Cambria, Esq.
with an additional copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: William E. Curbow, Esq.
if to the Company:
Microdyne Corporation
3601 Eisenhower Avenue
Alexandria, VA 22304
Attention: Michael E. Jalbert
with copies to:
McGuire, Woods, Battle & Boothe LLP
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attention: David H. Pankey, Esq.
and
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, N.Y. 10019-6092
Attention: Morton A. Pierce, Esq.
SECTION 9.3 Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned
person;
(b) "beneficial owner" with respect to any Shares means a
person who shall be deemed to be the beneficial owner of such Shares
(i) which such person or any of its affiliates or associates
beneficially owns, directly or indirectly, (ii) which such person or
any of its affiliates or associates (as such term is defined in Rule
12b-2 of the Exchange Act) has, directly or indirectly, (A) the right
to acquire (whether such right is exercisable immediately or subject
only to the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise
<PAGE>
of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement,
arrangement or understanding or (iii) which are beneficially owned,
directly or indirectly, by any other persons with whom such person or
any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares;
(c) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction
of the management policies of a person, whether through the ownership
of stock, as trustee or executor, by contract or credit arrangement or
otherwise;
(d) "generally accepted accounting principles" shall mean the
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as may be approved by a
significant segment of the accounting profession in the United States,
in each case applied on a basis consistent with the manner in which
the audited financial statements for the fiscal year of the Company
ended September 28, 1997 were prepared;
(e) "knowledge", when used with reference to the Company or
its subsidiaries shall mean the actual knowledge of senior executive
officers of the Company after reasonable investigation.
(f) "Intellectual Property" shall mean intellectual or
property of a similar nature including without limitation trademark
rights, patent rights, copyrights, design rights, proprietary
information and all other intellectual property rights, including,
without limitation, inventions, processes, formulae, technology,
know-how, techniques or other data and information, confidential and
proprietary trade secrets, computer software, technical manuals and
documentation used in connection with any of the foregoing, and
licenses and rights with respect to the foregoing or property of like
nature;
(g) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d)(3) of the Exchange Act); and
(h) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent or any other person means any
<PAGE>
corporation, partnership, joint venture or other legal entity of which
the Company, the Surviving Corporation, Parent or such other person,
as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests the holder of which is generally entitled to
vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
SECTION 9.4 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the fullest extent possible.
SECTION 9.5 Entire Agreement; Assignment. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the
subject matter hereof. This Agreement shall not be assigned by operation of law
or otherwise, except that Parent and Purchaser may assign all or any of their
respective rights and obligations hereunder to any direct or indirect wholly
owned subsidiary or subsidiaries of Parent, provided that no such assignment
shall relieve the assigning party of its obligations hereunder if such assignee
does not perform such obligations.
SECTION 9.6 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement , other than rights conferred upon Indemnified
Parties under Section 6.7.
SECTION 9.7 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York except
to the extent Maryland law is mandatorily applicable.
SECTION 9.8 Headings. The descriptive headings
contained in this Agreement are included for convenience of
<PAGE>
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
L-3 COMMUNICATIONS CORPORATION
By: /s/ Christopher C. Cambria
--------------------------------
Name: Christopher C. Cambria
Title: Vice President
L-M ACQUISITION CORPORATION
By: /s/ Christopher C. Cambria
--------------------------------
Name: Christopher C. Cambria
Title: President and Secretary
MICRODYNE CORPORATION
By: /s/ Michael E. Jalbert
--------------------------------
Name: Michael E. Jalbert
Title: President and Chief
Executive Officer
<PAGE>
ANNEX A
Offer Conditions
The capitalized terms used in this Annex A have the meanings
set forth in the attached Agreement, except that the term "Merger Agreement"
shall be deemed to refer to the attached Agreement and the term "Commission"
shall be deemed to refer to the SEC.
Notwithstanding any other provision of the Offer, Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the Commission, including Rule 14e-1(c) under the Exchange
Act (relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for any Shares
tendered pursuant to the Offer, and may postpone the acceptance for payment or,
subject to the restriction referred to above, payment for any Shares tendered
pursuant to the Offer, and may amend or terminate the Offer (whether or not any
Shares have theretofore been purchased or paid for) if, prior to the expiration
of the Offer, (i) a number of shares of Company Common Stock which, together
with any Shares owned by L-3 Communications Holdings, Inc., Parent or
Purchaser, or any controlled affiliate thereof, constitutes at least a majority
of the voting power (determined on a fully-diluted basis), on the date of
purchase, of all the securities of the Company entitled to vote generally in
the election of directors or in a merger shall not have been validly tendered
and not properly withdrawn prior to the expiration of the Offer (the "Minimum
Condition"), (ii) Purchaser shall have not received the consent of the Required
Lenders (having the meaning assigned to such term under the Credit Agreement
and the 364 Day Credit Agreement) to the transactions contemplated by the
Merger Agreement under (x) the Credit Agreement and (y) the 364 Day Credit
Agreement, or (iii) at any time on or after December 3,1998 and prior to the
acceptance for payment of Shares, any of the following conditions occurs or has
occurred or Purchaser makes a good faith determination that any of the
following conditions has occurred:
(a) there shall have been instituted and pending any action
or proceeding brought by any governmental authority before any federal
or state court, or any order or preliminary or permanent injunction
entered in any action or proceeding before any federal or state court
or governmental, administrative or regulatory authority or agency, or
any other action taken, proposed or threatened, or statute, rule,
regulation, legislation, interpretation, judgment or order proposed,
sought, enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to Parent, Purchaser, the Company or any subsidiary
or affiliate of Purchaser or the Company or the Offer or the Merger,
by any legislative body, court, government or governmental,
administrative or regulatory authority or
<PAGE>
agency which could reasonably be expected to have the effect of: (i)
making illegal, materially delaying or otherwise directly or
indirectly restraining or prohibiting or making materially more costly
the making of the Offer, the acceptance for payment of, or payment
for, some of or all the Shares by Purchaser or any of its affiliates,
the consummation of any of the transactions contemplated by the Merger
Agreement or materially delaying the Merger; (ii) prohibiting or
materially limiting the ownership or operation by the Company or any
of its subsidiaries or Parent, Purchaser or any of Parent's affiliates
of all or any material portion of the business or assets of the
Company or any of its subsidiaries or Parent, or any of its
affiliates, or compelling Parent, Purchaser or any of Parent's
affiliates to dispose of or hold separate all or any material portion
of the business or assets of the Company or any of its subsidiaries or
Parent, or any of its affiliates, as a result of the transactions
contemplated by the Offer or the Merger Agreement; (iii) imposing or
confirming limitations on the ability of Parent, Purchaser or any of
Parent's affiliates effectively to acquire or hold or to exercise full
rights of ownership of Shares, including without limitation the right
to vote any Shares acquired or owned by Parent or Purchaser or any of
its affiliates on all matters properly presented to the stockholders
of the Company, including without limitation the adoption and approval
of the Merger Agreement and the Merger or the right to vote any shares
of capital stock of any subsidiary directly or indirectly owned by the
Company; or (iv) requiring divestiture by Parent or Purchaser or any
of their affiliates of any Shares;
(b) there shall have occurred any fact that had or could
reasonably be expected to have a Material Adverse Effect;
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in the United
States, (ii) a decline of at least 25% in either the Dow Jones Average
of Industrial Stocks or the Standard & Poor's 500 index from the date
hereof, (iii) any material adverse change or any existing or
threatened condition, event or development involving a prospective
material adverse change in United States or other material
international currency exchange rates or a suspension of, or
limitation on, the markets therefor, (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States, (v) any limitation (whether or not mandatory) by any
government or governmental, administrative or regulatory authority or
agency, domestic or foreign, on, or any other event that, in the
reasonable judgment of Purchaser, could
A-2
<PAGE>
reasonably be expected to materially adversely affect the extension of
credit by banks or other lending institutions, (vi) a commencement of
a war or armed hostilities or other national or international calamity
directly or indirectly involving the United States (except for any
such event involving Iraq) or having a Material Adverse Effect or
materially adversely affecting (or material delaying) the consummation
of the Offer or (vii) in the case of any of the foregoing existing at
the time of commencement of the Offer, a material acceleration or
worsening thereof;
(d) (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse
to Parent or Purchaser the approval or recommendation of the Offer,
the Merger or the Merger Agreement, or approved or recommended any
takeover proposal or any other acquisition of Shares other than the
Offer and the Merger, or (ii) any such corporation, partnership,
person or other entity or group shall have entered into a definitive
agreement or an agreement in principle with the Company with respect
to a tender offer or exchange offer for any Shares or a merger,
consolidation or other business combination with or involving the
Company or any of its subsidiaries;
(e) any of the representations and warranties of the Company
set forth in the Merger Agreement shall not be true and correct, in
each case as if such representations and warranties were made at the
time of such determination, except where the failure of any such
representations and warranties to be true and correct would not have a
Material Adverse Effect or would make materially more costly the
making of the Offer or the acceptance for payment of, or payment for,
some or all of the Shares by Purchaser or any of its affiliates;
(f) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with
by it under the Merger Agreement;
(g) the Merger Agreement shall have been terminated in
accordance with its terms or the Offer shall have been terminated with
the consent of the Company; or
(h) any waiting periods under the HSR Act applicable to the
purchase of Shares pursuant to the Offer, and any applicable waiting
periods under any material foreign statutes or regulations, shall not
have expired or been terminated, or any material approval, permit,
authorization or consent of any domestic or foreign governmental,
administrative or regulatory agency (federal, state, local, provincial
or otherwise) shall not have been obtained on
A-3
<PAGE>
terms satisfactory to the Parent in its reasonable
discretion;
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (including any
action or inaction by Purchaser or any of its affiliates other than a breach of
the Merger Agreement) giving rise to any such condition, makes it inadvisable
to proceed with the Offer or with such acceptance for payment of or payment for
Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of
Purchaser and may be asserted by Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser in whole or in
part at any time and from time to time in its sole discretion (subject to the
terms of the Merger Agreement). The failure by Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
A-4
<PAGE>
TENDER AGREEMENT
TENDER AGREEMENT (this "Agreement"), dated as of December 3,
1998, among L-3 Communications Corporation, a Delaware corporation ("Parent"),
and Philip T. Cunningham, Successor Trust to Philip T. Cunningham Grantor
Retained Annuity Trust #1 ("Trust #1"), Philip T. Cunningham Grantor Retained
Annuity Trust #2 ("Trust #2"), Maura Spaeth, Katharine Cunningham, and Neal
Sanders as agent for Roman Herzig and Gallerie Nissl (collectively, the
"Stockholders").
RECITALS
Concurrently herewith, Parent, L-M Acquisition Corporation, a
Maryland corporation and a wholly-owned subsidiary of Parent ("Sub"), and
Microdyne Corporation, a Maryland corporation (the "Company"), are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement), pursuant to which Sub agrees to
make an offer (the "Offer") for all outstanding shares of Common Stock, par
value $0.10 per share (the "Common Stock"), of the Company, at a price of $5.00
per share (the "Offer Price"), net in cash, to be followed by a merger (the
"Merger") of Sub with and into the Company.
As a condition to their willingness to enter into the Merger
Agreement and make the Offer, Parent and Sub have required that the
Stockholders agree, and the Stockholders have agreed, among other things, to
tender the number of shares of Common Stock of each Stockholder set forth on
Annex A hereto, together with any additional shares when and if they are
acquired (such shares, and any additional shares when and if they are acquired,
being referred to herein as the "Shares") pursuant to the Offer and not
withdraw any Shares therefrom on the terms and conditions provided for herein.
The Board of Directors of the Company has exempted this
Agreement, the Merger Agreement and the transactions contemplated hereby and
thereby so as to render inapplicable Section 3-602 of the Maryland General
Corporation Law ("MGCL") to the transactions contemplated hereby and thereby.
The Board of Directors of the Company has amended the By-laws of the Company so
as to render inapplicable Section 3-702(a)(i) of the MGCL to the transactions
contemplated by this Agreement and the Merger Agreement.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Agreement to Tender. The Stockholders hereby agree to
validly tender all of their Shares pursuant to the Offer and not withdraw any
Shares therefrom; provided that the Merger Agreement has not been terminated;
and provided further that the Stockholders are entitled to receive the same
consideration to be received by the other stockholders of the Company in the
Offer.
<PAGE>
2. Voting of Shares. Each Stockholder hereby agrees, so long
as such Stockholder is required to tender his or its Shares pursuant to Section
1 of this Agreement, to (a) vote the Shares in favor of the approval of the
Merger Agreement; (b) vote the Shares against any action or agreement that
would result in a breach in any material respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement; and (c) vote the Shares against any action or
agreement (other than the Merger Agreement or the transactions contemplated
thereby) that would impede, interfere with, delay, postpone or attempt to
discourage the Merger or the Offer. Each Stockholder shall not hereafter, so
long as such Stockholder is required to tender his or its Shares pursuant to
Section 1 of this Agreement, purport to vote (or execute a consent with respect
to) such Shares (other than in accordance with the requirements of this Section
2) or grant any other proxy or power of attorney with respect to any Shares,
deposit any Shares into a voting trust or enter into any agreement (other than
this Agreement), arrangement or understanding with any person, directly or
indirectly, to vote, grant any proxy or give instructions with respect to the
voting of such Shares.
3. Representations and Warranties.
3.1 Representations and Warranties of Parent. Parent hereby
represents and warrants to the Stockholders as follows:
(a) Due Authorization. The execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors
of Parent, and no other corporate proceedings on the part of Parent
are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Parent and constitutes a valid and
binding agreement of Parent, enforceable against Parent in accordance
with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) is
subject to general principles of equity.
(b) No Conflicts. Except for (i) filings under the
HSR Act, if applicable, (ii) the applicable requirements of the
Exchange Act and the Securities Act, (iii) the applicable requirements
of state securities, takeover or Blue Sky laws, (iv) such
notifications, filings, authorizing actions, orders and approvals as
may be required under other laws and (v) the consent of the Required
Lenders under the Credit Agreement and the 364 Day Credit Agreement to
the transactions contemplated hereby, (A) no filing with, and no
permit, authorization, consent or approval of, any state, federal or
foreign public body or authority is necessary for the execution of
this Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby and (B) neither the execution and
delivery of this Agreement by Parent nor the consummation by Parent of
the transactions contemplated hereby nor compliance by Parent with any
of the provisions hereof shall (1) conflict with or result in any
breach of any provision of the certificate of incorporation or by-laws
(or similar documents) of Parent, (2) result in a violation or breach
of, or constitute (with or without notice or lapse of time or both) a
default (or give
2
<PAGE>
rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, contract,
agreement or other instrument or obligation to which Parent is a party
or by which it or any of its properties or assets may be bound or (3)
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent or any of its properties or assets,
except in the case of (2) or (3) for violations, breaches or defaults
which would not in the aggregate materially impair the ability of
Parent to perform its obligations hereunder.
(c) Good Standing. Parent is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware and has all requisite corporate power and authority to
execute and deliver this Agreement.
3.2 Representations and Warranties of Stockholders. Each
Stockholder, jointly and severally, hereby represents and warrants to Parent as
follows:
(a) Ownership of Shares. Each Stockholder is the
owner (or, in the case of Neal Sanders only, the authorized
representative of the owner) of the Shares set forth opposite its name
on Annex A hereto and has the power to vote and dispose of such
Shares. To each Stockholder's knowledge, such Shares are validly
issued, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof. Each Stockholder has good title to
the Shares, free and clear of any agreements, liens, adverse claims or
encumbrances whatsoever with respect to the ownership of or the right
to vote such Shares, except that 70,000 Shares owned by Philip T.
Cunningham are pledged to Burke & Herbert Bank as security for certain
outstanding loans.
(b) Power; Binding Agreement. Each Stockholder has
the legal capacity, power and authority to enter into and perform all
of its obligations under this Agreement. The execution, delivery and
performance of this Agreement by each Stockholder will not violate any
other agreement to which any Stockholder is a party including, without
limitation, any voting agreement, stockholders agreement or voting
trust or, in the cases of Trust #1 and Trust #2, the constitutive
documents of such trust. This Agreement has been duly and validly
authorized, executed and delivered by each Stockholder and constitutes
a valid and binding agreement of each Stockholder, enforceable against
each Stockholder in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement
of creditors' rights generally and (ii) is subject to general
principles of equity.
(c) No Conflicts. Except for (i) filings under the
HSR Act, if applicable, (ii) the applicable requirements of the
Exchange Act and the Securities Act, (iii) the applicable requirements
of state securities, takeover or Blue Sky laws and (iv)
such notifications, filings, authorizing actions, orders and approvals
as may be required under other laws, (A) no filing with, and no
permit, authorization, consent or approval of, any state, federal or
foreign public body or authority is necessary for the execution of
this Agreement by each Stockholder and the consummation by each
Stockholder of the
3
<PAGE>
transactions contemplated hereby and (B) neither the execution and
delivery of this Agreement by the Stockholders nor the consummation by
the Stockholders of the transactions contemplated hereby nor
compliance by the Stockholders with any of the provisions hereof shall
(1) conflict with or result in any breach of any provision of the
certificate of incorporation, by-laws, trust or charitable instruments
(or similar documents) of any Stockholder, (2) result in a violation
or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, contract, agreement or other instrument
or obligation to which any Stockholder is a party or by which they or
any of their properties or assets may be bound or (3) violate any
order, writ, injunction, decree, statute, rule or regulation
applicable to any Stockholder or any of his or its properties or
assets, except in the case of (2) or (3) for violations, breaches or
defaults which would not in the aggregate materially impair the
ability of the Stockholders to perform their obligations hereunder.
4. Certain Covenants of Stockholder. Each Stockholder hereby
covenants and agrees as follows:
4.1 No Solicitation. No Stockholder nor any employee,
representative or agent of any Stockholder shall, directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations
with, or provide any information to, any corporation, partnership, person or
other entity or group (other than Parent and Sub, any affiliate or associate of
Parent and Sub or any designees of Parent or Sub) concerning any merger, sale
of all or any material portion of the assets, sale of shares of capital stock
or similar transactions (including an exchange of stock or assets) involving
the Company or any subsidiary or division of the Company; provided, however,
that nothing in this Section 4.1 shall prevent Philip T. Cunningham from taking
any action required to be taken by him in his capacity as a director consistent
with the requirements of the Merger Agreement. If any Stockholder, or any
employee, representative or agent of any Stockholder, receives an inquiry or
proposal with respect to the sale of Shares, then such Stockholder shall
promptly inform Parent of the terms and conditions, if any, of such inquiry or
proposal and the identity of the person making it. Each Stockholder shall, and
shall cause his or its employees, representatives and agents to, immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing.
4.2 Topping Fee. (a) In the event that any Topping Fee Event
shall occur, each Stockholder shall pay to Parent any Topping Fee due to Parent
with respect to his or its Shares in connection with such Topping Fee Event.
Payment of Topping Fees to Parent shall be due immediately following the
consummation of the related Topping Fee Event and shall be payable in
immediately available funds by wire transfer to the account designated in
writing by Parent; provided that if the Selling Price is payable in a form
other than cash ("Non-Cash Consideration") and the Stockholders are legally
prohibited from selling the Non-Cash Consideration into the market, the
Stockholders, at their option, may pay a pro rata portion of the Topping Fee in
the same form of consideration as the Non-Cash Consideration so long as Parent
is granted registration rights with respect to the Non-Cash Consideration on
terms no less
4
<PAGE>
favorable than the registration rights, if any, granted to any of the
Stockholders. For the avoidance of doubt, Topping Fees shall be payable, from
time to time, upon the occurrence of each Topping Fee Event.
(b) For purposes of this Section 4.2, the following
terms shall have the following meanings:
"Initial Amount" shall equal $0.50, as adjusted from time to
time in accordance with Section 6.
"Selling Price" shall mean the consideration per share
(whether cash or non-cash) to be received by any Stockholder in connection with
a Topping Fee Event; provided that if the consideration received by such
Stockholder in connection with a Topping Fee Event shall be other than cash,
(i) in the case of securities listed on a national securities exchange or
traded on the NASDAQ National Market ("NASDAQ"), the per share value of such
consideration shall be equal to the closing price per share listed on such
national securities exchange or NASDAQ on the date the Topping Fee Event is
consummated and (ii) in the case of consideration in a form other than such
securities, the per share value shall be determined in good faith as of the
date the Topping Fee Event is consummated by Parent and the Stockholders, or,
if Parent and the Stockholders cannot reach agreement, by a nationally
recognized investment banking firm reasonably acceptable to the parties, which
determination shall be conclusive for all purposes of this Agreement.
"Set Amount" shall equal $5.50, as adjusted from time to time
in accordance with Section 6.
"Topping Fee" shall mean a fee payable by a Stockholder to
Parent equal to the product of (i) the number of Shares directly or indirectly
sold or disposed by such Stockholder or otherwise in respect of which such
Stockholder is entitled to receive consideration and (ii) (A) if the Selling
Price is less than or equal to the Set Amount, the Selling Price less the Offer
Price or (B) if the Selling Price is greater than the Set Amount, the sum of
(1) the Initial Amount plus (2) 50% of the excess of the Selling Price less the
Set Amount.
"Topping Fee Event" shall mean (a) the direct or indirect
sale or other disposition by any Stockholder of his or its Shares, (b) a merger
or consolidation of the Company or any of its subsidiaries (or similar
transaction) with or into another person, (c) a sale or other disposition of
all or substantially all of the assets of the Company and/or its subsidiaries
(whether in one or more transactions) or (d) any other extraordinary
transaction involving the Company or any of its subsidiaries or any of their
respective assets, in each case, in which any Stockholder is entitled to
receive, cash or non-cash consideration with respect to any of his or its
Shares, provided that such sale, other disposition, merger, consolidation or
other extraordinary transaction is consummated (or a definitive written
agreement with respect thereto is entered into) within twelve (12) months after
any Fee Termination Event pursuant to the Merger Agreement; provided further
that any of the transactions described in clauses (a) - (d) above that involve
Parent or any of its subsidiaries shall not be deemed to constitute a Topping
Fee Event.
5
<PAGE>
4.3 Restriction on Transfer and NonInterference. Each
Stockholder hereby agrees, while this Agreement is in effect, and except as
contemplated hereby, not to (a) sell, transfer, pledge (provided that, subject
to the requirements of this Agreement, 160,000 Shares owned by Philip T.
Cunningham may be pledged to Burke & Herbert Bank and Chevy Chase Bank),
encumber, assign or otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to the sale, transfer, pledge,
encumbrance, assignment or other disposition of, any Shares; provided that any
Stockholder may transfer Shares to any other Stockholder (other than Neal
Sanders as agent for Roman Herzig and Gallerie Nissl); provided further that as
a condition to such transfer, such other Stockholder agrees in writing on terms
reasonably acceptable to Parent to become a party to, and agrees to be bound
by, to the same extent as the transferring Stockholder, the terms of this
Agreement or (b) take any action that would make any representation or warranty
of such Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling such Stockholder from performing or its obligations
under this Agreement.
4.4 Legending of Certificates; Nominees Shares. If requested
by Parent, the Stockholders agree to submit to Parent contemporaneously with or
promptly following execution of this Agreement all certificates representing
their Shares so that Parent may note thereon a legend referring to the rights
granted to it by this Agreement, including, without limitation, the right to
receive Topping Fees pursuant to Section 4.2. If any of the Shares beneficially
owned by the Stockholders are held of record by a brokerage firm in "street
name" or in the name of any other nominee (a "Nominee," and, as to such Shares,
"Nominee Shares"), the Stockholders agree that, upon written notice by Parent
requesting it, the Stockholders will within five days of the giving of such
notice execute and deliver to Parent a limited power of attorney in such form
as shall be reasonably satisfactory to Parent enabling Parent to require the
Nominee to (i) enter into an agreement to the same effect as Section 2 hereof
with respect to the Nominee Shares held by such Nominee, (ii) tender such
Nominee Shares in the Offer pursuant to Section 1 hereof and (iii) submit to
Parent the certificates representing such Nominee Shares for notation of the
above-referenced legend thereon.
4.5 Stop Transfer Order. In furtherance of this Agreement,
concurrently herewith, the Stockholders shall and hereby do authorize the
Company's counsel to notify the Company's transfer agent that, except as
permitted pursuant to Section 4.3 of this Agreement, there is a stop transfer
order with respect to all of the Shares (and that this Agreement places limits
on the transfer of such Shares).
4.6 Prohibited Transfers. No Stockholder may sell, transfer,
hypothecate or otherwise dispose of any Shares to any affiliate or associate of
such Stockholder or in a transaction at less than fair value unless the
transferee of such Shares agrees in writing to become a party to, and to be
bound by, to the same extent as the Stockholders, the terms of this Agreement.
5. Further Assurances. From time to time, at the other
party's request and without further consideration, each party hereto shall
execute and deliver such additional documents and take all such further action
as may be necessary or desirable to consummate the transactions contemplated by
this Agreement.
6
<PAGE>
6. Adjustments to Prevent Dilution. In the event of a stock
dividend or distribution, or any change in the Company's Common Stock by reason
of any stock dividend, split-up, reclassification, recapitalization,
combination or the exchange of shares, the term "Shares" shall be deemed to
refer to and include the Shares as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Shares
may be changed or exchanged. In such event, the definitions of "Set Amount" and
"Initial Amount" shall be proportionally adjusted.
7. Miscellaneous.
7.1 Entire Agreement; Assignment. This Agreement (i)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof and (ii) shall not be assigned by operation of law or otherwise,
provided that Parent may assign its rights and obligations hereunder to any
direct or indirect wholly owned parent company or subsidiary of Parent, but no
such assignment shall relieve Parent of its obligations hereunder if such
assignee does not perform such obligations.
7.2 Amendments. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereto.
7.3 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered to
the respective parties at the following addresses:
If to the Stockholders: Philip T. Cunningham
304 South St. Asaph Street
Alexandria, Virginia 22314
copy to: Powell, Goldstein, Frazer & Murphy
1001 Pennsylvania Avenue
Suite 600 South
Washington, D.C. 20004
Attention: Joseph Berl, Esq.
If to Parent: L-3 Communications Corporation
600 Third Avenue
New York, New York 10016
7
<PAGE>
Attention: Christopher Cambria, Esq.
copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: William E. Curbow, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
7.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
7.5 Cooperation as to Regulatory Matters. If so requested by
Parent, promptly after the date hereof, the Stockholders will use their
reasonable best efforts to make and to cause the Company (if required) to make
all filings which are required under the HSR Act and applicable requirements
and to seek all regulatory approvals required in connection with the
transactions contemplated hereby. The parties shall furnish to each other such
necessary information and reasonable assistance as may be requested in
connection with the preparation of filings and submissions to any governmental
agency, including, without limitation, filings under the provisions of the HSR
Act. The Stockholders shall also use their reasonable best efforts to cause the
Company to supply Parent with copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between the
Company and its representatives and the Federal Trade Commission, the
Department of Justice and any other governmental agency or authority and
members of their respective staffs with respect to this Agreement and the
transactions contemplated hereby.
7.6 Termination. This Agreement shall terminate on the
earlier of (i) the Effective Time or (ii) except for the provisions of Section
4.2, Section 4.4, Section 4.6, Section 6 and Section 7, the termination of the
Merger Agreement in accordance with its terms.
7.7 Waiver of Dissenter's and Appraisal Rights. The
Stockholders agree that they will not exercise any rights to dissent from the
Merger or request appraisal rights of their Shares pursuant to Section 3-202 of
the MGCL or any other similar provisions of law in connection with the
transactions contemplated hereby.
7.8 Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore, each of the parties hereto agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or
in equity.
8
<PAGE>
7.9 Counterparts. This Agreement may be executed in any
number of separate counterparts, each of which shall be deemed to be an
original, and all of which shall constitute one and the same agreement.
7.10 Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
7.11 Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
9
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by or on
behalf of each of the parties hereto, all as of the date first above written.
L-3 COMMUNICATIONS CORPORATION
By: /s/ Christopher C. Cambria
-------------------------------------------
Name: Christopher C. Cambria
Title: Vice President
PHILIP T. CUNNINGHAM
By: /s/ Philip T. Cunningham
-------------------------------------------
Name: Philip T. Cunningham
SUCCESSOR TRUST TO
PHILIP T. CUNNINGHAM
GRANTOR RETAINED ANNUITY TRUST #1
By: /s/ Jack Porter
-------------------------------------------
Name: Jack Porter
Title: Trustee
PHILIP T. CUNNINGHAM
GRANTOR RETAINED ANNUITY TRUST #2
By: /s/ Philip T. Cunningham
-------------------------------------------
Name: Philip T. Cunningham
MAURA SPAETH
By: /s/ Maura Spaeth
-------------------------------------------
Name: Maura Spaeth
KATHARINE CUNNINGHAM
By: /s/ Katharine Cunningham
-------------------------------------------
Name: Katharine Cunningham
NEAL SANDERS, as agent for Roman Herzig
and Gallerie Nissl
By: /s/ Neal Sanders
-------------------------------------------
Name: Neal Sanders
Title: Agent
10
<PAGE>
ANNEX A
Number of Shares
Name of Common Stock
- ---- ----------------
Philip T. Cunningham 4,380,487
Successor Trust to Philip T. Cunningham
Grantor Retained Annuity Trust #1 209,847
Philip T. Cunningham Grantor Retained
Annuity Trust #2 621,400
Maura Spaeth 19,300
Katharine Cunningham 23,541
Neal Sanders, as agent for
Roman Herzig
and Gallerie Nissl 500,000
11
